What changed in this filing

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Item 1. Financial Statements

2023-07-27 compared with 2023-04-27 · 161 added, 118 removed, 868 unchanged (24% of the section changed)

3 unchanged sentences

Consolidated Balance Sheet

(in thousands, except share and per share data) March 31, 2023 December 31, 2022

(in thousands, except share and per share data) June 30, 2023 December 31, 2022

Cash and due from banks $ 29,776 $ 24,896

28 unchanged sentences

authorized 50,000,000 shares;

no shares issued and outstanding at March 31, 2023 and December 31, 2022

no shares issued and outstanding at June 30, 2023 and December 31, 2022

Common stock, no par value;

authorized 50,000,000 shares;

and 16,640,413 shares issued and outstanding at March 31, 2023

and 16,640,413 shares issued and outstanding at June 30, 2023

and December 31, 2022, 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) 2023 2022 2023 2022

42 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) 2023 2022 2023 2022

6 unchanged sentences

Unrealized gains (losses) on derivatives:

Unrealized holding gains (losses) arising during the period ( 1,634 ) 10,536

Unrealized holding gains arising during the period 8,102 4,066 6,468 14,602

reclassification adjustment for net (gains) losses realized in net income ( 2,467 ) 642 ( 4,425 ) 1,687

Income tax (expense) benefit 882 ( 2,930 )

Other comprehensive income (loss) on derivatives ( 2,710 ) 8,651

Income tax expense ( 1,382 ) ( 1,191 ) ( 500 ) ( 4,121 )

Other comprehensive income on derivatives 4,253 3,517 1,543 12,168

Total other comprehensive income (loss) ( 2,392 ) ( 29,660 ) 3,654 ( 61,791 )

5 unchanged sentences

(in thousands, except share and per share data)

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

Additional Other

1 unchanged sentence

Stock Shares Amount Capital Earnings Income (Loss) Total

Balance, March 31, 2023 $ — 16,712,257 $ 3,000 $ 31,797 $ 267,620 $ ( 85,425 ) $ 216,992

— — — — 5,862 — 5,862

Other comprehensive loss, net of tax — — — — — ( 2,392 ) ( 2,392 )

Cash dividends declared, $ 0.25 per common share

— — — — ( 4,181 ) — ( 4,181 )

Stock-based compensation costs

— — — 845 — — 845

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes — 12,837 — — — — —

Balance, June 30, 2023 $ — 16,725,094 $ 3,000 $ 32,642 $ 269,301 $ ( 87,817 ) $ 217,126

Three Months Ended June 30, 2022

Additional Other

Preferred Common Stock Paid-In Retained Comprehensive

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

Net income — — — — 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

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, 2023

Additional Other

Preferred Common Stock Paid-In Retained Comprehensive

Stock Shares Amount Capital Earnings Income (Loss) Total

Balance, December 31, 2022 $ — 16,640,413 $ 3,000 $ 32,021 $ 267,562 $ ( 91,471 ) $ 211,112

9 unchanged sentences

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes — 84,681 — ( 935 ) — — ( 935 )

Balance, March 31, 2023 $ — 16,712,257 $ 3,000 $ 31,797 $ 267,620 $ ( 85,425 ) $ 216,992

Three Months Ended March 31, 2022

Balance, June 30, 2023 $ — 16,725,094 $ 3,000 $ 32,642 $ 269,301 $ ( 87,817 ) $ 217,126

Six Months Ended June 30, 2022

Additional Other

10 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

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

(1) Cumulative effect adjustment pursuant to adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

5 unchanged sentences

Consolidated Statements of Cash Flows

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

6 unchanged sentences

Increase in cash value of bank-owned life insurance ( 507 ) ( 463 )

Gain from bank-owned life insurance ( 691 ) —

Depreciation 808 680

1 unchanged sentence

Change in assets and liabilities:

Increase in accrued interest receivable ( 296 ) ( 1,193 )

(Increase) decrease in accrued interest receivable 203 ( 473 )

(Increase) decrease in other assets ( 947 ) 1,448

8 unchanged sentences

Purchases of premises and equipment ( 15,000 ) ( 8,548 )

