What changed in this filing

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Item 1. Financial Statements

2022-07-28 compared with 2022-04-28 · 173 added, 97 removed, 792 unchanged (25% of the section changed)

3 unchanged sentences

Consolidated Balance Sheet

(in thousands, except share and per share data) March 31, 2022 December 31, 2021

(in thousands, except share and per share data) June 30, 2022 December 31, 2021

Cash and due from banks $ 26,174 $ 17,555

29 unchanged sentences

authorized 50,000,000 shares;

no shares issued and outstanding at March 31, 2022 and December 31, 2021

no shares issued and outstanding at June 30, 2022 and December 31, 2021

Common stock, no par value;

authorized 50,000,000 shares;

and 16,554,846 shares issued and outstanding at March 31, 2022

and 16,554,846 shares issued and outstanding at June 30, 2022

and December 31, 2021, respectively

8 unchanged sentences

Consolidated Statements of Income

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except per share data) 2022 2021 2022 2021

21 unchanged sentences

Increase in cash value of bank-owned life insurance 236 240 463 460

Loan swap fees — 42 — 42

Realized securities gains, net — 36 — 40

19 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

(in thousands) 2022 2021 2022 2021

2 unchanged sentences

Unrealized gains (losses) on securities:

Unrealized holding losses arising during the period ( 54,595 ) ( 8,338 )

Unrealized holding gains (losses) arising during the period ( 44,413 ) 4,048 ( 99,008 ) ( 4,290 )

reclassification adjustment for net gains realized in net income — ( 36 ) — ( 40 )

Income tax benefit 13,813 2,102

Other comprehensive loss on securities ( 40,782 ) ( 6,240 )

Income tax (expense) benefit 11,236 ( 1,011 ) 25,049 1,091

Other comprehensive income (loss) on securities ( 33,177 ) 3,001 ( 73,959 ) ( 3,239 )

Unrealized gains (losses) on derivatives:

Unrealized holding gains arising during the period 10,536 7,763

Unrealized holding gains (losses) arising during the period 4,066 ( 2,321 ) 14,602 5,442

reclassification adjustment for net losses realized in net income 642 1,098 1,687 6,068

Income tax expense ( 2,930 ) ( 3,208 )

Other comprehensive income on derivatives 8,651 9,525

Income tax (expense) benefit ( 1,191 ) 308 ( 4,121 ) ( 2,900 )

Other comprehensive income (loss) on derivatives 3,517 ( 915 ) 12,168 8,610

Total other comprehensive income (loss) ( 29,660 ) 2,086 ( 61,791 ) 5,371

5 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Additional Other

1 unchanged sentence

Stock Shares Amount Capital Earnings Income (Loss) Total

Balance, March 31, 2022 $ — 16,631,413 $ 3,000 $ 29,421 $ 246,827 $ ( 42,768 ) $ 236,480

— — — — 12,667 — 12,667

Other comprehensive loss, net of tax — — — — — ( 29,660 ) ( 29,660 )

Cash dividends declared, $ 0.25 per common share

— — — — ( 4,160 ) — ( 4,160 )

Stock-based compensation costs

— — — 862 — — 862

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes — 9,000 — — — — —

Balance, June 30, 2022 $ — 16,640,413 $ 3,000 $ 30,283 $ 255,334 $ ( 72,428 ) $ 216,189

Three Months Ended June 30, 2021

Additional Other

Preferred Common Stock Paid-In Retained Comprehensive

Stock Shares Amount Capital Earnings Income (Loss) Total

Balance, March 31, 2021 $ — 16,540,381 $ 3,000 $ 28,243 $ 211,847 $ ( 8,561 ) $ 234,529

Net income — — — — 13,239 — 13,239

Other comprehensive income, net of tax — — — — — 2,086 2,086

Cash dividends declared, $ 0.24 per common share

— — — — ( 3,973 ) — ( 3,973 )

Stock-based compensation costs

— — — 645 — — 645

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes — 14,465 — — — — —

Balance, June 30, 2021 $ — 16,554,846 $ 3,000 $ 28,888 $ 221,113 $ ( 6,475 ) $ 246,526

See Notes to Consolidated Financial Statements.

