-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Oh2sOojflj+fleLj8cFjH2VJ8+pEb/G3oWNlXWeU1mO2UtU6RXwH86tptXwWbUAi dHf2p5qjVeMEumkRVbOLqg== 0000950137-04-001249.txt : 20040226 0000950137-04-001249.hdr.sgml : 20040226 20040226101653 ACCESSION NUMBER: 0000950137-04-001249 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040226 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WEST BANCORPORATION INC CENTRAL INDEX KEY: 0001166928 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 421230603 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-49677 FILM NUMBER: 04629186 BUSINESS ADDRESS: STREET 1: 1601 22ND ST CITY: WEST DES MOINES STATE: IA ZIP: 50266 BUSINESS PHONE: 5152222309 MAIL ADDRESS: STREET 1: 1601 22ND ST CITY: WEST DES MOINES STATE: IA ZIP: 50266 10-K 1 c83230e10vk.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 or [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________________ to _______________________ Commission file number 0-49677 WEST BANCORPORATION, INC. ------------------------- (Exact name of registrant as specified in its charter) IOWA 42 - 1230603 ---- ------------ (State of incorporation (I.R.S. Employer Identification No.) or organization) 1601 22nd STREET, WEST DES MOINES, IOWA 50266 - --------------------------------------- ----- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (515) 222-2300 Securities registered pursuant to Section 12(b) of the Act: NONE Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, NO PAR VALUE -------------------------- (Title of Class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. [X] Yes [ ] No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X]. Indicate by check mark whether the registrant is an accelerated filer (as defined in rule 12b-2 of the Act). [X] Yes [ ] No The aggregate market value of the voting stock held by non-affiliates of the registrant as of June 30, 2003, was $266,953,202. Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the most recent practicable date, February 6, 2004. 16,060,271 shares Common Stock, no par value DOCUMENTS INCORPORATED BY REFERENCE The Appendix to the Proxy Statement for the 2003 calendar year is incorporated by reference into Part II and Part IV hereof to the extent indicated in such Parts. The definitive proxy statement of West Bancorporation, Inc., which will be filed not later than 120 days after the close of the Company's fiscal year ending December 31, 2003, is incorporated by reference into Part III hereof to the extent indicated in such Part. 2 TABLE OF CONTENTS PART I
PAGE ITEM 1. BUSINESS.................................................................. 4 ITEM 2. PROPERTIES................................................................ 11 ITEM 3. LEGAL PROCEEDINGS......................................................... 12 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS....................... 12 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASERS OF EQUITY SECURITIES........................ 12 ITEM 6. SELECTED FINANCIAL DATA................................................... 12 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS....................................... 12 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK............................................................... 12 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA............................... 12 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.................................... 13 ITEM 9A. CONTROLS AND PROCEDURES................................................... 13 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT........................ 13 ITEM 11. EXECUTIVE COMPENSATION.................................................... 16 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............................................................ 16 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS............................ 16 ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES.................................... 16 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K....................................................... 17
3 PART I ITEM 1. BUSINESS GENERAL West Bancorporation, Inc. (the "Company") is an Iowa corporation and bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Company owns 100 percent of the stock of one state banking subsidiary and one registered investment advisory firm, as described below. All of the Company's banking operations are conducted in the State of Iowa and primarily within the Des Moines and Iowa City, Iowa metropolitan areas. The Company's registered investment advisory firm's operations are conducted primarily in the Des Moines and Cedar Rapids, Iowa metropolitan areas, but it also has customers throughout the United States. The Company does not engage in any material business activities apart from its ownership of its banking and investment advisory subsidiaries. The principal executive offices of the Company are located at 1601 22nd Street, West Des Moines, Iowa 50266 and its telephone number is (515) 222-2300. The Company was organized and incorporated on May 22, 1984 under the laws of the State of Iowa to serve as a holding company for its principal banking subsidiary, West Bank (sometimes referred to as the "Bank") whose main office is located in West Des Moines, Iowa. The principal sources of Company revenue are derived from West Bank: (1) interest and fees earned on loans made; (2) service charges on deposit accounts and (3) interest on fixed income securities. West Bank's lending activities consist primarily of short-term and medium-term commercial and real estate loans, business operating loans and lines of credit, equipment loans, vehicle loans, personal loans and lines of credit, home improvement loans and conventional and secondary market mortgage loan origination. West Bank also offers a variety of demand, savings and time deposits, merchant credit card processing, safe deposit boxes, wire transfers, debit cards, direct deposit of payroll and social security checks and automated teller machine access, trust services and correspondent bank services. The Company's investment advisory subsidiary, WB Capital Management Inc., was formed on October 1, 2003. At that time WB Capital Management Inc., purchased the assets of VMF Capital, L.L.C., a registered investment advisor. The subsidiary is operating as VMF Capital. BANKING SUBSIDIARY West Bank, West Des Moines, Iowa. West Bank is a state chartered commercial bank insured by the Federal Deposit Insurance Corporation ("FDIC"). It was organized in 1893 as First Valley Junction Savings Bank. The name was changed to West Des Moines State Bank in 1938. The Bank became a wholly owned subsidiary of the Company in 1984 through a bank holding company organization whereby the bank's controlling interest was transferred to West Bancorporation, Inc. On July 18, 2003, West Bank purchased the assets and assumed certain liabilities of Hawkeye State Bank in Iowa City, Iowa. Assets acquired in this transaction totaled approximately $129 million at two offices in Iowa City. In the fall of 2003, the name of the bank was shortened from West Des Moines State Bank to West Bank. West Bank provides full-service banking to businesses and residents primarily in the Des Moines and Iowa City metropolitan areas as well as correspondent services to banking organizations primarily located in Iowa. It provides a variety of products and services designed to meet the needs of the markets it serves. It has an experienced staff of bank officers who have spent the majority of their banking careers with West Bank and local financial service organizations and who emphasize long-term customer relationships. West Bank conducts business out of eight full-service offices within the Des Moines metropolitan area and two full-service offices in the Iowa City metropolitan area. As of December 31, 2003, West Bank had capital of $86,796,000. West Bank had net income of $17,783,000 in 2003, $16,516,000 in 2002 and $15,754,000 in 2001. Total assets as of December 31, 2003, 2002 and 2001 were $997,097,000, $886,103,000 and $815,970,000, respectively. INVESTMENT ADVISOR SUBSIDIARY WB Capital Management Inc. (d/b/a VMF Capital), Clive, Iowa. VMF Capital is a registered investment advisor regulated by the Securities and Exchange Commission, which provides portfolio management services to individual investors, retirement plans, corporations, foundations and endowments. The subsidiary specializes in domestic equity and fixed income strategies and also provides customized strategies to meet specific investment objectives of clients. As of December 31, 2003, VMF Capital had approximately $462 million in assets under management. For the three-month period ended December 31, 2003, it had a net loss of $82,000. 4 BUSINESS STRATEGY AND OPERATIONS The Company is a bank holding company serving primarily the Des Moines and Iowa City metropolitan areas. As previously discussed, during 2003, the Bank grew through the acquisition of two offices in Iowa City. The business strategy is to emphasize strong personal and business relationships to provide products and services that meet the needs of its customers. The Company seeks to maintain a strong return on equity and net income. To accomplish these goals, West Bank focuses on small to medium size businesses that traditionally wish to develop an exclusive relationship with a single bank. West Bank has the size to give the personal attention required by business owners, in addition to the credit expertise to help businesses meet their goals. The Company emphasizes strong cost controls while striving to achieve return on equity and net income goals. West Bank offers a full range of deposit services that are typically available in most financial institutions, including checking accounts, savings accounts, money market accounts and time certificates of deposit. One major goal in developing the Bank's product mix is to keep the product offerings as simple as possible, both in terms of the number of products and the features and benefits of the individual services. The transaction accounts and time certificates are tailored to the marketplace at competitive rates. In addition, the Bank offers retirement accounts such as Individual Retirement Accounts. The FDIC insures all deposit accounts up to the maximum amount. The Bank solicits these accounts from small-to-medium sized businesses and from individuals who live and/or work within its market area. Occasionally, one particular customer may have balances in short-term deposits that represent approximately 15% of the Bank's total deposits. Those funds are specifically invested in short-term liquid investments. The Company does not believe that the loss of deposits of any one customer or of a few customers would have an adverse effect on the Bank's operation or erode its core deposit base. Loans are provided to creditworthy borrowers regardless of their race, color, national origin or ancestry, religion, sex, age, marital status, sexual orientation, disability, veteran status, receipt of public assistance or any other basis prohibited by law. West Bank intends to fulfill this commitment while maintaining prudent credit standards. In the course of fulfilling this obligation to meet the credit needs of the marketplace it serves, West Bank will give consideration to each credit application regardless of the fact that the applicant may reside in a low to moderate income neighborhood, and without regard to the geographic location of the residence, property or business within the market area. The Bank provides quality financial products and services such as telephone and internet banking and trust services that meet the banking needs of its customers and its market place. The loan programs and acceptance of certain loans may vary from time-to-time depending on the funds available and regulations governing the banking industry. West Bank offers all basic types of credit to its marketplace including commercial, real estate and consumer loans. The types of loans within these categories are as follows: Commercial Loans. Commercial loans are typically made to sole proprietors, partnerships, corporations and other business entities such as municipalities and individuals where the loan is to be used primarily for business purposes. These loans are typically secured by assets owned by the borrower and often involve personal guarantees given by the owners of the business. The types of loans that West Bank offers include financing guaranteed under Small Business Administration programs, operating and working capital loans, loans to finance equipment and other capital purchases, commercial real estate loans, business lines of credit, term loans, loans to professionals, and letters of credit. Consumer Loans. Consumer loans are typically available to finance home improvements and consumer purchases, such as automobiles, boats and education. These loans are made on both a secured and an unsecured basis. The types of loans that West Bank offers include automobiles and trucks, boats and recreational vehicles, personal loans and lines of credit, home equity lines of credit, home improvement and rehabilitation loans, credit card services and residential real estate loans. Other types of credit programs, such as loans to nonprofit organizations and to public entities for community development, also are available. West Bank offers trust services typically found in a commercial bank with trust powers, including the administration of estates, conservatorships, personal and corporate trusts and agency accounts. West Bank also earns fees from the origination of residential mortgages that are sold in the secondary real estate market without retaining the mortgage servicing rights. The Bank offers traditional banking services, such as safe deposit boxes, wire transfers, direct deposit of payroll and social security checks, automated teller machine access and automatic drafts (ACH) for various accounts. West Bank offers correspondent bank services to community banks located primarily in Iowa. These services include the buying and selling of federal funds as well as purchases and sales of loan participations. 5 CREDIT MANAGEMENT The Company strives to achieve sound credit risk management. In order to achieve this, the Company has established uniform credit policies and underwriting criteria for West Bank's loan portfolio. The Bank diversifies the types of loans offered and is subject to regular credit examinations by regulators, annual external loan audits and an internal annual review of large loans. The Company attempts to identify potential problem loans early, charge off loans promptly and maintain an adequate allowance for loan losses. The Bank has established credit guidelines for the lending activities that include guidelines relating to the more commonly requested loan types, as follows: Commercial Real Estate Loans - Commercial real estate loans are normally based on loan-to-appraisal value ratios of not more than 75 percent and secured by a first priority lien position. Loans are typically subject to interest rate adjustments no less frequently than 5 years from origination. Fully amortized monthly repayment terms normally do not exceed twenty years. Projections and cash flows that show ability to service debt within the amortization period are required. Property and casualty insurance is required to protect the Banks' collateral interests. A major risk factor for commercial real estate loans, as well as the other loan types described below, is the geographic concentration in the Des Moines and Iowa City metropolitan areas. Loans are generally guaranteed by the principal(s). Commercial Operating Lines - These loans are made to businesses with normal terms up to twelve months. The credit needs are generally seasonal with the source of repayment coming from the entity's normal business cycle. Cash flow reviews are completed to establish the ability to service the debt within the terms of the loan. A first priority lien on the general assets of the business normally secures these types of loans. Loan-to-value limits vary and are dependent upon the nature and type of the underlying collateral and the financial strength of the borrower. Loans are generally guaranteed by the principal(s). Commercial Term Loans - These loans are made to businesses to finance equipment and other capital expenditures. Terms are generally the lesser of five years or the useful life of the asset. Term loans are normally secured by the asset being financed and are often additionally secured with the general assets of the business. Loan-to-value is generally a maximum of 75 percent of the cost or value of the assets. Loans are normally guaranteed by the principal(s). Construction Loans - Construction loans on commercial real estate are normally based on a loan-to-appraisal value ratio of not more than 75 percent and secured by a first priority lien position. Loan payments are typically interest only for a term of 1-1/2 to 2 years. The interest rate is usually variable, based on the prime rate. Residential construction loans are generally for a term not to exceed one year, based on a loan-to-appraisal value ratio of not more than 80% and secured by a first priority lien position. Interest is normally paid monthly or quarterly based on a variable rate tied to prime. Residential First Mortgage Loans - Proceeds of these loans are used to buy or refinance the purchase of residential real estate with the loan secured by a first lien on the real estate. Most of the residential mortgage loans originated by the Bank during the past year have been sold (including servicing rights) in the secondary mortgage market due to the higher interest rate risk inherent in the 15 and 30 year fixed rate terms consumers prefer. Loans that are originated and not sold in the secondary market generally have higher interest rates and have rate adjustment periods normally no longer than seven years. The maximum amortization of first mortgage residential real estate loans is 30 years. The loan-to-value ratios do not exceed 80 percent. Property insurance is required on all loans to protect the Banks' collateral position. Home Equity Term Loans - These loans are normally for the purpose of home improvement or other consumer purposes and are secured by a junior mortgage on residential real estate. Loan-to-value ratios normally do not exceed 90 percent of market value. Home Equity Lines of Credit - The Bank offers a home equity line of credit with a maximum term of 60 months. These loans are secured by a junior mortgage on the residential real estate and normally do not exceed a loan-to-value ratio of 90 percent with the interest adjusted quarterly. Consumer Loans - Consumer loans are normally made to consumers under the following guidelines: automobiles - loans on new and used automobiles generally will not exceed 80 and 75 percent of the value, respectively; recreational vehicles and boats - 75 percent of value; mobile home loans have a maximum term of 180 months with the loan-to-value ratio generally not exceeding 80 percent. Each of these loans is secured by a first priority lien on the assets and requires insurance to protect the Bank's collateral position. The term for unsecured loans generally does not exceed 24 months. 