WEST BANCORPORATION INC 10-Q

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. "SAFE HARBOR" CONCERNING FORWARD-LOOKING STATEMENTS Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of rising interest rates; 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; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; 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 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; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their business; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies; the impact of a continued shutdown of the U.S. government; talent and labor shortages; and any other risks described in the “Risk Factors” sections of this and other reports filed by the Company with the SEC. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. CRITICAL ACCOUNTING POLICIES The discussion and analysis of the Company's financial condition and results of operations are based upon the Company's consolidated financial statements that have been prepared in accordance with GAAP. The preparation of the Company's financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The estimates and judgments that management believes involve the most complex and subjective estimates and judgments and have the greatest effect on the Company's reported financial position and results of operations are described as critical accounting policies in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC on February 20, 2025. There have been no significant changes in the critical accounting policies or the assumptions and judgments utilized in applying these policies since December 31, 2024. 32 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) NON-GAAP FINANCIAL MEASURES This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results for the periods indicated. 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 September 30, Nine Months Ended September 30, 2025 2024 2025 2024 Reconciliation of net interest income and net interest margin on a FTE basis to GAAP: Net interest income (GAAP) $ 22,501 $ 17,960 $ 64,775 $ 51,940 Tax-equivalent adjustment (1) 61 29 186 166 Net interest income on a FTE basis (non-GAAP) 22,562 17,989 64,961 52,106 Average interest-earning assets 3,790,154 3,749,688 3,769,158 3,692,647 Net interest margin on a FTE basis (non-GAAP) 2.36 % 1.91 % 2.30 % 1.88 % Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP: Net interest income on a FTE basis (non-GAAP) $ 22,562 $ 17,989 $ 64,961 $ 52,106 Noninterest income 2,503 2,359 7,156 7,004 Adjustment for losses on disposal of premises and equipment, net — 26 8 47 Adjusted income 25,065 20,374 72,125 59,157 Noninterest expense 13,550 12,892 40,098 37,954 Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) 54.06 % 63.28 % 55.60 % 64.16 % (1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources. (2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company's financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable. 33 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) OVERVIEW 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 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. The Company conducts business from its headquarters building in West Des Moines, Iowa and through its branch offices in central Iowa, which is generally the greater Des Moines metropolitan area; eastern Iowa, which is the area including and surrounding Iowa City and Coralville; and southern Minnesota, which includes the cities of Rochester, Owatonna, Mankato and St. Cloud. 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. 34 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) On a quarterly basis, the Company compares three key performance metrics to those of our identified peer group. The peer group for 2025 consists of 20 Midwestern, publicly traded financial institutions, including Bank First Corporation, Bridgewater Bancshares Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., German American Bancorp, Inc., HBT Financial Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, MidWest One Financial Group, Inc., Nicolet Bankshares, Inc., Peoples Bancorp, Inc., and Southern Missouri Bancorp, Inc. The Company is in the middle of the group in terms of asset size. The Company's goal is to perform at or near the top of this peer group relative to what we consider to be three key metrics: return on average equity, efficiency ratio and nonperforming assets to total assets. We believe these measures encompass the factors that define the performance of a community bank. Company and peer results for the key financial performance measures are summarized below. West Bancorporation, Inc. Peer Group Range (2) 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% Efficiency ratio (1) 55.60% 56.41% 45.60% - 71.29% Nonperforming assets to total assets 0.00% 0.00% 0.08% - 0.84% (1) The efficiency ratio is a non-GAAP financial measure. For further information, refer to the Non-GAAP Financial Measures section of this report. (2) Latest data available. 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. 35 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) RESULTS OF OPERATIONS 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 % Net income $ 9,314 $ 5,952 $ 3,362 56.49 % $ 25,135 $ 16,953 $ 8,182 48.26 % Average assets 4,004,769 3,973,824 30,945 0.78 % 3,988,902 3,916,919 71,983 1.84 % Average stockholders' equity 242,245 227,513 14,732 6.48 % 235,551 222,392 13,159 5.92 % Return on average assets 0.92 % 0.60 % 0.32 % 0.84 % 0.59 % 0.25 % Return on average equity 15.25 % 10.41 % 4.84 % 14.27 % 10.18 % 4.09 % Net interest margin (1) 2.36 % 1.91 % 0.45 % 2.30 % 1.88 % 0.42 % Efficiency ratio (1) (2) 54.06 % 63.28 % (9.22) % 55.60 % 64.16 % (8.56) % Dividend payout ratio 45.47 % 70.71 % (25.24) % 50.44 % 74.31 % (23.87) % Average equity to average assets ratio 6.05 % 5.73 % 0.32 % 5.91 % 5.68 % 0.23 % As of September 30, 2025 2024 Change Nonperforming assets to total assets (2) 0.00 % 0.01 % (0.01) % Equity to assets ratio 6.40 % 5.90 % 0.50 % Tangible common equity ratio 6.40 % 5.90 % 0.50 % (1) Amounts are presented on a FTE basis. These are non-GAAP financial measures. For further information, refer to the Non-GAAP Financial Measures section of this report. (2) A lower ratio is more desirable. Definitions of ratios: • Return on average assets - annualized net income divided by average assets. • Return on average equity - annualized net income divided by average stockholders' equity. • Net interest margin - annualized tax-equivalent net interest income divided by average interest-earning assets. • Efficiency ratio - noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income. • Dividend payout ratio - dividends paid to common stockholders divided by net income. • Average equity to average assets ratio - average equity divided by average assets. • Nonperforming assets to total assets - total nonperforming assets divided by total assets. • Equity to assets ratio - equity divided by assets. • Tangible common equity ratio - common equity less intangible assets (none held) divided by tangible assets. 36 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) Net Interest Income 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 September 30: Average Balance Interest Income/Expense Yield/Rate 2025 2024 Change Change- % 2025 2024 Change Change- % 2025 2024 Change Interest-earning assets: Loans: (1) (2) Commercial $ 499,754 $ 507,127 $ (7,373) (1.45) % $ 8,182 $ 8,514 $ (332) (3.90) % 6.50 % 6.68 % (0.18) % Real estate (3) 2,436,758 2,469,145 (32,387) (1.31) % 33,647 33,721 (74) (0.22) % 5.48 % 5.43 % 0.05 % Consumer and other 23,450 15,000 8,450 56.33 % 399 282 117 41.49 % 6.75 % 7.48 % (0.73) % Total loans 2,959,962 2,991,272 (31,310) (1.05) % 42,228 42,517 (289) (0.68) % 5.66 % 5.65 % 0.01 % Securities: Taxable 425,238 468,100 (42,862) (9.16) % 2,643 3,261 (618) (18.95) % 2.49 % 2.79 % (0.30) % Tax-exempt (3) 121,446 141,214 (19,768) (14.00) % 770 822 (52) (6.33) % 2.54 % 2.33 % 0.21 % Total securities 546,684 609,314 (62,630) (10.28) % 3,413 4,083 (670) (16.41) % 2.50 % 2.68 % (0.18) % Deposits with banks 186,474 149,102 37,372 25.06 % 2,087 2,041 46 2.25 % 4.44 % 5.45 % (1.01) % Securities purchased under agreements to resell 97,034 — 97,034 N/A 1,258 — 1,258 N/A 5.07 % — % 5.07 % Total interest-earning assets (3) $ 3,790,154 $ 3,749,688 $ 40,466 1.08 % 48,986 48,641 345 0.71 % 5.13 % 5.16 % (0.03) % Interest-bearing liabilities: Deposits: Interest-bearing demand $ 457,323 $ 453,589 $ 3,734 0.82 % 1,830 2,167 (337) (15.55) % 1.59 % 1.90 % (0.31) % Savings and money market 1,817,719 1,609,695 208,024 12.92 % 15,021 15,566 (545) (3.50) % 3.28 % 3.85 % (0.57) % 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 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: Federal funds purchased and other short-term borrowings 1 8,132 (8,131) (99.99) % — 115 (115) (100.00) % 4.52 % 5.62 % (1.10) % Subordinated notes, net 80,058 79,792 266 0.33 % 1,107 1,112 (5) (0.45) % 5.49 % 5.55 % (0.06) % Federal Home Loan Bank advances 270,000 315,000 (45,000) (14.29) % 2,292 2,748 (456) (16.59) % 3.37 % 3.47 % (0.10) % Long-term debt 39,407 44,407 (5,000) (11.26) % 486 601 (115) (19.13) % 4.90 % 5.38 % (0.48) % Total borrowed funds 389,466 447,331 (57,865) (12.94) % 3,885 4,576 (691) (15.10) % 3.96 % 4.07 % (0.11) % Total interest-bearing liabilities $ 3,211,641 $ 3,176,553 $ 35,088 1.10 % 26,424 30,652 (4,228) (13.79) % 3.26 % 3.84 % (0.58) % Net interest income (FTE) (4) $ 22,562 $ 17,989 $ 4,573 25.42 % Net interest spread (FTE) 1.87 % 1.32 % 0.55 % Net interest margin (FTE) (4) 2.36 % 1.91 % 0.45 % 37 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) Data for the nine months ended September 30: Average Balance Interest Income/Expense Yield/Rate 2025 2024 Change Change- % 2025 2024 Change Change- % 2025 2024 Change Interest-earning assets: Loans: (1) (2) Commercial $ 519,911 $ 525,870 $ (5,959) (1.13) % $ 25,167 $ 26,266 $ (1,099) (4.18) % 6.47 % 6.67 % (0.20) % Real estate (3) 2,447,208 2,438,739 8,469 0.35 % 98,704 97,438 1,266 1.30 % 5.39 % 5.34 % 0.05 % Consumer and other 21,248 13,916 7,332 52.69 % 1,070 785 285 36.31 % 6.73 % 7.53 % (0.80) % Total loans 2,988,367 2,978,525 9,842 0.33 % 124,941 124,489 452 0.36 % 5.59 % 5.58 % 0.01 % Securities: Taxable 428,445 478,742 (50,297) (10.51) % 8,116 10,071 (1,955) (19.41) % 2.53 % 2.80 % (0.27) % Tax-exempt (3) 123,371 141,354 (17,983) (12.72) % 2,321 2,501 (180) (7.20) % 2.51 % 2.36 % 0.15 % Total securities 551,816 620,096 (68,280) (11.01) % 10,437 12,572 (2,135) (16.98) % 2.52 % 2.70 % (0.18) % Deposits with banks 195,696 94,026 101,670 108.13 % 6,551 3,855 2,696 69.94 % 4.48 % 5.48 % (1.00) % Securities purchased under agreements to resell 33,279 — 33,279 N/A 1,280 — 1,280 N/A 5.14 % — % 5.14 % Total interest-earning assets (3) $ 3,769,158 $ 3,692,647 $ 76,511 2.07 % 143,209 140,916 2,293 1.63 % 5.08 % 5.10 % (0.02) % Interest-bearing liabilities: Deposits: Interest-bearing demand $ 498,965 $ 460,005 $ 38,960 8.47 % 6,192 6,550 (358) (5.47) % 1.66 % 1.90 % (0.24) % Savings and money market 1,714,363 1,504,553 209,810 13.95 % 41,509 42,054 (545) (1.30) % 3.24 % 3.73 % (0.49) % Time 598,560 622,105 (23,545) (3.78) % 18,937 22,974 (4,037) (17.57) % 4.23 % 4.93 % (0.70) % 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: Federal funds purchased and other short-term borrowings 1 101,166 (101,165) (100.00) % — 4,248 (4,248) (100.00) % 4.63 % 5.61 % (0.98) % Subordinated notes, net 79,991 79,726 265 0.33 % 3,316 3,325 (9) (0.27) % 5.54 % 5.57 % (0.03) % Federal Home Loan Bank advances 270,000 315,000 (45,000) (14.29) % 6,786 7,791 (1,005) (12.90) % 3.36 % 3.30 % 0.06 % Long-term debt 40,657 45,674 (5,017) (10.98) % 1,508 1,868 (360) (19.27) % 4.96 % 5.46 % (0.50) % Total borrowed funds 390,649 541,566 (150,917) (27.87) % 11,610 17,232 (5,622) (32.63) % 3.97 % 4.25 % (0.28) % Total interest-bearing liabilities $ 3,202,537 $ 3,128,229 $ 74,308 2.38 % 78,248 88,810 (10,562) (11.89) % 3.27 % 3.79 % (0.52) % Net interest income (FTE) (4) $ 64,961 $ 52,106 $ 12,855 24.67 % Net interest spread (FTE) 1.81 % 1.31 % 0.50 % Net interest margin (FTE) (4) 2.30 % 1.88 % 0.42 % (1) Average loan balances include nonaccrual loans. Interest income recognized on nonaccrual loans has been included. (2) Interest income on loans includes amortization of loan fees and costs and prepayment penalties collected, which are not material. (3) Tax-exempt income has been adjusted to a tax-equivalent basis using a federal income tax rate of 21 percent and is adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. (4) Net interest income (FTE) and net interest margin (FTE) are non-GAAP financial measures. For further information, refer to the Non-GAAP Financial Measures section of this report. 38 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) The Company's largest component of net income is net interest income, which is the difference between interest earned on interest-earning assets, consisting primarily of loans and securities, and interest paid on interest-bearing liabilities, consisting of deposits and borrowings. Fluctuations in net interest income can result from the combination of changes in the average balances of asset and liability categories and changes in interest rates. 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 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 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. The political and economic environments can also influence the volume of new loan originations and the mix of variable-rate versus fixed-rate loans. 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 $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 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. 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. 39 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) 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 $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 The credit loss expense recorded on the income statement represents a charge made to earnings to maintain an adequate allowance for credit losses. The adequacy of the allowance for credit losses is evaluated quarterly by management and reviewed by the Board of Directors. 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 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: the borrower's financial condition; the value and adequacy of loan collateral; the condition of the local economy and the borrower's specific industry; the levels and trends of loans by segment; and a review of delinquent and classified loans. The quarterly evaluation of the allowance focuses on factors such as specific loan reviews, changes in the components of the loan portfolio given the current and forecasted economic conditions, and historical loss experience. Any one of the following conditions may result in the review of a specific loan: concern about whether the customer's cash flow or net worth is sufficient to repay the loan; delinquency status; criticism of the loan in a regulatory examination; the suspension of interest accrual; or other factors, including whether the loan has other special or unusual characteristics that suggest special monitoring is warranted. The Company's concentration risks include geographic concentrations in central and eastern Iowa and southern Minnesota. The local economies in those markets are composed primarily of major financial service companies, healthcare providers, educational institutions, technology and agribusiness companies, and state and local governments. West Bank has a significant portion of its loan portfolio in commercial real estate loans, commercial lines of credit, commercial term loans, and construction and land development loans. West Bank's typical commercial borrower is a small- or medium-sized, privately owned business entity. Compared to residential mortgages or consumer loans, commercial loans typically have larger balances and repayment usually depends on the borrowers' successful business operations. Commercial loans generally are not fully repaid over the loan period and may require refinancing or a large payoff at maturity. When the economy turns downward, commercial borrowers may not be able to repay their loans, and the value of their assets, which are usually pledged as collateral, may decrease rapidly and significantly. While management uses available information to recognize losses on loans, further reduction in the carrying amounts of loans may be necessary based on changes in circumstances, changes in the overall economy in the markets we currently serve, or later acquired information. Identifiable sectors within the general economy are subject to additional volatility, which at any time may have a substantial impact on the loan portfolio. In addition, regulatory agencies, as integral parts of their examination processes, periodically review the credit quality of the loan portfolio and the level of the allowance for credit losses. Such agencies may require West Bank to recognize additional charge-offs or provisions for credit losses based on such agencies' review of information available to them at the time of their examinations. 40 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) West Bank's policy is to charge off loans when, in management's opinion, a loan or a portion of a loan is deemed uncollectible. 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 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 Balance at beginning of period $ 30,539 $ 28,422 $ 2,117 $ 30,432 $ 28,342 $ 2,090 Charge-offs (35) (16) (19) (35) (20) (15) Recoveries 11 13 (2) 118 97 21 Net (charge-offs) recoveries (24) (3) (21) 83 77 6 Provision for credit losses charged (credited) to operations — 1,000 (1,000) — 1,000 (1,000) Balance at end of period $ 30,515 $ 29,419 $ 1,096 $ 30,515 $ 29,419 $ 1,096 Average loans outstanding $ 2,959,962 $ 2,991,272 $ 2,988,367 $ 2,978,525 Ratio of annualized net (charge-offs) recoveries during the period to average loans outstanding 0.00 % 0.00 % 0.00 % 0.00 % Ratio of allowance for credit losses for loans to average loans outstanding 1.03 % 0.98 % 1.02 % 0.99 % Ratio of allowance for credit losses for loans to total loans at end of period 1.01 % 0.97 % 1.01 % 0.97 % 41 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) Noninterest Income 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 September 30, Noninterest income: 2025 2024 Change Change % Service charges on deposit accounts $ 491 $ 459 $ 32 6.97 % Debit card usage fees 477 500 (23) (4.60) % Trust services 894 828 66 7.97 % Increase in cash value of bank-owned life insurance 308 287 21 7.32 % Other income 333 285 48 16.84 % Total noninterest income $ 2,503 $ 2,359 $ 144 6.10 % Nine Months Ended September 30, Noninterest income: 2025 2024 Change Change % Service charges on deposit accounts $ 1,448 $ 1,381 $ 67 4.85 % Debit card usage fees 1,401 1,448 (47) (3.25) % Trust services 2,472 2,398 74 3.09 % Increase in cash value of bank-owned life insurance 885 839 46 5.48 % Other income 950 938 12 1.28 % Total noninterest income $ 7,156 $ 7,004 $ 152 2.17 % 42 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) Noninterest Expense 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 September 30, Noninterest expense: 2025 2024 Change Change % Salaries and employee benefits $ 7,457 $ 6,823 $ 634 9.29 % Occupancy and equipment 2,090 1,926 164 8.52 % Data processing 663 771 (108) (14.01) % Technology and software 794 722 72 9.97 % FDIC insurance 637 711 (74) (10.41) % Professional fees 303 239 64 26.78 % Director fees 195 223 (28) (12.56) % Other expenses: Insurance expense 186 197 (11) (5.58) % Business development 249 216 33 15.28 % Trust 189 168 21 12.50 % Consulting fees 70 61 9 14.75 % Marketing 22 12 10 83.33 % Low income housing projects amortization 114 123 (9) (7.32) % New markets tax credit project amortization and management fees 76 230 (154) (66.96) % All other 505 470 35 7.45 % Total other expenses 1,411 1,477 (66) (4.47) % Total noninterest expense $ 13,550 $ 12,892 $ 658 5.10 % Nine Months Ended September 30, Noninterest expense: 2025 2024 Change Change % Salaries and employee benefits $ 21,804 $ 20,481 $ 1,323 6.46 % Occupancy and equipment 6,087 5,225 862 16.50 % Data processing 1,923 2,239 (316) (14.11) % Technology and software 2,371 2,153 218 10.13 % FDIC insurance 1,894 1,861 33 1.77 % Professional fees 914 740 174 23.51 % Director fees 603 658 (55) (8.36) % Other expenses: Insurance expense 771 592 179 30.24 % Business development 663 613 50 8.19 % Trust 566 495 71 14.34 % Consulting fees 201 198 3 1.52 % Marketing 58 75 (17) (22.67) % Low income housing projects amortization 399 439 (40) (9.11) % New markets tax credit project amortization and management fees 228 689 (461) (66.91) % All other 1,616 1,496 120 8.02 % Total other 4,502 4,597 (95) (2.07) % Total noninterest expense $ 40,098 $ 37,954 $ 2,144 5.65 % 43 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) 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 $2,140 (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 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. 44 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) FINANCIAL CONDITION 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 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 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 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 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 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 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. 45 Table of Contents 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. September 30, 2025 December 31, 2024 Change Nonaccrual loans $ — $ 133 $ (133) Loans past due 90 days and still accruing interest — — — Loan restructurings (1) — — — Total nonperforming loans — 133 (133) Other real estate owned — — — Total nonperforming assets $ — $ 133 $ (133) Nonperforming loans to total loans 0.00 % 0.00 % 0.00 % Nonperforming assets to total assets 0.00 % 0.00 % 0.00 % (1) While loan restructurings made to borrowers experiencing financial difficulty (loan restructurings) are commonly reported by the industry as nonperforming, those not classified in the nonaccrual category are accruing interest due to payment performance. Loan restructurings on nonaccrual status are categorized as nonaccrual. There were no loan restructurings categorized as nonaccrual as of September 30, 2025 or December 31, 2024. Deposits 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. 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 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 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. This strategy of hedging short-term rolling funding provides cost effective fixed-rate wholesale funding through the maturity dates of the various interest rate swaps. Liquidity The objectives of liquidity management are to ensure the availability of sufficient cash flows to meet all financial commitments and to capitalize on opportunities for profitable business expansion. The Company's principal source of funds is deposits. Other sources include loan principal repayments, proceeds from the maturity and sale of securities, principal payments on amortizing securities, federal funds purchased, advances from the FHLB, other wholesale funding and funds provided by operations. Liquidity management is conducted on both a daily and a long-term basis. 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 $232,932 as of September 30, 2025 compared with $243,478 as of December 31, 2024. 46 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) 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, 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 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. 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 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. Capital 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 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. Failure to meet minimum capital requirements (as shown in the following table) can result in certain mandatory and possibly additional discretionary actions by regulators, which, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and West Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. 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 September 30, 2025. 47 Table of Contents West Bancorporation, Inc. Management's Discussion and Analysis (in thousands, except share and per share data) The Company's and West Bank's capital amounts and ratios are presented in the following table. Actual For Capital Adequacy Purposes For Capital Adequacy Purposes With Capital Conservation Buffer To Be Well-Capitalized Amount Ratio Amount Ratio Amount Ratio Amount Ratio As of September 30, 2025 Total Capital (to Risk-Weighted Assets) Consolidated $ 442,602 12.54 % $ 282,290 8.00 % $ 370,506 10.50 % $ 352,863 10.00 % West Bank 464,483 13.17 % 282,218 8.00 % 370,412 10.50 % 352,773 10.00 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated 350,542 9.93 % 211,718 6.00 % 299,933 8.50 % 282,290 8.00 % West Bank 432,423 12.26 % 211,664 6.00 % 299,857 8.50 % 282,218 8.00 % Common Equity Tier 1 Capital (to Risk-Weighted Assets) Consolidated 330,542 9.37 % 158,788 4.50 % 247,004 7.00 % 229,361 6.50 % West Bank 432,423 12.26 % 158,748 4.50 % 246,941 7.00 % 229,303 6.50 % Tier 1 Capital (to Average Assets) Consolidated 350,542 8.51 % 164,811 4.00 % 164,811 4.00 % 206,014 5.00 % West Bank 432,423 10.50 % 164,775 4.00 % 164,775 4.00 % 205,968 5.00 % As of December 31, 2024 Total Capital (to Risk-Weighted Assets) Consolidated $ 429,208 12.11 % $ 283,628 8.00 % $ 372,261 10.50 % $ 354,535 10.00 % West Bank 455,572 12.86 % 283,468 8.00 % 372,051 10.50 % 354,335 10.00 % Tier 1 Capital (to Risk-Weighted Assets) Consolidated 337,232 9.51 % 212,721 6.00 % 301,354 8.50 % 283,628 8.00 % West Bank 423,596 11.95 % 212,601 6.00 % 301,184 8.50 % 283,468 8.00 % Common Equity Tier 1 Capital (to Risk-Weighted Assets) Consolidated 317,232 8.95 % 159,541 4.50 % 248,174 7.00 % 230,447 6.50 % West Bank 423,596 11.95 % 159,451 4.50 % 248,034 7.00 % 230,317 6.50 % Tier 1 Capital (to Average Assets) Consolidated 337,232 7.93 % 170,113 4.00 % 170,113 4.00 % 212,641 5.00 % West Bank 423,596 9.97 % 170,029 4.00 % 170,029 4.00 % 212,537 5.00 % The Company and West Bank are subject to a 2.5 percent capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. 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 September 30, 2025, the capital ratios for the Company and West Bank were sufficient to meet the conservation buffer. 48 Table of Contents