• Net Income: $5.2 million for Q2 2024, compared to $5.8 million in Q1 2024 and Q2 2023.
• Loan Portfolio Growth: Grew by $71 million or 2.43% in the first six months of 2024.
• Net Interest Income: Increased by $480,000 in Q2 2024 compared to Q1 2024.
• Loan-to-Value Ratios: Multifamily at 69%, Warehouse at 67%, Office at 67%, Mixed Use at 65%, Hotel at 64%, Medical Office at 58%, Senior Care at 64%.
• Debt Service Coverage Ratios: Multifamily at 1.35, Warehouse at 1.9, Office at 1.38, Mixed Use at 1.95, Hotel at 1.37, Medical Office at 2.49, Senior Care at 1.38.
• Core Deposits Growth: Increased by 1.9% year to date, excluding large municipal deposit and broker deposit activity.
• Dividend Declared: $0.25 per common share, payable August 21, 2024.

• Warning! GuruFocus has detected 6 Warning Signs with WTBA.

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 (NASDAQ:WTBA) 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 (NASDAQ: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.