What changed in this filing

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Item 1. Financial Statements

2022-10-27 compared with 2022-07-28 · 126 added, 117 removed, 848 unchanged (22% of the section changed)

3 unchanged sentences

Consolidated Balance Sheet

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

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

Cash and due from banks $ 58,342 $ 17,555

15 unchanged sentences

Interest-bearing demand 469,257 548,242

Savings 1,360,020 1,550,636

Time of $250 or more 87,086 53,019

Other time 232,091 143,972

Savings and money market 1,252,694 1,550,636

Time 388,174 196,991

Total deposits 2,822,847 3,016,005

9 unchanged sentences

authorized 50,000,000 shares;

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

no shares issued and outstanding at September 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 June 30, 2022

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

and December 31, 2021, respectively

8 unchanged sentences

Consolidated Statements of Income

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

Three Months Ended September 30, Nine Months Ended September 30,

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

43 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss)

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

Three Months Ended September 30, Nine Months Ended September 30,

(in thousands) 2022 2021 2022 2021

2 unchanged sentences

Unrealized gains (losses) on securities:

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

Unrealized holding losses arising during the period ( 42,621 ) ( 6,172 ) ( 141,629 ) ( 10,462 )

reclassification adjustment for net gains realized in net income — ( 11 ) — ( 51 )

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 )

Other ( 11 ) — ( 11 ) —

Income tax benefit 10,569 1,558 35,618 2,649

Other comprehensive loss on securities ( 32,063 ) ( 4,625 ) ( 106,022 ) ( 7,864 )

Unrealized gains (losses) on derivatives:

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) benefit ( 1,191 ) 308 ( 4,121 ) ( 2,900 )

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

Unrealized holding gains arising during the period 8,637 359 23,239 5,801

reclassification adjustment for net (gains) losses realized in net income ( 259 ) 1,105 1,428 7,173

Income tax expense ( 2,051 ) ( 369 ) ( 6,172 ) ( 3,269 )

Other comprehensive income on derivatives 6,327 1,095 18,495 9,705

Total other comprehensive income (loss) ( 25,736 ) ( 3,530 ) ( 87,527 ) 1,841

5 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended June 30, 2022

Three Months Ended September 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

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

— — — — 11,602 — 11,602

4 unchanged sentences

— — — 869 — — 869

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

Balance, September 30, 2022 $ — 16,640,413 $ 3,000 $ 31,152 $ 262,776 $ ( 98,164 ) $ 198,764

Three Months Ended September 30, 2021

Additional Other

1 unchanged sentence

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

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

Net income — — — — 12,706 — 12,706

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

Other comprehensive loss, net of tax — — — — — ( 3,530 ) ( 3,530 )

Cash dividends declared, $ 0.24 per common share

2 unchanged sentences

— — — 648 — — 648

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

Balance, September 30, 2021 $ — 16,554,846 $ 3,000 $ 29,536 $ 229,845 $ ( 10,005 ) $ 252,376

See Notes to Consolidated Financial Statements.

3 unchanged sentences

(in thousands, except share and per share data)

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Additional Other

10 unchanged sentences

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes — 85,567 — ( 1,519 ) — — ( 1,519 )

— 85,567 — ( 1,519 ) — — ( 1,519 )

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

Six Months Ended June 30, 2021

Balance, September 30, 2022 $ — 16,640,413 $ 3,000 $ 31,152 $ 262,776 $ ( 98,164 ) $ 198,764

Nine Months Ended September 30, 2021

Additional Other

10 unchanged sentences

— 85,574 — ( 1,213 ) — — ( 1,213 )

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

Balance, September 30, 2021 $ — 16,554,846 $ 3,000 $ 29,536 $ 229,845 $ ( 10,005 ) $ 252,376

See Notes to Consolidated Financial Statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended June 30,

Nine Months Ended September 30,

(in thousands) 2022 2021

12 unchanged sentences

Decrease in other assets 930 2,299

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

Increase in accrued expenses and other liabilities 7,889 312

Net cash provided by operating activities 48,921 42,434

10 unchanged sentences

Net increase (decrease) in deposits ( 193,158 ) 35,929

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

Net increase in federal funds purchased 201,620 34,005

Proceeds from issuance of subordinated debt, net of issuance costs 58,756 —

12 unchanged sentences

Income taxes 7,490 9,220

Supplemental Disclosure of Noncash Investing and Financing Activities:

Purchase of securities available for sale, pending settlement $ — $ 30,151

See Notes to Consolidated Financial Statements.

