• Net Income: $6 million for Q3 2024, compared to $5.2 million in Q2 2024 and $6 million in Q3 2023.
• Loan Portfolio Growth: $94 million or 3.2% increase for the first nine months of 2024.
• Core Deposit Growth: 3.5% increase in core deposits.
• Net Interest Margin: Increased by 5 basis points in Q3 2024 compared to Q2 2024.
• Provision for Credit Losses: $1 million recorded in Q3 2024 due to forecasted unemployment rates.
• Dividend: $0.25 per share declared for shareholders of record as of November 6, payable November 20.

• Warning! GuruFocus has detected 9 Warning Signs with WTBA.

Release Date: October 24, 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 a stable quarter with modest loan growth despite weak loan demand.
• The company has a strong deposit pipeline, contributing to a 3.5% growth in core deposits.
• Credit quality remains robust with no significant issues, and only one past due loan which is expected to be fully paid.
• Net interest income has increased for three consecutive quarters, with a 5 basis point improvement in the latest quarter.
• The board declared a $0.25 per share quarterly dividend, indicating confidence in financial stability.

Negative Points

• Loan demand is not strong, with limited new projects leading to a decline in overall loan values.
• The commercial real estate portfolio has seen a slight decline in debt service coverages.
• Net income for the first nine months of 2024 was lower compared to the same period in 2023.
• The interest rate environment remains challenging, impacting the company's financial strategies.
• Future rate cuts may not allow for the same level of aggressive rate adjustments on deposit accounts.

Q & A Highlights

Q: Can you provide more details on the loan growth outlook, considering the current pipeline and any potential payoffs? A: David Nelson, CEO, mentioned that while there are anticipated payoffs due to construction advances and a large C&I customer selling their business, they expect to fill these gaps. The loan growth is expected to remain stable by year-end.

Q: How is the margin improvement progressing, and what are the expectations for the fourth quarter? A: Jane Funk, CFO, explained that they are seeing benefits from repricing CDs and brokered CDs, with a significant portion maturing within six months. The 50 basis point rate cut has been beneficial, particularly in CDs, and they have not seen negative reactions to rate adjustments in money market accounts.

Q: Are there any significant changes in the deposit strategy, especially concerning CDs and money markets? A: Jane Funk noted that they have been aggressive with rate adjustments following the 50 basis point cut, particularly in CDs. Future rate cuts may not allow for the same level of adjustment, but they are continuously assessing the market.

Q: What is the impact of the current interest rate environment on your operations in Minnesota? A: Bradley Peters, Minnesota Group President, highlighted that the interest rate environment presents challenges but also opportunities. Their relationship-based strategy and high-quality bankers give them a competitive edge in the market.

Q: How is the credit quality of the loan portfolio, and are there any concerns about future repricing? A: Harlee Olafson, Chief Risk Officer, stated that the loan portfolio remains strong with no significant issues. They have stress-tested loans expected to reprice and do not foresee significant payment problems at higher rates.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.