West Bancorporation (WTBA) Q2 2024 earnings summary

Executive summary

• Net income for Q2 2024 was $5.2 million ($0.31 per diluted share), down from $5.8 million in Q1 2024 and $5.9 million ($0.35 per share) in Q2 2023; six-month net income was $11.0 million ($0.65 per share), down from $13.7 million ($0.82 per share) year-over-year.

• Annualized return on average assets for Q2 2024 was 0.53% and return on average equity was 9.50%, both lower than the prior year.

• Total assets increased to $3.97 billion as of June 30, 2024, up from $3.83 billion at year-end 2023.

• Deposit growth was strong, including a $120 million municipal deposit expected to be drawn down over 12–18 months.

• Opened new headquarters in West Des Moines in April; declared a $0.25 per share dividend payable in August.

Financial highlights

• Net interest income for Q2 2024 was $17.2 million, up from $16.8 million in Q1 2024 but down 0.6% year-over-year, mainly due to higher deposit interest expense.

• Net interest margin (FTE) for Q2 2024 was 1.86%, down from 2.02% in Q2 2023.

• Noninterest expense rose 5.8% in Q2 2024, driven by new headquarters occupancy, technology, and FDIC insurance costs.

• Efficiency ratio (FTE) increased to 67.14% in Q2 2024 from 62.83% a year ago.

• Allowance for credit losses to total loans was 0.95% at June 30, 2024.

Outlook and guidance

• Management expects continued pressure on net interest margin due to high interest rates and deposit competition.

• Expectation of continued loan growth from $123 million in unfunded construction commitments over the next 12 months.

• Anticipate some loan payoffs (~$25 million) in Q3, to be replaced by funded commitments.

• Additional non-interest expense uptick expected when new Minnesota office opens late Q4 2024 or early Q1 2025.

• Strategic investments in new buildings are expected to drive future profitable growth.