8 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 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.

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 September 30, 2022 and December 31, 2021, net income, comprehensive income (loss) and changes in stockholders' equity for the three and nine months ended September 30, 2022 and 2021, and cash flows for the nine months ended September 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.

21 unchanged sentences

Credit losses relating to available for sale debt securities should be recorded through an allowance for credit losses.

The FASB has also issued multiple updates to ASU No.

2016-13 as codified in Topic 326, including ASU No.

2019-04, ASU No.

2019-05, ASU No.

2019-11, ASU No.

2020-02, and ASU No.

These ASUs have provided for various minor technical corrections and improvements to the codification as well as other transition matters.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

In December 2019, the FASB issued ASU No.

5 unchanged sentences

The Company met the definition of a smaller reporting company as of that date and plans to adopt the standard with the amended effective date.

The Company does not plan to early adopt this standard, but continues to work through implementation.

The Company continues collecting and retaining loan and credit data and evaluating various loss estimation models.

The Company continues to develop it's methodology and work through model validation and implementation considerations.

While we currently cannot reasonably estimate the impact of adopting this standard, we expect the impact will be influenced by the composition, characteristics and quality of our loan and securities portfolios, as well as the general economic conditions and forecasts as of the adoption date.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

In April 2019, the FASB issued ASU No.

2019-04, Codification Improvements to Financial Instruments - Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825) .

The amendments in the ASU improve the Codification by eliminating inconsistencies and providing clarifications.

The amended guidance in this ASU related to the credit losses will be effective for the Company for fiscal years and interim periods beginning after December 15, 2022.

The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.

In March 2022, the FASB issued ASU No.

18 unchanged sentences

The Company is currently evaluating the impact of the reference rate reform on the Company's consolidated financial statements.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

Earnings per Common Share

3 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 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,

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

Three Months Ended September 30, Nine Months Ended September 30,

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

12 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 June 30, 2022 and December 31, 2021.

June 30, 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 September 30, 2022 and December 31, 2021.

September 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 $ 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.

Securities with an amortized cost of approximately $ 299,397 and $ 295,961 as of September 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 September 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.

June 30, 2022

September 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 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,

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

2 unchanged sentences

Gross losses on sales — — — 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 June 30, 2022 and December 31, 2021.

June 30, 2022

September 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 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.

As of September 30, 2022, securities available for sale with unrealized losses included 118 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 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.

At September 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 September 30, 2022 were due to market interest rate conditions rather than reduced estimated cash flows.

At September 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 September 30, 2022.

West Bancorporation, Inc.

3 unchanged sentences

Loans and Allowance for Loan Losses

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

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

Commercial $ 526,336 $ 492,815

7 unchanged sentences

$ 2,614,145 $ 2,456,196

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).

Included in commercial loans at September 30, 2022 and December 31, 2021, were $ 1,119 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 $ 1,220,000 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.

Real estate loans of approximately $ 1,240,000 and $ 1,190,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of September 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 $ 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.

TDR loans totaled $ 0 and $ 8,599 as of September 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 nine months ended September 30, 2022.

There were six loan modifications related to one borrower considered to be TDR, with a pre- and post-modification recorded investment of $ 14,044 , that occurred during the three and nine months ended September 30, 2021.

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

No TDR loans that were modified within the 12 months preceding September 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 June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

September 30, 2022 December 31, 2021

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

27 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 and six months ended June 30, 2022 and 2021.

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

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

33 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 June 30, 2022 and December 31, 2021.

June 30, 2022

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

September 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 June 30, 2022 and December 31, 2021.

June 30, 2022

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

September 30, 2022

Pass Watch Substandard Doubtful Total

88 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 and six months ended June 30, 2022 and 2021.

Three Months Ended June 30, 2022

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

Three Months Ended September 30, 2022

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

5 unchanged sentences

Ending balance $ 5,099 $ 3,486 $ 363 $ 105 $ 16,275 $ 90 $ 25,418

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

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

5 unchanged sentences

Ending balance $ 4,700 $ 3,448 $ 355 $ 101 $ 19,447 $ 47 $ 28,098

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

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

5 unchanged sentences

Ending balance $ 5,099 $ 3,486 $ 363 $ 105 $ 16,275 $ 90 $ 25,418

Six Months Ended June 30, 2021

Nine Months Ended September 30, 2021

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

10 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 June 30, 2022 and December 31, 2021.