Proceeds of principal and earnings from bank-owned life insurance 2,458 —

Net cash used in investing activities ( 59,600 ) ( 205,026 )

Cash Flows from Financing Activities:

Net increase (decrease) in deposits ( 82,015 ) 75,247

Net decrease in deposits ( 44,083 ) ( 173,554 )

Net increase (decrease) in federal funds purchased and other short-term borrowings ( 15,850 ) 130,120

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

Net increase in Federal Home Loan Bank advances 125,000 —

3 unchanged sentences

Net cash provided by financing activities 54,541 5,496

Net decrease in cash and cash equivalents ( 4,059 ) ( 48,570 )

Net increase (decrease) in cash and cash equivalents 5,205 ( 165,885 )

Cash and Cash Equivalents:

15 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, 2022 filed with the SEC on February 23, 2023.

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, 2023 and December 31, 2022, and net income, comprehensive income (loss), changes in stockholders' equity and cash flows for the three months ended March 31, 2023 and 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, 2023 and December 31, 2022, and net income, comprehensive income (loss) and changes in stockholders' equity for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022.

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

4 unchanged sentences

Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change in the near term are the fair value of financial instruments and the allowance for loan losses .

Material estimates that are particularly susceptible to significant change in the near term are the fair value of financial instruments and the allowance for credit losses .

The accompanying unaudited consolidated financial statements include the accounts of the Company, West Bank and West Bank's special purpose subsidiaries.

37 unchanged sentences

The Company recorded a reduction to retained earnings of $3,626 upon adoption of ASU No.

The transition adjustment included an increase to the allowance for credit losses on loans of $2,458 and established an allowance for credit losses on off-balance sheet credit exposure of $2,344.

The transition adjustment included an increase to the allowance for credit losses on loans of $2,458 and established an allowance for credit losses on off-balance sheet credit exposures of $2,344.

There was no allowance for credit losses recorded for available-for-sale debt securities.

43 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, 2023 and 2022 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, 2023 and 2022 are presented in the following table.

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

(in thousands, except per share data) 2023 2022 2023 2022

2 unchanged sentences

Weighted average effect of restricted stock units outstanding

34 145 46 218

Diluted weighted average common shares outstanding 16,756 16,783 16,729 16,817

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, 2023 and December 31, 2022.

March 31, 2023

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, 2023 and December 31, 2022.

June 30, 2023

(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 $ 381,622 and $ 293,017 as of March 31, 2023 and December 31, 2022, respectively, were pledged to secure access to FHLB advances and Federal Reserve credit programs, 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, 2023, by contractual maturity, are shown below.

Securities with an amortized cost of approximately $ 464,361 and $ 293,017 as of June 30, 2023 and December 31, 2022, respectively, were pledged to secure access to FHLB advances and Federal Reserve credit programs, 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, 2023, 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, 2023

June 30, 2023

Amortized Cost Fair Value

8 unchanged sentences

(dollars in thousands, except per share data)

There were no sales of securities available for sale during the three months ended March 31, 2023 and 2022.

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, 2023 and December 31, 2022.

March 31, 2023

There were no sales of securities available for sale during the three and six months ended June 30, 2023 and 2022.

June 30, 2023

Less than 12 months 12 months or longer Total

22 unchanged sentences

If the Company intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis, then the security is written down to fair value through income.

As of March 31, 2023, the Company did not have the intent to sell, nor was it more likely than not that we would be required to sell any of the securities in an unrealized loss position prior to recovery.

As of March 31, 2023, the Company also determined that no individual securities in an unrealized loss position represented credit losses that would require an allowance for credit losses.

The Company concluded that the unrealized losses were primarily attributed to increases in market interest rates since these securities were purchased and other market conditions.

As of June 30, 2023, the Company did not have the intent to sell, nor was it more likely than not that we would be required to sell any of the securities in an unrealized loss position prior to recovery.

As of June 30, 2023, the Company also determined that no individual securities in an unrealized loss position represented credit losses that would require an allowance for credit losses.

The Company concluded that the unrealized losses were primarily attributable to increases in market interest rates since these securities were purchased and other market conditions.

