West Bancorporation(WTBA) - 2025 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - West Bancorporation Inc. reported a 16% earnings increase over the prior quarter and a 55% increase compared to the third quarter of the previous year [4] - Net income for the third quarter was $9.3 million, up from $8 million in the second quarter and $6 million in the same quarter last year [11] - The net interest margin improved by nine basis points compared to the previous quarter [11] - Loan yield increased to 5.66% from 5.59% in the second quarter and 5.52% in the first quarter of the year [12] - Core deposit balances decreased by approximately $82 million in the third quarter due to normal cash flow fluctuations [11] Business Line Data and Key Metrics Changes - Loan outstandings were slightly up at just over $3 billion, with a few larger payoffs from asset sales and refinance activity [7] - The commercial real estate portfolio remains well diversified and is performing as expected [6] Market Data and Key Metrics Changes - The Minnesota banking segment is experiencing a slowdown with manufacturing clients due to economic uncertainty, but new business opportunities are arising from M&A activity in the market [8] - The company is focusing on deposit-rich business banking opportunities and has successfully attracted new deposits from high-earning individuals [9] Company Strategy and Development Direction - The company is committed to maintaining strong credit quality and has no past dues or non-accrual loans [6] - There is a focus on organic growth and taking advantage of good loan opportunities, with no specific plans for capital deployment at this time [21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a positive growth pace despite a more selective approach to loan opportunities [16] - The company anticipates continued margin improvements due to fixed-rate loans repricing into higher yields [19] - The effective tax rate is expected to stabilize similar to the first half of the year after a lower rate in the third quarter [20] Other Important Information - A quarterly dividend of $0.25 per share was declared, payable on November 19, 2025 [5] Q&A Session Summary Question: Update on loan growth pipeline and market share in Minnesota - Management indicated that the pipeline is good but not as robust as in the past due to a more selective credit approach, expecting mid-single-digit growth going forward [16] Question: Funding growth outlook with deposit gathering - The objective is to fund growth through cash flows from the investment portfolio and deposit gathering, with potential short-term reliance on wholesale funding [17] Question: Margin tailwinds and deposit beta assumptions - There are still repricing opportunities in the fixed-rate loan portfolio, but deposit betas may not be as aggressive as in the past due to competitive pricing pressure [19] Question: Future tax rate expectations - The forward tax rate is expected to be similar to the first half of the year, with the third quarter being an anomaly [20] Question: Capital management and deployment priorities - No specific plans for capital deployment were mentioned, with a focus on organic growth and good loan opportunities [21]