West Bancorporation, Inc. (WTBA) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call presents a mixed sentiment. Positive aspects include improved net income YoY, better net interest margins, and a dividend declaration. However, challenges such as the trucking industry risk, fewer loan opportunities, and a $4 million securities loss dampen the outlook. The Q&A session revealed cautious optimism about loan growth and deposit dynamics, but the lack of clear guidance on securities repositioning and uncertain deposit outlook balance the positives. Overall, these factors suggest a neutral sentiment, likely resulting in minimal stock price movement.
Key Financial Performance
Net Income (Q4 2025) $7.4 million, compared to $9.3 million in Q3 2025 and $7.1 million in Q4 2024. The decrease from Q3 2025 is due to a $4 million pretax net loss from the sale of $64 million in securities, while the increase from Q4 2024 reflects improved core earnings.
Net Income (Full Year 2025) $32.6 million, up 35% from $24.1 million in 2024. The increase is attributed to continuous improvement in core earnings and better net interest margins.
Net Interest Margin Increased by 11 basis points compared to Q3 2025 and 49 basis points compared to Q4 2024. This improvement is due to better interest rate management and higher earning assets.
Cost of Deposits Declined by 28 basis points compared to Q3 2025 and 64 basis points compared to Q4 2024. This reduction reflects improved deposit cost management.
Core Deposit Balances Increased by approximately $212 million in Q4 2025 and $223 million for the full year. Growth was seen across retail, commercial, and public fund deposits, driven by strong customer relationships.
Loan Outstandings Just under $3 billion as of Q4 2025, slightly down due to larger payoffs from asset sales and refinance activity. These were replaced with higher-quality assets at better interest rates.
Deposit Balances Increased by over $162 million in Q4 2025, driven by growth in core commercial and retail deposits.
Securities Sale $64 million of securities sold in Q4 2025, resulting in a $4 million pretax net loss. This was done to improve balance sheet flexibility and redeploy funds into higher-earning assets or repay high-cost funding.
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Operating Highlights
Minnesota regional center banks expansion: West Bancorporation has successfully expanded its Minnesota regional center banks, starting with Rochester Bank in 2013 and adding St. Cloud, Mankato, and Owatonna locations in 2019. These locations transitioned from loan production offices to full-service banks, leveraging community leaders and unique facilities to build strong relationships and attract new business.
New business opportunities from competitor M&A: The company is actively pursuing new business opportunities arising from recent M&A activity by competitors in its markets. Bankers are targeting high-quality prospects and focusing on full relationships, including deposit-rich business banking opportunities.
Deposit growth: Deposit balances increased by $162 million in Q4 2025, with growth in core commercial and retail deposits. Core deposit balances, excluding brokered funds, increased by $212 million in Q4 and $223 million for the year.
Loan portfolio management: Loan outstandings were slightly down at just under $3 billion due to larger payoffs from asset sales and refinance activity. These were replaced with quality new assets at better interest rates.
Net interest margin improvement: Net interest margin improved by 11 basis points compared to Q3 2025 and 49 basis points compared to Q4 2024. The cost of deposits declined by 28 basis points compared to Q3 2025 and 64 basis points compared to Q4 2024.
Securities loss trade for balance sheet flexibility: The company sold $64 million of securities available for sale, realizing a pretax net loss of $4 million. This move was aimed at improving balance sheet flexibility and redeploying proceeds into higher-earning assets or repaying high-cost funding.
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Risk or Challenges
Trucking Industry Challenges: 70% of the watch list loans are related to the trucking industry, which is facing low freight volumes and excess capacity. This poses a risk to the portfolio despite the businesses being well-secured.
Loan Opportunities and Competitive Market: The company is experiencing fewer new loan opportunities compared to prior years, and the market remains highly competitive, which could impact growth.
Securities Loss Trade: A $4 million pretax net loss was realized from the sale of $64 million in securities. While this was done to improve balance sheet flexibility, it represents a financial challenge.
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Guidance & Outlook
Loan Growth: Loan growth is expected to pick up when the economic expansion begins.
Net Interest Margin: Net interest income continued to improve through improvement in our net interest margin. Margin increased 11 basis points compared to third quarter and 49 basis points compared to fourth quarter last year.
Deposit Growth: Deposit balances increased just over $162 million during the quarter, with increases in core commercial and retail deposits. Core deposit balances, excluding brokered funds, increased approximately $212 million in the fourth quarter and $223 million for the year.
Strategic Securities Sale: Proceeds from the sale of $64 million of securities may be used for strategic improvement in long-term earnings profile through redeployment into higher earning assets or repayment of high-cost funding.
2026 Outlook: The company believes it is set up for a strong 2026, with continuous improvement in core earnings and flexibility in the balance sheet.