6 EMPLOYEES At December 31, 2003, the Bank had a total of 139 full-time equivalent employees, VMF Capital had 15 employees and the Company had 1 employee. Full-time equivalents represent the number of people a business would employ if all of its employees were employed on a full-time basis. It is calculated by dividing the total number of hours worked by all full and part-time employees by the number of hours a full-time individual would work for a given period of time. Employees are provided with a comprehensive program of benefits, including comprehensive medical and dental plans, long-term disability coverage, and a profit sharing plan with a 401(k) feature. Management considers its relations with employees to be satisfactory. Unions represent none of the employees. MARKET AREA The Company operates one commercial bank with eight locations throughout the Des Moines, Iowa metropolitan area and two locations in the Iowa City, Iowa metropolitan area. West Bank's primary business includes providing business and retail banking services and lending. West Bank's main office is located in West Des Moines, Iowa, one of the fastest growing communities in Iowa. The population of the Des Moines metropolitan area is nearly 500,000. Des Moines is the capital of Iowa. Major employers are the State of Iowa, Principal Financial Group, Pioneer Hi-Bred International, Inc., Central Iowa Hospital Corporation, Mercy Hospital Medical Center, Hy-Vee Food Stores, Inc., and the Des Moines Independent School District. COMPETITION The geographic market area served by West Bank is highly competitive with respect to both loans and deposits. The Bank competes principally with other commercial banks, savings and loans associations, credit unions, mortgage companies, finance divisions of auto companies, and other service providers. Some of these competitors are local, while others are statewide or nationwide. The major commercial bank competitors include Bankers Trust Company, NA, a local banking organization; regional banks: Union Planters Bank, NA and Commercial Federal Bank; and several nationwide banks: Wells Fargo Bank, Bank of America and U.S. Bank, NA. Among the advantages such larger banks have are their ability to finance extensive advertising campaigns and to allocate their investment assets to geographic regions of higher yield and demand. Such banks offer certain services, which are not offered directly by West Bank, but that may be offered through correspondent banking institutions. These larger banking organizations have much higher legal lending limits than West Bank and thus are better able to finance large regional, national and global commercial customers. In order to compete, to the fullest extent possible, with the other financial institutions in its primary trade area, West Bank uses the flexibility that is accorded by its independent status. This includes an emphasis on specialized services, local promotional activities and personal contacts by the Bank's officers, directors and employees. In particular, the Bank competes for deposits principally by offering depositors a variety of deposit programs, convenient office locations, hours and other services. West Bank competes for loans primarily by offering competitive interest rates, experienced lending personnel with local decision-making authority and quality products and services. Pursuant to the FDIC's Summary of Deposits, as of June 30, 2003, there were 29 other banks and savings and loan associations within Polk County, Iowa, where eight of the Bank's offices are located. West Bank ranked 6th based on total deposits of all offices in Polk County. As of June 30, 2003, there were 13 other banks and savings and loan associations within Johnson County, Iowa, where the two offices acquired through the Hawkeye State Bank transaction are located. West Bank, ranked 4th based on total deposits of all offices in Johnson County. For the entire state, West Bank, ranked 9th in terms of deposit size. The Bank also competes with the financial markets for funds. Yields on corporate and government debt securities and commercial paper affect the ability of commercial banks to attract and hold deposits. Commercial banks also compete for funds with money market instruments and similar investment vehicles offered by competitors including brokerage firms, insurance companies, credit card issuers and retailers such as Sears. Money market funds offered by these types of organizations have provided substantial competition for deposits. This trend will likely continue in the future. The Company anticipates bank competition will continue to change significantly over the next several years as more banks, including the major regionals and nationals, continue to consolidate. Credit unions, because of their income tax advantage, will continue to show substantial growth. 7 SUPERVISION AND REGULATION The following discussion generally refers to certain statutes and regulations affecting the banking industry. These references provide brief summaries and, therefore, do not purport to be complete and are qualified in their entirety by reference to those statutes and regulations. In addition, due to the numerous statutes and regulations that apply to and regulate the operation of the banking industry, many are not referenced below. The Company and West Bank are subject to extensive federal and state regulation and supervision. Regulation and supervision of financial institutions is primarily intended to protect depositors and the FDIC rather than shareholders of the Company. The laws and regulations affecting banks and bank holding companies have changed significantly over recent years, particularly with the passage of the Financial Services Modernization Act. There is reason to expect that similar changes will continue in the future. Any change in applicable laws, regulations or regulatory policies may have a material effect on the business, operations and prospects of the Company. The Company is unable to predict the nature or the extent of the effects on its business and earnings that any fiscal or monetary policies or new federal or state legislation may have in the future. The Company The Company is a bank holding company by virtue of its ownership of West Bank, and is registered as such with the Board of Governors of the Federal Reserve System (the "Federal Reserve"). The Company is subject to regulation under the Bank Holding Company Act of 1956, as amended (the "BHCA"), which subjects the Company and the Bank to supervision and examination by the Federal Reserve. Under the BHCA, the Company files with the Federal Reserve quarterly and annual reports of its operations and such additional information as the Federal Reserve may require. Source of Strength to the Bank. The Federal Reserve takes the position that a bank holding company is required to serve as a source of financial strength to its subsidiary bank and may not conduct its operations in an unsafe or unsound manner. In addition, it is the Federal Reserve's position that in serving as a source of strength to its subsidiary bank, a bank holding company should use available resources to provide adequate capital funds to its subsidiary bank during periods of financial stress or adversity. It should also maintain the financial flexibility and capital raising capacity to obtain additional resources for providing assistance to its subsidiary bank. A bank holding company's failure to meet its obligations to serve as a source of strength to its subsidiary bank will generally be considered by the Federal Reserve to be an unsafe and unsound banking practice or a violation of the Federal Reserve's regulations or both. Federal Reserve Approval. Bank holding companies must obtain the approval of the Federal Reserve before they: (1) acquire direct or indirect ownership or control of any voting stock of any bank if, after such acquisition, they would own or control, directly or indirectly, more than 5 percent of the voting stock of such bank; (2) merge or consolidate with another bank holding company; or (3) acquire substantially all of the assets of any additional banks. Non-Banking Activities. With certain exceptions, the BHCA also prohibits bank holding companies from acquiring direct or indirect ownership or control of voting stock in any company other than a bank or bank holding company unless the Federal Reserve finds the company's business to be incidental to the business of banking. When making this determination, the Federal Reserve in part considers whether allowing a bank holding company to engage in those activities would offer advantages to the public that would outweigh possible adverse effects. A bank holding company may engage in permissible non-banking activities on a de novo basis, if the holding company meets certain criteria and notifies the Federal Reserve within ten (10) business days after the activity has commenced. Under the Financial Services Modernization Act, an eligible bank holding company may elect (with the approval of the Federal Reserve) to become a "financial holding company". Financial holding companies are permitted to engage in certain financial activities through affiliates that had previously been prohibited activities for bank holding companies. Such financial activities include securities and insurance underwriting and merchant banking. At this time, the Company has not elected to become a financial holding company, but may choose to do so at some time in the future. Control Transactions. The Change in Bank Control Act of 1978, as amended, requires a person or group of persons acquiring "control" of a bank holding company to provide the Federal Reserve with at least 60 days prior written notice of the proposed acquisition. Following receipt of this notice, the Federal Reserve has 60 days to issue a notice disapproving the proposed acquisition, but the Federal Reserve may extend this time period for up to another 30 days. An acquisition may be completed before the disapproval period expires if the Federal Reserve issues written notice of its intent not to disapprove the action. Under a rebuttable presumption established by the Federal Reserve, the acquisition of 10 percent or more of a class of voting stock of a bank holding company with a class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended, would constitute the acquisition of control. In addition, any "company" would be required to obtain the approval of the Federal Reserve under the BHCA before acquiring 25 percent (or 5 percent if the "company" is a bank holding company) or more of the outstanding shares of the Company, or otherwise obtain control over the Company. 8 Affiliate Transactions. The Company, West Bank and VMF Capital are deemed affiliates within the meaning of the Federal Reserve Act, and transactions between affiliates are subject to certain restrictions. Generally, the Federal Reserve Act: (1) limits the extent to which the financial institution or its subsidiaries may engage in "covered transactions" with an affiliate; and (2) requires all transactions with an affiliate, whether or not "covered transactions", to be on terms substantially the same, or at least as favorable to the institution or subsidiary, as those provided to a non-affiliate. The term "covered transaction" includes the making of loans, purchase of assets, issuance of guarantees and similar transactions. State Law on Acquisitions. Iowa law permits bank holding companies to make acquisitions throughout the state. However, Iowa currently has a deposit concentration limit of 15 percent on the amount of deposits in the state that any one banking organization can control and continue to acquire banks or bank deposits (by acquisitions), which applies to all depository institutions doing business in Iowa. Banking Subsidiaries Applicable federal and state statutes and regulations governing a bank's operations relate, among other matters, to capital adequacy requirements, required reserves against deposits, investments, loans, legal lending limits, certain interest rates payable, mergers and consolidations, borrowings, issuance of securities, payment of dividends, establishment of branches and dealings with affiliated persons. West Bank is a state bank subject to primary federal regulation and supervision by the Federal Deposit Insurance Corporation (the "FDIC") and the Iowa Division of Banking. The federal laws that apply to the bank regulate, among other things, the scope of its business, its investments, its reserves against deposits, the timing of the availability of deposited funds and the nature and amount of and collateral for loans. The laws and regulations governing the bank generally have been promulgated to protect depositors and the deposit insurance fund of the FDIC and not to protect stockholders of such institutions or their holding companies. The FDIC has authority to prohibit banks under their supervision from engaging in what it considers to be unsafe and unsound practices in conducting business. The Federal Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA") requires federal banking regulators to adopt regulations or guidelines in a number of areas to ensure bank safety and soundness, including internal controls, credit underwriting, asset growth, earnings, management compensation and ratios of classified assets to capital. FDICIA also contains provisions which are intended to change independent auditing requirements, restrict the activities of state-chartered insured banks, amend various consumer banking laws, limit the ability of "undercapitalized banks" to borrow from the Federal Reserve's discount window, require regulators to perform periodic on-site bank examinations and set standards for real estate lending. Borrowing Limitations. West Bank is subject to limitations on the aggregate amount of loans that it can make to any one borrower, including related entities. Subject to numerous exceptions based on the type of loans and collateral, applicable statutes and regulations generally limit loans to one borrower of 15 percent of total equity and reserves. West Bank is in compliance with applicable loans to one borrower requirements. FDIC Insurance. Generally, customer deposit accounts in banks are insured by the FDIC for up to a maximum amount of $100,000. The FDIC has adopted a risk-based insurance assessment system under which depository institutions contribute funds to the FDIC insurance fund based on their risk classification. The FDIC may terminate the deposit insurance of any insured depository institution if it determines after an administrative hearing that the institution has engaged or is engaging in unsafe or unsound practices, is in an unsafe or unsound condition to continue operations or has violated any applicable law. Capital Adequacy Requirements. The Federal Reserve, the FDIC and the Office of the Comptroller of the Currency ("OCC") (collectively, the "Agencies") have adopted risk-based capital guidelines for banks and bank holding companies that are designed to make regulatory capital requirements more sensitive to differences in risk profiles among banks and bank holding companies and account for off-balance sheet items. Failure to achieve and maintain adequate capital levels may give rise to supervisory action through the issuance of a capital directive to ensure the maintenance of required capital levels. West Bank is in compliance with applicable regulatory capital level requirements. The current guidelines require all federally regulated banks to maintain a minimum risk-based total capital ratio equal to 8 percent, of which at least 4 percent must be Tier 1 capital. Tier 1 capital includes common shareholders' equity, qualifying perpetual preferred stock and minority interests in equity accounts of consolidated subsidiaries, but excludes goodwill and most other intangibles and the allowance for loan and lease losses. Tier 2 capital includes the excess of any preferred stock not included in Tier 1 capital, mandatory convertible securities, hybrid capital instruments, subordinated debt and intermediate term preferred stock and general reserve for loan and lease losses up to 1.25 percent of risk weighted assets. West Bank has not received any notice indicating that it will be subject to higher capital requirements. 