West Bancorp. (WTBA) in Des Moines, Iowa, is taking advantage of low interest rates to buy back a chunk of its stock.
The $1.4 billion-asset parent of West Bank said Thursday that it had repurchased 1.4 million shares, or about 8.3% of its common stock, from American Equity Investment Life Holding for $15.8 million.
The purchase price was $10.95 per share, according to the company, which said it would borrow $16 million over five years to finance the buyback.
"We view this transaction as an acquisition of the company we know best," David Nelson, West Bank's chief executive, said in a news release.
Had West Bank wanted to repurchase the shares directly, it would have had sufficient cash, according to a research note Monday by Andrew Liesch, an analyst with Sandler O'Neill, which advised West Bank on the deal. But West Bank explained in its news release that "management believes the low interest rate environment makes the lending facility an attractive funding source for the transaction."
West Bancorp's shares were trading at $12.05, up 1.8%, around midday Monday.