WTBA - Earnings call transcript Q2 2022 | West Bancorporation, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the West Bancorporation Incorporated Earnings Call. My name is Irene and I will be coordinating this event. I would like to turn it over to our host Jane Funk, Chief Financial Officer. Jane, please go ahead.

Jane Funk

morning, good and you everybody. Thank us Thanks call morning. the for joining this on Brad and Brad got the Nelson, we've Harlee Risk on call, myself; of Region got West Officer; President; Chief our Today Peters, our we've President. Olafson, WTBA; President Dave Winterbottom, Bank our and our Minnesota CEO disclosure out fair statement. start I'll our reading of the Any during call conference the this comments Litigation Private within Harbor Securities the of Safe may meaning XXXX. Reform Act made provisions contain of forward-looking statements during today's this currently us is Any based and information forward-looking by statement on call available speaks only made only date. us to as of The company circumstances statements after to events. the or or to or call update unanticipated to reflect undertakes such no obligation this occurrence events reflect current of revise Dave And with Nelson us that, started. I'll get turn to over to the call

David Nelson

Jane, just you very we'll and few We details. had then joining us. and others for your in strong you, with have call turn I quarter more the for thank performance our We interest everyone metrics. a another company. over appreciate to much comments Thank general good

have to payable shareholders XXth to of common record XXXX. a dividend as We August of August stockholders XXth, $X.XX declared

sitting While the all on marketplace remains The stalling permits. have building our continued our where business In of loans. perhaps extent impact record on communities rates do the with activity coupled inflationary improve some putting increasing on our is in corresponding has problem point at an or is the we our are quality we increasing even rate unknown. to the have which delaying this will of interest absence past due pressure to almost credit of margin, or environment loans most of

that Olafson. credit to a in pristine I'd the Harlee over Mr. Chief Risk we strong However, call in quality. event, our have to like any Officer, turn pipeline With

Harlee Olafson

Dave. on few Well, going Again make credit Olafson, I'm our Harlee this comments to you, is quality. thank a

been. it shape our credit is in best the ever opinion being has First our that quality in

loans due past We over have XX-days. no

base the hopefully some Our philosophy we risky margin a customer be downturn. believe suffer will there the but manage through and past future. has up million enough $X than to challenges, loss within that after business in concentrations have we well reserve. We less our freed assigned an resolved. may feel served non-accrual had that has $XXX,XXX. one a This take credit and in portfolio there banking credit certainly on loss to $X.X now over specific Previously had in recession, is not in was that million economic unduly We may significant little we on in our that strong been in reserve payoff credit us a don't the

on are has new to Before at Winterbottom. Bank for I slowdown growth in a good, now Prospects to turn and strong turn will Eastern call Iowa our we I business future Iowa but also our loan in been President, markets. projects see I other that to Brad the Again, over will there be there our over Eastern Brad year-to-date. Winterbottom, the has call continued comment X% approximately there in performance

Brad Winterbottom

Harlee. Thanks,

For is the excellent an growth quarter, X%, total quarter. loan was which approximately

headwinds have us. in we forward, Going front of

and with the a remainder and to $XXX have matured off this million. two have those have three -- projects construction expected total loans of that as off through We that pay three are we commercial couple today, paid third have of the year, one

costs to to the Central rate business, makes hold have it and on the put we're the the sense up Iowa, -- slowing but have working seeing nice which uncertain and rate construction will on replacement our they are of folks on, some customers rising have passed that environment, homebuilding planning with a the chain things some in and they we're for getting I terms due growth or in that up. We portfolio them, homebuilding we think interest given environment, those of slow long-term dealing seeing some sense very and some makes those, probably We're stages, issues, reputable pattern, have deals us. in of supply to

mode have list working environment a gathering that lost I of their go up, money with refinance it deposits. We've cash. out something rising Existing very funded some some of months that customers tell a this do to today on in We significant a replace a things ago. but volume. obviously to was long acquisition to other than We're maybe right they harder lot the six other that one it's where of end was deposit can using now. you we're rate will things,

making daily calls anticipate Peters, we're and still will Mr. not customers next. deposits. We're are that and I you prospects on So gathering change.

