What changed in this filing

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Item 1. Financial Statements

2024-04-25 compared with 2023-10-26 · 133 added, 240 removed, 792 unchanged (32% of the section changed)

3 unchanged sentences

Consolidated Balance Sheet

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

(in thousands, except share and per share data) March 31, 2024 December 31, 2023

Cash and due from banks $ 27,071 $ 33,245

28 unchanged sentences

authorized 50,000,000 shares;

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

no shares issued and outstanding at March 31, 2024 and December 31, 2023

Common stock, no par value;

authorized 50,000,000 shares;

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

and 16,725,094 shares issued and outstanding at March 31, 2024

and December 31, 2023, respectively

8 unchanged sentences

Consolidated Statements of Income

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

Three Months Ended March 31,

(in thousands, except per share data) 2024 2023

21 unchanged sentences

Gain from bank-owned life insurance — 691

Loan swap fees 431 835 431 835

Other income 331 355

19 unchanged sentences

Consolidated Statements of Comprehensive Income (Loss)

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

Three Months Ended March 31,

(in thousands) 2024 2023

2 unchanged sentences

Unrealized gains (losses) on securities:

Unrealized holding losses arising during the period ( 23,391 ) ( 42,621 ) ( 20,561 ) ( 141,629 )

Income tax benefit 5,819 10,558 5,100 35,607

Other comprehensive loss on securities ( 17,572 ) ( 32,063 ) ( 15,461 ) ( 106,022 )

Unrealized holding gains (losses) arising during the period ( 7,758 ) 11,667

Income tax (expense) benefit 1,910 ( 2,911 )

Other comprehensive income (loss) on securities ( 5,848 ) 8,756

Unrealized gains on derivatives:

Unrealized holding gains arising during the period 5,303 8,637 11,771 23,239

reclassification adjustment for net (gains) losses realized in net income ( 2,903 ) ( 259 ) ( 7,328 ) 1,428

Income tax expense ( 590 ) ( 2,051 ) ( 1,090 ) ( 6,172 )

Other comprehensive income on derivatives 1,810 6,327 3,353 18,495

Total other comprehensive loss ( 15,762 ) ( 25,736 ) ( 12,108 ) ( 87,527 )

Comprehensive income (loss) $ ( 9,856 ) $ ( 14,134 ) $ 7,504 $ ( 50,074 )

See Notes to Consolidated Financial Statements.

West Bancorporation, Inc.

and Subsidiary

Consolidated Statements of Stockholders' Equity

(in thousands, except share and per share data)

Three Months Ended September 30, 2023

Additional Other

Preferred Common Stock Paid-In Retained Comprehensive

Stock Shares Amount Capital Earnings Income (Loss) Total

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

— — — — 5,906 — 5,906

Other comprehensive loss, net of tax — — — — — ( 15,762 ) ( 15,762 )

Cash dividends declared, $ 0.25 per common share

— — — — ( 4,182 ) — ( 4,182 )

Stock-based compensation costs

— — — 845 — — 845

Balance, September 30, 2023 $ — 16,725,094 $ 3,000 $ 33,487 $ 271,025 $ ( 103,579 ) $ 203,933

Three Months Ended September 30, 2022

Additional Other

Preferred Common Stock Paid-In Retained Comprehensive

Stock Shares Amount Capital Earnings Income (Loss) Total

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

— — — — 11,602 — 11,602

Other comprehensive loss, net of tax — — — — — ( 25,736 ) ( 25,736 )

Cash dividends declared, $ 0.25 per common share

— — — — ( 4,160 ) — ( 4,160 )

Stock-based compensation costs

— — — 869 — — 869

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

Unrealized holding gains (losses) arising during the period 7,489 ( 1,634 )

reclassification adjustment for net gains realized in net income ( 2,915 ) ( 1,958 )

Income tax (expense) benefit ( 1,129 ) 882

Other comprehensive income (loss) on derivatives 3,445 ( 2,710 )

Total other comprehensive income (loss) ( 2,403 ) 6,046

Comprehensive income $ 3,406 $ 13,890

See Notes to Consolidated Financial Statements.