West Bancorporation, Inc.

and Subsidiary

Consolidated Statements of Stockholders' Equity

(in thousands, except share and per share data)

Six Months Ended June 30, 2022

Additional Other

Preferred Common Stock Paid-In Retained Comprehensive

Stock Shares Amount Capital Earnings Income (Loss) Total

Balance, December 31, 2021 $ — 16,554,846 $ 3,000 $ 30,183 $ 237,782 $ ( 10,637 ) $ 260,328

8 unchanged sentences

— 85,567 — ( 1,519 ) — — ( 1,519 )

Balance, March 31, 2022 $ — 16,631,413 $ 3,000 $ 29,421 $ 246,827 $ ( 42,768 ) $ 236,480

Three Months Ended March 31, 2021

Balance, June 30, 2022 $ — 16,640,413 $ 3,000 $ 30,283 $ 255,334 $ ( 72,428 ) $ 216,189

Six Months Ended June 30, 2021

Additional Other

10 unchanged sentences

— 85,574 — ( 1,213 ) — — ( 1,213 )

Balance, March 31, 2021 $ — 16,540,381 $ 3,000 $ 28,243 $ 211,847 $ ( 8,561 ) $ 234,529

Balance, June 30, 2021 $ — 16,554,846 $ 3,000 $ 28,888 $ 221,113 $ ( 6,475 ) $ 246,526

See Notes to Consolidated Financial Statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2022 2021

11 unchanged sentences

Increase in accrued interest receivable ( 473 ) ( 184 )

(Increase) decrease in other assets 249 ( 2,883 )

Increase in accrued expenses and other liabilities 1,702 5,547

Decrease in other assets 1,448 3,170

Increase (decrease) in accrued expenses and other liabilities 4,189 ( 1,181 )

Net cash provided by operating activities 33,645 28,508

10 unchanged sentences

Net increase (decrease) in deposits ( 173,554 ) 124,295

Net decrease in federal funds purchased ( 2,880 ) ( 1,315 )

Net increase (decrease) in federal funds purchased 130,120 ( 1,770 )

Proceeds from issuance of subordinated debt, net of issuance costs 58,783 —

Net decrease in Federal Home Loan Bank advances — ( 50,000 )

Principal payments on long-term debt ( 35 ) ( 1,272 )

1 unchanged sentence

Restricted stock units withheld for payroll taxes ( 1,519 ) ( 1,213 )

Net cash provided by (used in) financing activities 66,674 ( 25,691 )

Net cash provided by financing activities 5,496 62,444

Net decrease in cash and cash equivalents ( 165,885 ) ( 125,612 )

16 unchanged sentences

Although management believes that the disclosures are adequate to make the information presented understandable, it is suggested that these interim consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2021 filed with the SEC on February 24, 2022.

In the opinion of management, the accompanying consolidated financial statements of the Company contain all adjustments necessary to fairly present its financial position as of March 31, 2022 and December 31, 2021 and net income, comprehensive income, changes in stockholders' equity and cash flows for the three months ended March 31, 2022 and 2021.

In the opinion of management, the accompanying consolidated financial statements of the Company contain all adjustments necessary to fairly present its financial position as of June 30, 2022 and December 31, 2021, net income, comprehensive income (loss) and changes in stockholders' equity for the three and six months ended June 30, 2022 and 2021, and cash flows for the six months ended June 30, 2022 and 2021.

The results for these interim periods may not be indicative of results for the entire year or for any other period.

43 unchanged sentences

Troubled Debt Restructurings and Vintage Disclosures .

The amendments in this ASU improve the usefulness of information provided to investors about certain loan refinancing, restructurings, and write-offs.

