Two Iowa-based regional banks reported drops in year-over-year net income losses in their 2023 fourth quarter reports released Jan. 25.

But the West Des Moines-based West Bancorporation Inc. and Iowa City-based MidWestOne Financial Group Inc. were able to point to loan and deposit growth as positive trends in their balance sheets.

According to West Bancorporation’s report, the company had net income of $4.53 million in the fourth quarter of 2023, compared with $8.95 million during the same period in 2022. West Bancorporation, the parent company of West Bank, reported a total net income in 2023 of $24.1 million, compared with 2022 net income of $46.4 million.

The report also shows the company’s loans increased $77.8 million in the fourth quarter of 2023, or 10.9% annualized, and deposits were up $218.2 million, or 7.9%, in the fourth quarter.

Brokered deposits totaled $305.4 million as of Dec. 31, compared with $237 million on Sept. 30, 2023, an increase of $68.4 million, according to the report.

West Bancorporation President and CEO David Nelson noted in a prepared statement that the bank faced similar trends in 2023 to its peers.

“Like the rest of our industry, our company experienced some significant margin challenges in 2023. The interest rate environment, including dramatic increases in short-term rates, an ongoing inverted yield curve and aggressive deposit competition, had a significant impact on our cost of funds and net interest margin,” Nelson said. “We have a clear understanding of what is driving our challenges, along with a clear understanding of our path forward to more normalized margins.”

Nelson said the bank had no loan greater than 30 days past due.

MidWestOne’s report showed net income in the fourth quarter 2023 of $2.73 million, compared with $16 million reported in the same period in 2022. The report shows a drop in revenue from $54.50 million in fourth quarter 2022 to $36.42 million in the fourth quarter 2023.

But the bank recorded annualized loan growth of 6.1%, according to the report. MidWestOne CEO Charles “Chip” Reeves said in a prepared statement he’s “pleased with our balance sheet trends … and continue to benefit from the expansion of our major market banking teams.”

The company’s deposits, excluding brokered deposits, increased $31.4 million. The report says that’s the second sequential quarter of deposit growth for MidWestOne.

“We also achieved core deposit growth in the quarter, and remain cautiously optimistic that we can grow our core deposit franchise through the year ahead,” Reeves said. “That said, we remain liability sensitive, and funding cost pressure continued to impact our margins and earnings through the fourth quarter, though that pressure has been moderating.”

According to Reeves’ statement, MidWestOne is “well ahead” in its plan to position the bank to hit financial results at the median of the bank’s peer group by the end of 2025. MidWestOne also closed on its merger with Denver Bankshares Inc. on Jan. 31.

“Key new hires in our Iowa Metro and Twin Cities markets, the hiring of a talented executive to lead our wealth management business, and the expansion of our specialty business lines with the recruitment of an agri-business team” were other highlights, Reeves said.

“We are rapidly scaling in our core markets while adding new business lines, which taken together, provide visibility to improved growth and returns,” he said.

Read the full reports here:

• West Bancorporation Inc.
• MidWestOne Financial Group Inc.