Brad Peters

expansion Good Thanks, everyone. I'm a provide brief market Minnesota. into Brad. on morning, going to update our

Our our markets make ongoing regional in are building relationships solid bankers focused our have our to team activities continues Each our centers. of good seeing created are business opportunities. growing and in each Minnesota progress growth, business new on of

business core middle begun of treasury a new the management new We opened business. the to this in year. growth on plans focus our new next deposit month of facility March with construction continue and C&I Mankato Cloud completion relationships market has in the for and We adding focused our during building by of grow has St. driven strong

comments. in That process now is over turn building. of back Jane. the my market of it is Owatonna exploring potential new to Our I for end will the sites

Jane Funk

just make financial statements. comments I'll Brad. the Thanks, on couple of a

was that's was settled. a specific years provision On that statement, impaired the Total negative provision we $X.X had had that for loan $X.X that million. relationship on we income our In June, impaired particular a the by record that significant did loan we negative the reserve of million primarily driven quarter. this

Our ultimate was charge-off $XXX,XXX.

second reason the the for primary the was provisions negative that So in quarter.

rates income that assets of tax of Bank us $XXX,XXX that in those higher our in were quarter rates a this as franchise tax June. changes and tax resulted was tax and in the remeasuring a in result an in effective -- income was those there June expense enacted in tax tax deferred Our change additional for rates, rate resulted Iowa

our a one-time numbers the an that's the by significance quarter the a driven X.XX% the deferred from X.XX% more margin and of year-to-date From compared and standpoint, large remeasurement of we was really -- asset for compared one-time of investment X.XX. X.XX% to the XXXX at tax portfolio. the have deferred loans. So impact are PPP on margin a the amount tax last assets The year to is are event,

just continued rate environment in at and is mentioned part for increase So, as than some Bank on pricing, little their the liquidity decline when using injected we the that of deposits, margin in driven are and deposit continued fewer into the that to shift recognized the then PPP some questions using by recognition decline pressure also to more will really rates into the majority we're money also borrowing into and then and on all at of in our that customers driven -- look it fees vast -- of transactions, by deposits rates the in the issuance up I on this were That's level, complete primarily side market did their the on of June our it’s markets, sub-debt side a at our rather complete also capital. our seeing the million cash, and Brad loans. the competition accounted XXth. business quarter. June that issued pressure those we're sub-debt some -- a or in open treasuries pricing still existing that we competition level moved some for net around of proceeds We in financial for statements, accounts West the loans the We the transactions fairly I holding in for high company market and had in of and sensitive comments that have was of $XX bit second the think time. XXXX

Operator

Ladies we open. and Our now your is will Piper begin Sandler. gentlemen, our [Operator first you. Brendan, from Nosal line Instructions] question-and-answer comes session. from Brendan question Thank

Brendan Nosal

are Hey, good How morning folks. you?

Jane Funk

Good morning, Brendan.

Dave Nelson

morning. Good

Brendan Nosal

Yes.

growth the off million. year Certainly me of growth on tie to what kind strong $XXX the move just the of loan for on year? prepared with the of to balance things, factors this congratulations payoffs competing expecting clean-up you First, start see. higher credit definitely get, based you're that to your through as some pipelines, nice quarter. comments in on side help Maybe anticipated we to that of Can but the

Dave Nelson

but That's really say, of to shot. I'll kind give hard it a

other up have We and nice large ones. a construction picked couple projects of

The of And that items get vast this be that another So all a by talked that's the terms paid are units to closed. scheduled those pay-off of in sold. replace I July are and the month the that in end will those condo project of those year. is one happened the that majority as to of off about going

off. some have right construction we behind that are the think projects ones paying are I So that

up, catch chasing that things take, significant So, but XX pipeline we're over names on probably that weekly of we that, but I to conversations list our year meantime, working got there's we're literally working in having report we're should a on, with. and the do probably that maybe that that'll here a we're

of we'll And sir. I don't don't a front that. anticipate of helps, if I nothing double-digit have the by have that or that says growth would my I that the but So that that's end loan me not opinion. just in have year, know

Brendan Nosal

you that the think Yes, you. achieve Thank for don't that's correct? double-digits like saying you'll you're full-year, it certainly and does. Seems

Dave Nelson

That's know what based for today. year, the full I on

Brendan Nosal

you right, understand you on to vein clear but of, you I loud additional dynamics, deposit help side as helpful. the will do things and me higher? are here, guys that you Will for outflows that Maybe get remarks mode, you That's today? hear kind dynamic good. that All prepared the highlighted during that perfect. kind at continue moving funding just Perfect, as look gathering in the move and rates pressure potential of deposit think deposit or the

Jane Funk

rates. kind second saw I a the of bit, Fed a was thing in think we when moving quarter little that's timing that started was the what

that quickly flows. the moved, for have transaction them in the for good significant -- So been using seen having quarter. had ability investments. kind then customer would for to -- to that. the last being early Fed those time in months cash I few basis as seeing certainly that are. And management certainly alternative that of, XX That's and we second I'm part had do that are some significant the closely haven't certainly It's just that me in people as deposit other happening. that basis manage that -- our expected, points know to another that at moved process that year, move like we any monitoring certainly point this large points and But are this maybe that not customers we things another XXX to of the

couple last pretty So predict what months are going it's flows has the do, the been but hard what's in of to to happened stable.

