What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-07-24 compared with 2025-04-24 · 207 added, 107 removed, 348 unchanged (47% of the section changed)

10 unchanged sentences

competitive pressures, including from non-bank competitors such as credit unions, "fintech" companies and digital asset service providers;

technological changes implemented by us and other parties, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence;

pricing pressures on loans and deposits;

2 unchanged sentences

the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits;

the imposition of domestic or foreign tariffs or other governmental policies impacting the global supply chain and the value of products produced by our commercial borrowers;

the threat or imposition of domestic or foreign tariffs or other governmental policies impacting the global supply chain and the value of products produced by our commercial borrowers;

changes in local, national and international economic conditions, including the level and impact of inflation, and future monetary policies of the Federal Reserve in response thereto, and possible recession;

the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in recent bank failures;

changes in legal and regulatory requirements, limitations and costs, including in response to the recent bank failures;

the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general or investor and depositor sentiment regarding the stability and liquidity of banks;

changes in legal and regulatory requirements, limitations and costs;

changes in customers’ acceptance of the Company’s products and services;

29 unchanged sentences

The following table reconciles the non-GAAP financial measures of net interest income and net interest margin on a FTE basis and efficiency ratio on an adjusted and FTE basis to their most directly comparable measures under GAAP.

Three Months Ended March 31,

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

2025 2024 2025 2024

Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:

1 unchanged sentence

Tax-equivalent adjustment (1)

59 55 125 137

Net interest income on a FTE basis (non-GAAP) 21,478 17,285 42,399 34,117

19 unchanged sentences

The following discussion describes the consolidated operations and financial condition of the Company, West Bank and West Bank's special purpose subsidiaries (which are invested in new markets tax credit activities).

Results of operations for the three months ended March 31, 2025 are compared to the results for the same period in 2024, and the consolidated financial condition of the Company as of March 31, 2025 is compared to that as of December 31, 2024.

Results of operations for the three and six months ended June 30, 2025 are compared to the results for the same periods in 2024, and the consolidated financial condition of the Company as of June 30, 2025 is compared to that as of December 31, 2024.

This discussion and analysis should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025.

2 unchanged sentences

and southern Minnesota, which includes the cities of Rochester, Owatonna, Mankato and St.

Net income for the three months ended March 31, 2025 was $7,842, or $0.46 per diluted common share, compared to $5,809, or $0.35 per diluted common share, for the three months ended March 31, 2024.

The Company's annualized return on average assets and return on average equity for the three months ended March 31, 2025 were 0.81 percent and 13.84 percent, respectively, compared to 0.61 percent and 10.63 percent, respectively, for the three months ended March 31, 2024.

Net interest income for the three months ended March 31, 2025 increased $4,105, or 24.5 percent, compared to the three months ended March 31, 2024.

The increase in net interest income was primarily due to increases in interest income on loans and interest-bearing deposits at other financial institutions and a decrease in interest expense on short term borrowed funds.

Growth in average deposit balances provided for a reduction in average short term borrowings and an increase in average interest bearing deposits in other financial institutions.

Interest expense on deposits declined slightly, as growth in deposit balances was offset by a reduction in deposit interest rates.

A reduction in the interest rates on interest bearing cash deposits, short term borrowings and deposits have been driven by the Federal Reserve's 100 basis point reduction of the federal funds rate in September through December of 2024.

Noninterest income decreased $56 for the three months ended March 31, 2025 compared to the same period in 2024.

Noninterest expense increased $1,195 during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to increases in salaries and employee benefits and occupancy and equipment expense.

Total loans outstanding increased $11,611, or 0.4 percent, to $3,016,471 during the first three months of 2025.

The credit quality of the loan portfolio remained strong, as evidenced by the Company's ratio of nonperforming loans to total assets of 0.00 percent as of both March 31, 2025 and December 31, 2024.

As of both March 31, 2025 and December 31, 2024, the allowance for credit losses was 1.01 percent of total outstanding loans.

Management believed the allowance for credit losses at March 31, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.

Net income for the three months ended June 30, 2025 was $7,979, or $0.47 per diluted common share, compared to $5,192, or $0.31 per diluted common share, for the three months ended June 30, 2024.

The Company's annualized return on average assets and return on average equity for the three months ended June 30, 2025 were 0.80 percent and 13.65 percent, respectively, compared to 0.53 percent and 9.50 percent, respectively, for the three months ended June 30, 2024.

Net interest income for the three months ended June 30, 2025 increased $4,189, or 24.3 percent, compared to the three months ended June 30, 2024.

The increase in net interest income was primarily due to an increase in interest income on deposits with banks and decreases in interest expense on deposits and borrowed funds, partially offset by a decrease in interest income on securities.

Noninterest income increased $64 for the three months ended June 30, 2025 compared to the same period in 2024.

