Earnings call transcript Q2 2023

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Jane M. Funk

Thank you, and good afternoon, everybody. Welcome to the West Bancorporation, Inc. second quarter earnings call. Today I've got with me Dave Nelson, our CEO; Harlee Olafson, our Chief Risk Officer; Brad Winterbottom, Bank President; and Brad Peters, our Minnesota President.

I'll start out reading our fair disclosure statement.

Act we meaning projections provisions financial of Private Litigation call, statements other of performance conference future Securities the regarding within the Reform of today's the may the or make forward-looking the events Company. During or XXXX future of Safe Harbor actual caution We that such materially. differ are statements may that and predictions results us. risks Please release for earnings see second and which XXXX uncertainties quarter the forward-looking our statement may affect information disclosure about in more accurate as that The June will information today is no update we and XXXX, to undertake information. of we provide XX, duty

And Nelson. we'll start off the call with, Dave

David D. Nelson

Thank recently thank I to more detail. We just us. Welcome turn statements, you, Company. few others appreciate for a will as Jane. their over summary $XX brief everyone you America. billion for call XX have $X in and the and American list your banks large interest Bank then out and joining That performing for the Banker year. with West of number community ranked Magazine top XXXX last between was in billion and came

the squeezing has increased in rates, our are growth in in margin. monetary been and also depository the Reserve their In curtailing markets dramatically policy which successful has Federal our meantime, resulted

X%. about loan year-to-date growth Our is

Our $X.XX credit quarter X. record of pristine. August a XX, shareholders dividend declared per second quality remains We of to payable, August share as of

to call I Chief Risk our would Harlee the Officer, now over to like Olafson. turn

Harlee N. Olafson

there brief talk Thank a Dave. about. you, since of isn't credit comments be also issues will lot quality to My

As West strong bank. at with remain credit very that, does quality

quarter for being the two loan time historically collected. low fully that's of levels. in watch had years guaranteed at past-due a in We Our first list this PPP one the process and it's is

very estate real Our portfolio performing commercial is well.

categories multi-tenant have office ones Other we have little estate very metro are commercial would real are doing expect. as fine. properties of performing we We the

to markets. really having customers strong is performance due Our a and strong

continuing and staying opportunities. prospect to to their new are close customers bankers are Our

Brad to additional Winterbottom, over it turn to going information. some to I'm that, With provide

Brad L. Winterbottom

afternoon. Good

For to on our markets. year, of six really is put interest Dave until grow did told Many X.X% billion hold the more all $X.X rate outstandings. activities a environment. has have stable months projects customers The mentioned, they’ve first us in business environment new the there in slowed loan portfolio rate

C&I do see As we of The to decline for their versus their our remained the cash they cash suggesting not businesses, are general in a that financials balances a see weakening customers and customer of own we needs. strong, business our borrowing, using base.

prospects and that bankers call they Our on that's things do existing to were customers relationships. to do continue hired the and to build

Deposit gathering speak important for are my deposit Jane, Minnesota. to remains will are comments, that. to about we to Mr. and a little bit. do in hard now trends Peters Those working and us

Brad P. Peters

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

continues our region team relationships build centers. Our to Minnesota new in each of

our has approach of challenging is grown deposit business enhanced management relationship-based new and enabled In we us new environment, business, our Our continue grow household, to C&I, which of the existing and majority business businesses. to spite new treasury relationships. has grow

Those construction completion over fourth the forward for are early building has Jane. new purchased quarter. now new of comments, The that their The will market of we end begin is my land new and back to occupying the this and to the looking building, turn the Mankato it I facility, in anticipate to, market we construction Owatonna anticipate of a fall.

Jane M. Funk

open then comments for we Thanks Brad. the it will on just and make I'll financials, a up questions. few

interest the to inverted the on very base, rate increase continue Net to loan obvious for yield portfolios. significant net our deposit We the driver $X.X can with in re-pricing the in our our and by change in of income. outpace compared quarter continue declined interest see quarter ratio earnings curve cost So, securities our and million. the efficiency our pressure is first to and come interest the

our year increase model costs in the rate provision While still inflationary business expenses compensation with building non-interest last recorded with our We with associated from losses is this assessment and in opening benefits on FDIC's pressures minimum incredibly credit our Cloud. and new of have for increased cost occupancy St. the year efficient, no quarter.

pristine issues our million marketplace. with we're As listing, loan seeing our that of less in quality $X and no watch to classified than mentioned credit loans declined glaring it and has the earlier, remains

my are those now for and comments, open we’ll questions. So, it up

Operator

with Sandler. first comes Brendan question ahead. go Thank from Piper you. Our Please Instructions] Nosal [Operator

Brendan Nosal

to Hi, was doing for I just during more Hope afternoon. afternoon, quality. hoping little credit on good a Hi, start-off you're upgraded the It’s was the everybody. improvement offer quarter? into could the what you crew in the quarter. just good here fantastic well. relationship drove Maybe insight that simply

Harlee N. Olafson

Sure. commercial and real We waited much prior be that updating, the watch that this, borrower were their cash was but the We're but underneath were waiting performing, verified for that had knew, the year-end properties to and we estate we received the financials updated. information when list. of audited audited received. flow it pretty that's financial were to until on We liquidity

Brendan Nosal

it. Got

Okay.

Harlee N. Olafson

Excuse me --

Brendan Nosal

Yes.

David D. Nelson

slowed, during the really I back come their the during it because went also add since the just that, COVID, would on it but is strong. pandemic very business list

Brendan Nosal

happen where the to over folks the sense Maybe of the you interest you. June, the for give a Thank of to quarter? the start Do just might turning have where to was net month third margin. margin Fantastic. NIM

Jane M. Funk

Yes.