9 Under these guidelines, bank assets are given risk weights of 0 percent, 20 percent, 50 percent or 100 percent. Most loans are assigned to the 100 percent risk category, except for first mortgage loans fully secured by residential property and, under certain circumstances, residential construction loans (both carry a 50 percent rating). Most investment securities are assigned to the 20 percent category, except for municipal or state revenue bonds (which have a 50 percent rating) and direct obligations of or obligations guaranteed by the United States Treasury or United States Government Agencies (which have a 0 percent rating). The Agencies have also implemented a leverage ratio, which is equal to Tier 1 capital as a percentage of average total assets less intangibles, to be used as a supplement to the risk based guidelines. The principal objective of the leverage ratio is to limit the maximum degree to which a bank may leverage its equity capital base. The minimum required leverage ratio for top rated institutions is 3 percent, but most institutions are required to maintain an additional cushion of at least 100 to 200 basis points. Any institution operating at or near the 3 percent level is expected to be a strong banking organization without any supervisory, financial or operational weaknesses or deficiencies. Any institution experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions, well above the minimum levels. Prompt Corrective Action. Regulations adopted by the Agencies impose even more stringent capital requirements. The FDIC and other Agencies must take certain "prompt corrective action" when a bank fails to meet capital requirements. The regulations establish and define five capital levels: (1) "well-capitalized", (2) "adequately capitalized", (3) "undercapitalized", (4) "significantly undercapitalized" and (5) "critically undercapitalized". Increasingly severe restrictions are imposed on the payment of dividends and management fees, asset growth and other aspects of the operations of institutions that fall below the category of being "adequately capitalized". Undercapitalized institutions are required to develop and implement capital plans acceptable to the appropriate federal regulatory agency. Such plans must require that any company that controls the undercapitalized institution must provide certain guarantees that the institution will comply with the plan until it is adequately capitalized. As of the date of this Annual Report on Form 10-K, neither the Company or West Bank was subject to any regulatory order, agreement or directive to meet and maintain a specific capital level for any capital measure. Furthermore, as of that same date, West Bank was categorized as "well capitalized" under regulatory prompt corrective action provisions. Restrictions on Dividends. Dividends paid to the Company by West Bank are the major source of Company cash flow. Various federal and state statutory provisions limit the amount of dividends banking subsidiaries are permitted to pay to their holding companies without regulatory approval. Federal Reserve policy further limits the circumstances under which bank holding companies may declare dividends. For example, a bank holding company should not continue its existing rate of cash dividends on its common stock unless its net income is sufficient to fully fund each dividend and its prospective rate of earnings retention appears consistent with its capital needs, asset quality and overall financial condition. In addition, the Federal Reserve and the FDIC have issued policy statements that provide that insured banks and bank holding companies should generally pay dividends only out of current operating earnings. Federal and state banking regulators may also restrict the payment of dividends by order. West Bank, as a state chartered bank, is restricted under Iowa law to paying dividends only out of its undivided profits. Additionally, the payment of dividends by West Bank is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and West Bank is generally prohibited from paying any dividends if, following payment thereof, the bank would be undercapitalized. As of December 31, 2003, approximately $7,000,000 was available to be paid as dividends by West Bank to the Company without prior regulatory approval. Reserves Against Deposits. The Federal Reserve requires all depository institutions to maintain reserves against their transaction accounts (primarily checking accounts) and non-personal time deposits. Generally reserves of 3 percent must be maintained against total transaction accounts of $45,400,000 or less (subject to an exemption not in excess of the first $6,600,000 of transaction accounts). A reserve of $1,164,000 plus 10 percent of amounts in excess of $45,400,000 must be maintained in the event total transaction accounts exceed $45,400,000. The balances maintained to meet the reserve requirements imposed by the Federal Reserve may be used to satisfy applicable liquidity requirements. Because required reserves must be maintained in the form of vault cash or a non-interest bearing account at a Federal Reserve Bank, the effect of this reserve requirement is to reduce the earning assets of West Bank. Bank Offices. Iowa law regulates the establishment of bank offices and thus may affect the Company's future plans to establish additional offices of West Bank. Pursuant to amendments to Iowa law effective February 21, 2001, current Iowa laws permits a state bank to establish up to three (3) offices anywhere in the state. Until July 1, 2004, in addition to the three offices which may be established anywhere in the state, a bank may only establish a bank office inside the boundaries of the county in which the principal place of business of the state bank is located and those counties contiguous to or cornering upon such county. The number of offices a state bank may establish in a particular municipality or urban complex may also be limited depending upon the population. Effective July 1, 2004, the geographical restrictions on bank office locations will be repealed. Finally, until July 1, 2004, Iowa law restricts the ability of a bank to establish a de novo office within the limits of a municipal corporation where there is an already established state or national bank or bank office. 10 Nonbanking Subsidiaries VMF Capital is under the jurisdiction of the Investment Advisors Act of 1940 and is regulated by the Securities and Exchange Commission ("SEC"). VMF Capital has filed its form ADV with the SEC. Investment advisers are heavily regulated by the SEC. In addition, in light of recent market events, the SEC has recently promulgated several proposed as well as final rules pertaining to corporate governance and compliance matters pursuant to which VMF Capital will have to comply. Regulatory Developments In 1999, the Financial Services Modernization Act was enacted which: (1) repealed historical restrictions on preventing banks from affiliating with securities firms; (2) broadened the activities that may be conducted by bank subsidiaries of holding companies; and (3) provided an enhanced framework for protecting the privacy of consumers' information. In addition, bank holding companies may be owned, controlled or acquired by any company engaged in financially related activities, as long as such company meets regulatory requirements. To the extent that this legislation permits banks to affiliate with financial services companies, the banking industry may experience further consolidation, although the impact of this legislation on the Company and West Bank is unclear at this time. Regulatory Enforcement Authority The enforcement powers available to federal and state banking regulators are substantial and include, among other things, the ability to assess civil monetary penalties, to issue cease-and-desist or removal orders and to initiate injunctive actions against banking organizations and institution-affiliated parties, as defined. In general, enforcement actions must be initiated for violations of laws and regulations and unsafe or unsound practices. Other actions, or inactions, may provide the basis for enforcement action, including misleading or untimely reports filed with regulatory authorities. Applicable law also requires public disclosure on final enforcement actions by the federal banking agencies. National Monetary Policies In addition to being affected by general economic conditions, the earnings and growth of West Bank are affected by the regulatory authorities' policies, including the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply, credit conditions and interest rates. Among the instruments used to implement these objectives are open market operations in U.S. Government securities, changes in reserve requirements against bank deposits and the Federal Reserve Discount Rate, which is the rate charged banks borrowing from the Federal Reserve Bank. These instruments are used in varying combinations to influence overall growth and distribution of credit, bank loans, investments and deposits, and their use may also affect interest rates charged on loans or paid on deposits. The monetary policies of the Federal Reserve have had a material impact on the operating results of commercial banks in the past and are expected to do so in the future. Also important in terms of effect on banks are controls on interest rates paid by banks on deposits and types of deposits that may be offered by banks. The Depository Institutions Deregulation Committee, created by Congress in 1980, phased out ceilings on the rate of interest that may be paid on deposits by commercial banks and savings and loan associations, with the result that the differentials between the maximum rates banks and savings and loans can pay on deposit accounts have been eliminated. The effect of deregulation of deposit interest rates has been to increase banks' cost of funds and to make banks more sensitive to fluctuations in market rates. ITEM 2. PROPERTIES The Company's office is housed in the main office of West Bank located at 1601 22nd Street in West Des Moines, Iowa. The space is leased and consists of approximately 300 square feet with annual rent of $5,000. West Bank's main office is also located in the leased facility at 1601 22nd Street in West Des Moines. The Bank rents 13,952 square feet and pays annual rent of $358,000 for a full-service banking location that includes drive-in facilities and two automated teller machines. The bank also leases buildings and space for six other locations located within the Des Moines metropolitan area. These offices are full-service banking locations with five of these offices having drive-in facilities and all six locations have automated teller machines. Lease payments for these six offices totaled $364,000 for the year ended December 31, 2003. The Bank owns one other full-service banking location in Des Moines and two full service banking locations in Iowa City. These locations also include drive-in facilities and automatic teller machines. VMF Capital has leased offices in Clive and Cedar Rapids, Iowa. Annual lease payments for these offices totaled $92,000 for the period from formation of the Company through December 31, 2003. 11 ITEM 3. LEGAL PROCEEDINGS West Bank from time to time is a party to various legal actions arising in the normal course of business. The Company believes that there is no threatened or pending proceeding against the Company, West Bank or VMF Capital, which, if determined adversely, would have a material adverse effect on the business or financial position of the Company, West Bank or VMF Capital. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS There were no matters submitted to a vote of security holders, through the solicitation of proxies or otherwise, during the fourth quarter of the fiscal year covered by this report. PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASERS OF EQUITY SECURITIES The information appearing on page 55 of the Corporation's Appendix to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by reference. There were 337 holders of record of the Company's no par value common stock as of February 6, 2004, and an estimated 600 additional beneficial holders whose stock was held in street name by brokerage houses. The closing price of the Company's common stock was $17.26 on February 6, 2004. The Company increased dividends to common shareholders in 2003 to $.64 per share, a 3.2 percent increase over $.62 for 2002. Dividend declarations are evaluated and determined by the Board of Directors on a quarterly basis. The ability of the Company to continue to pay such dividends will depend primarily upon the earnings of West Bank and its ability to pay dividends to the Company. It is anticipated that West Bank will continue to pay dividends on a regular basis in the future. The ability of West Bank to pay dividends is governed by various statutes. West Bank, as a state bank, is restricted to paying dividends only out of undivided profits. These statutes provide that no bank shall declare or pay any dividends in an amount greater than its retained earnings, without approval from governing regulatory bodies. In addition, applicable bank regulatory authorities have the power to require any bank to suspend the payment of any and all dividends until the bank shall have complied with all requirements that may have been imposed by such authorities. ITEM 6. SELECTED FINANCIAL DATA The information appearing on page 3 of the Company's Appendix to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by reference. ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The information appearing on pages 4 through 23 of the Company's Appendix to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by reference. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information appearing on pages 20 through 22 of the Company's Appendix to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by reference. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The information appearing on pages 24 through 54 of the Company's Appendix to the Proxy Statement, filed as Exhibit 13 hereto, is incorporated herein by reference. 12 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Within the two years prior to the date of the most recent financial statements, there have been no changes in or disagreements with accountants of the Company. ITEM 9A. CONTROLS AND PROCEDURES As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of the Company's Chief Executive Officer and Chief Financial Officer of the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 240.13a-15(e)). Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's current disclosure controls and procedures are effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. There were no changes in the Company's internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting. PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The following table sets forth summary information about the directors and executive officers of the Company and certain executive officers of West Bank. 13
Position with Company, Name Age West Bank or WB Capital Management Inc. - --------------------- --- --------------------------------------------------------- Frank W. Berlin 58 Director of Company and Bank Steven G. Chapman 52 Director of Company and Bank Michael A. Coppola 47 Director of Company and Bank Orville E. Crowley 77 Director of Company Raymond G. Johnston 75 Director and Vice Chairman of Company David L. Miller 71 Director and Chairman Emeritus of Company David R. Milligan 56 Director and Executive Vice President of Company; Director, Chairman and Chief Executive Officer of Bank; Director of WB Capital Management Inc. Robert G. Pulver 56 Director of Company and Bank Thomas E. Stanberry 49 Director and Chairman, President and Chief Executive Officer of Company; Director and Vice Chairman of Bank; Director and Chairman of WB Capital Management Inc. Jack G. Wahlig 71 Director of Company and Bank Connie Wimer 71 Director of Company and Bank Joyce A. Chapman 59 Vice President and Treasurer of Company; Director and Executive Vice President of Bank; Director of WB Capital Management Inc. Douglas R. Gulling 50 Chief Financial Officer of Company and Bank; Director and Treasurer of WB Capital Management Inc. Sharen K. Surber 59 Executive Vice President of Bank Brad L. Winterbottom 47 Director and President of Bank; Director of WB Capital Management Inc.
