UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended ~~September~~June 30, ~~2017~~2021

or

o☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from __________ to __________

Commission File Number: 0-49677

WEST BANCORPORATION, INC.

(Exact Name of Registrant as Specified in its Charter)



~~IOWA~~	~~42-1230603~~
~~(State of Incorporation)~~	~~(I.R.S. Employer Identification No.)~~



Iowa			42-1230603
(State of Incorporation)			(I.R.S. Employer Identification No.)


			1601 22nd Street, West Des Moines, Iowa			50266
			(Address of principal executive offices)			(Zip Code)

Registrant's telephone number, including area code: (515) 222-2300

Securities registered or to be registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, no par value	WTBA	The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x☒ No o☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes x☒ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

o☐

Accelerated filer

x☒

Non-accelerated filer

o☐

~~(Do not check if a smaller reporting company)~~

Smaller reporting company

o☐

Emerging growth company

o☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o☐ No x☒

As of ~~October 25, 2017,~~July 28, 2021, there were ~~16,215,672~~16,554,846 shares of common stock, no par value, outstanding.

WEST BANCORPORATION, INC.

INDEX


					Page
PART I.			FINANCIAL INFORMATION

				~~Page~~
~~PART I.~~Item 1.	~~FINANCIAL INFORMATION~~

~~Item 1.~~	Financial Statements	4

			Consolidated Balance Sheets as of ~~September 30, 2017~~June 3 0 , 2021 and December 31, ~~2016~~2020		4

			Consolidated Statements of Income for the three and ~~nine~~ six months ended ~~September 30, 2017~~June 3 0 , 2021 and ~~2016~~2020		5

			Consolidated Statements of Comprehensive Income for the three and ~~nine~~ six months ended ~~September~~June 30 ~~2017~~, 2021 and ~~2016~~2020		6

			Consolidated Statements of Stockholders' Equity for the ~~nine~~ three and six months ended ~~September~~June 30 ~~2017~~, 2021 and ~~2016~~2020		7

			Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~September~~June 30 ~~2017~~, 2021 and ~~2016~~2020		89

			Notes to Consolidated Financial Statements		910

Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations		30

			"Safe Harbor" C~~oncerning~~Concerning Forward-Looking Statements		30

			Critical Accounting Policies		30

			Non-GAAP Financial Measures		31

			Overview		3132

			Impact of COVID-19		32

			Summary		32

			Results of Operations		3435

			Financial Condition		44

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		48

Item 4.			Controls and Procedures		48

PART II.			OTHER INFORMATION

Item 1.			Legal Proceedings		4849

Item 1A.			Risk Factors		4849

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		4849

Item 3.			Defaults Upon Senior Securities		4849

Item 4.			Mine Safety Disclosures		4849

Item 5.			Other Information		4849

Item 6.			Exhibits		4850

			Signatures		5051

	~~Exhibit~~ ~~Index~~	X

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

West Bancorporation, Inc. and Subsidiary

Consolidated Balance Sheet

(unaudited)

West Bancorporation, Inc. and Subsidiary
Consolidated Balance Sheets
(unaudited)

(in thousands, except share and per share data) September 30, 2017 December 31, 2016
ASSETS
Cash and due from banks $ 33,560
$ 40,943
Federal funds sold 5,937
35,893
Cash and cash equivalents 39,497
76,836
Investment securities available for sale, at fair value 418,374
260,637
Investment securities held to maturity, at amortized cost (fair value of $46,356 and $47,789 at September 30, 2017 and December 31, 2016, respectively) 45,597
48,386
Federal Home Loan Bank stock, at cost 12,256
10,771
Loans 1,456,905
1,399,870
Allowance for loan losses (16,358 ) (16,112 )
Loans, net 1,440,547
1,383,758
Premises and equipment, net 23,173
23,314
Accrued interest receivable 6,636
5,321
Bank-owned life insurance 33,451
33,111
Deferred tax assets, net 5,861
6,957
Other assets 4,956
5,113
Total assets $ 2,030,348
$ 1,854,204

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand $ 384,625
$ 479,311
Interest-bearing demand 328,156
282,592
Savings 776,921
668,688
Time of $250 or more 16,539
10,446
Other time 145,025
105,568
Total deposits 1,651,266
1,546,605
Federal funds purchased 925
9,690
Short-term borrowings 48,000
—
Subordinated notes, net 20,408
20,398
Federal Home Loan Bank advances, net 101,005
99,886
Long-term debt, net 24,195
5,126
Accrued expenses and other liabilities 6,462
7,123
Total liabilities 1,852,261
1,688,828
COMMITMENTS AND CONTINGENCIES (NOTE 9)

STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized 50,000,000 shares; no shares issued and outstanding at September 30, 2017 and December 31, 2016 —
—
Common stock, no par value; authorized 50,000,000 shares; 16,215,672
and 16,137,999 shares issued and outstanding at September 30, 2017
and December 31, 2016, respectively
3,000
3,000
Additional paid-in capital 22,763
21,462
Retained earnings 152,252
141,956
Accumulated other comprehensive income (loss) 72
(1,042 )
Total stockholders' equity 178,087
165,376
Total liabilities and stockholders' equity $ 2,030,348
$ 1,854,204


(in thousands, except share and per share data)	June 30, 2021		December 31, 2020
ASSETS
Cash and due from banks	$	31,978	$	77,693
Federal funds sold	238,845		318,742
Cash and cash equivalents	270,823		396,435
Securities available for sale, at fair value	601,462		420,571
Federal Home Loan Bank stock, at cost	10,189		11,723
Loans	2,309,527		2,280,575
Allowance for loan losses	(28,042)		(29,436)
Loans, net	2,281,485		2,251,139
Premises and equipment, net	30,753		29,077
Accrued interest receivable	11,415		11,231
Bank-owned life insurance	43,146		42,686
Deferred tax assets, net	8,733		11,289
Other assets	10,754		11,593
Total assets	$	3,268,760	$	3,185,744

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand	$	703,691	$	696,731
Interest-bearing demand	487,642		553,881
Savings	1,391,231		1,274,254
Time of $250 or more	46,660		46,907
Other time	196,065		129,221
Total deposits	2,825,289		2,700,994
Federal funds purchased	3,605		5,375
Subordinated notes, net	20,458		20,452
Federal Home Loan Bank advances	125,000		175,000
Long-term debt	20,286		21,558
Accrued expenses and other liabilities	27,596		38,670
Total liabilities	3,022,234		2,962,049
COMMITMENTS AND CONTINGENCIES (NOTE 8)	0		0
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized 50,000,000 shares; 0 shares issued and outstanding at June 30, 2021 and December 31, 2020	0		0
Common stock, 0 par value; authorized 50,000,000 shares; 16,554,846 and 16,469,272 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively	3,000		3,000
Additional paid-in capital	28,888		28,823
Retained earnings	221,113		203,718
Accumulated other comprehensive loss	(6,475)		(11,846)
Total stockholders' equity	246,526		223,695
Total liabilities and stockholders' equity	$	3,268,760	$	3,185,744

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Consolidated Statements of Income

(unaudited)


West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Income
(unaudited)
	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2017		2016		2017		2016		(in thousands, except per share data)	2021		2020		2021		2020
Interest income:									Interest income:
Loans, including fees	$	15,854	$	14,898	$	46,865	$	42,667	Loans, including fees	$	23,139	$	22,332	$	47,177	$	44,643
Investment securities:
Securities:									Securities:
Taxable	1,489		991		3,755		3,222		Taxable	1,895		1,994		3,540		4,377
Tax-exempt	1,081		780		2,674		2,482		Tax-exempt	712		319		1,270		616
Federal funds sold	136		27		223		58		Federal funds sold	75		12		144		241
Total interest income	18,560		16,696		53,517		48,429		Total interest income	25,821		24,657		52,131		49,877
Interest expense:									Interest expense:
Deposits	2,108		872		5,084		2,401		Deposits	1,995		2,351		3,872		7,397
Federal funds purchased	4		1		24		4		Federal funds purchased	1		3		2		19
Short-term borrowings	9		8		58		39
Subordinated notes	232		169		667		533		Subordinated notes	251		253		500		508
Federal Home Loan Bank advances	972		894		2,837		2,645		Federal Home Loan Bank advances	649		1,204		1,632		2,513
Long-term debt	204		31		334		114		Long-term debt	75		99		154		229
Total interest expense	3,529		1,975		9,004		5,736		Total interest expense	2,971		3,910		6,160		10,666
Net interest income	15,031		14,721		44,513		42,693		Net interest income	22,850		20,747		45,971		39,211
Provision for loan losses	—		200		—		900		Provision for loan losses	(2,000)		3,000		(1,500)		4,000
Net interest income after provision for loan losses	15,031		14,521		44,513		41,793		Net interest income after provision for loan losses	24,850		17,747		47,471		35,211
Noninterest income:									Noninterest income:
Service charges on deposit accounts	715		632		1,946		1,847		Service charges on deposit accounts	578		531		1,160		1,134
Debit card usage fees	435		450		1,333		1,372		Debit card usage fees	511		391		953		773
Trust services	436		355		1,264		946		Trust services	691		461		1,343		924
Increase in cash value of bank-owned life insurance	167		160		484		492		Increase in cash value of bank-owned life insurance	240		136		460		294
Gain from bank-owned life insurance	—		—		307		443
Realized investment securities gains, net	197		—		423		60
Loan swap fees									Loan swap fees	42		3		42		589
Realized securities gains (losses), net									Realized securities gains (losses), net	36		(69)		40		(75)
Other income	314		322		983		892		Other income	417		322		982		656
Total noninterest income	2,264		1,919		6,740		6,052		Total noninterest income	2,515		1,775		4,980		4,295
Noninterest expense:									Noninterest expense:
Salaries and employee benefits	4,430		4,154		13,216		12,644		Salaries and employee benefits	5,672		5,318		11,280		10,602
Occupancy	1,087		1,038		3,315		2,972		Occupancy	1,199		1,217		2,427		2,430
Data processing	635		643		2,031		1,849		Data processing	617		554		1,219		1,184
FDIC insurance	151		272		514		714		FDIC insurance	426		292		830		529
Professional fees	184		189		725		619		Professional fees	268		200		551		439
Director fees	240		202		697		672		Director fees	214		194		405		428
Other expenses	1,293		1,495		3,737		4,141		Other expenses	2,130		1,642		4,085		3,468
Total noninterest expense	8,020		7,993		24,235		23,611		Total noninterest expense	10,526		9,417		20,797		19,080
Income before income taxes	9,275		8,447		27,018		24,234		Income before income taxes	16,839		10,105		31,654		20,426
Income taxes	2,870		2,634		8,142		7,249		Income taxes	3,600		2,136		6,663		4,368
Net income	$	6,405	$	5,813	$	18,876	$	16,985	Net income	$	13,239	$	7,969	$	24,991	$	16,058

Basic earnings per common share	$	0.40	$	0.36	$	1.17	$	1.05	Basic earnings per common share	$	0.80	$	0.48	$	1.51	$	0.98
Diluted earnings per common share	$	0.39	$	0.36	$	1.16	$	1.05	Diluted earnings per common share	$	0.79	$	0.48	$	1.49	$	0.97
Cash dividends declared per common share	$	0.18	$	0.17	$	0.53	$	0.50

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Consolidated Statements of Comprehensive Income

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2021		2020		2021		2020
Net income	$	13,239	$	7,969	$	24,991	$	16,058
Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period	4,048		5,622		(4,290)		5,814
Plus: reclassification adjustment for net (gains) losses realized in net income	(36)		69		(40)		75

Income tax (expense) benefit	(1,011)		(1,423)		1,091		(1,472)
Other comprehensive income (loss) on securities	3,001		4,268		(3,239)		4,417
Unrealized gains (losses) on derivatives:
Unrealized holding gains (losses) arising during the period	(2,321)		(2,910)		5,442		(24,168)
Plus: reclassification adjustment for net losses on derivatives realized in net income	1,098		1,038		6,068		1,363
Plus: reclassification adjustment for amortization of derivative termination costs	0		15		0		31
Income tax (expense) benefit	308		463		(2,900)		5,692
Other comprehensive income (loss) on derivatives	(915)		(1,394)		8,610		(17,082)
Total other comprehensive income (loss)	2,086		2,874		5,371		(12,665)
Comprehensive income	$	15,325	$	10,843	$	30,362	$	3,393

West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands) 2017 2016 2017 2016
Net income $ 6,405
$ 5,813
$ 18,876
$ 16,985
Other comprehensive income:

Unrealized gains (losses) on investment securities:
Unrealized holding gains (losses) arising during the period (1,316 ) 301
2,509
4,771
Less: reclassification adjustment for net gains realized in net income (197 ) —
(423 ) (60 )
Less: reclassification adjustment for amortization of net unrealized gains to interest income on securities transferred from available for sale to
held to maturity
(34 ) (7 ) (234 ) (122 )
Income tax (expense) benefit 588
(112 ) (704 ) (1,744 )
Other comprehensive income (loss) on investment securities (959 ) 182
1,148
2,845
Unrealized gains (losses) on derivatives:
Unrealized holding gains (losses) arising during the period (29 ) 248
(376 ) (889 )
Less: reclassification adjustment for net loss on derivatives realized in net income 70
118
239
362
Less: reclassification adjustment for amortization of derivative termination costs 28
28
82
82
Income tax (expense) benefit (26 ) (149 ) 21
170
Other comprehensive income (loss) on derivatives 43
245
(34 ) (275 )
Total other comprehensive income (loss) (916 ) 427
1,114

2,570
Comprehensive income $ 5,489
$ 6,240
$ 19,990
$ 19,555

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Consolidated Statements of Stockholders' Equity

(unaudited)


(in thousands, except share and per share data)

	Three Months Ended June 30, 2021
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, March 31, 2021	$	—	16,540,381	$	3,000	$	28,243	$	211,847	$	(8,561)	$	234,529
Net income	—		—	—		—		13,239		0		13,239
Other comprehensive income, net of tax	—		—	—		—		—		2,086		2,086
Cash dividends declared, $0.24 per common share	—		—	—		—		(3,973)		—		(3,973)
Stock-based compensation costs	—		—	—		645		—		—		645
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes	0		14,465	—		—		—		—		—
Balance, June 30, 2021	$	—	16,554,846	$	3,000	$	28,888	$	221,113	$	(6,475)	$	246,526


	Three Months Ended June 30, 2020
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, March 31, 2020	$	0	16,447,272	$	3,000	$	27,023	$	189,470	$	(18,800)	$	200,693
Net income	—		—	—		—		7,969		—		7,969
Other comprehensive income, net of tax	—		—	—		—		—		2,874		2,874
Cash dividends declared, $0.21 per common share	—		—	—		—		(3,458)		—		(3,458)
Stock-based compensation costs	—		—	—		609		—		—		609
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes	0		22,000	—		—		—		—		—
Balance, June 30, 2020	$	—	16,469,272	$	3,000	$	27,632	$	193,981	$	(15,926)	$	208,687

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Consolidated Statements of Stockholders' Equity

(unaudited)

West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
(unaudited)

Accumulated
Additional Other
Preferred Common Stock Paid-In Retained Comprehensive
(in thousands, except share and per share data) Stock Shares Amount Capital Earnings Income (Loss) Total
Balance, December 31, 2015 $ —
16,064,435
$ 3,000
$ 20,067
$ 129,740
$ (430 ) $ 152,377
Net income —
—
—
—
16,985
—
16,985
Other comprehensive income, net of tax —
—
—
—
—
2,570
2,570
Cash dividends declared, $0.50 per common share —
—
—
—
(8,057 ) —
(8,057 )
Stock-based compensation costs —
—
—
1,278
—
—
1,278
Issuance of common stock upon vesting of restricted

stock units, net of shares withheld for payroll taxes —
73,564
—
(394 ) —
—
(394 )
Excess tax benefits from vesting of restricted stock units —
—
—
105
—
—
105
Balance, September 30, 2016 $ —
16,137,999
$ 3,000
$ 21,056
$ 138,668
$ 2,140
$ 164,864

Balance, December 31, 2016 $ —
16,137,999
$ 3,000
$ 21,462
$ 141,956
$ (1,042 ) $ 165,376
Net income —
—
—
—
18,876
—
18,876
Other comprehensive income, net of tax —
—
—
—
—
1,114
1,114
Cash dividends declared, $0.53 per common share —
—
—
—
(8,580 ) —
(8,580 )
Stock-based compensation costs —
—
—
1,932
—
—
1,932
Issuance of common stock upon vesting of restricted

stock units, net of shares withheld for payroll taxes —
77,673
—
(631 ) —
—
(631 )
Balance, September 30, 2017 $ —
16,215,672

$ 3,000
$ 22,763
$ 152,252
$ 72
$ 178,087


(in thousands, except share and per share data)

	Six Months Ended June 30, 2021
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, December 31, 2020	$	—	16,469,272	$	3,000	$	28,823	$	203,718	$	(11,846)	$	223,695
Net income	—		—	—		—		24,991		0		24,991
Other comprehensive income, net of tax	—		—	—		—		—		5,371		5,371
Cash dividends declared, $0.46 per common share	—		—	—		—		(7,596)		0		(7,596)
Stock-based compensation costs	—		—	—		1,278		—		—		1,278
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes	0		85,574	—		(1,213)		—		—		(1,213)
Balance, June 30, 2021	$	—	16,554,846	$	3,000	$	28,888	$	221,113	$	(6,475)	$	246,526


	Six Months Ended June 30, 2020
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, December 31, 2019	$	0	16,379,752	$	3,000	$	27,260	$	184,821	$	(3,261)	$	211,820
Net income	—		—	—		—		16,058		—		16,058
Other comprehensive loss, net of tax	—		—	—		—		—		(12,665)		(12,665)
Cash dividends declared, $0.42 per common share	—		—	—		—		(6,898)		—		(6,898)
Stock-based compensation costs	—		—	—		1,121		—		—		1,121
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes	0		89,520	0		(749)		0		0		(749)
Balance, June 30, 2020	$	—	16,469,272	$	3,000	$	27,632	$	193,981	$	(15,926)	$	208,687

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Consolidated Statements of Cash Flows

(unaudited)


West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
	Nine Months Ended September 30,							Six Months Ended June 30,
(in thousands)	2017			2016			(in thousands)	2021		2020
Cash Flows from Operating Activities:							Cash Flows from Operating Activities:
Net income	$	18,876		$	16,985		Net income	$	24,991	$	16,058
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses	—			900			Provision for loan losses	(1,500)		4,000
Net amortization and accretion	2,921			3,293			Net amortization and accretion	929		1,269
Investment securities gains, net	(423		)	(60		)
Securities (gains) losses, net							Securities (gains) losses, net	(40)		75
Stock-based compensation	1,932			1,278			Stock-based compensation	1,278		1,121
Increase in cash value of bank-owned life insurance	(484		)	(492		)	Increase in cash value of bank-owned life insurance	(460)		(294)
Gain from bank-owned life insurance	(307		)	(443		)

Depreciation	1,007			740			Depreciation	759		753
Deferred income taxes	413			253
(Benefit) provision for deferred income taxes							(Benefit) provision for deferred income taxes	746		(540)
Change in assets and liabilities:							Change in assets and liabilities:
(Increase) in accrued interest receivable	(1,315		)	(542		)
Increase in accrued interest receivable							Increase in accrued interest receivable	(184)		(1,333)
(Increase) decrease in other assets	(125		)	248			(Increase) decrease in other assets	3,170		(119)
Increase (decrease) in accrued expenses and other liabilities	(516		)	152			Increase (decrease) in accrued expenses and other liabilities	(1,181)		2,540
Net cash provided by operating activities	21,979			22,312			Net cash provided by operating activities	28,508		23,530
Cash Flows from Investing Activities:							Cash Flows from Investing Activities:
Proceeds from sales of securities available for sale	74,224			1,544			Proceeds from sales of securities available for sale	28,961		78,581
Proceeds from maturities and calls of investment securities	38,529			46,190
Proceeds from maturities and calls of securities available for sale							Proceeds from maturities and calls of securities available for sale	43,153		32,814
Purchases of securities available for sale	(267,133		)	—			Purchases of securities available for sale	(258,216)		(49,748)
Purchases of Federal Home Loan Bank stock	(16,794		)	(16,907		)	Purchases of Federal Home Loan Bank stock	(861)		(6,853)
Proceeds from redemption of Federal Home Loan Bank stock	15,309			16,887			Proceeds from redemption of Federal Home Loan Bank stock	2,395		7,037
Net increase in loans	(56,789		)	(136,116		)	Net increase in loans	(28,846)		(257,897)

Purchases of premises and equipment	(866		)	(10,201		)	Purchases of premises and equipment	(3,150)		(428)
Proceeds of principal and earnings from bank-owned life insurance	451			812

Net cash used in investing activities	(213,069		)	(97,791		)	Net cash used in investing activities	(216,564)		(196,494)
Cash Flows from Financing Activities:							Cash Flows from Financing Activities:
Net increase in deposits	104,661			50,927			Net increase in deposits	124,295		240,953
Net (decrease) in federal funds purchased	(8,765		)	(1,840		)
Net increase in short-term borrowings	48,000			15,500
Proceeds from long-term debt	22,000			—
Net increase (decrease) in federal funds purchased							Net increase (decrease) in federal funds purchased	(1,770)		3,095

Net decrease in Federal Home Loan Bank advances							Net decrease in Federal Home Loan Bank advances	(50,000)		—
Principal payments on long-term debt	(2,934		)	(2,458		)	Principal payments on long-term debt	(1,272)		(58)
Common stock dividends paid	(8,580		)	(8,057		)	Common stock dividends paid	(7,596)		(6,898)
Restricted stock units withheld for payroll taxes	(631		)	(394		)	Restricted stock units withheld for payroll taxes	(1,213)		(749)
Net cash provided by financing activities	153,751			53,678			Net cash provided by financing activities	62,444		236,343
Net (decrease) in cash and cash equivalents	(37,339		)	(21,801		)
Net increase (decrease) in cash and cash equivalents							Net increase (decrease) in cash and cash equivalents	(125,612)		63,379
Cash and Cash Equivalents:							Cash and Cash Equivalents:
Beginning	76,836			72,651			Beginning	396,435		53,290
Ending	$	39,497		$	50,850		Ending	$	270,823	$	116,669

Supplemental Disclosures of Cash Flow Information:							Supplemental Disclosures of Cash Flow Information:
Cash payments for:							Cash payments for:
Interest	$	8,667		$	5,742		Interest	$	6,499	$	11,377
Income taxes	6,410			5,160			Income taxes	5,530		1,020

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

1. Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by West Bancorporation, Inc. (the Company) pursuant to the rules and regulations of the Securities and Exchange ~~Commission.~~Commission (SEC). Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. Although management believes that the disclosures are adequate to make the information presented understandable, it is suggested that these interim consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, ~~2016~~.2020 filed with the SEC on March 1, 2021. In the opinion of management, the accompanying consolidated financial statements of the Company contain all adjustments necessary to fairly present its financial position as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~,2020, net income, ~~and~~ comprehensive income and changes in stockholders' equity for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016,~~2020, and cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~2020. The results for these interim periods may not be indicative of results for the entire year or for any other period.

The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (GAAP) established by the Financial Accounting Standards Board (FASB). References to GAAP issued by the FASB in these footnotes are to the FASB Accounting Standards Codification™, sometimes referred to as the Codification or ASC. In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses for the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term are the fair value ~~and other than temporary impairment (OTTI)~~ of financial instruments and the allowance for loan losses.

The accompanying unaudited consolidated financial statements include the accounts of the Company, West Bank and West Bank's ~~wholly-owned subsidiary WB Funding Corporation.~~special purpose subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. In accordance with GAAP, West Bancorporation Capital Trust I is recorded on the books of the Company using the equity method of accounting and is not consolidated.

Current accounting developments: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606). The guidance in this update supersedes the revenue recognition requirements in ASC Topic 605, Revenue Recognition, and most industry-specific guidance throughout the industry topics of the Codification. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2017. The Company's revenue is primarily comprised of interest income on financial instruments, including investment securities and loans, which are excluded from the scope of ASU 2014-09. The Company does not expect the guidance to have a material impact on the Company's consolidated financial statements. The most significant impact of the update for the Company may be additional noninterest income disclosure requirements.