Our right interest was net margin X%. around June

Brendan Nosal

Okay. All helpful. right. That's

pretty and monthly for the of So June guess, like compression I is pace I was meaningfully, it mean, X%, you X.XX% correct? eased and quarter -- if ran feels certainly the

Jane M. Funk

see on rates continue June, just but to yesterday we trying the for and pressure still those and deposits, some May Well, we retaining have significantly, Fed gather rates, raised easing, deposits. did June, deposit

the are margin is will volatility what still interest because of not any market. do, making predictions So, we lot on really net there a in

Brendan Nosal

update and deposit quarter Maybe No, lending at Minnesota can stood helpful. that's course. us of you the loan turning particularly end within and course, where to balances those markets? Of just market,

Brad P. Peters

four deposits we're are of Sure. Well, in markets million the million. just the side. on the collectively, under neighborhood loan $XXX between $XXX And

Brendan Nosal

Okay. Perfect.

maybe Let's growth stronger the loan quarter versus in a first. the on more definitely specifically, see, second

what growth curious think of and opportunities how the you balance the of through about to loans seeing sort year? new in marketplace you're add Just the

David D. Nelson

their I of that. would the say amount in of markets, all primarily that four real too, two We all Minnesota markets. a estate entities We've certainly side had have it's on Iowa slowed activities. fair and selling of assets payoffs do

We well. There in we to long few there daily visiting those that with the opportunities business, have that a out volume. those of we are folks times add our gather, to but C&I some basis looking are at, really lead construction projects a as terms will are on are

anticipate to range would growth months, year, the another be seen I years that we're significant in do maybe for couple like you've -- in of I last from going us. what for not first six the X% X% the

Brendan Nosal

Okay. Yes.

loan getting in Okay. second That's new certainly helpful. the quarter? And production have Roughly. then yields do to you're you on what happen

David D. Nelson

in to the stuff. mid right five If mid-Xs, a It's low-Xs fixed year. now, new in on

Brendan Nosal

and the quarter? it and nicely deposits good excellent. in it funding money including you over savings as flows of market accounts. the mix up deposit of for turning things, side through Okay, growth Maybe walk quarter, shift looks occurred the were core like the Maybe to course

Jane M. Funk

was public from of good a funds growth portion quarter the from first probably that deposits. Yes,

April. in payment have So, they tax would monies received like

So, in quarter. we would an generally see uptick second the

far still amount from volatility of as fair moving deposits, around. of other core As money as there's kind a is day-to-day

out for go stable, that are continue So, relatively out are sellers I bringing to new X% see successful the relationships specials or do dollars. and new think we customers new we on interest competing but there, but average and also treasuries and in it's rates in institutional

of So right recycling now. it's a like little bit feels

Brendan Nosal

yes. Yes,

the then Good. us portfolio you expect much from can And right. the let's get cash update securities flow on All the XX next to see, on months? how you over Okay. portfolio,

Jane M. Funk

around the right $XX XX next X%, over It rate. roll-off should be is months, I million believe the just around

Brendan Nosal

Last had before the the going been lower if a great. quarters was for particular step little anything your wondering expectations rate in then of than couple forward? tax Looks it past, Okay, that, tax like back. your for and one of kind driving bit I over past there's me rate

Jane M. Funk

fair won't with income We of fluctuate our level. do Nothing a that amount particular. in tax credits have

effective So, when tax and it our credits reduces type stuff, those this in of some rate of you apply environment.

Brendan Nosal

Understood. All all my you taking questions. right. Fantastic. Thank for

Jane M. Funk

Brendan. Thanks,

Operator

from question comes David. ahead, Oaks Our Welch with David Capital. go next Please River

Your line is open.

David Welch

just $XX Thank but been business, large I'm of that to QX buildings, upgraded, missing on what you. us tell Can but that's that And just the a relationship, news you no geographies, many credit I and it's idea core how was very issues. quarter capital million just like or a that disclosure about I is maybe me bit little the is? I good equity past you CRE, sensing apologize relationship had a I feels the relationship. almost in had guess but this, that's,

guess I well? looking I'm relationship this bank then, for elaboration is as your and the largest in So,

David D. Nelson

Midwest. chains All seven include I'm right. going various ten the in that would probably I to restaurant -- many How that the say in and say buildings? building this hotels multiple, throughout would to would markets in range the

they're sprinkled over. all So,

one Moines. significant in real have market, Moines. City, they're Des biggest but Des been in market Kansas no any maybe headquartered exposure So, the They're would in

David Welch

Okay.

David D. Nelson

largest? largest. not it's it our our Is No,

David Welch

number, a I'm and can Okay. is number, more the My me how give different number prefer? relationships $XX might just follow-up largest other but how or you some many picking question million is, what say or than -- a you many

David D. Nelson

I in the in got say would five four, range. Maybe that $XX million that we've relationships range,

David Welch

are mean have manager, shares. a I these have ownership Okay. typically that -- to of that just have some those, different entities on clarify might might common

them not from become we a from more they So, perspective. combinable how but lending entity, legal look a perspective, at a

David D. Nelson

corporate have We personal significant in Des people parent liquidity. the would these Typically have are guarantees, Moines. These guarantees, folks. borrowing know guarantees, all entities,

David Welch

you for elaboration. Okay. the Thank All right.

David D. Nelson

XX beyond extend That years.

David Welch

Okay.

Operator

that, At questions questions. have [Operator Instructions] further we And have with registered. this no time, no we further

the So, management turn to call comments. team I'll back for any the further

Jane M. Funk

our you. for call your joining thank We No want Company to you Thank the comments. in us on everybody thank and further for just interest today.

Operator

joining concludes call. our us you Thank everyone for This today.

you disconnect now may lines. You

West Bancorporation (WTBA) 27 Jul 232023 Q2 Earnings call transcript