West Bancorporation (NASDAQ:WTBA) executives highlighted improving core earnings trends, expanding net interest margin, and exceptionally strong credit metrics during the company’s fourth-quarter 2025 earnings call. Management also detailed a securities portfolio repositioning that reduced fourth-quarter reported income but was described as improving balance sheet flexibility heading into 2026.
Fourth-quarter and full-year earnings, including securities repositioning
Chief Financial Officer Jane Funk said net income was $7.4 million for the fourth quarter, compared with $9.3 million in the third quarter of 2025 and $7.1 million in the fourth quarter of the prior year. For full-year 2025, net income was $32.6 million, up from $24.1 million in 2024.
Absent the securities loss, Funk said fourth-quarter net income would have exceeded $10 million. CEO Dave Nelson said that despite the loss trade, full-year net income rose 35% from the prior year, and he described the company as being positioned for “a special year.”
Net interest margin and deposit cost trends
Funk said net interest income continued to improve, driven by an expanding net interest margin. She reported that margin rose 11 basis points versus the third quarter and 49 basis points versus the fourth quarter of last year.
Deposit costs also moved lower. Funk said the cost of deposits declined 28 basis points compared with the third quarter and 64 basis points compared with the year-ago quarter.
On the call, Funk provided an update on margin trends heading into the first quarter. She said that in late 2025 and early 2026 the bank was “probably running around 2.5% margin,” and she added that management believed there was room for improvement through the year even without changes in the rate environment.
Deposit growth and the mix of core funding
Management emphasized deposit gathering as a key focus. Chief Credit Officer Todd Mather said deposit balances increased by just over $162 million during the quarter, including increases in core, commercial, and retail deposits.
Funk added that core deposit balances excluding brokered funds increased by approximately $212 million in the fourth quarter and $223 million for the year. She said growth was seen across retail, commercial, and public fund deposits, and she described public funds as core deposits due to the bank’s municipal relationships.
However, Funk cautioned that the deposit outlook carried some uncertainty because part of the growth came from public funds tied to municipal bond offerings. She said the company expects some of that money to flow out during 2026, which could create normal volatility that might offset growth in retail and commercial deposits.
Loan trends: payoffs, replacement activity, and repricing
Mather said loan outstandings were down slightly in the quarter to just under $3 billion, citing a few larger payoffs driven by asset sales and refinancing activity. He said many of the paid-off assets were priced below the current interest rate environment and were being replaced with “quality new assets at better interest rates.”
During the Q&A session, Bank President Brad Winterbottom provided additional detail on the payoffs. He said one customer sold medical office buildings, resulting in more than $50 million in payoffs. He also referenced other customers selling or refinancing into secondary markets and large multifamily, noting the activity was elevated in the fourth quarter and could continue “a little bit more” into the first quarter as the bank works to replace volume.
Funk also discussed loan repricing. In response to an analyst question, she said the fixed-rate portfolio repricing in 2026 totals just under $400 million, with an expected rate pickup of roughly 1.5% to 2%. She said the average rate on that repricing block was “in the low fours.”
CEO Nelson added that the company expects loan growth to pick up when the economic expansion begins, and he said margins were expanding with “more of that to come.”
Credit quality: “pristine” metrics and watch list concentration
Chief Risk Officer Harlee Olafson described year-end 2025 credit quality as “very strong.” He stated the company had:
- No past dues over 30 days
- No other real estate owned
- No nonaccruals
- No substandard loans
Olafson said the watch list increased but remained low at 1.7% of total loans. He noted that about 70% of the watch list related to the trucking industry, which he said has been pressured by low freight levels and excess capacity. Olafson said the portfolio is well secured and that management believes those businesses are making decisions to remain viable.
Funk said no provision for credit losses was recorded in the fourth quarter, reflecting what she described as “pristine” credit quality.
Separately, Nelson said the company declared a $0.25 dividend payable February 25 to shareholders of record as of February 11.
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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