~~In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments—Overall (Subtopic 825-10):~~ ~~Recognition and Measurement of Financial Assets and Financial Liabilities.~~ The update enhances the reporting model for financial instruments to provide users of financial statements with more decision-useful information by updating certain aspects of recognition, measurement, presentation and disclosure of financial instruments. Among other changes, the update requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes, and clarifies that entities should evaluate the need for a valuation allowance on a deferred tax asset related to available for sale securities in combination with the entities' other deferred tax assets. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2017, and is to be applied on a modified retrospective basis. Upon the effective date, the fair value of the Company's loan portfolio will be presented using an exit price method. The Company has concluded that the remaining requirements of this update are not expected to have a material impact on the Company's consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The guidance in the update supersedes the requirements in ASC Topic 840, Leases. The guidance is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet for leases with lease terms of more than 12 months. For public companies, this update will be effective for interim and annual periods beginning after December 15, 2018, and is to be applied on a modified retrospective basis. The Company currently leases its main location and space for six other branch offices and operational departments under operating leases that will result in recognition of lease assets and lease liabilities on the consolidated balance sheets under the ASU. The amount of assets and liabilities added to the balance sheet are not expected to have a material impact on the Company's consolidated financial statements per preliminary estimates.

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718). The guidance in this update simplifies several aspects of accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The guidance also allows an entity to make an entity-wide accounting policy election to either estimate expected forfeitures or account for forfeitures as they occur. For public companies, the update was effective for annual periods beginning after December 15, 2016. Portions of the amended guidance were to be applied using a modified retrospective transition method, and others require prospective application. Upon adoption of this update on January 1, 2017, the Company made the accounting policy election to account for forfeitures as they occur. This resulted in no effect on the Company's consolidated financial statements, as prior stock-based compensation expense assumed no expected forfeitures. Also upon adoption, the Company changed the calculation of the assumed proceeds of the treasury stock method on a prospective basis to eliminate deferred taxes from the calculation. The net impact on the income statement is dependent upon the change in the Company's stock price from grant date to vesting date and cannot be predicted with any certainty. The requirement to report the excess tax benefit or shortfall related to settlements of share-based payment awards in earnings as an increase or decrease to tax expense has been applied to settlements occurring on or after January 1, 2017, and the impact of applying that guidance reduced reported income tax expense $285 for the nine months ended September 30, 2017.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326). The amendments in this update require a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected. The allowance for credit losses is a valuation account that is deducted from the amortized cost basis of the financial assets to present the net carrying value at the amount expected to be collected on the financial assets. ~~The~~Under the update, the income statement ~~reflects~~will reflect the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectibility of the reported amount of financial assets. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The allowance for credit losses for purchased financial assets with a more-than-insignificant amount of credit deterioration since origination that are measured at amortized cost basis is determined in a similar manner to other financial assets measured at amortized cost basis; however, the initial allowance for credit losses is added to the purchase price rather than being reported as a credit loss expense. Only subsequent changes in the allowance for credit losses are recorded as a credit loss expense for these assets. Off-balance-sheet arrangements such as commitments to extend credit, guarantees, and standby letters of credit that are not considered derivatives under ASC 815 and are not unconditionally cancellable are also within the scope of this update. Credit losses relating to ~~available-for-sale~~available for sale debt securities should be recorded through an allowance for credit losses. ~~For public~~

In December 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326). This update amends the effective date of ASU No. 2016-13 for certain entities, including smaller reporting companies ~~the update is effective for annual periods~~until fiscal years beginning after December 15, ~~2019,~~2022, including interim periods within those fiscal years. All entities may adopt the amendments in this update earlier as of fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. An entity will apply the amendments in this update on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently planning for the implementation of this accounting standard. It is too early to assess the impact that this guidance will have on the Company's consolidated financial statements.

~~In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230):~~ ~~Classification of Certain Cash Receipts and Cash Payments.~~ The amendments in this update provide guidance for eight specific cash flow classification issues for which current guidance is unclear or does not exist, thereby reducing diversity in practice. For public companies, the update is effective for annual periods beginning after December 15, 2017, with early adoption permitted. The Company's early adoption of the update as of January 1, 2017, did not have a material impact on the Company's consolidated financial statements.

~~In March 2017, the FASB issued ASU 2017-08, Receivables—Nonrefundable Fees and Other Costs (Subtopic 310-20):~~ ~~Premium Amortization on Purchased Callable Debt Securities~~. The amendments in this update shorten the amortization period for certain purchased callable debt securities held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount; the discount continues to be amortized to maturity. For public companies, the update is effective for annual periods beginning after December 15, 2018, and is to be applied on a modified retrospective basis with a cumulative-effect adjustment directly to retained earnings as of the beginning of the adoption period.periods. Early adoption is ~~permitted, including adoption in an interim period.~~permitted. The one-time determination date for identifying as a smaller reporting company was November 15, 2019. The Company met the definition of a smaller reporting company as of that date and plans to adopt the standard with the amended effective date. The Company does not plan to early adopt this standard, but continues to work through implementation. The Company continues collecting and retaining loan and credit data and evaluating various loss estimation models. While we currently cannot reasonably estimate the impact of adopting this standard, we expect the ~~guidance to have a material~~ impact onwill be influenced by the ~~Company's consolidated financial statements.~~composition, characteristics and quality of our loan and securities portfolios, as well as the general economic conditions and forecasts as of the adoption date.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

In ~~August 2017,~~April 2019, the FASB issued ASU ~~2017-12,~~No. 2019-04, Codification Improvements to Financial Instruments - Credit Losses (ASC 326), Derivatives and Hedging (ASC 815), and Financial Instruments (ASC 825). The amendments in the ASU improve the Codification by eliminating inconsistencies and providing clarifications. The amended guidance in this ASU related to the credit losses will be effective for the Company for fiscal years and interim periods beginning after December 15, 2022. The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic ~~815)~~848): ~~Targeted Improvements~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional guidance for a limited period of time to ~~Accounting~~ease the potential burden in accounting for ~~Hedging Activities~~(or recognizing the effects of) reference rate reform on financial reporting. It provides optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently evaluating the impact of the reference rate reform on the Company’s consolidated financial statements.

In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this update ~~better align an entity's risk management activities~~refine the scope for certain optional expedients and ~~financial reporting~~exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships ~~through changes to both~~affected by the ~~designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. For public companies, the~~discounting transition. The amendments in this update isare effective for ~~annual periods beginning after~~all entities as of March 12, 2020 through December ~~15, 2018, with early adoption permitted, including in an interim period. The amendments' presentation and disclosure guidance is required on a prospective basis.~~31, 2022. The Company is currently ~~assessing~~evaluating the impact of ~~this guidance, but does not expect~~ the ~~guidance to have a material impact~~reference rate reform on the Company's consolidated financial statements.

2. Earnings per Common Share

Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflect the potential dilution that could occur if the Company's outstanding restricted stock units were vested. The dilutive effect was computed using the treasury stock method, which assumes all stock-based awards were exercised and the hypothetical proceeds from exercise were used by the Company to purchase common stock at the average market price during the period. The incremental shares, to the extent they would have been dilutive, were included in the denominator of the diluted earnings per common share calculation. The calculations of earnings per common share and diluted earnings per common share for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 are presented in the following table.


	Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share data)	2017		2016		2017		2016		(in thousands, except per share data)	2021		2020		2021		2020
Net income	$	6,405	$	5,813	$	18,876	$	16,985	Net income	$	13,239	$	7,969	$	24,991	$	16,058

Weighted average common shares outstanding	16,213		16,135		16,186		16,110		Weighted average common shares outstanding	16,551		16,464		16,513		16,424
Weighted average effect of restricted stock units outstanding	118		51		127		47		Weighted average effect of restricted stock units outstanding	209		42		213		55
Diluted weighted average common shares outstanding	16,331		16,186		16,313		16,157		Diluted weighted average common shares outstanding	16,760		16,506		16,726		16,479

Basic earnings per common share	$	0.40	$	0.36	$	1.17	$	1.05	Basic earnings per common share	$	0.80	$	0.48	$	1.51	$	0.98
Diluted earnings per common share	$	0.39	$	0.36	$	1.16	$	1.05	Diluted earnings per common share	$	0.79	$	0.48	$	1.49	$	0.97
Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation	24		88		14		106		Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation	0		249		56		267

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

3. ~~Investment~~ Securities Available for Sale

The following tables show the amortized cost, gross unrealized gains and losses, and fair value of ~~investment~~ securities available for sale, by ~~investment~~ security type as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016.~~2020.


	June 30, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
Securities available for sale:
State and political subdivisions	$	200,660	$	3,471	$	(2,012)	$	202,119
Collateralized mortgage obligations (1)	232,133		3,544		(744)		234,933
Mortgage-backed securities (1)	112,387		540		(1,107)		111,820
Collateralized loan obligations	42,849		46		(98)		42,797
Corporate notes	9,750		43		0		9,793
	$	597,779	$	7,644	$	(3,961)	$	601,462


	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
Securities available for sale:
State and political subdivisions	$	141,405	$	3,441	$	(514)	$	144,332
Collateralized mortgage obligations (1)	135,338		5,650		(26)		140,962
Mortgage-backed securities (1)	82,994		651		(122)		83,523

Collateralized loan obligations	52,822		50		(1,118)		51,754

	$	412,559	$	9,792	$	(1,780)	$	420,571

September 30, 2017

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
(Losses)

Fair
Value
Securities available for sale:
U.S. government agencies and corporations $ 2,500
$ —
$ (11 ) $ 2,489
State and political subdivisions 133,300
1,442
(486 ) 134,256
Collateralized mortgage obligations ⁽¹⁾
150,298
150
(1,081 ) 149,367
Mortgage-backed securities ⁽¹⁾
54,622
288
(123 ) 54,787
Asset-backed securities ⁽²⁾
46,351
61
(139 ) 46,273
Trust preferred securities 2,130
—
(430 ) 1,700
Corporate notes 29,288
306
(92 ) 29,502
$ 418,489
$ 2,247
$ (2,362 ) $ 418,374

Securities held to maturity:
State and political subdivisions $ 45,597
$ 807
$ (48 ) $ 46,356

December 31, 2016

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
(Losses)

Fair
Value
Securities available for sale:
U.S. government agencies and corporations $ 2,524
$ 69
$ —
$ 2,593
State and political subdivisions 64,551
376
(591 ) 64,336
Collateralized mortgage obligations ⁽¹⁾
103,038
255
(1,343 ) 101,950
Mortgage-backed securities ⁽¹⁾
80,614
341
(797 ) 80,158
Trust preferred security 1,784
—
(534 ) 1,250
Corporate notes 10,326
25
(1 ) 10,350
$ 262,837
$ 1,066
$ (3,266 ) $ 260,637

Securities held to maturity:
State and political subdivisions $ 48,386
$ 70
$ (667 ) $ 47,789


~~(1)~~	All collateralized mortgage obligations and mortgage-backed securities consist of residential mortgage pass-through securities guaranteed by FHLMC or FNMA, real estate mortgage investment conduits guaranteed by FNMA, FHLMC or GNMA, and commercial mortgage pass-through securities guaranteed by the SBA.


~~(2)~~	~~Pass-through asset-backed securities guaranteed by the SBA, representing participating interests in pools of long-term debentures issued by state and local development companies certified by the SBA.~~

(1)Collateralized mortgage obligations and mortgage-backed securities consist of residential and commercial mortgage pass-through securities and collateralized mortgage obligations guaranteed by FNMA, FHLMC, GNMA and SBA.

~~Investment securities~~

Securities with an amortized cost of approximately ~~$123,457~~$297,417 and ~~$141,995~~$232,206 as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~,2020, respectively, were pledged to secure access to the Federal Reserve discount window, for public fund deposits, and for other purposes as required or permitted by law or regulation.

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

The amortized cost and fair value of ~~investment~~ securities available for sale as of ~~September~~June 30, ~~2017,~~2021, by contractual maturity, are shown below. Certain securities have call features that allow the issuer to call the securities prior to maturity. Expected maturities may differ from contractual maturities for collateralized mortgage obligations ~~mortgage-backed securities~~ and ~~asset-backed~~mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Therefore, collateralized mortgage obligations ~~mortgage-backed securities~~ and ~~asset-backed~~mortgage-backed securities are not included in the maturity categories within the following maturity summary.

September 30, 2017
Amortized Cost Fair Value
Due in one year or less $ 2,117
$ 2,121
Due after one year through five years 5,633
5,660
Due after five years through ten years 43,213
43,819
Due after ten years 116,255
116,347
167,218
167,947
Collateralized mortgage obligations, mortgage-backed and asset-backed securities 251,271
250,427
$ 418,489
$ 418,374

~~The amortized cost and fair value of investment securities held to maturity as of~~ ~~September 30, 2017, by contractual maturity, are shown below. Certain securities have call features that allow the issuer to call the securities prior to maturity.~~


	June 30, 2021
	Amortized Cost		Fair Value


Due after five years through ten years	$	36,927	$	36,872
Due after ten years	216,332		217,837
	253,259		254,709
Collateralized mortgage obligations and mortgage-backed securities	344,520		346,753
	$	597,779	$	601,462

September 30, 2017
Amortized Cost Fair Value
Due in one year or less $ —
$ —
Due after one year through five years 1,595
1,600
Due after five years through ten years 24,936
25,364
Due after ten years 19,066
19,392
$ 45,597
$ 46,356

~~The details of the sales of investment securities available for sale for the~~ ~~three and nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~and~~ ~~2016~~ ~~are summarized in the following table.~~

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Proceeds from sales $ 21,204
$ —
$ 74,224
$ 1,544
Gross gains on sales 197
—
527
60
Gross losses on sales —
—
104
—

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The details of the sales of securities available for sale for the three and six months ended June 30, 2021 and 2020 are summarized in the following table.


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Proceeds from sales	$	10,186	$	39,504	$	28,961	$	78,581
Gross gains on sales	110		556		272		1,455
Gross losses on sales	74		625		232		1,530

The following tables show the fair value and gross unrealized losses, aggregated by investment type and length of time that individual securities have been in a continuous loss position, as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016.~~2020.


	June 30, 2021
	Less than 12 months				12 months or longer				Total
	Fair Value		Gross Unrealized (Losses)		Fair Value		Gross Unrealized (Losses)		Fair Value		Gross Unrealized (Losses)
Securities available for sale:
State and political subdivisions	$	119,419	$	(2,012)	$	0	$	0	$	119,419	$	(2,012)
Collateralized mortgage obligations	86,411		(744)		0		0		86,411		(744)
Mortgage-backed securities	82,603		(1,107)		0		0		82,603		(1,107)
Collateralized loan obligations	0		0		17,768		(98)		17,768		(98)
	$	288,433	$	(3,863)	$	17,768	$	(98)	$	306,201	$	(3,961)


	December 31, 2020
	Less than 12 months				12 months or longer				Total
	Fair Value		Gross Unrealized (Losses)		Fair Value		Gross Unrealized (Losses)		Fair Value		Gross Unrealized (Losses)
Securities available for sale:
State and political subdivisions	$	48,752	$	(514)	$	0	$	0	$	48,752	$	(514)
Collateralized mortgage obligations	9,275		(26)		0		0		9,275		(26)
Mortgage-backed securities	14,183		(122)		0		0		14,183		(122)

Collateralized loan obligations	14,667		(206)		32,026		(912)		46,693		(1,118)

	$	86,877	$	(868)	$	32,026	$	(912)	$	118,903	$	(1,780)

September 30, 2017
Less than 12 months 12 months or longer Total

Fair
Value

Gross
Unrealized
(Losses)

Fair
Value

Gross
Unrealized
(Losses)

Fair
Value

Gross
Unrealized
(Losses)
Securities available for sale:
U.S. government agencies and corporations $ 2,489
$ (11 ) $ —
$ —
$ 2,489
$ (11 )
State and political subdivisions 54,004
(486 ) —
—
54,004
(486 )
Collateralized mortgage obligations 102,016
(830 ) 18,001
(251 ) 120,017
(1,081 )
Mortgage-backed securities 27,500
(123 ) —
—
27,500
(123 )
Asset-backed securities 20,217
(139 ) —
—
20,217
(139 )
Trust preferred securities —
—
1,700
(430 ) 1,700
(430 )
Corporate notes 7,410
(92 ) —
—
7,410
(92 )
$ 213,636
$ (1,681 ) $ 19,701
$ (681 ) $ 233,337
$ (2,362 )

Securities held to maturity:
State and political subdivisions $ 1,658
$ (7 ) $ 1,755
$ (41 ) $ 3,413
$ (48 )

December 31, 2016
Less than 12 months 12 months or longer Total

Fair
Value

Gross
Unrealized
(Losses)

Fair
Value

Gross
Unrealized
(Losses)

Fair
Value

Gross
Unrealized
(Losses)
Securities available for sale:
State and political subdivisions $ 34,903
$ (591 ) $ —
$ —
$ 34,903
$ (591 )
Collateralized mortgage obligations 75,771
(1,255 ) 2,538
(88 ) 78,309
(1,343 )
Mortgage-backed securities 60,221
(797 ) —
—
60,221
(797 )
Trust preferred security —
—
1,250
(534 ) 1,250
(534 )
Corporate notes 1,499
(1 ) —
—
1,499
(1 )
$ 172,394
$ (2,644 ) $ 3,788
$ (622 ) $ 176,182
$ (3,266 )

Securities held to maturity:
State and political subdivisions $ 32,976
$ (458 ) $ 3,968
$ (209 ) $ 36,944
$ (667 )

As of ~~September~~June 30, ~~2017, the~~2021, securities available for sale ~~and held to maturity securities~~ with unrealized losses included ~~one U.S. government agency security, 89~~35 state and political subdivision securities, 3010 collateralized mortgage obligation securities, ~~eight~~10 mortgage-backed securities ~~three asset-backed~~and 3 collateralized loan obligation securities. Collateralized loan obligation securities ~~one trust preferred security and two corporate notes.~~are debt securities backed by pools of senior secured commercial loans to a diverse group of companies across a broad spectrum of industries. At June 30, 2021, the Company only owned collateralized loan obligations that were AAA or AA rated. The Company ~~believed~~believes the unrealized losses on ~~investments~~securities available for sale ~~and held to maturity~~ as of ~~September~~June 30, ~~2017~~2021 were due to market conditions rather than reduced estimated cash flows. ~~The~~At June 30, 2021, the Company ~~does~~did not intend to sell these securities, ~~does~~did not anticipate that these securities will be required to be sold before anticipated recovery, and ~~expects~~expected full principal and interest to be collected. Therefore, the Company did not consider these ~~investments~~securities to have ~~OTTI~~other than temporary impairment as of ~~September~~June 30, ~~2017~~.2021.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

4. Loans and Allowance for Loan Losses

Loans consisted of the following segments as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~.2020.


	June 30, 2021		December 31, 2020
Commercial	$	510,947	$	603,599
Real estate:
Construction, land and land development	281,754		236,093
1-4 family residential first mortgages	66,006		58,912
Home equity	7,880		9,444
Commercial	1,445,512		1,373,007
Consumer and other	3,883		5,694
	2,315,982		2,286,749
Net unamortized fees and costs	(6,455)		(6,174)
	$	2,309,527	$	2,280,575

September 30, 2017 December 31, 2016
Commercial $ 316,716
$ 334,014
Real estate:
Construction, land and land development 249,453
205,610
1-4 family residential first mortgages 49,369
47,184
Home equity 14,558
18,057
Commercial 820,144
788,000
Consumer and other loans 8,235
8,355
1,458,475
1,401,220
Net unamortized fees and costs (1,570 ) (1,350 )
$ 1,456,905
$ 1,399,870

Included in commercial loans at June 30, 2021 and December 31, 2020, were $84,573 and $180,757, respectively, of loans originated in the Paycheck Protection Program (PPP). The PPP was established by the Coronavirus Aid, Relief and Economic Security Act (CARES Act), enacted on March 27, 2020, and expanded by the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act, enacted on December 27, 2020 and the American Rescue Plan Act, enacted on March 11, 2021, in response to the Coronavirus Disease 2019 (COVID-19) pandemic. The PPP is administered by the Small Business Administration (SBA). PPP loans may be forgiven by the SBA and are 100 percent guaranteed by the SBA. Therefore, no allowance for loan losses is allocated to PPP loans.

Real estate loans of approximately ~~$710,000~~$1,220,000 and ~~$680,000~~$1,010,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~,2020, respectively.

Loans are stated at the principal amounts outstanding, net of unamortized loan fees and costs, with interest income recognized on the interest method based upon ~~those outstanding loan balances.~~the terms of the loan. Loan origination fees, net of certain direct origination costs, are deferred and recognized as an adjustment of the related loan yield using the interest method. Loans are reported by the portfolio segments identified above and are analyzed by management on this basis. All loan policies identified below apply to all segments of the loan portfolio.

Delinquencies are determined based on the payment terms of the individual loan agreements. The accrual of interest on past due and other impaired loans is generally discontinued at 90 days past due or when, in the opinion of management, the borrower may be unable to make all payments pursuant to contractual terms. Unless considered collectible, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income, if accrued in the current year, or charged to the allowance for loan losses, if accrued in the prior year. Generally, all payments received while a loan is on nonaccrual status are applied to the principal balance of the loan. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.

A loan is classified as a troubled debt restructured (TDR) loan when the Company separately concludes that a borrower is experiencing financial difficulties and a concession is granted that would not otherwise be considered. Concessions may include a restructuring of the loan terms to alleviate the burden of the borrower's cash requirements, such as an extension of the payment terms beyond the original maturity date or a change in the interest rate charged. TDR loans with extended payment terms are accounted for as impaired until performance is established. A change to the interest rate would change the classification of a loan to a TDR loan if the restructured loan yields a rate that is below a market rate for that of a new loan with comparable risk. TDR loans with below-market rates are considered impaired until fully collected. TDR loans may also be reported as nonaccrual or 90 days past due ~~90 days~~ if they are not performing per the restructured terms.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The CARES Act also provided financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time in certain circumstances. This temporary suspension may only be applied to modifications of loans that were not more than 30 days past due as of December 31, 2019 and may not be applied to modifications that are not related to the COVID-19 pandemic. If elected, the temporary suspension may be applied to eligible modifications executed during the period beginning on March 1, 2020 and, as extended by the Coronavirus Response and Relief Supplemental Appropriations Act of 2021, ending on the earlier of January 1, 2022 or 60 days after the termination of the COVID-19 national emergency. In 2020, federal banking regulators, in consultation with FASB, issued interagency statements that included similar guidance on their approach for the accounting of loan modifications in light of the economic impact of the COVID-19 pandemic that provide that short-term modifications and additional accommodations made on a good faith basis in response to COVID-19 to borrowers who were current prior to any relief are not TDRs. At June 30, 2021, there were 0 COVID-19-related loan modifications.

Based upon its ongoing assessment of credit quality within the loan portfolio, the Company maintains a Watch List, which includes loans classified as Doubtful, Substandard and Watch according to the Company's classification criteria. These loans involve the anticipated potential for payment defaults or collateral inadequacies. A loan on the Watch List is considered impaired when management believes it is probable the Company will be unable to collect all contractual principal and interest payments due in accordance with the terms of the loan agreement. Impaired loans are measured based on the present value of expected future cash flows discounted at the loan's effective interest rate or, as a practical expedient, at the loan's observable market price or the fair value of the collateral if the loan is collateral dependent. The amount of impairment, if any, and any subsequent changes are included in the specific component of the allowance for loan losses.

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

TDR loans totaled ~~$247 and $426~~$0 as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016, respectively,~~2020 and were included in the nonaccrual ~~loans.~~category. There were no0 loan modifications considered to be TDR that occurred during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016. No~~2020. NaN TDR loans that were modified within the twelve months preceding ~~September~~June 30, ~~2017~~2021 and ~~September 30, 2016~~2020 have subsequently had a payment default. A TDR loan is considered to have a payment default when it is past due 30 days or more. As noted above, COVID-19-related loan modifications are not reported as TDRs.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The following table summarizes the recorded investment in impaired loans by segment, broken down by loans with no related allowance for loan losses and loans with a related allowance and the amount of that allowance as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016.~~2020.