During 2003, and until the Annual Shareholders' Meeting on April 15, 2004, the Board of Directors was and will be comprised of eleven (11) members. Two long-time directors, David L. Miller and Raymond G. Johnston have each decided to retire for personal reasons. Subsequent to the annual meeting, the Board will be comprised of nine (9) members, the majority of which will be "independent" pursuant to NASD Rule 4350(c)(1). Directors are elected at each annual meeting of shareholders to hold office until the next annual meeting of shareholders after their election and until their successor shall be elected and shall qualify or until their earlier resignation, removal from office, death or incapacitation. The shareholders may at any time remove any director, with or without cause, by majority vote of the outstanding shares and elect a successor to fill the vacancy. The executive officers of the Company are elected on an annual basis by the Board of Directors of the Company. An executive officer may be removed by the Board of Directors whenever in its judgment the best interest of the Company will be served thereby. The principal occupation or business and experience of the directors and executive officers of the Company and certain executive officers of West Bank for the past five years are set forth below: FRANK W. BERLIN is president of Frank W. Berlin & Associates, an insurance broker. Mr. Berlin has served as a director of the Company and the Bank since 1995. STEVEN G. CHAPMAN is president and chief executive officer of ITAGroup, Inc., a performance marketing group headquartered in West Des Moines, Iowa. He has served as a director of the Company since 1994 and the Bank since 1993. MICHAEL A. COPPOLA is president of Coppola Enterprises, Inc. a fully integrated real estate development and management company. He has been a director of the Company and the Bank since 1996. 14 ORVILLE E. CROWLEY is president and chief operating officer of Linden Lane Farms Company, a family farm corporation involved in growing row crops in Madison and Warren counties in Iowa. Mr. Crowley has been a director of the Company since 1984. RAYMOND G. JOHNSTON is vice chairman of the Board of Directors of the Company and has been a director of the Company since 1986. Mr. Johnston is a retired executive vice president of the Bank. DAVID L. MILLER is chairman emeritus of the Company. He retired as chairman, president and chief executive officer of the Company as of February 28, 2003. He retired as chief executive officer of the Bank as of December 31, 2001 and retired as vice chairman of the Bank as of January 1, 2004. Mr. Miller has been a director of the Company since 1984 and the Bank since 1962. He joined the Bank in 1961. DAVID R. MILLIGAN is executive vice president of the Company. He has served as chairman and chief executive officer of the Bank since January 1, 2002. Prior to 2002 he was executive vice president and general counsel of the Bank. Mr. Milligan has been a director of the Company since 2002, of the Bank since 2000 and of VMF Capital since October 2003. He started with the Bank in 1980. ROBERT G. PULVER is president of All State Industries, Inc. an industrial rubber products manufacturer. He has been a director of the Company since 1984 and the Bank since 1981. THOMAS E. STANBERRY is chairman, president and chief executive officer of the Company. He was elected to this position effective March 1, 2003. He has been a director of the Bank since May 2003 and of VMF Capital since October 2003. From 1989 until February 2003, Mr. Stanberry served in a variety of capacities for U.S. Bancorp Piper Jaffray, most recently as a Managing Director in its Fixed Income Capital Markets division. JACK G. WAHLIG is president of Integrus Financial, L.C. He is a retired partner from the certified public accounting firm McGladrey & Pullen, LLP. Mr. Wahlig has been a director of the Company since 2001 and the Bank since 1997. CONNIE WIMER is owner/publisher of Business Publications Corporation and retired November 1, 2001 as president of Iowa Title Company. She has been a director of the Company and the Bank since 1985. JOYCE A. CHAPMAN is vice president and treasurer of the Company. She has served as executive vice president-administration of the Bank since 2001. Prior to that time she was senior vice president-administration. Ms. Chapman has been a director of the Bank since 1975 and served as a director of the Company from 1984 until February 2002. She has been a director of VMF Capital since October 2003. She has been with the Bank since 1971. DOUGLAS R. GULLING joined the Company in November 2001 as chief financial officer and was elected chief financial officer of the Bank in February 2002. He has been a director and treasurer of VMF Capital since October 2003. From 1996 until 2001, Mr. Gulling served as senior vice president and corporate controller of Brenton Bank in Des Moines, Iowa. SHAREN K. SURBER is executive vice president-operations of the Bank and has served in that capacity since 2001. Prior to that time she was senior vice president-operations. She has been with the bank since 1975, serving in a variety of capacities including cashier and human resource director. BRAD L. WINTERBOTTOM is president of the Bank and has served as a director and president of the Bank since 2000. He has been a director of VMF Capital since October 2003. He was executive vice president - credit from 1998 to 2000. Prior to that time he was senior vice president - credit of the Bank. He joined the Bank in 1992. Identification of Audit Committee and Audit Committee Financial Expert The information for this matter as required pursuant to Item 401 of Regulation S-K can be found in the Company's definitive Proxy Statement at page 4, which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 2003, is incorporated herein by reference. Shareholder Recommendations for Nominees to the Board of Directors The information for this matter as required pursuant to Item 401 of Regulation S-K can be found in the Company's definitive Proxy Statement at page 13, which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 2003, is incorporated herein by reference. 15 Section 16(a) Beneficial Ownership Reporting Compliance The information for this matter as required pursuant to Item 405 of Regulation S-K can be found in the Company's definitive Proxy Statement at page 6, which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 2003, is incorporated herein by reference. Code of Ethics The Company has adopted a code of conduct which applies to all directors, officers and employees, including the chairman, president and chief executive officer, chief financial officer and controller. A copy of the code of conduct is filed as Exhibit 14 to this Form 10-K. ITEM 11. EXECUTIVE COMPENSATION The information for this matter as required pursuant to Item 402 of Regulation S-K can be found in the Company's definitive Proxy Statement at page 5 and pages 7 through 10, which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 2003, is incorporated herein by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information for this matter as required pursuant to Item 201(d) and Item 403 of Regulation S-K can be found in the Company's definitive Proxy Statement at pages 5 through 6, which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 2003, is incorporated herein by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information for this matter as required pursuant to Item 404 of Regulation S-K can be found in the Company's definitive Proxy Statement at page 9, which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 2003, is incorporated herein by reference. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The information for this matter as required pursuant to Item 9(e) of Schedule 14A can be found in the Company's definitive Proxy Statement at pages 11 through 12, which will be filed not later than 120 days following the close of the Company's fiscal year ended December 31, 2003, is incorporated herein by reference. 16 PART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K The following exhibits and financial statement schedules of the Company are filed as part of this report: (a) 1. Financial Statements See the financial statements on pages 24 through 54 of the Company's Appendix to the Proxy Statement, filed as Exhibit 13 hereto, which are incorporated herein by reference. 2. Financial Statement Schedules All schedules are omitted because they are not applicable, not required or because the required information is included in the consolidated financial statements or notes thereto. 3. Exhibits (not covered by independent auditors' report). 3.1 Restated Articles of Incorporation of the Company* 3.2 By-laws of the Company* 10.1 Lease for Main Bank Facility* 10.2 Supplemental Agreement to Lease for Main Bank Facility* 10.3 Short-term Lease related to Main Bank Facility* 10.4 Assignment* 10.5 Lease Modification Agreement No. 1 for Main Bank Facility* 10.6 Memorandum of Real Estate Contract* 10.7 Affidavit* 10.8 Addendum to Lease for Main Bank Facility* 10.9 Data Processing Contract* 10.10 Employment Contract* 10.11 Consulting Contract* 10.12 Data Processing Contract Amendment** 10.13 Purchase and Assumption Agreement between West Des Moines State Bank and Hawkeye State Bank*** 10.14 Employment Agreement effective March 1, 2003, which was consummated in the first quarter of 2004 13 The Appendix to the Proxy Statement for West Bancorporation, Inc. for the 2003 calendar year**** 14 Code of Conduct 21 Subsidiaries 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes Oxley Act of 2002 31.2 Certification of Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002 32.1 Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 32.1 Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002 * Incorporated herein by reference to the related exhibit filed with the Form 10 on March 11, 2002. ** Incorporated herein by reference to the related exhibit filed with the Form 10-K on March 26, 2003. *** Incorporated herein by reference to the related exhibit filed with the Form 10-Q on May 15, 2003. **** Incorporated herein by reference to the definitive proxy statement 14A filed on March 3, 2004. The Company will furnish to any person, upon request, and upon payment of a fee of $.50 per page, a copy of any exhibit. No fee payment will be required for a copy of the Company's Code of Conduct. Requests for copies of exhibits should be directed to Chief Financial Officer, West Bancorporation, Inc., 1601 22nd Street, West Des Moines, Iowa 50266. (b) Reports on Form 8-K During the three months ended December 31, 2003, the Company filed Form 8-K on October 1, 2003, which contained a press release announcing the completion of the transaction to acquire VMF Capital, L.L.C., Form 8-K on October 9, 2003 which contained a press release announcing the quarterly dividend, and Form 8-K on October 20, 2003 which contained a press release announcing earnings for the three and nine months ended September 30, 2003. 17 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. WEST BANCORPORATION, INC. (Registrant) March 4, 2004 By: /s/ Thomas E. Stanberry ------------------------------ Thomas E. Stanberry Chairman, President and Chief Executive Officer (Principal Executive Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. March 4, 2004 By: /s/ Thomas E. Stanberry ------------------------ Thomas E. Stanberry Chairman, President and Chief Executive Officer (Principal Executive Officer) March 4, 2004 By: /s/ Douglas R. Gulling ----------------------- Douglas R. Gulling Chief Financial Officer (Principal Accounting Officer) BOARD OF DIRECTORS March 4, 2004 By: /s/ Frank W. Berlin ------------------- Frank W. Berlin March 4, 2004 By: /s/ Steven G. Chapman --------------------- Steven G. Chapman March 4, 2004 By: /s/ Michael A. Coppola ---------------------- Michael A. Coppola March 4, 2004 By: /s/ Orville E. Crowley ---------------------- Orville E. Crowley March 4, 2004 By: /s/ Raymond G. Johnston ----------------------- Raymond G. Johnston March 4, 2004 By: /s/ David L. Miller ------------------- David L. Miller March 4, 2004 By: /s/ David R. Milligan --------------------- David R. Milligan March 4, 2004 By: /s/ Robert G. Pulver -------------------- Robert G. Pulver March 4, 2004 By: /s/ Jack G. Wahlig ------------------ Jack G. Wahlig March 4, 2004 By: /s/ Connie Wimer ---------------- Connie Wimer 18 EXHIBIT INDEX The following exhibits are filed herewith:
Exhibit No. Description - ----------- ----------- 10.14 Employment Agreement effective March 1, 2003, which was consummated in the first quarter of 2004 14 Code of Conduct 21 Subsidiaries 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes Oxley Act of 2002 31.2 Certification of Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002 32.1 Certification of Chief Executive Officer under Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certification of Chief Financial Officer under Section 906 of the Sarbanes-Oxley Act of 2002
19 EX-10.14 3 c83230exv10w14.txt EMPLOYMENT AGREEMENT EXHIBIT 10.14 EMPLOYMENT AGREEMENT THIS AGREEMENT is made this 1st day of March, 2003 ("Effective Date"), by and between WEST BANCORPORATION, INC., (the "Company") and THOMAS E. STANBERRY (the "Employee"). INTRODUCTION The Board of Directors of the Company (the "Board") has determined that it is in the best interests of the Company to retain the Employee's services and to reinforce and encourage the continued attention and dedication of the Employee to his assigned duties. AGREEMENT NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained, the Company and the Employee hereby agree as follows: 1. Employment. Upon the terms and subject to the conditions contained in this Agreement, the Employee agrees to provide full-time services for the Company during the term of this Agreement. The Employee agrees to devote his best efforts to the business of the Company, and shall perform his duties in a diligent, trustworthy, and business-like manner, all for the purpose of advancing the business of the Company. 2. Duties. The Employee shall hold the title of CHAIRMAN, PRESIDENT & CEO of WEST BANCORPORATION, INC., AND VICE-CHAIRMAN AND CHIEF INVESTMENT OFFICER OF WEST BANK, and shall report directly to THE BOARD. The Employee shall render such administrative and management services for Company as are currently rendered and as are currently performed by persons situated in a similar executive capacity. The Employee shall also promote, by entertainment or otherwise, as and to the extent permitted by law, the business of the Company. The Employee's duties may, from time to time, be changed or modified at the discretion of the Board. 3. Employment Term. Subject to the terms and conditions hereof, the Company agrees to employ, and the Employee hereby accepts employment, for the 3 years commencing March 1, 2003, subject to the terms of this Agreement. Additionally, subject to the terms of this Agreement, and in the sole discretion of the Board, this Agreement may be renewed annually with written notice, on or before the anniversary date of the Effective Date, for another 3-year period. In the event of nonrenewal, this Agreement will expire at the end of any current three-year term unless renewal is granted before the Agreement expires. 4. Compensation and Benefits. (a) Base Salary. As of the Effective Date of this Agreement, the Company agrees to pay the Employee during the term of this Agreement an initial salary of: (i) $166,666.60 for the period from March 1, 2003 through December 31, 2003; and (ii) thereafter $200,000 per annum, payable in accordance with Company's normal payroll practices with such payroll deductions and withholdings as are required by law (the "Base Salary"). Employee's Base Salary will be reviewed by the Compensation Committee of the Board at least annually, and may be increased (but not reduced) thereafter on the anniversary of the Effective Date. (b) Annual Incentive Payment. In addition to other compensation to be paid under this Section 4, each year during the term of this Agreement the Employee shall be eligible to receive an annual cash incentive payment (the "Annual Incentive Payment"). The Annual Incentive Payment for the period from March 1, 2003 through December 31, 2003 shall be $133,333.40. In each successive year of the Employee's employment under this Agreement the Employee shall be entitled to an Annual Incentive Payment agreed to between the Employee and the Board. The amount actually awarded and paid to the Employee each year will be determined by the Compensation Committee of the Board in its sole discretion, in conjunction with the terms of any incentive plan document. (c) Equity Appreciation Plans. In addition to other compensation to be paid under this Section 4, the Company will grant stock options, stock appreciation rights, restricted stock or other forms of equity participation rights to Employee as a Participant if a plan is adopted by the Company. 20 (d) Vacation. The Employee shall be entitled to 25 days of paid vacation, plus all scheduled bank holidays, during each full year of his employment hereunder in accordance with the general terms of the vacation policy adopted by the Company. In addition, upon any Termination under Section 5, except for Termination for Cause, the Employee will be paid any remaining accrued vacation that has not been taken through the date of Termination. (e) Reimbursement of Expenses. The Company shall reimburse the Employee in accordance with Company's expense reimbursement policies for all reasonable, ordinary and necessary business expenses incurred by the Employee in the course of his duties conducted on behalf of the Company. In addition, the Company shall pay the Employee's annual dues at Des Moines Golf and Country Club and the Des Moines Club/Embassy Club and expenses related to the Employee's use of such clubs for matters related to the business of the Company. (f) Employee Benefits. The Employee shall be entitled to participate in any employee benefit plans, including profit sharing plans, now existing or established hereafter generally available to employees of the Company or senior officers of the Company, and to all normal perquisites provided to senior officers of the Company, provided Employee is otherwise qualified to participate in such plans or programs. As part of its normal course of business, the Company may amend and/or terminate employee benefits. (g) Benefits Not in Lieu of Compensation. No benefit or perquisite provided to the Employee shall be deemed to be in lieu of Base Salary, Annual Incentive Payment or other compensation, provided that the reporting of any benefits shall be consistent with IRS regulations. 