West Bancorporation(WTBA) - 2024 Q2 - Quarterly Results

Financial Results and Dividend Announcement West Bancorporation announced its Q2 2024 financial results, reporting decreased net income and diluted EPS, alongside a declared quarterly dividend Q2 2024 Financial Results and Dividend West Bancorporation reported second quarter 2024 net income of $5.2 million, or $0.31 per diluted common share, and declared a $0.25 quarterly dividend Quarterly Financial Performance Summary | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net Income | $5.2 million | $5.8 million | $5.9 million | | Diluted EPS | $0.31 | $0.35 | $0.35 | - The Board of Directors declared a regular quarterly dividend of $0.25 per common share, payable on August 21, 2024, to stockholders of record on August 7, 2024[1] Management Commentary Management emphasized pristine credit quality, positive deposit growth, stabilized net interest income, and strategic investments in new buildings - Credit quality remains pristine due to disciplined loan growth and credit risk management, with the ratio of nonperforming assets to total assets at 0.01%[2] - In the first half of 2024, the company experienced deposit growth, improved net interest income, and a stabilized net interest margin[2] - The efficiency ratio increased as anticipated due to costs associated with new buildings, which are viewed as strategic investments for relationship building and business development[2] Financial Highlights The second quarter saw loan and deposit growth but also a decline in net income and increased efficiency ratio compared to prior periods Q2 2024 vs. Q1 2024 Comparison Net income decreased by $0.6 million, while loans and deposits grew, but the efficiency ratio worsened and net interest margin slightly compressed - Loans increased by $18.6 million (2.5% annualized), primarily from funding previously committed construction loans[5] - Deposits increased by $115.9 million; excluding a $26.1 million decrease in brokered deposits, core deposits grew by $142.0 million, including a temporary $120.0 million municipal deposit[9] - The efficiency ratio increased to 67.14% from 62.04% in Q1 2024, mainly due to higher salaries and occupancy costs related to the new headquarters[9] - Net interest margin (tax-equivalent) slightly decreased to 1.86% from 1.88% in the prior quarter[9] Q2 2024 vs. Q2 2023 Comparison Year-over-year, net income decreased by $0.7 million despite significant loan and deposit growth, with net interest margin contraction and higher efficiency ratio - Loans increased by $191.7 million, or 6.8%, compared to June 30, 2023, mainly due to funding of construction loans[9] - Deposits increased by $344.6 million year-over-year, including an increase in brokered deposits from $230.7 million to $370.3 million[9] - Net interest margin (tax-equivalent) decreased to 1.86% from 2.02% in Q2 2023[9] - The efficiency ratio increased to 67.14% from 62.83% in Q2 2023, driven by lower net interest income and higher noninterest expense, particularly occupancy costs[9] Financial Statements The financial statements detail the balance sheet, loan and deposit composition, credit quality, and income statements, reflecting asset growth funded by deposits Condensed Balance Sheets Total assets reached $3.965 billion, with loans at $2.970 billion and deposits at $3.181 billion, enabling a reduction in borrowings Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | March 31, 2024 | June 30, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $3,965,115 | $3,962,692 | $3,678,555 | | Loans, net | $2,970,352 | $2,951,760 | $2,779,137 | | Total Deposits | $3,180,922 | $3,065,030 | $2,836,325 | | Total Borrowings* | $525,498 | $639,683 | $593,886 | | Stockholders' Equity | $223,883 | $223,756 | $217,126 | Loan, Deposit, and Credit Quality Total loans reached $3.0 billion with strong credit quality, while deposits grew to $3.18 billion, primarily in nonmaturity accounts Loan Composition (in thousands) | Loan Type | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Commercial | $526,589 | $544,293 | | Construction, land & dev. | $496,864 | $465,247 | | Commercial Real Estate | $1,856,301 | $1,839,580 | | Total Loans | $2,998,774 | $2,980,133 | Credit Quality (in thousands) | Rating | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Pass | $2,994,310 | $2,983,618 | | Watch | $7,651 | $142 | | Substandard | $521 | $289 | Deposit Composition (in thousands) | Deposit Type | June 30, 2024 | March 31, 2024 | | :--- | :--- | :--- | | Noninterest-bearing demand | $530,441 | $521,377 | | Total nonmaturity deposits | $2,554,622 | $2,406,861 | | Total time deposits | $626,300 | $658,169 | | Total Deposits | $3,180,922 | $3,065,030 | Consolidated Statements of Income Q2 2024 net income was $5.2 million, impacted by higher noninterest expenses, contributing to a six-month net income of $11.0 million Quarterly Income Statement (in thousands) | Account | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $17,230 | $16,750 | $17,341 | | Credit Loss Expense | $0 | $0 | $0 | | Total Noninterest Income | $2,346 | $2,299 | $2,389 | | Total Noninterest Expense | $13,194 | $11,868 | $12,474 | | Net Income | $5,192 | $5,809 | $5,862 | Six-Month Income Statement (in thousands) | Account | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net Interest Income | $33,980 | $36,036 | | Total Noninterest Expense | $25,062 | $24,545 | | Net Income | $11,001 | $13,706 | Key Ratios and Shareholder Data Key Q2 2024 performance ratios include ROA of 0.53%, ROE of 9.50%, and a net interest margin of 1.86%, with strong regulatory capital Common Share Data (Q2 2024) | Metric | Value | | :--- | :--- | | Diluted EPS | $0.31 | | Dividends per share | $0.25 | | Book value per share | $13.30 | Key Performance Ratios (Q2 2024) | Ratio | Value | | :--- | :--- | | Return on average assets | 0.53% | | Return on average equity | 9.50% | | Net interest margin (FTE) | 1.86% | | Efficiency ratio (non-GAAP) | 67.14% | | Nonperforming assets to total assets | 0.01% | | Tangible common equity ratio | 5.65% | Regulatory Capital Ratios (Consolidated, June 30, 2024) | Ratio | Value | | :--- | :--- | | Total risk-based capital | 11.85% | | Tier 1 risk-based capital | 9.30% | | Common equity tier 1 | 8.74% | Non-GAAP Financial Measures The company provides non-GAAP financial measures, such as FTE net interest margin and adjusted efficiency ratio, for enhanced performance analysis Reconciliation of Non-GAAP Measures The report reconciles non-GAAP measures like FTE net interest margin (1.86%) and adjusted efficiency ratio (67.14%) to their GAAP equivalents for clearer financial analysis - Management uses non-GAAP measures like FTE net interest income and an adjusted efficiency ratio to enhance comparability and provide useful information for analyzing financial performance[22] Non-GAAP Reconciliation Summary (Q2 2024) | Metric | GAAP Value | FTE / Adjusted Value (Non-GAAP) | | :--- | :--- | :--- | | Net Interest Income | $17,230 thousand | $17,285 thousand | | Net Interest Margin | N/A | 1.86% | | Efficiency Ratio | N/A | 67.14% | Company Information and Forward-Looking Statements West Bancorporation, a community bank, provides an overview of its operations and discloses forward-looking statements subject to various market and economic risks Company Overview and Disclosures West Bancorporation, a community bank founded in 1893, operates across Iowa and Minnesota, with its forward-looking statements subject to various market and regulatory risks - West Bancorporation, Inc. is a community bank holding company with operations in Des Moines, Coralville, Rochester, Owatonna, Mankato, and St. Cloud, focusing on business and consumer lending, deposits, and trust services[10] - The report contains forward-looking statements that are subject to numerous risks, including interest rate risk, competitive pressures from fintech, credit risks, and changes in economic and regulatory conditions[11]