	June 30, 2021						December 31, 2020
	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With no related allowance recorded:
Commercial	$	0	$	0	$	—	$	0	$	0	$	—
Real estate:
Construction, land and land development	0		0		—		0		0		—
1-4 family residential first mortgages	364		364		—		377		377		—
Home equity	0		0		—		0		0		—
Commercial	0		0		—		0		0		—
Consumer and other	0		0		—		0		0		—
	364		364		—		377		377		—
With an allowance recorded:
Commercial	0		0		—		0		0		—
Real estate:
Construction, land and land development	0		0		—		0		0		—
1-4 family residential first mortgages	0		0		—		0		0		—
Home equity	0		0		—		0		0		—
Commercial	14,222		14,222		3,000		15,817		15,817		3,000
Consumer and other	0		0		—		0		0		—
	14,222		14,222		3,000		15,817		15,817		3,000
Total:
Commercial	0		0		0		0		0		0
Real estate:
Construction, land and land development	0		0		0		0		0		0
1-4 family residential first mortgages	364		364		0		377		377		0
Home equity	0		0		0		0		0		0
Commercial	14,222		14,222		3,000		15,817		15,817		3,000
Consumer and other	0		0		0		0		0		0
	$	14,586	$	14,586	$	3,000	$	16,194	$	16,194	$	3,000

September 30, 2017 December 31, 2016
Recorded Investment Unpaid Principal Balance Related Allowance Recorded Investment Unpaid Principal Balance Related Allowance
With no related allowance recorded:
Commercial $ —
$ —
$ —
$ 35
$ 35
$ —
Real estate:
Construction, land and land development —
—
—
—
—
—
1-4 family residential first mortgages 94
94
—
108
108
—
Home equity 30
30
—
41
41
—
Commercial 247
247
—
335
335
—
Consumer and other loans —
—
—
—
—
—
371
371
—
519
519
—
With an allowance recorded:
Commercial —
—
—
91
91
91
Real estate:
Construction, land and land development —
—
—
—
—
—
1-4 family residential first mortgages —
—
—
—
—
—
Home equity 23
23
23
276
276
276
Commercial 123
123
123
136
136
136
Consumer and other loans —
—
—
—
—
—
146
146
146
503
503
503
Total:
Commercial —
—
—
126
126
91
Real estate:
Construction, land and land development —
—
—
—
—
—
1-4 family residential first mortgages 94
94
—
108
108
—
Home equity 53
53
23
317
317
276
Commercial 370
370
123
471
471
136
Consumer and other loans —
—
—
—
—
—
$ 517
$ 517
$ 146
$ 1,022
$ 1,022
$ 503

The balance of impaired loans at ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~2020 was composed of 5 ~~and~~ 102 different ~~borrowers, respectively.~~borrowers. The Company has no0 commitments to advance additional funds on any of the impaired loans.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The following table summarizes the average recorded investment and interest income recognized on impaired loans by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~2020.


	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With no related allowance recorded:
Commercial	$	0	$	0	$	67	$	2	$	0	$	0	$	77	$	2
Real estate:
Construction, land and land development	0		0		0		0		0		0		0		0
1-4 family residential first mortgages	367		0		394		3		370		0		399		3
Home equity	0		0		0		0		0		0		5		0
Commercial	0		0		0		5		0		0		1		10
Consumer and other	0		0		0		0		0		0		0		0
	367		0		461		10		370		0		482		15
With an allowance recorded:
Commercial	0		0		0		0		0		0		0		0
Real estate:
Construction, land and land development	0		0		0		0		0		0		0		0
1-4 family residential first mortgages	0		0		0		0		0		0		0		0
Home equity	0		0		0		0		0		0		0		0
Commercial	14,688		0		0		0		15,172		0		0		0
Consumer and other	0		0		0		0		0		0		0		0
	14,688		0		0		0		15,172		0		0		0
Total:
Commercial	0		0		67		2		0		0		77		2
Real estate:
Construction, land and land development	0		0		0		0		0		0		0		0
1-4 family residential first mortgages	367		0		394		3		370		0		399		3
Home equity	0		0		0		0		0		0		5		0
Commercial	14,688		0		0		5		15,172		0		1		10
Consumer and other	0		0		0		0		0		0		0		0
	$	15,055	$	0	$	461	$	10	$	15,542	$	0	$	482	$	15

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
With no related allowance recorded:
Commercial $ —
$ —
$ —
$ —
$ 24
$ —
$ —
$ —
Real estate:
Construction, land and land development —
—
—
—
—
—
11
—
1-4 family residential first mortgages 97
—
124
—
101
—
242
1
Home equity 29
—
—
—
33
—
—
—
Commercial 262
—
377
—
291
—
407
—
Consumer and other loans —
—
—
—
—
—
—
—
388
—
501
—
449
—
660
1
With an allowance recorded:
Commercial 62
—
130
—
78
—
135
—
Real estate:
Construction, land and land development —
—
—
—
—
—
—
—
1-4 family residential first mortgages —
—
—
—
—
—
—
—
Home equity 157
—
254
—
223
—
261
—
Commercial 125
—
143
—
130
—
148
—
Consumer and other loans —
—
—
—
—
—
—
—
344
—
527
—
431
—
544
—
Total:
Commercial 62
—
130
—
102
—
135
—
Real estate:
Construction, land and land development —
—
—
—
—
—
11
—
1-4 family residential first mortgages 97
—
124
—
101
—
242
1
Home equity 186
—
254
—
256
—
261
—
Commercial 387
—
520
—
421
—
555
—
Consumer and other loans —
—
—
—
—
—
—
—
$ 732
$ —
$ 1,028
$ —
$ 880
$ —
$ 1,204
$ 1

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The following tables provide an analysis of the payment status of the recorded investment in loans as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~.2020.


	June 30, 2021
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Nonaccrual Loans		Total Loans
Commercial	$	0	$	0	$	0	$	0	$	510,947	$	0	$	510,947
Real estate:
Construction, land and
land development	0		0		0		0		281,754		0		281,754
1-4 family residential
first mortgages	0		85		0		85		65,557		364		66,006
Home equity	0		0		0		0		7,880		0		7,880
Commercial	0		0		0		0		1,431,290		14,222		1,445,512
Consumer and other	0		0		0		0		3,883		0		3,883
Total	$	0	$	85	$	0	$	85	$	2,301,311	$	14,586	$	2,315,982


	September 30, 2017															December 31, 2020
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Nonaccrual Loans		Total Loans			30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Nonaccrual Loans		Total Loans
Commercial	$	—	$	—	$	—	$	—	$	316,716	$	—	$	316,716	Commercial	$	18	$	0	$	0	$	18	$	603,581	$	0	$	603,599
Real estate:															Real estate:
Construction, land and															Construction, land and
land development	—		—		—		—		249,453		—		249,453		land development	0		0		0		0		236,093		0		236,093
1-4 family residential															1-4 family residential
first mortgages	—		—		—		—		49,275		94		49,369		first mortgages	0		0		0		0		58,535		377		58,912
Home equity	3		—		—		3		14,502		53		14,558		Home equity	0		0		0		0		9,444		0		9,444
Commercial	—		—		—		—		819,774		370		820,144		Commercial	0		0		0		0		1,357,190		15,817		1,373,007
Consumer and other	—		—		—		—		8,235		—		8,235		Consumer and other	0		0		0		0		5,694		0		5,694
Total	$	3	$	—	$	—	$	3	$	1,457,955	$	517	$	1,458,475	Total	$	18	$	0	$	0	$	18	$	2,270,537	$	16,194	$	2,286,749

December 31, 2016

30-59
Days Past
Due

60-89
Days Past
Due

90 Days
or More
Past Due

Total
Past Due
Current Nonaccrual Loans
Total
Loans
Commercial $ 109
$ —
$ —
$ 109
$ 333,779
$ 126
$ 334,014
Real estate:
Construction, land and
land development —
—
—
—
205,610
—
205,610
1-4 family residential
first mortgages 64
—
—
64
47,012
108
47,184
Home equity —
—
—
—
17,740
317
18,057
Commercial —
—
—
—
787,529
471
788,000
Consumer and other —
—
—
—
8,355
—
8,355
Total $ 173
$ —
$ —
$ 173
$ 1,400,025
$ 1,022
$ 1,401,220

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The following tables present the recorded investment in loans by credit quality indicator and loan segment as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016.~~2020.


	June 30, 2021
	Pass		Watch		Substandard		Doubtful		Total
Commercial	$	510,405	$	86	$	456	$	0	$	510,947
Real estate:
Construction, land and land development	281,697		57		0		0		281,754
1-4 family residential first mortgages	65,134		244		628		0		66,006
Home equity	7,880		0		0		0		7,880
Commercial	1,340,984		90,306		14,222		0		1,445,512
Consumer and other	3,883		0		0		0		3,883
Total	$	2,209,983	$	90,693	$	15,306	$	0	$	2,315,982


	September 30, 2017											December 31, 2020
	Pass		Watch		Substandard		Doubtful		Total			Pass		Watch		Substandard		Doubtful		Total
Commercial	$	314,078	$	560	$	2,078	$	—	$	316,716	Commercial	$	601,806	$	992	$	801	$	0	$	603,599
Real estate:											Real estate:
Construction, land and land development	249,308		145		—		—		249,453		Construction, land and land development	236,035		58		0		0		236,093
1-4 family residential first mortgages	48,564		552		253		—		49,369		1-4 family residential first mortgages	57,680		609		623		0		58,912
Home equity	14,377		56		125		—		14,558		Home equity	9,113		331		0		0		9,444
Commercial	800,622		18,246		1,276		—		820,144		Commercial	1,331,780		24,725		16,502		0		1,373,007
Consumer and other	8,196		39		—		—		8,235		Consumer and other	5,694		0		0		0		5,694
Total	$	1,435,145	$	19,598	$	3,732	$	—	$	1,458,475	Total	$	2,242,108	$	26,715	$	17,926	$	0	$	2,286,749

December 31, 2016
Pass Watch Substandard Doubtful Total
Commercial $ 329,366
$ 3,303
$ 1,345
$ —
$ 334,014
Real estate:
Construction, land and land development 204,572
—
1,038
—
205,610
1-4 family residential first mortgages 46,278
798
108
—
47,184
Home equity 17,646
—
411
—
18,057
Commercial 769,010
18,392
598
—
788,000
Consumer and other 8,355
—
—
—
8,355
Total $ 1,375,227
$ 22,493
$ 3,500
$ —
$ 1,401,220

All loans are subject to the assessment of a credit quality indicator. Risk ratings are assigned for each loan at the time of approval, and they change as circumstances dictate during the term of the loan. The Company utilizes a 9-point risk rating scale as shown below, with ratings 1 - 5 included in the Pass column, rating 6 included in the Watch column, ratings 7 - 8 included in the Substandard column and rating 9 included in the Doubtful column. All loans classified as impaired that are included in the specific evaluation of the allowance for loan losses are included in the Substandard column along with all other loans with ratings of 7 - 8.

Risk rating 1: The loan is secured by cash equivalent collateral.

Risk rating 2: The loan is secured by properly margined marketable securities, bonds or cash surrender value of life insurance.

Risk rating 3: The borrower is in strong financial condition and has strong debt service capacity. The loan is performing as agreed, and the financial characteristics and trends of the borrower exceed industry statistics.

Risk rating 4: The borrower's financial condition is satisfactory and stable. The borrower has satisfactory debt service capacity, and the loan is well secured. The loan is performing as agreed, and the financial characteristics and trends fall in line with industry statistics.

Risk rating 5: The borrower's financial condition is less than satisfactory. The loan is still generally paying as agreed, but strained cash flows may cause some slowness in payments. The collateral values adequately preclude loss on the loan. Financial characteristics and trends lag industry statistics. There may be noncompliance with loan covenants.

Risk rating 6: The borrower's financial condition is deficient. Payment delinquencies may be more common. Collateral values still protect from loss, but margins are narrow. The loan may be reliant on secondary sources of repayment, including liquidation of collateral and guarantor support.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

Risk rating 7: The loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Well-defined weaknesses exist that jeopardize the liquidation of the debt. The Company is inadequately protected by the valuation or paying capacity of the collateral pledged. If deficiencies are not corrected, there is a distinct possibility that a loss will be sustained.

Risk rating 8: All the characteristics of rating 7 exist with the added condition that the loan is past due more than 90 days or there is reason to believe the Company will not receive its principal and interest according to the terms of the loan agreement.

Risk rating 9: All the weaknesses inherent in risk ratings 7 and 8 exist with the added condition that collection or liquidation, on the basis of currently known facts, conditions and values, is highly questionable and improbable. A loan reaching this category would most likely be charged off.

Credit quality indicators for all loans and the Company's risk rating process are dynamic and updated on a continuous basis. Risk ratings are updated as circumstances that could affect the repayment of an individual loan are brought to management's attention through an established monitoring process. Individual ~~lenders~~bankers initiate changes as appropriate for ratings 1 through 5, and changes for ratings 6 through 9 are initiated via communications with management. The likelihood of loss increases as the risk rating increases and is generally preceded by a loan appearing on the Watch List, which consists of all loans with a risk rating of 6 or worse. Written action plans with firm target dates for resolution of identified problems are maintained and reviewed on a quarterly basis for all segments of ~~criticized loans.~~loans included on the Watch List.

In addition to the Company's internal credit monitoring practices and procedures, an outsourced independent credit review function is in place to further assess assigned internal risk classifications and monitor compliance with internal lending policies and procedures.

In all portfolio segments, the primary risks are that a borrower's income stream diminishes to the point that the borrower is not able to make scheduled principal and interest payments and any collateral securing the loan declines in value. The risk of declining collateral values is present for most types of loans.

Commercial loans consist primarily of loans to businesses for various purposes, including revolving lines to finance current operations, inventory and accounts receivable, and capital expenditure loans to finance equipment and other fixed assets. These loans generally have short maturities, have either adjustable or fixed interest rates, and are either unsecured or secured by inventory, accounts receivable and/or fixed assets. For commercial loans, the primary source of repayment is from the operation of the business.

Real estate loans include various types of loans for which the Company holds real property as collateral, and consist of loans on commercial properties and single and multifamily residences. Real estate loans are typically structured to mature or reprice every five to ten years with payments based on amortization periods up to 30 years. The majority of construction loans are to contractors and developers for construction of commercial buildings or residential real estate. These loans typically have maturities of up to 24 months. The Company's loan policy includes minimum appraisal and other credit guidelines.

Consumer loans include loans extended to individuals for household, family and other personal expenditures not secured by real estate. The majority of the Company's consumer lending is for vehicles, consolidation of personal debts and household improvements. The repayment source for consumer loans, including 1-4 family residential and home equity loans, is typically wages.

The allowance for loan losses is established through a provision for loan losses charged to expense. The allowance is an amount that management believes will be adequate to absorb probable losses on existing loans based on an evaluation of the collectability of loans and prior loss experience. This evaluation also takes into consideration such factors as changes in the nature and volume of the loan portfolio, overall portfolio quality, the review of specific problem loans, and the current economic conditions that may affect the borrower's ability to pay. Loans are charged-off against the allowance for loan losses when management believes that collectability of the principal is unlikely. While management uses the best information available to make its evaluations, future adjustments to the allowance may be necessary if there are significant changes in economic conditions or the other factors relied upon.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The allowance for loan losses consists of specific and general components. The specific component relates to loans that meet the definition of impaired. The general component covers the remaining loans and is based on historical loss experience adjusted for qualitative factors such as delinquency trends, loan growth, economic elements and local market conditions. These same policies are applied to all segments of loans. In addition, regulatory agencies, as an integral part of their examination processes, periodically review the Company's allowance for loan losses, and may require the Company to make additions to the allowance based on their judgment about information available to them at the time of their examinations.

The following tables detail the changes in the allowance for loan losses by segment for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~2020.


	Three Months Ended June 30, 2021
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	4,618	$	2,743	$	430	$	90	$	22,057	$	70	$	30,008
Charge-offs	0		0		0		0		0		0		0
Recoveries	30		0		0		1		3		0		34
Provision (1)	(184)		207		(71)		0		(1,931)		(21)		(2,000)
Ending balance	$	4,464	$	2,950	$	359	$	91	$	20,129	$	49	$	28,042

	Three Months Ended June 30, 2020
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	4,131	$	2,595	$	247	$	127	$	11,154	$	78	$	18,332
Charge-offs	0		0		0		0		0		0		0
Recoveries	21		0		1		1		3		5		31
Provision (1)	166		705		83		0		2,048		(2)		3,000
Ending balance	$	4,318	$	3,300	$	331	$	128	$	13,205	$	81	$	21,363

	Six Months Ended June 30, 2021
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	4,718	$	2,634	$	360	$	114	$	21,535	$	75	$	29,436
Charge-offs	0		0		0		0		0		0		0
Recoveries	97		0		1		2		6		0		106
Provision (1)	(351)		316		(2)		(25)		(1,412)		(26)		(1,500)
Ending balance	$	4,464	$	2,950	$	359	$	91	$	20,129	$	49	$	28,042

	Six Months Ended June 30, 2020
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	3,875	$	2,375	$	216	$	127	$	10,565	$	77	$	17,235
Charge-offs	0		0		0		(1)		0		0		(1)
Recoveries	44		0		71		2		6		6		129
Provision (1)	399		925		44		0		2,634		(2)		4,000
Ending balance	$	4,318	$	3,300	$	331	$	128	$	13,205	$	81	$	21,363

Three Months Ended September 30, 2017
Real Estate
Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total
Beginning balance $ 3,802
$ 2,552
$ 350
$ 372
$ 9,307
$ 103
$ 16,486
Charge-offs (3 ) —
—
(176 ) —
—
(179 )
Recoveries 34
—
8
5
3
1
51
Provision ⁽¹⁾
(165 ) 170
(24 ) 16
1
2
—
Ending balance $ 3,668
$ 2,722
$ 334
$ 217
$ 9,311
$ 106
$ 16,358

Three Months Ended September 30, 2016
Real Estate
Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total
Beginning balance $ 4,441
$ 2,804
$ 393
$ 483
$ 7,606
$ 102
$ 15,829
Charge-offs (25 ) (140 ) —
—
—
(6 ) (171 )
Recoveries 53
—
37
6
4
—
100
Provision ⁽¹⁾
(318 ) 8
(84 ) (25 ) 621
(2 ) 200
Ending balance $ 4,151
$ 2,672
$ 346
$ 464
$ 8,231
$ 94
$ 15,958

Nine Months Ended September 30, 2017
Real Estate
Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total
Beginning balance $ 3,881
$ 2,639
$ 317
$ 478
$ 8,697
$ 100
$ 16,112
Charge-offs (196 ) —
—
(176 ) —
—
(372 )
Recoveries 174
398
10
20
9
7
618
Provision ⁽¹⁾
(191 ) (315 ) 7
(105 ) 605
(1 ) —
Ending balance $ 3,668
$ 2,722
$ 334
$ 217
$ 9,311
$ 106
$ 16,358

Nine Months Ended September 30, 2016
Real Estate
Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total
Beginning balance $ 4,369
$ 2,338
$ 508
$ 481
$ 7,254
$ 17
$ 14,967
Charge-offs (25 ) (140 ) (93 ) —
—
(6 ) (264 )
Recoveries 194
56
58
30
10
7
355
Provision ⁽¹⁾
(387 ) 418
(127 ) (47 ) 967
76
900
Ending balance $ 4,151
$ 2,672
$ 346
$ 464
$ 8,231
$ 94
$ 15,958
(1)The negative provisions for the various segments are related to the decline in outstanding balances in each of those portfolio segments during the time periods disclosed and/or improvement in the credit quality factors related to those portfolio segments.


~~(1)~~	The negative provisions for the various segments are either related to the decline in outstanding balances in each of those portfolio segments during the time periods disclosed and/or improvement in the credit quality factors related to those portfolio segments.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The following tables present a breakdown of the allowance for loan losses disaggregated on the basis of impairment analysis method by segment as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016.~~2020.


	June 30, 2021
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	3,000	$	0	$	3,000
Collectively evaluated for impairment	4,464		2,950		359		91		17,129		49		25,042
Total	$	4,464	$	2,950	$	359	$	91	$	20,129	$	49	$	28,042

	December 31, 2020
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:
Individually evaluated for impairment	$	0	$	0	$	0	$	0	$	3,000	$	0	$	3,000
Collectively evaluated for impairment	4,718		2,634		360		114		18,535		75		26,436
Total	$	4,718	$	2,634	$	360	$	114	$	21,535	$	75	$	29,436

September 30, 2017
Real Estate
Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total
Ending balance:
Individually evaluated for impairment $ —
$ —
$ —
$ 23
$ 123
$ —
$ 146
Collectively evaluated for impairment 3,668
2,722
334
194
9,188
106
16,212
Total $ 3,668
$ 2,722
$ 334
$ 217
$ 9,311
$ 106
$ 16,358

December 31, 2016
Real Estate
Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total
Ending balance:
Individually evaluated for impairment $ 91
$ —
$ —
$ 276
$ 136
$ —
$ 503
Collectively evaluated for impairment 3,790
2,639
317
202
8,561
100
15,609
Total $ 3,881
$ 2,639
$ 317
$ 478
$ 8,697
$ 100
$ 16,112

The following tables present the recorded investment in loans, exclusive of unamortized fees and costs, disaggregated on the basis of impairment analysis method by segment as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~.2020.


	June 30, 2021
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:
Individually evaluated for impairment	$	0	$	0	$	364	$	0	$	14,222	$	0	$	14,586
Collectively evaluated for impairment	510,947		281,754		65,642		7,880		1,431,290		3,883		2,301,396
Total	$	510,947	$	281,754	$	66,006	$	7,880	$	1,445,512	$	3,883	$	2,315,982


	September 30, 2017															December 31, 2020
			Real Estate															Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total			Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:															Ending balance:
Individually evaluated for impairment	$	—	$	—	$	94	$	53	$	370	$	—	$	517	Individually evaluated for impairment	$	0	$	0	$	377	$	0	$	15,817	$	0	$	16,194
Collectively evaluated for impairment	316,716		249,453		49,275		14,505		819,774		8,235		1,457,958		Collectively evaluated for impairment	603,599		236,093		58,535		9,444		1,357,190		5,694		2,270,555
Total	$	316,716	$	249,453	$	49,369	$	14,558	$	820,144	$	8,235	$	1,458,475	Total	$	603,599	$	236,093	$	58,912	$	9,444	$	1,373,007	$	5,694	$	2,286,749

December 31, 2016
Real Estate
Commercial Construction and Land 1-4 Family Residential Home Equity Commercial Consumer and Other Total
Ending balance:
Individually evaluated for impairment $ 126
$ —
$ 108
$ 317
$ 471
$ —
$ 1,022
Collectively evaluated for impairment 333,888
205,610
47,076
17,740
787,529
8,355
1,400,198
Total $ 334,014
$ 205,610
$ 47,184
$ 18,057
$ 788,000
$ 8,355
$ 1,401,220

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

5. ~~Long-Term Debt~~

On May 25, 2017, the Company entered into a credit agreement with a commercial bank and borrowed $25,000. This credit agreement replaced a prior credit agreement with the same commercial bank that had a remaining outstanding principal balance of $3,000. The additional borrowing was used to make a capital injection into the Company's subsidiary, West Bank. Principal and interest under the term note are payable quarterly over five years. Required quarterly principal payments are $625, with the balance due at maturity. The Company may make additional principal payments without penalty. The interest rate is variable at 1.95 percent over the 30-day LIBOR rate. The interest rate was 3.18 percent at September 30, 2017. In the case of an event of default, the unaffiliated commercial bank may accelerate the payment of the loan. The loan is secured by 100 percent of the stock of West Bank.

6. Derivatives

The Company has entered into various ~~forward-starting~~ interest rate swap ~~transactions~~agreements as part of its interest rate risk management strategy. The Company uses interest rate swaps to ~~effectively convert variable~~manage its interest rate risk exposure on certain loans, variable-rate and short-term borrowings, and deposits due to interest rate movements. The notional amounts of the interest rate swaps do not represent amounts exchanged by the counterparties, but rather, the notional amount is used to determine, along with other terms of the derivative, the amounts to be exchanged between the counterparties.