The amendments in this ASU improve the usefulness of information provided to investors about certain loan refinancings, restructurings, and write-offs.

The amendments eliminate the accounting guidance for troubled debt restructurings (TDRs) by creditors that have adopted ASU No.

It also enhances disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficult.

It also enhances disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty.

Lastly, the amendments require that a public business entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases.

4 unchanged sentences

The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

They provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022.

10 unchanged sentences

The incremental shares, to the extent they would have been dilutive, were included in the denominator of the diluted earnings per common share calculation.

The calculations of earnings per common share and diluted earnings per common share for the three months ended March 31, 2022 and 2021 are presented in the following table.

Three Months Ended March 31,

The calculations of earnings per common share and diluted earnings per common share for the three and six months ended June 30, 2022 and 2021 are presented in the following table.

Three Months Ended June 30, Six Months Ended June 30,

(in thousands, except per share data) 2022 2021 2022 2021

2 unchanged sentences

Weighted average effect of restricted stock units outstanding

145 209 218 213

Diluted weighted average common shares outstanding 16,783 16,760 16,817 16,726

7 unchanged sentences

Securities Available for Sale

The following tables show the amortized cost, gross unrealized gains and losses, and fair value of securities available for sale, by security type as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following tables show the amortized cost, gross unrealized gains and losses, and fair value of securities available for sale, by security type as of June 30, 2022 and December 31, 2021.

June 30, 2022

(Losses) Fair

20 unchanged sentences

(1) Collateralized mortgage obligations and mortgage-backed securities consist of residential and commercial mortgage pass-through securities and collateralized mortgage obligations guaranteed by FNMA, FHLMC, GNMA and SBA.

Securities with an amortized cost of approximately $ 286,672 and $ 295,961 as of March 31, 2022 and December 31, 2021, respectively, were pledged to secure access to the Federal Reserve discount window, for public fund deposits, and for other purposes as required or permitted by law or regulation.

The amortized cost and fair value of securities available for sale as of March 31, 2022, by contractual maturity, are shown below.

Securities with an amortized cost of approximately $ 303,597 and $ 295,961 as of June 30, 2022 and December 31, 2021, respectively, were pledged to secure access to the Federal Reserve discount window, for public fund deposits, and for other purposes as required or permitted by law or regulation.

The amortized cost and fair value of securities available for sale as of June 30, 2022, by contractual maturity, are shown below.

Certain securities have call features that allow the issuer to call the securities prior to maturity.

1 unchanged sentence

Therefore, collateralized mortgage obligations and mortgage-backed securities are not included in the maturity categories within the following maturity summary.

March 31, 2022

June 30, 2022

Amortized Cost Fair Value

8 unchanged sentences

(dollars in thousands, except per share data)

The details of the sales of securities available for sale for the three months ended March 31, 2022 and 2021 are summarized in the following table.

Three Months Ended March 31,

The details of the sales of securities available for sale for the three and six months ended June 30, 2022 and 2021 are summarized in the following table.

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Proceeds from sales $ — $ 10,186 $ — $ 28,961

1 unchanged sentence

Gross losses on sales — 74 — 232

The following tables show the fair value and gross unrealized losses, aggregated by investment type and length of time that individual securities have been in a continuous loss position, as of March 31, 2022 and December 31, 2021.

March 31, 2022

June 30, 2022

Less than 12 months 12 months or longer Total

19 unchanged sentences

$ 530,081 $ ( 10,295 ) $ 36,246 $ ( 1,505 ) $ 566,327 $ ( 11,800 )

As of March 31, 2022, securities available for sale with unrealized losses included 75 state and political subdivision securities, 72 collateralized mortgage obligation securities, 25 mortgage-backed securities, six collateralized loan obligation securities and seven corporate notes.

As of June 30, 2022, securities available for sale with unrealized losses included 114 state and political subdivision securities, 79 collateralized mortgage obligation securities, 27 mortgage-backed securities, six collateralized loan obligation securities and eight corporate notes.