Accrued interest receivable is not included in available-for-sale security balances and is presented in the "Accrued interest receivable" line of the Consolidated Balance Sheets.

Interest receivable on securities was $ 3,553 as of March 31, 2023, and is excluded from the estimate of credit losses.

Interest receivable on securities was $ 3,354 as of June 30, 2023, and is excluded from the estimate of credit losses.

As of December 31, 2022, the Company believed the unrealized losses on securities available for sale were due to market conditions rather than reduced estimated cash flows.

6 unchanged sentences

Loans and Allowance for Credit Losses

Loans consisted of the following segments as of March 31, 2023 and December 31, 2022.

March 31, 2023 December 31, 2022

Loans consisted of the following segments as of June 30, 2023 and December 31, 2022.

June 30, 2023 December 31, 2022

Commercial $ 535,085 $ 519,196

7 unchanged sentences

$ 2,807,075 $ 2,742,836

Real estate loans of approximately $ 1,300,000 and $ 1,190,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of March 31, 2023 and December 31, 2022, respectively.

Real estate loans of approximately $ 1,390,000 and $ 1,190,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of June 30, 2023 and December 31, 2022, 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.

2 unchanged sentences

All loan policies identified below apply to all segments of the loan portfolio.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

Allowance for Credit Losses for Loans

1 unchanged sentence

2016-13 on January 1, 2023, at which time the Company implemented the current expected credit loss model in estimating the allowance for credit losses (ACL) valuation account.

The following table details the changes in the ACL by loan segment for the three months ended March 31, 2023.

Three Months Ended March 31, 2023

The following tables detail the changes in the ACL by loan segment for the three and six months ended June 30, 2023.

Three Months Ended June 30, 2023

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

Beginning balance $ 5,497 $ 3,166 $ 466 $ 88 $ 18,645 $ 79 $ 27,941

Charge-offs ( 18 ) — — — — — ( 18 )

Recoveries 13 — — 2 — — 15

Provision for credit loss expense (1)

4 118 6 20 ( 176 ) 28 —

Ending balance $ 5,496 $ 3,284 $ 472 $ 110 $ 18,469 $ 107 $ 27,938

Six Months Ended June 30, 2023

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

Beginning balance $ 4,804 $ 3,548 $ 357 $ 101 $ 16,575 $ 88 $ 25,473

Adoption of CECL 677 ( 234 ) 121 ( 8 ) 1,911 ( 9 ) 2,458

11 unchanged sentences

2016-13 on January 1, 2023, the Company calculated the allowance for loan losses using the incurred loss methodology.

The following table presents the activity in the allowance for loan losses by segment for the three months ended March 31, 2022.

Three Months Ended March 31, 2022

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

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

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 for loan losses (1)

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

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

(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.

The following tables present a breakdown of the allowance for credit losses by segment, disaggregated based on the evaluation method as of March 31, 2023 and December 31, 2022.

March 31, 2023

The following tables present a breakdown of the allowance for credit losses by segment, disaggregated based on the evaluation method as of June 30, 2023 and December 31, 2022.

June 30, 2023

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

13 unchanged sentences

(dollars in thousands, except per share data)

The following tables present the recorded investment in loans, exclusive of unamortized fees and costs, disaggregated based on the evaluation method by segment as of March 31, 2023 and December 31, 2022.

March 31, 2023

The following tables present the recorded investment in loans, exclusive of unamortized fees and costs, disaggregated based on the evaluation method by segment as of June 30, 2023 and December 31, 2022.

June 30, 2023

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

10 unchanged sentences

Under the current expected credit loss model, the ACL is a valuation account estimated at each balance sheet date and deducted from the amortized cost basis of loans to present the net amount expected to be collected.

The Company estimates the ACL based on the underlying loans' amortized cost basis, which is the amount at which the loan is originated or acquired, adjusted for collection of cash and charge-offs, as well as applicable accretion or amortization of premiums, discount, and net deferred fees or costs.

The Company's estimate of the ACL reflects losses expected over the remaining contractual life of the assets.

2 unchanged sentences

Therefore, the Company has made a policy election to exclude accrued interest from the measurement of the ACL.