Interest Rate Swaps Designated as a Cash Flow Hedge: The Company had interest rate swaps designated as cash flow hedges with total notional amounts of $255,000 and $305,000 at June 30, 2021 and December 31, 2020, respectively. As of June 30, 2021, the Company had swaps with a total notional amount of $125,000 that hedge the interest payments of rolling fixed-rate one-month funding consisting of FHLB advances ~~and~~or brokered deposits. Also as of June 30, 2021, the Company had a swap with a total notional amount of $20,000 that effectively converts variable-rate junior subordinated notes to ~~fixed rate~~fixed-rate debt, asand swaps with a total notional amount of ~~forward-starting dates. The swap transactions were designated as cash flow hedges. Interest~~$110,000 that hedge the interest payments of certain deposits accounts. In March 2021, the Company terminated interest rate swaps with a total notional amount of ~~$70,000~~$50,000. In the second quarter of 2021, the Company repaid $50,000 of FHLB advances related to these terminated swaps as a result of excess liquidity and in response to market conditions. Pre-tax losses of $3,600 were ~~terminated in 2015, subject to termination fees totaling $541. The termination fees are being~~ reclassified from accumulated other comprehensive income ~~to interest expense over~~(AOCI) and recorded in noninterest income at termination.

Derivatives Not Designated as Accounting Hedges: To accommodate customer needs, the ~~remaining life of the underlying cash flows through June 2020. An~~Company on occasion offers loan level interest rate swaps to its customers and offsets its exposure from such contracts by entering into mirror image swaps with a swap counterparty (back-to-back swap program). The interest rate swaps are free-standing derivatives and are recorded at fair value. The Company enters into a floating-rate loan and a fixed-rate swap with our customer. Simultaneously, the Company enters into an offsetting fixed-rate swap with a swap counterparty. In connection with each swap transaction, the Company agrees to pay interest to the customer on a notional amount at a variable interest rate and receive interest from the customer on the same notional amount at a fixed interest rate. At the same time, the Company agrees to pay a swap counterparty the same fixed interest rate on the same notional amount and receive the same variable interest rate on the same notional amount. These transactions allow the Company’s customers to effectively convert variable-rate loans to fixed-rate loans. The customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting.

The Company entered into forward-starting interest rate swaps with a total notional amount of ~~$30,000 became effective~~$100,000 in January 2021 that were not accounting hedges. These swaps were terminated in March 2021, and the resulting gains of $3,781 were recorded in noninterest income.

The table below identifies the balance sheet category and fair values of the Company's derivative instruments as of June 30, 2021 and December ~~2015. Another interest rate swap, with a notional amount~~31, 2020.


	June 30, 2021			December 31, 2020
Cash Flow Hedges:
Gross notional amount	$	255,000		$	305,000
Fair value in other liabilities	(12,340)			(23,848)
Weighted-average floating rate received	0.37		%	0.38		%
Weighted-average fixed rate paid	2.09		%	2.17		%
Weighted-average maturity in years	4.7			5.0

Non-Hedging Derivatives:
Gross notional amount	$	166,294		$	167,752
Fair value in other assets	2,821			492
Fair value in other liabilities	(2,821)			(492)

Table of ~~$20,000, has a forward-starting date~~Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in ~~September 2018.~~ No ~~amount of ineffectiveness was included in net income~~thousands, except per share data)

The following table identifies the pre-tax gains or losses recognized on the Company's derivative instruments designated as cash flow hedges for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~ ~~or 2016,~~2021 and ~~the~~2020.


	Six Months Ended June 30,
	2021		2020
Pre-tax gain (loss) recognized in other comprehensive income	$	5,442	$	(24,168)
Reclassification from AOCI into income:
Interest expense	$	(2,468)	$	(1,394)
Swap termination losses reclassified to noninterest income	3,600		0

The Company estimates there will be approximately ~~$373 of cash payments and reclassification~~$4,380 reclassified from accumulated other comprehensive income to interest expense through the 12 months ~~ended September~~ending June 30, ~~2018.~~2022 related to cash flow hedges.

The Company is exposed to credit risk in the event of nonperformance by interest rate swap counterparties, which is minimized by collateral-pledging provisions in the agreements. Derivative contracts with swap counterparties are executed with a Credit Support Annex, which is a bilateral ratings-sensitive agreement that requires collateral postings at established credit threshold levels. These agreements protect the interests of the Company and its counterparties should either party suffer a credit rating deterioration. As of ~~both September~~June 30, ~~2017~~2021 and December 31, ~~2016,~~2020, the Company pledged ~~$470~~$9,520 and $24,100, respectively, of collateral to the ~~counterparty~~counterparties in the form of cash on deposit with a third ~~party.~~parties. The ~~Company's counterparty was required to pledge $720~~interest rate swap product with the borrower is cross-collateralized with the underlying loan and ~~$1,070 at September 30, 2017 and December 31, 2016, respectively.~~therefore there is no pledged cash collateral under swap contracts with customers.

~~The table below identifies the balance sheet category and fair values of the Company's derivative instruments designated as cash flow hedges as of September 30, 2017 and December 31, 2016.~~

Interest Rate Swap
Notional
Amount
Fair Value
Balance Sheet
Category
Weighted Average Receive Rate Weighted Average Pay Rate Maturity
September 30, 2017
Interest rate swap $ 30,000
$ (351 ) Other Liabilities 1.64 % 2.52 % 9/21/2020
Interest rate swap⁽¹⁾
20,000
786
Other Assets —
4.81 % 9/30/2026
December 31, 2016
Interest rate swap 30,000
(496 ) Other Liabilities 1.30 % 2.52 % 9/21/2020
Interest rate swap⁽¹⁾
20,000
1,068
Other Assets —
4.81 % 9/30/2026

~~(1) This swap is a forward-starting swap with a weighted average pay rate of 4.81 percent beginning September 30, 2018. No interest payments are required related to this swap until December 30, 2018.~~

~~The following table identifies the pre-tax losses recognized on the Company's derivative instruments designated as cash flow hedges for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~and 2016.~~

Effective Portion Ineffective Portion
Amount of
Reclassified from AOCI into
Income

Recognized in Income on
Derivatives
Pre-tax (Loss)
Recognized Amount of Amount of
Interest Rate Swap in OCI Category (Loss) Category Gain (Loss)
September 30, 2017 $ (376 ) Interest Expense $ (321 ) Other Income $ —
September 30, 2016 (889 ) Interest Expense (444 ) Other Income —

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

~~7. Deferred~~6. Income Taxes

Net deferred tax assets consisted of the following as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016~~. 2020.


	June 30, 2021		December 31, 2020
Deferred tax assets:
Allowance for loan losses	$	7,067	$	7,418

Net unrealized losses on interest rate swaps	3,110		6,010
Lease liabilities	1,757		1,919
Accrued expenses	320		352
Restricted stock unit compensation	492		763
State net operating loss carryforward	1,238		1,197

Other	18		37
	14,002		17,696
Deferred tax liabilities:
Right-of-use assets	1,702		1,863
Net deferred loan fees and costs	254		256
Net unrealized gains on securities available for sale	928		2,019

Premises and equipment	865		801
Other	282		271
	4,031		5,210
Net deferred tax assets before valuation allowance	9,971		12,486
Valuation allowance	(1,238)		(1,197)
Net deferred tax assets	$	8,733	$	11,289

September 30, 2017 December 31, 2016
Deferred tax assets:
Allowance for loan losses $ 6,216
$ 6,123
Net unrealized losses on securities available for sale 15
719
Intangibles 231
462
Accrued expenses 499
706
Restricted stock compensation 564
446
State net operating loss carryforward 1,339
1,271
Other 137
190
9,001
9,917
Deferred tax liabilities:
Net deferred loan fees and costs 289
321
Net unrealized gains on interest rate swaps 59
80
Premises and equipment 1,227
1,027
Other 226
261
1,801
1,689
Net deferred tax assets before valuation allowance 7,200
8,228
Valuation allowance (1,339 ) (1,271 )
Net deferred tax assets $ 5,861
$ 6,957

The Company has recorded a valuation allowance against the tax effect of the state net operating loss carryforwards, as management believes it is more likely than not that these carryforwards will expire without being utilized. The state net operating loss carryforwards expire in ~~2019~~2021 and thereafter.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

7. Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016.~~2020.


	Unrealized		Unrealized		Accumulated
	Gains		Gains		Other
	(Losses) on		(Losses) on		Comprehensive
	Securities		Derivatives		Income (Loss)
Balance, December 31, 2020	$	5,994	$	(17,840)	$	(11,846)
Other comprehensive income (loss) before reclassifications	(3,209)		4,072		863
Amounts reclassified from accumulated other comprehensive income	(30)		4,538		4,508
Net current period other comprehensive income (loss)	(3,239)		8,610		5,371
Balance, June 30, 2021	$	2,755	$	(9,230)	$	(6,475)

Balance, December 31, 2019	$	1,057	$	(4,318)	$	(3,261)
Other comprehensive income (loss) before reclassifications	4,361		(18,126)		(13,765)
Amounts reclassified from accumulated other comprehensive income	56		1,044		1,100
Net current period other comprehensive income (loss)	4,417		(17,082)		(12,665)
Balance, June 30, 2020	$	5,474	$	(21,400)	$	(15,926)

Unrealized Unrealized Accumulated
Gains Gains Other
(Losses) on (Losses) on Comprehensive
Securities Derivatives Income (Loss)
Balance, December 31, 2015 $ 342
$ (772 ) $ (430 )
Other comprehensive income (loss) before reclassifications 2,958
(550 ) 2,408
Amounts reclassified from accumulated other comprehensive income (113 ) 275
162
Net current period other comprehensive income (loss) 2,845
(275 ) 2,570
Balance, September 30, 2016 $ 3,187
$ (1,047 ) $ 2,140

Balance, December 31, 2016 $ (1,172 ) $ 130
$ (1,042 )
Other comprehensive income (loss) before reclassifications 1,556
(233 ) 1,323
Amounts reclassified from accumulated other comprehensive income (408 ) 199
(209 )
Net current period other comprehensive income (loss) 1,148
(34 ) 1,114
Balance, September 30, 2017 $ (24 ) $ 96
$ 72

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

9.8. Commitments and Contingencies

Financial instruments with off-balance-sheet risk: The Company is party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments include commitments to extend credit and standby letters of credit. These instruments involve, to varying degrees, elements of credit risk in excess of the amount recognized in the consolidated balance sheets. The Company's exposure to credit loss in the event of nonperformance by the other party to the financial instrument for commitments to extend credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments and conditional obligations that it uses for on-balance-sheet instruments. The Company's commitments consisted of the following ~~approximate~~ amounts as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016.~~ 2020.


	June 30, 2021		December 31, 2020
Commitments to extend credit	$	798,749	$	832,590
Standby letters of credit	17,614		23,295
	$	816,363	$	855,885

September 30, 2017 December 31, 2016
Commitments to extend credit $ 597,325
$ 614,681
Standby letters of credit 5,424
5,487
$ 602,749
$ 620,168

West Bank previously executed Mortgage Partnership Finance (MPF) Master Commitments (Commitments) with the FHLB of Des Moines to deliver residential mortgage loans and to guarantee the payment of any realized losses that exceed the FHLB's first loss account for mortgages delivered under the Commitments. West Bank receives credit enhancement fees from the FHLB for providing this guarantee and continuing to assist with managing the credit risk of the MPF Program residential mortgage loans. ~~At September 30, 2017, the liability represented by the present value of the credit enhancement fees less any expected losses in the mortgages delivered under the Commitments was approximately $125.~~ The outstanding balance of mortgage loans sold under the MPF Program was ~~$98,353~~$34,187 and ~~$112,084~~$43,847 at ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

Contractual commitments: The Company ~~has~~had remaining commitments to invest in qualified affordable housing projects totaling ~~$6,253~~$3,294 and ~~$5,768~~$3,505 as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016,~~2020, respectively.

During 2020, the Company began construction on a new office in Sartell, Minnesota, which had a remaining construction commitment of $5,729 and $8,324 as of June 30, 2021 and December 31, 2020, respectively.

Contingencies: Neither the Company nor West Bank is a party, and no property of these entities is subject, to any material pending legal proceedings, other than ordinary routine litigation incidental to West Bank's business. The Company does not know of any proceeding contemplated by a governmental authority against the Company or West Bank.

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

~~(dollars in thousands, except per share data)~~

~~10.~~9. Fair Value Measurements

~~Accounting guidance on fair value measurements and disclosuresdefines fair value and establishes a framework for measuring the fair value of assets and liabilities using a hierarchy system.~~ Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business.

The Company's balance sheet contains ~~investment~~ securities available for sale and derivative instruments that are recorded at fair value on a recurring basis. The three-level valuation hierarchy for disclosure of fair value is as follows:

Level 1 uses quoted market prices in active markets for identical assets or liabilities.

Level 2 uses observable market-based inputs or unobservable inputs that are corroborated by market data.

Level 3 uses unobservable inputs that are not corroborated by market data.

The Company's policy is to recognize transfers between ~~Levels~~levels at the end of each reporting period, if applicable. There were no0 transfers between ~~Levels~~levels of the fair value hierarchy during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~.2021.

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

~~Investment securities~~Securities available for sale: When available, quoted market prices are used to determine the fair value of ~~investment securities.~~securities (Level 1). If quoted market prices are not available, the Company determines fair value based on various sources and may apply matrix pricing with observable prices for similar bonds where a price for the identical bond is not ~~observable.~~observable (Level 2). The fair values of these securities are determined by pricing models that consider observable market data such as interest rate volatilities, ~~LIBOR~~ yield ~~curve,~~curves, credit spreads, prices from market makers and live trading systems. Level 1 securities include certain corporate bonds and would include U.S. Treasuries, if any were held. Level 2 securities include U.S. government and agency securities, collateralized mortgage obligations, mortgage-backed securities, asset-backed securities, state and political subdivision securities, and trust preferred securities. The Company currently holds no investment securities classified as Level 3.

~~Generally, management~~Management obtains the fair value of ~~investment~~ securities at the end of each reporting period via a third-party pricing service. Management reviewed the valuation process used by the third party and believed ~~that~~the process was valid. On a quarterly basis, ~~the Company tests~~management corroborates the fair values ~~by selecting~~of a randomly selected sample of ~~investment~~ securities ~~from each category of securities,~~by obtaining pricing from an independent ~~investment portfolio management firm~~financial market data vendor and comparing the two sets of fair values. Any significant variances are reviewed and investigated. For a sample of securities, prices are further validated by management ~~with assistance from an independent investment portfolio management firm,~~ by obtaining details of the inputs used by the pricing service. Those inputs were independently tested, and management concluded the fair values were consistent with GAAP requirements and the ~~investment~~ securities were properly classified in the fair value ~~hierarchy as of the end of the period covered by this report.~~hierarchy.

Derivative instruments: The Company's derivative instruments consist of interest rate swaps accounted for as cash flow hedges, as well as interest rate swaps which are accounted for as ~~cash flow hedges.~~non-hedging derivatives. The Company's derivative positions are classified within Level 2 of the fair value hierarchy and are valued using models generally accepted in the financial services industry and that use actively quoted or observable market input values from external market data providers and/or non-binding broker-dealer quotations. The fair value of the derivatives is determined using discounted cash flow models. These models’ key assumptions include the contractual terms of the respective contract along with significant observable inputs, including interest rates, yield curves, nonperformance risk and volatility.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The following tables present the balances of financial assets and liabilities measured at fair value on a recurring basis by level as of ~~September~~June 30, ~~2017~~2021 and December 31, ~~2016.~~2020.


	June 30, 2021
	Total		Level 1		Level 2		Level 3
Financial assets:
Securities available for sale:
State and political subdivisions	$	202,119	$	0	$	202,119	$	0
Collateralized mortgage obligations	234,933		0		234,933		0
Mortgage-backed securities	111,820		0		111,820		0
Collateralized loan obligations	42,797		0		42,797		0
Corporate notes	9,793		0		9,793		0
Derivative instruments, interest rate swaps	2,821		0		2,821		0

Financial liabilities:
Derivative instruments, interest rate swaps	$	15,161	$	0	$	15,161	$	0


	September 30, 2017									December 31, 2020
	Total		Level 1		Level 2		Level 3			Total		Level 1		Level 2		Level 3
Financial assets:									Financial assets:
Investment securities available for sale:
U.S. government agencies and corporations	$	2,489	$	—	$	2,489	$	—
Securities available for sale:									Securities available for sale:
State and political subdivisions	134,256		—		134,256		—		State and political subdivisions	$	144,332	$	0	$	144,332	$	0
Collateralized mortgage obligations	149,367		—		149,367		—		Collateralized mortgage obligations	140,962		0		140,962		0
Mortgage-backed securities	54,787		—		54,787		—		Mortgage-backed securities	83,523		0		83,523		0
Asset-backed securities	46,273		—		46,273		—
Trust preferred securities	1,700		—		1,700		—
Corporate notes	29,502		29,202		300		—
Derivative instrument, interest rate swap	786		—		786		—

Collateralized loan obligations									Collateralized loan obligations	51,754		0		51,754		0

Derivative instruments, interest rate swaps									Derivative instruments, interest rate swaps	492		0		492		0

Financial liabilities:									Financial liabilities:
Derivative instrument, interest rate swap	$	351	$	—	$	351	$	—	Derivative instrument, interest rate swap	$	24,340	$	0	$	24,340	$	0

December 31, 2016
Total Level 1 Level 2 Level 3
Financial assets:
Investment securities available for sale:

U.S. government agencies and corporations $ 2,593
$ —
$ 2,593
$ —
State and political subdivisions 64,336
—
64,336
—
Collateralized mortgage obligations 101,950
—
101,950
—
Mortgage-backed securities 80,158
—
80,158
—
Trust preferred security 1,250
—
1,250
—
Corporate notes 10,350
10,050
300
—
Derivative instrument, interest rate swap 1,068
—
1,068
—

Financial liabilities:
Derivative instrument, interest rate swap $ 496
$ —
$ 496
$ —

Certain assets are measured at fair value on a nonrecurring basis. That is, they are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). AsImpaired loans with a net book value of ~~both September 30, 2017~~$11,222 and ~~December 31, 2016, impaired loans~~$12,817 for which a fair value adjustment was recorded were ~~recorded at a~~classified as Level 3 as of June 30, 2021 and December 31, 2020, respectively.

In determining the estimated net ~~value of $0. Impaired loans are evaluated and valued at the lower of cost or fair value when the loan is identified as impaired. Fair value is measured based on the~~realizable value of the underlying collateral ~~securing these loans. The types~~of impaired loans, the Company primarily uses third-party appraisals or broker opinions which may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available and include consideration of variations in location, size, and income production capacity of the property. Additionally, the appraisals are periodically further adjusted by the Company in consideration of charges that may be incurred in the event of foreclosure and are based on management’s historical knowledge, changes in business factors and changes in market conditions. Because of the high degree of judgment required in estimating the fair value of collateral ~~vary widely~~underlying impaired loans and ~~could include accounts receivables, inventory, a variety of equipment and real estate. Evaluations~~because of the ~~underlying assets are completed~~relationship between fair value and general economic conditions, the Company considers the fair value of impaired loans to be highly sensitive to changes in market conditions.

The following table presents quantitative information about Level 3 fair value measurements for ~~each impaired loan with~~financial instruments measured at fair value on a ~~specific reserve. Collateral evaluations are reviewed~~non-recurring basis at June 30, 2021 and discounted as appropriate based on knowledge of the specific type of collateral. In the case of real estate, an independent appraisal may be obtained. Types of discounts considered included aging of receivables, condition of the collateral, potential market for the collateral and estimated disposal costs. These discounts will vary from loan to loan and may be discounted based on management's opinions concerning market developments or the client's business.December 31, 2020.

Valuation Technique

Unobservable Inputs

Range (Weighted Average)

Impaired loans

Appraisal of collateral

Appraisal adjustment

7% selling costs

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

GAAP requires disclosure of the fair value of financial assets and financial liabilities, including those that are not measured and reported at fair value on a recurring or nonrecurring basis. The ~~methodologies for estimating~~following table presents the carrying amounts and approximate fair ~~value~~values of financial assets and ~~financial~~ liabilities ~~that are measured at fair value on a recurring or nonrecurring basis are discussed above. The methodologies for other financial assets~~as of June 30, 2021 and ~~financial liabilities are discussed below.~~December 31, 2020.

~~Cash and due from banks: The carrying amount approximates fair value.~~


	June 30, 2021
	Carrying Amount		Approximate Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	31,978	$	31,978	$	31,978	$	—	$	—
Federal funds sold	238,845		238,845		238,845		—		—
Securities available for sale	601,462		601,462		—		601,462		—
Federal Home Loan Bank stock	10,189		10,189		10,189		—		—
Loans, net	2,281,485		2,344,457		—		2,333,235		11,222
Accrued interest receivable	11,415		11,415		11,415		—		—
Interest rate swaps	2,821		2,821		—		2,821		—
Financial liabilities:
Deposits	$	2,825,289	$	2,825,803	$	—	$	2,825,803	$	—
Federal funds purchased	3,605		3,605		3,605		—		—
Subordinated notes, net	20,458		17,148		—		17,148		—
Federal Home Loan Bank advances	125,000		125,000		—		125,000		—
Long-term debt	20,286		20,285		—		20,285		—
Accrued interest payable	600		600		600		—		—
Interest rate swaps	15,161		15,161		—		15,161		—
Off-balance sheet financial instruments:
Commitments to extend credit	0		—		0		0		0
Standby letters of credit	0		—		0		0		0

~~Federal funds sold: The carrying amount approximates fair value.~~

~~Investment securities held to maturity: The fair values of these securities, which are all state and political subdivisions, are determined by the same method previously described for investment securities available for sale.~~

~~FHLB stock: The fair value of this restricted stock is estimated at its carrying value and redemption price of $100 per share.~~

~~Loans~~: The fair values of fixed rate loans are estimated using discounted cash flow analysis based on observable market interest rates currently being offered for loans with similar terms to borrowers with similar credit quality. The carrying values of variable rate loans approximate their fair values.

~~Deposits~~: The carrying amounts for demand and savings deposits, which represent the amounts payable on demand, approximate their fair values. The fair values for time deposits are estimated using discounted cash flow analysis, based on observable market interest rates currently being offered on time deposits with similar terms.

~~Accrued interest receivable and payable: The fair values of both accrued interest receivable and payable approximate their carrying amounts.~~

~~Borrowings~~: The carrying amounts of federal funds purchased, short-term borrowings, variable rate FHLB advances, and variable rate long-term borrowings approximate their fair values. Fair values of subordinated notes, a fixed rate FHLB advance and other long-term borrowings are estimated using discounted cash flow analysis, based on observable market interest rates currently being offered with similar terms.

~~Commitments to extend credit and standby letters of credit~~: The approximate fair values of commitments and standby letters of credit are based on the fees currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and creditworthiness of the counterparties.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)


	December 31, 2020
	Carrying Amount		Approximate Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	77,693	$	77,693	$	77,693	$	—	$	—
Federal funds sold	318,742		318,742		318,742		—		—
Securities available for sale	420,571		420,571		—		420,571		—
Federal Home Loan Bank stock	11,723		11,723		11,723		—		—
Loans, net	2,251,139		2,329,684		—		2,316,867		12,817
Accrued interest receivable	11,231		11,231		11,231		—		—
Interest rate swaps	492		492		—		492		—
Financial liabilities:
Deposits	$	2,700,994	$	2,701,833	$	—	$	2,701,833	$	—
Federal funds purchased	5,375		5,375		5,375		—		—
Subordinated notes, net	20,452		17,349		—		17,349		—
Federal Home Loan Bank advances	175,000		175,000		—		175,000		—
Long-term debt	21,558		21,556		—		21,556		—
Accrued interest payable	939		939		939		—		—
Interest rate swaps	24,340		24,340		—		24,340		—
Off-balance sheet financial instruments:
Commitments to extend credit	0		0		0		0		0
Standby letters of credit	0		—		0		0		0

~~The following table presents the carrying amounts and approximate fair values of financial assets and liabilities as of~~ ~~September 30, 2017~~ ~~and~~ ~~December 31, 2016~~.

