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WB

WEST BANCORPORATION INC (WTBA)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered clean results and incremental operating improvement: net income $8.0M and diluted EPS $0.47, both up vs Q1 2025 and Q2 2024, with net interest margin at 2.27% and efficiency ratio at 56.45% .
  • Versus S&P Global Wall Street consensus, WTBA posted a modest beat on EPS (+$0.02) and revenue (+$0.33M), continuing a pattern of estimate outperformance since Q4 2024; estimate counts remain thin (one estimate) which can amplify surprises [Q2 2025 EPS and revenue consensus/actuals]*.
  • Credit quality remains pristine: zero nonaccruals, zero substandard, watchlist limited and well-secured; ACL/loans rose to 1.03% and net recoveries were $13K, supporting confidence in forward earnings durability .
  • Deposits rose $67.5M QoQ, mix improved as brokered fell by $127.2M; a $243.0M municipal bond deposit inflow lifts liquidity, while uninsured deposits dropped to ~27.2%—a favorable funding/capital narrative for the stock .
  • Forward catalysts: continued asset repricing tailwinds, deposit-gathering momentum, and stable expense outlook; management sees H2 margin “opportunity” with deposit costs flat-to-up a few bps absent Fed action .

What Went Well and What Went Wrong

What Went Well

  • “Enviable zeros” in credit: zero nonaccruals, zero substandard, zero OREO; watchlist limited and secured, with office CRE LTV ~65% and DSC ~1.35x—clear asset quality strength underpinning risk-adjusted returns .
  • Funding mix improved: deposits +$67.5M QoQ, brokered -$127.2M, uninsured deposits ~27.2%; a $243.0M municipal inflow supports liquidity and lower wholesale reliance .
  • Margin resilience: NIM held at 2.27% (FTE), loan yields +7 bps QoQ to 5.59% as originations/renewals price higher; efficiency ratio stable at 56.45% .
    • CEO: “We are well positioned for continued improvement in earnings through asset repricing while controlling funding costs and maintaining our pristine credit quality” .

What Went Wrong

  • Loan balances -$50.1M QoQ amid payoffs/refis and lower line utilization; average loans fell ~$26.5M, tempering balance-sheet growth momentum .
  • Deposit costs +4 bps QoQ (3.19%), with pockets of upward pricing pressure; NIM ticked down 1 bp QoQ to 2.27%, reflecting competitive funding dynamics .
  • Limited formal guidance and thin Street coverage (single estimate) keep investor visibility modest; outsized municipal deposit inflow will be withdrawn over ~24 months, normalizing liquidity over time .

Financial Results

MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$19.576 $20.852 $23.098 $23.829
Diluted EPS ($USD)$0.31 $0.42 $0.46 $0.47
Net Interest Margin % (FTE, non-GAAP)1.86% 1.98% 2.28% 2.27%
Efficiency Ratio % (FTE, non-GAAP)67.14% 60.79% 56.37% 56.45%
Loan Mix (as of Q2 2025)% of Portfolio
C&I17%
CRE – Non-Owner-Occupied36%
CRE – Owner-Occupied13%
Multifamily14%
Construction & Development15%
1–4 Family3%
Consumer & Other2%
Deposits Mix (as of Q2 2025)% of Total Deposits
Savings & Money Market52%
Time Deposits13%
Interest-Bearing Demand14%
Noninterest-Bearing Demand15%
Brokered6%
KPIs (Period-end unless stated)Q4 2024Q1 2025Q2 2025
Loans ($USD Millions)$3,004.9 $3,016.5 $2,966.4
Deposits ($USD Millions)$3,357.6 $3,324.5 $3,392.0
Brokered Deposits ($USD Millions)$266.4 $335.5 $208.3
Estimated Uninsured Deposits (%)~30.0% ~28.0% ~27.2%
ACL / Loans (%)1.01% 1.01% 1.03%
Nonperforming Assets / Assets (%)0.00% 0.00% 0.00%
Net Charge-offs (Recoveries) ($USD Thousands)$(12) $(94) $(13)
ROA (%)0.68% 0.81% 0.80%
ROE (%)12.24% 13.84% 13.65%
Tangible Common Equity Ratio (%)5.68% 5.97% 5.94%
Loan Yield (%)5.53% 5.52% 5.59%
Deposit Cost (%)3.53% 3.15% 3.19%
Net Interest Income ($USD Millions)$19.422 $20.855 $21.419

