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West Bancorporation, Inc. Announces First Quarter 2024 Financial Results and Declares Quarterly Dividend
Source: Nasdaq GlobeNewswire / 25 Apr 2024 08:30:01 America/New_York
WEST DES MOINES, Iowa, April 25, 2024 (GLOBE NEWSWIRE) -- West Bancorporation, Inc. (Nasdaq: WTBA; the “Company”), parent company of West Bank, today reported first quarter 2024 net income of $5.8 million, or $0.35 per diluted common share, compared to fourth quarter 2023 net income of $4.5 million, or $0.27 per diluted common share, and first quarter 2023 net income of $7.8 million, or $0.47 per diluted common share. On April 24, 2024, the Company’s Board of Directors declared a regular quarterly dividend of $0.25 per common share. The dividend is payable on May 22, 2024, to stockholders of record on May 8, 2024.
David Nelson, President and Chief Executive Officer of the Company, commented, “We have completed our move to our new headquarters building in West Des Moines. After being in the same leased space for over 50 years, our new building is an opportunity to consolidate our corporate operations under one roof, provide space for future growth and enhance business development opportunities. This construction project was years in the making and is a commitment to honor our 131 year history and support the future of our community.”
David Nelson added, “Like the rest of our industry, our Company continues to experience margin challenges in 2024. High short-term rates, an ongoing inverted yield curve and aggressive deposit competition continues to have a significant impact on our cost of funds and net interest margin. We have a clear understanding of our path forward to more normalized margins and earnings.”
First Quarter 2024 Financial Highlights
Quarter Ended
March 31, 2024Net income (in thousands) $5,809 Return on average equity 10.63 % Return on average assets 0.61 % Efficiency ratio (a non-GAAP measure) 62.04 % Nonperforming assets to total assets 0.01 % First Quarter 2024 Compared to Fourth Quarter 2023 Overview
- Loans increased $52.6 million in the first quarter of 2024, or 7.2 percent annualized. The increase is primarily due to the funding of previously committed construction loans.
- No credit loss expense was recorded in the first quarter of 2024, compared to a credit loss expense of $500 thousand recorded in the fourth quarter of 2023. The $500 thousand credit loss expense recorded in the fourth quarter of 2023 was due to growth in loans and unfunded commitments.
- The allowance for credit losses to total loans was 0.95 percent at March 31, 2024, compared to 0.97 percent at December 31, 2023. Nonaccrual loans at March 31, 2024 consisted of one loan with a balance of $289 thousand, compared to one loan with a balance of $296 thousand at December 31, 2023.
- Deposits increased $91.3 million, or 3.1 percent, in the first quarter of 2024. Brokered deposits totaled $396.4 million at March 31, 2024, compared to $305.4 million at December 31, 2023, an increase of $91.0 million. Excluding brokered deposits, deposits increased $0.3 million during the first quarter of 2024. As of March 31, 2024, estimated uninsured deposits, which exclude deposits in the IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, accounted for approximately 27.2 percent of total deposits.
- Borrowed funds increased to $639.7 million at March 31, 2024, compared to $592.6 million at December 31, 2023. The increase was primarily attributable to an increase of $48.2 million in federal funds purchased and other short-term borrowings.
- The efficiency ratio (a non-GAAP measure) was 62.04 percent for the first quarter of 2024, compared to 64.66 percent for the fourth quarter of 2023. The decrease in the efficiency ratio was primarily due to the increase in net interest income.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.88 percent for the first quarter of 2024, compared to 1.87 percent for the fourth quarter of 2023. Net interest income for the first quarter of 2024 was $16.8 million, compared to $16.4 million for the fourth quarter of 2023.
- The tangible common equity ratio was 5.65 percent at March 31, 2024, compared to 5.88 percent at December 31, 2023. The decrease was attributable to the increase in accumulated other comprehensive loss, which was primarily driven by the effect of increasing long-term interest rates in the first quarter on the unrealized market value adjustment of our available for sale investment portfolio. While accumulated other comprehensive losses reduce tangible common equity, they have no impact on regulatory capital.
First Quarter 2024 Compared to First Quarter 2023 Overview
- Loans increased $223.9 million at March 31, 2024, or 8.1 percent, compared to March 31, 2023.
- Deposits increased $266.6 million at March 31, 2024, compared to March 31, 2023. Included in deposits were brokered deposits totaling $396.4 million at March 31, 2024, compared to $234.2 million at March 31, 2023. Excluding brokered deposits, deposits increased $104.4 million, or 4.1 percent, as of March 31, 2024 compared to March 31, 2023.
