WTBA - Earnings call transcript Q2 2024 | West Bancorporation, Inc.

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Operator

Hello, and welcome to West Bancorporation, Inc. Q2 2024 Earnings Call.

[Operator Instructions]

As a reminder, this conference is being recorded. I would now like to turn the call over to the company's Chief Financial Officer, Jane Funk. ahead. go Please

Jane Funk

Chief welcome, President. on and with you joining Peters, Olafson, for today Bank Winterbottom, Thank and President; second everybody. quarter today Brad our Harlee CEO; our Nelson, Minnesota got Officer; earnings us Brad Dave our Group you, our our Thank Risk call. me I've

Nelson. We'll start I'll today. call turn it off the over to Dave

David Nelson

afternoon, Thank and good everyone. Jane, you,

Jane Funk

read got I to Sorry, first disclosure. I to go value the got back,

the fair disclosure about Sorry I'll that. read statement.

may we the the call, XXXX may results During predictions projections safe or provisions company. within conference today's events materially. Private future differ of statements forward-looking make of are the and Reform We meaning harbor that or other performance regarding future Act the caution actual of financial statements Securities that of the Litigation such

is the The see more for may about Please XXXX our statement we undertake information. XX, in no information earnings to will as affect forward-looking second update uncertainties, duty release quarter today the XXXX, and risks accurate which us. of we and June information disclosure provide

over Dave Now it to turn Nelson. I'll

David Nelson

Thank thank for interest everyone, you our and you, in you company. your us. joining Jane. Good for afternoon, Also, thank

provide overview more have others I some comments and detail. general will

expected. Our first as quarter really went we

has interest flat is had the the net believe we yields increasing, loan during growth Our and was essentially deposit income margin good our our improving during stabilized. are growth quarter, and quarter also we and

dividend August getting of XX Des Yesterday, August our owners feels during declared record remains it settled headquarter quality April, we Our credit really common to as $X.XX West we're per we We no pristine, and Moines in. now of share a like new problems. X. payable have building in credit opened and

call of extent Chief to our Olafson. the Officer, over are I'd Those turn my Mr. prepared Harlee like Risk and to now remarks, the

Harlee Olafson

is of seems to loan portfolio. what Commercial to the quality talk Thanks, the when today everyone assessing estate want Dave. real about

credit see that commercial stress worth our and commercial strong in real significant our past borrowers to to and different We this no our stress us. real We estate provide consistent of quarterly have attribute multiple very have income. and commercial to our base. net and looked estate have We last of test we customer test, that coverages. trends all to In seasoned I dues of portfolio. we sources estate concern at strong portfolio we liquidity look types loan value lowest have have experienced have if the net service real to the

at Our watch stands X.XX%. list portfolio on total our

million estate we statistics by some coverage coverage service real our debt average service X.XX, with a of Multifamily, debt are on and loan-to-value have a type. an an outstanding portfolio loan-to-value average commercial XX% have we X.X. XX% $XXX of million properties, Here $XXX outstanding of of warehouse with and

million totaled XX% coverage of X.XX, properties average at an use type of of a mixed coverage a loan-to-value with $XXX office XX% of X.XX. stand with Our a loan-to-value and million, service $XXX debt debt and service properties

X.XX. of with $XXX average coverage Our a hotel and loan-to-value XX% debt totaled an million of service properties

average Our totaled coverage properties and medical XX% of X.XX. of with loan-to-value million an debt office $XXX average an service

Our to loan debt of average our with service senior $XXX care and X.XX. coverage a totaled facilities value million average XX%

work and cores great cities a office has deal downtown crisis devastated. those home, Office downtown in retail due other property from come under many the scrutiny to having leaving of with

properties significant multi-tenant in no downtown office, have We portfolio. our

of are office XX% occupied. properties our About owner

of we cost the cost concerns that operations, care to pandemic. as senior since this high seen due area coming down the of have although the me Another facilities end

strong. need, due The but of the the economy our remained markets this market of type not to of passed regional operations. in high has We have on to doing due more lending, cost

sheet balance Our deposit had of available bankers have numerous our our questions. prepared and sides of be I successes. been for remarks, focusing on will the building end At both

bank it that, to with turn over Winterbottom. will I our Brad President, And

Brad Winterbottom

Thank you, Harlee.

the first quarter June X/XX. For quarter portfolio under ended billion. were Out-standings was when just $X the ended to XX, loan relatively compared flat 'XX, our

X $XX 'XX, vertical of our primarily For commitments. the loan months million first X.XX% or grew portfolio loan construction driven on

slightly we're fair sales unfunded environment an have of over We months. Deposit over highly battles. that share competitive in serve, to in XX on $XXX vertical be in draws markets next million we construction emphasis winning commitments continue occur our a the and gathering should the efforts

remain our good have in to continue our markets positive We in in We we and and customers me, share confident create our prospects we but that selective loan and see opportunities. we're abilities maintain -- relationships market grow opportunities to remain pursuing. excuse to with grow serve, our

turn that, I'll to Mr. over Peters. it With

Bradley Peters

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

We centers. regional business continue to each new build our in Minnesota of

C&I on focused and high-value are We retail deposits.