3 unchanged sentences

(in thousands, except share and per share data)

Nine Months Ended September 30, 2023

Three Months Ended March 31, 2024

Additional Other

2 unchanged sentences

Balance, December 31, 2023 $ — 16,725,094 $ 3,000 $ 34,197 $ 271,369 $ ( 83,523 ) $ 225,043

Cumulative effect of change in accounting principle (1)

— — — — 5,809 — 5,809

— — — — 19,612 — 19,612

Other comprehensive loss, net of tax

5 unchanged sentences

Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes — 88,858 — ( 1,087 ) — — ( 1,087 )

Balance, September 30, 2023 $ — 16,725,094 $ 3,000 $ 33,487 $ 271,025 $ ( 103,579 ) $ 203,933

Nine Months Ended September 30, 2022

Balance, March 31, 2024 $ — 16,813,952 $ 3,000 $ 33,685 $ 272,997 $ ( 85,926 ) $ 223,756

Three Months Ended March 31, 2023

Additional Other

2 unchanged sentences

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

Cumulative effect of change in accounting principle (1)

— — — — ( 3,626 ) — ( 3,626 )

Other comprehensive loss, net of tax — — — — — ( 87,527 ) ( 87,527 )

— — — — 7,844 — 7,844

Other comprehensive income, net of tax — — — — — 6,046 6,046

Cash dividends declared, $ 0.25 per common share

4 unchanged sentences

— 71,844 — ( 935 ) — — ( 935 )

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

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

(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

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2024 2023

2 unchanged sentences

Adjustments to reconcile net income to net cash provided by operating activities:

Credit loss expense (benefit) 200 ( 2,500 )

Net amortization and accretion 797 829

1 unchanged sentence

Increase in cash value of bank-owned life insurance ( 274 ) ( 257 )

Gain from bank-owned life insurance ( 691 ) —

Depreciation 525 404

3 unchanged sentences

(Increase) decrease in other assets 262 ( 1,322 )

Increase (decrease) in accrued expenses and other liabilities ( 3,058 ) 7,889

Decrease in accrued expenses and other liabilities ( 416 ) ( 6,054 )

Net cash provided by operating activities 6,121 2,494

1 unchanged sentence

Proceeds from principal paydowns, maturities and calls of securities available for sale 9,695 9,661

Purchases of securities available for sale — ( 120,077 )

Purchases of Federal Home Loan Bank stock ( 34,193 ) ( 31,595 )

2 unchanged sentences

Purchases of premises and equipment ( 10,328 ) ( 7,164 )

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

Net cash used in investing activities ( 56,424 ) ( 13,733 )

Cash Flows from Financing Activities:

Net decrease in deposits ( 124,879 ) ( 193,158 )

Net increase (decrease) in deposits 91,251 ( 82,015 )

Net increase in federal funds purchased and other short-term borrowings 48,230 29,290

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

Net increase in Federal Home Loan Bank advances — 65,000

3 unchanged sentences

Net cash provided by financing activities 132,963 7,180

Net decrease in cash and cash equivalents ( 5,918 ) ( 133,434 )

Net increase (decrease) in cash and cash equivalents 82,660 ( 4,059 )

Cash and Cash Equivalents:

14 unchanged sentences

Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations.

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

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, as amended, for the year ended December 31, 2023, filed with the SEC on February 23, 2024.

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, 2024 and December 31, 2023, and net income, comprehensive income (loss), changes in stockholders' equity and cash flows for the three months ended March 31, 2024 and 2023.

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

9 unchanged sentences

Current accounting developments :

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326).

The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected on the financial assets.

Under the update, the income statement will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period.

The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount of financial assets.

An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances.

The allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination that are measured at amortized cost basis is determined in a similar manner to other financial assets measured at amortized cost basis;

however, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense.

Only subsequent changes in the allowance for credit losses are recorded as a credit loss expense for these assets.

Off-balance sheet arrangements such as commitments to extend credit, guarantees, and standby letters of credit that are not considered derivatives under ASC 815 and are not unconditionally cancellable are also within the scope of this update.

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

In December 2019, the FASB issued ASU No.

2019-10, Financial Instruments-Credit Losses (Topic 326).

This update amended the effective date of ASU No.

2016-13 for certain entities, including smaller reporting companies until fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods.

Early adoption was permitted.

The one-time determination date for identifying as a smaller reporting company was November 15, 2019.

The Company met the definition of a smaller reporting company as of that date and was not required to adopt the standard until January 1, 2023.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

In March 2020, the FASB issued ASU No.

2022-02, Financial Instruments - Credit Losses (ASC 326):

Troubled Debt Restructurings and Vintage Disclosures .

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 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.

The Company adopted ASU No.

2016-13 using the modified retrospective method for financial assets measured at amortized cost and off-balance-sheet credit exposures.

Results for the periods beginning after January 1, 2023 are presented under ASU No.

2016-13, while prior period amounts are reported in accordance with the previously applicable accounting standards.

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 exposures of $2,344.

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

The transition adjustment included corresponding increases in deferred tax assets of $ 1,176 .

The following table illustrates the impact of ASC 326 adoption.

January 1, 2023

Pre-ASC 326 Adoption Impact of ASC 326 Adoption As Reported Under ASC 326

Commercial $ 4,804 $ 677 $ 5,481

Construction, land and land development 3,548 ( 234 ) 3,314

1-4 family residential first mortgages 357 121 478

Home equity 101 ( 8 ) 93

Commercial 16,575 1,911 18,486

Consumer and other 88 ( 9 ) 79

Allowance for credit losses on loans $ 25,473 $ 2,458 $ 27,931

Liability for off-balance sheet credit exposures $ — $ 2,344 $ 2,344

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

13 unchanged sentences

The Company does not expect the updates within Topic 848 to have a material impact on our financial statements.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

In March 2023, the FASB issued ASU No.

4 unchanged sentences

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years.

The ASU does not have a material impact on the Company's financial statements.

West Bancorporation, Inc.

and Subsidiary

Notes to Consolidated Financial Statements

(dollars in thousands, except per share data)

In October 2023, the FASB issued ASU No.

2023-06, Disclosure Improvements:

Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative .

The ASU incorporates certain SEC disclosure requirements into the FASB A ccounting Standards Codification TM.

The amendments in the ASU are expected to clarify or improve disclosure presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations.

For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules.

For all other entities, the amendments will be effective two years later.

However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity.

These amendments have not had an impact to the Company as of March 31, 2024.

In November 2023, the FASB issued ASU No.

2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures .

The amendments in this ASU are intended to improve reportable segment disclosure requirements primarily through enhanced disclosures about significant segment expenses.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

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

In December 2023, the FASB issued ASU No.

2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The ASU is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation table and income taxes paid to be disaggregated by jurisdiction.

It also includes certain amendments to improve the effectiveness of income tax disclosures.

For public business entities, the amendments are effective for fiscal years beginning after December 15, 2024.

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

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 nine months ended September 30, 2023 and 2022 are presented in the following table.

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

The calculations of earnings per common share and diluted earnings per common share for the three months ended March 31, 2024 and 2023 are presented in the following table.

Three Months Ended March 31,

(in thousands, except per share data) 2024 2023

2 unchanged sentences

Weighted average effect of restricted stock units outstanding

43 154 45 200

Diluted weighted average common shares outstanding 16,786 16,805

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 September 30, 2023 and December 31, 2022.

September 30, 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 March 31, 2024 and December 31, 2023.