September 30, 2017 December 31, 2016
Fair Value Hierarchy Level Carrying Amount Approximate Fair Value Carrying Amount Approximate Fair Value
Financial assets:
Cash and due from banks Level 1 $ 33,560
$ 33,560
$ 40,943
$ 40,943
Federal funds sold Level 1 5,937
5,937
35,893
35,893
Investment securities available for sale See previous table 418,374
418,374
260,637
260,637
Investment securities held to maturity Level 2 45,597
46,356
48,386
47,789
Federal Home Loan Bank stock Level 1 12,256
12,256
10,771
10,771
Loans, net⁽¹⁾
Level 2 1,440,547
1,439,084
1,383,758
1,382,569
Accrued interest receivable Level 1 6,636
6,636
5,321
5,321
Interest rate swap Level 2 786
786
1,068
1,068
Financial liabilities:
Deposits Level 2 $ 1,651,266
$ 1,651,307
$ 1,546,605
$ 1,546,307
Federal funds purchased Level 1 925
925
9,690
9,690
Short-term borrowings Level 1 48,000
48,000
—
—
Subordinated notes, net Level 2 20,408
14,021
20,398
12,703
Federal Home Loan Bank advances, net Level 2 101,005
101,113
99,886
99,959
Long-term debt, net Level 2 24,195
24,134
5,126
5,054
Accrued interest payable Level 1 616
616
280
280
Interest rate swap Level 2 351
351
496
496
Off-balance-sheet financial instruments:
Commitments to extend credit Level 3 —
—
—
—
Standby letters of credit Level 3 —
—
—
—

~~(1) All loans are Level 2 except impaired loans with a net value of $0 as of both September 30, 2017 and December 31, 2016, which are Level 3.~~

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

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~~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,” “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: the effects of the COVID-19 pandemic, including its potential effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic; interest rate risk; competitive pressures; pricing pressures on loans and deposits; changes in credit and other risks posed by the ~~Company's~~Company’s loan and investment portfolios, including declines in commercial or residential real estate values or changes in the allowance for loan losses dictated by new market conditions, accounting standards (including as a result of the future implementation of the current expected credit loss (CECL) accounting standard) or regulatory requirements; actions of bank and nonbank competitors; changes in local, national and international economic conditions; changes in legal and regulatory requirements, limitations and costs; changes in ~~customers'~~customers’ acceptance of the ~~Company's~~Company’s products and services; cyber-attacks; 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, widespread disease or pandemics, such as the COVID-19 pandemic, or other adverse external events; developments and uncertainty related to the future use and availability of some reference rates, such as the London Interbank Offered Rate, as well as other alternative reference rates; changes to U.S. tax laws, regulations and guidance; and any other risks described in the “Risk Factors” sections of this and other reports filed by the Company with the ~~Securities and Exchange Commission.~~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 ~~these~~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 most 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, ~~2016,~~2020, as filed with the ~~Securities and Exchange Commission~~SEC on March 1, ~~2017.~~2021. There have been no significant changes in the critical accounting policies or the assumptions and judgments utilized in applying these policies since ~~the year ended~~ December 31, ~~2016.~~2020.

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.~~expenses, and the presentation of the allowance for loan losses ratio, excluding PPP loans. 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. The following table reconciles the non-GAAP financial measures of net interest income and net interest margin ~~and~~on a fully taxable equivalent basis, efficiency ratio on an adjusted and FTE basis, loans, net of PPP loans and allowance for loan losses ratio, excluding PPP loans to their most directly comparable measures under GAAP.


														Three Months Ended June 30,						Six Months Ended June 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2021			2020			2021			2020
	2017			2016			2017			2016
Reconciliation of net interest income and annualized net interest margin on an FTE basis to GAAP:
Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:													Reconciliation of net interest income and net interest margin on a FTE basis to GAAP:
Net interest income (GAAP)	$	15,031		$	14,721		$	44,513		$	42,693		Net interest income (GAAP)	$	22,850		$	20,747		$	45,971		$	39,211
Tax-equivalent adjustment ⁽¹⁾	677			639			1,892			1,994			Tax-equivalent adjustment (1)	270			194			499			372
Net interest income on an FTE basis (non-GAAP)	$	15,708		$	15,360		$	46,405		$	44,687
Net interest income on a FTE basis (non-GAAP)													Net interest income on a FTE basis (non-GAAP)	23,120			20,941			46,470			39,583
Average interest-earning assets	$	1,882,837		$	1,745,878		$	1,820,997		$	1,699,703		Average interest-earning assets	3,102,649			2,572,211			3,041,519			2,496,354
Net interest margin on an FTE basis (non-GAAP)	3.31		%	3.50		%	3.41		%	3.51		%
Net interest margin on a FTE basis (non-GAAP)													Net interest margin on a FTE basis (non-GAAP)	2.99		%	3.27		%	3.08		%	3.19		%

Reconciliation of efficiency ratio on an FTE basis to GAAP:
Net interest income on an FTE basis (non-GAAP)	$	15,708		$	15,360		$	46,405		$	44,687
Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:													Reconciliation of efficiency ratio on an adjusted and FTE basis to GAAP:
Net interest income on a FTE basis (non-GAAP)													Net interest income on a FTE basis (non-GAAP)	$	23,120		$	20,941		$	46,470		$	39,583
Noninterest income	2,264			1,919			6,740			6,052			Noninterest income	2,515			1,775			4,980			4,295
Less: realized investment securities gains, net	(197		)	—			(423		)	(60		)
Plus: losses on disposal of premises and equipment, net	10			—			25			—
Adjustment for realized securities (gains) losses, net													Adjustment for realized securities (gains) losses, net	(36)			69			(40)			75
Adjustment for losses on disposal of premises & equipment, net													Adjustment for losses on disposal of premises & equipment, net	5			—			29			2
Adjusted income	$	17,785		$	17,279		$	52,747		$	50,679		Adjusted income	25,604			22,785			51,439			43,955
Noninterest expense	$	8,020		$	7,993		$	24,235		$	23,611		Noninterest expense	10,526			9,417			20,797			19,080
Efficiency ratio on an adjusted and FTE basis (non-GAAP) ⁽²⁾	45.10		%	46.25		%	45.95		%	46.59		%	Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2)	41.11		%	41.33		%	40.43		%	43.41		%

																				June 30, 2021			December 31, 2020
Reconciliation of allowance for loan losses ratio, excluding PPP loans:													Reconciliation of allowance for loan losses ratio, excluding PPP loans:
Loans outstanding (GAAP)													Loans outstanding (GAAP)							$	2,309,527		$	2,280,575
Less: PPP loans													Less: PPP loans							(84,573)			(180,757)
Loans, net of PPP loans (non-GAAP)													Loans, net of PPP loans (non-GAAP)							2,224,954			2,099,818
Allowance for loan losses													Allowance for loan losses							28,042			29,436
Allowance for loan losses ratio, excluding PPP loans (non-GAAP)													Allowance for loan losses ratio, excluding PPP loans (non-GAAP)							1.26		%	1.40		%

(1) Computed on a tax-equivalent basis using ~~an incremental~~a federal income tax rate of 3521 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) ~~Efficiency~~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 ~~results, as it enhances~~performance. It is a standard measure of comparison within the ~~comparability~~banking industry.

Table of ~~income~~Contents

West Bancorporation, Inc.

Management's Discussion and ~~expenses arising from taxable~~Analysis

(in thousands, except share and ~~nontaxable sources.~~per share data)

~~THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2017~~

OVERVIEW

The following discussion describes the consolidated operations and financial condition of the Company, West Bank and West Bank's ~~wholly owned subsidiary WB Funding Corporation.~~special purpose subsidiaries (which are invested in new markets tax credit activities). Results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 are compared to the results for the same periods in ~~2016~~,2020, and the consolidated financial condition of the Company as of ~~September~~June 30, ~~2017~~2021 is compared to that as of December 31, ~~2016~~. 2020. 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, 2020, filed with the SEC on March 1, 2021.

The Company ~~operates~~conducts business from its main office in ~~three markets:~~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, Iowa;~~Coralville; and southern Minnesota, which includes the cities of Rochester, Owatonna, Mankato and St. Cloud.

IMPACT OF COVID-19

We continue to monitor the impact COVID-19 has on the local economies we operate in and the ~~Rochester, Minnesota area.~~uncertainty of the long-term ramifications to our customers and operations. Within our markets, vaccinations have become readily available, infection positivity rates are relatively low, and the restrictions on businesses have been fully lifted. However, the lasting effects of government aid programs are relatively unknown as stimulus packages begin to taper, and the ultimate ramifications of the business shutdowns that occurred as a result of COVID-19 are uncertain in many sectors of the economy. The potential impact of COVID-19 variants, such as the Delta variant, remains unknown at this time.

The Federal Reserve, in response to the economic risks resulting from the COVID-19 pandemic, returned to a zero-interest rate policy in March 2020. This was after most broader market rates decreased significantly in response to evolving news about the COVID-19 pandemic. Many areas of consumer and business spending have rebounded in recent months, but there remains uncertainty about the longer lasting impact on local businesses as well as the travel and entertainment industries resulting from the COVID-19 pandemic. This could cause a longer recovery time for all sectors of the economy and could make it challenging for sectors that have had better recoveries to maintain those recoveries in the long run.

At the onset of the COVID-19 pandemic, the Bank lowered its offered rates on all deposit products and experienced an immediate positive impact on our cost of deposits. We responded to lower market rates for lending by lowering rates offered on our loan products. Given current rates offered on new loans and prepayments on existing loans, the yield on the total loan portfolio is likely to continue to decrease. With significant cash inflows realized from growth in deposit balances and forgiveness of PPP loans, the current yields on reinvested funds into new securities are lower than existing portfolio yields. Considering the low market interest rates and the ongoing economic uncertainty, our net interest margin could decrease in future periods.

Certain industries have been particularly impacted by shutdowns, capacity restrictions, quarantines and social distancing that were put in place in response to COVID-19. Those industries include travel, hospitality and entertainment. At June 30, 2021, West Bank's commercial real estate and commercial operating loan exposure to the hotel, restaurant and movie theater industries was approximately $218,964, $19,705 and $17,393, respectively. Collectively, at June 30, 2021, those exposures made up approximately 11.1 percent of the total loan portfolio. Hotel occupancy rates have been steadily increasing and restaurants and theaters have been allowed to return to normal operations. We do not have any loans at June 30, 2021 that are under COVID-19-related modifications.

SUMMARY

Net income for the three months ended ~~September~~June 30, ~~2017~~2021 was ~~$6,405,~~$13,239, or ~~$0.39~~$0.79 per diluted common share, compared to ~~$5,813,~~$7,969, or ~~$0.36~~$0.48 per diluted common share, for the three months ended ~~September~~June 30, ~~2016.~~2020. The Company's annualized return on average assets and return on average equity for the three months ended ~~September~~June 30, ~~2017~~2021 were ~~1.29~~1.65 percent and ~~14.41~~22.20 percent, respectively, compared to ~~1.26~~1.19 percent and ~~14.20~~15.68 percent, respectively, for the three months ended ~~September~~June 30, ~~2016.~~2020.

The increase in net income for the three months ended June 30, 2021 compared to the same period in 2020 was primarily due to a decrease in the provision for loan losses and an increase in net interest income and noninterest income, partially offset by an increase in noninterest expense.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

The increase in net income for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 was primarily due to the combination of higher net interest income, growth in noninterest income and a decrease in the provision for loan losses. Noninterest expense for the three months ended September 30, 2017 held steady compared to the same period in 2016.

Net interest income for the three months ended ~~September~~June 30, ~~2017~~2021 grew ~~$310,~~$2,103, or ~~2.1~~10.1 percent, compared to the three months ended ~~September~~June 30, ~~2016.~~2020. The increase in net interest income was ~~driven by a $47,008, or 3.4 percent,~~primarily due to the increase in ~~average~~interest income on loans ~~outstanding~~ and decrease in interest expense on deposits and borrowed funds. The Company recorded a ~~$68,071, or 19.7 percent, increase in average investment securities held~~negative provision for loan losses of $2,000 during the three months ended June 30, 2021, compared to a provision of $3,000 for the three months ended ~~September~~June 30, ~~2017 compared~~2020. The provision in 2020 was due to uncertainty surrounding economic conditions as a result of the COVID-19 pandemic. The negative provision recorded in the second quarter of 2021 was due to the ~~same time period~~improvements in ~~2016. Partially offsetting~~economic conditions and removal of pandemic-related restrictions for businesses, in addition to the ~~increase in interest income was an increase~~lack of ~~$1,236 in interest expense on deposits, primarily due to higher interest rates paid on certain deposit products. The Company recorded no provision for~~ loan losses for the ~~three months ended September 30, 2017 compared to a $200 provision in~~Company since the ~~three months ended September 30, 2016.~~onset of the COVID-19 pandemic.

Noninterest income ~~grew $345, or 18.0 percent,~~increased $740 during the three months ended ~~September~~June 30, ~~2017~~2021 compared to the ~~same time period in 2016, mainly as the result of net gains on sales of investment securities and~~three months ended June 30, 2020, primarily due to an increase in trust ~~revenue.~~services revenue and debit card usage fees. Noninterest expense increased $1,109 during the three months ended June 30, 2021 compared to the three months ended June 30, 2020, primarily due to increases in salaries and employee benefits and FDIC insurance expense.

Net income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 was ~~$18,876,~~$24,991, or ~~$1.16~~$1.49 per diluted common share, compared to ~~$16,985,~~$16,058, or ~~$1.05~~$0.97 per diluted common share, for the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2020. The Company's annualized return on average assets and return on average equity for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 were ~~1.32~~1.59 percent and ~~14.69~~21.50 percent, respectively, compared to ~~1.26~~1.23 percent and ~~14.29~~15.61 percent, respectively, for the first ~~nine~~six months of ~~2016.~~2020.

The increase in net income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the same period in ~~2016~~2020 was primarily due to ~~growth in net interest income associated with loan growth that exceeded the increase in interest expense on deposits,~~ a decrease in the provision for loan losses and increases in net interest income and noninterest income, partially offset by an increase in noninterest ~~income. Partially offsetting these positive changes for the first nine months of 2017 compared to the first nine months of 2016 was a 2.6 percent increase in noninterest expense.~~expenses.

Net interest income for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 grew ~~$1,820,~~$6,760, or ~~4.3~~17.2 percent, compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2020. The increase in net interest income was primarily due to the ~~$113,699~~ increase in ~~average~~interest income on loans ~~outstanding for the first nine months of 2017 compared to the first nine months of 2016. During the nine months ended September 30, 2017,~~and decrease in interest expense on deposits ~~increased $2,683~~and borrowed funds. The Company recorded a negative provision for loan losses of $1,500 during the six months ended June 30, 2021, compared to a provision of $4,000 for the ~~nine~~six months ended ~~September~~June 30, ~~2016, mainly~~2020. The provision in 2020 was due to ~~increased interest rates on certain money market deposit products and certificates of deposit~~uncertainty surrounding economic conditions as a result of ~~rising market rates.~~the COVID-19 pandemic. The ~~Company recorded no~~negative provision ~~for~~in 2021 was due to the improvement in economic conditions and removal of pandemic-related restrictions on businesses, along with the lack of loan losses for the ~~nine months ended September 30, 2017 compared to a $900 provision in~~Company since the ~~nine months ended September 30, 2016. During~~onset of the ~~nine months ended September 30, 2017, the allowance for loan losses grew $246 as a result of net recoveries on previously charged off loans exceeding current year charge-offs.~~COVID-19 pandemic.

Noninterest income increased ~~$688, or 11.4 percent,~~$685 during the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the ~~nine~~six months ended ~~September~~June 30, ~~2016, mainly~~2020, due primarily to ~~net gains on sales of investment securities, an~~the increase in trust ~~revenue and a nonrecurring gain on an asset sale.~~services revenue. Noninterest expense ~~grew $624 during~~increased $1,717 for the ~~first nine~~six months ~~of 2017,~~ended June 30, 2021 compared to the six months ended June 30, 2020, primarily due to ~~an increase~~increases in salaries and ~~benefit costs.~~benefits and FDIC insurance expenses.

Total loans outstanding increased ~~$57,035,~~$28,952, or ~~4.1~~1.3 percent, during the first ~~nine~~six months of ~~2017. Management believes~~2021. Excluding the impact of PPP loan ~~pipeline is strong and that loan growth will continue in all three of our markets~~activity, total loans outstanding increased $125,136, or 6.0 percent, during the ~~remainder~~first six months of ~~2017. The credit quality of the loan portfolio remained strong as evidenced by the Company's Texas ratio, which was 0.27 percent as of September 30, 2017.~~2021. As of ~~September~~June 30, ~~2017,~~2021, the allowance for loan losses was ~~1.12~~1.21 percent of outstanding loans, ~~and management~~compared to 1.29 percent as of December 31, 2020. At June 30, 2021, the allowance for loan losses was 1.26 percent of outstanding loans, excluding $84,573 of PPP loans (a non-GAAP financial measure), which are 100 percent guaranteed by the SBA, compared to 1.40 percent of outstanding loans, excluding $180,757 of PPP loans, as of December 31, 2020. Management believed the allowance for loan losses at June 30, 2021 was adequate to absorb any losses inherent in the loan ~~portfolio.~~portfolio as of that date.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

~~Each quarter throughout~~On a quarterly basis, the ~~year, the Company's four~~Company compares three key performance metrics ~~are compared~~ to those of our identified peer group. The peer group for 2021 consists of ~~16 companies. The group of 16~~21 Midwestern, publicly traded ~~peer~~ financial institutions ~~against which we compare our performance each quarter consists of BankFinancial~~including Bank First Corporation, Civista Bancshares, Inc., CrossFirst Bankshares, Inc., Equity Bancshares, Inc., Farmers ~~Capital Bank Corporation,~~National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First ~~Defiance~~ Financial Corp., First ~~Mid-Illinois~~Mid Bancshares, Inc., German American Bancorp, Inc., Hills Bancorporation, ~~Horizon~~Isabella Bank Corporation, LCNB Corp., Level One Bancorp, ~~Isabella~~Inc., Macatawa Bank Corporation, Mackinac Financial Corporation, Mercantile Bank Corporation, MidWestOne Financial Group, Inc., ~~MutualFirst Financial, Inc.,~~ Nicolet Bankshares, Inc., Peoples Bancorp, ~~QCR Holdings,~~ Inc., ~~Southwest~~and Southern Missouri Bancorp, ~~and Waterstone Financial,~~ Inc. ~~The members of the peer group are selected based on their business focus, scope and location of operations, size and other considerations.~~ The Company is in the middle of the group in terms of asset size. The ~~group is periodically reviewed, with changes made primarily to reflect merger and acquisition activity. Our~~Company's goal is to perform at or near the top of ~~these peers~~this peer group relative to what we consider to be ~~four~~three key metrics: ~~return on average assets,~~ return on average equity, efficiency ratio and Texas ratio. We believe these measures encompass the factors that define the performance of a community bank. ~~When contrasted with the~~Company and peer ~~group's metrics~~results for the six months ended June 30, 2017 (latest data available), the Company's metrics for the nine months ended September 30, 2017 were better than those of each company in the peer group as shown in the table below, except for one peer that had a higher return on average assets.key financial performance measures are summarized below.



	~~West Bancorporation, Inc.~~	~~Peer Group Range~~
	~~Nine months ended September 30, 2017~~	~~Six months ended June 30, 2017~~
~~Return on average assets~~	~~1.32%~~	~~0.56% - 1.75%~~
~~Return on average equity~~	~~14.69%~~	~~4.37% - 12.13%~~
Efficiency ratio*⁽¹⁾	~~45.95%~~	~~54.04% - 73.76%~~
Texas ratio*	~~0.27%~~	~~3.78% - 23.16%~~

* A lower ratio is more desirable.


	West Bancorporation, Inc.		Peer Group Range(3)
	As of and for the six months ended June 30, 2021	As of and for the three months ended March 31, 2021	As of and for the three months ended March 31, 2021
Return on average equity	21.50%	20.77%	2.78% - 18.48%
Efficiency ratio(1) (2)	40.43%	39.75%	41.92% - 72.31%
Texas ratio(2)	5.31%	9.38%	2.03% - 18.89%

(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) A lower ratio is more desirable.

~~In July 2017, the Company was included on~~ ~~Bank Director Magazine~~'s 2017 Bank Performance Scorecard listing of the top performing publicly traded banks in the nation with assets of $1 billion to $5 billion. The ranking was based on five key metrics that measured performance for 2016. The Company was ranked No. 6 in the nation.(3) Latest data available.

At its meeting on ~~October 25, 2017,~~July 28, 2021, the Company's Board of Directors declared a quarterly cash dividend of ~~$0.18~~$0.24 per common share. The dividend is payable on ~~November 22, 2017,~~August 25, 2021, to stockholders of record ~~as of November 8, 2017. The dividend was increased by $0.01 to the $0.18 level for the dividend declared in April 2017 and represents the highest quarterly dividend ever paid by the Company.~~

on August 11, 2021.

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~~six months ended ~~September~~June 30, ~~2017~~2021 compared with the same periods in ~~2016.~~2020.


	Three Months Ended September 30,											Nine Months Ended September 30,												Three Months Ended June 30,											Six Months Ended June 30,
	2017			2016			Change			Change %		2017			2016			Change			Change %			2021			2020			Change			Change %		2021			2020			Change			Change %
Net income	$	6,405		$	5,813		$	592		10.18	%	$	18,876		$	16,985		$	1,891		11.13	%	Net income	$	13,239		$	7,969		$	5,270		66.13	%	$	24,991		$	16,058		$	8,933		55.63	%
Average assets	1,969,547			1,838,125			131,422			7.15	%	1,911,391			1,794,777			116,614			6.50	%	Average assets	3,224,318			2,700,720			523,598			19.39	%	3,167,401			2,616,175			551,226			21.07	%
Average stockholders' equity	176,308			162,867			13,441			8.25	%	171,827			158,821			13,006			8.19	%	Average stockholders' equity	239,218			204,387			34,831			17.04	%	234,372			206,896			27,476			13.28	%

Return on average assets	1.29		%	1.26		%	0.03		%			1.32		%	1.26		%	0.06		%			Return on average assets	1.65		%	1.19		%	0.46		%			1.59		%	1.23		%	0.36		%
Return on average equity	14.41		%	14.20		%	0.21		%			14.69		%	14.29		%	0.40		%			Return on average equity	22.20		%	15.68		%	6.52		%			21.50		%	15.61		%	5.89		%
Net interest margin ⁽¹⁾	3.31		%	3.50		%	(0.19		)%			3.41		%	3.51		%	(0.10		)%			Net interest margin (1)	2.99		%	3.27		%	(0.28)		%			3.08		%	3.19		%	(0.11)		%
Efficiency ratio ^{(1) (2)}	45.10		%	46.25		%	(1.15		)%			45.95		%	46.59		%	(0.64		)%			Efficiency ratio (1) (2)	41.11		%	41.33		%	(0.22)		%			40.43		%	43.41		%	(2.98)		%
Dividend payout ratio	45.57		%	47.19		%	(1.62		)%			45.46		%	47.43		%	(1.97		)%			Dividend payout ratio	30.01		%	43.40		%	(13.39)		%			30.40		%	42.96		%	(12.56)		%
Average equity to average assets ratio	8.95		%	8.86		%	0.09		%			8.99		%	8.85		%	0.14		%			Average equity to average assets ratio	7.42		%	7.57		%	(0.15)		%			7.40		%	7.91		%	(0.51)		%

												As of September 30,																							As of June 30,
												2017			2016			Change																	2021			2020			Change
Texas ratio ⁽²⁾												0.27		%	0.55		%	(0.28		)%			Texas ratio (2)												5.31		%	0.17		%	5.14		%
Equity to assets ratio												8.77		%	9.03		%	(0.26		)%			Equity to assets ratio												7.54		%	7.62		%	(0.08)		%
Tangible common equity ratio	Tangible common equity ratio											8.77		%	9.03		%	(0.26		)%			Tangible common equity ratio												7.54		%	7.62		%	(0.08)		%

(1) Amounts are presented on ana 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)~~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.

•Texas ratio - total nonperforming assets divided by tangible common equity plus the allowance for loan losses.

•Equity to assets ratio - equity divided by assets.

•Tangible common equity ratio - common equity less intangible assets (none held) divided by tangible assets.

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 an FTE basis.