Noninterest expense increased $291 during the three months ended June 30, 2025 compared to the three months ended June 30, 2024, primarily due to increases in salaries and employee benefits and occupancy and equipment expense.

Net income for the six months ended June 30, 2025 was $15,821, or $0.93 per diluted common share, compared to $11,001, or $0.65 per diluted common share, for the six months ended June 30, 2024.

The Company's annualized return on average assets and return on average equity for the six months ended June 30, 2025 were 0.80 percent and 13.74 percent, respectively, compared to 0.57 percent and 10.07 percent, respectively, for the six months ended June 30, 2024.

Net interest income for the six months ended June 30, 2025 increased $8,294, or 24.4 percent, compared to the six months ended June 30, 2024.

The increase in net interest income was primarily due to increases in interest income on loans and deposits with banks and decreases in interest expense on deposits and short-term borrowed funds, partially offset by a decrease in interest income on securities.

Noninterest income increased $8 for the six months ended June 30, 2025 compared to the same period in 2024.

Noninterest expense increased $1,486 during the six months ended June 30, 2025 compared to the six months ended June 30, 2024, primarily due to increases in salaries and employee benefits and occupancy and equipment expense.

Total loans outstanding decreased $38,503, or 1.3 percent, to $2,966,357 during the first six months of 2025.

The credit quality of the loan portfolio remained strong, as evidenced by the Company's ratio of nonperforming loans to total assets of 0.00 percent as of both June 30, 2025 and December 31, 2024.

As of June 30, 2025, the allowance for credit losses was 1.03 percent of total outstanding loans, compared to 1.01 percent of total outstanding loans as of December 31, 2024.

Management believed the allowance for credit losses at June 30, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.

West Bancorporation, Inc.

10 unchanged sentences

Peer Group Range (2)

As of and for the three months ended March 31, 2025 As of and for the year ended December 31, 2024 As of and for the year ended December 31, 2024

As of and for the six months ended June 30, 2025 As of and for the three months ended March 31, 2025 As of and for the three months ended March 31, 2025

Return on average equity 13.74% 13.84% (18.39%) - 13.75%

5 unchanged sentences

(2) Latest data available.

At its meeting on April 23, 2025, the Company's Board of Directors declared a regular quarterly cash dividend of $0.25 per common share.

The dividend is payable on May 21, 2025, to stockholders of record on May 7, 2025.

At its meeting on July 23, 2025, the Company's Board of Directors declared a regular quarterly cash dividend of $0.25 per common share.

The dividend is payable on August 20, 2025, to stockholders of record on August 6, 2025.

West Bancorporation, Inc.

2 unchanged sentences

RESULTS OF OPERATIONS

The following table shows selected financial results and measures for the three months ended March 31, 2025 compared with the same period in 2024.

Three Months Ended March 31,

2025 2024 Change Change %

The following table shows selected financial results and measures for the three and six months ended June 30, 2025 compared with the same periods in 2024.

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

2025 2024 Change Change % 2025 2024 Change Change %

Net income $ 7,979 $ 5,192 $ 2,787 53.68 % $ 15,821 $ 11,001 $ 4,820 43.81 %

10 unchanged sentences

5.84 % 5.54 % 0.30 % 5.83 % 5.65 % 0.18 %

As of March 31,

As of June 30,

2025 2024 Change

21 unchanged sentences

Net Interest Income

The following table presents average balances and related interest income or interest expense, with the resulting annualized average yield or rate by category of interest-earning assets or interest-bearing liabilities.

The following tables present average balances and related interest income or interest expense, with the resulting annualized average yield or rate by category of interest-earning assets or interest-bearing liabilities.

Interest income and the resulting net interest income

are shown on a FTE basis.

Data for the three months ended March 31:

Data for the three months ended June 30:

Average Balance Interest Income/Expense Yield/Rate

12 unchanged sentences

Total securities 552,017 615,396 (63,379) (10.30) % 3,458 4,226 (768) (18.17) % 2.51 % 2.75 % (0.24) %

Interest-bearing deposits 144,465 10,584 133,881 1,264.94 % 1,617 148 1,469 992.57 % 4.54 % 5.64 % (1.10) %

Deposits with banks 255,688 121,786 133,902 109.95 % 2,847 1,666 1,181 70.89 % 4.47 % 5.50 % (1.03) %

Securities purchased under

agreements to resell 1,738 — 1,738 N/A 22 — 22 N/A 5.08 % — % 5.08 %

Total interest-earning assets (3)

3 unchanged sentences

Savings and money market 1,721,968 1,474,202 247,766 16.81 % 14,034 13,639 395 2.90 % 3.27 % 3.72 % (0.45) %

Time deposits 623,994 659,073 (35,079) (5.32) % 6,531 8,109 (1,578) (19.46) % 4.20 % 4.95 % (0.75) %

Total deposits 2,850,548 2,602,166 248,382 9.55 % 22,676 23,943 (1,267) (5.29) % 3.19 % 3.70 % (0.51) %

