West Bancorporation Q1 Earnings Call Highlights

Key Points

• West Bancorporation reported net income of $10.6 million for Q1, a 35% year-over-year increase, driven by higher net interest income and an expanding net interest margin while non-interest expenses remained controlled.
• Management expects margin tailwinds as roughly $250 million of loans and investments reprice over the next 12 months and about $38 million of low-yield securities roll off, which should boost margins if the Fed holds rates and funding costs stay steady.
• Credit quality was described as pristine with no loans past due over 30 days, no non-accruals, and a watch list down to 1.4% of loans, though about 90% of that watch list is concentrated in trucking credits the bank says are well secured.

West Bancorporation NASDAQ: WTBA executives highlighted stronger earnings, improving margin trends, and what management described as “pristine” credit quality during the company’s first quarter 2026 earnings call.

Earnings rise on net interest income gains

Chief Financial Officer Jane Funk said the company generated net income of $10.6 million for the quarter ended March 31, 2026, up from $7.8 million in the first quarter of 2025, a 35% increase.

Funk attributed the improvement primarily to higher net interest income and an expanding net interest margin. Net interest income increased $3.5 million, or 17%, versus the year-ago quarter. She said the net interest margin rose 12 basis points from the prior quarter and 31 basis points from the first quarter of last year. Deposit costs improved as well, with Funk reporting the cost of deposits declined 14 basis points from the previous quarter and 40 basis points year-over-year.

Funk added that non-interest expense remained controlled, increasing 3% from the year-ago quarter, and said there were “no unusual items to identify” in the period. She also noted there was no provision for credit losses recorded in the quarter.

Management expects margin tailwinds from repricing

President and CEO Dave Nelson said the company had “a very strong quarter” and expects continued earnings growth, pointing to an anticipated benefit as “the COVID era five-year duration assets reprice.”

On the margin outlook if the Federal Reserve holds rates steady, Funk told analysts the company expects continued repricing benefits from the asset side of the balance sheet. She said cash flow from fixed-rate assets maturing in 2026 and 2027 remains at rates “still in the fours, some in the threes,” while a portion of the investment portfolio rolling off carries significantly lower yields.

“We’ll have about, I think it’s projected about $38 million rolling off of the investment portfolio over the next 12 months, and that’s a 2% or sub 2% rate,” Funk said. “We believe if rates are steady and deposit and funding costs are steady, we’ve got plenty of opportunity on the asset side in repricing to improve margin.”

Asked about where the net interest margin could land over the next few quarters, Funk said the company does not have “a specific number or target,” but noted that over the next 12 months, “between loans and investments,” roughly $250 million is expected to reprice at a blended rate “maybe below 4%.”

Loans flat as payoffs continue; deposits show mixed movement

Nelson said loan balances have been flat while deposits have grown, adding that when loan demand increases, “we will definitely find it,” and that the bank has “several attractive credit opportunities in our pipeline.”

During management’s prepared remarks, the company said total loans were flat compared to year-end 2025, ending the first quarter at $3 billion in outstandings. Management cited notable loan payoffs driven by secondary-market refinancing and asset sales, while emphasizing that customers are being retained.

“We continue to backfill these payoffs with new opportunities at better interest rates,” the company said during the discussion, adding, “We are not losing customers. Rather, they are restructuring their asset portfolios with longer-term interest rates through the secondary markets.”

Chief Risk Officer Harlee Olafson provided additional context around loan growth dynamics, saying that when rates were “relatively high,” new construction activity “came close to a standstill,” creating a gap between projects completing and new projects starting. Olafson said he is seeing “some signs of borrowers and developers starting to fill in that gap again with new projects.”

On deposits, Funk said core deposit balances were “down a little bit” compared to year-end, primarily reflecting typical customer cash flow fluctuations and seasonality. In response to an analyst question about a municipal depositor that had placed $243 million of bond proceeds at the bank last year, Funk said “probably 75%” of those balances remain on the balance sheet.

Looking ahead to funding loan growth, Funk said the bank has been building short-term liquidity in anticipation of loan demand and plans to deploy investment cash flows as needed. “We haven’t been purchasing securities the last few years,” she said, “and so a lot of the liquidity that we’re building, the short-term liquidity is really for that anticipation of loan activity.”

Credit quality described as “pristine,” with trucking watch list concentration

Nelson said that as of March 31, the company’s credit quality “remains pristine,” and that it “did not have a single loan past due 30 days.” Olafson echoed the strength of credit metrics, reporting no past dues over 30 days, no other real estate owned, no non-accruals, and no substandard loans.

Olafson said the watch list declined 20% from year-end and stood at 1.4% of total loans. He noted that about 90% of the watch list relates to the trucking industry, which he said continues to face “low freight, excess capacity and high price of diesel.” Still, he said the bank’s trucking credits are well secured and that borrowers are making decisions “to remain viable.” Olafson added that the bank expects resolution of “a large credit within that group before the end of the second quarter.”

On commercial real estate, Olafson said the portfolio “continues to perform very well” and is diversified by property type and location. He said stress testing “continues to show lower loan to values and good strong cash flow on a majority of the credit.”

Dividend declared; Minnesota expansion remains a multi-year opportunity

Nelson said the board declared a quarterly dividend of $0.25 per share, payable May 20 to shareholders of record as of May 6.

Minnesota Group President Brad Peters outlined the bank’s Minnesota expansion, which began with a Rochester full-service bank in 2016 and expanded to St. Cloud, Mankato, and Owatonna in 2019, with the final building completed last year in Owatonna. Peters said the bank is still relatively new in those markets and continues introducing the franchise locally, emphasizing a relationship-based, business-banking model.

Peters said disruption from recent M&A activity in the region has created targets to pursue and that West Bank is also capturing personal business from owners and executives, along with high-value retail deposit opportunities. He said he expects continued core deposit and loan growth and believes the opportunity from market disruption could play out over multiple years. “I think it’s several years,” Peters said, adding that sales cycles take time and that the team’s focus is to get “in second place and position ourselves to win the business.”

On expenses and hiring, Funk said the company expects ordinary-course expense management and is not anticipating anomalies. Peters added that the bank continues to evaluate talent opportunities, though the timing of any additions has not been established.

About West Bancorporation NASDAQ: WTBA

West Bancorporation, Inc is the bank holding company for West Town Bank and Trust, a full-service community bank headquartered in Chicago, Illinois. Through its subsidiary, the company offers a comprehensive suite of commercial and consumer banking products, including deposit accounts, residential and commercial mortgages, business loans and treasury management services. West Bancorporation focuses on delivering personalized financial solutions to small- and medium-sized businesses, real estate developers and individual customers within its urban market.

Since launching operations in 2006, West Town Bank and Trust has steadily expanded its presence across the Chicago metropolitan area.

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