West Bancorporation(WTBA) - 2024 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements This section presents West Bancorporation, Inc.'s unaudited consolidated financial statements for Q1 2024 and 2023, encompassing balance sheets, income statements, and detailed notes Consolidated Balance Sheets Total assets increased to $3.96 billion by March 31, 2024, driven by loans and cash, while liabilities grew due to deposits, and equity slightly decreased Consolidated Balance Sheet Highlights (in thousands USD) | Account | March 31, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Total Assets | $3,962,692 | $3,825,758 | | Cash and cash equivalents | $148,017 | $65,357 | | Loans, net | $2,951,760 | $2,899,193 | | Securities available for sale | $605,735 | $623,919 | | Total Liabilities | $3,738,936 | $3,600,715 | | Total deposits | $3,065,030 | $2,973,779 | | Federal Home Loan Bank advances | $315,000 | $315,000 | | Total Stockholders' Equity | $223,756 | $225,043 | Consolidated Statements of Income Net income for Q1 2024 decreased to $5.8 million from $7.8 million in Q1 2023, primarily due to a $1.9 million decline in net interest income Q1 2024 vs. Q1 2023 Income Statement (in thousands USD, except per share data) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Total Interest Income | $44,570 | $37,179 | | Total Interest Expense | $27,820 | $18,484 | | Net Interest Income | $16,750 | $18,695 | | Credit Loss Expense (benefit) | $0 | $0 | | Total Noninterest Income | $2,299 | $2,957 | | Total Noninterest Expense | $11,868 | $12,071 | | Net Income | $5,809 | $7,844 | | Diluted EPS | $0.35 | $0.47 | Notes to Consolidated Financial Statements These notes detail accounting policies, financial instruments, the securities portfolio's unrealized losses, strong loan credit quality, and off-balance-sheet commitments - As of March 31, 2024, the securities available for sale portfolio had $129.6 million in gross unrealized losses, primarily due to increased market interest rates[30][35] - The loan portfolio grew to $2.98 billion, with an Allowance for Credit Losses of $28.4 million (0.95% of total loans), and minimal nonaccrual loans of $289 thousand, reflecting strong credit quality[37][40][53] - The company uses $515 million in interest rate swaps as cash flow hedges to manage interest rate risk on borrowings and deposits[82][85] - Off-balance-sheet commitments totaled $955 million, primarily for real estate construction loans ($343.8 million) and other credit extensions ($593.5 million)[93][94] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Q1 2024 financial results, noting a decrease in net income to $5.8 million due to net interest margin compression, while highlighting strong credit quality and capital position Overview Q1 2024 net income decreased to $5.8 million ($0.35 diluted EPS) from $7.8 million in Q1 2023, primarily due to lower net interest income, despite loan growth and strong credit quality Q1 2024 Key Performance Metrics (in thousands USD, except percentages and EPS) | Metric | Q1 2024 | Q1 2023 | | :--- | :--- | :--- | | Net Income | $5,809 thousand | $7,844 thousand | | Diluted EPS | $0.35 | $0.47 | | Return on Average Assets | 0.61% | 0.88% | | Return on Average Equity | 10.63% | 14.77% | - The Board of Directors declared a quarterly cash dividend of $0.25 per common share, payable on May 22, 2024[127] Results of Operations Q1 2024 operating results show net interest margin compression, with net interest income (FTE) falling 10.7% to $16.8 million, while noninterest income decreased and noninterest expense slightly declined - Net interest margin (FTE) compressed to 1.88% in Q1 2024 from 2.23% in Q1 2023, as the cost of interest-bearing liabilities rose faster than asset yields[134][138] - No credit loss expense was recorded in Q1 2024 or Q1 2023, with the allowance for credit losses deemed adequate at $28.4 million[142][148] - Noninterest income fell by $0.66 million, primarily due to a non-recurring $0.69 million gain from a bank-owned life insurance death benefit claim in Q1 2023[150] - Noninterest expense decreased by $0.20 million, mainly from a $0.38 million reduction in salaries and employee benefits, partially offset by higher technology and FDIC insurance costs[152] Financial Condition As of March 31, 2024, total assets grew to $3.96 billion, driven by a $52.6 million increase in loans, while deposits rose by $91.3 million, and capital ratios remained strong - Total loans grew by $52.6 million (1.8%) in Q1 2024, reaching $2.98 billion, with nonperforming assets remaining extremely low at $289 thousand[157][160] - Total deposits increased by $91.3 million (3.1%), with brokered deposits rising to $396.4 million, and estimated uninsured deposits at approximately 27.2% of total deposits[161][162] - The company maintains significant available liquidity, including $479 million in FHLB borrowing capacity and $73 million from the Federal Reserve discount window[165] Capital Ratios as of March 31, 2024 (%) | Ratio | Consolidated Actual | To Be Well-Capitalized | | :--- | :--- | :--- | | Common Equity Tier 1 Capital | 8.67% | 6.50% | | Tier 1 Capital | 9.23% | 8.00% | | Total Capital | 11.78% | 10.00% | | Tier 1 Capital (Leverage) | 8.36% | 5.00% | Quantitative and Qualitative Disclosures About Market Risk The company's primary market risk is interest rate risk, with an earnings simulation model projecting a 5.86% decrease in net interest income for a +100 bps rate rise and a 1.57% increase for a -100 bps rate fall Sensitivity of Net Interest Income (1-Year Horizon, % Change) | Change in Interest Rates | % Change in NII | | :--- | :--- | | +300 bps | (16.94)% | | +200 bps | (11.34)% | | +100 bps | (5.86)% | | -100 bps | 1.57% | | -200 bps | 1.63% | Controls and Procedures The CEO and CFO concluded that disclosure controls and procedures are effective, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that disclosure controls and procedures were effective as of the end of the reporting period[177] - No material changes in internal control over financial reporting occurred during the quarter[178] PART II. OTHER INFORMATION Legal Proceedings The company is not a party to any material pending legal proceedings beyond ordinary routine litigation incidental to its business - There are no material pending legal proceedings against the Company or its subsidiary, West Bank, outside of ordinary routine litigation[180] Risk Factors There have been no material changes to the risk factors previously disclosed in the company's amended Form 10-K filed on February 23, 2024 - Management believes there have been no material changes to the risk factors previously disclosed in the Company's Annual Report on Form 10-K[181] Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered sales of equity securities during the reporting period - None[182]