Our actively team on new consistently is calling business. and winning

due have set apart interest environment challenges rise the These has bankers navigate the in new us to team. We our of to opportunities created our continue competition. our quality rapid rates. a approach relationship-based challenging for from our through and

mind. We facilities with have designed built relationship building in

construction new high-quality this the the my We facility comments. end Those that opportunities and The lead have business. facilities grow in to the these of one-on-one we year. be our of market fourth bank anticipate are new Owatonna to late occupying discussions are is in our we'll leveraging to quarter under

to I will the now call turn back Jane. over

Jane Funk

Brad. Thanks,

quarter. net the income XXXX first million second and was the million to recorded no was in provision quarter in of quarter 'XX. credit $X.X Our this quarter of There for compared the million in $X.X second $X.X losses

remains previously our As quality credit pristine. mentioned,

a include And Our income customer interest our second second in we that quarters. quarter our draw deposit down which And to loans. XXXX, our to the growth balances new was construction occupancy with to over compared the months interest project. of earlier, of due XX from was about primarily the of quarter net as straight Net is for a XX increased -- headquarters. few to the at expect mentioned loan corporate next as the in stabilized $XXX,XXX XX deposit an large June of construction have the municipal first income. Noninterest our last increase interest expenses X.X%, expected up quarter margin has net funding a

Excluding I year-to-date. of funds are broker any the going prepared deposits comments, to cover. X.X% now our was end open highlights deposit the activity, -- Those the increased core and we'll questions. have those Those and it for that's

Operator

[Operator Liesch comes first Instructions] Piper from Andrew question Our Sandler. from

Andrew Liesch

with see afternoon, How good payoffs large Are is just third growth pipe? the stick the some there here, here of down looking any the pretty of want quarter? construction. everyone. pipeline for Good loan the I to coming that you that

Brad Winterbottom

payoffs we a get in range to get roughly are -- probably are aware around going replaced this the and it's the maybe commitments, XX $XX million, million. ones But with, of "Hey, that $XX we have scheduled funded few million close in surprised property sold can We with, the you $XX that will days.

adding our We upon liquidity very selective where position. based been have new with CRE in projects and we stand

Andrew Liesch

That's And Where other stand? Then funding like side, the do to win deposits? it. of helpful. potential there customers. are deposit the from trends that those great of some any potential get timing some commercial municipality. Got on very larger It sounds

Brad Winterbottom

job commercial out XX their roughly we daily, find XX that's they those bankers, Well, and and bankers principal go and have deposits. about

lower-priced So might noninterest-bearing but X%, that your are deposits the that and be north we're X out we're We're any We're of every months as well, It's not hunting question I'm we're CDs chasing chasing well all. competing. answering very deposits. competitive. type seeing very day. as but

Andrew Liesch

like expenses? higher million on $XX.X going a forward, very in in hits information. good on office the Jane, maybe helpful. the next was Very good you front like expense that's run No, Is Minnesota as until mentioned the this rate and expected. occupancy branch number

Jane Funk

I think there we it's had new -- reasonable probably some would costs of It's probably in occupancy with the had a full stuff, the quarter. headquarters have quarter And move-in onetime pretty a we in there in I assumption. close. this but was mean

Andrew Liesch

then it. the there? office new in little an Got once comes bit And Minnesota a of uptick

Jane Funk

we've be building January. Yes, December, January a And -- that smaller that's probably will that constructed.

smaller will that scale. be on So a

Andrew Liesch

the Any Very behind list. watch increase Harlee, increase that? commentary And Like Okay. this then, drove what helpful. in that quarter? the

Harlee Olafson

weaker a We secured. well well just that operating customers that have of had a performance capitalized, couple they're commercial

to it because it's list commercial customers. and almost again, this said, good to at like the them our I for low their expect be projections And I our come of watch continue We about portfolio. through so And next year. get talking X.XX% meet embarrassed total

a the next are of of have while pay non-accruals, the we well, or closings couple for that before be We are some they'll I that end those. year, in gone us off have scheduled refinance but all expect sale think been there that we from a the -- of with will have

Andrew Liesch

the of towards came brokered looks my -- used end really I trends that That's to the good it. then you helpful some deposits Got on, And guess, hear. fund some to question, and it some payoffs like was funding. that of

have you what to if that that versus deposits the set the came Just handy, the rate spread? off paid brokers were on was

Jane Funk

were They very similar.

Andrew Liesch

Okay.

Jane Funk

was There Yes. [indiscernible].

Andrew Liesch

Okay.

you seem Do start So you cuts it here. need to really it margin moving think that the stabilized rate does like for higher?

Jane Funk

rates kind cost -- on deposits I really We probably of we're of And we'll net don't. stabilizing one we the interest X%. see yields below rate a challenges the of that do interest improvement year. in of those swaps, and maturing rate is that couple in loan probably a the couple do of fixed have of we the have be margin is half our will mean second good the seeing

rates refinancing those. be on resetting we'll So

yield a in I what we So think -- but are of that's excess loans little expected, on bit we so. had improvement seeing

Andrew Liesch

then that bit after expansion little a reasonable? we a that, It's cuts of Great. little -- then get rate help margin bit some sound and

Jane Funk

hope so. We

Andrew Liesch

That Thanks my much. covers questions. so all

Jane Funk

Andrew. Thanks,

Operator

back like Funk further Jane the closing to remarks. I over turn have questions. We call no to for any would

Jane Funk

you. today, you next look to quarter. for talking We to want you. again joining Thank right. just forward us thank and everybody to Thank All we

Operator

This you for Thank conference call. concludes your participation. today's

disconnect. now may You

West Bancorporation (WTBA) 25 Jul 242024 Q2 Earnings call transcript