5. At-will Employment and Termination. Employment with West Bancorporation, Inc. will be at-will and may be terminated at any time by either party for the reasons in this Section 5. (a) For purposes of this Agreement, "Good Reason" shall mean: (i) Without the Employee's express written consent, the assignment to the Employee of any duties or responsibilities inconsistent with the Employee's positions, or a change in the Employee's reporting responsibilities, titles or offices as described under Section 2, or any removal of the Employee from or any failure to re-elect the Employee to any of such positions, except in connection with the termination of the Employee's employment for Cause, Disability or retirement or as a result of the Employee's death; (ii) A reduction by the Company in the Employee's Base Salary; (iii) Any failure of the Company to obtain the assumption of, or the agreement to perform, this Agreement by any successor as contemplated in Section 15(a) hereof; or (iv) The Company requiring the Employee to be based anywhere other than the Polk County, Iowa, area except for required travel on Company business to an extent substantially consistent with the Employee's present business travel obligations and as described under Section 2, or, in the event the Employee consents to any relocation, the failure by the Company to pay (or reimburse the Employee) for all reasonable moving and relocation expenses incurred by the Employee relating to a change of the Employee's principal residence in connection with such relocation. (b) Cause. Notwithstanding any provision of this Agreement to the contrary, the Company shall not pay any Compensation and Benefits under this Agreement if the Company determines that the Employee committed one of the following acts while in the employ of the Company: (i) Gross negligence or gross neglect of duties; (ii) Commission of a felony or of a gross misdemeanor involving moral turpitude; or (iii) Fraud, disloyalty, dishonesty or willful violation of any law or significant Company policy committed in connection with Employee's employment and resulting in an adverse effect on the Company. (c) Death. This Agreement shall be terminated automatically upon the death of the Employee. Within ten (10) business days of termination, the company shall pay to the Employee's beneficiary a sum equal to one month of Base Salary at the then-effective rate paid to the Employee, plus the Annual Incentive Payment for the current fiscal year pro-rated for the months worked. 21 (i) The Employee shall designate a beneficiary by filing a written designation with the Company. The Employee may revoke or modify the designation at any time by filing a new designation. However, designations will only be effective if signed by the Employee and received by the Company during the Employee's lifetime. The Employee's beneficiary designation shall be deemed automatically revoked if the beneficiary predeceases the Employee, or if the Employee names a spouse as beneficiary and the marriage is subsequently dissolved. If the Employee dies without a valid beneficiary designation, all payments shall be made to the Employee's estate. (ii) If a benefit is payable to a minor, to a person declared incompetent, or to a person incapable of handling the disposition of his or her property, the Company may pay such benefit to the guardian, legal representative or person having the care or custody of such minor, incapacitated person or incapable person. The Company may require proof of incompetence, minority or guardianship as it may deem appropriate prior to distribution of the benefit. Such distribution shall completely discharge the Company from all liability with respect to such benefit. (d) Disability. The Company may terminate the Employee's employment for Disability as defined under the Company's long-term disability policy. If the company does not have a long-term disability policy, disability shall be defined as the Employee's inability through physical or mental illness or other cause to perform the essential functions of the Employee's position, with or without reasonable accommodation, in the opinion of the Company, for the continuous period of six (6) months. Within ten (10) business days of termination, the Company shall pay to the Employee a sum equal to one month of Base Salary at the then-effective rate paid to the Employee, plus the amount of Annual Incentive for the current fiscal year pro-rated for the months worked. (e) Voluntary Resignation or Termination for Cause. If the Employee shall voluntarily terminate his employment for other than Good Reason, as defined in Section 5(a), or if the Company shall discharge the Employee for Cause, as defined in Section 5(b), this Agreement shall terminate immediately and the Company shall have no further obligation to make any payment under this Agreement which has not already become payable, but has not yet been paid; provided, however, that with respect to restricted stock, incentive plans, deferred compensation arrangements, or other plans or programs in which the Employee is participating at the time of termination of his employment, the Employee's rights and benefits under each such plan shall be determined in accordance with the terms, conditions, and limitations of the plan and any separate agreement executed by the Employee which may then be in effect. Termination for Cause shall only occur after the Board, in its sole and absolute discretion, has made a full and thorough determination of "Cause." (f) Involuntary Termination Without Cause or Resignation for Good Reason. If during the term of the Agreement, the Employee's employment is involuntarily terminated by the Company without Cause or the Employee voluntarily terminates the Employee's employment for Good Reason, then the following shall apply: (i) Base Salary. Within ten (10) business days of termination, the Company shall pay the Employee in a lump sum an amount equal to the aggregate amount of Base Salary the Employee would be entitled to receive under this Agreement for the balance of the Employment Term, but no less than one year. (ii) Annual Incentive Payment. In addition to Base Salary and within ten (10) business days of termination, the Company shall also pay to the Employee in a lump sum an amount equal to the most recent Annual Incentive Payment the Employee would be entitled to receive under this Agreement for the balance of the Employment Term, but not less than one year. If Involuntary Termination occurs within 12 months following, or 2 months prior to, a Change in Control, then the benefit under Section 6 shall apply, in lieu of payments provided for in paragraph 5(f)(i) and (ii). 6. Termination After Change in Control Benefit. If within 12 months after, or 2 months prior to, a Change in Control of the Company as defined in Section 6(a), the Company terminates the Employee's employment for reasons other than those under Section 5(b) herein, or if the Employee shall terminate his employment for Good Reason, then the Company shall pay to the Employee a benefit as defined in Section 6(b). (a) Change in Control. The term Change in Control shall have the following meaning: (i) Any person or entity or group of affiliated persons or entities (other than the Company) becomes a beneficial owner, directly or indirectly, of 30% or more of the Company's voting securities or all or substantially all of the assets of the Company; 22 (ii) The Company enters into a definitive agreement which contemplates the merger, consolidation or combination of the Company with an unaffiliated entity in which either or both of the following is to occur: (i) the Board of Directors of the Company, as applicable, immediately prior to such merger, consolidation or combination will constitute less than a majority of the board of directors of the surviving, new or combined entity; or (ii) less than 50% of the outstanding voting securities of the surviving, new or combined entity will be beneficially owned by the stock holders of the Company immediately prior to such merger, consolidation or combination; provided, however, that if any definitive agreement to merge, consolidate or combine is terminated without consummation of the transaction, then no Change in Control shall be deemed to have occurred pursuant to this paragraph; (iii) The Company enters into a definitive agreement which contemplates the transfer of all or substantially all of the Company's assets, other than to a wholly-owned Subsidiary of the Company; provided, however, that if any definitive agreement to transfer assets is terminated without consummation of the transfer, then no Change in Control shall be deemed to have occurred pursuant to this paragraph; or (iv) A majority of the members of the Board of Directors of the Company shall be persons who: (i) were not members of such Board on the Effective Date ("current members"); and (ii) were not nominated by a vote of such Board which included the affirmative vote of a majority of the current members on such Board at the time of their nomination ("future designees") and (iii) were not nominated by a vote of such Board which included the affirmative vote of a majority of the current members and future designees, taken as a group, on such Board at the time of their nomination. (b) Amount. Upon a termination of the Employee's employment under the circumstances described in this Section 6, the Employee will receive a Change in Control Benefit equal to three (3) times the Employee's Current Annual Compensation as defined in this Section 6(b)(i) as of the date of the Change in Control. (i) Current Annual Compensation. The Employee's current annual Base Salary paid by the Company which was includible in the Employee's gross income as of the time of Employee's termination plus the most recent Annual Incentive Payment. This definition covers amounts includible in compensation, i.e., the Base Salary and Cash Annual Incentive prior to any cash or deferred arrangements. (ii) Equity Appreciation Plans. The Company shall pay to the Employee any amounts due under Section 4(c) according with the terms, conditions and limitations of the plans and any separate agreements under Section 4(c) without regard to "vesting" thereunder. (c) Consideration of Benefit. As consideration for the benefit paid in this Section 6, at the discretion of the successors as described in Section 15(a), the Employee must work with the new organization for a period of not less than six months. However, if the Employee fails to remain employed for at least six months with the new organization for reason other than Good Reason, or if the Company terminates the Employee's employment for Termination for Cause, then no benefits will be provided to the Employee. (d) Limited Benefit. Notwithstanding any of the provisions of this Section 6 or other provisions in this Agreement to the contrary, if any payments or benefits received or to be received by the Employee (whether pursuant to the terms of this Agreement or any other plan, arrangement or agreement with the Company, any person whose actions result in a change of Control or any person affiliated with the Company or such person) constitute "parachute payments" within the meaning of Section 280G(b)(2)(A) of the Code and the value thereof exceeds 2.99 times the Employee's "base amount," as defined in Section 280G(b)(3) of the Code, then in lieu thereof, the Company shall pay to the Employee, as soon as practicable following the termination of the Employee's employment by the Company but in no event later than thirty (30) days thereafter, a lump sum cash payment equal to 2.99 times his "base amount" (the "Alternative Severance Payment") , reduced as provided below. The value of the payments to be made under Section 6(b) and the Employee's base amount shall be determined in accordance with temporary or final regulations, if any, promulgated under Section 280G of the Code and based upon the advice of the tax counsel referred to below. The Alternative Severance Payment shall be reduced by the amount of any other payment or the value of any benefit received or to be received by the Employee in connection with a Change of Control of the Company or his termination of employment unless (i) the Employee shall have effectively waived his receipt or enjoyment of such payment or benefit prior to the date of payment of the alternative Severance Payment, (ii) in the opinion of tax counsel selected by the Company's independent auditors, such other payment or benefit does not constitute a "parachute payment" within the meaning of Section 280G(b)(2) of the Code, or (iii) in the opinion of such tax counsel, the Alternative Severance Payment plus all other payments or benefits which constitute "parachute payments" within the meaning of Section 280G(b)(2) of the Code are reasonable compensation for services actually rendered within the meaning of Section 280G(b)(4) of the Code or are otherwise not subject to disallowance as a deduction by reason of Section 280G of the Code. The value of any non-cash benefit or any deferred payment or benefit shall be determined in accordance with the principles of Section 280G(d)(3) and (4) of the Code. 23 (e) Section 162(m) Limitation. In the event that the payments due to the Employee under this Section 6 exceed the "reasonable compensation" limitations of Section 162(m) of the Code, that portion thereof that would not be deductible by the Company in the taxable year in which the payment is due shall be deferred by the Company and paid to the Employee on the date that is sixteen (16) months following the termination of the Employee's employment by the Company, together with interest thereon at the rate provided in Section 7872(f)(2) of the Code. 7. Confidential Information. The Employee recognizes and acknowledges that he will have access to certain information of the Company and that such information is confidential and constitutes valuable, special and unique property of the Company. The Employee shall not at any time, either during or subsequent to the term of this Agreement, disclose to others, use, copy or permit to be copied, except as directed by law or in pursuance of the Employee's duties for or on behalf of the Company, its successors, assigns or nominees, any Confidential Information of the Company (regardless of whether developed by the Employee), without the prior written consent of the Company. The term "Confidential Information" with respect to any person means any secret or confidential information or know-how and shall include, but shall not be limited to, the plans, customers, costs, prices, uses, and applications of products and services, results of investigations, studies owned or used by such person, and all products, processes, compositions, computer programs, and servicing, marketing or operational methods and techniques at any time used, developed, investigated, made or sold by such person, before or during the term of this Agreement, that are not readily available to the public or that are maintained as confidential by such person. The Employee shall maintain in confidence any Confidential Information of third parties received as a result of the Employee's employment with the Company in accordance with the Company's obligations to such third parties and the policies established by the Company. 8. Delivery of Documents upon Termination. The Employee shall deliver to the company or its designee at the termination of the Employee's employment all correspondence, memoranda, notes, records, drawings, sketches, plans, customer lists, product compositions, and other documents and all copies thereof, made, composed or received by the Employee, solely or jointly with others, that are in the Employee's possession, custody, or control at termination and that are related in any manner to the past, present, or anticipated business or any member of the Company. 9. No Competition. No Solicitation. Throughout the term of the Agreement and (i) for a period of two (2) years immediately following any termination of the Agreement under Section 5(b) or (ii) for a period of one (1) year immediately following any termination of the Agreement under Section 5(f) or Voluntary Resignation under Section 5(e), the Employee shall not directly or indirectly engage in the business of banking, or any other business in which the Company directly or indirectly engages during the term of the Agreement; provided, however, that the restriction in this Section 9 shall apply only to Johnson, Polk and adjacent counties in Iowa. For purposes of this Section 9, the Employee shall be deemed to engage in a business if he directly or indirectly, engages or invests in, owns manages, operates, controls or participates in the ownership, management, operation or control of, is employed by, associated or in any manner connected with, or renders services or advice to, any business engaged in banking, provided, however, that the Employee may invest in the securities of any enterprise (but without otherwise participating in the activities of such enterprise) if two conditions are met: (a) such securities are listed on any national or regional securities (exchange or have been registered under Section 12(g) of the Securities Exchange Act of 1934) and (b) the Employee does not beneficially own (as defined Rule 13d-3 promulgated under the Securities Exchange Act of 1934) in excess of 1% of the outstanding capital stock of such enterprise. The provisions of this paragraph shall survive regardless of the reason for the Employee's termination. During the period described in the first paragraph of Section 9 the Executive will not, directly or indirectly, for the benefit of any bank or financial institution or any company or other entity affiliated, directly or indirectly, with another bank or financial institution other than the Company, solicit the employment or services of, hire, or assist in the hiring of any person eligible for the Company's compensation or benefit plans for senior officers or executives. 10. No Tampering. Throughout the term of the Agreement and (i) for a period of two (2) years immediately following any termination of the Agreement under Section 5(b), or (ii) for a period of one (1) year immediately following any termination of the Agreement under Section 5(f) or Voluntary Resignation under Section 5(e), the Employee shall not directly or indirectly (a) request, induce or attempt to influence any existing or prospective customers, vendors or licensors of the Company to curtail or cancel any business they may transact with the Company; or (b) request, induce or attempt to influence any employee of the Company to terminate the Employee's or his employment with the Company. For purposes of this Section 10, "prospective customers" shall mean individuals or entities whom the Company or its affiliates have contacted within the twelve (12) months immediately preceding the termination of the Agreement. The provisions of this paragraph shall survive regardless of the reason for the Employee's termination. 24 11. Publicity and Advertising. The Employee agrees that the Company may use the Employee's name, picture, or likeness for any advertising, publicity, or other business purpose at any time, during the term of the Agreement by the Company and may continue to use materials generated during the term of the Agreement for a period of six months thereafter. The Employee shall receive no additional consideration if the Employee's name, picture or likeness is so used. The Employee further agrees that any negatives, prints or other material for printing or reproduction purposes prepared in connection with the use of the Employee's name, picture or likeness by the Company shall be and are the sole property of the Company. 