Collateralized loan obligation securities are debt securities backed by pools of senior secured commercial loans to a diverse group of companies across a broad spectrum of industries.

At March 31, 2022, the Company only owned collateralized loan obligations that were AAA- or AA-rated.

The Company believes the unrealized losses on securities available for sale as of March 31, 2022 were due to market interest rate conditions rather than reduced estimated cash flows.

At March 31, 2022, the Company did not intend to sell these securities, did not anticipate that these securities will be required to be sold before anticipated recovery, and expected full principal and interest to be collected.

Therefore, the Company did not consider these securities to have other than temporary impairment as of March 31, 2022.

At June 30, 2022, the Company only owned collateralized loan obligations that were AAA- or AA-rated.

The Company believes the unrealized losses on securities available for sale as of June 30, 2022 were due to market interest rate conditions rather than reduced estimated cash flows.

At June 30, 2022, the Company did not intend to sell these securities, did not anticipate that these securities will be required to be sold before anticipated recovery, and expected full principal and interest to be collected.

Therefore, the Company did not consider these securities to have other than temporary impairment as of June 30, 2022.

West Bancorporation, Inc.

3 unchanged sentences

Loans and Allowance for Loan Losses

Loans consisted of the following segments as of March 31, 2022 and December 31, 2021.

March 31, 2022 December 31, 2021

Loans consisted of the following segments as of June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

Commercial $ 475,704 $ 492,815

7 unchanged sentences

$ 2,573,129 $ 2,456,196

Included in commercial loans at March 31, 2022 and December 31, 2021, were $ 9,398 and $ 22,206 , respectively, of loans originated in the Paycheck Protection Program (PPP).

Included in commercial loans at June 30, 2022 and December 31, 2021, were $ 3,196 and $ 22,206 , respectively, of loans originated in the Paycheck Protection Program (PPP).

The PPP was established by the Coronavirus Aid, Relief and Economic Security Act (CARES Act), enacted on March 27, 2020, and expanded by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, enacted on December 27, 2020 and the American Rescue Plan Act, enacted on March 11, 2021, in response to the Coronavirus Disease 2019 (COVID-19) pandemic.

2 unchanged sentences

Therefore, no allowance for loan losses is allocated to PPP loans.

Real estate loans of approximately $ 1,170,000 and $ 1,190,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of March 31, 2022 and December 31, 2021, respectively.

Real estate loans of approximately $ 1,220,000 and $ 1,190,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of June 30, 2022 and December 31, 2021, respectively.

Loans are stated at the principal amounts outstanding, net of unamortized loan fees and costs, with interest income recognized on the interest method based upon the terms of the loan.

22 unchanged sentences

The amount of impairment, if any, and any subsequent changes are included in the specific component of the allowance for loan losses.

TDR loans totaled $ 8,458 and $ 8,599 as of March 31, 2022 and December 31, 2021 and were included in the nonaccrual category.

There were no loan modifications considered to be TDR that occurred during the three months ended March 31, 2022 and 2021.

A specific reserve of $ 2,500 related to TDR loans was recorded at March 31, 2022 and December 31, 2021.

No TDR loans that were modified within the 12 months preceding March 31, 2022 and 2021 have subsequently had a payment default.

TDR loans totaled $ 0 and $ 8,599 as of June 30, 2022 and December 31, 2021, respectively, and were included in the nonaccrual category.

There were no loan modifications considered to be TDR that occurred during the three and six months ended June 30, 2022 and 2021.

A specific reserve of $ 0 and $ 2,500 related to TDR loans was recorded at June 30, 2022 and December 31, 2021, respectively.

No TDR loans that were modified within the 12 months preceding June 30, 2022 and 2021 have subsequently had a payment default.

A TDR loan is considered to have a payment default when it is past due 30 days or more.