- Borrowed funds increased to $639.7 million at March 31, 2024, compared to $580.2 million at March 31, 2023. The increase included increases of $75.0 million in FHLB one-month rolling advances hedged with long-term interest rate swaps, and $20.0 million in FHLB long-term advances, partially offset by a decrease of $30.5 million in federal funds purchased and other short-term borrowings.
- The efficiency ratio (a non-GAAP measure) was 62.04 percent for the first quarter of 2024, compared to 55.34 percent for the first quarter of 2023. The increase in the efficiency ratio in the first quarter of 2024 compared to the first quarter of 2023 was primarily due to the decreases in net interest income and noninterest income.
- Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 1.88 percent for the first quarter of 2024, compared to 2.23 percent for the first quarter of 2023. Net interest income for the first quarter of 2024 was $16.8 million, compared to $18.7 million for the first quarter of 2023. Through 2023 and the first quarter of 2024, the rising cost of deposits and borrowed funds and the change in mix of funding increased interest expense faster than the increase in interest income from loan repricing and loan originations.
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, April 25, 2024. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 8178676. A recording of the call will be available until May 9, 2024, by dialing 800-770-2030.
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 recent rate increases by the Federal Reserve; 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 “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 who have balances above current FDIC insurance limits; changes in local, national and international economic conditions, including high rates 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; the 1 percent excise tax on stock buybacks by publicly traded companies; 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) 222-5766WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) As of CONDENSED BALANCE SHEETS March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Assets Cash and due from banks $ 27,071 $ 33,245 $ 18,819 $ 29,776 $ 21,579 Interest-bearing deposits 120,946 32,112 1,802 1,968 901 Securities available for sale, at fair value 605,735 623,919 609,365 645,091 665,358 Federal Home Loan Bank stock, at cost 26,181 22,957 26,691 22,488 22,226 Loans 2,980,133 2,927,535 2,849,777 2,807,075 2,756,185 Allowance for credit losses (28,373 ) (28,342 ) (28,147 ) (27,938 ) (27,941 ) Loans, net 2,951,760 2,899,193 2,821,630 2,779,137 2,728,244 Premises and equipment, net 95,880 86,399 75,675 66,683 59,565 Bank-owned life insurance 44,138 43,864 43,589 43,328 44,830 Other assets 90,981 84,069 104,329 90,084 82,240 Total assets $ 3,962,692 $ 3,825,758 $ 3,701,900 $ 3,678,555 $ 3,624,943 Liabilities and Stockholders’ Equity Deposits $ 3,065,030 $ 2,973,779 $ 2,755,529 $ 2,836,325 $ 2,798,393 Federal funds purchased and other short-term borrowings 198,500 150,270 261,510 184,150 229,290 Other borrowings 441,183 442,367 443,552 409,736 350,921 Other liabilities 34,223 34,299 37,376 31,218 29,347 Stockholders’ equity 223,756 225,043 203,933 217,126 216,992 Total liabilities and stockholders’ equity $ 3,962,692 $ 3,825,758 $ 3,701,900 $ 3,678,555 $ 3,624,943 For the Quarter Ended AVERAGE BALANCES March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Assets $ 3,812,199 $ 3,706,497 $ 3,679,541 $ 3,645,651 $ 3,617,458 Loans 2,949,672 2,857,594 2,813,213 2,783,463 2,745,381 Deposits 2,931,222 2,878,676 2,764,184 2,854,945 2,846,926 Stockholders’ equity 219,835 201,920 215,230 213,177 215,391 WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) As of LOANS March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Commercial $ 544,293 $ 531,594 $ 529,293 $ 535,085 $ 520,894 Real estate: Construction, land and land development 465,247 413,477 399,253 351,461 336,739 1-4 family residential first mortgages 108,065 106,688 89,713 80,998 75,223 Home equity 14,020 14,618 12,429 12,625 9,726 Commercial 1,839,580 1,854,510 1,812,816 1,820,718 1,810,158 Consumer and other 12,844 