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Shareholder Return Plan
Dividend Declaration: West Bank has declared a $0.25 dividend payable February 25 to shareholders of record as of February 11.
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Key Q&A
Q:Can you walk us through some of the loan growth dynamics in the quarter and provide insights into the loan pipeline heading into this year?
A:Brad Winterbottom explained that there were significant payoffs, including a customer selling medical office buildings worth over $50 million and other customers refinancing or selling in the secondary markets. Bradley Peters added that opportunities from M&A activities, such as the Bremer and Aleris transactions, are expected to continue into 2026.
Q:Can you update us on the amount of loans repricing over the balance of this year and the expected yield pickup?
A:Jane Funk stated that the fixed-rate portfolio repricing in 2026 is just under $400 million, with an expected yield pickup of around 1.5% to 2%. The average rate on maturing loans is in the low 4% range.
Q:Was the deposit growth among core categories in the quarter influenced by seasonality or unique flows, and what is the outlook for loan and deposit growth this year?
A:Jane Funk mentioned that deposit growth was influenced by public funds from bond offerings, which are expected to flow out in 2026. The outlook for deposits is uncertain, and growth in retail and commercial deposits might be offset by public fund volatility. Mid-single-digit growth in loans and deposits is anticipated.
Q:What is the appetite and potential magnitude for executing additional securities portfolio repositionings in 2026?
A:Jane Funk explained that securities portfolio repositioning is evaluated regularly based on liquidity and cash deployment needs. There are no set goals or plans for 2026, but evaluations will continue.
Q:What is the starting point for the margin, considering the timing of the repositioning in the quarter and opportunities to reduce deposit costs?
A:Jane Funk indicated that the margin is around 2.5% at the end of December and the beginning of January. There is room for improvement throughout the year without changes in the rate environment.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the specific plans or magnitude for securities portfolio repositioning in 2026, stating only that it is an ongoing evaluation without set goals or plans.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Bancorporation Inc
Bank Chief
Bank St
Bank banker
Bank dividend
Chief Credit
Cloud Mankato
Credit Officer
Deposits Loan
Executive VP
Instructions Chief
Loan expansion
Mankato location
Mather
Mr Executive
Officer Bank
Officer afternoon
President Minnesota
Rochester Bank
St Cloud
Today opportunity
West Bancorporation
West Bank
activity plan
bank location
banker relationship
community leader
history
loan watch
loss trade
time
trucking industry
watch list
WTBA Transcript
West Bancorporation, Inc. (WTBA) Q4 2025 Earnings Call Transcript
Unknown1-29
The earnings call presents a mixed sentiment. Positive aspects include improved net income YoY, better net interest margins, and a dividend declaration. However, challenges such as the trucking industry risk, fewer loan opportunities, and a $4 million securities loss dampen the outlook. The Q&A session revealed cautious optimism about loan growth and deposit dynamics, but the lack of clear guidance on securities repositioning and uncertain deposit outlook balance the positives. Overall, these factors suggest a neutral sentiment, likely resulting in minimal stock price movement.
West Bancorporation, Inc. (WTBA) Q3 2025 Earnings Call Transcript
Positive10-23
The company demonstrated strong financial performance with increased earnings and net income, improved net interest margin, and strong credit quality. Despite some challenges like core deposit decline and competitive market, the company is optimistic about deposit growth and loan portfolio yield improvements. The Q&A session confirmed positive growth expectations, especially in Minnesota, and management provided clear, confident responses. The declared dividend supports shareholder return sentiment. Overall, the positive financials and strategic outlook suggest a stock price increase in the short term.
West Bancorporation, Inc. (WTBA) Q2 2025 Earnings Call Transcript
Positive7-24
The earnings call reveals strong financial performance, with net income and loan yields improving. Dividend declaration and high yield are positive for shareholders. Despite some risks, such as competitive pressures and economic uncertainty, management's robust pipeline and strategic focus on deposit growth and asset repricing are promising. The Q&A session highlights opportunities for growth and margin improvement, supporting a positive outlook. Overall, the positive financial results, strategic initiatives, and optimistic guidance suggest a likely stock price increase of 2% to 8% over the next two weeks.
West Bancorporation, Inc. (WTBA) Q1 2025 Earnings Call Transcript
Unknown4-24
The earnings call presents a mixed outlook: strong financial performance with a 35% increase in net income and improved net interest margin, but flat loan and deposit growth indicate potential challenges. The dividend declaration is positive, but the lack of a share repurchase program is neutral. Economic uncertainties, supply chain challenges, and competitive pressures pose risks. The Q&A session revealed static deposit costs and unclear growth expectations. Overall, the sentiment is balanced, leading to a neutral prediction for stock price movement.
WTBA Report
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