West Bancorporation(WTBA)2023-01-27 01:06Financial Data and Key Metrics Changes - In 2022, West Bancorporation reported the second strongest earnings year in its 130-year history, with earnings approximately 47% higher than in 2020, despite falling short of 2021 earnings [7] - The net loan growth for the year was about 11.7%, with no loans past due for six consecutive quarters [7][8] - The net interest margin decreased to 2.49% in Q4 2022 from 2.78% in Q3 2022, while loan yields increased to 4.63% from 4.34% [23] Business Line Data and Key Metrics Changes - Excluding PPP loans, loans outstanding grew just under 5% or 300 million or 12.7% for the full year [13][14] - The top five loan concentrations included C&I business (20%), multifamily (13%), construction (13%), office and medical office (13%), and warehouses (10%) [11] Market Data and Key Metrics Changes - The retail customer base saw a 4% increase in total deposits, while the commercial customer base experienced a decrease due to customers seeking better returns or using funds for growth [16][17] - The Eastern Iowa team reported substantial loan asset growth and continued to bring in new relationships [12] Company Strategy and Development Direction - The company is focused on building core deposits while also utilizing brokered deposits and Federal Home Loan Bank advances to manage funding costs [29] - Expansion efforts in Minnesota are ongoing, with new facilities planned to enhance business growth [19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged that rising interest rates have slowed residential and commercial development, but expressed confidence in the company's ability to handle economic challenges [10][11] - The company remains vigilant in monitoring credit quality, with no significant issues anticipated in the near term [34][35] Other Important Information - The company declared a quarterly dividend of 70 million of principal is projected to roll off the investment portfolio in 2023 [28] Question: What are your thoughts on deposit pricing and the current cycle? - Management noted that deposit sensitivity to Fed rates is high, and improvements in funding costs will depend on the Fed's actions [30] Question: What leverage do you have to address margin compression? - Management expects modest expense growth and is closely monitoring noninterest expenses [33] Question: What are your capital priorities for the new year? - The company plans to maintain strong core capital and regulatory capital, with no significant changes to its capital strategy anticipated [38]