3 unchanged sentences

(dollars in thousands, except per share data)

The following table summarizes the recorded investment in impaired loans by segment, broken down by loans with no related allowance for loan losses and loans with a related allowance and the amount of that allowance as of March 31, 2022 and December 31, 2021.

March 31, 2022 December 31, 2021

June 30, 2022 December 31, 2021

Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance

22 unchanged sentences

$ 335 $ 335 $ — $ 8,948 $ 8,948 $ 2,500

The balance of impaired loans at March 31, 2022 and December 31, 2021 was composed of two different borrowers.

The Company has no commitments to advance additional funds on any of the impaired loans.

3 unchanged sentences

(dollars in thousands, except per share data)

The following table summarizes the average recorded investment and interest income recognized on impaired loans by segment for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized

The following table summarizes the average recorded investment and interest income recognized on impaired loans by segment for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized

With no related allowance recorded:

1 unchanged sentence

Construction, land and land development

— — — — — — — —

1-4 family residential first mortgages

339 — 367 — 342 — 370 —

Home equity — — — — — — — —

1 unchanged sentence

Consumer and other — — — — — — — —

339 — 367 — 342 — 370 —

With an allowance recorded:

1 unchanged sentence

Construction, land and land development

— — — — — — — —

1-4 family residential first mortgages

— — — — — — — —

Home equity — — — — — — — —

4 unchanged sentences

Construction, land and land development

— — — — — — — —

1-4 family residential first mortgages

339 — 367 — 342 — 370 —

Home equity — — — — — — — —

6 unchanged sentences

(dollars in thousands, except per share data)

The following tables provide an analysis of the payment status of the recorded investment in loans as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following tables provide an analysis of the payment status of the recorded investment in loans as of June 30, 2022 and December 31, 2021.

June 30, 2022

Past Due Total

25 unchanged sentences

(dollars in thousands, except per share data)

The following tables present the recorded investment in loans by credit quality indicator and loan segment as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following tables present the recorded investment in loans by credit quality indicator and loan segment as of June 30, 2022 and December 31, 2021.

June 30, 2022

Pass Watch Substandard Doubtful Total

57 unchanged sentences

Risk ratings are updated as circumstances that could affect the repayment of an individual loan are brought to management's attention through an established monitoring process.

Individual bankers initiate changes as appropriate for ratings 1 through 5, and changes for ratings 6 through 9 are initiated via communications with management.

Individual bankers initiate changes as appropriate for ratings 1 through 5, and changes for ratings 6 through 9 are approved by management.

The likelihood of loss increases as the risk rating increases and is generally preceded by a loan appearing on the Watch List, which consists of all loans with a risk rating of 6 or worse.

28 unchanged sentences

In addition, regulatory agencies, as an integral part of their examination processes, periodically review the Company's allowance for loan losses, and may require the Company to make additions to the allowance based on their judgment about information available to them at the time of their examinations.

The following tables detail the changes in the allowance for loan losses by segment for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31, 2022

The following tables detail the changes in the allowance for loan losses by segment for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022

Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total

5 unchanged sentences

Ending balance $ 4,661 $ 4,043 $ 373 $ 95 $ 16,189 $ 73 $ 25,434

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total

5 unchanged sentences

Ending balance $ 4,464 $ 2,950 $ 359 $ 91 $ 20,129 $ 49 $ 28,042

Six Months Ended June 30, 2022

Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total

Beginning balance $ 4,776 $ 3,646 $ 339 $ 91 $ 19,466 $ 46 $ 28,364

Charge-offs — — — — ( 451 ) — ( 451 )

Recoveries 12 — 1 2 6 — 21

Provision (1)

( 127 ) 397 33 2 ( 2,832 ) 27 ( 2,500 )

Ending balance $ 4,661 $ 4,043 $ 373 $ 95 $ 16,189 $ 73 $ 25,434

Six Months Ended June 30, 2021

Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total

Beginning balance $ 4,718 $ 2,634 $ 360 $ 114 $ 21,535 $ 75 $ 29,436

Charge-offs — — — — — — —

Recoveries 97 — 1 2 6 — 106

Provision (1)

( 351 ) 316 ( 2 ) ( 25 ) ( 1,412 ) ( 26 ) ( 1,500 )

Ending balance $ 4,464 $ 2,950 $ 359 $ 91 $ 20,129 $ 49 $ 28,042

(1) The negative provisions for the various segments are related to the decline in outstanding balances in each of those portfolio segments during the time periods disclosed and/or improvement in the credit quality factors related to those portfolio segments.