Data for the three months ended September 30:
Data for the three months ended June 30:																									Data for the three months ended June 30:

	Average Balance									Interest Income/Expense									Yield/Rate							Average Balance								Interest Income/Expense								Yield/Rate
	2017		2016		Change			Change- %		2017		2016		Change			Change- %		2017		2016		Change			2021		2020		Change		Change- %		2021		2020		Change		Change- %		2021		2020		Change
Interest-earning assets:																									Interest-earning assets:
Loans: ^{(1) (2)}																									Loans: (1) (2)
Commercial	$	308,585	$	365,632	$	(57,047	)	(15.60	)%	$	3,452	$	3,874	$	(422	)	(10.89	)%	4.44	%	4.22	%	0.22	%	Commercial	$	553,401	$	582,605	$	(29,204)	(5.01)	%	$	5,383	$	5,362	$	21	0.39	%	3.90	%	3.70	%	0.20	%
Real estate ⁽³⁾	1,109,041		1,003,492		105,549			10.52	%	12,503		11,166		1,337			11.97	%	4.47	%	4.43	%	0.04	%	Real estate (3)	1,750,198		1,559,152		191,046		12.25	%	17,807		17,022		785		4.61	%	4.08	%	4.39	%	(0.31)	%
Consumer and other	8,489		9,983		(1,494		)	(14.97	)%	88		102		(14		)	(13.73	)%	4.09	%	4.06	%	0.03	%	Consumer and other	4,112		6,215		(2,103)		(33.84)	%	53		66		(13)		(19.70)	%	5.13	%	4.29	%	0.84	%
Total loans	1,426,115		1,379,107		47,008			3.41	%	16,043		15,142		901			5.95	%	4.46	%	4.37	%	0.09	%	Total loans	2,307,711		2,147,972		159,739		7.44	%	23,243		22,450		793		3.53	%	4.04	%	4.20	%	(0.16)	%

Investment securities:
Securities:																									Securities:
Taxable	259,225		230,054		29,171			12.68	%	1,489		991		498			50.25	%	2.30	%	1.72	%	0.58	%	Taxable	376,165		329,780		46,385		14.07	%	1,895		1,994		(99)		(4.96)	%	2.01	%	2.42	%	(0.41)	%
Tax-exempt⁽³⁾	154,834		115,934		38,900			33.55	%	1,569		1,176		393			33.42	%	4.05	%	4.06	%	(0.01	)%	Tax-exempt (3)	141,819		45,488		96,331		211.77	%	879		395		484		122.53	%	2.47	%	3.46	%	(0.99)	%
Total investment securities	414,059		345,988		68,071			19.67	%	3,058		2,167		891			41.12	%	2.95	%	2.50	%	0.45	%
Total securities																									Total securities	517,984		375,268		142,716		38.03	%	2,774		2,389		385		16.12	%	2.14	%	2.55	%	(0.41)	%

Federal funds sold	42,663		20,783		21,880			105.28	%	136		26		110			423.08	%	1.27	%	0.51	%	0.76	%	Federal funds sold	276,955		48,971		227,984		465.55	%	75		12		63		525.00	%	0.11	%	0.10	%	0.01	%
Total interest-earning assets ⁽³⁾	$	1,882,837	$	1,745,878	$	136,959		7.84	%	19,237		17,335		1,902			10.97	%	4.05	%	3.95	%	0.10	%	Total interest-earning assets (3)	$	3,102,650	$	2,572,211	$	530,439	20.62	%	26,092		24,851		1,241		4.99	%	3.37	%	3.89	%	(0.52)	%

Interest-bearing liabilities:																									Interest-bearing liabilities:
Deposits:																									Deposits:
Interest-bearing demand,																									Interest-bearing demand,
savings and money																									savings and money
market	$	1,081,227	$	944,809	$	136,418		14.44	%	1,686		678		1,008			148.67	%	0.62	%	0.29	%	0.33	%	market	$	1,828,394	$	1,453,322	$	375,072	25.81	%	1,536		1,317		219		16.63	%	0.34	%	0.36	%	(0.02)	%
Time deposits	159,949		110,223		49,726			45.11	%	422		194		228			117.53	%	1.04	%	0.70	%	0.34	%	Time deposits	240,988		237,951		3,037		1.28	%	459		1,034		(575)		(55.61)	%	0.76	%	1.75	%	(0.99)	%
Total deposits	1,241,176		1,055,032		186,144			17.64	%	2,108		872		1,236			141.74	%	0.67	%	0.33	%	0.34	%	Total deposits	2,069,382		1,691,273		378,109		22.36	%	1,995		2,351		(356)		(15.14)	%	0.39	%	0.56	%	(0.17)	%
Other borrowed funds	150,548		132,583		17,965			13.55	%	1,421		1,103		318			28.83	%	3.75	%	3.31	%	0.44	%	Other borrowed funds	181,890		229,847		(47,957)		(20.86)	%	976		1,559		(583)		(37.40)	%	2.15	%	2.73	%	(0.58)	%
Total interest-bearing																									Total interest-bearing
liabilities	$	1,391,724	$	1,187,615	$	204,109		17.19	%	3,529		1,975		1,554			78.68	%	1.01	%	0.66	%	0.35	%	liabilities	$	2,251,272	$	1,921,120	$	330,152	17.19	%	2,971		3,910		(939)		(24.02)	%	0.53	%	0.82	%	(0.29)	%

Tax-equivalent net interest income (FTE) ⁽⁴⁾										$	15,708	$	15,360	$	348		2.27	%
Net interest income (FTE) (4)																									Net interest income (FTE) (4)									$	23,121	$	20,941	$	2,180	10.41	%
Net interest spread (FTE)																			3.04	%	3.29	%	(0.25	)%	Net interest spread (FTE)																	2.84	%	3.07	%	(0.23)	%
Net interest margin (FTE) ⁽⁴⁾	Net interest margin (FTE) ⁽⁴⁾																		3.31	%	3.50	%	(0.19	)%	Net interest margin (FTE) (4)																	2.99	%	3.27	%	(0.28)	%

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)


Data for the six months ended June 30:

	Average Balance								Interest Income/Expense								Yield/Rate
	2021		2020		Change		Change- %		2021		2020		Change		Change- %		2021		2020		Change
Interest-earning assets:
Loans: (1) (2)
Commercial	$	559,975	$	508,963	$	51,012	10.02	%	$	12,193	$	10,378	$	1,815	17.49	%	4.39	%	4.10	%	0.29	%
Real estate (3)	1,727,198		1,541,142		186,056		12.07	%	35,080		34,350		730		2.13	%	4.10	%	4.48	%	(0.38)	%
Consumer and other	4,744		6,547		(1,803)		(27.54)	%	107		146		(39)		(26.71)	%	4.55	%	4.50	%	0.05	%
Total loans	2,291,917		2,056,652		235,265		11.44	%	47,380		44,874		2,506		5.58	%	4.17	%	4.39	%	(0.22)	%

Securities:
Taxable	351,584		341,866		9,718		2.84	%	3,540		4,377		(837)		(19.12)	%	2.01	%	2.56	%	(0.55)	%
Tax-exempt (3)	121,519		43,413		78,106		179.91	%	1,566		757		809		106.87	%	2.58	%	3.49	%	(0.91)	%
Total securities	473,103		385,279		87,824		22.79	%	5,106		5,134		(28)		(0.55)	%	2.16	%	2.67	%	(0.51)	%

Federal funds sold	276,499		54,423		222,076		408.06	%	144		241		(97)		(40.25)	%	0.11	%	0.89	%	(0.78)	%
Total interest-earning assets (3)	$	3,041,519	$	2,496,354	$	545,165	21.84	%	52,630		50,249		2,381		4.74	%	3.49	%	4.05	%	(0.56)	%

Interest-bearing liabilities:
Deposits:
Interest-bearing demand,
savings and money
market	$	1,794,044	$	1,433,888	$	360,156	25.12	%	3,020		4,953		(1,933)		(39.03)	%	0.34	%	0.69	%	(0.35)	%
Time deposits	214,239		249,615		(35,376)		(14.17)	%	852		2,444		(1,592)		(65.14)	%	0.80	%	1.97	%	(1.17)	%
Total deposits	2,008,283		1,683,503		324,780		19.29	%	3,872		7,397		(3,525)		(47.65)	%	0.39	%	0.88	%	(0.49)	%
Other borrowed funds	201,836		231,167		(29,331)		(12.69)	%	2,288		3,269		(981)		(30.01)	%	2.29	%	2.84	%	(0.55)	%
Total interest-bearing
liabilities	$	2,210,119	$	1,914,670	$	295,449	15.43	%	6,160		10,666		(4,506)		(42.25)	%	0.56	%	1.12	%	(0.56)	%

Net interest income (FTE) (4)									$	46,470	$	39,583	$	6,887	17.40	%
Net interest spread (FTE)																	2.93	%	2.93	%	—	%
Net interest margin (FTE) (4)																	3.08	%	3.19	%	(0.11)	%

(1)Average loan balances include nonaccrual loans. Interest income recognized on nonaccrual loans has been included.

Data for the nine months ended September 30:

Average Balance Interest Income/Expense Yield/Rate
2017 2016 Change
Change-
%
2017 2016 Change
Change-
%
2017 2016 Change
Interest-earning assets:
Loans: ^{(1) (2)}

Commercial $ 326,090
$ 361,315
$ (35,225 ) (9.75 )% $ 10,556
$ 11,377
$ (821 ) (7.22 )% 4.33 % 4.21 % 0.12 %
Real estate ⁽³⁾
1,100,526
951,226
149,300
15.70 % 36,692
31,768
4,924
15.50 % 4.46 % 4.46 % — %
Consumer and other 8,340
8,716
(376 ) (4.31 )% 251
257
(6 ) (2.33 )% 4.02 % 3.94 % 0.08 %
Total loans 1,434,956
1,321,257
113,699
8.61 % 47,499
43,402
4,097
9.44 % 4.43 % 4.39 % 0.04 %

Investment securities:

Taxable 230,060
243,811
(13,751 ) (5.64 )% 3,755
3,222
533
16.54 % 2.18 % 1.76 % 0.42 %
Tax-exempt ⁽³⁾
129,808
120,049
9,759
8.13 % 3,932
3,742
190
5.08 % 4.04 % 4.16 % (0.12 )%
Total investment securities 359,868
363,860
(3,992 ) (1.10 )% 7,687
6,964
723
10.38 % 2.85 % 2.55 % 0.30 %

Federal funds sold 26,173
14,586
11,587
79.44 % 223
57
166
�� 291.23 % 1.14 % 0.53 % 0.61 %
Total interest-earning assets ⁽³⁾
$ 1,820,997
$ 1,699,703
$ 121,294
7.14 % 55,409
50,423
4,986
9.89 % 4.07 % 3.96 % 0.11 %

Interest-bearing liabilities:

Deposits:

Interest-bearing demand,
savings and money
market $ 1,030,095
$ 909,950
$ 120,145
13.20 % 4,107
1,842
2,265
122.96 % 0.53 % 0.27 % 0.26 %
Time deposits 139,964
110,218
29,746
26.99 % 977
559
418
74.78 % 0.93 % 0.68 % 0.25 %
Total deposits 1,170,059
1,020,168
149,891
14.69 % 5,084
2,401
2,683
111.75 % 0.58 % 0.31 % 0.27 %
Other borrowed funds 146,583
138,687
7,896
5.69 % 3,920
3,335
585
17.54 % 3.58 % 3.21 % 0.37 %
Total interest-bearing
liabilities $ 1,316,642
$ 1,158,855
$ 157,787
13.62 % 9,004
5,736
3,268
56.97 % 0.91 % 0.66 % 0.25 %

Tax-equivalent net interest income (FTE) ⁽⁴⁾

$ 46,405
$ 44,687
$ 1,718
3.84 %

Net interest spread (FTE)

3.16 % 3.30 % (0.14 )%
Net interest margin (FTE) ⁽⁴⁾

3.41 % 3.51 % (0.10 )%
(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.


~~(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 an incremental federal income tax rate of 35 percent and is adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt investment securities and loans.


~~(4)~~	~~Net interest income (FTE) and net interest margin (FTE) are non-GAAP measures. For further information, refer to the Non-GAAP Financial Measures section of this report.~~

(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.

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 ~~investment~~ 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 affected by general economic conditions, particularly changes in market interest rates, and by competitive factors, government policies and actions of regulatory authorities. The ~~Board of Governors of the~~ Federal Reserve ~~System increased~~decreased the targeted federal funds interest rate by 25a total of 150 basis points in ~~each~~March 2020, reaching its current range of ~~December 2016, March 2017~~0.0 - 0.25 percent. This decrease impacts the comparability of net interest income between 2020 and ~~June 2017.~~2021.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Net interest margin, 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~~six months ended ~~September~~June 30, ~~2017 declined 19~~2021 decreased by 28 and 1011 basis points, respectively, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016.~~2020. The primary ~~drivers~~driver of the ~~decline~~decrease in the net interest margin ~~were an increase in interest rates paid on certain deposit categories and an increase in the variable rates paid on other borrowed funds, partially offset by an increase~~was a decrease in yield on loans and ~~investment securities. Despite the decline~~securities, partially offset by a decrease in the interest rates paid on deposits and other borrowed funds. The higher average balances of federal funds sold also contributed to a lower net interest ~~margin, tax-equivalent~~margin. Tax-equivalent net interest income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 increased ~~$348~~$2,180 and ~~$1,718,~~$6,887, respectively, compared to the same time periods in ~~2016.~~2020. The increase in net interest income for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2020 was ~~largely~~primarily due to ~~the increase~~increases in average ~~outstanding~~ loans and ~~an increase~~securities balances and decreases in ~~yield~~deposit interest rates, partially offset by increases in average deposit balances and decreases in yields on ~~investment~~loans and securities. Management expects the current interest rate environment to continue to put pressure on the net interest margin throughout the remainder of 2017. Management continually develops and applies strategies to attempt to maintain the net interest margin.

Tax-equivalent interest income on loans increased ~~$901~~$793 for the three months ended ~~September~~June 30, ~~2017~~2021 compared to the three months ended ~~September~~June 30, ~~2016.~~2020. Included in commercial loans were PPP loans with interest income of $1,387 and $1,073 and yields of 4.00 percent and 2.47 percent for the three months ended June 30, 2021 and June 30, 2020, respectively. For the ~~nine~~six months ended ~~September~~June 30, ~~2017,~~2021, tax-equivalent interest income on loans increased ~~$4,097~~$2,506 compared to the same ~~time~~ period in ~~2016.~~2020. Included in commercial loans were PPP loans with interest income of $4,229 and $1,073 and yields of 5.80 percent and 2.47 percent for the six months ended June 30, 2021 and June 30, 2020, respectively. The ~~improvement for both~~PPP loan interest income in 2021 included accelerated origination fees recognized at the time ~~periods was primarily due to~~of loan forgiveness. Exclusive of the ~~increase in average loan balances outstanding. The average yields~~PPP loans, the yield on loans ~~increased by nine~~was 4.00 percent and ~~four basis points, respectively,~~4.30 percent for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017 compared to~~2021 and June 30, 2020, respectively, and 4.06 percent and 4.49 percent for the ~~three and nine~~six months ended ~~September~~June 30, ~~2016.~~ 2021 and June 30, 2020, respectively. Management believes interest income on loans and the yield on loans could decline during the second half of 2021 if the low interest rate environment and strong competition persist.

The Company continues to focus on expanding existing and entering into new customer relationships while maintaining strong credit quality. 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~~variable-rate versus ~~fixed rate~~fixed-rate loans.

~~The average balance of investment securities was higher during the three months ended September 30, 2017 than during the same period~~ We anticipate that our interest income could be adversely affected in ~~2016~~future periods as a result of ~~significant investment purchase activity during~~ the ~~second~~long-term impact of the COVID-19 pandemic, including the possibility of decreases in the size of our loan portfolio and ~~third quarters~~declining credit quality, the effect of ~~2017. The average balance of investment securities was slightly~~ lower during the nine months ended September 30, 2017 than during the same period in 2016. The purchase activity in 2017 focused on higher yielding bonds within the existing risk profile and was the result of growth in depositsinterest rates, and the ~~reinvestment of proceeds from sales and principal paydowns of investment securities. In certain cases, securities were sold and the funds were reinvested~~potential for an increase in securities with higher rates while slightly extending the duration of the portfolio, which is expected to improve the yield on the investment portfolio in future periods. The overall portfolio yield increased 45 and 30 basis points, respectively, for the three and nine months ended September 30, 2017 compared to the same periods last year.nonaccrual loans.

The average balance of interest-bearing demand, savings and money market deposits increased for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, partially~~2020, primarily due to an increase in average balances of money market ~~accounts, including public~~and interest-bearing demand accounts. The increase in average balances was primarily due to changes in customer behavior as a result of the COVID-19 pandemic and our customers' desire to retain liquidity, as well as a result of additional funds from municipalities. In addition, approximately $76,000 of noninterest-bearing accounts were reclassified to interest-bearing accounts in April 2017 as part of a retail deposit product restructuring in which we realigned and simplified the retail checking account products provided to ~~our customers.~~individuals and businesses by government relief programs. The average rate paid on interest-bearing demand, savings and money market deposits for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017 increased 33~~2021 decreased 2 and 2635 basis points, respectively, compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016. The increase in interest expense was primarily due to increasing interest rates on certain money market deposit products in response to the Federal Reserve System's rate increases.~~2020. The average balance of time deposits increased for the three and nine months ended September 30, 2017 compared to the same periods in 2016. The increase was primarily due to the shift of demand and savings account balances to higher interest rate ~~time deposits. Interest rates~~paid on time deposits ~~increased 34~~decreased 99 and 25117 basis points, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the ~~same periods in 2016,~~three and six months ended June 30, 2020. The decreases were primarily due to ~~higher market~~decreasing interest rates ~~paid at~~on all deposit products in response to the ~~time new and renewed time deposits were issued.~~unprecedented decrease in the targeted federal funds rate that occurred in March 2020.

The average balance of other borrowed funds decreased $47,957 and $29,331, respectively, for the three and six months ended June 30, 2021 compared to the three and six months ended June 30, 2020. The rate paid on ~~other~~ borrowed funds ~~increased 44~~declined by 58 and 3755 basis points, respectively, for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016. The increase~~2020. These declines are primarily due to the repayment of $50,000 of FHLB advances in the ~~average rate paid was due to increases in rates for variable~~second quarter of 2021 and the maturity of long-term, high rate FHLB advances ~~the subordinated notes and long-term debt. The Company borrowed an additional $22,000 in long-term borrowings in May 2017 resulting in an increase~~ in the ~~average balance~~second and third quarters of ~~other borrowed funds.~~2020.

As a result of the historically low interest rate environment, we expect that our net interest income and net interest margin could decrease in future periods.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Provision for Loan Losses and the Related Allowance for Loan Losses

The provision for loan losses represents ~~charges~~a charge made to earnings to maintain an adequate allowance for loan losses. The adequacy of the allowance for loan losses is evaluated quarterly by management and reviewed by the Board of Directors. The allowance for loan losses is management's best estimate of probable losses inherent in the loan portfolio as of the balance sheet date. Based upon the evaluation, no provision was recorded for either the three or nine months ended September 30, 2017, as 2017 year-to-date recoveries on previously charged off loans exceeded year-to-date charge-offs and were sufficient to increase the allowance for loan losses to a level deemed appropriate in relation to the 2017 year-to-date loan growth and credit quality. The provision for loan losses were negative $2,000 and negative $1,500 for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016 was $200~~2021, compared to a provision of $3,000 and ~~$900, respectively.~~$4,000 for the three and six months ended June 30, 2020. The provisions in 2020 were due to uncertainty surrounding economic conditions as a result of the COVID-19 pandemic, while the negative provisions recorded in 2021 were due to the improvement in economic conditions and removal of pandemic-related restrictions for businesses, in addition to the lack of loan losses for the Company since the onset of the COVID-19 pandemic.

Factors considered 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. In response to COVID-19, the Company increased its monitoring efforts of certain segments of the loan portfolio that management believed were under increased stress, including hotel and movie theater exposures. Ongoing communication with customers regarding revenue and cash flow expectations continue to be used to monitor risks and stress in the loan portfolio. For example, customers in the hotel industry provide monthly updates on occupancy rates.

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 ~~concentration~~concentrations in central and eastern Iowa and ~~southeastern~~southern Minnesota. The local economies in those markets are composed primarily of service industries and state and county 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. ~~West Bank's commercial loans typically have greater credit risks than~~Compared to residential mortgages or consumer loans, ~~because they often~~commercial loans typically have larger balances and repayment usually depends on the borrowers' successful business operations. Commercial loans ~~also involve additional risks because they~~ generally are not fully repaid over the loan period and ~~thus,~~ 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 loan losses. Such agencies may require West Bank to recognize additional charge-offs or provision for loan losses based on such agencies' review of information available to them at the time of their examinations.

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. Concerted efforts are made to maximize subsequent recoveries. The following table summarizes the activity in the Company's allowance for loan losses for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021 and ~~2016~~2020 and related ratios.


	Three Months Ended September 30,									Nine Months Ended September 30,										Three Months Ended June 30,								Six Months Ended June 30,
	2017			2016			Change			2017			2016			Change				2021			2020			Change		2021			2020			Change
Balance at beginning of period	$	16,486		$	15,829		$	657		$	16,112		$	14,967		$	1,145		Balance at beginning of period	$	30,008		$	18,332		$	11,676	$	29,436		$	17,235		$	12,201
Charge-offs	(179		)	(171		)	(8		)	(372		)	(264		)	(108		)	Charge-offs	—			—			—		—			(1)			1
Recoveries	51			100			(49		)	618			355			263			Recoveries	34			31			3		106			129			(23)
Net (charge-offs) recoveries	(128		)	(71		)	(57		)	246			91			155
Net recoveries																			Net recoveries	34			31			3		106			128			(22)
Provision for loan losses charged to operations	—			200			(200		)	—			900			(900		)	Provision for loan losses charged to operations	(2,000)			3,000			(5,000)		(1,500)			4,000			(5,500)
Balance at end of period	$	16,358		$	15,958		$	400		$	16,358		$	15,958		$	400		Balance at end of period	$	28,042		$	21,363		$	6,679	$	28,042		$	21,363		$	6,679

Average loans outstanding	$	1,426,115		$	1,379,107					$	1,434,956		$	1,321,257					Average loans outstanding	$	2,307,711		$	2,147,972				$	2,291,917		$	2,056,652

Ratio of annualized net charge-offs (recoveries) during the period to average loans outstanding	0.04		%	0.02		%				(0.02		)%	(0.01		)%
Ratio of annualized net (charge-offs) recoveries during the period to average loans outstanding																			Ratio of annualized net (charge-offs) recoveries during the period to average loans outstanding	0.01		%	0.01		%			0.01		%	0.02		%

Ratio of allowance for loan losses to average loans outstanding	1.15		%	1.16		%				1.14		%	1.21		%				Ratio of allowance for loan losses to average loans outstanding	1.22		%	0.99		%			1.22		%	1.04		%

Ratio of allowance for loan losses to total loans at end of period																			Ratio of allowance for loan losses to total loans at end of period	1.21		%	0.97		%			1.21		%	0.97		%

Ratio of allowance for loan losses to total loans at end of period, excluding PPP loans(1)																			Ratio of allowance for loan losses to total loans at end of period, excluding PPP loans(1)	1.26		%	1.08		%			1.26		%	1.08		%

(1) A non-GAAP financial measure. For further information, refer to the Non-GAAP Financial Measures section of this report.

