West Bancorporation, Inc. Q2 FY2025 earnings call

Dave Nelson - CEO

• West Bancorporation had a solid quarter better than last year's second quarter, first half earnings $5M higher than last year. Focus on relationship building and deposit growth, with asset repricing to improve margin and earnings. Declared $0.25 per share dividend.

Harlee Olafson - Chief Risk Officer

• Credit quality very strong at West Banc, with 0 nonaccruals, 0 substandard loans, etc. Watch list has 4 relationships, mostly well-secured. Commercial real estate portfolio improving, but Des Moines office property has vacancy issues, though multi-tenant properties watched are performing well.

Todd Mather - Chief Credit Officer and Business Banking Manager

• Loan outstandings slightly down, replaced assets with quality new assets at better rates. Deposit gathering successful, attracting new depositors.

Brad Peters - Minnesota's Group President

• Minnesota banks' clients cautious, bankers staying close to clients, targeting deposit-rich business banking and high-value retail deposits. Facilities help host events for business growth.

Loan outstandings were just under $3 billion at quarter end, down slightly due to larger payoffs from asset sales and refinance activity, with replaced assets at better interest rates. Deposit balances increased just over $67 million during the quarter. Net income was $8 million in the second quarter, compared to $7.8 million in the first quarter of 2025 and $5.2 million in the second quarter of 2024. The loan yield in the second quarter was 5.59% compared to 5.52% in the first quarter. Revenue contribution: Loan portfolio and deposit gathering are key segments with loan yield improvement and deposit growth contributing to overall financials.

Jane Funk

• Sees opportunity for margin improvement in the second half of the year due to asset repricing in loan portfolio. Expect deposit costs to be relatively flat, maybe tick up a couple of basis points.

Harlee Olafson

• Pipeline is robust, believes there will be many good opportunities to maintain and grow loan portfolio this year.

Harlee Olafson

• Office property in Des Moines market has significant vacancy problems. Some multi-tenant properties in the market have leases expiring, and their future health depends on keeping tenants.

Q: How are you guys seeing client sentiment these days and how the pipeline is looking ahead into the back half of the year from a loan growth perspective?

A: Harlee Olafson says the pipeline is pretty robust right now, there are a number of projects within the pipeline, and they are holding a little bit strong on pricing thought process but believe they will have many good opportunities this year to maintain and grow the loan portfolio.

Q: How are you thinking about the margin trajectory in the back half of this year?

A: Jane Funk says they do see opportunity for some improvement in the margin in the second half of the year, asset repricing in the loan portfolio will continue whether the Fed cuts rates or not, and deposit costs are expected to be relatively flat, maybe tick up a couple of basis points.

Q: What's the upside to hire additional producers in northern markets or open other offices given M&A-related disruption?

A: Brad Peters says there are opportunities in the marketplace, they already have some capacity in the markets they serve and see continued opportunities with M&A and larger banks abandoning regional centers.

Q: How are you thinking about deposit growth opportunities in the back half of the year?

A: Jane Funk says the pipeline is focused on deposit relationships as much as credit relationships, and bankers are working every day on growing deposits.

Q: Is the run rate of expenses seen in 2Q a good figure to use in the back half of the year?

A: Jane Funk says the second quarter is probably a good indicator, and she doesn't see any significant items happening in the second half of the year