West Bancorporation Inc (WTBA) 2017 Q1 法說會逐字稿

Good morning and welcome to the West Bancorporation Quarterly Earnings Conference call. All participants will be in listen-only mode.(Operator Instructions)

After today's presentation, there will be an opportunity to ask questions. (Operator Instructions). I would now like to turn the conference over to Mr. Doug Gulling. Please go ahead.

Yes. Thank you, Andrea. And welcome, good morning. We appreciate you joining us this morning. With me on the call are Brad Winterbottom, West Bank President; Dave Nelson, our CEO; Marie Roberts, our Chief Accounting Officer and Harlee Olafson, our Chief Risk Officer.

Let me get our fair disclosure statement out of the way. Comments made during this conference call may contain forward-looking statements within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control.

Our actual results and financial condition may differ materially from those indicated in the forward-looking statements, therefore you should not rely on any of these forward-looking statements. Additional information concerning factors that could cause actual results to differ materially from those in the forward-looking statements can be found in the Company's periodic filings with the Securities and Exchange Commission including the Company's 10-K for the year ended December 31, 2016.

Any forward-looking statements made by us during this call is based only on information currently available to us and speaks only as of today's date. The Company undertakes no obligation to revise or update such statements to reflect current events or circumstances after this call or to reflect the occurrence of unanticipated events. I'd like to turn it over to Dave Nelson to start our call.

Thank you, Doug and good morning, everyone. Thank you for joining us. We appreciate both your interest and support in our Company. We had a record first quarter, which is now our 11th consecutive record quarter, and we are off to a very good start for the year. Our good growth continues with exceptional credit quality. All appears to be well at West Bank. Our Board declared an increase to our quarterly dividend to $0.18 per share, which represents the highest quarterly dividend ever paid by our Company, this dividend will be payable May 24th to shareholders of record as of May 10th. We now have record earnings and record dividends.

I'd like to turn the call over to Brad Winterbottom, our Bank President to discuss more details.

Thanks, Dave. The loan balances increased from roughly $1.4 billion to $1.45 billion for the first quarter. Our commercial -- the C&I piece of this, I would say that we have picked up a handful of really nice relationships over the last few months, and those new relationships are kind of replacing a couple of long-time customers that ended up selling to private equity companies, and we have -- so we've lost a couple of customers as well.

Our construction and land development, it is mostly construction activity has increased for the first quarter, I think the mild winter kept the construction companies busy, and we've had advances on construction notes and I would anticipate that number to continue to increase probably through the fall as we have about a couple of handfuls of very large construction projects that are in midstream.

I will also tell you that we anticipate converting those to term basis at the end of construction, and so that that will be amortizing probably by the end of the year.

Our commercial real estate numbers have also increased, those would be primarily some owner occupied transactions that have taken place. But in all three markets, we've seen growth. Our pipeline is full. We're pleased with the pipeline and with that we are chasing a lot of deposits to help fund this growth, and I'm pleased to report that progress is doing very well also.

Those would be my comments. I'll turn it over to Harlee, to talk about asset quality and he might have a few more comments about Rochester and our Iowa City markets.

Thanks, Brad. I'll be brief here on our credit quality since it is very good. One statistic is that for both year-end 2015, year-end 2016 and the first quarter of 2017, we have been in a net recovery position in both years and the first quarter. Our watch list today is at a historically low level, past dues this last quarter in a portfolio of a billion for [$1.450 billion] were a total of $70,000 over 30 days past due, so -- and I think both of those were barely over 30 days past due and now current. We have no OREO, we have no possessions pending. So the credit trends are very good and appear to be sustainable and strong.

Rochester and Iowa City both have good pipelines in fact combined have over $100 million in our commercial pipelines right now between the two. Rochester bank is open for business, the new bank is up and running, it's -- looks real nice and I think it's getting stronger. Strong results. Right now, they are working very diligently to continue to sell to our commercial customers their personal banking services and are having good results doing that. And on a combined basis, we continue to implement proper pricing and fees to properly support our products and services that we're providing. The increase in short-term rates has changed our cost a bit on our savings products, but is also increasing on our lines of credit the earnings there. So with that, I'll turn it back over to Doug.

Thanks, Harlee. I just have one follow-up comment, just comment on the provision. As you noticed, we did not take provision for loan loss this quarter, but Harlee mentioned, we've been in a recovery mode really for quite some time. And in the first quarter, we had net recoveries of $315,000. And so, when we analyze the allowance at the end of the quarter, we felt that was an appropriate increase in the allowance to cover the loan growth for the first quarter. So we did not add any more into the allowance, but with that, we will stop and ask if there are any questions.

We will now begin the question-and-answer session. (Operator Instructions) Andrew Liesch, Sandler O'Neill.

Good morning, guys. Just a question on the securities book, looks like it's holding pretty close to the $260 million or so, is that kind of the level that you want to manage it to going forward or do you look at it as a percentage of assets?

I think, we look at it more just as an absolute number. It probably won't drop much lower than it is right now.

Okay. So if it stays around here and you get the loan growth coming on presumably improved earning asset mix, better loan yield maybe offset by some higher funding cost and we could see the margin move up from this [3.48] level, does that seem reasonable?

Well, that's possible. I guess, I wouldn't expect it to move significantly from where it is right now but I think your points are valid.

Okay, and then just curious, what tax rate we should be using to forecast, is it going to bounce back to the normal level this quarter?

Congress won't do anything this quarter, will they?

No, I was thinking, related to like stock-based compensation?

No, I think, we're talking around 32%.

Okay, that's format and yet those all are my questions. Thanks so much.

Tom Carlstrom, West Bank.

Hey, guys. This is Tom Carlstrom. Just checking in. I don't have a question, just want to tell you, keep up the good work. It's nice to watch from a distance and nice to know that I've got a little in the gain . Thanks again.

Thanks for listening in Tom

(Operator Instructions) There appear to be no further questions at this time. I would like to turn the conference back over to Mr. Doug Gulling for any closing remarks.

Well, just like to thank you again for joining us this morning. And again, we appreciate your interest in our Company, and we will do this again at the end of July. So, thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.