March 31, 2024

(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 $ 458,126 and $ 293,017 as of September 30, 2023 and December 31, 2022, respectively, were pledged to secure access to Federal Home Loan Bank (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 September 30, 2023, by contractual maturity, are shown below.

Securities with an amortized cost of approximately $ 442,363 and $ 447,074 as of March 31, 2024 and December 31, 2023, respectively, were pledged to secure access to Federal Home Loan Bank (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, 2024, 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.

September 30, 2023

March 31, 2024

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 and nine months ended September 30, 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 September 30, 2023 and December 31, 2022.

September 30, 2023

There were no sales of securities available for sale during the three months ended March 31, 2024 and 2023.

March 31, 2024

Less than 12 months 12 months or longer Total

7 unchanged sentences

Mortgage-backed securities — — — 127,836 ( 27,386 ) 27 127,836 ( 27,386 )

Collateralized loan obligations — — — 37,530 ( 332 ) 6 37,530 ( 332 )

Corporate notes — — — 11,739 ( 2,011 ) 8 11,739 ( 2,011 )

13 unchanged sentences

$ 3,353 $ ( 89 ) 5 $ 615,436 $ ( 121,717 ) 205 $ 618,789 $ ( 121,806 )

The Company adopted ASU No.

2016-13 effective January 1, 2023 which requires credit losses on available-for-sale securities to be recorded in an allowance for credit losses.

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 September 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 September 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.

As of March 31, 2024 and December 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, 2024 and December 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 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 $ 3,588 as of September 30, 2023, and was 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.

At December 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, under the accounting principles effective at December 31, 2022, the Company did not consider these securities to have other than temporary impairment as of December 31, 2022.

Interest receivable on securities was $ 3,443 and $ 3,271 as of March 31, 2024 and December 31, 2023, respectively, and was excluded from the estimate of credit losses.

West Bancorporation, Inc.

3 unchanged sentences

Loans and Allowance for Credit Losses

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

September 30, 2023 December 31, 2022

Loans consisted of the following segments as of March 31, 2024 and December 31, 2023.

March 31, 2024 December 31, 2023

Commercial $ 544,293 $ 531,594

7 unchanged sentences

$ 2,980,133 $ 2,927,535

Real estate loans of approximately $ 1,380,000 and $ 1,190,000 were pledged as security for FHLB advances as of September 30, 2023 and December 31, 2022, respectively.

Real estate loans of approximately $ 1,460,000 and $ 1,420,000 were pledged as security for FHLB advances as of March 31, 2024 and December 31, 2023, 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

The Company adopted ASU No.

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

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

Three Months Ended September 30, 2023

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

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

Charge-offs — — — — — — —

Recoveries 8 — — 1 — — 9

Provision for credit loss expense (1)

( 221 ) 467 97 — ( 143 ) — 200

Ending balance $ 5,283 $ 3,751 $ 569 $ 111 $ 18,326 $ 107 $ 28,147

Nine Months Ended September 30, 2023

The following tables detail the changes in the allowance for credit losses (ACL) by loan segment for the three months ended March 31, 2024 and 2023.

Three Months Ended March 31, 2024

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

Beginning balance $ 5,291 $ 3,668 $ 704 $ 142 $ 18,420 $ 117 $ 28,342

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

Charge-offs — — — — — — —

3 unchanged sentences

Ending balance $ 5,326 $ 4,045 $ 828 $ 140 $ 17,891 $ 143 $ 28,373

(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, improvement in qualitative risk factors related to those portfolio segments and/or changes in economic forecasts.

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

Prior to the adoption of ASU No.

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

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

Three Months Ended September 30, 2022

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

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

Charge-offs — — ( 31 ) — — — ( 31 )

Recoveries 9 — 1 1 4 — 15

Provision for loan losses (1)

429 ( 557 ) 20 9 82 17 —

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

Nine Months Ended September 30, 2022

Three Months Ended March 31, 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

Charge-offs — — — — — — —

Recoveries 8 — 1 1 — — 10

Provision for loan losses (1)

Provision for credit loss expense (1)

8 ( 148 ) ( 13 ) ( 6 ) 159 — —

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

(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 September 30, 2023 and December 31, 2022.