12. Remedies. The Employee acknowledges that a remedy at law for any breach or attempted breach of the Employee's obligations under Sections 7 through 10 may be inadequate, agrees that the Company may be entitled to specific performance and injunctive and other equitable remedies in case of any such breach or attempted breach and further agrees to waive any requirement for the securing or posting of any bond in connection with the obtaining of any such injunctive or other equitable relief. The Company shall have the right to offset against amounts to be paid to the Employee pursuant to the terms hereof any amounts from time to time owing by the Employee to the Company. The termination of the Agreement shall not be deemed to be a waiver by the Company of any breach by the Employee of this Agreement or any other obligation owed the Company, and notwithstanding such a termination the Employee shall be liable for all damages attributable to such a breach. 13. Dispute Resolution. Subject to the Company's right to seek injunctive relief in court as provided in Section 12 of this Agreement, any dispute, controversy or claim arising out of or in relation to or connection to this Agreement, including without limitation any dispute as to the construction, validity, interpretation, enforceability or breach of this Agreement, including a claim for indemnification under Section 14, shall be resolved either as provided by applicable law, or, at the option of either party, by impartial binding arbitration. In the event that either the Company or the Employee demands arbitration, the Employee and the Company agree that such arbitration shall be the exclusive, final and binding forum for the ultimate resolution of such claims, subject to any rights of appeal that either party may have under the Federal Arbitration Act and/or under applicable state law dealing with the review of arbitration decisions. (a) Arbitration. Arbitration shall be heard and determined by one arbitrator, who shall be impartial and who shall be selected by mutual agreement of the parties; provided, however, that if the dispute involves more than $1,000,000, then the arbitration shall be heard and determined by three (3) arbitrators. If three (3) arbitrators are necessary as provided above, then (i) each side shall appoint an arbitrator of its choice within thirty (30) days of the submission of a notice of arbitration and (ii) the party-appointed arbitrators shall in turn appoint a presiding arbitrator of the tribunal within thirty (30) days following the appointment of the last party-appointed arbitrator. If any party fails or refuses to appoint an arbitrator, the arbitration shall proceed with one (1) arbitrator. (b) Demand for Arbitration. In the event that the Employee or the Company initially elects to file suit in any court, the other party will have 60 days from the date that it is formally served with a summons and a copy of the suit to notify the party filing the suit of the non-filing party's demand for arbitration. In that case, the suit must be dismissed by consent of the parties or by the court on motion, and arbitration commenced with the arbitrators. In situations where suit has not been filed, either the Employee or the Company may initiate arbitration by serving a written demand for arbitration upon the other party. Such a demand must be served within twelve months of the events giving rise to the dispute. Any claim that is not timely made will be deemed waived. (c) Proceedings. Unless otherwise expressly agreed in writing by the parties to the arbitration proceedings: (i) The arbitration proceedings shall be held in the Polk County, Iowa, area, and at a site chosen by mutual agreement of the parties. Or, if the parties cannot reach agreement on a location within thirty (30) days of the appointment of the last arbitrator, then at a site chosen by the arbitrators; (ii) The arbitrators shall be and remain at all times wholly independent and impartial; (iii) The arbitration proceedings shall be conducted in accordance with the Employment Arbitration Rules of the American Arbitration Association, as amended from time to time; (iv) Any procedural issues not determined under the arbitral rules selected pursuant to item (iii) above shall be determined by the law of the place of arbitration, other than those laws which would refer the matter to another jurisdiction; (v) The costs of the arbitration proceedings (including attorneys' fees and costs) shall be borne in the manner determined by the arbitrators; (vi) The arbitrators may grant any remedy or relief that would have been available to the parties had the matter been heard in court; 25 (vii) The decision of the arbitrators shall be reduced to writing; final and binding without the right of appeal; the sole and exclusive remedy regarding any claims, counterclaims, issues or accounting presented to the arbitrators; made and promptly paid in United States dollars free of any deduction or offset; and any costs or fees incident to enforcing the award shall to the maximum extent permitted by law, be charged against the party resisting such enforcement; (viii) The award shall include interest from the date of any breach or violation of this Agreement, as determined by the arbitral award, and from the date of the award until paid in full, at 6% per annum; and (ix) Judgment upon the award may be entered in any court having jurisdiction over the person or the assets of the party owing the judgment or application may be made to such court for a judicial acceptance of the award and an order of enforcement, as the case may be. (d) Acknowledgement of Parties. The Company and Employee understand and acknowledge that this Agreement means that neither can pursue an action against the other in a court of law regarding any employment dispute, except for claims involving workers' compensation benefits or unemployment benefits, and except as set forth elsewhere in this Agreement, in the event that either party notifies the other of its demand for arbitration under this Agreement. The Company and Employee understand and agree that this Section 13, concerning arbitration, shall not include any controversies or claims related to any agreements or provisions (including provisions in this Agreement) respecting Sections 7 through 10 herein, which shall not be subject to arbitration. (e) Consultation. Employee has been advised of the Employee's right to consult with an attorney prior to entering into this Agreement. 14. Indemnification. The Employee shall be protected against any and all legal actions when he is either a party, witness or a participant in any legal action brought against the Company, West Bank, WB Capital Management Inc. d/b/a VMF Capital, the Employee or a Board Member. He will be protected through any programs that cover the outside directors or other Employees of the Company. 15. Miscellaneous Provisions. (a) Successors of the Company. The Company will require any successor (whether direct or indirect, by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by agreement in form and substance satisfactory to the Employee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place. As used in this Agreement, "Company" as hereinbefore defined shall include any successor to its business and/or assets as aforesaid which executes and delivers the agreement provided for in this Section 15 or which otherwise becomes bound by all the terms and provisions of this Agreement by operation of law. (b) Employee's Heirs, etc. The Employee may not assign the Employee's rights or delegate the Employee's duties or obligations hereunder without the written consent of the Company. This Agreement shall inure to the benefit of and be enforceable by the Employee's personal or legal representatives, executors, administrators, successors, heirs, distributes, devisees and legatees. If the Employee should die while any amounts would still be payable to the Employee hereunder as if he had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Agreement to the Employee's designee or, if there be no such designee, to the Employee's estate. (c) Notices. Any notice or communication required or permitted under the terms of this Agreement shall be in writing and shall be delivered personally, or sent by registered or certified mail, return receipt requested, postage prepaid, or sent by nationally recognized overnight carrier, postage prepaid, or sent by facsimile transmission to the Company at the Company's principal office and facsimile number in West Des Moines, Iowa or to the Employee at the address appearing on the books and records of the Company. Such notice or communication shall be deemed given (a) when delivered if personally delivered; (b) five mailing days after having been placed in the mail, if delivered by registered or certified mail; (c) the business day after having been placed with a nationally recognized overnight carrier, if delivered by nationally recognized overnight carrier, and (d) the business day after transmittal when transmitted with electronic confirmation of receipt, if transmitted by facsimile. Any party may change the address or facsimile number to which notices or communications are to be sent to it by giving notice of such change in the manner herein provided for giving notice. Until changed by notice, the following shall be the address and facsimile number to which notices shall be sent: 26 If to the Company, to: West Bancorporation, Inc. 1601 22nd Street, Suite 209 West Des Moines, IA. 50266 Fax: 515-225-8032 If to the Employee, to: Thomas E. Stanberry 1100 Briar Ridge West Des Moines, IA 50266 (d) Amendment or Waiver. No provisions of this Agreement may be modified, waived or discharged unless such waiver, modification or discharge is agreed to in writing signed by the Employee and such officer as may be specifically designated by the Board (which shall not include the Employee). No waiver by either party hereto at any time of any breach by the other party hereto of or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. No agreements or representations, oral or otherwise, express or implied, with respect to the subject matter hereof have been made by either party that are not set forth expressly in this Agreement. (e) Invalid Provisions. Should any portion of this Agreement be adjudged or held to be invalid, unenforceable or void, such holding shall not have the effect of invalidating or voiding the remainder of this Agreement and the parties hereby agree that the portion so held invalid, unenforceable or void shall if possible, be deemed amended or reduced in scope, or otherwise be stricken from this Agreement to the extent required for the purposes of validity and enforcement thereof. (f) Survival of the Employee's Obligations. The Employee's obligations under this Agreement shall survive regardless of whether the Employee's employment by the Company is terminated, voluntarily or involuntarily, by the Company or the Employee, with or without Cause. (g) Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. (h) Governing Law. This Agreement and any action or proceeding related to it shall be governed by and construed under the laws of the State of Iowa. (i) Captions and Gender. The use of Captions and Section headings herein is for purposes of convenience only and shall not effect the interpretation or substance of any provisions contained herein. Similarly, the use of the masculine gender with respect to pronouns in this Agreement is for purposes of convenience and includes either sex who may be a signatory. (j) Entire Agreement. This Agreement, and any attachments, represents the entire agreement between Company and Employee concerning the subject matter of Employee's employment and supersedes any prior agreements. IN WITNESS WHEREOF, the Employee and a duly authorized Company officer have signed this Agreement. THE EMPLOYEE: THE COMPANY: West Bancorporation, Inc. /s/ Thomas E. Stanberry /s/ Connie Wimer - ----------------------- ------------------- Thomas E. Stanberry Connie Wimer Chair of the Compensation Committee 27 EX-14 4 c83230exv14.txt CODE OF CONDUCT EXHIBIT 14 WEST BANCORPORATION, INC. WEST BANK WB CAPITAL MANAGEMENT INC. CODE OF CONDUCT West Bancorporation, Inc. (the "Company") has adopted a Code of Conduct (the "Code") which applies to all directors, officers and employees of the Company, West Bank (the "Bank") and WB Capital Management Inc. d/b/a VMF Capital ("VMF"). This Code is intended to promote the following: a. Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; b. Compliance with applicable governmental laws, rules and regulations; c. The prompt internal reporting to an appropriate person or persons identified in this Code of violations of this Code; and d. Accountability for adherence to this Code. INTERPRETATION AND REPORTING If you have questions about the meaning of our Code or about applying our standards to a particular situation, contact your supervisor. If you do not receive a clear explanation or believe you may not receive an adequate review of the issue by your supervisor, contact Sharen Surber. If you believe someone has engaged in a violation of this Code or in other unethical or illegal conduct, promptly report the conduct to your supervisor, Sharen Surber or the Chairman of the Audit Committee of our Board of Directors. VIOLATIONS AND THEIR CONSEQUENCES Violations of our Code compromise our brand in the marketplace and may affect our success. Violations of the Code, including failure to cooperate with an investigation or inquiry may result in disciplinary action, including termination. Enforcement of this Code shall be prompt, fair and consistent, and may be administered by a supervisor, company management or the Audit Committee. CERTIFICATION PROCESS As a condition of employment, we are each required to comply with the Code. Once each year, each of us is asked to certify our compliance with the Code. Please ensure you are completely familiar with these standards before the certification process begins. BACKGROUND We always compete aggressively and ethically in the marketplace, and we will not violate the law or our ethical standards in conducting our business activities. An illegal or unethical act cannot be justified by saying it benefited the Company, or that it was directed by someone else in the organization, even a higher authority. You are never authorized by the Company to commit or to direct another employee to commit such an act. Employees are expected to act lawfully, ethically and professionally in the performance of their jobs at all times. We pride ourselves on the fact that we are clear, truthful and accurate in what we say and do. We always act in a manner that preserves and enhances our reputation. Disparaging remarks to or about customers that compromise or jeopardize our reputation are not acceptable. Our demands for excellence and the preservation of our integrity and objectivity are our distinguishing characteristics. We rely on employees to report the discovery of any questionable, fraudulent or illegal activities that may violate this Code. If an instance involving a senior officer is identified, the report should be made to the Chief Executive Officer or the Chairman of the Audit Committee of the Board of Directors as appropriate. 28 Our standards will also be strictly enforced. Any action or behavior that, in the opinion of senior management or the Board of Directors, violates or jeopardizes this standard of honesty, integrity and nondiscriminatory behavior will result in immediate disciplinary action up to and including termination. If you're ever in a situation where the right thing is unclear, ask for clarification or examine your options with this quick test: - Could it harm our reputation? - Is it legal and is it the right thing to do? - How would it look in the newspaper or on the news? - How would my friends, family, the community or shareholders view it? - Is it consistent with our values? Our reputation, and your conscience and good name, are far too valuable for you to do anything that wouldn't pass the Ethics Quick Test. This means that all of us must tell the truth and fulfill our promises. And we must treat fellow employees, customers, shareholders and our communities with honesty and respect. HONESTY Our business is based on mutual trust and absolute honesty in all our affairs, both internally and externally. This philosophy must be respected at all times and throughout both our personal and corporate behavior. Our business demands personal candor and openness by all. Complete candor with our lawyers, auditors, compliance staff and senior management is essential. We expect everyone to be frank and objective with information that leads to the earliest identification of real or potential, small or large problems. Violations of laws involving dishonesty or breach of trust or which may affect our reputation must be disclosed and reported to us, even if they are outside the scope of employment. INTEGRITY The nature of our business provides opportunities that can be developed through integrity in our personal and professional business practices. We are accountable to a number of constituencies-our shareholders, our customers, our communities and all employees. We must treat all our resources, including our name, with the respect befitting a valuable asset. We should never use them in a manner that could be interpreted as imprudent, improper or for personal gain. GIFTS State and federal law prohibit employees, officers, directors, agents and attorneys of financial institutions from seeking or accepting anything of value in connection with any transaction or business of their financial institutions. The employee need not benefit directly from the item of value. It still can be considered a bribe if the item of value is for the benefit of a third person or party. Directors, officers, employees and members of their families shall not solicit nor allow themselves to be solicited or accept gifts, entertainment, or other gratuities intended to or appearing to influence our decisions toward a customer's business. Reasonable entertainment and other accommodations of nominal value may be accepted if offered and accepted in goodwill only and not as a return for special treatment by us. We recognize that the refusal of such gifts may damage relations and in these situations employees should consult with their supervisor or the Company's Chief Executive Officer regarding the appropriateness of exceptions. Exceptions occasionally are made allowing or encouraging employees to attend events that exceed policy if a significant customer or vendor sponsors an event or attendance at an event is important to maintaining our relationship with that customer or vendor. Generally, however, gifts are to be limited to a nominal value. Cash or checks cannot be accepted regardless of the amount. OTHER PAYMENTS AND USES OF VENDOR RESOURCES Payments that include fees and commissions are an integral part of business activity. We regularly engage the service of vendors as well as lawyers, accountants, consultants, and other professionals. While selection for performance of a specific service may