What changed in this filing

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Item 1. Business

2026-02-26 compared with 2025-02-20 · 183 added, 187 removed, 262 unchanged (59% of the section changed)

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While the Company does not currently have a plan to engage in any new activities, as a financial holding company, it has the ability to respond more quickly to market developments and opportunities.

West Bancorporation, Inc.

and Subsidiary

The Company currently operates in the following markets:

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

West Bancorporation, Inc.

and Subsidiary

The Company continues to grow, as loans outstanding at the end of 2024 totaled $3.0 billion compared to $2.9 billion at the end of 2023, an increase of 2.6 percent.

The Company continues to grow, as total assets at the end of 2025 totaled $4.1 billion compared to $4.0 billion at the end of 2024, an increase of 3.2 percent.

Total deposits at the end of 2025 totaled $3.5 billion compared to $3.4 billion at the end of 2024, an increase of 3.3 percent.

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West Bank has six offices in the Des Moines area, one office in Coralville, Iowa and one office in each of our four Minnesota markets.

In 2024, West Bank completed construction of a new headquarters building in West Des Moines, Iowa.

The new building consolidates the organization’s operations under one roof, and provides space for future growth and enhanced business development opportunities.

West Bank offers many types of credit to its customers, including commercial, real estate and consumer loans.

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West Bank also offers online banking, mobile banking and treasury management services, which help to meet the banking needs of its customers.

Treasury management services offered to business customers include cash management, client-generated automated clearing house transactions, remote deposit, lock box and fraud protection services.

Also offered are merchant credit card processing and corporate credit cards.

Treasury management services offered to business customers include online and mobile cash management, client-generated automated clearing house transactions, remote deposit capture, lock box and fraud protection services.

Also offered are merchant card processing and corporate credit cards.

West Bank’s business strategy emphasizes strong business and personal relationships between West Bank and its customers and the delivery of products and services that meet the individualized needs of those customers.

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We encourage employees to seek educational opportunities for both industry knowledge and professional development.

We believe that diversity encourages innovation and inclusion, and our team’s differences give us a competitive advantage.

Our goal is to foster a culture in which those differences are valued and respected.

Our team is made up of 180 full-time employees and 9 part-time employees.

We are proud of our culturally and gender diverse workforce, with approximately 22 percent identifying as culturally or ethnically diverse and approximately 59 percent as female.

We continue to invest in initiatives aimed at the growth and readiness of our workforce, including our West Bank Women’s Impact Network (WIN).

Since 2014, WIN connects and expands relationships among women at West Bank with women in our communities and our customers.

WIN connects and expands relationships among women at West Bank with women in our communities and our customers.

The network builds a system of sponsors and mentors to provide more opportunities for women in leadership at West Bank and furthers our impact on the community through support and sponsorship of women’s leadership initiatives.

20 percent of West Bank’s current executive management team, 45 percent of West Bank officers and 48 percent of department managers are women.

20 percent of West Bank’s current executive management team and 41 percent of West Bank officers and department managers are women.

Currently, women comprise 30 percent of the directors on our Board of Directors.

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Our employees are provided a formal performance evaluation annually that includes discussion of the opportunity for advancement and career development.

West Bancorporation, Inc.

and Subsidiary

In addition to competitive base wages, additional programs include annual bonus opportunities, Company-matched 401(k) and discretionary 401(k) contributions, stock award opportunities, educational expense reimbursement, insurance benefits, paid time off, family leave and employee assistance programs.

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Offering premium coverage through our health insurance provider, our employees are afforded a large network of doctors and the Company pays 75 percent of monthly medical premiums for employees enrolled.

West Bancorporation, Inc.

and Subsidiary

Our approach also promotes longevity in our workforce.

The average tenure of our employees is nine years and the average tenure of bank officers is over 12 years.

Approximately 17 percent have been with West Bank for 10-15 years and approximately 22 percent have been with West Bank for over 15 years.

Non-teller turnover was approximately 7 percent in 2024, compared to 10 percent in 2023.

Approximately 17 percent of employees have been with West Bank for 10-15 years and approximately 22 percent of employees have been with West Bank for over 15 years.

Non-teller turnover was approximately 7 percent in both 2025 and 2024.

We conduct periodic company-wide employee engagement surveys to assess employee satisfaction and engagement.

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In addition, the CEO annually provides the Board with his assessment of senior leaders and their potential to succeed at key senior management positions.

Environmental, Social, and Governance (ESG) & Corporate Responsibility

West Bancorporation, Inc.

strives to be a good corporate citizen by operating as an employer that is committed to our vibrant and diverse workforce and by conducting business in an environmentally responsible manner.

The Board carefully considers corporate social responsibility when it works with management to determine the Company’s strategic priorities and plans to achieve such priorities.

Learn more about our ESG practices on the Corporate Governance section of our website at www.westbankstrong.com under Investor Relations/Overview/Corporate Governance documents.

SUPERVISION AND REGULATION

FDIC-insured institutions, their holding companies and their affiliates are extensively regulated under federal and state law.

As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various banking agencies, including the Iowa Division of Banking, the Board of Governors of the Federal Reserve System (Federal Reserve), the FDIC and the Consumer Financial Protection Bureau (CFPB).

Banking institutions insured by the Federal Deposit Insurance Corporation (FDIC), together with their holding companies and affiliates, are extensively regulated under federal and state law.

As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various banking agencies, including the Iowa Division of Banking (IDOB), the Board of Governors of the Federal Reserve System (Federal Reserve), the FDIC and federal and state consumer financial protection agencies.

Furthermore, taxation laws administered by the Internal Revenue Service (IRS) and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board (FASB), securities laws administered by the U.S.

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and our payment of dividends.

In reaction to the global financial crisis and particularly following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), we experienced heightened regulatory requirements and scrutiny.

In response to the global financial crisis and particularly following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), we experienced heightened regulatory requirements and scrutiny.

Although the reforms primarily targeted large banking organizations and other systemically important financial institutions, their influence filtered down in varying degrees to community banks over time and caused our compliance and risk management processes, and the costs thereof, to increase.

The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (Regulatory Relief Act) eliminated questions about the applicability of certain Dodd-Frank Act reforms to community bank systems, including relieving us of any requirement to engage in mandatory stress tests, maintain a risk committee or comply with the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds.

We believe these reforms have been favorable to our operations.

It is anticipated that the Trump Administration and the current U.S.

Congress likely will not increase the regulatory burden on community banking organizations and may seek to reduce and streamline certain prudential and regulatory requirements applicable to community banking organizations at a federal level based on statements made by relevant congressional leaders and the acting leaders of certain banking agencies.

At this time, however, it is not possible to predict with any certainty the actual impact the Trump Administration may have on the banking industry or our operations.

The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (Regulatory Relief Act) clarified the inapplicability of certain Dodd-Frank Act reforms to community banking organizations, including relieving us of any requirement to engage in mandatory stress tests, maintain a risk committee, or comply with the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds.

Over the past year, the federal banking agencies have continued efforts to reduce regulatory burden on banking organizations, including community banks, through various supervisory, regulatory, and policy initiatives.

These efforts have included rescission or revision of certain rulemakings and proposals, initiatives to streamline examination and application processes, and efforts to increase transparency and consistency in supervisory expectations.

Congress also has considered additional measures aimed at easing specific compliance obligations for community banks, although no reforms comparable in scope to the Regulatory Relief Act have been enacted to date.

These regulatory developments may be favorable to our operations;

however, future changes in laws, regulations, or supervisory priorities, and their impacts on our business, remain uncertain.

The supervisory framework applicable to U.S.

banking organizations subjects banks and bank holding companies to regular examination by their respective banking agencies.

These examinations result in confidential examination reports and supervisory ratings that may impact an institution’s operations, capital levels, growth, and strategic initiatives.

Examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality, management performance, earnings, liquidity, and overall risk profile, among other things.

The banking agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine that such operations are unsafe or unsound, violate applicable law, or are otherwise inconsistent with laws and regulations.

Changes in supervisory approach or emphasis may materially affect our operations and financial results.

West Bancorporation, Inc.

and Subsidiary

The supervisory framework for U.S.

banking organizations subjects banks and bank holding companies to regular examination by their respective banking agencies, which results in examination reports and ratings that are not publicly available and that can impact the conduct and growth of their business.

These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity and various other factors.

The banking agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations.

The approach to supervision adopted by each banking agency may have significant impacts on our operations and results, as well as the banking industry in general.

Based on statements made by congressional leaders and the acting leaders of certain federal banking agencies, there may be changes in the supervisory processes and approach made by the Trump Administration banking agencies, but it is not possible at this time to predict the specific changes (or the timing of any such changes) that may be made.

In recent supervisory communications, rulemakings, and policy statements, federal banking agencies have indicated an increased focus on core, material financial risks (rather than risk management processes), greater transparency in supervisory expectations, and efforts to reduce examination burden, particularly for community banks.

For example, the FDIC, West Bank’s primary federal regulator, has proposed or implemented initiatives:

(i) to clarify standards for unsafe or unsound practices;

(ii) to enhance supervisory appeals processes;

(iii) to streamline examination procedures;

and (iv) to revise standards governing the termination of enforcement actions.

These initiatives may enable management to focus more effectively on growth opportunities and the management of material financial risks.

The following is a summary of the material elements of the supervisory and regulatory framework applicable to the Company and West Bank.

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Under the BHCA, we are subject to periodic examination by the Federal Reserve and are required to file with the Federal Reserve periodic reports of our operations and such additional information regarding our operations as the Federal Reserve may require.

Acquisitions and Activities/Financial Holding Company Election .

Acquisitions and Activities .

The primary purpose of a bank holding company is to control and manage banks.

The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company.

Subject to certain conditions (including deposit concentration limits established by the BHCA), the Federal Reserve may allow a bank holding company to acquire banks located in any state of the United States.

In approving interstate acquisitions, the Federal Reserve is required to give effect to applicable state law limitations on the aggregate amount of deposits that may be held by the acquiring bank holding company and its FDIC-insured institution affiliates in the state in which the target bank is located (provided that those limits do not discriminate against out-of-state institutions or their holding companies) and state laws that require that the target bank has been in existence for a minimum period of time (not to exceed five years) before being acquired by an out-of-state bank holding company.

Furthermore, in accordance with the Dodd-Frank Act, bank holding companies must be well-capitalized and well-managed in order to effect interstate mergers or acquisitions.

The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than five percent of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries.

Pursuant to the BHCA and the Dodd-Frank Act, the Federal Reserve may permit a well-capitalized and well-managed bank holding company to acquire banks located in any U.S.

state, subject to federal deposit concentration limits, applicable nondiscriminatory state deposit-cap laws, and state minimum-existence requirements for target banks (not exceeding five years).

The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than five percent of the outstanding voting shares of any nonbanking entity, and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries.

This general prohibition is subject to a number of exceptions.

The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ...

as to be a proper incident thereto.” This authority would permit us to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development) and mortgage banking and brokerage services.

The BHCA does not place territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.

In addition to approval from the Federal Reserve in certain circumstances, prior approval for acquisitions may be required from other agencies, such as the Iowa Division of Banking or other agencies that regulate the target company of an acquisition.

as to be a proper incident thereto.” This authority would permit the Company to engage in a variety of banking-related businesses, including, among other things, the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development), and mortgage banking and brokerage services.

The BHCA does not place formal territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.

In addition to approval from the Federal Reserve in certain circumstances, prior approval for the establishment or acquisition of nonbank subsidiaries by a bank holding company may be required from other agencies, such as the IDOB or agencies that regulate such nonbank company.

Financial Holding Company Election .

Bank holding companies that meet certain BHCA eligibility requirements and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that:

(i) the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity;

or (ii) the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.

West Bancorporation, Inc.

and Subsidiary

Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.

In the third quarter of 2016, we elected to operate as a financial holding company.

In order to maintain our status as a financial holding company, both the Company and West Bank must be well-capitalized and well-managed, and West Bank must have at least a satisfactory CRA rating.

If the Federal Reserve determines that either the Company or West Bank is not well-capitalized or well-managed, the Federal Reserve will provide a period of time in which to re-achieve compliance with those requirements, but, during the period of noncompliance, the Federal Reserve may place any limitations on us that it deems appropriate.

To maintain our status as a financial holding company, both the Company and West Bank must be well-capitalized and well-managed, and West Bank must have at least a satisfactory CRA rating.

Furthermore, if the Federal Reserve determines that West Bank has not achieved a satisfactory CRA rating, we would not be able to commence any new financial activities or acquire a company that engages in such activities.

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Federal law prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal banking agencies.

Control is conclusively presumed to exist upon the acquisition of 25 percent or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10 percent and 24.99 percent ownership.

Control is conclusively determined to exist upon the acquisition of 25 percent or more of the outstanding voting securities of a bank or bank holding company, but may be presumed to arise under certain circumstances between 10 percent and 24.99 percent ownership.

Company Capital Requirements .

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Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies.

In addition, under the Basel III Rule, which imposes consolidated capital requirements on banking organizations, banking organizations that want to pay dividends must maintain 2.5 percent in Common Equity Tier 1 Capital attributable to the capital conservation buffer.

Finally, the Basel III Rule imposes consolidated capital requirements on banking organizations.

As a result, banking organizations must hold a capital conservation buffer of 2.5 percent of risk-weighted assets in Common Equity Tier 1 Capital above the minimum risk-based capital requirements to avoid regulatory limits on dividends and other capital distributions.

See “-the Basel III Rule” below.

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It increased stockholder influence over boards of directors by requiring companies to give stockholders a nonbinding vote on executive compensation and so-called “golden parachute” payments, and authorized the SEC to promulgate rules that would allow stockholders to nominate and solicit voters for their own candidates using a company’s proxy materials.

The Dodd-Frank Act also directed the Federal Reserve, in coordination with the other federal banking and financial services agencies, to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded.

Although several agencies have made repeated efforts to implement rules under this provision of the Dodd-Frank Act-including a proposal issued most recently in May 2024, which was subsequently withdrawn-no final rule has been adopted at this time.

West Bancorporation, Inc.

and Subsidiary

The Dodd-Frank Act also directed the Federal Reserve, together with the other federal banking and financial services agencies, to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded.

In May 2024, certain of the federal banking and other financial services agencies released a proposed rule regarding certain incentive-based compensation arrangements at certain financial institutions with at least $1 billion in assets, as required under Section 956 of the Dodd-Frank Act.

The Federal Reserve and the SEC, however, did not join in this proposal, signaling potential interagency misalignment and raising doubts regarding the likelihood of the proposed rule being finalized in its current form.

It is not yet clear whether this regulatory initiative will continue during the Trump Administration.

Supervision and Regulation of West Bank

West Bank is an Iowa-chartered bank.

The deposit accounts of West Bank are insured by the FDIC’s Deposit Insurance Fund (DIF) to the maximum extent provided under federal law and FDIC regulations, currently $250,000 per insured depositor category.

As an Iowa-chartered FDIC-insured bank, West Bank is subject to the examination, supervision, reporting and enforcement requirements of the Iowa Division of Banking, the chartering authority for Iowa banks, and the FDIC, designated by federal law as the primary federal regulator of insured state banks that, like West Bank, are not members of the Federal Reserve System (nonmember banks).

Deposit Insurance .

West Bank is an Iowa-chartered, nonmember bank.

Ongoing policy discussions at the federal level have focused on potential changes to deposit insurance coverage, including possible adjustments to coverage limits, although no definitive changes have been enacted.

West Bank is subject to the examination, supervision, reporting, and enforcement requirements of the IDOB, its chartering authority, and the FDIC, which is designated by federal law as the primary federal regulator of insured state banks that, like West Bank, are not members of the Federal Reserve System.

Deposit Insurance Assessments .

As an FDIC-insured institution, West Bank is required to pay deposit insurance premium assessments to the FDIC.

The FDIC has adopted a risk-based assessment system whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification.

For institutions, like West Bank, that are not considered large and highly complex banking organizations, assessments are now based on examination ratings and financial ratios.

The total base assessment rates, effective as of January 1, 2023, currently range from 2.5 basis points to 32 basis points.

For institutions, like West Bank, that are not considered large and highly complex banking organizations, assessments are based on examination ratings and financial ratios.

For small institutions that have been insured for more than five years, the total base assessment rates, effective as of January 1, 2023, generally range from 2.5 basis points (for the lowest risk institutions) to 32 basis points or beyond (for higher risk institutions).

At least semi-annually, the FDIC updates its loss and income projections for the DIF and, if needed, increases or decreases the assessment rates, following notice and comment on proposed rulemaking.

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In response to the global financial crisis, the Dodd-Frank Act increased the minimum reserve ratio from 1.15% to 1.35% of the estimated amount of total insured deposits.

In its October 2024 semiannual update, the FDIC stated that the reserve ratio likely will reach the statutory minimum by the September 30, 2028 deadline, and no adjustments to the base assessment rates are currently projected.

In addition, because the total cost of the failures of Silicon Valley Bank and Signature Bank was approximately $24.1 billion, the FDIC adopted a special assessment applicable to bank organizations with total assets of $5 billion or more.

In a May 2025 report, the FDIC stated that the reserve ratio likely will reach the statutory minimum by the September 30, 2028 deadline, and no adjustments to the base assessment rates are currently projected.

In addition, because the cost of the failures of Silicon Valley Bank and Signature Bank attributable to the systemic risk exception was approximately $16.7 billion, the FDIC adopted a special assessment applicable to bank organizations with total assets of $5 billion or more.

The base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits for the December 31, 2022 reporting period, adjusted to exclude the first $5 billion in estimated uninsured deposits.

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Supervisory Assessments .

All Iowa banks are required to pay supervisory assessments to the Iowa Division of Banking to fund the operations of that agency.

The amount of the assessment is calculated on the basis of West Bank’s total assets.

All Iowa banks are required to pay supervisory assessments to the IDOB to fund the operations of that agency.

The amount of the assessment is calculated on the basis of West Bank’s total assets and the costs and expenses incurred in the discharge of the IDOB’s examination, supervisory, and regulatory duties.

Bank Capital Requirements .

Regulatory capital represents the net assets of a banking organization available to absorb losses.

Because of the risks attendant to their business, FDIC-insured institutions, such as banks, as well as their holding companies (i.e., banking organizations) generally are required to hold more capital than other businesses, which directly affects our earnings capabilities.

Although capital has historically been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the 2007-2008 global financial crisis, as the banking agencies recognized that the amount and quality of capital held by banking organizations prior to that crisis was insufficient to absorb losses during periods of severe stress.

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Banking organizations have been required to hold minimum levels of capital based on guidelines established by the banking agencies since 1983.

The minimum capital levels for banking organizations have been expressed in terms of ratios of “capital” divided by “total assets”.

The capital guidelines for U.S.

banking organizations beginning in 1989 have been based upon international capital accords (known as “Basel” accords) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as implemented by the U.S.

The minimum capital levels for banking organizations have been expressed in terms of ratios of “capital” divided by “total assets.” The capital guidelines for U.S.

banking organizations beginning in 1989 have been based upon international capital accords (known as the “Basel” accords) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as interpreted and implemented by the U.S.

federal banking agencies on an interagency basis.

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federal banking agencies adopted the U.S.

Basel III regulatory capital reforms, and, at the same time, effected changes required by the Dodd-Frank Act, in regulations that were effective (with certain phase-ins) in 2015 (Basel III Rule).

Basel III regulatory capital reforms, and, at the same time, effected changes required by the Dodd-Frank Act, in regulations that were effective in 2015 (with certain phase-ins) (the Basel III Rule).

The Basel III Rule established capital standards for banks and bank holding companies that are meaningfully more stringent than those established previously and are still in effect today.

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Thus, West Bank and the Company are subject to the Basel III Rule as described below.

Not only did the Basel III Rule increase most of the required minimum capital ratios in effect prior to January 1, 2015, but, in requiring that forms of capital be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments.

The Basel III Rule also changed the definition of capital by establishing more stringent criteria that instruments must meet to be considered Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations).

The Basel III Rule also constrained the inclusion of minority interests, mortgage-servicing assets, and deferred tax assets in capital and required deductions from Common Equity Tier 1 Capital if such assets exceeded a percentage of a banking organization’s Common Equity Tier 1 Capital.

The Basel III Rule requires banking organizations to maintain minimum capital ratios, as follows:

• A ratio of Common Equity Tier 1 Capital equal to 4.5% of risk-weighted assets;

Not only did the Basel III Rule increase most of the required minimum capital ratios in effect prior to January 1, 2015, but, by requiring that capital instruments be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital (CET1), which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and CET1 minority interests, subject to certain regulatory adjustments and deductions.

The Basel III Rule also changed the definition of regulatory capital by establishing more stringent criteria for instruments to qualify as Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations).

In addition, the Basel III Rule limited the inclusion of minority interests, mortgage-servicing assets, and deferred tax assets in regulatory capital and required deductions from CET1 if such assets exceeded prescribed thresholds.

The Basel III Rule requires banking organizations to maintain minimum capital ratios to be deemed “adequately capitalized,” as follows:

• A ratio of CET1 equal to 4.5% of risk-weighted assets;

• A ratio of Tier 1 Capital equal to 6% of risk-weighted assets;

• A continuation of the minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets;

• A leverage ratio of Tier 1 Capital to total quarterly average assets equal to 4% in all circumstances.

In addition, banking organizations that want to make capital distributions (including for dividends and repurchases of stock) and pay discretionary bonuses to executive officers without restriction must also maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer.

The purpose of the conservation buffer is to ensure that banking institutions maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress.

Factoring in the conservation buffer increases the minimum ratios depicted above to 7% for Common Equity Tier 1 Capital, 8.5% for Tier 1 Capital and 10.5% for Total Capital.

In July 2023, the Biden Administration banking agencies had proposed wide-ranging and significant changes to the Basel III Rules (the “Basel III Endgame Proposal”), which would have, among other requirements, imposed structural changes to the calculation of capital requirements and risk-weighted assets in an effort to finish the implementation of the Basel III accords.

The Basel III Endgame Proposal would generally have impacted the capital requirements applicable to banking organizations with $100 billion or more in total assets, and, as a general matter, would not have had a significant impact on the Company or West Bank.

The Basel III Endgame Proposal has not been, and is not expected to be, adopted in a form substantially similar to the Basel III Endgame Proposal.

The Trump Administration banking agencies may issue their own version of this proposal.

• A ratio of Total Capital (Tier 1 plus Tier 2 Capital) equal to 8% of risk-weighted assets;

• A Tier 1 leverage ratio (calculated as Tier 1 Capital divided by average total quarterly) assets equal to 4% of risk-weighted assets.

In addition, banking organizations that want to make capital distributions (including dividends and share repurchases) and pay discretionary bonuses to executive officers without restriction must maintain 2.5% of CET1 in the form of a capital conservation buffer.

The purpose of the conservation buffer is to ensure that banking organizations maintain a cushion of capital that can be used to absorb losses during periods of financial and economic stress.

Factoring in the capital conservation buffer increases the minimum ratios described above to 7% for CET1, 8.5% for Tier 1 Capital, and 10.5% for Total Capital.

Well Capitalized Requirements .

The capital ratios described above are minimum standards in order for banking organizations to be considered “adequately capitalized.” Banking agencies uniformly encourage banking organizations to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements.

For example, a banking organization that is well-capitalized may:

(i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities;

(ii) qualify for expedited processing of other required notices or applications;

The capital ratios described above represent minimum standards for banking organizations to be considered “adequately capitalized.” Banking agencies uniformly encourage banking organizations to maintain capital levels above these minimums and to be classified as “well-capitalized.” To that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital in excess of minimum regulatory requirements.

For example, a well-capitalized banking organization may:

(i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain activities;

(ii) receive expedited processing of other required notices or applications;

and (iii) accept, roll-over, or renew brokered deposits.

Higher capital levels could also be required if warranted by the particular circumstances or risk profiles of individual banking organizations.

For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by concentrations of credit, nontraditional activities or securities trading activities.

In addition, the banking agencies may require higher capital levels where warranted by an institution’s specific risk profile or operating circumstances.

For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, risks, such as interest rate risk, or risks associated with credit concentration, nontraditional activities, or securities trading activities.

Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions ( i.e.

, Tier 1 Capital less all intangible assets), well above the minimum levels.

West Bancorporation, Inc.

and Subsidiary

Under the capital regulations of the FDIC and the Federal Reserve, in order to be well‑capitalized, West Bank and the Company must maintain:

• A Common Equity Tier 1 Capital ratio to risk-weighted assets of 6.5% or more;

, Tier 1 Capital less all intangible assets), well above the minimum regulatory levels.

Under the FDIC and the Federal Reserve regulations, in order to be well‑capitalized, West Bank and the Company must maintain:

• A CET1 ratio to risk-weighted assets of 6.5% or more;

• A ratio of Tier 1 Capital to total risk-weighted assets of 8% or more;

• A ratio of Total Capital to total risk-weighted assets of 10% or more;

• A leverage ratio of Tier 1 Capital to total adjusted average quarterly assets of 5% or greater.

It is possible under the Basel III Rule to be well-capitalized while remaining out of compliance with the capital conservation buffer discussed above.

• A Tier 1 leverage ratio of 5% or greater.

Under the Basel III Rule, a banking organization may be considered “well capitalized” while not complying with the capital conservation buffer requirements described above.

West Bancorporation, Inc.

and Subsidiary

As of December 31, 2025:

(i) West Bank was not subject to a directive from Iowa Division of Banking or the FDIC to increase its capital and (ii) West Bank was well-capitalized, as defined by FDIC regulations.

(i) West Bank was not subject to a directive from IDOB or the FDIC to increase its capital;

and (ii) West Bank was well-capitalized, as defined by FDIC regulations.

As of December 31, 2025, the Company had regulatory capital in excess of the Federal Reserve’s requirements and met the Basel III Rule requirements to be well-capitalized.

West Bank and the Company also were in compliance with the capital conservation buffer.

Basel III Endgame Proposal .

Previously, federal banking agencies proposed a “Basel III Endgame Rule” to complete the implementation of certain aspects of the Basel III accords;

however, the proposal was not adopted, in part due to stakeholder concerns regarding potential economic impacts, data transparency, and the alignment of certain provisions with statutory tailoring requirements.

Based on public statements from federal agency officials, it is anticipated that a revised proposal may be issued in the future.

Any re-proposal of the Basel III Endgame Rule is expected to primarily affect large, complex banking organizations.

Prompt Corrective Action .

The concept of a banking organization being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution.

The concept of a banking organization being “adequately capitalized” or “well capitalized,” as defined above, is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution.

The extent of the banking agencies’ powers depends on whether the banking organization in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation.

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(i) less than $10 billion in total consolidated assets, (ii) limited amounts of certain assets and off-balance sheet exposures, and (iii) a CBLR greater than 9%.

In late 2025, the federal banking agencies proposed changes to the CBLR framework intended to encourage broader adoption, including reducing the required leverage ratio from 9.0% to 8.0%;

however, the proposal has not yet been finalized.

We have not elected to use the CBLR framework at this time.

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Banks are required to implement liquidity risk management frameworks that ensure they maintain sufficient liquidity, including a cushion of unencumbered, high-quality liquid assets, to withstand a range of stress events.

The level and speed of deposit outflows contributing to the failures of Silicon Valley Bank, Signature Bank and First Republic Bank in the first half of 2023 was unprecedented and contributed to acute liquidity and funding strain.

These events have further underscored the importance of liquidity risk management and contingency funding planning by insured depository institutions like West Bank, as highlighted in a 2023 addendum to existing interagency guidance on funding and liquidity risk management.

The level and speed of deposit outflows contributing to the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 was unprecedented and contributed to acute liquidity and funding strain, underscoring the importance of liquidity risk management and contingency funding planning by insured depository institutions like West Bank, as highlighted in a 2023 addendum to existing interagency guidance on funding and liquidity risk management.

The primary role of liquidity risk management is to:

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These tests provide an incentive for banks and bank holding companies to increase their holdings in Treasury securities and other sovereign debt as a component of assets, increase the use of long-term debt as a funding source and rely on stable funding like core deposits (in lieu of brokered deposits).

Although these tests do not apply to West Bank, we continue to review our liquidity risk management policies in light of regulatory requirements and industry developments.

West Bancorporation, Inc.

and Subsidiary

Although these tests do not apply to West Bank, we continue to review our liquidity risk management policies in light of regulatory requirements and industry developments.

For instance, in July 2024, the FDIC released a request for information on deposits, soliciting information on whether and to what extent certain types of deposits may behave differently from each other (particularly during periods of economic or financial stress), the results of which may impact liquidity monitoring and risk management requirements, including for FDIC-insured institutions, like West Bank, going forward.

Dividend Payments .

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Under the Iowa Banking Act, Iowa-chartered banks generally may pay dividends only out of undivided profits.

The Iowa Division of Banking may restrict the declaration or payment of a dividend by an Iowa-chartered bank, such as West Bank.

The IDOB may restrict the declaration or payment of a dividend by an Iowa-chartered bank, such as West Bank.

The payment of dividends by any FDIC-insured institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and an FDIC-insured institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized.

As described above, West Bank exceeded its capital requirements under applicable guidelines as of December 31, 2025.

Notwithstanding the availability of funds for dividends, however, the FDIC and the Iowa Division of Banking may prohibit the payment of dividends by West Bank if either or both determine such payment would constitute an unsafe or unsound practice.

In addition, under the Basel III Rule, banking organizations that want to pay dividends will have to maintain 2.5 percent in Common Equity Tier 1 Capital attributable to the capital conservation buffer.

Notwithstanding the availability of funds for dividends, however, the FDIC and the IDOB may prohibit the payment of dividends by West Bank if either agency determines that such payment would constitute an unsafe or unsound practice.

In addition, under the Basel III Rule, banking organizations that want to pay dividends must maintain 2.5 percent in CET1 attributable to the capital conservation buffer.

See “—Bank Capital Requirements” above.

State Bank Investments, Activities, and Acquisitions .

West Bank is permitted to make investments and engage in activities directly or through subsidiaries as authorized by Iowa law.

However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank.

Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries, subject to certain exceptions, from engaging as principal in any activity that is not permitted for a national bank unless West Bank meets, and continues to meet, its minimum regulatory capital requirements and the FDIC determines that the activity would not pose a significant risk to the DIF.

West Bank is permitted to make investments and engage in activities directly or through subsidiaries as authorized under Iowa law.

However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments that are not permissible for a national bank.

Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries from engaging as principal in any activity that is not permitted for a national bank, unless they meet and continue to meet minimum regulatory capital requirements and the FDIC determines that the activity would not pose a significant risk to the DIF.

These restrictions have not had, and are not currently expected to have, a material impact on the operations of West Bank.

West Bank may be required to seek approval from the Iowa Division of Banking, the FDIC and other banking or financial services agencies before engaging in certain acquisitions or mergers under applicable state and federal law.

In 2024, each of the OCC and the FDIC separately released updated policy statements-and in the case of the OCC, a final rule-regarding how each banking agency reviews applications submitted pursuant to the Bank Merger Act based on statutory factors.

The acting leader of the Trump Administration’s FDIC has indicated that the FDIC may seek to reverse the FDIC’s 2024 policy statement.

Insider Transactions .

West Bank is subject to certain restrictions imposed by federal law on “covered transactions” between West Bank and its “affiliates.” The Company is an affiliate of West Bank for purposes of these restrictions, and covered transactions subject to the restrictions include extensions of credit to the Company, investments in the stock or other securities of the Company, and the acceptance of the stock or other securities of the Company as collateral for loans made by West Bank.

The Dodd-Frank Act enhanced the requirements for certain transactions with affiliates, including an expansion of the definition of “covered transactions” and an increase in the amount of time for which collateral requirements regarding covered transactions must be maintained.

Certain limitations and reporting requirements are also placed on extensions of credit by West Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal stockholders of the Company and to “related interests” of such directors, officers and principal stockholders under state and federal law.

In addition, federal law and regulations may affect the terms on which any person who is a director or officer of the Company or West Bank, or a principal stockholder of the Company, may obtain credit from banks with which West Bank maintains a correspondent relationship.

West Bank may be required to obtain approval from the IDOB, the FDIC, and other applicable banking or financial services agencies before engaging in certain acquisitions or mergers under applicable state and federal law.

In 2025, the federal banking agencies rescinded certain prior administrative actions regarding the review and approval of mergers and acquisitions, with the intent of streamlining and expediting the regulatory review of certain merger and acquisition applications.

With respect to interstate mergers and acquisitions, federal law permits state banks to merge with out-of-state banks subject to:

(i) regulatory approval;

(ii) federal and state deposit concentration limits;

and (iii) state law requirements that the merging bank has been in existence for a minimum period of time (not to exceed five years), prior to the merger.

Branching Authority .

Iowa banks, such as West Bank, have the authority under Iowa law to establish branches anywhere in the State of Iowa, subject to receipt of all required regulatory approvals.

The Dodd-Frank Act permits well-capitalized and well-managed banks to establish new interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) without impediments.

Affiliate and Insider Transactions .

Covered transactions subject to these restrictions include extensions of credit to the Company, investments in the stock or other securities of the Company, and the acceptance of the Company’s stock or other securities as collateral for loans made by West Bank.

The Dodd-Frank Act enhanced these requirements by expanding the definition of “covered transactions” and extending the period for which collateral requirements for such transactions must be maintained.

Certain limitations and reporting requirements also apply to extensions of credit by West Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal stockholders of the Company, and to “related interests” of such directors, officers and principal stockholders under state and federal law.

In addition, federal law and regulations may govern the terms on which any person who is a director or officer of the Company or West Bank, or a principal stockholder of the Company, may obtain credit from banks with which West Bank maintains a correspondent relationship.

Safety and Soundness Standards/Risk Management .

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The federal banking agencies have adopted operational and managerial standards to promote the safety and soundness of such institutions that address internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings.

These standards generally prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals.

If an institution fails to operate in a safe and sound manner its primary federal regulator may require the submission of a plan to achieve and maintain compliance.

Failure to submit an acceptable compliance plan, or to implement a plan in any material respect, may result in formal agency orders directing the institution to cure deficiencies.

Until such deficiencies are resolved, the agency may restrict the institution’s rate of growth, require additional capital, limit deposit rates, or take other corrective action as deemed appropriate.

Operating in an unsafe or unsound manner also will constitute grounds for other enforcement action by the federal banking agencies, including cease and desist orders and civil money penalty assessments.

West Bancorporation, Inc.

and Subsidiary

In general, the safety and soundness standards prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals.

If an institution fails to operate in a safe and sound manner, the FDIC-insured institution’s primary federal regulator may require the institution to submit a plan for achieving and maintaining compliance.

If an FDIC-insured institution fails to submit an acceptable compliance plan, or fails in any material respect to implement a compliance plan that has been accepted by its primary federal regulator, the agency is required to issue an order directing the institution to cure the deficiency.

Until the deficiency cited in the banking agency’s order is cured, the agency may restrict the FDIC-insured institution’s rate of growth, require the FDIC-insured institution to increase its capital, restrict the rates that the institution pays on deposits, or require the institution to take any action that the agency deems appropriate under the circumstances.

Operating in an unsafe or unsound manner will also constitute grounds for other enforcement action by the federal banking agencies, including cease and desist orders and civil money penalty assessments.

During the past decade, the banking agencies have increasingly emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions that they supervise.

Properly managing risks has been identified as critical to the conduct of safe and sound banking activities and has become even more important as new technologies, product innovation, third-party relationships, and the size and speed of financial transactions have changed the nature of banking markets.

The agencies have identified a spectrum of risks facing a banking organization including, but not limited to, credit, market, liquidity, operational, legal and reputational risk.

Federal banking agencies have emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions.

In 2025, however, the agencies signaled a shift toward focusing on the identification and management of material financial risks, rather than primarily on adherence to prescriptive operational processes.

Although effective risk management, internal controls, and board and management oversight remain important, supervisory attention may increasingly center on whether specific practices pose material harm to the institution’s financial condition or create a risk of loss to the DIF.

Despite this potential shift in focus, the agencies continue to evaluate a broad spectrum of risks including credit, market, liquidity, operational, and legal risks, emphasizing their potential impact on safety and soundness.

Notably, the federal banking agencies have indicated that they intend to remove reputation risk from consideration, citing concerns about its use in restricting banking services to certain industries or groups.

The key risk themes identified for 2025 are discussed under Risk Factors.

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and comprehensive internal controls.

The federal banking agencies also have released specific risk management guidance on certain topics, including third-party relationships, in response to the proliferation of relationships between banking organizations and financial technology companies (although the guidance applies more broadly).

The federal banking agencies also issued guidance on specific risk management topics, including third-party relationships, in response to the proliferation of relationships between banking organizations and financial technology companies (although the guidance applies more broadly).

Privacy and Cybersecurity .

West Bank is subject to many U.S.

federal and state laws and regulations governing requirements for maintaining policies and procedures to protect non-public confidential information of their customers.

These laws require West Bank to periodically disclose its privacy policies and practices relating to sharing such information and permit consumers to opt out of their ability to share information with unaffiliated third parties under certain circumstances.

They also impact West Bank’s ability to share certain information with affiliates and non-affiliates for marketing and/or non-marketing purposes, or to contact customers with marketing offers.

In addition, as a part of its operational risk mitigation, West Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information and to require the same of its service providers.

These security and privacy policies and procedures are in effect across all business lines and geographic locations.

West Bank and the Company also are subject to a number of federal and state laws and regulations requiring notifications and disclosures regarding certain cybersecurity incidents.

In addition, West Bank must consider and address cybersecurity considerations as part of its risk management processes.

Branching Authority .

Iowa banks, such as West Bank, have the authority under Iowa law to establish branches anywhere in the State of Iowa, subject to receipt of all required regulatory approvals.

In addition, federal law permits state and national banks to merge with banks in other states subject to:

(i) regulatory approval;

(ii) federal and state deposit concentration limits;

and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger.

West Bank is subject to numerous U.S.

federal and state laws and regulations aimed at protecting the non-public, confidential information of its customers.

These laws require West Bank to periodically disclose its privacy policies and practices regarding the sharing of non-public customer information, and in certain circumstances, permit consumers to opt out of the sharing of information with unaffiliated third parties.

They also limit West Bank’s ability to share certain information with affiliates and non-affiliates for marketing or non-marketing purposes.

In addition, as a part of its operational risk mitigation, West Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to protect the security and confidentiality of customer records and information, and to require the same of its service providers.

These security and privacy policies and procedures are applied consistently across all business lines and geographic locations.

West Bank and the Company are also subject to federal and state laws and regulations requiring notifications and disclosures regarding certain cybersecurity incidents.

In addition, West Bank must consider and address cybersecurity risks as part of its risk management processes, including implementing and maintaining appropriate safeguards, monitoring and testing systems, and overseeing the cybersecurity practices of its service providers.

Regulatory guidance emphasizes the cybersecurity should be integrated into overall enterprise risk management and business continuity planning.

Community Reinvestment Act Requirements .

The CRA requires West Bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods.

The FDIC regularly assesses West Bank’s record of meeting the credit needs of its communities in dedicated examinations.

The Community Reinvestment Act (CRA) imposes on West Bank a continuing and affirmative obligation, consistent with safe and sound operations, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods.

The FDIC regularly assesses West Bank’s record of meeting these credit needs through periodic CRA examinations.

West Bank’s CRA ratings derived from these examinations can have significant impacts on the activities in which West Bank and the Company may engage.

For example, a low CRA rating may impact the review of applications for acquisitions by West Bank or the Company’s financial holding company status.

On October 24, 2023, the federal banking agencies issued a final rule to strengthen and modernize the CRA regulations (the CRA Rule).

Elements of this rule were supposed to become effective on April 1, 2024 (while other elements had much later effective dates).

However, the effective date of the CRA Rule was paused because of a preliminary injunction issued in connection with ongoing litigation claiming that the federal banking agencies exceeded their statutory authority in promulgating the CRA Rule.

Despite this lawsuit, management of West Bank is continuing to assess the impact of the CRA Rule on its CRA lending and investment activities in West Bank’s respective markets.

In October 2023, the federal banking agencies issued a final rule intended to strengthen and modernize the CRA regulations (the CRA Rule).

The CRA Rule was subsequently challenged in court, which prevented it from taking effect.

In 2025, the federal banking agencies issued a proposed rule to rescind the CRA Rule and reinstate the prior CRA regulatory framework adopted in 1995.

Additionally, the FDIC has determined to lengthen the period between CRA examinations for certain banks with less than $3 billion in assets;

however, this change is not expected to impact West Bank, which has more than $3 billion in total assets.

Anti-Money Laundering/Sanctions .

The Bank Secrecy Act (BSA) is a U.S.

federal statutory framework, as amended by subsequent laws and implemented through regulations, which is designed to combat money laundering, terrorist financing, and other illicit financial activity.

The BSA and related anti-money laundering/countering the financing of terrorism (AML/CFT) laws and regulations are intended to prevent terrorists and criminals from accessing the U.S.

financial system and have significant implications for FDIC-insured institutions and other businesses involved in the transmission of funds.

Together, this regulatory framework provides a foundation to promote financial transparency and deter and detect efforts to misuse the U.S.

financial system to launder criminal proceeds, finance terrorist acts, or facilitate other illicit conduct.

West Bancorporation, Inc.

and Subsidiary

The CRA Rule is designed to update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated.

More specifically, the federal banking agencies described the goals of the CRA Rule as follows:

(i) to expand access to credit, investment, and basic banking services in low and moderate income communities;

(ii) to adapt to changes in the banking industry, including mobile and internet banking by modernizing assessment areas while maintaining a focus on branch based areas;

(iii) to provide greater clarity, consistency, and transparency in the application of the regulations through the use of standardized metrics as part of CRA evaluation and clarifying eligible CRA activities focused on low and moderate income communities and underserved rural communities;

(iv) to tailor CRA rules and data collection to bank size and business model;

and (v) to maintain a unified approach among the regulators.

Anti-Money Laundering/Sanctions .

The Bank Secrecy Act (BSA) is the common name for a series of laws and regulations enacted in the United States to combat money laundering and the financing of terrorism.

They are designed to deny terrorists and criminals the ability to obtain access to the U.S.

financial system and have significant implications for FDIC-insured institutions and other businesses involved in the transfer of money.

The so-called Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) regime under the BSA provides a foundation to promote financial transparency and deter and detect those who seek to misuse the U.S.

financial system to launder criminal proceeds, finance terrorist acts, or move funds for other illicit purposes.

The laws mandate financial services companies to have policies and procedures with respect to measures designed to address:

(i) customer identification programs;

(ii) money laundering;

(iii) terrorist financing;

(iv) identifying and reporting suspicious activities and currency transactions;

(v) currency crimes;

and (vi) cooperation between FDIC-insured institutions and law enforcement authorities.

West Bank must also comply with stringent economic and trade sanctions regimes administered and enforced by the Office of Foreign Assets Control.

The BSA and related regulations require financial institutions to establish and maintain policies and procedures addressing:

(i) customer identification and due diligence;

(ii) the prevention and detection of money laundering and terrorist financing;

(iii) the identification and reporting of suspicious activities and certain currency transactions;

(iv) compliance with laws relating to currency crimes;

and (v) cooperation with law enforcement authorities.

West Bank also must comply with stringent economic and trade sanctions regimes administered and enforced by the Office of Foreign Assets Control.

Although core AML/CFT statutory requirements and expectations remain unchanged, federal banking agencies and the Financial Crimes Enforcement Network (FinCEN) have recently pursued or considered efforts to modernize and streamline BSA/AML compliance through a more risk-based approach, including targeted regulatory relief, revised examination expectations, and efforts to reduce certain reporting and compliance burden, particularly for lower-risk and community banking organizations.

Concentrations in Commercial Real Estate .

Concentration risk exists when FDIC-insured institutions deploy too many assets to any one industry or segment.

A concentration in commercial real estate (CRE) is one example of regulatory concern, which has been subject to additional scrutiny by federal banking agencies as well as the SEC (for publicly-traded banking organizations) in recent years.

The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance (CRE Guidance) provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny:

(i) CRE loans exceeding 300 percent of capital and increasing 50 percent or more in the preceding three years;

Concentration risk exists when FDIC-insured institutions allocate a disproportionate amount of assets to a single industry or economic segment.

Concentration in commercial real estate (CRE) lending is one area of regulatory focus, which has been subject to additional scrutiny by federal banking agencies as well as the SEC (for publicly-traded banking organizations) in recent years.

The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance (CRE Guidance) provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying institutions with potentially significant CRE loan concentrations that may warrant greater supervisory attention.

These indicators include:

(i) total CRE loans exceeding 300 percent of capital and increasing 50 percent or more in the preceding three years;

or (ii) construction and land development loans exceeding 100 percent of capital.

The CRE Guidance does not limit banks’ levels of CRE lending activities, but rather guides institutions in developing risk management practices and levels of capital that are commensurate with the level and nature of their CRE concentrations.

On December 18, 2015, and again in recent years, the federal banking agencies have issued statements to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards.

The federal banking agencies reminded FDIC-insured institutions to maintain underwriting discipline and exercise prudent risk-management practices to identify, measure, monitor and manage the risks arising from CRE lending.

In addition, FDIC-insured institutions must maintain capital commensurate with the level and nature of their CRE concentration risk.

West Bank has historically exceeded, and continues to exceed, the 300 percent guideline for CRE loans.

The CRE Guidance does not establish binding limits on CRE lending activities, but rather is intended to inform supervisory assessments of whether an institution’s risk profile, earnings capacity, and capital levels are commensurate with its CRE exposure.

In recent years, the federal banking agencies have issued statements to reinforce prudent risk-management practices related to CRE lending in response to observed growth in CRE markets, increased competitive pressures, rising CRE concentrations, and an easing of CRE underwriting standards.

In other statements, the agencies reminded FDIC-insured institutions to maintain underwriting discipline and to identify, measure, monitor, and manage the risks arising from CRE lending, including by holding capital commensurate with those risks.

West Bank historically has exceeded, and continues to exceed, the 300 percent guideline for CRE loans.

Additional monitoring processes have been implemented to manage this increased risk.

Consumer Financial Services .

The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the CFPB commenced operations to supervise and enforce consumer protection laws.

The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the Consumer Financial Protection Bureau (CFPB) commenced operations to supervise and enforce consumer protection laws.

The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including West Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices.

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FDIC-insured institutions with $10 billion or less in assets, like West Bank, continue to be examined by their applicable primary federal banking regulators.

Because abuses in connection with residential mortgages were a significant factor contributing to the global financial crisis, many new rules issued by the CFPB, as required by the Dodd-Frank Act, addressed mortgage and mortgage-related products, their underwriting, origination, servicing and sales.

The Dodd-Frank Act significantly expanded underwriting requirements applicable to loans secured by 1-4 family residential real property and augmented federal law combating predatory lending practices.

In addition to numerous disclosure requirements, the Dodd-Frank Act and the CFPB’s enabling rules imposed new standards for mortgage loan originations on all lenders, including banks and savings associations, in an effort to strongly encourage lenders to verify a borrower’s ability to repay, while also establishing a presumption of compliance for certain “qualified mortgages.” The CFPB has from time to time released additional rules as to qualified mortgages and the borrower’s ability to repay.

West Bancorporation, Inc.

and Subsidiary

In response to mortgage-related abuses that contributed to the global financial crisis, the Dodd-Frank Act and CFPB rulemaking significantly expanded underwriting, disclosure, and anti-predatory lending requirements for residential mortgage loans, including by imposing ability-to-repay standards and establishing a presumption of compliance for certain “qualified mortgages.” The CFPB has continued to refine these requirements through additional rulemaking addressing qualified mortgages and ability-to-repay standards.

Over the last several years, the CFPB has taken an aggressive approach to the regulation (and supervision, where applicable) of providers of consumer financial products and services.

For example, the CFPB has taken, or attempted to take, a proactive, multi-front approach to protect consumers from excessive overdraft and non-sufficient funds fees, including through proposed or final rules, interpretive opinions, and enforcement actions.

Given the increased number and expansive nature of its regulatory initiatives, the CFPB has been subject to lawsuits brought by the banking industry and other providers of consumer financial products and services.

The CFPB’s approach may change under the Trump Administration, but it remains unclear exactly what changes will occur or how quickly.

In addition, certain rules that the Biden Administration CFPB finalized may be subject to reversal by either the U.S.

Congress or the new CFPB administration.

More recently, changes in leadership and policy direction have led to:

(i) shifts in regulatory priorities, including the rescission or reconsideration of certain CFPB guidance and rules;

(ii) a reduction in CFPB enforcement activity;

and (iii) constraints on the CFPB’s budget and resources, although the CFPB continues to retain broad statutory authority to administer, supervise, and enforce federal consumer financial protection laws.

In addition, state banking and other financial services regulatory agencies retain authority to administer and enforce state consumer financial protection laws and could increase supervisory or enforcement activity in response to changes in federal regulatory priorities.

The CFPB’s rules have not had a significant impact on West Bank’s operations, except for higher compliance costs.

West Bank must also comply with certain state consumer protection laws and requirements in the states in which it operates.

West Bank also must comply with certain state consumer protection laws and requirements in the states in which it operates.

West Bancorporation, Inc.

and Subsidiary

ADDITIONAL INFORMATION

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What changed 10-K

Item 1. Business