Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- West Bancorp Inc (WTBA, Financial) reported stable net interest margin and increasing net interest income for the second consecutive quarter.
- The company declared a $0.25 per common share dividend, indicating a commitment to returning value to shareholders.
- Credit quality remains pristine with no credit problems, and the commercial real estate portfolio has no past dues.
- The company experienced good deposit growth during the quarter, with core deposits increasing by 1.9% year to date.
- West Bancorp Inc (WTBA) successfully opened a new headquarters building in West Des Moines, enhancing operational capabilities.
Negative Points
- Net income for the quarter decreased to $5.2 million from $5.8 million in both the first quarter of 2024 and the second quarter of 2023.
- Loan growth was relatively flat during the quarter, with only a 2.43% increase over the first six months of 2024.
- Noninterest expenses increased due to the occupancy of the new corporate headquarters, impacting overall profitability.
- The competitive environment for deposit gathering remains challenging, with high competition for lower-priced deposits.
- The company faces potential challenges with fixed-rate interest rate swaps maturing in the second half of the year, which may impact net interest margin.
Q & A Highlights
Q: Can you provide an update on the loan growth and any large payoffs expected in the third quarter?
A: We anticipate a few payoffs in the $20 million to $25 million range, which will be replaced with funded commitments. We are being selective with new projects based on our commercial real estate (CRE) and liquidity position. - Brad Winterbottom, President of West Bank
Q: How is the funding side progressing, particularly with potential commercial customers?
A: We have a team of commercial and principal bankers actively seeking deposits. It's a competitive environment, but we are pursuing both lower-priced and non-interest-bearing deposits. - Brad Winterbottom, President of West Bank
Q: Is the current expense level a good run rate until the new Minnesota office opens?
A: Yes, the $13.2 million is a reasonable assumption for now. We had some one-time costs with the move to the new headquarters, and expenses will slightly increase when the new Minnesota office opens in December or January. - Jane Funk, CFO of West Bank
Q: What caused the increase in the watchlist this quarter?
A: The increase was due to a few commercial customers with weaker operating performance, but they are well-capitalized and secured. Our watchlist remains very low at 0.03% of our total portfolio. - Harlee Olafson, Chief Risk Officer of West Bank
Q: How do the rates of new deposits compare to the brokered funding that was paid off?
A: The rates were very similar, indicating that our net interest margin has stabilized. We are seeing yield improvements on loans, which is slightly better than expected. - Jane Funk, CFO of West Bank
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