involve a degree of subjectivity, the choice should always be predicated on quality, competence, competitive price and service, business relationship and evidence of the same standards of integrity demanded by this Code. 29 In all cases, we shall compete for business only on the basis of the quality and price of our services and to meet our customers' immediate and future needs. At no time will we enter into any payment or other arrangement that violates this statement, lowers our ethical standards or could conceivably bring disrepute to us. Gifts, monetary payments, loans, lavish entertainment, or other values or favors made to or received from vendors or other outside parties in exchange for business or influence of any kind are strictly prohibited. PERSONAL BENEFIT We do not take advantage of our position to profit personally from information, corporate property, services or other business opportunities, unless the situation is deemed incidental or authorized by us. COMMITMENTS You shall not make actual or apparent commitments, formally or informally, on our behalf without appropriate authorization in accordance with approved procedures. Approved commitments within the scope of one's authority must be properly documented and retained. COMPLIANCE We are in a business that is highly regulated at both the state and federal level. We comply with all local, state and federal laws and regulations that apply to our business. When laws or regulations seem unclear or ambiguous, employees should consult their immediate supervisor or the Compliance Officer for further clarification. Special attention must be paid to compliance with the privacy and anti-money laundering laws and regulations. Each of us must adhere to established policies and procedures that are designed to prevent the bank from being used as a conduit for money laundering or the funding of terrorist activity. The penalties for failure to comply with the established federal regulations can be severe. In addition to personal fines and prison time, we can be subjected to corporate fines and would experience significant reputation damage should we be implicated with a money laundering event. We must comply with our established accounting and reporting rules, regulations and controls. Records should accurately reflect transactions in a timely manner, and errors must be corrected immediately. If an employee, director or officer has concerns or complaints regarding questionable accounting or auditing matters, then he or she is encouraged to promptly submit those concerns or complaints (anonymously, confidentially or otherwise) to the Chairman of the Audit Committee (which, will subject to its duties arising under applicable law, treat such submissions confidentially). POLITICAL CONTRIBUTIONS Employees are encouraged to participate in political activities of their choosing, individually and on their own time. This participation is completely voluntary, however, and no individual political effort shall be reimbursed or compensated by us. You may of course make personal political contributions to the candidate of your choice, but you may not be reimbursed from corporate funds for such personal contributions. Employees are prohibited by law and by these ethical standards from using normal work time or our corporate resources to engage in activities related to local, state, or national elections, or political conventions or caucuses. LOAN AND INVESTMENT DECISIONS We believe that all loan and investment decisions should be made in the most responsible and constructive manner possible. Loan and investment decisions should be made with strict attention to legal and financial implications and in strict accordance with the bank's asset quality standards. We must always carefully evaluate the long-term implications of our decisions. As individuals, we should not act on behalf of the Company in transactions involving people or organizations with which we or our families have a financial commitment, interest, or decision-making influence. Use of inside or confidential information in any personal investment decision is prohibited. It is also a violation of federal securities laws to buy or sell securities on the basis of material inside information that has not been made public, or to provide material inside information to others for their use. Please refer to additional policies in this section on Maintaining Confidentiality, Insider Trading and Proprietary Information and Customer Lists for more information. 30 FINANCIAL RESPONSIBILITY Your personal financial matters should be handled with prudence at all times. Employees and their families are prohibited from borrowing from customers (other than financial institutions), suppliers, other employees or contingent workers. Employees are expected to manage their personal finances in a manner that avoids embarrassment to themselves or the Company. This includes writing checks against insufficient funds which is evidence of poor financial judgment and a violation of state law. Employee privileges carry the responsibility of prudent use, prompt payment, and care to follow all guidelines and reimbursement procedures. A corporate credit card may be used for business-related expenses only and may not be used to secure personal cash advances or for personal purchases. Misuse of any corporate credit card or repeated late payments may be grounds for denying future use of the card or other forms of disciplinary actions, including termination. When an employee terminates, any balance owed on the account must be reconciled and payment arranged. Falsifying business related expenses is grounds for termination. In addition, misuse of an employee checking account or any bank product or service may result in the loss of account privileges and could subject you to disciplinary action up to and including termination. ACCOUNT TRANSACTIONS Many of us are required to process customer account transactions such as cashing checks, waiving service fees, approving credit, etc. Employees are not allowed to process or approve transactions relating to their own personal accounts, the accounts of family members or personal acquaintances or to accounts on which they may have a personal interest or on which they are an authorized signer. Specifically, this includes, but is not limited to, refunding, reversing or waiving fees; approving or increasing credit lines; cashing checks; etc. There may be other specific restrictions pertaining to transactions on personal accounts or the account of family members or co-workers. All account transactions must be handled in strict compliance with our policies and procedures. Examples of inappropriate transactions include, but are not limited to, misappropriation of funds; opening, closing or altering accounts without proper authorization; unauthorized transfer of funds; and transactions that are inconsistent with policies, procedures or practices. Violation of this policy is grounds for disciplinary action, including termination. Please discuss restrictions and appropriate procedures with your supervisor. INSIDER TRADING Our activities frequently result in obtaining material and non-public information about other companies. Directors, employees or other insiders who possess material non-public information concerning a company or specific securities are prohibited by law from effecting any transactions in the relevant securities. Directors, employees or other insiders may not buy or sell securities of companies with which they have significant dealings on our behalf or for which they have responsibility on our behalf. TRANSACTIONS BY EMPLOYEES OR OTHER INSIDERS IN THE SECURITIES OF WEST BANCORPORATION, INC. We recognize the special interest that employees and other insiders may have in owning the Company's common stock. No director or employee may trade in the Company's common stock while in possession of material non-public information about the Company, the Bank or VMF, or in violation of the provisions of our Insider Trading Policy. Employees and other insiders should review the Insider Trading Policy to see if it applies to them and contact the Chief Financial Officer regarding any questions. MAINTAINING CONFIDENTIALITY It is essential that we maintain a professional standard of conduct that assures confidentiality of information and relationships with our customers. Confidential information regarding customers or banking transactions should not be discussed except in the normal transaction of business. The use of any banking information stemming from your employment shall be restricted to that which is absolutely necessary for legitimate and proper business purposes. Externally, we should protect the privacy of our customers. A random remark with family, friends or acquaintances can form the basis for misinterpretation or otherwise violate the integrity of our relationships. 31 Also, information about how we run our business (such as our strategic plans and our products) or other non-public information about customers must be treated with utmost discretion. Inappropriate discussions or the improper release of information may result in disciplinary action up to and including termination. When your employment ends, your obligation to maintain the confidentiality of information continues to apply. PROPRIETARY INFORMATION AND CUSTOMER LISTS As directors and employees, we may produce, develop and have access to information, ideas, inventions, techniques, processes, computer software, "know how," materials, programs, reports, studies, records, data, customer lists, customer information, trade secrets and other information not generally available to the public regarding the bank and all related entities, their customers, prospective customer and other third parties (collectively "Proprietary Information"). Proprietary Information may be original, duplicated, computerized, memorized, handwritten or in another form. Proprietary Information (whether developed or produced by an employee, or provided to any employee by the bank or a customer or other third party) is entrusted to employees as representatives of the Company. Our directors and employees may not use, duplicate or remove any Proprietary Information except for the sole purpose of conducting business on our behalf. All records, files, documents and other Proprietary Information employees prepare, use or come into contact with shall remain our property. Because it is unique and cannot be lawfully duplicated or easily acquired, we protect this information with trade secret status. Directors or employees may not use, divulge or disclose Proprietary Information to any third party. Under no circumstances should a director or an employee reveal or permit this information to become known by any of our competitors, or any other third party, either during or after employment. We are expected to use reasonable care to prevent the disclosure or destruction of Proprietary Information that we possess or use. If you cease to be employed by us, individuals must return all Proprietary Information, including information that may have been retained in personal items (e.g. electronic devices or home computers). Employees are paid to work for us and may be using our facilities and equipment to develop Proprietary Information. As a condition of employment, all employees acknowledge and agree that Proprietary Information is our sole property and disclaim any rights and interest in any Proprietary Information and assign these rights to us. Additionally, all employees agree to immediately disclose all Proprietary Information to us. Our customer lists and other Proprietary Information about customers, directors, and employees are to be treated as highly confidential in all cases. This information may not be disclosed to any third party or used for any purpose other than performance of job duties for us either during or after employment. Unauthorized use or duplication of customer lists and other information (including copies in electronic form) is expressly forbidden. CONFLICT OF INTEREST It is a conflict of interest if you have an interest outside of work that interferes with your responsibilities to us or affects your ability to perform your duties properly. You must avoid conflicts of interest and potential conflicts of interest, including situations where there might be an appearance that there is, or could be, a conflict of interest. Employees may not engage in any employment or activity which is in competition with our business; which conflicts with the fiduciary obligations of any other department; or which creates a conflict of interest with the employee's position or department. In all cases, positions in which you are employed outside of work must be approved in advance by your supervisor. We encourage participation in civic affairs as a part of our commitment to community involvement including service with constructive and legitimate for-profit and not-for-profit organizations. There are cases, however, in which organizations have business relationships with us or in which the handling of confidential information might result in a conflict of interest. All actual and potential conflicts of interest must be reported immediately to your supervisor. 32 FIDUCIARY APPOINTMENT You may not accept an appointment or continue to act as a fiduciary or co-fiduciary of any estate, trust, agency, guardianship or custodianship account of one of our customers (other than a family member) unless authorized by the Chief Financial Officer and your supervisor or except as appropriate in the regular and proper discharge of your job responsibilities. INHERITANCE UNDER WILLS OR TRUSTS You or your immediate family members may not receive any inheritance from a customer unless the customer is a family member or you have never dealt with the customer as a representative of the company or any of its affiliates. If you have been named as a beneficiary in a prohibited situation, immediately notify the Chief Financial Officer who will discuss the situation with your supervisor. DIRECTORSHIPS You may accept election or appointment to public or civic commissions and to boards of nonprofit corporations if you give reasonable notice to your supervisor before you are elected or appointed. Antitrust and banking laws prohibit certain interlocking corporate directorships and management positions. All candidacies or appointments to business corporation boards, and the terms and remuneration related to the directorship, must be approved in advance by the Chief Financial Officer and your supervisor. To avoid a potential conflict of interest you may not, without the approval of the Chief Financial Officer and your supervisor, serve on the board of an entity that: competes with us; is in substantial default to the bank on a loan, contract, or other obligation; or is involved in a substantial controversy or litigation with us. In all cases, senior management's knowledge and approval of the appointment or candidacy does not imply that you are serving at our direction or desire, nor does it imply our endorsement of the organization or its purposes. ANTITRUST COMPLIANCE Antitrust law is extremely complex. You are prohibited from entering into arrangements with competitors to set or control prices, rates, trade practices or marketing policies. You must avoid any situation in which it might even appear that you have entered into such an arrangement. You also must avoid conversations with competitors regarding pricing, trade practices, marketing policies, or similar information. It also is an antitrust violation to require customers to engage in certain tied or reciprocal transactions. We will not extend credit, lease or sell property of any kind, furnish any service, or fix or vary the consideration for any business activity on the conditions that: - - The customer obtain some additional credit, property or service other than a loan, deposit or trust service; - - The customer obtain any additional service from a bank affiliate; - - The customer provide some additional credit, property, or service to us; or - - The customer not obtain some other credit, property, or service from one of our competitors. Employees are encouraged to contact the Compliance Officer when contemplating transactions involving multiple products and services. USE OF COMPANY RESOURCES Our telephones, personal computers, copy and fax machines, supplies, mail service, e-mail, bulletin boards and conference rooms are intended for our business only. Personal use of these or other of our resources can disrupt the vital flow of information or tie up resources our customers depend on. Personal telephone calls should be limited and Company addresses or mail, including e-mail, should not be used for personal correspondence. Misuse or abuse of Company resources may result in disciplinary action, including termination. Company resources assigned to you during the course of your employment, must be returned upon termination and/or at our request. 33 BUSINESS COMMUNICATIONS AND RECORDS All communications, whether verbal or written, should be conducted professionally and should adhere to our ethical standards. What we say, write and do should reflect a clear understanding of our ethical values and expectations and should demonstrate sound personal judgment. That means being clear, truthful, and accurate. It also means being respectful. Always avoid exaggeration, colorful language, guesswork, legal speculation, and derogatory remarks or characterizations of people, companies or their products and services. What we say, write or do should preserve or enhance our integrity and reputation-it should never jeopardize it. This policy applies to communications of all kinds, including voice mails, e-mail and informal notes or memos. The following section of this policy provides guidance specifically regarding e-mail communications, but also applies in principle to all other forms of communication as well, including voice mail and memos. E-MAIL E-mail is an important form of internal and external communication. E-mails are written records and even if deleted, they may be stored and accessed as permanent records. Our ethical standards apply to every e-mail we create no matter how informal or casual it may be. An e-mail should never be created or sent if it does not first pass the scrutiny of our ethical standards. Like voice mail, computer systems or other office equipment, e-mail is our exclusive property and it is not intended for personal use. The sharing or transmission of jokes, excessive use of e-mail for non-business matters, or other unauthorized use of e-mail is never appropriate. All e-mails should be created with the understanding they may be formal public records. They should be written in a professional tone and they must be protected from unauthorized disclosure or access. The transmission of all messages must comply with all Company policies. Important Tips to Follow When Writing E-mails - Draft e-mails just as you would any other letter that may become a formal, written record. Be clear, truthful and accurate. Don't exaggerate or use colorful language. Avoid writing e-mails in the form of casual conversation. - Ensure our ethical standards are followed. That means being respectful, professional and consistent with the spirit and intent of our ethical standards and policies. Always avoid the use of profanity and/or disparaging remarks. - When responding to e-mails, ensure your message contains sufficient context to avoid misinterpretation. - Write e-mails in response to the specific requirement of your job; avoid using e-mail for personal and/or non-business purposes. - Never send an e-mail that you would be embarrassed to see repeated in print at a later date. - Review it carefully before you send it. Does it meet our standards? Some Important Notes about E-mail - This Code applies equally to electronic communications. No e-mail messages should be sent which may be perceived as offensive, intimidating or hostile. - E-mail on the Company system is not protected by any privacy right. We reserve the right to monitor any employee's e-mail and computer files for any reason. Examples include, but are not limited to, e-mails containing sexual innuendo or off-color jokes; chain letters; downloading, copying or sending confidential information to an unauthorized party; excessive or unauthorized personal use that violate company policy. - It is important to keep in mind that all public statements about us must be accurate and consistent. When using Internet communications such as online forums, bulletin or message boards and chat rooms, it may sometimes give the appearance that you are communicating with a small group. You may, however, potentially be communicating with a very large audience. We prohibit such communications purported to be on our behalf or in your capacity as an employee. Only authorized spokespersons may communicate about the Company and its policies, practices and procedures. We treat Internet communications like any other publication. Although it may be tempting to comment or correct errors about us that you find on the Internet, due to legal constraints and to ensure consistency, doing so is a violation of Company policy. 