September 30, 2023

The following tables present a breakdown of the ACL by segment, disaggregated based on the evaluation method as of March 31, 2024 and December 31, 2023.

March 31, 2024

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

6 unchanged sentences

Ending balance:

Individually evaluated for impairment $ — $ — $ — $ — $ — $ — $ —

Collectively evaluated for impairment 4,804 3,548 357 101 16,575 88 25,473

Individually evaluated for credit losses $ — $ — $ — $ — $ — $ — $ —

Collectively evaluated for credit losses 5,291 3,668 704 142 18,420 117 28,342

Total $ 5,291 $ 3,668 $ 704 $ 142 $ 18,420 $ 117 $ 28,342

3 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 September 30, 2023 and December 31, 2022.

September 30, 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 March 31, 2024 and December 31, 2023.

March 31, 2024

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

6 unchanged sentences

Ending balance:

Individually evaluated for impairment $ — $ — $ 322 $ — $ — $ — $ 322

Collectively evaluated for impairment 519,196 363,014 74,889 10,322 1,771,940 7,292 2,746,653

Individually evaluated for credit losses $ — $ — $ 296 $ — $ — $ — $ 296

Collectively evaluated for credit losses 531,594 413,477 106,392 14,618 1,854,510 10,930 2,931,521

Total $ 531,594 $ 413,477 $ 106,688 $ 14,618 $ 1,854,510 $ 10,930 $ 2,931,817

Under the CECL 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 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, discounts, and net deferred fees or costs.

3 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 $ 10,005 and $ 8,665 at September 30, 2023 and December 31, 2022, respectively, was included in accrued interest receivable on the balance sheet and was 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.

Accrued interest on loans of $ 11,709 and $ 10,292 at March 31, 2024 and December 31, 2023, respectively, was included in the "Accrued interest receivable" line of the Consolidated Balance Sheets and was excluded from the estimate of credit losses.

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

When the Company deems all or a portion of a loan to be uncollectible, the appropriate amount is written off and the ACL is reduced by the same amount.

21 unchanged sentences

Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

The following table presents the amortized cost basis of loans on nonaccrual status, loans on nonaccrual status with no allowance for credit losses recorded, and loans past due 90 days or more and still accruing by loan segment.

The following table presents the amortized cost basis of loans on nonaccrual status, loans on nonaccrual status with no ACL recorded, and loans past due 90 days or more and still accruing by loan segment.

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

September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022 September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023 March 31, 2024 December 31, 2023

Commercial $ — $ — $ — $ — $ — $ —

7 unchanged sentences

Total $ 289 $ 296 $ 289 $ 296 $ — $ —

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

There was no interest income recognized on loans that were on nonaccrual for the three months ended March 31, 2024 and March 31, 2023.

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 September 30, 2023 and December 31, 2022.

September 30, 2023

The following tables provide an analysis of the delinquency status of the amortized cost of loans as of March 31, 2024 and December 31, 2023.

March 31, 2024

Past Due Total

26 unchanged sentences

Loan Restructurings Made to Borrowers Experiencing Financial Difficulty

As of September 30, 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 and nine months ended September 30, 2023 and 2022.

As of March 31, 2024 and December 31, 2023, 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 September 30, 2023 and December 31, 2022.

Term Loans by Origination Year

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

As of March 31, 2024 2024 2023 2022 2021 2020 Prior Revolving Loans Total

Pass $ 36,649 $ 130,459 $ 104,541 $ 46,283 $ 28,261 $ 48,969 $ 149,131 $ 544,293

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 September 30, 2023

As of March 31, 2024

Primary Type of Collateral

10 unchanged sentences

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

The Company's allowance for credit losses for unfunded commitments was $ 2,544 as of March 31, 2024 and December 31, 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 nine months ended September 30, 2023.

