West Bancorp Q2FY26 Results: Net profit rises 39% YoY, dividend up
- Net income rose 39% YoY to $11.1 million in Q2 2026
- Net interest margin expanded 42 bps YoY; cost of deposits fell 46 bps
- Dividend increased to record $0.26 per share
- Watch list declined 50% since March 2026; zero past-due loans
- $200 million in CRE development loans sold/refinanced in H1 2026
*this image is generated using AI for illustrative purposes only.
West Bancorp (NASDAQ: WTBA) reported a 39% year-over-year increase in net income for the second quarter of 2026, reaching $11.1 million. The bank also announced a record quarterly dividend increase to $0.26 per share.
The results reflect strong profitability metrics, with year-to-date return on average equity exceeding 16%. Management highlighted pristine credit quality, noting zero loans past due 30 days and a 50% decline in the watch list since March 2026.
Financial Performance
Net interest income rose 19% to an increase of $4.1 million compared to the second quarter of 2025. This growth was supported by a widening net interest margin, which expanded by 10 basis points sequentially and 42 basis points year-over-year.
| Metric | Q2 2026 | Change vs Q2 2025 |
|---|---|---|
| Net Income | $11.1 million | +39% |
| Net Interest Income Increase | $4.1 million | +19% |
| Cost of Deposits | - | -46 bps |
| Noninterest Expenses | - | +2% |
The cost of deposits declined by 2 basis points quarter-over-quarter and 46 basis points year-over-year. Noninterest expenses remained controlled, rising only 2% from the prior year period. No provision for credit losses was recorded in the quarter.
Credit Quality and Loan Book
Credit quality remains strong with no nonaccruals or other real estate owned (OREO). The watch list stands at 0.7% of the loan balance, down from March 31, 2026 levels. Chief Risk Officer Harley Oleson noted that while two credits were downgraded due to cash flow difficulties, they are well-secured and not expected to result in losses.
Average loan outstandings increased slightly in the quarter. However, spot balances declined due to over $200 million in commercial real estate development loans being sold or refinanced into non-recourse financing during the first half of 2026. CEO Dave Nelson attributed this to cautious customer behavior regarding new developments amid persistent interest rates.
What the Numbers Show
The divergence between average loan growth and declining spot balances highlights a structural shift in the loan book rather than a loss of customers. The exit of $200 million in development loans suggests a strategic de-risking from speculative real estate projects, while the pipeline for commercial and industrial (C&I) lending remains robust.
Outlook and Market Dynamics
Management anticipates continued core deposit growth, particularly in Minnesota where national banks have reduced local presence. Approximately $600 million in fixed-rate loans are expected to reprice over the next 12 months, weighted toward the first half of next year. This repricing is expected to support margin expansion despite fierce competition in transactional accounts and certificates of deposit.
Todd Mather, Central Iowa Market President, expects payoff activity to moderate after the third quarter as the bank captures new business opportunities.
How might the repricing of $600 million in fixed-rate loans impact West Bancorp's net interest margin if interest rates decline faster than anticipated?
What specific strategies is West Bancorp employing to capture market share from national banks retreating from Minnesota, and what are the associated acquisition costs?
Could the strategic exit from $200 million in commercial real estate development loans limit long-term growth potential in high-yield lending segments?
18
Create Custom Screeners 
Access 200+ Pre-built Filters 
Use 50+ Readymade Screener 