In ~~general,~~2020, the U.S. economy ~~is growing, but at~~deteriorated significantly as a ~~slower rate than was considered normal before~~result of the ~~financial crisis. Average monthly job growth through August 2017 was approximately 177,000, while~~COVID-19 pandemic and the impact of economic uncertainties. The national unemployment rate ~~has declined slightly~~jumped from 4.4 percent in March 2020 to ~~4.2~~14.8 percent ~~as of September 30, 2017, the lowest level since May 2007. The U.S. economy lost 33,000 jobs~~ in ~~September 2017, primarily~~April 2020 amid nationwide shutdowns and other restrictions in the ~~leisure~~interest of public health and safety. In 2021, the economy has begun to recover; however some economic measures still lag pre-pandemic levels. Additionally, certain industries, including travel, hospitality ~~industries,~~and entertainment had been particularly impacted by shutdowns, capacity restrictions, and social distancing requirements that ~~were attributed~~occurred in response to ~~Hurricanes Irma~~COVID-19. There remains uncertainty about recovery times and ~~Harvey. Activity in~~ the ~~housing market continues at a moderate pace. Interest rates are expected to continue to gradually rise.~~long term impact on local businesses as well as the travel and entertainment industries. The ~~economic environments in Iowa and Minnesota continue to improve. Based on the current economic indicators, the~~ Company ~~decided to maintain~~increased the economic factors within the allowance for loan losses evaluation atin 2020 in response to the ~~same levels used~~COVID-19 pandemic. Based on the continued improvement in ~~2016. In~~national and local economic performances measures, the ~~first nine months~~relative success of ~~2017,~~vaccination efforts and the lifting of pandemic-related restrictions, the Company ~~continued to use experience~~decreased the economic factors ~~based on the highest losses calculated over a rolling 12-, 16-, or 20-quarter period. Loan growth in the first nine months of 2017 resulted in the portion of~~within the allowance for loan losses related to loans collectively evaluated for impairment to increase $603 to a total of $16,212, or 1.11 percent, as of September 30, 2017 compared to $15,609, or 1.11 percent, as of December 31, 2016. Management believed the resulting allowance for loan losses as of September 30, 2017 was adequate to absorb any losses inherentevaluation in the ~~loan portfolio at the end~~second quarter of ~~the quarter.~~2021.

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~~table shows the variance from the prior year in the noninterest income categories shown in the Consolidated Statements of Income. ~~In addition, accounts within~~


	Three Months Ended June 30,
Noninterest income:	2021		2020		Change		Change %
Service charges on deposit accounts	$	578	$	531	$	47	8.85	%
Debit card usage fees	511		391		120		30.69	%
Trust services	691		461		230		49.89	%
Increase in cash value of bank-owned life insurance	240		136		104		76.47	%
Loan swap fees	42		3		39		1,300.00	%
Realized securities gains (losses), net	36		(69)		105		152.17	%
Other income:
All other income	417		322		95		29.50	%
Total other income	417		322		95		29.50	%
Total noninterest income	$	2,515	$	1,775	$	740	41.69	%

	Six Months Ended June 30,
Noninterest income:	2021		2020		Change		Change %
Service charges on deposit accounts	$	1,160	$	1,134	$	26	2.29	%
Debit card usage fees	953		773		180		23.29	%
Trust services	1,343		924		419		45.35	%
Increase in cash value of bank-owned life insurance	460		294		166		56.46	%
Loan swap fees	42		589		(547)		(92.87)	%
Realized securities gains (losses), net	40		(75)		115		153.33	%
Other income:
All other income	982		656		326		49.70	%
Total other income	982		656		326		49.70	%
Total noninterest income	$	4,980	$	4,295	$	685	15.95	%

Debit card usage fees increased for the ~~“Other income” category that represent a significant portion~~three and six months months ended June 30, 2021 when compared to the same periods ended June 30, 2020, due to an increase in transaction volume as consumers respond to the reopening of the economy. Revenue from trust services increased for the three and six months ended June 30, 2021 when compared to the same periods ended June 30, 2020, primarily as a result of an increase in the value of trust assets in 2021 compared to 2020. The increase in cash value of bank-owned life insurance was driven by the purchase of additional life insurance in the third quarter of 2020, increasing total orlife insurance investments for the three and six months ended June 30, 2021 in comparison to the three and six months ended June 30, 2020. The Company offers loan level interest rate swaps to its customers and offsets its exposure from such contracts by entering into mirror image swaps with a ~~significant variance~~swap counterparty (back-to-back swap program). Loan swap fees consist of fees earned in the back-to-back swap program at contract origination and are ~~shown below.~~dependent on the timing and volume of customer activity.

Three Months Ended September 30,
Noninterest income: 2017 2016 Change Change %
Service charges on deposit accounts $ 715
$ 632
$ 83
13.13 %
Debit card usage fees 435
450
(15 ) (3.33 )%
Trust services 436
355
81
22.82 %
Increase in cash value of bank-owned life insurance 167
160
7
4.38 %
Realized investment securities gains, net 197
—
197
N/A
Other income:

Discount on purchased income tax credits 36
8
28
350.00 %
All other income 278
314
(36 ) (11.46 )%
Total other income 314
322
(8 ) (2.48 )%
Total noninterest income $ 2,264
$ 1,919
$ 345
17.98 %

Nine Months Ended September 30,
Noninterest income: 2017 2016 Change Change %
Service charges on deposit accounts $ 1,946
$ 1,847
$ 99
5.36 %
Debit card usage fees 1,333
1,372
(39 ) (2.84 )%
Trust services 1,264
946
318
33.62 %
Increase in cash value of bank-owned life insurance 484
492
(8 ) (1.63 )%
Gain from bank-owned life insurance 307
443
(136 ) (30.70 )%
Realized investment securities gains, net 423
60
363
605.00 %
Other income:

Discount on purchased income tax credits 117
43
74
172.09 %
Gain on sale of other assets 88
—
88
N/A
All other income 778
849
(71 ) (8.36 )%
Total other income 983
892
91
10.20 %
Total noninterest income $ 6,740
$ 6,052
$ 688
11.37 %

The increase in ~~service charges on deposit accounts~~other income for the ~~three and nine~~six months ended ~~September~~June 30, ~~2017~~2021 compared to the ~~three and nine~~six months ended ~~September~~June 30, ~~2016~~2020 was driven by the March and April 2017 realignment and simplification of the retail checking account products provided to our customers. We expect to see higher retail service charge income for the remainder of 2017 compared to the same period in 2016, but we cannot predict how customers may modify their banking behavior in response to the change in checking account terms related to the product realignment. During the three and nine months ended September 30, 2017, nonsufficient funds fees declined $33 and $86, respectively, compared to the same time periods in 2016, consistent with the trend of the past several years.

~~Revenue from trust services was higher during the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016~~primarily due to the ~~combination~~recognition of net swap termination gains totaling $181 in March 2021. Interest rate swaps with a ~~higher~~total notional amount of ~~one-time estate fees~~$150,000 were terminated and ~~asset growth achieved through ongoing business development efforts.~~

~~Gain from bank-owned life insurance was recognized for both~~ the ~~nine months ended September 30, 2017 and 2016, but not during the three months ended September 30, 2017 and 2016.~~

The Company recognized net gains on sales of investment securities in the three and nine months ended September 30, 2017, as the Company took advantage of the opportunity to sell various types of investment securities available for sale atpre-tax gains and ~~reinvested~~losses were recorded in other noninterest income. Refer to Note 5 to the ~~proceeds in higher yielding securities with similar risk profiles and slightly longer durations.~~financial statements for additional information.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Total revenue from discounts on purchased transferable State of Iowa income tax credits increased for the three and nine months ended September 30, 2017 compared to the same time periods in 2016. During the second quarter of 2017, the Company entered into agreements to purchase additional discounted transferable income tax credits and expects to recognize total income from discounts of approximately $153 for the year ended December 31, 2017. The Company reviews opportunities to acquire transferable State of Iowa income tax credits at favorable discounts as they are presented and as they are aligned with our projected ability to utilize them.

~~Gain on sale of other assets for the nine months ended September 30, 2017 included a nonrecurring gain of $88 in June 2017 related to a final payment received from the 2015 sale of SmartyPig, LLC.~~

All other income declined during the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016, primarily due to a lower level of letter of credit fees and small losses on equipment disposals.

~~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~~table shows 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 June 30,
Noninterest expense:	2021		2020		Change		Change %
Salaries and employee benefits	$	5,672	$	5,318	$	354	6.66	%
Occupancy	1,199		1,217		(18)		(1.48)	%
Data processing	617		554		63		11.37	%
FDIC insurance	426		292		134		45.89	%
Professional fees	268		200		68		34.00	%
Director fees	214		194		20		10.31	%
Other expenses:
Marketing	57		44		13		29.55	%
Business development	261		137		124		90.51	%
Insurance expense	123		110		13		11.82	%
Charitable contributions	60		45		15		33.33	%
Subscriptions and service contracts	467		317		150		47.32	%
Trust	137		103		34		33.01	%
Consulting fees	78		89		(11)		(12.36)	%
Low income housing projects amortization	192		102		90		88.24	%
New markets tax credit project amortization and management fees	229		229		—		—	%
All other	526		466		60		12.88	%
Total other expenses	2,130		1,642		488		29.72	%
Total noninterest expense	$	10,526	$	9,417	$	1,109	11.78	%

	Six Months Ended June 30,
Noninterest expense:	2021		2020		Change		Change %
Salaries and employee benefits	$	11,280	$	10,602	$	678	6.40	%
Occupancy	2,427		2,430		(3)		(0.12)	%
Data processing	1,219		1,184		35		2.96	%
FDIC insurance	830		529		301		56.90	%
Professional fees	551		439		112		25.51	%
Director fees	405		428		(23)		(5.37)	%
Other expenses:
Marketing	102		88		14		15.91	%
Business development	447		404		43		10.64	%
Insurance expense	244		214		30		14.02	%
Charitable contributions	120		90		30		33.33	%
Subscriptions and service contracts	845		631		214		33.91	%
Trust	278		220		58		26.36	%
Consulting fees	153		166		(13)		(7.83)	%
Low income housing projects amortization	326		205		121		59.02	%
New markets tax credit project amortization and management fees	459		459		—		—	%
All other	1,111		991		120		12.11	%
Total other expenses	4,085		3,468		617		17.79	%
Total noninterest expense	$	20,797	$	19,080	$	1,717	9.00	%

Three Months Ended September 30,
Noninterest expense: 2017 2016 Change Change %
Salaries and employee benefits $ 4,430
$ 4,154
$ 276
6.64 %
Occupancy 1,087
1,038
49
4.72 %
Data processing 635
643
(8 ) (1.24 )%
FDIC insurance expense 151
272
(121 ) (44.49 )%
Professional fees 184
189
(5 ) (2.65 )%
Director fees 240
202
38
18.81 %
Other expenses:

Business development 191
157
34
21.66 %
Insurance expense 89
88
1
1.14 %
Investment advisory fees 22
124
(102 ) (82.26 )%
Charitable contributions 180
—
180
N/A
Postage and courier 72
79
(7 ) (8.86 )%
Trust 124
106
18
16.98 %
Consulting fees 60
91
(31 ) (34.07 )%
Miscellaneous losses (5 ) 247
(252 ) (102.02 )%
Low income housing projects amortization 102
99
3
3.03 %
All other 458
504
(46 ) (9.13 )%
Total other 1,293
1,495
(202 ) (13.51 )%
Total noninterest expense $ 8,020
$ 7,993
$ 27
0.34 %

Nine Months Ended September 30,
Noninterest expense: 2017 2016 Change Change %
Salaries and employee benefits $ 13,216
$ 12,644
$ 572
4.52 %
Occupancy 3,315
2,972
343
11.54 %
Data processing 2,031
1,849
182
9.84 %
FDIC insurance expense 514
714
(200 ) (28.01 )%
Professional fees 725
619
106
17.12 %
Director fees 697
672
25
3.72 %
Other expenses:

Business development 609
574
35
6.10 %
Insurance expense 267
256
11
4.30 %
Investment advisory fees 89
397
(308 ) (77.58 )%
Charitable contributions 180
—
180
N/A
Postage and courier 238
241
(3 ) (1.24 )%
Trust 339
310
29
9.35 %
Consulting fees 213
238
(25 ) (10.50 )%
Miscellaneous losses (1 ) 246
(247 ) (100.41 )%
Low income housing projects amortization 322
305
17
5.57 %
All other 1,481
1,574
(93 ) (5.91 )%
Total other 3,737
4,141
(404 ) (9.76 )%
Total noninterest expense $ 24,235
$ 23,611
$ 624
2.64 %

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~~six months ended ~~September~~June 30, ~~2017~~2021 when compared to the three and ~~nine~~six months ended ~~September~~June 30, ~~2016, mainly as the result of~~2020, primarily due to an increase in ~~the price of Company common~~expenses related to restricted stock ~~which~~units. FDIC insurance expense increased ~~stock-based employee compensation costs.~~

~~When compared with~~during the three and ~~nine~~six months ended ~~September~~June 30, 2016, occupancy costs increased for the three and nine months ended September 30, 2017, partially as the result of operating costs associated with the new Rochester, Minnesota, office, which opened in November 2016. Also impacting the increase in occupancy costs compared to the prior year was a first quarter 2016 one-time reversal of previously accrued rent related to the terms of the previous lease for the Waukee, Iowa, branch facility at the time the branch was acquired in February 2016.

The increase in data processing expense for the nine months ended September 30, 2017 compared to the same time period in 2016 was primarily because of costs associated with upgrading credit analysis software, one-time costs associated with revising the retail checking account products, ongoing enhancements and monitoring tools for maintaining security, and an annual-inflation-rate-based contractual increase in fees paid to our core applications systems service provider.

FDIC insurance expense declined for the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016. The FDIC assessment rate calculation includes a series of risk-based factors. As a result of the May 2017 capital injection of $40,000 into West Bank, the capital ratio component improved enough to reduce the assessment rate to the minimum level established by the FDIC. Management believes the assessment rate will remain at the minimum level throughout the remainder of 2017 and into 2018.

Professional fees increased for the nine months ended September 30, 2017 compared to the same time period in 2016, chiefly due to increased costs associated with preparation and adoption of the West Bancorporation, Inc. 2017 Equity Incentive Plan and filing a new shelf registration statement with the Securities and Exchange Commission (which allows us to issue registered equity and debt instruments) and due to higher legal fees at West Bank.

The increase in business development expense for the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016 was the result of efforts to cultivate new and expanded customer relationships.

Investment advisory fees declined for the three and nine months ended September 30, 2017 as contrasted with the same time periods in 2016, mainly as a result of bringing the administration of the investment portfolio in-house, effective October 1, 2016. The Company also pays an administrative fee to an investment management firm for assisting with the purchase and administration of public company floating rate commercial loans. That administrative fee has declined as the result of holding a lower level of those loans.

~~Charitable contributions increased for the three and nine months ended September 30, 2017~~2021 when compared to the same time periods in ~~2016~~2020 due to increases in both the ~~accrual of~~Company's average assets and assessment rate.

Business development expense increased for the ~~normal annual contribution~~three months ended June 30, 2021 in comparison to the ~~West Bancorporation Foundation.~~

~~The increase in trust expense~~three months ended June 30, 2020. Business development activities have increased in the ~~three~~second quarter of 2021 as local economies return to normal activities. Business development activities were significantly limited during COVID-19 shutdowns and ~~nine~~social distancing guidelines that began in the second quarter of 2020. All other expenses were higher for the six months ended ~~September~~June 30, ~~2017~~2021 when compared to the ~~three and nine~~six months ended ~~September~~June 30, ~~2016 is commensurate with~~2020, due primarily to the ~~increase in the growth in trust assets.~~

Consulting fees declined in the three and nine months ended September 30, 2017, as the 2016 expense included data analysis costs associated with a class action litigation matter, which was settled in the third quarter of 2016. Miscellaneous losses declined in 2017, as the three and nine months ended September 30, 2016 included a $250 settlement of ~~the previously mentioned class action litigation. An offsetting $300 insurance reimbursement~~a loss on a check fraud scheme.

Income Tax Expense

The Company recorded income tax expense of ~~litigation costs was received in the fourth quarter~~$3,600 (21.4 percent of ~~2016.~~

~~All other expenses declined~~pre-tax income) and $6,663 (21.1 percent of pre-tax income) for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2021, compared towith $2,136 (21.1 percent of pre-tax income) and $4,368 (21.4 percent of pre-tax income) for the ~~same periods~~three and six months ended June 30, 2020. The Company's consolidated income tax rate differs from the federal statutory income tax rate in ~~2016,~~each period, primarily due to tax-exempt interest income, the ~~elimination~~tax-exempt increase in cash value of ~~certain costs related to a retail deposit product, and first quarter 2016 included a one-time cost associated with a~~ bank-owned life insurance, ~~claim.~~disallowed interest expense, and state income taxes. In addition, for the six months ended June 30, 2021, a tax benefit of $233 was recorded as a result of the increase in fair value of restricted stock over the vesting period. Comparatively, for the six months ended June 30, 2020, a tax expense of $116 was recorded as a result of the decrease in fair value of restricted stock over the vesting period. The tax rates for the first six months of 2021 and 2020 were also impacted by year-to-date federal low income housing tax credits and a new markets tax credit of approximately $684 and $620, respectively.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

~~Income Tax Expense~~

The Company recorded income tax expense of $2,870 (30.9 percent of pre-tax income) and $8,142 (30.1 percent of pre-tax income) for the three and nine months ended September 30, 2017, respectively, compared with $2,634 (31.2 percent of pre-tax income) and $7,249 (29.9 percent of pre-tax income) for the three and nine months ended September 30, 2016. The Company's consolidated income tax rate differs from the federal statutory income tax rate, primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, tax-exempt gain on bank-owned life insurance, disallowed interest expense, and state income taxes.

Two other items significantly impacted the effective tax rate for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016. The adoption of ASU No. 2016-09, Compensation—Stock Compensation (Topic 718), effective January 1, 2017, simplified the recording of income taxes related to vesting of equity compensation. The impact of an increase in the fair value of restricted stock over the vesting period is now recorded as a reduction in income tax expense rather than as additional paid-in capital. During the nine months ended September 30, 2017, a tax benefit of $285 was recorded as a result of this change in accounting method. By comparison, the tax benefit recorded in additional paid-in capital for the nine months ended September 30, 2016 was $105. The tax rate for the first nine months of 2017 and 2016 was also impacted by year-to-date federal low income housing tax credits of approximately $308 and $262, respectively.

FINANCIAL CONDITION

The Company had total assets of ~~$2,030,348~~$3,268,760 as of ~~September~~June 30, ~~2017, an increase of 9.5 percent~~2021, compared to total assets of ~~$1,854,204~~$3,185,744 as of December 31, ~~2016. The most significant changes~~2020. Fluctuations in the balance sheet ~~were~~included increases in ~~investment~~loans, securities ~~available for sale, loans,~~and deposits ~~short-term borrowings~~ and ~~long-term debt,~~decreases in Federal Home Loan Bank advances and ~~a decline in cash and cash equivalents. A summary of changes in the balance sheet components is provided below.~~other liabilities.

~~Investment~~ Securities

The balance of ~~investment~~ securities available for sale increased by ~~$157,737~~$180,891 during the ~~nine~~six months ended ~~September~~June 30, ~~2017. State and political subdivision~~2021. In the first six months of 2021, securities increased by $69,920, corporate notes increased by $19,152, and government agency guaranteed collateralized mortgage obligations, mortgage-backed securities and asset-backed securities increased by a total of $68,319 duringwere purchased to improve the nine months ended September 30, 2017. The Company purchased $267,133 of investment securities available for sale during the nine months ended September 30, 2017. Securities sold totaled $74,224, and the proceeds were primarily reinvested in higher yielding securities that have a similar risk profile. The remaining purchases included the reinvestment of normal principal paydowns, calls and maturities, as well as investing the growth in deposits. The overall mix of the entire investment portfolio did not change significantly as a result of this activity.

yield on excess liquidity. As of ~~September~~June 30, ~~2017,~~2021, approximately 6058 percent of the available for sale ~~investment~~ securities portfolio consisted of government agency guaranteed collateralized mortgage obligations ~~mortgage-backed securities~~ and ~~asset-backed~~mortgage-backed securities. Management currently believes these securities provide relatively good yields, have little to no credit risk and provide fairly consistent cash flows.

Loans and Nonperforming Assets

Loans outstanding increased ~~$57,035,~~$28,952 from ~~$1,399,870~~$2,280,575 as of December 31, ~~2016~~2020 to ~~$1,456,905~~$2,309,527 as of ~~September~~June 30, ~~2017. Growth~~2021. Changes in the loan portfolio during the first ~~nine~~six months of ~~2017 was primarily the result of~~2021 included increases of ~~$43,843 in construction loans and $32,144~~$72,505 in commercial real estate loans and $45,661 in construction, land and land development loans. ~~This growth was partially offset by a decrease of $17,298 in commercial~~Commercial loans ~~that~~declined $92,652, which included a ~~$16,556 reduction~~$96,184 decline in ~~public company floating rate~~PPP loans. As of June 30, 2021, PPP loans ~~purchased~~outstanding totaled $84,573, which was made up of $13,431 from ~~a third-party asset manager.~~round one of the program in 2020 and $71,142 from round two in 2021. The Company continues to focus on business development efforts in all of its markets. ~~Management believes~~We believe that loan growth ~~will continue~~may be lower in ~~all three of our markets during the remainder of 2017.~~

~~Credit quality~~2021 compared to 2020 as a result of the ~~Company's loan portfolio remains strong~~ongoing effects of the COVID-19 pandemic and ~~stable.~~the related economic impact in our market areas.

Nonaccrual loans decreased $1,608 from December 31, 2020 to June 30, 2021. The Company's Texas ratio, which is computed by dividing total nonperforming assets by tangible common equity plus the allowance for loan losses, was ~~0.27~~5.31 percent as of ~~September~~June 30, ~~2017,~~2021, compared to ~~0.56~~6.40 percent as of December 31, ~~2016.~~ 2020.

The ~~ratio for both dates was significantly better than the~~watch classification of loans increased to $90,693 as of June 30, ~~2017 peer~~2021 from $26,715 as of December 31, 2020. The increase was primarily due to the addition of $68,424 of hotel, restaurant and other commercial real estate loans related to one borrowing group. This relationship was downgraded to watch classification primarily due to a slower rebound in their hotel occupancy rates compared to other market data. The loans in this downgraded borrowing group are considered well collateralized with a weighted average ~~(latest data available), which was approximately 8.57 percent, according~~loan to ~~data~~value ratio of 63 percent.

Even though we have seen improvement in economic conditions, we believe the long-term effects of the COVID-19 pandemic could have further adverse affects on the credit quality of our loan portfolio. The duration of business disruptions to our customers in the ~~June 2017 Bank Holding Company Performance Report prepared~~hotel, restaurant and movie theater industries could result in increased loan delinquencies and defaults. Management believes impaired loans could increase in the future as a result of the long-term economic effects of the COVID-19 pandemic, including the risk of future shutdowns in response to COVID-19 variants. No credit issues are anticipated with PPP loans at this time, as they are 100 percent guaranteed by the ~~Division~~SBA.

In accordance with regulatory guidelines, the Company exercises heightened risk management practices when non-owner occupied commercial real estate lending exceeds 300 percent of ~~Supervision~~total risk-based capital or construction, land development, and ~~Regulation~~other land loans exceed 100 percent of total risk-based capital. Although the Company's loan portfolio is heavily concentrated in real estate and its real estate portfolio levels exceed these regulatory guidelines, it has established risk management policies and procedures to regularly monitor the commercial real estate portfolio. An analysis of the ~~Federal Reserve.~~Company's non-owner occupied commercial real estate portfolio as of December 31, 2020 was presented in the Company's Form 10-K filed with the SEC on March 1, 2021, and the Company has not experienced any material changes to that analysis since December 31, 2020.

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.


	June 30, 2021			December 31, 2020			Change
Nonaccrual loans	$	14,586		$	16,194		$	(1,608)
Loans past due 90 days and still accruing interest	—			—			—
Troubled debt restructured loans (1)	—			—			—
Total nonperforming loans	14,586			16,194			(1,608)
Other real estate owned	—			—			—
Total nonperforming assets	$	14,586		$	16,194		$	(1,608)

Nonperforming loans to total loans	0.63		%	0.71		%	(0.08)		%
Nonperforming assets to total assets	0.45		%	0.51		%	(0.06)		%

September 30, 2017 December 31, 2016 Change
Nonaccrual loans $ 517
$ 1,022
$ (505 )
Loans past due 90 days and still accruing interest —
—
—
Troubled debt restructured loans ⁽¹⁾
—
—
—
Total nonperforming loans 517
1,022
(505 )
Other real estate owned —
—
—
Total nonperforming assets $ 517
$ 1,022
$ (505 )

Nonperforming loans to total loans 0.04 % 0.07 % (0.03 )%
Nonperforming assets to total assets 0.03 % 0.06 % (0.03 )%
(1)While TDR loans are commonly reported by the industry as nonperforming, those not classified in the nonaccrual category are accruing interest due to payment performance. TDR loans on nonaccrual status are categorized as nonaccrual. There were no TDR loans as of June 30, 2021 and December 31, 2020 categorized as nonaccrual.