Brendan Nosal

fantastic. Okay, a color. couple of That's

Fed deposit what to data up maybe so costs so see, of points deposit the past of this this can kind did turning what on update funds cycle? of Let's pricing pricing, you're deposit quarter-over-quarter, it's XX%-ish deposit to seeing from far quarter, feels averages through beta XX% on is interest-bearing And then the were, the assumptions XX you your us couple like hikes? basis

Jane Funk

might regular what on I what bit for pricing, volatility just for an this our betas they're seeing with But the communication in little be and a than funds. customers deposit us process their higher environment Well, mentioned for an of ongoing you alternative in general. certainly that's management think and betas, industry our

those probably think. are see And year that mentioned I just the so will continue throughout I to think betas betas you the

Brendan Nosal

Okay, good.

strip result the kind earning more asset Turning actually was expansion PPP, and quarter. of to securities. of, quite it this base loans lot you and guess, out margin really nice like, remixing once less I and cash looks the a of drove the

asset that curious this if So I'm the to of more base do point? remixing there's intend you any at that

Jane Funk

Not. specific. No, nothing

Brendan Nosal

on kind rates? thoughts what light maybe likely Fed of Okay, move as we of margin continue outlook the the right, the then And year has short-term in the through all good. balance of more your a

Jane Funk

function a markets deposit of really the deposit managing deposit be competition loan also, betas, the on function margins competition just the deposit we the going can that bring a volumes of the local in side. local not the and Yes, side to the

so expecting margin to our So little still in we middle June issued pressure in and we're reflective margin. that really We I of pricing some liability we're think, bit isn't a more sub-debt did yet. see on so sensitive, --

betas. just So factor manage loan managing of generation we deposit how a it be will through and

Brendan Nosal

understood. Yes,

the potential for for Okay. run See, of maybe on expenses, expenses quarter X% I is about were good about pressure? that remainder the the core to for upward there rate is to you guess, feel $XX.X year? Or million, some the that pretty a X.X% more

Jane Funk

the of be similar. I would rest think year would the pretty

Brendan Nosal

Maybe capital ratio. the finally Okay, on perfect.

ratio by but many still like the capital were banks quite So get are ratios, reg healthy. AOCI, impacted other again there

discrepancy but thoughts kind how a any Just with still TCE on updated reg view strong the thinner of you ratios? ratio today

Jane Funk

Yes.

biggest capital investment the the adjustment GAAP now, investment impact portfolio. the and right portfolio Our on on the is value fair that

So available among whether that's clouded from plan the to bit but vary we watch any at other time our for will little institutions to it, to we a -- so of that'll depending like we specific be securities, comparability held institutions same -- to don't they've that it's this got level what continue strategy. stuff but change that, -- is, actions gets have that their maturity sale on

Brendan Nosal

Yes.

final perfect. back before one step One from me Okay, I here.

the the of to Iowa expense, there ramification will on there know I rate? on be one-time any related one-time expense the your tax law tax Just this quarter go Outside forward effective tax rate, change. the was

Jane Funk

that Not this aware time. of I'm at

Brendan Nosal

right, thank all right. my you so for Okay, Perfect. All well taking much questions.

Jane Funk

Brendan. Thanks,

Operator

for [Operator closing gentlemen, I to you. to Jane back would and Thank like questions. Funk remarks. to any hand we it over further Ladies Jane, have currently Therefore, no you. Instructions] that seems

Jane Funk

in Thank you. thank we'll next to having you. And to and we quarter. for again interest everybody us all morning. you joining want Once just company thank Yes, talk this an again, our

Operator

Ladies gentlemen, us this call. today’s Thank today. day a Have lovely conference ahead. for being and with concludes you

may now. disconnect lines You your

West Bancorporation (WTBA) 29 Jul 222022 Q2 Earnings call transcript