34 MEDIA CONTACTS We are committed to building and maintaining effective and ongoing communications with key stakeholders through the media. Effective media relations also ensure that our public statements express a clear and factual representation of the Company. It is our policy that all media inquiries will be forwarded to the Director of Marketing. Only the Director of Marketing is authorized to initiate contact with the media. Certain exceptions to this policy may be granted in writing by the Chief Executive Officer. RESPECT AND CONSIDERATION IN OUR DEALINGS WITH ALL Our goal is to treat fellow employees with respect, consideration and understanding. Our intention is to foster a climate conducive to a high level of performance through full communication at all levels. We encourage the open discussion of job-related problems and prompt resolution of those problems. Externally, we must treat customers, potential customers, vendors and the communities we serve with equal respect. This demands courteous service, as well as ethical business conduct and compliance with all laws and regulations. As employees of a customer-driven institution, we have the responsibility to act in ways that reflect favorably on us. In addition, we are frequently asked by our customers to offer opinions on legal or tax matters. Employees should refrain from offering any advice where they lack professional qualifications or are legally prohibited from providing advice. Being considerate and open in our dealings demands the development, encouragement and maintenance of a positive attitude towards ethical behavior, one important dimension of which is an open appreciation of diversity. It is absolutely essential for us to value and respect differences among the people with whom we interact daily. When we are able to manage effectively our reaction to diversity, we can be more successful in identifying and meeting customer needs and developing effective work relationships, thereby increasing productivity. We must be compelled to conduct our day-to-day business with the highest standards of integrity, and we must devote our complete efforts to successfully performing our jobs to ensure the attainment of our Company goals and objectives. It is in this spirit that all employees are expected to act. EQUAL EMPLOYMENT OPPORTUNITY/AFFIRMATIVE ACTION We have made a commitment to create a work environment that values each individual's unique talents and background, respects differences, and recognizes the opinions and ideas of every employee. Current employees, the labor market and our existing and prospective customers comprise a widely diverse population. We are committed to equal employment opportunity. Embracing diversity is not only the right way to do business, it is essential to the success of our business. The way we will serve a diverse marketplace is by having a diverse workforce. We prohibit both discrimination against and harassment including offensive or degrading remarks and conduct, of any employee or applicant, and ensure that all personnel practices are administered on individual merit and capability without regard to race, religion, color, age, sex, national origin or ancestry, sexual orientation, disability, veteran status, or other factors identified and protected by federal, state, and local legislation. These practices include, but are not limited to, recruitment, advertising, selection, compensation, training, placement, transfer, demotion, promotion, disciplinary action and termination. Harassment because of race, religion, color, age, sex, national origin or ancestry, sexual orientation, disability, veteran status, or other factors identified and protected by federal, state, and local legislation may be prohibited by law and is not tolerated. If you have a concern about offensive behavior, please contact your supervisor. Allegations of offensive behavior and harassment are taken seriously. We will investigate and will take appropriate corrective action if it is determined that a violation of our policy has occurred. No employee will be subjected to retaliation for making a report of offensive behavior or harassment. EMPLOYEES AND CUSTOMERS WITH DISABILITIES Individuals with disabilities are entitled to the same access to goods, services, products, accommodations and employment as persons without disabilities. We are committed to providing reasonable accommodations for qualified employees and customers who have disabilities. We include individuals with disabilities in our non-discrimination policy and as part of the diversity of the workforce. We will make reasonable accommodations so that an individual with a disability may have the opportunity to perform the essential functions of a particular position and otherwise participate fully in employment. Sometimes this may involve special equipment or simple physical adjustments to the work site. 35 If you have a disability that requires special accommodation within your current job or in a position for which you wish to apply, please discuss your situation with your supervisor or Sharen Surber. They will work with you to try to evaluate accommodation options. It's important to be aware that customers may have disabilities that need to be accommodated. Whether you work with customers face to face or over the phone, please pay attention to any physical or communication barriers customers encounter, offer assistance and provide your manager with information about the situation. We want to ensure that architectural and communication barriers are remedied where feasible so that all customers have equal access to our products and services. SOLICITATION Solicitation during working time for products, services, charities or interests not related to Company business can have a negative impact on our ability to serve our customers and can be disruptive to our internal workflow particularly when multiple employees are soliciting for the same event. For this reason, we prohibit any active solicitation of employees by other employees and non-employees during any work time, whether it is for participation in volunteer agencies, the sale of goods or services, or contributions to a charitable organization. Except for Company sponsored charitable fund-raising or events which receive senior management approval the term "work time" is defined as time spent in the performance of job duties. If you wish to solicit your co-workers for such an event contact your supervisor and provide the details so your request can be considered. SUBSTANCE ABUSE We recognize that alcohol and drug abuse adversely affect job performance and safety in the workplace. We believe that a productive and safe work environment is in the best interest of our employees, our customers and our shareholders. Therefore, we prohibit or restrict the use of alcohol, narcotics, depressants, stimulants, hallucinogens and marijuana, as well as the use of prescription drugs when resulting behavior or appearance adversely affects work performance. Possession or use of narcotics, depressants, stimulants, hallucinogens and marijuana on Company premises is prohibited and grounds for immediate dismissal. Consumption or possession of alcoholic beverages on Company premises, other than for sanctioned activities after normal business hours, is prohibited and will be grounds for disciplinary action including dismissal. Consumption of intoxicating beverages during lunch or a business meeting is not acceptable business behavior. If you feel such consumption is necessary then request the remainder of the day off. During bank or other social functions please keep consumption of alcoholic beverages to a reasonable level. The Company's image is a direct result of its staff's behavior. This policy applies to all employees, including contract employees or employees of temporary employment agencies. The policy is applicable at Company facilities or wherever Company employees are performing Company business. We recognize that drug and alcohol abuse are serious problems that may be successfully treated. Employees who feel that substance abuse is a problem for themselves or family members can obtain confidential help through the Employee Assistance Program. Any employee who is unable to work due to alcohol or drug use, who uses illegal drugs at or outside of work, or who violates this policy may be sent home and may be subject to disciplinary action, up to and including termination. In addition, the employee may be referred to the Employee Assistance Program for an evaluation. This referral does not preclude other disciplinary action, including termination of employment, nor does it imply or constitute disciplinary action. SMOKING The Company provides a smoke-free workplace for our employees and customers. This means that you are not permitted to use tobacco products in any Company facility. Smoking is allowed outdoors. OFFENSIVE BEHAVIOR AND HARASSMENT It is the Company's policy and the responsibility of all employees to maintain a working atmosphere free of harassment, intimidation and/or unwelcome or inappropriate conduct, including sexual overture, jokes, graphic material, etc. Verbal or physical conduct of a demeaning or sexual nature that creates an intimidating, hostile or offensive working environment, that in any way affects the employment relationship or is otherwise deemed to be inappropriate by the Company is not permitted. 36 Harassment may include verbal or physical conduct that denigrates or shows hostility or aversion toward an individual because of the individual's race, religion, color, age, sex, national origin or ancestry, sexual orientation, disability, veteran status, or other factors protected by state and local legislation. Harassment may include but is not limited to: disparaging remarks; slurs; negative stereotyping; threats; intimidation; hostile acts; and denigrating or hostile written or graphic material posted or circulated in the workplace. Harassment may also include sexual harassment which includes any unwelcome sexual advance, request for sexual favor, and other verbal or physical conduct or a sexual nature where: - Submission to the conduct is or is threatened to be a condition of employment; - Submission to or rejection of such conduct is used or is threatened to be used as the basis for employment decisions; - The conduct has the purpose or effect of unreasonably interfering with an individual's work performance; or - The conduct has the purpose or effect of creating an intimidating, hostile or offensive work environment. Employees who violate this policy are subject to disciplinary action up to and including termination. If an employee believes he or she has been harassed by a co-worker, member of management, vendor or customer, promptly report this to the supervisor or Sharen Surber. A timely investigation will be conducted and appropriate action will be taken. We will not tolerate any retaliatory action against any individual for reporting such an incident. USE OF COMPANY TECHNOLOGY Technology, including computer hardware and software, is an important asset for us and our customers. The Information Security Services policies, available through your supervisor, provide direction for using technology. They also identify precautions that should be taken to secure date from unauthorized access. All employees who use our technology resources must become familiar with and understand policies and standards and comply with their provisions. Some of these basic rules include, but are not limited to, the following: - Use resources and data only for authorized purposes. - Do not attempt to access data that you are not authorized to access. - Ensure information is treated as a valuable Company asset and is disclosed only on a need-to-know basis. - Use all software in accordance with its license agreements. - Do not make any unauthorized copies of any software under any circumstances. Anyone found copying software other than for backup purposes is subject to disciplinary action, including termination. - Do not use our computer resources for personal business. - Do not access inappropriate Internet sites. COMPUTER AND INFORMATION SECURITY Protecting information from unauthorized disclosure is a responsibility of all employees. It is important to be familiar with all policies concerning computer systems, information and privacy. These policies are available from your supervisor and should be reviewed carefully. In general, here are a few basic rules to keep in mind: - Ensure that all of your computer access is on a need-to-know basis and is limited to the information required to perform your job. - Provide for the physical security of the hardware. Laptop computers and system components are extremely vulnerable to theft. - Ensure you have power-on and screensaver passwords on your personal computers. - Ensure you have current virus detection software on your computer. - Do not write down access codes or passwords. - Do not share your user ID or passwords with anyone. You are responsible for all unauthorized use of your user ID. - Change your passwords if you suspect your user ID has been compromised and contact Information Security Services. SERVING AS AN EXPERT The expertise you develop in the course of your employment may provide opportunities to participate in outside activities as a paid or unpaid speaker or consultant. It is important to discuss these opportunities with your supervisor to ensure there is no conflict between organizational and personal interests. Use or distribution of materials or products developed as part of your responsibilities with us should occur only with the authorization of your supervisor. 37 PRIVACY IN THE WORKPLACE We may assign workspace, equipment, or other Company property for use in performing your job accountabilities. Company property is not intended for personal use. We reserve the right to access and/or search workspace and equipment that has been assigned to you. Equipment owned by employees but used for business purposes is not considered private and may be accessed and searched for any purpose. We also reserve the right to monitor employee accounts and electronic forms of communication, including e-mail, telephones, computer systems and other electronic records for any reason. We prohibit unauthorized recording of conversations, meetings, etc. RETALIATION To the extent consistent with applicable law and the Company's whistleblowing policy, the Company will not retaliate against employees, officers or directors who in good faith make reports or complaints of violations of this Code. 38 EX-21 5 c83230exv21.txt SUBSIDIARIES . . . EXHIBIT 21 SUBSIDIARIES
Name Operating Name Ownership % State of Incorporation - -------------------------- -------------- ----------- ---------------------- West Bank West Bank 100% Iowa WB Capital Management Inc. VMF Capital 100% Iowa
39 EX-31.1 6 c83230exv31w1.txt CERTIFICATION OF CEO EXHIBIT 31.1 Certification of Chief Executive Officer under Section 302 of the Sarbanes Oxley Act of 2002 I, Thomas E. Stanberry, certify that: 1. I have reviewed this annual report on Form 10-K of West Bancorporation, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 4, 2004 /s/ Thomas E. Stanberry - -------------------------- Thomas E. Stanberry Chairman, President and Chief Executive Officer 40 EX-31.2 7 c83230exv31w2.txt CERTIFICATION OF CFO EXHIBIT 31.2 Certification of Chief Financial Officer under Section 302 of the Sarbanes Oxley Act of 2002 I, Douglas R. Gulling, certify that: 1. I have reviewed this annual report on Form 10-K of West Bancorporation, Inc. 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by the report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c. disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 4, 2004 /s/ Douglas R. Gulling - -------------------------- Douglas R. Gulling Chief Financial Officer 41 EX-32.1 8 c83230exv32w1.txt CERTIFICATION OF CEO EXHIBIT 32.1 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of West Bancorporation, Inc. on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Thomas E. Stanberry, Chief Executive Officer of West Bancorporation, Inc., certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the report fairly presents, in all material respects, the financial conditions and results of operations of West Bancorporation, Inc. March 4, 2004 /s/ Thomas E. Stanberry - -------------------------- Thomas E. Stanberry Chief Executive Officer 42 EX-32.2 9 c83230exv32w2.txt CERTIFICATION OF CFO EXHIBIT 32.2 Certification Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 In connection with the annual report of West Bancorporation, Inc. on Form 10-K for the year ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Douglas R. Gulling, Chief Financial Officer of West Bancorporation, Inc., certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 that: (1) The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) the information contained in the report fairly presents, in all material respects, the financial conditions and results of operations of West Bancorporation, Inc. March 4, 2004 /s/ Douglas R. Gulling - -------------------------- Douglas R. Gulling Chief Financial Officer 43 -----END PRIVACY-ENHANCED MESSAGE-----