Executive Summary

Q1 2025 delivered clear operating leverage: net income rose to $7.8M ($0.46 diluted EPS) on a 30 bps sequential NIM expansion to 2.28% (FTE) and a 442 bps improvement in the efficiency ratio to 56.37% .
Results beat S&P Global consensus: EPS $0.46 vs $0.38 and “revenue” (NII + noninterest income) $23.10M vs $21.61M; beats were driven by lower deposit costs and funding mix shifts post late-2024 Fed cuts; expense run-rate stabilized. Values retrieved from S&P Global.*
Credit remains pristine (NPAs/Assets 0.00%); the only nonaccrual ($181K) was paid off after quarter-end, leaving no nonaccruals, OREO or adversely classified assets, per CRO commentary .
Management tone constructive: deposit costs near-term “pretty static” absent further rate cuts; expense run-rate viewed as sustainable; tax rate higher in 2025 following expiration of a 2024 tax credit; $0.25 dividend maintained (5.02% annualized yield) .

What Went Well and What Went Wrong

What Went Well
- Margin and efficiency inflected positively: NIM (FTE) rose to 2.28% from 1.98% in Q4; efficiency improved to 56.37% from 60.79% .
- Funding cost relief: cost of deposits fell 38 bps vs Q4; deposit cost tracked to ~3.15% on presentation metrics; CRO/management emphasized strong core relationship banking .
- Credit quality remained “best-in-class”: NPAs/Assets 0.00%; one $181K nonaccrual at quarter-end was paid off post quarter-end; ACL/Loans steady at 1.01% .
- Management quote: “Our financial improvement is underway. Our margin is our main driver and we are experiencing improvement.” – CEO David Nelson .
What Went Wrong
- Period-end deposit balances declined 1.0% q/q (ex-brokered down 3.3%); brokered deposits rose $69.1M to $335.5M, reflecting normal customer cash flow but adds some headline sensitivity .
- Loan growth modest (period end +$11.6M q/q; +$36.3M y/y), with pipeline tempered by payoffs/refinancings and a competitive environment .
- Office CRE remains an area to monitor: market vacancy acknowledged; while portfolio performing, tenant renewals may weaken borrower leverage in negotiations, per CRO .

Financial Results

Actuals vs S&P Global Consensus (Q1 2025)

Metric	Q1 2025 Actual	Q1 2025 Consensus	Surprise
Diluted EPS ($)	0.46	0.38*	+0.08, +21%*
“Revenue” ($M)	23.10 (NII $20.86 + Noninterest $2.24)	21.61*	+$1.49, +6.9%*

Values retrieved from S&P Global.*

Quarterly P&L and Ratios (oldest → newest)

Metric	Q1 2024	Q4 2024	Q1 2025
Net Interest Income ($M)	16.75	19.42	20.86
Noninterest Income ($M)	2.30	1.43	2.24
Net Income ($M)	5.81	7.10	7.84
Diluted EPS ($)	0.35	0.42	0.46
NIM (FTE, %)	1.88%	1.98%	2.28%
Efficiency Ratio (%)	62.04%	60.79%	56.37%
ROA (%)	0.61%	0.68%	0.81%
ROE (%)	10.63%	12.24%	13.84%

Balance Sheet and Credit KPIs (trend)

KPI	Q3 2024	Q4 2024	Q1 2025
Loans (Period End, $M)	3,021.2	3,004.9	3,016.5
Deposits (Period End, $M)	3,278.6	3,357.6	3,324.5
Brokered Deposits ($M)	425.9	266.4	335.5
Loans/Deposits (%)	92.15%	89.49%	90.73%
Nonaccrual Loans ($K)	233	133	181 (paid off post-Q1)
NPAs/Assets (%)	0.01%	0.00%	0.00%
ACL/Loans (%)	0.97%	1.01%	1.01%
Tangible Common Equity (%)	5.90%	5.68%	5.97%
Deposit Cost (%)	3.80%	3.53%	3.15%
Loan Yield (%)	5.65%	5.53%	5.52%

Loan Mix (as of March 31, 2025)

Sector	Balance ($K)
Multifamily	546,842
Warehouse & Trucking Terminals	286,573
Hotels	259,205
Retail (Total of strip + stand-alone)	246,975
Office	161,595
Senior Care/Living	105,714
Mixed Use	104,759
Medical	97,283
Residential	162,128
Land & Land Development	98,101
Other	291,385

Notes:

Non-GAAP: NIM (FTE) and efficiency ratio are non-GAAP; reconciliations provided in the 8-K/exhibit .

