West Bancorporation, Inc. Announces Third Quarter 2024 Financial Results and Declares Quarterly Dividend
WEST DES MOINES, Iowa, Oct. 24, 2024 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (NASDAQ:WTBA, the "Company")), parent company of West Bank, today reported third quarter 2024 net income of $6.0 million, or $0.35 per diluted common share, compared to second quarter 2024 net income of $5.2 million, or $0.31 per diluted common share, and third quarter 2023 net income of $5.9 million, or $0.35 per diluted common share. On October 23, 2024, the Company's Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on November 20, 2024, to stockholders of record on November 6, 2024.
David Nelson, President and Chief Executive Officer of the Company, commented, "Our third quarter results include moderate growth in loans and core deposits along with an increase in quarterly net interest income and net interest margin. Our credit quality remains pristine as a result of our disciplined loan growth and credit risk management practices. The ratio of nonperforming assets to total assets remains negligible at 0.01%."
David Nelson added, "West Bank is focused on initiatives that will drive sustained core profitability. Those initiatives are centered around our culture of building strong relationships and providing exceptional personal service to drive growth in both commercial and consumer banking services."
Third Quarter 2024 Financial Highlights
Quarter Ended September 30, 2024
Nine Months Ended September 30, 2024
Net income (in thousands)
$5,952
$16,953
Return on average equity
10.41%
10.18%
Return on average assets
0.60%
0.59%
Efficiency ratio (a non-GAAP measure)
63.28%
64.16%
Nonperforming assets to total assets
0.01%
0.01%
Third Quarter 2024 Compared to Second Quarter 2024 Overview
Loans increased $22.4 million in the third quarter of 2024, or 3.0 percent annualized. The increase is primarily due to the funding of previously committed construction loans.
A provision for credit losses on loans of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. A negative provision for credit losses on unfunded commitments of $1.0 million was recorded in the third quarter of 2024, compared to no provision in the second quarter of 2024. The provision for loans in the third quarter of 2024 was primarily due to changes in the forecasted loss rates due to increases in forecasted unemployment rates. The negative provision for unfunded commitments was primarily due to the decline in unfunded commitments resulting primarily from the funding of construction loans.
The allowance for credit losses to total loans was 0.97 percent and 0.95 percent at September 30, 2024 and June 30, 2024, respectively. Nonaccrual loans at September 30, 2024 consisted of two loans with a total balance of $233 thousand, compared to three loans with a balance of $521 thousand at June 30, 2024.
Deposits increased $97.6 million, or 3.1 percent, in the third quarter of 2024. Brokered deposits totaled $425.9 million at September 30, 2024, compared to $370.3 million at June 30, 2024, an increase of $55.6 million. Excluding brokered deposits, deposits increased $42.0 million during the third quarter of 2024. As of September 30, 2024, estimated uninsured deposits, which exclude deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, accounted for approximately 27.8 percent of total deposits.
Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $525.5 million at June 30, 2024. The decrease was primarily due to the balance of federal funds purchased and other short-term borrowings decreasing to $0 as of September 30, 2024, from $85.5 million as of June 30, 2024 as a result of growth in deposits.
The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 67.14 percent for the second quarter of 2024. The improvement in the efficiency ratio was primarily due to the increase in net interest income. In the third quarter of 2024, the increase in interest income on loans outpaced the increase in interest expense on deposits and borrowed funds.
Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for the third quarter of 2024, compared to 1.86 percent for the second quarter of 2024. Net interest income for the third quarter of 2024 was $18.0 million, compared to $17.2 million for the second quarter of 2024.
The tangible common equity ratio was 5.90 percent as of September 30, 2024, compared to 5.65 percent as of June 30, 2024. The increase in the tangible common equity ratio was driven by retained net income and the decrease in accumulated other comprehensive loss, which was primarily the result of the increase in the market value of our available for sale investment portfolio.
Third Quarter 2024 Compared to Third Quarter 2023 Overview
Loans increased $171.4 million at September 30, 2024, or 6.0 percent, compared to September 30, 2023. The increase is primarily due to increases in commercial real estate loans and the funding of previously committed construction loans.
Deposits increased to $3.3 billion at September 30, 2024, compared to $2.8 billion at September 30, 2023. Included in deposits were brokered deposits totaling $425.9 million at September 30, 2024, compared to $237.0 million at September 30, 2023. Brokered deposits were used to reduce short-term borrowed funds and to fund loan growth. Excluding brokered deposits, deposits increased $334.2 million, or 13.3 percent, as of September 30, 2024, compared to September 30, 2023. Deposit growth included a mix of public funds and commercial and consumer deposits.
Borrowed funds decreased to $438.8 million at September 30, 2024, compared to $705.1 million at September 30, 2023. The decrease was primarily attributable to a decrease of $261.5 million in federal funds purchased and other short-term borrowings as a result of growth in deposits.
The efficiency ratio (a non-GAAP measure) was 63.28 percent for the third quarter of 2024, compared to 60.83 percent for the third quarter of 2023. The increase in the efficiency ratio in the third quarter of 2024 compared to the third quarter of 2023 was primarily due to the increase in noninterest expense, partially offset by an increase in net interest income. Occupancy and equipment expense increased primarily due to the occupancy costs associated with the Company's newly constructed headquarters.
Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.91 percent for both the third quarter of 2024 and the third quarter of 2023. Net interest income for the third quarter of 2024 was $18.0 million, compared to $16.6 million for the third quarter of 2023.
The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company's financial results. The Form 10-Q is available on the Investor Relations section of West Bank's website at www.westbankstrong.com.
The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, October 24, 2024. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 7846129. A recording of the call will be available until November 7, 2024, by dialing 800-770-2030. The conference ID for the replay call is 7846129, followed by the # key.
About West Bancorporation, Inc. (NASDAQ:WTBA)
West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company's business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words "believes," "expects," "intends," "anticipates," "projects," "future," "confident," "may," "should," "will," "strategy," "plan," "opportunity," "will be," "will likely result," "will continue" or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as credit unions, "fintech" companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company's loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including the level and impact of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures; changes in legal and regulatory requirements, limitations and costs including in response to the recent bank failures; changes in customers' acceptance of the Company's products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the upcoming 2024 presidential election; talent and labor shortages; and any other risks described in the "Risk Factors" sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
For more information contact:Jane Funk, Executive Vice President, Treasurer and Chief Financial Officer (515) 222-5766
WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
CONDENSED BALANCE SHEETS
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
Assets
Cash and due from banks
$
34,157
$
27,994
$
27,071
$
33,245
$
18,819
Interest-bearing deposits
123,646
121,825
120,946
32,112
1,802
Securities available for sale, at fair value
597,745
588,452
605,735
623,919
609,365
Federal Home Loan Bank stock, at cost
17,195
21,065
26,181
22,957
26,691
Loans
3,021,221
2,998,774
2,980,133
2,927,535
2,849,777
Allowance for credit losses
(29,419
)
(28,422
)
(28,373
)
(28,342
)
(28,147
)
Loans, net
2,991,802
2,970,352
2,951,760
2,899,193
2,821,630
Premises and equipment, net
106,771
101,965
95,880
86,399
75,675
Bank-owned life insurance
44,703
44,416
44,138
43,864
43,589
Other assets
72,547
89,046
90,981
84,069
104,329
Total assets
$
3,988,566
$
3,965,115
$
3,962,692
$
3,825,758
$
3,701,900
Liabilities and Stockholders' Equity
Deposits
$
3,278,553
$
3,180,922
$
3,065,030
$
2,973,779
$
2,755,529
Federal funds purchased and other short-term borrowings
—
85,500
198,500
150,270
261,510
Other borrowings
438,814
439,998
441,183
442,367
443,552
Other liabilities
35,846
34,812
34,223
34,299
37,376
Stockholders' equity
235,353
223,883
223,756
225,043
203,933
Total liabilities and stockholders' equity
$
3,988,566
$
3,965,115
$
3,962,692
$
3,825,758
$
3,701,900
For the Quarter Ended
AVERAGE BALANCES
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
Assets
$
3,973,824
$
3,964,109
$
3,812,199
$
3,706,497
$
3,679,541
Loans
2,991,272
2,994,492
2,949,672
2,857,594
2,813,213
Deposits
3,258,669
3,123,282
2,956,635
2,878,676
2,764,184
Stockholders' equity
227,513
219,771
219,835
201,920
215,230
WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
LOANS
September 30, 2024
June 30, 2024
March 31, 2024
December 31, 2023
September 30, 2023
Commercial
$
512,884
$
526,589
$
544,293
$
531,594
$
529,293
Real estate:
Construction, land and land development
520,516
496,864
465,247
413,477
399,253
1-4 family residential first mortgages
89,749
92,230
108,065
106,688
89,713
Home equity
17,140
15,264
14,020
14,618
12,429
Commercial
1,870,132
1,856,301
1,839,580
1,854,510
1,812,816
Consumer and other
14,261
15,234
12,844
10,930
10,123
3,024,682
3,002,482
2,984,049
2,931,817
2,853,627
Net unamortized fees and costs
(3,461
)
(3,708
)
(3,916
)
(4,282
)
(3,850
)
Total loans
$
3,021,221
$
2,998,774
$
2,980,133
$
2,927,535
$
2,849,777
Less: allowance for credit losses
(29,419
)
(28,422
)
(28,373
)
(28,342
)
(28,147
)
Net loans
$
2,991,802
$
2,970,352
$
2,951,760
$
2,899,193
$
2,821,630
CREDIT QUALITY
Pass
$
3,016,493
$
2,994,310
$
2,983,618
$
2,931,377
$
2,853,100
Watch
7,956
7,651
142
144
184
Substandard
233
521
289
296
343
Doubtful
—
—
—
—
—
Total loans
$
3,024,682
$
3,002,482
$
2,984,049
$
2,931,817
$
2,853,627
DEPOSITS
Noninterest-bearing demand
$
525,332
$
530,441
$
521,377
$
548,726
$
551,688
Interest-bearing demand
438,402
443,658
449,946
481,207
417,802
Savings and money market - non-brokered
1,481,840
1,483,264
1,315,698
1,315,741
1,249,309
Money market - brokered
123,780