Borrowed Funds:

Federal funds purchased and

other short-term borrowings 1 139,853 (139,852) (100.00) % 0 1,950 (1,950) (100.00) % 4.84 % 5.61 % (0.77) %

Subordinated notes, net 79,990 79,726 264 0.33 % 1,104 1,105 (1) (0.09) % 5.54 % 5.57 % (0.03) %

Federal Home Loan Bank

advances 270,000 315,000 (45,000) (14.29) % 2,259 2,718 (459) (16.89) % 3.36 % 3.47 % (0.11) %

Long-term debt 40,648 45,662 (5,014) (10.98) % 504 622 (118) (18.97) % 4.97 % 5.48 % (0.51) %

Total borrowed funds 390,639 580,241 (189,602) (32.68) % 3,867 6,395 (2,528) (39.53) % 3.97 % 4.43 % (0.46) %

Total interest-bearing

liabilities $ 3,241,187 $ 3,182,407 $ 58,780 1.85 % 26,543 30,338 (3,795) (12.51) % 3.28 % 3.83 % (0.55) %

Net interest income (FTE) (4)

$ 21,478 $ 17,285 $ 4,193 24.26 %

Net interest spread (FTE) 1.79 % 1.30 % 0.49 %

Net interest margin (FTE) (4)

2.27 % 1.86 % 0.41 %

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Data for the six months ended June 30:

Average Balance Interest Income/Expense Yield/Rate

2025 2024 Change Change-

% 2025 2024 Change Change-

% 2025 2024 Change

Interest-earning assets:

Commercial $ 530,156 $ 535,345 $ (5,189) (0.97) % $ 16,985 $ 17,752 $ (767) (4.32) % 6.46 % 6.67 % (0.21) %

Real estate (3)

2,452,519 2,423,369 29,150 1.20 % 65,057 63,717 1,340 2.10 % 5.35 % 5.29 % 0.06 %

Consumer and other 20,130 13,368 6,762 50.58 % 671 503 168 33.40 % 6.72 % 7.56 % (0.84) %

Total loans 3,002,805 2,972,082 30,723 1.03 % 82,713 81,972 741 0.90 % 5.55 % 5.55 % 0.00 %

Taxable 430,075 484,121 (54,046) (11.16) % 5,473 6,810 (1,337) (19.63) % 2.55 % 2.81 % (0.26) %

Tax-exempt (3)

124,349 141,426 (17,077) (12.07) % 1,551 1,679 (128) (7.62) % 2.49 % 2.37 % 0.12 %

Total securities 554,424 625,547 (71,123) (11.37) % 7,024 8,489 (1,465) (17.26) % 2.53 % 2.71 % (0.18) %

Deposits with banks 200,384 66,185 134,199 202.76 % 4,464 1,814 2,650 146.09 % 4.49 % 5.51 % (1.02) %

Securities purchased under

agreements to resell 874 — 874 N/A 22 — 22 N/A 5.08 % — % 5.08 %

Total interest-earning assets (3)

$ 3,758,487 $ 3,663,814 $ 94,673 2.58 % 94,223 92,275 1,948 2.11 % 5.06 % 5.06 % 0.00 %

Interest-bearing liabilities:

Interest-bearing demand $ 520,131 $ 463,248 $ 56,883 12.28 % 4,362 4,383 (21) (0.48) % 1.69 % 1.90 % (0.21) %

Savings and money market 1,661,827 1,451,405 210,422 14.50 % 26,488 26,488 0 0.00 % 3.21 % 3.67 % (0.46) %

Time 624,700 599,949 24,751 4.13 % 13,249 14,631 (1,382) (9.45) % 4.28 % 4.90 % (0.62) %

27 unchanged sentences

Interest rates earned and paid are also affected by general economic conditions, particularly changes in market interest rates, and by competitive factors, government policies and actions of regulatory authorities.

The Federal Reserve decreased the target federal funds interest rate by a total of 100 basis points from September through December of 2024, which impacted the comparability of the net interest margin between the three months ended March 31, 2025 and three months ended March 31, 2024.

The timing and extent of additional interest rate changes by the Federal Reserve is not known at this time.

The Federal Reserve decreased the target federal funds interest rate by a total of 100 basis points from September through December of 2024, which impacted the comparability of the net interest margin between the three and six months ended June 30, 2025 and the three and six months ended June 30, 2024.

Net interest margin on a FTE basis, a non-GAAP financial measure, is a measure of the net return on interest-earning assets and is computed by dividing annualized tax-equivalent net interest income by total average interest-earning assets for the period.

The net interest margin for the three months ended March 31, 2025 increased by 40 basis points compared to the three months ended March 31, 2024.

Tax-equivalent net interest income for the three months ended March 31, 2025 increased $4,089 when compared to the same period in 2024.

Tax-equivalent interest income on loans increased $778 for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The increase in interest income on loans was driven primarily by an increase in the average balance of loans.

The average balance of loans for the three months ended March 31, 2025 increased $66,446 compared to the three months ended March 31, 2024.

The yield on the loan portfolio increased by 3 basis points for the three months ended March 31, 2025 compared to the same period in 2024.

While the fixed-rate loan portfolio has benefited from higher prevailing market rates for originations and renewals compared to the roll off rates, the yield on the variable-rate loan portfolio has decreased due to reductions in the prime rate and SOFR rates driven by the reductions in the federal funds rate from September through December 2024.

The net interest margin for the three and six months ended June 30, 2025 increased by 41 and 40 basis points, respectively, compared to the three and six months ended June 30, 2024.

Tax-equivalent net interest income for the three and six months ended June 30, 2025 increased $4,193 and $8,282, respectively, when compared to the same periods in 2024.

Tax-equivalent interest income on loans decreased $37 for the three months ended June 30, 2025 compared to the three months ended June 30, 2024.

The decrease in tax-equivalent interest income on loans for the three months ended June 30, 2025 compared to the same period in 2024 was primarily due to a decrease in average loan balances.

Tax-equivalent interest income on loans increased $741 for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

The increase in interest income on loans during the six months ended June 30, 2025 compared to the same period in 2024 was driven primarily by an increase in the average loan balances.

The average balance of loans for the six months ended June 30, 2025 increased $30,723, compared to the six months ended June 30, 2024.

The yield on the loan portfolio decreased by 1 basis point for the three months ended June 30, 2025 compared to the same period in 2024, and remained unchanged for the six months ended June 30, 2025 compared to the six months ended June 30, 2024.

While the fixed-rate loan portfolio has benefited from higher prevailing market rates for originations and renewals compared to the roll off rates, the yield on the variable-rate loan portfolio has decreased due to reductions in the prime rate and SOFR rates driven by the 100 basis point reduction in the federal funds rate from September through December 2024.

The yield on the Company's loan portfolio is affected by the portfolio's loan mix, the interest rate environment, the effects of competition, the level of nonaccrual loans and reversals of previously accrued interest on charged-off loans.

2 unchanged sentences

In a declining rate environment, the yield on variable-rate loans will decline, however, as long as market rates remain higher than the yield on the fixed-rate portfolio, renewals and originations will continue to increase the yield on the fixed-rate portfolio.

Interest income on interest-bearing deposits in other financial institutions increased $1,469 for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

The increase was primarily due to the increase in the average balance of interest-bearing deposits in other financial institutions.

Tax-equivalent interest income on securities decreased $768 and $1,465, respectively, for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024.

The decrease was primarily due to the decrease in average balances of securities.

This decrease in average balances of securities is driven by calls and principal paydowns on securities, which have been reinvested in the loan portfolio and deposits with banks.

Interest income on deposits with banks increased $1,181 and $2,650, respectively, for the three and six months ended June 30, 2025, compared to the three and six months ended June 30, 2024.

The increase was primarily due to the increase in the average balances of interest-bearing deposits with banks.

This increase in balance sheet liquidity was driven by the growth in average deposit balances.

The average balance of deposits increased $335,243 for the three months ended March 31, 2025 compared to the same period in 2024.

The rate paid on deposits decreased 42 basis points for the three months ended March 31, 2025 compared to the same period in 2024.

The average balance of deposits increased $248,382 and $292,056, respectively, for the three and six months ended June 30, 2025 compared to the same periods in 2024.

The rate paid on deposits decreased 51 and 47 basis points for the three and six months ended June 30, 2025 compared to the same periods in 2024.

Deposit growth included a mix of public funds and commercial and consumer deposits.

In the second quarter of 2025, a local municipal customer deposited approximately $243,000 of bond proceeds that are expected to be withdrawn over 24 months.

The decrease in the cost of deposits was primarily driven by the reduction in the federal funds rate from September through December of 2024.

Interest expense on borrowed funds decreased $2,403 for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The average balance of borrowed funds decreased $206,292 for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

The average balance of federal funds purchased and other short-term borrowings decreased $156,533 for the three months ended March 31, 2025, compared to the same period in 2024 primarily due to increases in deposits.

The average balance of FHLB advances decreased by $45,000 for the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

This decrease in average balances was due to the maturity of two FHLB advances with a total balance of $45,000 in the fourth quarter of 2024.

One of these FHLB advances, with a balance of $25,000, was a one-month rolling advance that was hedged with a long-term interest rate swap agreement that matured.

West Bancorporation, Inc.

1 unchanged sentence

(in thousands, except share and per share data)

Interest expense on borrowed funds decreased $2,528 and $4,931, respectively, for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024.

The average balance of borrowed funds decreased $189,602 and $197,950, respectively, for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024.

The largest drivers of the decrease in average borrowed funds balances were decreases in average balances of federal funds purchased and other short-term borrowings and FHLB advances.

The average balance of federal funds purchased and other short-term borrowings decreased $139,852 and $148,193, respectively, for the three and six months ended June 30, 2025, compared to the same periods in 2024 primarily due to increases in customer deposits.

The average balance of FHLB advances decreased by $45,000 for both the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024.

This decrease in average balances of FHLB advances was due to maturities of two FHLB advances with a total balance of $45,000 in the fourth quarter of 2024.

Credit Loss Expense and the Related Allowance for Credit Losses

2 unchanged sentences

The allowance for credit losses is management's estimate of expected lifetime losses in the loan portfolio as of the balance sheet date.

The Company recorded no credit loss expense for loans for both the three months ended March 31, 2025 and March 31, 2024.

Management believed the allowance for credit losses at March 31, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.

The Company recorded no credit loss expense for loans for the three and six months ended June 30, 2025 and June 30, 2024.

Management believed the allowance for credit losses at June 30, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.

Factors management considers in establishing an appropriate allowance include:

27 unchanged sentences

Commercially reasonable efforts are made to maximize subsequent recoveries.

The following table summarizes the activity in the Company's allowance for credit losses on loans for the three months ended March 31, 2025 and 2024 and related ratios.

Three Months Ended March 31,

2025 2024 Change

The following table summarizes the activity in the Company's allowance for credit losses on loans for the three and six months ended June 30, 2025 and 2024 and related ratios.

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

2025 2024 Change 2025 2024 Change

Balance at beginning of period $ 30,526 $ 28,373 $ 2,153 $ 30,432 $ 28,342 $ 2,090

2 unchanged sentences

Net (charge-offs) recoveries 13 49 (36) 107 80 27

Provision for credit losses charged (credited) to operations — — —

Provision for credit losses charged

(credited) to operations — — — — — —

Balance at end of period $ 30,539 $ 28,422 $ 2,117 $ 30,539 $ 28,422 $ 2,117

Average loans outstanding $ 2,989,638 $ 2,994,492 $ 3,002,805 $ 2,972,082

Ratio of annualized net (charge-offs) recoveries during the period to average

Ratio of annualized net (charge-offs)

recoveries during the period to average

loans outstanding 0.00 % 0.01 % 0.01 % 0.01 %

Ratio of allowance for credit losses for loans to average loans outstanding 1.01 % 0.96 %

Ratio of allowance for credit losses for loans to total loans at end of period 1.01 % 0.95 %

Ratio of allowance for credit losses for

loans to average loans outstanding 1.02 % 0.95 % 1.02 % 0.96 %

Ratio of allowance for credit losses for

loans to total loans at end of period 1.03 % 0.95 % 1.03 % 0.95 %

West Bancorporation, Inc.

2 unchanged sentences

Noninterest Income

The following table shows the variance from the prior year in the noninterest income categories shown in the Consolidated Statements of Income.

Three Months Ended March 31,

The following tables show the variance from the prior year in the noninterest income categories shown in the Consolidated Statements of Income.

Three Months Ended June 30,

Noninterest income:

6 unchanged sentences

Total noninterest income $ 2,410 $ 2,346 $ 64 2.73 %

The decrease in other income was primarily due to a decrease in letter of credit and loan related fees during the three months ended March 31, 2025 compared to the three months ended March 31, 2024.

Six Months Ended June 30,

Noninterest income:

2025 2024 Change Change %

Service charges on deposit accounts $ 957 $ 922 $ 35 3.80 %

Debit card usage fees 924 948 (24) (2.53) %

Trust services 1,578 1,570 8 0.51 %

Increase in cash value of bank-owned life insurance 577 552 25 4.53 %

Other income 617 653 (36) (5.51) %

Total noninterest income $ 4,653 $ 4,645 $ 8 0.17 %

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Noninterest Expense

The following table shows the variance from the prior year in the noninterest expense categories shown in the Consolidated Statements of Income.

The following tables show the variance from the prior year in the noninterest expense categories shown in the Consolidated Statements of Income.

In addition, accounts within the “other expenses” category that represent a significant portion of the total or a significant variance are shown below.

Three Months Ended March 31,

Three Months Ended June 30,

Noninterest expense:

17 unchanged sentences

All other 547 546 1 0.18 %

Total other expenses 1,499 1,577 (78) (4.95) %

Total noninterest expense $ 13,485 $ 13,194 $ 291 2.21 %

Six Months Ended June 30,

Noninterest expense:

2025 2024 Change Change %

Salaries and employee benefits $ 14,347 $ 13,658 $ 689 5.04 %

Occupancy and equipment 3,997 3,299 698 21.16 %

Data processing 1,260 1,468 (208) (14.17) %

Technology and software 1,577 1,431 146 10.20 %

FDIC insurance 1,257 1,150 107 9.30 %

Professional fees 611 501 110 21.96 %

Director fees 408 435 (27) (6.21) %

Other expenses:

Insurance expense 585 395 190 48.10 %

Business development 414 397 17 4.39 %

Trust 377 327 50 15.29 %

Consulting fees 131 137 (6) (4.38) %

Marketing 36 63 (27) (42.86) %

Low income housing projects amortization 285 316 (31) (9.81) %

New markets tax credit project amortization and management

fees 152 459 (307) (66.88) %

All other 1,111 1,026 85 8.28 %

Total other 3,091 3,120 (29) (0.93) %

Total noninterest expense $ 26,548 $ 25,062 $ 1,486 5.93 %

Salaries and employee benefits increased for the three months ended March 31, 2025 compared to the same period in 2024 due primarily to an increase in incentive compensation related accruals.

Occupancy and equipment expense increased for the three months ended March 31, 2025 compared to the three months March 31, 2024 primarily due to an increase in occupancy costs related to new bank buildings, including the Company's new headquarters building, which opened in April 2024, and the new branch building in Owatonna, Minnesota, which opened in January 2025.

Insurance expense increased due to increased coverage related to these new bank buildings and general increases in insurance costs.

West Bancorporation, Inc.

1 unchanged sentence

(in thousands, except share and per share data)

Technology and software expense increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024 due to updates in information technology solutions.

New market tax credit project amortization declined due to the expiration of the related tax credit.

Salaries and employee benefits increased for the three and six months ended June 30, 2025 compared to the same periods in 2024 due primarily to an increase in incentive compensation related accruals.

Occupancy and equipment expense increased for the three and six months ended June 30, 2025 compared to the three and six months June 30, 2024 primarily due to an increase in occupancy costs related to new bank buildings.

The Company's new headquarters, which opened in April 2024, contributed to the increase for the six months ended June 30, 2025, compared to the six months ended June 30, 2024, and the new branch building in Owatonna, Minnesota, which opened in January 2025, contributed to the increase for the three and six months ended June 30, 2025 compared to the same periods in 2024.

Insurance expense increased due to increased coverage related to these new bank buildings and general increases in insurance costs.

Technology and software expense increased for the three and six months ended June 30, 2025 compared to the three and six months ended June 30, 2024 due to ongoing updates in information technology and security solutions.

New market tax credit project amortization declined with the expiration of the related tax credit.

Income Tax Expense

The Company recorded income tax expense of $2,193 (21.9 percent of pre-tax income) for the three months ended March 31, 2025, compared with $1,372 (19.1 percent of pre-tax income) for the three months ended March 31, 2024.

The increase in effective tax rate was primarily due to the expiration of the new market tax credit at the end of 2024.

The Company recorded income tax expense of $2,365 (22.9 percent of pre-tax income) and $4,558 (22.4 percent of pre-tax income) for the three and six months ended June 30, 2025, compared with $1,190 (18.6 percent of pre-tax income) and $2,562 (18.9 percent of pre-tax income) for the three and six months ended June 30, 2024.

The increase in effective tax rates was primarily due to the expiration of the new market tax credit at the end of 2024.

The Company's consolidated income tax rate differs from the federal statutory income tax rate in each period, primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, disallowed interest expense, and state income taxes.

Additionally, for the three months ended March 31, 2025, a tax benefit of $67 was recorded as a result of the increase in fair value of restricted stock over the vesting period.

For the three months ended March 31, 2024, a tax expense of $5 was recorded as a result of the decrease in fair value of restricted stock over the vesting period.

The tax rates for the first three months of 2025 and 2024 were also impacted by year-to-date tax credits of approximately $165 and $377, respectively.

Additionally, for the six months ended June 30, 2025, a tax benefit of $85 was recorded as a result of the increase in fair value of restricted stock over the vesting period, compared to a tax benefit of $2 for the six months ended June 30, 2024.

The tax rates for the first six months of 2025 and 2024 were impacted by total year-to-date tax credits of approximately $330 and $754, respectively.

West Bancorporation, Inc.

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FINANCIAL CONDITION

The Company had total assets of $3,986,669 as of March 31, 2025, compared to total assets of $4,014,991 as of December 31, 2024.

Changes in the balance sheet included increases in loans and stockholders' equity and decreases in interest-bearing cash deposits and total deposits.

Securities available for sale increased by $2,054 during the three months ended March 31, 2025.

This increase was due to a decrease in unrealized losses on securities since December 31, 2024, partially offset by calls and principal paydowns on securities.

Management concluded unrealized losses in the portfolio as of March 31, 2025 are the result of increases in risk-free market interest rates since the securities were purchased and are not an indication of declining credit quality.

The Company had total assets of $4,056,669 as of June 30, 2025, compared to total assets of $4,014,991 as of December 31, 2024.

Changes in the balance sheet included increases in securities purchased under agreements to resell, deposits and stockholders' equity and a decrease in loans.

Cash and Cash Equivalents

As of June 30, 2025, the Company held securities purchased under agreements to resell of $96,955 compared to none at December 31, 2024.

The Company uses these instruments as short-term secured investments which have a maturity of 30 days.

Balances will fluctuate based on the Company's liquidity and investment decisions.

Securities available for sale decreased by $7,856 during the six months ended June 30, 2025.

This decrease was primarily due to calls and principal paydowns on securities, partially offset by a decrease in unrealized losses on securities since December 31, 2024.

Management concluded unrealized losses in the portfolio as of June 30, 2025 are the result of increases in risk-free market interest rates since the securities were purchased and are not an indication of declining credit quality.

Unrealized losses are recorded in accumulated other comprehensive loss, net of tax.

The Company expects the securities portfolio as a percentage of total assets to decrease over time as the proceeds from paydowns and maturities may be used for loan growth or repayment of borrowed funds.

As of March 31, 2025, approximately 63 percent of the available for sale securities portfolio consisted of government agency guaranteed collateralized mortgage obligations and mortgage-backed securities.

As of June 30, 2025, approximately 63 percent of the available for sale securities portfolio consisted of government agency guaranteed collateralized mortgage obligations and mortgage-backed securities.

Management believes these securities have little to no credit risk and provide cash flows for liquidity and repricing opportunities.

Loans and Nonperforming Assets

Loans outstanding increased $11,611 from $3,004,860 as of December 31, 2024 to $3,016,471 as of March 31, 2025.

Changes in the loan portfolio during the first three months of 2025 included increases of $48,135 in commercial real estate loans and $17,035 in commercial loans and a decrease of $56,917 in construction, land and land development loans.

Loans outstanding decreased $38,503 from $3,004,860 as of December 31, 2024 to $2,966,357 as of June 30, 2025.

Changes in the loan portfolio during the first six months of 2025 included decreases of $49,110 in construction, land and land development loans and $13,378 in commercial loans and an increase of $14,662 in commercial real estate loans.

Loan production in the first six months of 2025 was offset by payoffs resulting from customers selling business assets and refinancings of commercial real estate in the secondary market.

In accordance with regulatory guidelines, the Company exercises heightened risk management practices when non-owner occupied commercial real estate lending exceeds 300 percent of total risk-based capital or construction, land and land development loans exceed 100 percent of total risk-based capital.

Although the commercial real estate portfolio exceeded these regulatory guidelines as of March 31, 2025, they were within the Company's established policy limits and management believes that the Company has appropriate risk management policies and procedures to regularly monitor the commercial real estate portfolio.

Although the commercial real estate portfolio exceeded these regulatory guidelines as of June 30, 2025, they were within the Company's established policy limits and management believes that the Company has appropriate risk management policies and procedures to regularly monitor the commercial real estate portfolio.

An analysis of the Company's non-owner occupied commercial real estate portfolio as of December 31, 2024 was presented in the Company's Form 10-K, filed with the SEC on February 20, 2025, and the Company has not experienced any material changes to that portfolio since December 31, 2024.

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

The following table sets forth the amount of nonperforming assets held by the Company and common ratio measurements of those assets as of the dates shown.

March 31, 2025 December 31, 2024 Change

June 30, 2025 December 31, 2024 Change

Nonaccrual loans $ — $ 133 $ (133)

8 unchanged sentences

Loan restructurings on nonaccrual status are categorized as nonaccrual.

There were no loan restructurings categorized as nonaccrual as of March 31, 2025 or December 31, 2024.

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Deposits decreased $33,078, or 1.0 percent, during the first three months of 2025.

Brokered deposits increased to $335,494 at March 31, 2025, from $266,418 at December 31, 2024.

Excluding brokered deposits, deposits decreased $102,154, or 3.3 percent, during the first three months of 2025.

The decline in deposits was due to normal cash flow fluctuations of our core depositors.

There were no loan restructurings categorized as nonaccrual as of June 30, 2025 or December 31, 2024.

Deposits increased $34,397, or 1.0 percent, during the first six months of 2025.

Brokered deposits decreased to $208,284 at June 30, 2025, from $266,418 at December 31, 2024.

Excluding brokered deposits, deposits increased $92,531, or 3.0 percent, during the first six months of 2025.

In the second quarter of 2025, a local municipal customer deposited approximately $243,000 of bond proceeds that are expected to be withdrawn over 24 months.

Deposit inflows and outflows can be influenced by prevailing market interest rates, competition, local and national economic conditions and fluctuations in our business customers' own liquidity needs.

West Bank participates in the IntraFi ® ICS and CDARS reciprocal deposit network which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount.

As of March 31, 2025, estimated uninsured deposits, which exclude deposits in the IntraFi ® reciprocal network, brokered deposits and public funds protected by state programs, were approximately 28.0 percent of total deposits.

In the second quarter of 2025, the Company entered into two interest rate collar agreements with a total notional amount of $75,000 to mitigate interest rate risk on certain customer deposits.

The structure of the interest rate collars is such that the Company pays the counterparty an incremental amount if the index rate falls below the floor rate.

Conversely, the Company receives an incremental amount if the index rate rises above the cap rate.

West Bank participates in a reciprocal deposit network which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount.

As of June 30, 2025, estimated uninsured deposits, which exclude deposits in reciprocal deposit networks, brokered deposits and public funds protected by state programs, were approximately 27.2 percent of total deposits.

Borrowed Funds

The Company had $270,000 of FHLB advances outstanding at March 31, 2025, all of which are one-month rolling advances hedged with long-term interest rate swaps.

The Company had $270,000 of FHLB advances outstanding at June 30, 2025, all of which are one-month rolling advances hedged with long-term interest rate swaps.

The interest rate swaps that hedge the interest rates on these FHLB advances have maturity dates ranging from July 2026 through June 2029 and fixed rates ranging from 1.86 percent to 4.32 percent.

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Investments in liquid assets are adjusted based on expected loan demand, projected loan and securities maturities and payments, expected deposit flows and the objectives set by the Company's asset-liability management policy.

The Company had liquid assets (cash and cash equivalents) of $210,610 as of March 31, 2025 compared with $243,478 as of December 31, 2024.

Our deposit growth strategy emphasizes core deposit growth.

Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions and fluctuations in our business customers' own liquidity needs.

The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth.

Brokered deposits are obtained through various programs administered by IntraFi ® , and through other third party brokers.

At March 31, 2025, the Company had $335,494 in brokered deposits, which included fixed-rate deposits with terms through September 2026 and variable-rate deposits with terms through February 2026.

As of March 31, 2025, West Bank had additional borrowing capacity available from the FHLB of approximately $635,000, as well as approximately $119,000 through the Federal Reserve discount window and $75,000 through unsecured federal funds lines of credit with correspondent banks.

Net cash from operating activities contributed $9,749 to liquidity for the three months ended March 31, 2025.

Management believed that the combination of high levels of liquid assets, unencumbered securities, cash flows from operations, and additional borrowing capacity were sufficient to meet our liquidity needs as of March 31, 2025.

The Company had remaining commitments to invest in qualified affordable housing projects totaling $663 and $861 as of March 31, 2025 and December 31, 2024, respectively.

The Company had liquid assets (cash and cash equivalents) of $345,201 as of June 30, 2025 compared with $243,478 as of December 31, 2024.

West Bancorporation, Inc.

1 unchanged sentence

(in thousands, except share and per share data)

The Company's total stockholders' equity increased to $237,873 at March 31, 2025 from $227,875 at December 31, 2024.

Our deposit growth strategy emphasizes core deposit growth.

The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth.

At June 30, 2025, the Company had $208,284 in brokered deposits, which included fixed-rate deposits and variable-rate deposits with terms through September 2026.

As of June 30, 2025, West Bank had additional borrowing capacity available from the FHLB of approximately $455,000, as well as approximately $53,000 through the Federal Reserve discount window and $75,000 through unsecured federal funds lines of credit with correspondent banks.

Net cash from operating activities contributed $23,276 to liquidity for the six months ended June 30, 2025.

The Company had remaining commitments to invest in qualified affordable housing projects totaling $1,488 and $861 as of June 30, 2025 and December 31, 2024, respectively.

The Company's total stockholders' equity increased to $240,930 at June 30, 2025 from $227,875 at December 31, 2024.

The increase was primarily the result of retained net income and the increase in the market value of our available for sale investment portfolio.

While accumulated other comprehensive losses reduce tangible common equity, they have no impact on regulatory capital.

At March 31, 2025, the Company's tangible common equity as a percent of tangible assets was 5.97 percent compared to 5.68 percent as of December 31, 2024.

At June 30, 2025, the Company's tangible common equity as a percent of tangible assets was 5.94 percent, compared to 5.68 percent as of December 31, 2024.

The Company and West Bank are subject to various regulatory capital requirements administered by federal and state banking agencies.

2 unchanged sentences

The Company's and West Bank's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Management believed the Company and West Bank met all capital adequacy requirements to which they were subject as of March 31, 2025.

Management believed the Company and West Bank met all capital adequacy requirements to which they were subject as of June 30, 2025.

West Bancorporation, Inc.

6 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

As of March 31, 2025

As of June 30, 2025

Total Capital (to Risk-Weighted Assets)

25 unchanged sentences

A banking organization with a capital conservation buffer of less than the required amount will be subject to limitations on capital distributions, including dividend payments, and certain discretionary bonus payments to executive officers.

At March 31, 2025, the capital ratios for the Company and West Bank were sufficient to meet the conservation buffer.

At June 30, 2025, the capital ratios for the Company and West Bank were sufficient to meet the conservation buffer.

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 2. Management’s Discussion and Analysis