Accrued interest on loans of $ 8,722 and $ 8,665 at March 31, 2023 and December 31, 2022, respectively, is included in accrued interest receivable on the balance sheet and is excluded from the estimate of credit losses.

Accrued interest on loans of $ 8,430 and $ 8,665 at June 30, 2023 and December 31, 2022, respectively, is included in accrued interest receivable on the balance sheet and is excluded from the estimate of credit losses.

Expected credit losses are reflected in the allowance for credit losses through a charge to credit loss expense.

24 unchanged sentences

Total Nonaccrual Nonaccrual with no Allowance for Credit Losses 90 Days or More Past Due and Accruing

March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022 March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022 June 30, 2023 December 31, 2022

Commercial $ — $ — $ — $ — $ — $ —

5 unchanged sentences

Total $ 309 $ 322 $ 309 $ 322 $ — $ —

There was no interest income recognized on loans that were on nonaccrual for the three months ended March 31, 2023 and March 31, 2022.

There was no interest income recognized on loans that were on nonaccrual for the six months ended June 30, 2023 and June 30, 2022.

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

The following tables provide an analysis of the delinquency status of the amortized cost of loans as of March 31, 2023 and December 31, 2022.

March 31, 2023

The following tables provide an analysis of the delinquency status of the amortized cost of loans as of June 30, 2023 and December 31, 2022.

June 30, 2023

Past Due Total

26 unchanged sentences

Loan Restructurings Made to Borrowers Experiencing Financial Difficulty

As of March 31, 2023 and December 31, 2022 the Company had no loan restructurings made to borrowers experiencing financial difficulty.

There were no loan restructurings made to borrowers experiencing financial difficulty for which there was a payment default within twelve months following the modification during the three months ended March 31, 2023 and 2022.

As of June 30, 2023 and December 31, 2022, the Company had no loan restructurings made to borrowers experiencing financial difficulty.

A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

65 unchanged sentences

(dollars in thousands, except per share data)

The following tables present the amortized cost basis of loans by loan segment, credit quality indicator and origination year, and the current period gross write-off by loan segment and origination year, based on the analysis performed as of March 31, 2023 and December 31, 2022.

Term Loans by Origination Year

As of March 31, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

As of June 30, 2023 2023 2022 2021 2020 2019 Prior Revolving Loans Total

Pass $ 94,720 $ 140,161 $ 54,141 $ 43,579 $ 8,197 $ 45,173 $ 149,114 $ 535,085

93 unchanged sentences

The following table presents the amortized cost basis of collateral dependent loans, by primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans.

As of March 31, 2023

As of June 30, 2023

Primary Type of Collateral

Real Estate Equipment Other Total ACL Allocation

Commercial $ — $ — $ — $ — $ —

Construction, land and land development — — — — —

1-4 family residential first mortgages $ 309 $ — $ — $ 309 $ —

Home equity — — — — —

Commercial — — — — —

Consumer and other — — — — —

Total $ 309 $ — $ — $ 309 $ —

2 unchanged sentences

Real Estate Equipment Other Total ACL Allocation

Commercial $ — $ — $ — $ — $ —

Construction, land and land development — — — — —

1-4 family residential first mortgages $ 322 $ — $ — $ 322 $ —

Home equity — — — — —

Commercial — — — — —

Consumer and other — — — — —

Total $ 322 $ — $ — $ 322 $ —

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures

1 unchanged sentence

The estimate includes consideration of the likelihood that funding will occur and an estimate of expected credit losses on commitments expected to be funded over its estimated life.

The Company has recorded an allowance for credit losses for unfunded commitments of $ 2,344 as of March 31, 2023.

The Company's allowance for credit losses for unfunded commitments was $ 2,344 as of June 30, 2023.

The allowance for credit losses for off-balance-sheet credit exposures is presented in the "Accrued expenses and other liabilities" line of the Consolidated Balance Sheets.

Changes in the allowance for credit losses for off-balance-sheet credit exposures is reflected in the "Credit loss expense " line of the Consolidated Statements of Income.

There were no changes to the allowance for credit losses for off-balance-sheet credit exposures during the three months ended March 31, 2023.

There were no changes to the allowance for credit losses for off-balance-sheet credit exposures during the six months ended June 30, 2023.