3 unchanged sentences

(dollars in thousands, except per share data)

The following tables present a breakdown of the allowance for loan losses disaggregated on the basis of impairment analysis method by segment as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following tables present a breakdown of the allowance for loan losses disaggregated on the basis of impairment analysis method by segment as of June 30, 2022 and December 31, 2021.

June 30, 2022

Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total

9 unchanged sentences

Total $ 4,776 $ 3,646 $ 339 $ 91 $ 19,466 $ 46 $ 28,364

The following tables present the recorded investment in loans, exclusive of unamortized fees and costs, disaggregated on the basis of impairment analysis method by segment as of March 31, 2022 and December 31, 2021.

March 31, 2022

June 30, 2022

Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total

17 unchanged sentences

Interest Rate Swaps Designated as a Cash Flow Hedge:

The Company had interest rate swaps designated as cash flow hedges with total notional amounts of $ 255,000 at March 31, 2022 and December 31, 2021.

As of March 31, 2022, the Company had swaps with a total notional amount of $ 125,000 that hedge the interest payments of rolling fixed-rate one-month funding consisting of FHLB advances or brokered deposits.

Also as of March 31, 2022, the Company had a swap with a total notional amount of $ 20,000 that effectively converts variable-rate junior subordinated notes to fixed-rate debt, and swaps with a total notional amount of $ 110,000 that hedge the interest payments of certain deposit accounts.

The Company had interest rate swaps designated as cash flow hedges with total notional amounts of $ 255,000 at June 30, 2022 and December 31, 2021.

As of June 30, 2022, the Company had swaps with a total notional amount of $ 125,000 that hedge the interest payments of rolling fixed-rate one-month funding consisting of FHLB advances or brokered deposits.

Also as of June 30, 2022, the Company had a swap with a total notional amount of $ 20,000 that effectively converts variable-rate junior subordinated notes to fixed-rate debt, and swaps with a total notional amount of $ 110,000 that hedge the interest payments of certain deposit accounts.

In March 2021, the Company terminated interest rate swaps with a total notional amount of $ 50,000 .

12 unchanged sentences

These swaps were terminated in March 2021, and the resulting gains of $ 3,781 were recorded in noninterest income.

The table below identifies the balance sheet category and fair values of the Company's derivative instruments as of March 31, 2022 and December 31, 2021.

March 31, 2022 December 31, 2021

The table below identifies the balance sheet category and fair values of the Company's derivative instruments as of June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

Cash Flow Hedges:

13 unchanged sentences

(dollars in thousands, except per share data)

The following table identifies the pre-tax gains or losses recognized on the Company's derivative instruments designated as cash flow hedges for the three months ended March 31, 2022 and 2021.

Three Months Ended March 31,

Pre-tax gain recognized in other comprehensive income $ 10,536 $ 7,763

The following table identifies the pre-tax gains or losses recognized on the Company's derivative instruments designated as cash flow hedges for the three and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, Six Months Ended June 30,

2022 2021 2022 2021

Pre-tax gain (loss) recognized in other comprehensive income $ 4,066 $ ( 2,321 ) $ 14,602 $ 5,442

Reclassification from AOCI into income:

1 unchanged sentence

Decrease in noninterest income, swap termination fees — — — ( 3,600 )

The Company estimates there will be approximately $ 3,651 reclassified from accumulated other comprehensive income to interest expense through the 12 months ending March 31, 2023 related to cash flow hedges.

