West Bancorporation NASDAQ: WTBA reported higher third-quarter earnings as net interest income and margin improved, while executives said loan growth returned after several quarters of customer asset sales and refinancing-related payoffs weighed on balances.
Net income totaled $11.6 million for the third quarter, up 25% from $9.3 million in the same period of 2025, Chief Financial Officer Jane Funk said. Through the first nine months of 2026, net income was $33.3 million, representing a 32% increase from the comparable period a year earlier.
Chief Executive Officer Dave Nelson said earnings per share continued to rise as expected and that the company’s operating metrics continued to strengthen. The board approved a quarterly dividend of $0.26 per share, payable Nov. 25 to shareholders of record on Nov. 11.
Loan Growth Returns as Payoffs Moderate
West Bank’s loan portfolio increased 1.5% from the second quarter and stood at approximately $3 billion at Sept. 30, according to Bank President Brad Winterbottom. It was the first sequential increase in outstanding loans in five quarters.
Management said loan production had been solid, but net growth was constrained by customers selling assets and by secondary-market refinancings. Winterbottom said the bank entered the third quarter expecting roughly $90 million of loan payoffs, which occurred during the period. The company now expects about $30 million in known payoffs between the end of the third quarter and year-end.
“We’ve done a nice job covering up the payoffs production-wise,” Winterbottom said, adding that some existing customers expanded their asset bases through new or improved assets.
Nelson said the company expects asset-sale-related pressure on loan balances to subside during 2027, though he noted there could be a couple more such transactions next year. Winterbottom said new lending activity remained “mild” because of economic and political uncertainty, but described the pipeline entering the fourth quarter as very positive.
During the question-and-answer session, Winterbottom said the pipeline was distributed across the company’s markets rather than being driven by one region. Chief Risk Officer Harlee Olafson cited recent larger loan closings of $25 million in Des Moines, $23 million in Iowa City and $22 million in Minnesota.
Margin Expansion Supported by Asset Repricing
Net interest income rose $3.9 million, or 17%, from the third quarter of 2025. Funk said the net interest margin increased 8 basis points from the preceding quarter and 41 basis points from a year earlier.
The cost of deposits increased 3 basis points sequentially but declined 41 basis points year over year. Looking ahead, Funk said higher short-term interest rates could slow, rather than reverse, the company’s margin improvement because West Bank has a relatively high deposit beta.
Management expects asset repricing to provide an offset. Funk said approximately $550 million in fixed-rate loans are scheduled to reprice during the next 12 months, with a weighted average rate of roughly 4.5%. Winterbottom said new loan production is being booked at yields in the “high sixes.”
Deposit competition has intensified in recent months, according to Funk. She said pricing pressure rose as markets began responding to indications of additional rate increases, making deposit retention and deposit growth a significant focus alongside lending.
Credit Quality Remains Strong
Olafson said credit quality remained strong, with no loans more than 30 days past due, no other real estate owned and no nonaccrual loans. The watch list represented 0.6% of total loans, with the majority of those credits in transportation-related businesses.
He said the watch-list credits were well-secured and properly structured, while Winterbottom added that the borrowers were continuing to make scheduled payments. The bank recorded no provision for credit losses during the quarter.
Olafson said the company continued to emphasize strong borrower balance sheets, global cash flow and liquidity in its underwriting. He also said the diversified commercial real estate portfolio continued to perform as expected.
Minnesota Expansion Shows Incremental Growth
Minnesota Group President Brad Peters said the company’s Minnesota expansion, which began with a Rochester office 10 years ago and expanded to St. Cloud, Mankato and Owatonna in early 2019, continued to produce slight growth in both loans and deposits.
Peters said West Bank’s relationship-based business banking model, seasoned lending team and disciplined calling efforts have helped differentiate it in the market. The company also has invested in facilities intended to support client and prospect engagement.
Despite economic uncertainty and interest-rate volatility affecting customers, Peters said bankers have increased calling activity and remained close to their clients to manage relationships.
Noninterest expense increased 3% from the third quarter of 2025 and was up 2.7% for the first nine months of the year. Funk said fourth-quarter expenses were expected to remain similar to recent levels. As the company plans for 2027 and 2028, she said technology and product investments are likely to be the most significant areas of potential spending increases, though specific plans had not yet been determined.
About West Bancorporation (NASDAQ:WTBA)
West Bancorporation, Inc NASDAQ: WTBA is a bank holding company headquartered in West Des Moines, Iowa. It operates primarily through West Bank, a community banking institution that provides financial services to businesses, individuals and nonprofit organizations.
West Bank offers commercial and consumer lending, including commercial real estate, business, residential real estate and personal loans. Its deposit products include checking, savings, money market and certificate of deposit accounts, while additional services include treasury management, online and mobile banking, cash management and trust or wealth management services.
Founded in 1893, West Bank serves communities primarily in central and eastern Iowa, with a presence in the Des Moines metropolitan area and other Iowa markets.
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