The Company has entered into various interest rate swap agreements as part of its interest rate risk management strategy.

1 unchanged sentence

The notional amounts of the interest rate swaps do not represent amounts exchanged by the counterparties, but rather, the notional amount is used to determine, along with other terms of the derivative, the amounts to be exchanged between the counterparties.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

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 $ 375,000 and $ 310,000 at March 31, 2023 and December 31, 2022, respectively.

As of March 31, 2023, the Company had swaps with a total notional amount of $ 245,000 that hedge the interest payments of rolling fixed-rate one-month funding consisting of FHLB advances or brokered deposits.

The Company had interest rate swaps designated as cash flow hedges with total notional amounts of $ 435,000 and $ 310,000 at June 30, 2023 and December 31, 2022, respectively.

As of June 30, 2023, the Company had swaps with a total notional amount of $ 285,000 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 March 31, 2023, 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.

Also as of June 30, 2023, the Company had swaps with a total notional amount of $ 40,000 that effectively converts variable-rate long-term debt to fixed-rate debt and swaps with a total notional amount of $ 110,000 that hedge the interest payments of certain deposit accounts.

Derivatives Not Designated as Accounting Hedges:

7 unchanged sentences

The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

The table below identifies the balance sheet category and fair values of the Company's derivative instruments as of March 31, 2023 and December 31, 2022.

March 31, 2023 December 31, 2022

The table below identifies the balance sheet category and fair values of the Company's derivative instruments as of June 30, 2023 and December 31, 2022.

June 30, 2023 December 31, 2022

Cash Flow Hedges:

9 unchanged sentences

Fair value in other liabilities ( 14,895 ) ( 15,309 )

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, 2023 and 2022.

Three Months Ended March 31,

Pre-tax gain (loss) recognized in other comprehensive income $ ( 1,634 ) $ 10,536

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, 2023 and 2022.

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

2023 2022 2023 2022

Pre-tax gain recognized in other comprehensive

income $ 8,102 $ 4,066 $ 6,468 $ 14,602

Reclassification from AOCI into income:

Increase (decrease) in interest expense $ ( 2,467 ) $ 642 $ ( 4,425 ) $ 1,687

The Company estimates there will be approximately $ 8,695 reclassified from accumulated other comprehensive income to reduce interest expense through the 12 months ending March 31, 2024 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.

Derivative contracts with swap counterparties are executed with a Credit Support Annex, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels.

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

As of both March 31, 2023 and December 31, 2022, the Company pledged $ 0 of collateral to the counterparties in the form of cash on deposit.

As of March 31, 2023 and December 31, 2022, the Company's counterparties pledged $ 26,280 and $ 31,560 , 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.

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

Net deferred tax assets consisted of the following as of March 31, 2023 and December 31, 2022.

March 31, 2023 December 31, 2022

The Company estimates there will be approximately $ 10,451 reclassified from accumulated other comprehensive income to reduce interest expense through the 12 months ending June 30, 2024 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.

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

As of both June 30, 2023 and December 31, 2022, the Company pledged $ 0 of collateral to the counterparties in the form of cash on deposit.

As of June 30, 2023 and December 31, 2022, the Company's counterparties pledged $ 33,880 and $ 31,560 , 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 June 30, 2023 and December 31, 2022.

June 30, 2023 December 31, 2022

Deferred tax assets:

23 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 three months ended March 31, 2023 and 2022.

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, 2023 and 2022.

Unrealized Unrealized Accumulated

3 unchanged sentences

Balance, December 31, 2022 $ ( 103,680 ) $ 12,209 $ ( 91,471 )

Other comprehensive income (loss) before reclassifications 8,762 ( 1,233 ) 7,529

Amounts reclassified from accumulated other comprehensive income ( 6 ) ( 1,477 ) ( 1,483 )

Net current period other comprehensive income (loss) 8,756 ( 2,710 ) 6,046

Balance, March 31, 2023 $ ( 94,924 ) $ 9,499 $ ( 85,425 )

Other comprehensive income before reclassifications 2,124 4,881 7,005

Amounts reclassified from accumulated other comprehensive income (loss) ( 13 ) ( 3,338 ) ( 3,351 )

