• Net Income: $7.1 million in Q4 2024, compared to $6 million in Q3 2024 and $4.5 million in Q4 2023.
• Annual Net Income: $24.1 million for both 2024 and 2023.
• Provision for Credit Losses: $1 million in Q4 2024.
• Investment Securities Loss: $1.2 million loss from selling $12 million of investment securities in December.
• Income Tax Benefit: $1.8 million from an energy-related investment tax credit.
• Core Deposit Growth: Increased 15.8% in 2024, with an 8.3% increase in Q4.
• Reduction in Wholesale Funding: Over $200 million reduction in Q4 2024.
• Net Interest Margin: Increased by 7 basis points in Q4 compared to Q3.

• Warning! GuruFocus has detected 8 Warning Signs with WTBA.

Release Date: January 23, 2025

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

Positive Points

• West Bancorp Inc (NASDAQ:WTBA) reported its best earnings quarter in the past seven quarters, indicating strong financial performance.
• The company successfully gathered deposits in 2024, allowing for a reduction in expensive wholesale deposits.
• Credit quality remains strong with zero past dues over 30 days and a minimal watch list representing only 0.26% of total loans.
• Core deposit balances increased by 15.8% in 2024, with an 8.3% increase in the fourth quarter, reflecting effective deposit relationship strategies.
• Net interest margin increased by 7 basis points in the fourth quarter, supported by a reduction in the Fed rate and lower deposit rates.

Negative Points

• The company recorded a $1.2 million loss from selling approximately $12 million of investment securities.
• Provision for credit losses was $1 million in the fourth quarter, due to an increase in certain qualitative factors, indicating potential future risks.
• New credit opportunities have slowed, and the company is being selective in its focus, which may limit growth.
• Interest rates could affect the level of new projects and expansions, potentially impacting future growth.
• The company faces challenges with significant vacancies in office properties within its markets.

Q & A Highlights

Q: Can you elaborate on the qualitative factors affecting the provision for credit losses? A: Jane Funk, CFO, explained that the provision was due to a broad-based acknowledgment of potential impacts on debt service coverage ratios as loans reprice higher, affecting property economics and values, rather than specific portfolio issues.

Q: Where are you seeing the most activity in loan pipelines? A: Harlee Olafson, Chief Risk Officer, noted that most activity is in the C&I (Commercial and Industrial) sector, with business purchases and relationship-based C&I opportunities, while new commercial real estate projects are limited.

Q: How should we view expenses moving into 2025? A: Jane Funk indicated that fourth-quarter expenses included accrual adjustments for incentive bonuses and depreciation costs for new buildings, suggesting December was slightly elevated. Seasonal upticks may occur in the first quarter.

Q: Is the increase in trust services income sustainable? A: Jane Funk stated that the increase is close to the new run rate, with recurring estate work contributing to the rise, rather than one-time benefits.

Q: Can we expect further improvements in the cost of deposits? A: Jane Funk confirmed that further improvements are likely, but the impact on margins will also depend on asset repricing and the timing of maturities and cash flows.

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