10,930 10,123 10,289 7,381 2,984,049 2,931,817 2,853,627 2,811,176 2,760,121 Net unamortized fees and costs (3,916 ) (4,282 ) (3,850 ) (4,101 ) (3,936 ) Total loans $ 2,980,133 $ 2,927,535 $ 2,849,777 $ 2,807,075 $ 2,756,185 Less allowance for credit losses (28,373 ) (28,342 ) (28,147 ) (27,938 ) (27,941 ) Net loans $ 2,951,760 $ 2,899,193 $ 2,821,630 $ 2,779,137 $ 2,728,244 CREDIT QUALITY Pass $ 2,983,618 $ 2,931,377 $ 2,853,100 $ 2,810,640 $ 2,706,951 Watch 142 144 184 187 52,766 Substandard 289 296 343 349 404 Doubtful — — — — — Total loans $ 2,984,049 $ 2,931,817 $ 2,853,627 $ 2,811,176 $ 2,760,121 DEPOSITS Noninterest-bearing demand $ 521,377 $ 548,726 $ 551,688 $ 568,029 $ 605,666 Interest-bearing demand 449,946 481,207 417,802 459,030 486,656 Savings and money market - non-brokered 1,315,698 1,315,741 1,249,309 1,302,468 1,202,756 Money market - brokered 119,840 124,335 99,282 114,142 92,524 Total nonmaturity deposits 2,406,861 2,470,009 2,318,081 2,443,669 2,387,602 Time - non-brokered 381,646 322,694 299,683 276,097 269,102 Time - brokered 276,523 181,076 137,765 116,559 141,689 Total time deposits 658,169 503,770 437,448 392,656 410,791 Total deposits $ 3,065,030 $ 2,973,779 $ 2,755,529 $ 2,836,325 $ 2,798,393 BORROWINGS Federal funds purchased and other short-term borrowings $ 198,500 $ 150,270 $ 261,510 $ 184,150 $ 229,290 Subordinated notes, net 79,697 79,631 79,566 79,500 79,435 Federal Home Loan Bank advances 315,000 315,000 315,000 280,000 220,000 Long-term debt 46,486 47,736 48,986 50,236 51,486 Total borrowings $ 639,683 $ 592,637 $ 705,062 $ 593,886 $ 580,211 STOCKHOLDERS’ EQUITY Preferred stock $ — $ — $ — $ — $ — Common stock 3,000 3,000 3,000 3,000 3,000 Additional paid-in capital 33,685 34,197 33,487 32,642 31,797 Retained earnings 272,997 271,369 271,025 269,301 267,620 Accumulated other comprehensive loss (85,926 ) (83,523 ) (103,579 ) (87,817 ) (85,425 ) Total Stockholders’ Equity $ 223,756 $ 225,043 $ 203,933 $ 217,126 $ 216,992 WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) (in thousands) For the Quarter Ended CONSOLIDATED STATEMENTS OF INCOME March 31,
2024December 31,
2023September 30,
2023June 30,
2023March 31,
2023Interest income: Loans, including fees $ 40,196 $ 38,208 $ 36,756 $ 35,011 $ 32,948 Securities: Taxable 3,416 3,521 3,427 3,432 3,316 Tax-exempt 810 869 880 883 885 Interest-bearing deposits 148 85 29 25 30 Total interest income 44,570 42,683 41,092 39,351 37,179 Interest expense: Deposits 21,559 20,024 17,156 16,277 13,339 Federal funds purchased and other short-term borrowings 2,183 2,024 3,165 2,264 2,079 Subordinated notes 1,108 1,114 1,113 1,109 1,106 Federal Home Loan Bank advances 2,325 2,482 2,329 1,621 1,262 Long-term debt 645 678 695 739 698 Total interest expense 27,820 26,322 24,458 22,010 18,484 Net interest income 16,750 16,361 16,634 17,341 18,695 Credit loss expense — 500 200 — — Net interest income after credit loss expense 16,750 15,861 16,434 17,341 18,695 Noninterest income: Service charges on deposit accounts 460 476 463 458 462 Debit card usage fees 458 488 495 511 486 Trust services 776 782 831 749 706 Increase in cash value of bank-owned life insurance 274 275 262 250 257 Gain from bank-owned life insurance — — — — 691 Loan swap fees — — 431 — — Realized securities losses, net — (431 ) — — — Other income 331 308 340 421 355 Total noninterest income 2,299 1,898 2,822 2,389 2,957 Noninterest expense: Salaries and employee benefits 6,489 6,468 6,696 7,029 6,867 Occupancy and equipment 1,447 1,499 1,359 1,322 1,327 Data processing 714 723 703 729 635 Technology and software 700 676 573 579 513 FDIC insurance 519 475 439 420 416 Professional fees 257 235 254 287 250 Director fees 199 240 196 251 205 Other expenses 1,543 1,845 1,685 1,857 1,858 Total noninterest expense 11,868 12,161 11,905 12,474 12,071 Income before income taxes 7,181 5,598 7,351 7,256 9,581 Income taxes 1,372 1,073 1,445 1,394 1,737 Net income $ 5,809 $ 4,525 $ 5,906 $ 5,862 $ 7,844 Basic earnings per common share $ 0.35 $ 0.27 $ 0.35 $ 0.35 $ 0.47 Diluted earnings per common share $ 0.35 $ 0.27 $ 0.35 $ 0.35 $ 0.47 WEST BANCORPORATION, INC. AND SUBSIDIARY Financial Information (unaudited) As of and for the Quarter Ended COMMON SHARE DATA March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Earnings per common share (basic) $ 0.35 $ 0.27 $ 0.35 $ 0.35 $ 0.47 Earnings per common share (diluted) 0.35 0.27 0.35 0.35 0.47 Dividends per common share 0.25 0.25 0.25 0.25 0.25 Book value per common share(1) 13.31 13.46 12.19 12.98 12.98 Closing stock price 17.83 21.20 16.31 18.41 18.27 Market price/book value(2) 133.96 % 157.50 % 133.80 % 141.83 % 140.76 % Price earnings ratio(3) 12.77 19.79 11.75 13.11 9.56 Annualized dividend yield(4) 5.61 % 4.72 % 6.13 % 5.43 % 5.47 % REGULATORY CAPITAL RATIOS Consolidated: Total risk-based capital ratio 11.78 % 11.88 % 11.96 % 12.15 % 12.17 % Tier 1 risk-based capital ratio 9.23 9.30 9.37 9.51 9.51 Tier 1 leverage capital ratio 8.36 8.50 8.58 8.60 8.60 Common equity tier 1 ratio 8.67 8.74 8.80 8.92 8.92 West Bank: Total risk-based capital ratio 12.63 % 12.76 % 12.89 % 13.13 % 13.16 % Tier 1 risk-based capital ratio 11.76 11.89 12.01 12.24 12.26 Tier 1 leverage capital ratio 10.65 10.86 11.00 11.08 11.10 Common equity tier 1 ratio 11.76 11.89 12.01 12.24 12.26 KEY PERFORMANCE RATIOS AND OTHER METRICS Return on average assets(5) 0.61 % 0.48 % 0.64 % 0.64 % 0.88 % Return on average equity(6) 10.63 8.89 10.89 11.03 14.77 Net interest margin(7)(13) 1.88 1.87 1.91 2.02 2.23 Yield on interest-earning assets(8)(13) 4.99 4.87 4.70 4.57 4.41 Cost of interest-bearing liabilities 3.70 3.60 3.38 3.10 2.76 Efficiency ratio(9)(13) 62.04 64.66 60.83 62.83 55.34 Nonperforming assets to total assets(10) 0.01 0.01 0.01 0.01 0.01 ACL ratio(11) 0.95 0.97 0.99 1.00 1.01 Loans/total assets 75.20 76.52 76.98 76.31 76.03 Loans/total deposits 97.23 98.44 103.42 98.97 98.49 Tangible common equity ratio(12) 5.65 5.88 5.51 5.90 5.99 (1) Includes accumulated other comprehensive loss.
(2) Closing stock price divided by book value per common share.
(3) Closing stock price divided by annualized earnings per common share (basic).
(4) Annualized dividend divided by period end closing stock price.
(5) Annualized net income divided by average assets.
(6) Annualized net income divided by average stockholders’ equity.
(7) Annualized tax-equivalent net interest income divided by average interest-earning assets.
(8) Annualized tax-equivalent interest income on interest-earning assets divided by average interest-earning assets.
(9) Noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
(10) Total nonperforming assets divided by total assets.
(11) Allowance for credit losses divided by total loans.
(12) Common equity less intangible assets (none held) divided by tangible assets.
(13) A non-GAAP measure.NON-GAAP FINANCIAL MEASURES
This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis.
(in thousands) For the Quarter Ended March 31, 2024 December 31, 2023 September 30, 2023 June 30, 2023 March 31, 2023 Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: Net interest income (GAAP) $ 16,750 $ 16,361 $ 16,634 $ 17,341 $ 18,695 Tax-equivalent adjustment(1) 82 95 113 122 161 Net interest income on a FTE basis (non-GAAP) 16,832 16,456 16,747 17,463 18,856 Average interest-earning assets 3,595,954 3,487,799 3,478,053 3,461,313 3,435,988 Net interest margin on a FTE basis (non-GAAP) 1.88 % 1.87 % 1.91 % 2.02 % 2.23 % Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: Net interest income on a FTE basis (non-GAAP) $ 16,832 $ 16,456 $ 16,747 $ 17,463 $ 18,856 Noninterest income 2,299 1,898 2,822 2,389 2,957 Adjustment for realized securities losses, net — 431 — — — Adjustment for losses on disposal of premises and equipment, net — 24 3 2 — Adjusted income 19,131 18,809 19,572 19,854 21,813 Noninterest expense 11,868 12,161 11,905 12,474 12,071 Efficiency ratio on an adjusted and FTE basis (non-GAAP)(2) 62.04 % 64.66 % 60.83 % 62.83 % 55.34 % (1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
(2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company's financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.
- Loans increased $52.6 million in the first quarter of 2024, or 7.2 percent annualized. The increase is primarily due to the funding of previously committed construction loans.