Net current period other comprehensive income 2,111 1,543 3,654

Balance, June 30, 2023 $ ( 101,569 ) $ 13,752 $ ( 87,817 )

Balance, December 31, 2021 $ ( 5,021 ) $ ( 5,616 ) $ ( 10,637 )

Other comprehensive income (loss) before reclassifications ( 73,959 ) 10,908 ( 63,051 )

Amounts reclassified from accumulated other comprehensive income — 781 781

Amounts reclassified from accumulated other comprehensive income (loss) — 1,260 1,260

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 )

Commitments and Contingencies

8 unchanged sentences

See Note 4 for additional information.

The Company's commitments consisted of the following amounts as of March 31, 2023 and December 31, 2022.

March 31, 2023 December 31, 2022

The Company's commitments consisted of the following amounts as of June 30, 2023 and December 31, 2022.

June 30, 2023 December 31, 2022

Commitments to fund real estate construction loans $ 442,446 $ 336,900

2 unchanged sentences

$ 999,364 $ 1,085,123

West Bank previously executed Mortgage Partnership Finance (MPF) Master Commitments (Commitments) with the FHLB of Des Moines to deliver residential mortgage loans and to guarantee the payment of any realized losses that exceed the FHLB's first loss account for mortgages delivered under the Commitments.

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 $ 21,791 and $ 23,337 at June 30, 2023 and December 31, 2022, respectively.

Contractual commitments :

The Company had remaining commitments to invest in qualified affordable housing projects totaling $ 2,678 and $ 3,431 as of June 30, 2023 and December 31, 2022, respectively.

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

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 $ 22,720 and $ 23,337 at March 31, 2023 and December 31, 2022, respectively.

Contractual commitments :

The Company had remaining commitments to invest in qualified affordable housing projects totaling $ 3,012 and $ 3,431 as of March 31, 2023 and December 31, 2022, respectively.

West Bank entered into a construction contract in 2022 for the construction of a new headquarters building in West Des Moines, Iowa.

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 March 31, 2023, there was a remaining commitment of $ 30,415 under this contract.

West Bank is also building a new office in Mankato, Minnesota to be completed in the fall of 2023, which had a remaining commitment of $ 5,426 as of March 31, 2023.

As of June 30, 2023, there was a remaining commitment of $ 24,511 under this contract.

West Bank is also building a new office in Mankato, Minnesota to be completed in the fourth quarter of 2023, which had a remaining commitment of $ 3,991 as of June 30, 2023.

Concentrations of credit risk :

14 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, 2023.

There were no transfers between levels of the fair value hierarchy during the six months ended June 30, 2023.

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

3 unchanged sentences

The fair values of these securities are determined by pricing models that consider observable market data such as interest rate volatilities, yield curves, credit spreads, prices from market makers and live trading systems.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

Management obtains the fair value of securities at the end of each reporting period via a third-party pricing service.

4 unchanged sentences

Those inputs were independently tested, and management concluded the fair values were consistent with GAAP requirements and the securities were properly classified in the fair value hierarchy.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

Derivative instruments:

3 unchanged sentences

These models’ key assumptions include the contractual terms of the respective contract along with significant observable inputs, including interest rates, yield curves, nonperformance risk and volatility.

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, 2023 and December 31, 2022.

March 31, 2023

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, 2023 and December 31, 2022.

June 30, 2023

Total Level 1 Level 2 Level 3

27 unchanged sentences

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

As of both March 31, 2023 and December 31, 2022, there were no individually evaluated loans with a fair value adjustment.

As of both June 30, 2023 and December 31, 2022, there were no individually evaluated loans with a fair value adjustment.

Individually evaluated loans are classified within Level 3 of the fair value hierarchy and are evaluated and valued at the lower of cost or fair value when the loan is individually evaluated.

5 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 March 31, 2023 and December 31, 2022.

March 31, 2023

The following table presents the carrying amounts and approximate fair values of financial assets and liabilities as of June 30, 2023 and December 31, 2022.

June 30, 2023

Carrying Amount Approximate Fair Value Level 1 Level 2 Level 3

47 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