West Bancorporation

Good afternoon, everyone. Thank you for attending today's West Bank Corporation Q1 earnings call. My name is Ciara and I will be your moderator today. All lines will be muted during the presentation portion of the call with an opportunity for questions and answers at the end. If you would like to ask a question, press star one on your telephone keypad. I would now like to pass the conference over to our host, Shane Funk, CFO of West Bank. Please proceed.

Thank you. I just want to start out by thanking everyone for joining us on our call today. With me in our conference room, I've got Dave Nelson, our CEO, Harley Oleson, our Chief Risk Officer, Brad Winterbottom, Bank President, and Brad Peters, our Minnesota Regional President. I'll start out by reading our fair disclosure statement. During today's conference call, we may make projections and other forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 regarding future events or the future financial performance of the company. We caution that such statements are predictions and that actual results may differ materially. Please see the forward-looking statement disclosure and our 2023 first quarter earnings release for more information about risks and uncertainties which may affect us. The information we will provide today is accurate as of March 31st, 2023, and we undertake no duty to update the information. At this point, I'll turn it over to Dave Nelson.

Thank you, Jane. Thank you, everyone, for joining us today. We appreciate your interest in our company. With all that has been happening during recent months with our economy and specifically within our industry, our first quarter turned out as we expected. The inverted yield curve has contracted our net interest margin and adversely impacted earnings. Given the run-up in deposit costs and uncertainty surrounding the economy, we think we have fared fairly well to remain relatively flat with loan and depository balances. When we say our deposits are relationship-based, we don't just mean people are loyal to our brand or logo. We mean we actually know them personally and interact with them frequently. We actually know what is most important to each other and try to mutually provide that to one another, so we have not had customers withdraw deposits for irrational reasons. We have lost some deposits due to some customers chasing a higher rate, and some business owners have been using their own reserves for various business purposes, but we have not lost customers. We are also successfully gaining new business. Obviously, our net interest margin has taken a hit as deposit costs have increased faster than loan yields. This problem will persist until the inverted yield curve subsides and the yield curve normalizes. West Bank is well capitalized and has plenty of liquidity and funding sources with the ability to get more if it were advantageous to do so. While we do have several opportunities in our pipeline, I don't think many, including are expecting our overall economy to grow much this year. If our economy does not grow, it is not possible for our industry as a whole to grow. Higher interest rates and fear of economic recession are expected to reduce loan demand. Our credit quality remains pristine, and we just had our seventh consecutive quarter end without having a single loan pass due 30 days. Rapidly increasing interest rates temporarily harm our net interest margin, but as assets reprice and rates stabilize, we believe our net interest margin will improve and our historic level of earnings will return. We are willing to pay up on deposits to maintain our customer base and position ourselves for long-term success. Our board of directors has declared a regular quarterly dividend of 25 cents per common share The dividend is payable on May 24, 2023, to stockholders of record on May 10 of this year. Those are the extent of my prepared remarks, so I'd now like to turn the call over to our Chief Risk Officer, Harley Olofsson.