The Company estimates there will be approximately $ 992 reclassified from accumulated other comprehensive income to interest expense through the 12 months ending June 30, 2023 related to cash flow hedges.

The Company is exposed to credit risk in the event of nonperformance by interest rate swap counterparties, which is minimized by collateral-pledging provisions in the agreements.

1 unchanged sentence

These agreements protect the interests of the Company and its counterparties should either party suffer a credit rating deterioration.

As of March 31, 2022 and December 31, 2021, the Company pledged $ 0 and $ 4,500 , respectively, of collateral to the counterparties in the form of cash on deposit with third parties.

As of March 31, 2022 and December 31, 2021, the Company's counterparties pledged $ 12,580 and $ 0 , respectively, of collateral to the Company in the form of cash on deposit.

As of June 30, 2022 and December 31, 2021, the Company pledged $ 0 and $ 4,500 , respectively, of collateral to the counterparties in the form of cash on deposit with third parties.

As of June 30, 2022 and December 31, 2021, the Company's counterparties pledged $ 22,060 and $ 0 , respectively, of collateral to the Company in the form of cash on deposit.

The interest rate swap product with the borrower is cross-collateralized with the underlying loan and therefore there is no pledged cash collateral under swap contracts with customers.

Net deferred tax assets consisted of the following as of March 31, 2022 and December 31, 2021.

March 31, 2022 December 31, 2021

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

Net deferred tax assets consisted of the following as of June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

Deferred tax assets:

17 unchanged sentences

Net deferred tax assets $ 29,861 $ 10,819

The Company has recorded a valuation allowance against the tax effect of the state net operating loss carryforwards, as management believes it is more likely than not that these carryforwards will expire without being utilized.

The state net operating loss carryforwards expire in 2022 and thereafter.

In the second quarter of 2022, the Company's income tax expense included a one-time increase in state income tax expense related to the June 2022 enactment of changes in the Iowa bank franchise tax rates.

This legislation reduces the Iowa bank franchise tax rate applied to apportioned income for 2023 and future years.

This future reduction in the state tax rate required the Company to reduce net deferred tax assets as of June 30, 2022 by $ 671 and in turn caused the one-time increase in 2022 tax expense.

The effective tax rate for the three and six months ended June 30, 2022 was 25.49 percent and 22.38 percent, respectively.

Excluding this one-time state tax expense, the effective tax rates for the three and six months ended June 30, 2022 would have been 21.55 percent and 20.37 percent, respectively.

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

The state net operating loss carryforwards expire in 2022 and thereafter.

Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2022 and 2021.

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the six months ended June 30, 2022 and 2021.

Unrealized Unrealized Accumulated

6 unchanged sentences

Net current period other comprehensive income (loss) ( 73,959 ) 12,168 ( 61,791 )

Balance, March 31, 2022 $ ( 45,803 ) $ 3,035 $ ( 42,768 )

Balance, June 30, 2022 $ ( 78,980 ) $ 6,552 $ ( 72,428 )

Balance, December 31, 2020 $ 5,994 $ ( 17,840 ) $ ( 11,846 )

2 unchanged sentences

Net current period other comprehensive income (loss) ( 3,239 ) 8,610 5,371

Balance, March 31, 2021 $ ( 246 ) $ ( 8,315 ) $ ( 8,561 )

Balance, June 30, 2021 $ 2,755 $ ( 9,230 ) $ ( 6,475 )

Commitments and Contingencies

5 unchanged sentences

The Company uses the same credit policies in making commitments and conditional obligations that it uses for on-balance-sheet instruments.

The Company's commitments consisted of the following amounts as of March 31, 2022 and December 31, 2021.

March 31, 2022 December 31, 2021

The Company's commitments consisted of the following amounts as of June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

Commitments to fund real estate construction loans $ 295,076 $ 294,580

4 unchanged sentences

West Bank receives credit enhancement fees from the FHLB for providing this guarantee and continuing to assist with managing the credit risk of the MPF Program residential mortgage loans.