There were no changes to the allowance for credit losses for off-balance-sheet credit exposures during the three months ended March 31, 2024 and March 31, 2023.

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

6 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 $ 445,000 and $ 310,000 at September 30, 2023 and December 31, 2022, respectively.

As of September 30, 2023, the Company had swaps with a total notional amount of $ 295,000 that hedge the interest payments of rolling one-month funding consisting of FHLB advances or brokered deposits.

Also as of September 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.

The Company had interest rate swaps designated as cash flow hedges with total notional amounts of $ 515,000 and $ 445,000 at March 31, 2024 and December 31, 2023, respectively.

As of March 31, 2024, the Company had swaps with a total notional amount of $ 315,000 that hedge the interest payments of rolling one-month funding consisting of FHLB advances or brokered deposits.

One of these swaps with a total notional amount of $ 20,000 is a forward-starting swap with a starting date in August 2024.

Also as of March 31, 2024, the Company had swaps with a total notional amount of $ 40,000 that effectively convert variable-rate long-term debt to fixed-rate debt and swaps with a total notional amount of $ 160,000 that hedge the interest payments of certain deposit accounts.

Two swaps with a total notional amount of $ 50,000 are forward-starting swaps with a starting date in July 2024 and will replace $ 50,000 of the swaps hedging interest payments on deposit accounts upon maturity.

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.

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

September 30, 2023 December 31, 2022

The table below identifies the balance sheet category and fair values of the Company's derivative instruments as of March 31, 2024 and December 31, 2023.

March 31, 2024 December 31, 2023

Cash Flow Hedges:

1 unchanged sentence

Fair value in other assets 14,942 11,313

Fair value in other liabilities ( 43 ) ( 988 )

Weighted-average floating rate received 5.63 % 5.64 %

5 unchanged sentences

Fair value in other liabilities ( 15,723 ) ( 14,114 )

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, 2023 and 2022.

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

2023 2022 2023 2022

Pre-tax gain recognized in other comprehensive

income $ 5,303 $ 8,637 $ 11,771 $ 23,239

Reclassification from AOCI into income:

Increase (decrease) in interest expense $ ( 2,903 ) $ ( 259 ) $ ( 7,328 ) $ 1,428

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, 2024 and 2023.

Three Months Ended March 31,

Pre-tax gain (loss) recognized in other comprehensive

income (loss) $ 7,489 $ ( 1,634 )

Decrease in interest expense ( 2,915 ) ( 1,958 )

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

The Company estimates there will be approximately $ 11,575 reclassified from accumulated other comprehensive income to reduce interest expense through the 12 months ending September 30, 2024 related to cash flow hedges.

The Company estimates there will be approximately $ 11,514 reclassified from accumulated other comprehensive income (loss) to decrease interest expense through the 12 months ending March 31, 2025 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 both September 30, 2023 and December 31, 2022, the Company pledged $ 0 of collateral to the counterparties in the form of cash on deposit.

As of September 30, 2023 and December 31, 2022, the Company's counterparties pledged $ 40,670 and $ 31,560 , respectively, of collateral to the Company in the form of cash on deposit.

As of both March 31, 2024 and December 31, 2023, the Company pledged $ 0 of collateral to the counterparties in the form of cash on deposit.

As of March 31, 2024 and December 31, 2023, the Company's counterparties pledged $ 29,820 and $ 22,340 , 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 September 30, 2023 and December 31, 2022.

September 30, 2023 December 31, 2022

Net deferred tax assets consisted of the following as of March 31, 2024 and December 31, 2023.

March 31, 2024 December 31, 2023

Deferred tax assets:

13 unchanged sentences

New markets tax credit loan 411 389

Other 122 125

Net deferred tax assets before valuation allowance 36,372 36,066

8 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 nine months ended September 30, 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 three months ended March 31, 2024 and 2023.