June 30, 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 September 30, 2022 and December 31, 2021.

September 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 June 30, 2022 and December 31, 2021.

June 30, 2022

September 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 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.

The Company had interest rate swaps designated as cash flow hedges with total notional amounts of $ 280,000 and $ 255,000 at September 30, 2022 and December 31, 2021, respectively.

As of September 30, 2022, the Company had swaps with a total notional amount of $ 150,000 that hedge the interest payments of rolling fixed-rate one-month funding consisting of FHLB advances or brokered deposits.

One of these swaps with a total notional amount of $ 25,000 is a forward-starting swap with a starting date in September 2023.

Also as of September 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 June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

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

September 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 and six months ended June 30, 2022 and 2021.

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

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 nine months ended September 30, 2022 and 2021.

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

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

Pre-tax gain recognized in other comprehensive income $ 8,637 $ 359 $ 23,239 $ 5,801

Reclassification from AOCI into income:

Increase in interest expense $ ( 642 ) $ ( 1,098 ) $ ( 1,687 ) $ ( 2,468 )

Increase (decrease) in interest expense $ ( 259 ) $ ( 1,105 ) $ 1,428 $ ( 3,573 )

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

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 estimates there will be approximately $ 2,615 reclassified from accumulated other comprehensive income to reduce interest expense through the 12 months ending September 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 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.

As of September 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.

As of September 30, 2022 and December 31, 2021, the Company's counterparties pledged $ 32,390 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.

3 unchanged sentences

(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

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

September 30, 2022 December 31, 2021

Deferred tax assets:

19 unchanged sentences

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.

In the second quarter of 2022, the Company recorded 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.

The effective tax rate for the nine months ended September 30, 2022 was 22.18 percent.

Excluding this one-time state tax expense, the effective tax rate for the nine months ended September 30, 2022 would have been 20.79 percent.

West Bancorporation, Inc.

3 unchanged sentences

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 six months ended June 30, 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 nine months ended September 30, 2022 and 2021.

Unrealized Unrealized Accumulated

6 unchanged sentences

Net current period other comprehensive income (loss) ( 106,022 ) 18,495 ( 87,527 )

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

Balance, September 30, 2022 $ ( 111,043 ) $ 12,879 $ ( 98,164 )

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

2 unchanged sentences

Net current period other comprehensive income (loss) ( 7,864 ) 9,705 1,841

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

Balance, September 30, 2021 $ ( 1,870 ) $ ( 8,135 ) $ ( 10,005 )

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 June 30, 2022 and December 31, 2021.

June 30, 2022 December 31, 2021

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

September 30, 2022 December 31, 2021

Commitments to fund real estate construction loans $ 405,058 $ 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 $ 25,271 and $ 31,552 at June 30, 2022 and December 31, 2021, respectively.

The outstanding balance of mortgage loans sold under the MPF Program was $ 24,197 and $ 31,552 at September 30, 2022 and December 31, 2021, respectively.

Contractual commitments :

The Company had remaining commitments to invest in qualified affordable housing projects totaling $ 3,707 and $ 3,986 as of September 30, 2022 and December 31, 2021, respectively.

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

Contractual commitments :

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.

West Bank entered into a construction contract for the construction of a new headquarters building in West Des Moines, Iowa subsequent to quarter-end.

West Bank will pay the contractor a contract price consisting of the cost of work plus a fee, subject to a guaranteed maximum price of $42,309, with anticipated construction completed in 2024.

As of September 30, 2022, $1,499 has been paid under this construction contract.

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 six months ended June 30, 2022.

There were no transfers between levels of the fair value hierarchy during the nine months ended September 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 June 30, 2022 and December 31, 2021.

June 30, 2022

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

September 30, 2022

Total Level 1 Level 2 Level 3

25 unchanged sentences

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.

As of September 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)

June 30, 2022

September 30, 2022

Impaired loans — — —

2 unchanged sentences

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 June 30, 2022 and December 31, 2021.

June 30, 2022

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

September 30, 2022

Carrying Amount Approximate Fair Value Level 1 Level 2 Level 3

54 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