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Interest MarginH2 2025None“Opportunity for some improvement” driven by asset repricing; depends on deposit pricing/Fed actions Indicated improvement
Deposit CostsH2 2025None“Relatively flat, maybe up a couple bps” absent Fed cuts Indicated slight increase
Loan GrowthH2 2025NonePipeline “robust”; disciplined pricing; expect opportunities despite payoffs Positive
Expenses Run-RateH2 2025NoneQ2 run-rate a good indicator; no significant items expected Maintained
DividendQ3 2025$0.25$0.25 declared (payable Aug 20; record Aug 6) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
Margin trajectoryNIM improvement since Q3; deposit rate cuts helped; more asset repricing ahead NIM 2.27%; asset repricing tailwind; deposit costs flat-to-up a few bps Improving, near-term stable
Deposit strategyStrong core deposit growth; reduced wholesale funding Deposits +$67.5M; brokered -$127.2M; municipal $243M inflow; uninsured ~27% Mix improving
Credit qualityMinimal NPAs; qualitative CRE provision in Q4 “Enviable zeros”; watchlist small and secured; office CRE LTV/DSC disciplined Strong/stable
CRE/Office riskOffice vacancy caution; limited exposure Continued caution; owner-occupied focus; monitoring lease expirations Watchful
Tariffs/macroManufacturer input cost/supply risks noted No new macro shocks; disciplined underwriting amid competition Ongoing monitoring
Operating expensesQ4 had accruals/depreciation step-up; Q1 run-rate steady Q2 run-rate indicative; no significant items expected Stable
MN market M&A disruptionNot discussedOpportunity to take share; capacity to capitalize on disruption Opportunity

Management Commentary

  • CEO Dave Nelson: “We still have a fair amount of asset repricing to benefit from this year and also during 2026, which will continue to improve our margin [and] earnings… We have declared a $0.25 per share dividend… yield in excess of 5%.”
  • CRO Harlee Olafson: “We have a number of enviable zeros… zero non-accruals… zero substandard loans… average LTV on non-owner-occupied office property is 65%, and the debt service coverage is 1.35x.”
  • CFO Jane Funk: “Core deposit balances increased approximately $195 million… municipal customer raised funds through a bond offering… expected to be withdrawn over the next couple of years… loan yield was 5.59% vs. 5.52% in Q1; deposit costs up four basis points.”

Q&A Highlights

  • Loan growth outlook: Pipeline “robust” with disciplined pricing; expected to maintain/grow portfolio despite payoffs .
  • Margin trajectory: Management sees H2 margin “opportunity” mainly from asset repricing; deposit costs likely flat-to-up a few bps without Fed cuts .
  • Market share/M&A disruption: MN markets present hiring and share-gain opportunities as larger banks exit regional centers .
  • Deposit growth: Pipeline as focused on deposits as credit; strategy targets deposit-rich business banking and high-value retail deposits .
  • Expense outlook: Q2 run-rate is a good guide for H2; no significant items expected .

Estimates Context

MetricQ2 2024Q1 2025Q2 2025
EPS – Consensus Mean ($USD)$0.32*$0.38*$0.45*
EPS – Actual ($USD)$0.31 $0.46 $0.47
Revenue – Consensus Mean ($USD Millions)$19.29*$21.61*$23.50*
Revenue – Actual ($USD Millions)$19.576 $23.098 $23.829
  • Beat/miss summary:
    • Q2 2025: EPS beat (+$0.02, +4%); revenue beat (+$0.33M, +1.4%)*.
    • Q1 2025: EPS beat (+$0.08); revenue beat (+$1.49M)*.
    • Q2 2024: EPS slight miss (-$0.01); revenue beat (+$0.29M).
      Values retrieved from S&P Global.

Key Takeaways for Investors

  • Funding mix and liquidity improved materially; brokered down, uninsured down—supporting lower risk and potential cost-of-funds leverage as rates evolve .
  • Asset repricing tailwinds should continue into 2026; loan yields rising while credit costs remain negligible, a constructive spread backdrop even with modest deposit pricing pressure .
  • Credit quality is a differentiator: zero NPAs/substandard, disciplined office CRE metrics (LTV/DSC) and diversified CRE sectors—reduces tail-risk perception for the stock .
  • Expense discipline intact; stable efficiency ratio and run-rate guide lend visibility to operating leverage if NIM expands in H2 .
  • Thin Street coverage (one estimate) can heighten quarterly surprise risk; recent beats suggest upward estimate revisions bias if asset repricing persists [Q2/Q1 consensus vs actuals]*.
  • Dividend stability with ~5% yield and CET1/TCE trends reinforce total-return profile for defensive bank exposure .
  • Near-term trading: Favor on clean credit and funding mix improvement; watch deposit-cost prints and municipal outflow cadence. Medium-term: thesis hinges on sustained margin accretion via repricing and continued core deposit wins .

Additional Notes

  • No separate Q2 2025 press releases beyond the 8-K exhibits were found [press release search result].
  • Non-GAAP metrics: NIM and efficiency are presented on FTE basis with reconciliations; comparisons use the company’s standard industry measures .
  • Closing stock price at quarter-end: $19.63; annualized dividend yield 5.09%—context for investor yield positioning .