Unrealized Unrealized Accumulated

4 unchanged sentences

Other comprehensive income (loss) before reclassifications ( 5,842 ) 5,640 ( 202 )

Amounts reclassified from accumulated other comprehensive income ( 20 ) ( 5,526 ) ( 5,546 )

Amounts reclassified from accumulated other comprehensive income (loss) ( 6 ) ( 2,195 ) ( 2,201 )

Net current period other comprehensive income (loss) ( 5,848 ) 3,445 ( 2,403 )

Balance, September 30, 2023 $ ( 119,141 ) $ 15,562 $ ( 103,579 )

Balance, March 31, 2024 $ ( 97,081 ) $ 11,155 $ ( 85,926 )

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

2 unchanged sentences

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

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

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

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 adopted ASU No.

2016-13 effective January 1, 2023 which requires an allowance for credit losses on off-balance sheet credit exposure.

See Note 4 for additional information.

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

September 30, 2023 December 31, 2022

The Company's commitments consisted of the following amounts as of March 31, 2024 and December 31, 2023.

March 31, 2024 December 31, 2023

Commitments to fund real estate construction loans $ 343,796 $ 385,846

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 $ 20,854 and $ 23,337 at September 30, 2023 and December 31, 2022, respectively.

The outstanding balance of mortgage loans sold under the MPF Program was $ 19,373 and $ 20,159 at March 31, 2024 and December 31, 2023, respectively.

Contractual commitments :

The Company had remaining commitments to invest in qualified affordable housing projects totaling $ 1,811 and $ 3,431 as of September 30, 2023 and December 31, 2022, respectively.

The Company had remaining commitments to invest in qualified affordable housing projects totaling $ 1,525 and $ 1,649 as of March 31, 2024 and December 31, 2023, respectively.

West Bancorporation, Inc.

2 unchanged sentences

(dollars in thousands, except per share data)

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 September 30, 2023, there was a remaining commitment of $ 18,625 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 $ 2,023 as of September 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 nine months ended September 30, 2023.

There were no transfers between levels of the fair value hierarchy during the three months ended March 31, 2024.

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

5 unchanged sentences

Management reviewed the valuation process used by the third party and believed the process was valid.

On a quarterly basis, management corroborates the fair values of a randomly selected sample of securities by obtaining pricing from an independent financial market data vendor and comparing the two sets of fair values.

On a quarterly basis, management corroborates the fair values of securities by obtaining pricing from an independent financial market data vendor and comparing the two sets of fair values.

Any significant variances are reviewed and investigated.

10 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 September 30, 2023 and December 31, 2022.

September 30, 2023

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, 2024 and December 31, 2023.

March 31, 2024

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 September 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.

Fair value is based on the value of the collateral securing these loans.

Individually evaluated loans that are deemed to have impairment are classified within Level 3 of the fair value hierarchy and are recorded at fair value, which is based on the value of the collateral securing these loans.

As of both March 31, 2024 and December 31, 2023, there were no individually evaluated loans with a fair value adjustment.

In determining the estimated net realizable value of the underlying collateral of individually evaluated 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.

3 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 September 30, 2023 and December 31, 2022.

September 30, 2023

The following table presents the carrying amounts and approximate fair values of financial assets and liabilities as of March 31, 2024 and December 31, 2023.

March 31, 2024

Carrying Amount Approximate Fair Value Level 1 Level 2 Level 3

15 unchanged sentences

Interest rate swaps 15,766 15,766 — 15,766 —

Off-balance sheet financial instruments:

Commitments to extend credit — — — — —

Standby letters of credit — — — — —

West Bancorporation, Inc.

20 unchanged sentences

Interest rate swaps 15,102 15,102 — 15,102 —

Off-balance sheet financial instruments:

Commitments to extend credit — — — — —

Standby letters of credit — — — — —

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