The outstanding balance of mortgage loans sold under the MPF Program was $ 26,676 and $ 31,552 at March 31, 2022 and December 31, 2021, respectively.

The outstanding balance of mortgage loans sold under the MPF Program was $ 25,271 and $ 31,552 at June 30, 2022 and December 31, 2021, respectively.

West Bancorporation, Inc.

3 unchanged sentences

Contractual commitments :

The Company had remaining commitments to invest in qualified affordable housing projects totaling $ 3,947 and $ 3,986 as of March 31, 2022 and December 31, 2021, respectively.

The Company had remaining commitments to invest in qualified affordable housing projects totaling $ 3,720 and $ 3,986 as of June 30, 2022 and December 31, 2021, respectively.

Contingencies :

9 unchanged sentences

The Company's policy is to recognize transfers between levels at the end of each reporting period, if applicable.

There were no transfers between levels of the fair value hierarchy during the three months ended March 31, 2022.

There were no transfers between levels of the fair value hierarchy during the six months ended June 30, 2022.

The following is a description of valuation methodologies used for financial assets and liabilities recorded at fair value on a recurring basis.

18 unchanged sentences

(dollars in thousands, except per share data)

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis by level as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis by level as of June 30, 2022 and December 31, 2021.

June 30, 2022

Total Level 1 Level 2 Level 3

23 unchanged sentences

That is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment).

Impaired loans with a net book value of $ 5,958 and $ 6,099 for which a fair value adjustment was recorded were classified as Level 3 as of March 31, 2022 and December 31, 2021, respectively.

As of March 31, 2022, impaired loans with a carrying value of $ 8,458 were reduced by a specific reserve of $ 2,500 , resulting in a reported fair value of $ 5,958 .

Impaired loans with a net book value of $ 6,099 for which a fair value adjustment was recorded were classified as Level 3 as of December 31, 2021.

As of December 31, 2021, impaired loans with a carrying value of $ 8,599 were reduced by a specific reserve of $ 2,500 , resulting in a reported fair value of $ 6,099 .

As of June 30, 2022, there were no loans for which a fair value adjustment was recorded.

In determining the estimated net realizable value of the underlying collateral of impaired loans, the Company primarily uses third-party appraisals or broker opinions which may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach.

8 unchanged sentences

Valuation Technique Unobservable Inputs Range (Weighted Average)

March 31, 2022

Impaired loans Appraisal of collateral Appraisal adjustment 50%, including selling costs

June 30, 2022

Impaired loans — — —

December 31, 2021

1 unchanged sentence

GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring or nonrecurring basis .

The following table presents the carrying amounts and approximate fair values of financial assets and liabilities as of March 31, 2022 and December 31, 2021.

March 31, 2022

The following table presents the carrying amounts and approximate fair values of financial assets and liabilities as of June 30, 2022 and December 31, 2021.

June 30, 2022

Carrying Amount Approximate Fair Value Level 1 Level 2 Level 3

43 unchanged sentences

Standby letters of credit — — — — —

Subordinated Notes

On June 14, 2022, the Company issued $ 60,000 of subordinated notes (the Notes).

The Notes initially bear interest at 5.25 percent per annum, with interest payable semi-annually for the first five years of the Notes.

Beginning June 15, 2027, the interest rate will reset quarterly to a floating rate per annum that is expected to be three-month term Secured Overnight Financing Rate (SOFR) plus 2.41 percent with payments due quarterly .

The Company may redeem the Notes, in whole or in part, on and after June 15, 2027 at a price equal to 100 percent of the principal amount of the Notes being redeemed plus accrued and unpaid interest.

The Notes will mature on June 15, 2032 if they are not earlier redeemed.

Proceeds from this debt issuance were used to make a $ 58,650 capital injection into the Company's subsidiary, West Bank.

West Bancorporation, Inc.

2 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements