What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-10-23 compared with 2025-07-24 · 111 added, 105 removed, 450 unchanged (32% of the section changed)

28 unchanged sentences

potential changes in federal policy and at regulatory agencies;

the impact of a continued shutdown of the U.S.

talent and labor shortages;

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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 June 30, Six Months Ended June 30,

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

2025 2024 2025 2024

24 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 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.

Results of operations for the three and nine months ended September 30, 2025 are compared to the results for the same periods in 2024, and the consolidated financial condition of the Company as of September 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.

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

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.

Net income for the three months ended September 30, 2025 was $9,314, or $0.55 per diluted common share, compared to $5,952, or $0.35 per diluted common share, for the three months ended September 30, 2024.

The Company's annualized return on average assets and return on average equity for the three months ended September 30, 2025 were 0.92 percent and 15.25 percent, respectively, compared to 0.60 percent and 10.41 percent, respectively, for the three months ended September 30, 2024.

Net interest income for the three months ended September 30, 2025 increased $4,541, or 25.3 percent, compared to the three months ended September 30, 2024.

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

Noninterest income increased $144 for the three months ended September 30, 2025 compared to the same period in 2024.

Noninterest expense increased $658 during the three months ended September 30, 2025 compared to the three months ended September 30, 2024, primarily due to increases in salaries and employee benefits and occupancy and equipment expense.

Net income for the nine months ended September 30, 2025 was $25,135, or $1.48 per diluted common share, compared to $16,953, or $1.00 per diluted common share, for the nine months ended September 30, 2024.

The Company's annualized return on average assets and return on average equity for the nine months ended September 30, 2025 were 0.84 percent and 14.27 percent, respectively, compared to 0.59 percent and 10.18 percent, respectively, for the nine months ended September 30, 2024.

Net interest income for the nine months ended September 30, 2025 increased $12,835, or 24.7 percent, compared to the nine months ended September 30, 2024.

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

Noninterest income increased $152 for the nine months ended September 30, 2025 compared to the same period in 2024.

Noninterest expense increased $2,144 during the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024, primarily due to increases in salaries and employee benefits and occupancy and equipment expense.

Total loans outstanding increased $4,028, or 0.1 percent, to $3,008,888 during the first nine months of 2025.

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

As of both September 30, 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 September 30, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.

West Bancorporation, Inc.

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Peer Group Range (2)

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

As of and for the nine months ended September 30, 2025 As of and for the six months ended June 30, 2025 As of and for the six months ended June 30, 2025

Return on average equity 14.27% 13.74% (0.21%) - 13.93%

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(2) Latest data available.

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.

At its meeting on October 22, 2025, the Company's Board of Directors declared a regular quarterly cash dividend of $0.25 per common share.

The dividend is payable on November 19, 2025, to stockholders of record on November 5, 2025.

West Bancorporation, Inc.

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RESULTS OF OPERATIONS

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,

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

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

2025 2024 Change Change % 2025 2024 Change Change %

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6.05 % 5.73 % 0.32 % 5.91 % 5.68 % 0.23 %

As of June 30,

As of September 30,

2025 2024 Change

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are shown on a FTE basis.

Data for the three months ended June 30:

Data for the three months ended September 30:

Average Balance Interest Income/Expense Yield/Rate

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Time deposits 547,133 665,938 (118,805) (17.84) % 5,688 8,343 (2,655) (31.82) % 4.12 % 4.98 % (0.86) %

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) %

Total interest-bearing deposits 2,822,175 2,729,222 92,953 3.41 % 22,539 26,076 (3,537) (13.56) % 3.17 % 3.80 % (0.63) %

Borrowed Funds:

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(in thousands, except share and per share data)

Data for the six months ended June 30:

Data for the nine months ended September 30:

Average Balance Interest Income/Expense Yield/Rate

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Time 598,560 622,105 (23,545) (3.78) % 18,937 22,974 (4,037) (17.57) % 4.23 % 4.93 % (0.70) %

Total deposits 2,806,658 2,514,602 292,056 11.61 % 44,099 45,502 (1,403) (3.08) % 3.17 % 3.64 % (0.47) %

Total interest-bearing deposits 2,811,888 2,586,663 225,225 8.71 % 66,638 71,578 (4,940) (6.90) % 3.17 % 3.70 % (0.53) %

Borrowed funds:

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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 and six months ended June 30, 2025 and the three and six months ended June 30, 2024.

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 nine months ended September 30, 2025 and the three and nine months ended September 30, 2024.

Additionally, in September 2025, the Federal Reserve decreased the target federal funds interest rate by 25 basis points.

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 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 net interest margin for the three and nine months ended September 30, 2025 increased by 45 and 42 basis points, respectively, compared to the three and nine months ended September 30, 2024.

Tax-equivalent net interest income for the three and nine months ended September 30, 2025 increased $4,573 and $12,855, respectively, when compared to the same periods in 2024.

Tax-equivalent interest income on loans decreased $289 for the three months ended September 30, 2025 compared to the three months ended September 30, 2024.

The decrease in tax-equivalent interest income on loans for the three months ended September 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 $452 for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024.

The increase in interest income on loans during the nine months ended September 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 nine months ended September 30, 2025 increased $9,842, compared to the nine months ended September 30, 2024.

The yield on the loan portfolio increased by 1 basis point for both the three and nine months ended September 30, 2025 compared to the same periods 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 since September 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.

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The yield on the loan portfolio is expected to increase in flat and rising rate environments as variable-rate loans reprice at higher rates and renewals and new originations are priced at prevailing market rates, which exceed the roll-off rate of principal repayments on existing loans.

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.

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.

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.

Tax-equivalent interest income on securities decreased $670 and $2,135, respectively, for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 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.

This decrease in average balances of securities was driven by calls and principal paydowns on securities, which have been reinvested in the loan portfolio, deposits with banks and securities purchased under agreements to resell.

Interest income on deposits with banks increased $46 and $2,696, respectively, for the three and nine months ended September 30, 2025, compared to the three and nine months ended September 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 $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.

Additionally, the Company began investing in securities purchased under agreements to resell in June 2025.

These produced interest income of $1,258 and $1,280 for the three and nine months ended September 30, 2025.

The average balance of interest-bearing deposits increased $92,953 and $225,225, respectively, for the three and nine months ended September 30, 2025 compared to the same periods in 2024.

The rate paid on interest-bearing deposits decreased 63 and 53 basis points for the three and nine months ended September 30, 2025 compared to the same periods in 2024.

The decrease in the cost of deposits was primarily driven by the reductions in the federal funds rate since September of 2024.

West Bancorporation, Inc.

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(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.

Interest expense on borrowed funds decreased $691 and $5,622, respectively, for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 30, 2024.

The average balance of borrowed funds decreased $57,865 and $150,917, respectively, for the three and nine months ended September 30, 2025 compared to the three and nine months ended September 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.

The average balance of federal funds purchased and other short-term borrowings decreased $8,131 and $101,165, respectively, for the three and nine months ended September 30, 2025, compared to the same periods in 2024 primarily due to increases in average customer deposits.

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

FHLB advances with a total balance of $45,000 matured in the fourth quarter of 2024.

Credit Loss Expense and the Related Allowance for Credit Losses

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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 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.

The Company recorded no credit loss expense for loans for the three and nine months ended September 30, 2025.

The Company recorded a credit loss expense for loans of $1,000 for the three and nine months ended September 30, 2024.

The credit loss expense for loans recorded in 2024 was primarily due to changes in the forecasted loss rates which were driven by increases in forecasted unemployment rates.

The Company recorded no credit loss expense related to unfunded commitments for the three and nine months ended September 30, 2025, compared to a negative credit loss expense of $1,000 related to unfunded commitments for the three and nine months ended September 30, 2024.

The negative credit loss expense related to unfunded commitments recorded in 2024 was primarily due to decreases in the balance of unfunded commitments resulting primarily from the funding of construction loans.

Management believed the allowance for credit losses at September 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:

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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 and six months ended June 30, 2025 and 2024 and related ratios.

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

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

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

2025 2024 Change 2025 2024 Change

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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,

Three Months Ended September 30,

Noninterest income:

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Total noninterest income $ 2,503 $ 2,359 $ 144 6.10 %

Six Months Ended June 30,

Nine Months Ended September 30,

Noninterest income:

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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 June 30,

Three Months Ended September 30,

Noninterest expense:

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Total noninterest expense $ 13,550 $ 12,892 $ 658 5.10 %

Six Months Ended June 30,

Nine Months Ended September 30,

Noninterest expense:

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(in thousands, except share and per share data)

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.

Salaries and employee benefits increased for the three and nine months ended September 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 nine months ended September 30, 2025 compared to the three and nine months September 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 nine months ended September 30, 2025, compared to the nine months ended September 30, 2024, and the new branch building in Owatonna, Minnesota, which opened in January 2025, contributed to the increase for the three and nine months ended September 30, 2025 compared to the same periods in 2024.

Insurance expense increased for the nine months ended September 30, 2025 compared to the same period in 2024 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 nine months ended September 30, 2025 compared to the three and nine months ended September 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 $2,365 (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 recorded income tax expense of $2,140 (18.7 percent of pre-tax income) and $6,698 (21.0 percent of pre-tax income) for the three and nine months ended September 30, 2025, compared with $1,475 (19.9 percent of pre-tax income) and $4,037 (19.2 percent of pre-tax income) for the three and nine months ended September 30, 2024.

The decrease in effective tax rate for the three months ended September 30, 2025 compared to the same period in 2024 was due to a change in estimate of energy-related investment tax credits in the third quarter of 2025.

The increase in effective tax rate for the nine months ended September 30, 2025 compared to the nine months ended September 30, 2024 was primarily due to the expiration of the new markets tax credit at the end of 2024.

The tax rates for the first nine months of 2025 and 2024 were impacted by total year-to-date tax credits of approximately $495 and $1,131, respectively.

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 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.

Additionally, for the nine months ended September 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 nine months ended September 30, 2024.

West Bancorporation, Inc.

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FINANCIAL CONDITION

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.

The Company had total assets of $3,985,480 as of September 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 and stockholders' equity and decreases in deposits and interest-earning deposits in banks.

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.

As of September 30, 2025, the Company held securities purchased under agreements to resell of $96,792 compared to none at December 31, 2024.

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

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

Securities available for sale decreased by $6,709 during the nine months ended September 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.

Management concluded unrealized losses in the portfolio as of September 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 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.

As of September 30, 2025, approximately 62 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 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.

Loans outstanding increased $4,028 from $3,004,860 as of December 31, 2024 to $3,008,888 as of September 30, 2025.

Changes in the loan portfolio during the first nine months of 2025 included an increase of $51,040 in commercial real estate loans and a decrease of $59,487 in construction, land and land development loans.

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 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.

Although the commercial real estate portfolio exceeded these regulatory guidelines as of September 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 Annual Report on 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.

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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.

June 30, 2025 December 31, 2024 Change

September 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 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.

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.

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

Deposits decreased $51,079, or 1.5 percent, during the first nine months of 2025.

Brokered deposits decreased to $204,832 at September 30, 2025, from $266,418 at December 31, 2024.

Excluding brokered deposits, deposits increased $10,507, or 0.3 percent, during the first nine months of 2025.

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

In the first nine months of 2025, the Company entered into three interest rate collar agreements with a total notional amount of $100,000 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.

1 unchanged sentence

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.

As of September 30, 2025, estimated uninsured deposits, which exclude deposits in reciprocal deposit networks, brokered deposits and public funds protected by state programs, were approximately 28.6 percent of total deposits.

Borrowed Funds

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 Company had $270,000 of FHLB advances outstanding at September 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.

5 unchanged sentences

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 $345,201 as of June 30, 2025 compared with $243,478 as of December 31, 2024.

The Company had liquid assets (cash and cash equivalents) of $232,932 as of September 30, 2025 compared with $243,478 as of December 31, 2024.

West Bancorporation, Inc.

2 unchanged sentences

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.

Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions, operating cycles of public fund deposits 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.

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.

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 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.

At September 30, 2025, the Company had $204,832 in brokered deposits, which included fixed-rate deposits and variable-rate deposits with terms through February 2027.

As of September 30, 2025, West Bank had additional borrowing capacity available from the FHLB of approximately $545,000, 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 $34,686 to liquidity for the nine months ended September 30, 2025.

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

The Company's total stockholders' equity increased to $255,133 at September 30, 2025 from $227,875 at December 31, 2024.

The increase was primarily the result of growth in retained earnings 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 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.

At September 30, 2025, the Company's tangible common equity as a percent of tangible assets was 6.40 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 June 30, 2025.

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

West Bancorporation, Inc.

6 unchanged sentences

Amount Ratio Amount Ratio Amount Ratio Amount Ratio

As of June 30, 2025

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

At September 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