Guidance Changes

Metric/Topic	Period	Previous Guidance	Current Guidance	Change
Operating expenses (run-rate)	2025 run-rate	Not specifically quantified	“First quarter performance will be pretty indicative of the go-forward”	Maintained/stable
Deposit costs	Near-term	Easing into Q4 on Fed cuts	“Probably pretty static until something else happens in the marketplace”	Maintained/stable near-term
Net interest margin drivers	2025	Improving into Q4 on mix/pricing	Continued benefit from deposit repricing post 100 bps Fed cuts since Sept-2024; NIM up 30 bps q/q	Improving
Tax rate	2025	2024 included new HQ energy tax credit	“Tax rate will be a little bit higher this year” after tax credit expired	Higher
Dividend	Q2 2025	$0.25 in Q4 2024	$0.25 declared for Q1 (payable May 21)	Maintained

Earnings Call Themes & Trends

Topic	Q3 2024 (Prev-2)	Q4 2024 (Prev-1)	Q1 2025 (Current)	Trend
NIM trajectory	NIM 1.91%; improvement vs Q2 on deposit mix/pricing	NIM 1.98%; deposit costs down 27 bps; funding cost decline	NIM 2.28%; deposit costs down 38 bps; further mix benefit	Improving
Deposit mix & liquidity	Brokered $425.9M; deposits +$97.6M q/q	Brokered down to $266.4M; deposits +$79.0M q/q	Deposits -1.0% q/q; brokered up to $335.5M; uninsured ~28%	Normalizing, stable risk
Credit quality	NPAs/Assets 0.01%; ACL 0.97%	NPAs/Assets 0.00%; ACL 1.01%	NPAs/Assets 0.00%; single nonaccrual paid off post-Q1; ACL 1.01%	Strong/stable
CRE office	Not highlighted	Not highlighted	Office vacancy pressure acknowledged; portfolio performing; office ~5.4% of total loans	Watch
Expenses	Higher occupancy due to new HQ	Efficiency improved to 60.79%	Run-rate stable; efficiency 56.37%	Stabilizing
Taxes	—	Energy tax credit lowered Q4 tax expense	Tax rate higher in 2025 (credit expired)	Higher 2025
Macro/tariffs	—	—	Tariff/supply risk noted for some manufacturers	Caution

Management Commentary

Strategy and momentum: “Our financial improvement is underway. Our margin is our main driver and we are experiencing improvement.” – CEO David Nelson .
Relationship banking focus: “We don’t like to be called lenders… we work both sides of the balance sheet… building a relationship and providing more services than just lending.” – CEO David Nelson .
Credit outlook: “We have no nonaccruals, no OREO and no adversely classified assets” post quarter-end; “seasoned” customers with strong balance sheets expected to weather macro changes – CRO Harlee Olafson .
Minnesota growth approach: Focus on C&I prospects with significant deposits, winning high-value retail deposits of business owners/executives, leveraging new facilities for client engagement – MN Group President Brad Peters .
Loan pricing dynamic: Replacing payoffs originated in “3s/4s” with new production generally starting with a “6” (some “7s”); current environment “high 6s” – Bank President Brad Winterbottom .

Q&A Highlights

Deposit costs near-term: “We’ve probably moved them as much as we think we can… probably pretty static until something else happens in the marketplace.” – CFO .
New loan yields vs roll-offs: Roll-offs largely in 3–4% range; replacements mostly starting with a 6-handle (some 7s); current environment “high 6s.” – Bank President .
Growth outlook: Pipeline has “handful of nice transactions,” opportunities expected to exceed planned payoffs though competitive processes persist – Bank President .
Expense cadence: Q1 expense run-rate “pretty indicative” for go-forward – CFO .
Tax rate: Higher in 2025 as a 7-year tax credit expired at end of 2024 – CFO .
Macro watch: Tariff-driven component cost/supply risks for some manufacturers; customer quality helps mitigate – CRO .
Rate sensitivity to customers: Relationship-based deposit pricing; customers can discuss rates with their banker – CFO .

Estimates Context

Q1 2025: WTBA delivered EPS of $0.46 vs $0.38 consensus and “revenue” of $23.10M vs $21.61M consensus; both are beats. Only one estimate was recorded for EPS and revenue in the quarter.*
Implications: NIM upside and lower deposit costs vs expectations support upward revisions to 2025 NIM and net interest income; higher 2025 tax rate vs 2024 should be considered in EPS models; expense run-rate stability reduces downside risk.*
Values retrieved from S&P Global.*

Key Takeaways for Investors

Margin inflection is the quarter’s core catalyst: 30 bps NIM (FTE) expansion and a 442 bps efficiency improvement drove EPS upside; with deposit costs “static” absent further cuts, incremental NIM gains hinge on asset yields/mix and rate path .
Credit remains a differentiator: 0.00% NPAs/Assets and post-quarter no nonaccruals/adverse classifications; watch office CRE but exposure is modest (~5.4% of loans) and currently performing .
Funding optics mixed but manageable: Core flows drove q/q deposit decline ex-brokered; brokered deposits flexed up to maintain liquidity (uninsured ~28%); loans/deposits ~90.7% keeps balance sheet conservative .
Earnings cadence constructive: Expense run-rate stability, loan yields in the high-6% range on new production, and strong pipelines point to maintaining improved profitability, subject to payoff timing and competition .
Tax rate is a 2025 headwind vs 2024 (credit expired); model a higher ETR than last year .
Dividend sustained at $0.25 (5.02% annualized yield), supported by rising ROA/ROE and capital ratios inching higher with AOCI improvement .
Near-term trading: Positive setup on margin momentum and pristine credit; sensitivity to deposit/brokered mix headlines and macro (tariffs) warrants monitoring .

Citations

Q1 2025 8-K press release and exhibits:
Q1 2025 earnings call transcript:
Q4 2024 press release (prior quarter):
Q3 2024 press release (prior-2 quarter):

Note: Asterisked estimate values are from S&P Global consensus and are included without document citations. Values retrieved from S&P Global.*

WEST BANCORPORATION INC (WTBA)·Q1 2025 Earnings Summary