Summary of WTBA Q1 2026 Earnings Call

1Key Financial Results and Metrics

Net Income: $10.6 million, a 35% increase from $7.8 million in Q1 2025.

Net Interest Income: Increased by $3.5 million (17% year-over-year).

Net Interest Margin (NIM): Improved by 12 basis points quarter-over-quarter and 31 basis points year-over-year.

Cost of Deposits: Decreased by 14 basis points from the previous quarter and 40 basis points year-over-year.

Loan Portfolio: Flat at $3 billion compared to year-end 2025, with notable loan payoffs due to secondary market refinancing.

Credit Quality: No loans past due 30 days; watch list down 20% to 1.4% of total loans.

2Strategic Updates and Business Highlights

Technology Investments: Continued investments to enhance customer service and operational efficiencies.

Dividend: A quarterly dividend of $0.25 declared, payable on May 20, 2026.

Market Expansion: Ongoing efforts in Minnesota with a focus on relationship-based business banking, capturing personal business from business owners.

Credit Pipeline: Strong pipeline with numerous opportunities, particularly in commercial real estate, despite current loan portfolio stagnation.

3Forward Guidance and Outlook

Loan Growth: Management expects loan demand to increase as economic conditions improve, although timing remains uncertain.

NIM Outlook: Continued improvement anticipated due to asset repricing; approximately $250 million in loans and investments expected to reprice at lower rates over the next year.

Expense Management: Anticipated ordinary growth in expenses around 4-5%, with no significant anomalies expected.

4Bad News, Challenges, or Points of Concern

Loan Demand: Current loan demand is mild, with many clients refinancing or restructuring their assets, leading to flat loan balances.

Trucking Industry Exposure: 90% of the watch list is related to the struggling trucking industry, which faces cyclical challenges.

Market Competition: Competitive pressures in deposit gathering and loan origination are noted, requiring selective engagement in new opportunities.

5Notable Q&A Insights

Municipal Deposits: Approximately 75% of a significant municipal deposit from last year remains on the balance sheet.

Loan Growth Expectations: Management is optimistic about backfilling loan payoffs with new opportunities, but timing for overall loan growth remains uncertain.

Capital Management: Capital needs are being balanced with growth opportunities; management is focused on retaining earnings to support future loan growth.

Market Disruption: Opportunities from recent M&A activity in Minnesota are expected to unfold over several years, with a focus on establishing relationships for future growth. Overall, WTBA reported a strong quarter with improved financial metrics and a solid credit quality profile, though challenges in loan growth and industry-specific risks were acknowledged. The outlook remains cautiously optimistic with strategic initiatives aimed at enhancing market presence and operational efficiency.