~~(1)~~

While TDR loans are commonly reported by the industry as nonperforming, those not classified in the nonaccrual category are accruing interest due to payment performance. TDR loans on nonaccrual status are categorized as nonaccrual. There was one TDR loan as of September 30, 2017 with a balance of $247, and two TDR loans as of ~~December 31, 2016~~ ~~with an aggregate balance of $426, categorized as nonaccrual.~~

~~For additional information, refer to “Provision for Loan Losses and the Related Allowance for Loan Losses” in this section, and Notes 4 and 10 to the financial statements.~~

Deposits

Deposits increased ~~$104,661~~$124,295 during the first ~~nine~~six months of ~~2017, or 6.8 percent, compared to December 31, 2016. Interest-bearing demand~~2021. Savings accounts, ~~increased $45,564, and noninterest-bearing demand accounts declined $94,686, from December 31, 2016 to September 30, 2017. Savings deposits,~~ which include money market ~~and insured cash sweep money market~~ accounts, increased ~~$108,233~~

by a total of $116,977 from December 31, ~~2016~~2020 to ~~September~~June 30, ~~2017. Approximately $76,000~~2021. Interest-bearing demand accounts decreased a total of ~~noninterest-bearing accounts was reclassified~~$66,239 from December 31, 2020 to ~~interest-bearing accounts in April 2017 as part of a retail deposit product restructuring. Other balance~~June 30, 2021. Balance fluctuations were primarily due to ~~business development efforts and~~ normal customer activity, as corporate customers' liquidity needs vary at any given time. ~~Total time deposits increased $45,550 during~~We believe that deposit levels could decrease in future periods as a result of the ~~first nine months~~end of ~~2017, primarily due~~broad government stimulus programs relating to ~~customers moving balances from savings accounts, including money market accounts, to higher~~the COVID-19 pandemic and low interest ~~rate time deposits. As of September 30, 2017, a significant related party relationship maintained total deposit balances with West Bank of approximately $146,000.~~rates.

~~Borrowings~~Borrowed Funds

~~Short-term borrowings, in the form~~The Company had $128,605 of overnight ~~funding, increased~~federal funds purchased and short-term FHLB advances outstanding at June 30, 2021, compared to ~~$48,000 as of September 30, 2017 from $0~~$180,375 as of December 31, ~~2016.~~2020. The ~~need for overnight funding is primarily dependent on corporate customer deposit fluctuations, loan fundings and loan repayments. The investment portfolio was increased during~~Company repaid $50,000 of FHLB advances at maturity in the ~~third~~second quarter of ~~2017 in anticipation~~2021 to reduce unneeded funding as a result of ~~known~~high deposit ~~increases coming in the fourth quarter. Overnight borrowings funded those investments in the interim.~~balances and excess liquidity.

~~Long-term debt increased $19,069 during the first nine months of 2017. On May 25, 2017,~~Derivatives

At June 30, 2021 and December 31, 2020, the Company ~~entered into a credit agreement~~had interest rate swap contracts associated with borrowed funds and deposits with a ~~commercial bank~~total notional amount of $255,000 and ~~borrowed $25,000. This credit agreement replaced a prior credit agreement with the same commercial bank that had a remaining balance~~$305,000, respectively. The fair value of $3,000. The additional borrowing was used to make a capital injection into the Company's subsidiary, West Bank. Principal and interest under the term note are payable quarterly over five years. Required quarterly principal payments are $625, withthese derivative contracts, which is reported in other liabilities on the balance sheet, increased $11,508 from December 31, 2020 to June 30, 2021 due ~~at maturity. The~~to the increases in projected long-term market interest rates. See Note 5 to the financial statements for additional information on the impact of the change in derivative fair values on AOCI.

In March 2021, the Company ~~may make additional principal payments without penalty. The~~terminated interest rate ~~is variable at 1.95 percent over~~swaps with a total notional amount of $150,000. Of the ~~30-day LIBOR rate. The~~total notional amount of $150,000, $100,000 were forward-starting interest rate ~~was 3.18 percent at September 30, 2017.~~swaps originated in January 2021 and $50,000 were interest rate swaps hedging the interest cash flows of FHLB advances. The net termination gains were recorded in other noninterest income.

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West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Liquidity and Capital Resources

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 ~~investment~~ securities, principal payments on collateralized mortgage obligations ~~mortgage-backed~~ and ~~asset-backed~~mortgage-backed securities, federal funds purchased, advances from the FHLB, 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 ~~investment~~ 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 ~~$39,497~~$270,823 as of ~~September~~June 30, ~~2017~~2021 compared with ~~$76,836~~$396,435 as of December 31, ~~2016.~~2020.

As of ~~September~~June 30, ~~2017,~~2021, West Bank had additional borrowing capacity available from the FHLB of approximately ~~$255,000,~~$575,000, as well as approximately $20,000 through the Federal Reserve discount window and $67,000 through unsecured federal funds lines of credit with correspondent banks. Net cash from operating activities contributed ~~$21,979~~$28,508 to liquidity for the ~~nine~~six months ended ~~September~~June 30, ~~2017.~~2021. Management believed that the combination of high levels of potentially liquid assets, cash flows from operations, and additional borrowing capacity provided the Company with strong liquidity as of ~~September~~June 30, ~~2017.~~2021.

The Company's total stockholders' equity increased to ~~$178,087~~$246,526 at ~~September~~June 30, ~~2017~~2021 from ~~$165,376~~$223,695 at December 31, ~~2016.~~2020. The increase was primarily the result of net income less dividends paid and an increase in ~~accumulated other comprehensive income.~~

fair value of derivatives, partially offset by a decrease in the fair value of securities. At ~~September~~June 30, ~~2017,~~2021, the Company's tangible common equity as a percent of tangible assets was ~~8.77~~7.54 percent compared to ~~8.92~~7.02 percent as of December 31, ~~2016.~~2020.

The Company had remaining commitments to invest in qualified affordable housing projects totaling $3,294 and $3,505 as of June 30, 2021 and December 31, 2020, respectively. During 2020, the Company began construction on a new office in Sartell, Minnesota, which had a remaining construction commitment of $5,729 and $8,324 as of June 30, 2021 and December 31, 2020, respectively.

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~~June 30, ~~2017.~~2021.

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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 June 30, 2021:
Total Capital (to Risk-Weighted Assets)
Consolidated	$	301,043	11.32	%	$	212,746	8.00	%	$	279,230	10.50	%	$	265,933	10.00	%
West Bank	305,420		11.49	%	212,670		8.00	%	279,130		10.50	%	265,838		10.00	%

Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	273,001		10.27	%	159,560		6.00	%	226,043		8.50	%	212,746		8.00	%
West Bank	277,378		10.43	%	159,503		6.00	%	225,962		8.50	%	212,670		8.00	%

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	253,001		9.51	%	119,670		4.50	%	186,153		7.00	%	172,856		6.50	%
West Bank	277,378		10.43	%	119,627		4.50	%	186,087		7.00	%	172,795		6.50	%

Tier 1 Capital (to Average Assets)
Consolidated	273,001		8.47	%	128,896		4.00	%	128,896		4.00	%	161,120		5.00	%
West Bank	277,378		8.61	%	128,817		4.00	%	128,817		4.00	%	161,022		5.00	%

As of December 31, 2020:
Total Capital (to Risk-Weighted Assets)
Consolidated	$	284,977	11.45	%	$	199,092	8.00	%	$	261,308	10.50	%	$	248,865	10.00	%
West Bank	290,677		11.69	%	198,995		8.00	%	261,181		10.50	%	248,744		10.00	%

Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	255,541		10.27	%	149,319		6.00	%	211,535		8.50	%	199,092		8.00	%
West Bank	261,241		10.50	%	149,246		6.00	%	211,431		8.50	%	198,995		8.00	%

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	235,541		9.46	%	111,989		4.50	%	174,205		7.00	%	161,762		6.50	%
West Bank	261,241		10.50	%	111,935		4.50	%	174,120		7.00	%	161,683		6.50	%

Tier 1 Capital (to Average Assets)
Consolidated	255,541		8.66	%	118,053		4.00	%	118,053		4.00	%	147,567		5.00	%
West Bank	261,241		8.86	%	117,946		4.00	%	117,946		4.00	%	147,433		5.00	%

Actual
For Capital
Adequacy Purposes With Capital Conservation Buffer

To Be Well-Capitalized
Under Prompt Corrective
Action Provisions
Amount Ratio Amount Ratio Amount Ratio
As of September 30, 2017:
Total Capital (to Risk-Weighted Assets)
Consolidated $ 214,373
12.01 % $ 165,070
9.25 % N/A
N/A
West Bank 235,067
13.18 % 164,963
9.25 % $ 178,339
10.00 %

Tier 1 Capital (to Risk-Weighted Assets)

Consolidated 198,015
11.10 % 129,379
7.25 % N/A
N/A
West Bank 218,709
12.26 % 129,295
7.25 % 142,671
8.00 %

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated 178,015
9.98 % 102,611
5.75 % N/A
N/A
West Bank 218,709
12.26 % 102,545
5.75 % 115,920
6.50 %

Tier 1 Capital (to Average Assets)

Consolidated 198,015
10.06 % 78,738
4.00 % N/A
N/A
West Bank 218,709
11.12 % 78,694
4.00 % 98,368
5.00 %

As of December 31, 2016:

Total Capital (to Risk-Weighted Assets)

Consolidated $ 202,530
11.87 % $ 147,108
8.625 % N/A
N/A
West Bank 186,118
11.04 % 145,414
8.625 % $ 168,597
10.00 %

Tier 1 Capital (to Risk-Weighted Assets)

Consolidated 186,418
10.93 % 112,996
6.625 % N/A
N/A
West Bank 170,006
10.08 % 111,695
6.625 % 134,877
8.00 %

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated 166,418
9.76 % 87,412
5.125 % N/A
N/A
West Bank 170,006
10.08 % 86,406
5.125 % 109,588
6.50 %

Tier 1 Capital (to Average Assets)

Consolidated 186,418
10.14 % 73,530
4.00 % N/A
N/A
West Bank 170,006
9.34 % 72,807
4.00 % 91,009
5.00 %

~~On January 1, 2015, the~~
The Company and West Bank ~~became~~are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection ~~Act changes.~~Act. The ~~new~~ rules ~~included~~include the implementation of a 2.5 percent capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. The capital conservation buffer is subject to a three year phase-in period that began on January 1, 2016 and will be fully phased-in on January 1, 2019 at 2.5 percent. The required phase-in capital conservation buffer during 2017 is 1.25 percent. 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~~June 30, ~~2017,~~2021, the capital ratios for the Company and West Bank were sufficient to meet the ~~fully phased-in~~ conservation buffer.

In late May 2017, the Company made a capital injection into the Company's subsidiary, West Bank, funded by entering into a $25,000 credit agreement with an unaffiliated commercial bank (see Note 5 to the Consolidated Financial Statements) and selling four bank buildings to West Bank for $18,000. The four bank buildings were properties the Company had previously owned and leased to West Bank. The new credit agreement replaced a prior credit agreement that had a remaining outstanding balance of $3,000, for net loan proceeds of $22,000. In total, $40,000 was added to West Bank's capital.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

~~Market risk is the risk of earnings volatility that results from adverse changes in interest rates and market prices.~~ The Company's market risk is composed primarily of interest rate risk arising from its core banking activities of lending and deposit taking. Interest rate risk isrefers to the ~~risk that the change~~exposure arising from changes in ~~market~~interest rates. Fluctuations in interest rates ~~may adversely affect~~have a significant impact not only upon net income, but also upon the ~~Company's net~~cash flows and market values of assets and liabilities. Our results of operations, like those of other financial institutions, are impacted by changes in interest ~~income.~~rates and the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities. Management continually develops and ~~implements~~applies strategies to mitigate this risk. The analysis of the Company's interest rate risk as of December 31, 2016 was presented in the Company's Form 10-K filed with the Securities and Exchange Commission on March 1, 2017. The Company has not experienced any material changes to its interest rate risk position since December 31, 2016. Management does not believe that the Company's primary market risk exposure and management of that exposure in the first ~~nine~~six months of ~~2017~~2021 have materially changed compared to those in the year ended ~~December 31, 2016.~~2020.

The Company's objectives are to manage interest rate risk to foster consistent growth of earnings and capital. It is our policy to maintain an acceptable level of interest rate risk over a range of possible changes in interest rates while remaining responsive to market demand for loan and deposit products. To measure that risk, the Company uses an earnings simulation approach.

The Company maintains an Asset Liability Committee which meets quarterly to review the interest rate sensitivity position and to review and develop various strategies for managing interest rate risk. Measuring and managing interest rate risk is a dynamic process that management performs with the objective of maximizing net interest margin while maintaining interest rate risk within acceptable tolerances. This process relies primarily on the simulation of net interest income over multiple interest rate scenarios. The Company engages a third party that utilizes a modeling program to measure the Company’s exposure to potential interest rate changes. For various assumed hypothetical changes in market interest rates, this analysis measures the estimated change in net interest income. The simulations allow for ongoing assessment of interest rate sensitivity and can include the impact of potential new business strategies. The modeled scenarios begin with a base case in which rates are unchanged and include parallel and nonparallel rate shocks. The results of these shocks are measured in two forms: first, the impact on the net interest margin and earnings over one and two year time frames; and second, the impact on the market value of equity. The results of the simulation are compared against approved policy limits.

The following table presents the estimated change in net interest income for one year under several scenarios of assumed interest rate changes for the rate shock levels shown. The net interest income in each scenario is based on parallel and permanent changes in the interest rates.


Scenario			% Change
300 basis points rising			4.23%
200 basis points rising			3.05%
100 basis points rising			1.73%
Base			—

As of June 30, 2021, the estimated effect of a 300 basis point increase in interest rates would be an increase of the Company's net interest income by approximately 4.23 percent, or $3,746 in 2021. The estimated effect of a decrease in rates is not reasonably calculable due to the current low interest rate environment.

Computations of the prospective effects of hypothetical interest rate changes are based on numerous assumptions. The assumptions used in our interest rate sensitivity simulation discussed above are inherently uncertain and, as a result, the simulations cannot precisely measure net interest income or precisely predict the impact of changes in interest rates on net interest income. Actual values may differ from those projections set forth above due to timing, magnitude and frequency of interest rate changes as well as changes in market conditions. Further, the computations do not contemplate any actions the Company may undertake in response to changes in interest rates.

Item 4. Controls and Procedures

a. Evaluation of disclosure controls and procedures. As of the end of the period covered by this report, an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) was performed under the supervision, and with the participation, of the Company's Chief Executive Officer and Chief Financial Officer. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that the Company's disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act was recorded, processed, summarized and reported within the time periods specified in the ~~Securities and Exchange Commission's~~SEC's rules and forms.

Table of Contents

b. Changes in internal ~~controls~~control over financial reporting. There were no changes in the Company's internal control over financial reporting that occurred during the ~~period covered by this report~~quarter ended June 30, 2021, that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

~~Part~~PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Neither the Company nor West Bank is a party, and no property of these entities is subject, to any material pending legal proceedings, other than ordinary routine litigation incidental to West Bank's business. The Company does not know of any proceeding contemplated by a governmental authority against the Company or West Bank.

Item 1A. Risk Factors

Management does not believe there have been any material changes in the risk factors that were disclosed in the Company's Form 10-K filed with the Securities and Exchange Commission on March 1, ~~2017.~~2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Table of Contents

Item 6. Exhibits

The following exhibits are filed as part of this report:



Exhibits			Description
~~31.1~~10.1			West Bancorporation, Inc. 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.3 filed with the Form S-8 on April 30, 2021)
10.2			F orm of West Bancorporation, Inc. 2021 Equity Incentive Plan Restricted St ock Unit Award Agreement (with holding period) (incorporated herein by reference to Exhibit 4.4 filed with the Form S-8 on April 30, 2021)
10.3			Form of West Bancorporation, Inc. 2021 Equity Incentive Plan Restricted Stock Unit Award Agreement (without holding period) (incorporated herein by reference to Exhibit 4.5 filed with the Form S-8 on April 30, 2021)
10.4			F orm of West Bancorporation, Inc. 2021 Equity Incentive Plan Perfor mance-Based Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 4.6 filed with the Form S-8 on April 30, 2021)
10.5			Form of West Bancorporation, Inc. 2021 Equity Incentive Plan Cash-Settled Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 4.7 filed with the Form S-8 on April 30, 2021)
10.6			F orm of West Bancorporation, Inc. 2021 Equity Incentive Plan Director Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 4.8 filed with the Form S-8 on April 30, 2021)
10.7			Employment Agreement dated April 29, 2021, between West Bancorporation, Inc. and Bradley P. Peters (incorporated herein by reference to Exhibit 10.2 filed with the Form 8-K on April 30, 2021)
10.8			T ransitional Employment Agreement dated May 27, 2021 , between West Bancorporation, Inc. and Douglas R. Gulling (incorporated herein by reference to Exhibit 10.1 filed with the Form 8-K on May 27, 2021)
10.9			E mployment Agreement dated May 27, 2021, between West Bancorporation, Inc. and Jane M. Funk (incorporated herein by reference to Exhibit 10.2 filed with the Form 8-K on May 27, 2021)
31.1			Certification of Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
31.2			Certification of Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
32.1			Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2			Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS			Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			Inline XBRL Taxonomy Extension Schema Document
101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF			Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB			Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE			Inline XBRL Taxonomy Extension Presentation Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and combined in Exhibit 101)

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


West Bancorporation, Inc.
(Registrant)


July 29, 2021			By:	/s/ David D. Nelson
Date				David D. Nelson
				Chief Executive Officer and President
				(Principal Executive Officer)

~~West Bancorporation, Inc.~~July 29, 2021			By:
~~(Registrant)~~


~~October 26, 2017~~	~~By:~~	~~/s/ David D. Nelson~~
~~Date~~		~~David D. Nelson~~
		~~Chief Executive Officer and President~~
		~~(Principal Executive Officer)~~

~~October 26, 2017~~	~~By:~~	/s/ Douglas R. Gulling
Date				Douglas R. Gulling
				Executive Vice President, Treasurer and Chief Financial Officer
				(Principal Financial Officer)

~~October 26, 2017~~July 29, 2021			By:	/s/ ~~Marie I. Roberts~~Jane M. Funk
Date				~~Marie I. Roberts~~Jane M. Funk
				Senior Vice President, Controller and Chief Accounting Officer
				(Principal Accounting Officer)



West Bancorporation, Inc. and Subsidiary
Consolidated Balance Sheets
(unaudited)

(in thousands, except share and per share data)	September 30, 2017			December 31, 2016
ASSETS
Cash and due from banks	$	33,560		$	40,943
Federal funds sold	5,937			35,893
Cash and cash equivalents	39,497			76,836
Investment securities available for sale, at fair value	418,374			260,637
Investment securities held to maturity, at amortized cost (fair value of $46,356 and $47,789 at September 30, 2017 and December 31, 2016, respectively)	45,597			48,386
Federal Home Loan Bank stock, at cost	12,256			10,771
Loans	1,456,905			1,399,870
Allowance for loan losses	(16,358		)	(16,112		)
Loans, net	1,440,547			1,383,758
Premises and equipment, net	23,173			23,314
Accrued interest receivable	6,636			5,321
Bank-owned life insurance	33,451			33,111
Deferred tax assets, net	5,861			6,957
Other assets	4,956			5,113
Total assets	$	2,030,348		$	1,854,204

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand	$	384,625		$	479,311
Interest-bearing demand	328,156			282,592
Savings	776,921			668,688
Time of $250 or more	16,539			10,446
Other time	145,025			105,568
Total deposits	1,651,266			1,546,605
Federal funds purchased	925			9,690
Short-term borrowings	48,000			—
Subordinated notes, net	20,408			20,398
Federal Home Loan Bank advances, net	101,005			99,886
Long-term debt, net	24,195			5,126
Accrued expenses and other liabilities	6,462			7,123
Total liabilities	1,852,261			1,688,828
COMMITMENTS AND CONTINGENCIES (NOTE 9)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized 50,000,000 shares; no shares issued and outstanding at September 30, 2017 and December 31, 2016	—			—
Common stock, no par value; authorized 50,000,000 shares; 16,215,672 and 16,137,999 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively	3,000			3,000
Additional paid-in capital	22,763			21,462
Retained earnings	152,252			141,956
Accumulated other comprehensive income (loss)	72			(1,042		)
Total stockholders' equity	178,087			165,376
Total liabilities and stockholders' equity	$	2,030,348		$	1,854,204



	Three Months Ended September 30, 2017
				Real Estate
	Commercial			Construction and Land			1-4 Family Residential			Home Equity			Commercial		Consumer and Other			Total
Beginning balance	$	3,802		$	2,552		$	350		$	372		$	9,307	$	103		$	16,486
Charge-offs	(3		)	—			—			(176		)	—		—			(179		)
Recoveries	34			—			8			5			3		1			51
Provision ⁽¹⁾	(165		)	170			(24		)	16			1		2			—
Ending balance	$	3,668		$	2,722		$	334		$	217		$	9,311	$	106		$	16,358

	Three Months Ended September 30, 2016
				Real Estate
	Commercial			Construction and Land			1-4 Family Residential			Home Equity			Commercial		Consumer and Other			Total
Beginning balance	$	4,441		$	2,804		$	393		$	483		$	7,606	$	102		$	15,829
Charge-offs	(25		)	(140		)	—			—			—		(6		)	(171		)
Recoveries	53			—			37			6			4		—			100
Provision ⁽¹⁾	(318		)	8			(84		)	(25		)	621		(2		)	200
Ending balance	$	4,151		$	2,672		$	346		$	464		$	8,231	$	94		$	15,958

	Nine Months Ended September 30, 2017
				Real Estate
	Commercial			Construction and Land			1-4 Family Residential			Home Equity			Commercial		Consumer and Other			Total
Beginning balance	$	3,881		$	2,639		$	317		$	478		$	8,697	$	100		$	16,112
Charge-offs	(196		)	—			—			(176		)	—		—			(372		)
Recoveries	174			398			10			20			9		7			618
Provision ⁽¹⁾	(191		)	(315		)	7			(105		)	605		(1		)	—
Ending balance	$	3,668		$	2,722		$	334		$	217		$	9,311	$	106		$	16,358

	Nine Months Ended September 30, 2016
				Real Estate
	Commercial			Construction and Land			1-4 Family Residential			Home Equity			Commercial		Consumer and Other			Total
Beginning balance	$	4,369		$	2,338		$	508		$	481		$	7,254	$	17		$	14,967
Charge-offs	(25		)	(140		)	(93		)	—			—		(6		)	(264		)
Recoveries	194			56			58			30			10		7			355
Provision ⁽¹⁾	(387		)	418			(127		)	(47		)	967		76			900
Ending balance	$	4,151		$	2,672		$	346		$	464		$	8,231	$	94		$	15,958



Interest Rate Swap	Notional Amount		Fair Value			Balance Sheet Category	Weighted Average Receive Rate		Weighted Average Pay Rate		Maturity
September 30, 2017
Interest rate swap	$	30,000	$	(351	)	Other Liabilities	1.64	%	2.52	%	9/21/2020
Interest rate swap⁽¹⁾	20,000		786			Other Assets	—		4.81	%	9/30/2026
December 31, 2016
Interest rate swap	30,000		(496		)	Other Liabilities	1.30	%	2.52	%	9/21/2020
Interest rate swap⁽¹⁾	20,000		1,068			Other Assets	—		4.81	%	9/30/2026



		September 30, 2017				December 31, 2016
	Fair Value Hierarchy Level	Carrying Amount		Approximate Fair Value		Carrying Amount		Approximate Fair Value
Financial assets:
Cash and due from banks	Level 1	$	33,560	$	33,560	$	40,943	$	40,943
Federal funds sold	Level 1	5,937		5,937		35,893		35,893
Investment securities available for sale	See previous table	418,374		418,374		260,637		260,637
Investment securities held to maturity	Level 2	45,597		46,356		48,386		47,789
Federal Home Loan Bank stock	Level 1	12,256		12,256		10,771		10,771
Loans, net⁽¹⁾	Level 2	1,440,547		1,439,084		1,383,758		1,382,569
Accrued interest receivable	Level 1	6,636		6,636		5,321		5,321
Interest rate swap	Level 2	786		786		1,068		1,068
Financial liabilities:
Deposits	Level 2	$	1,651,266	$	1,651,307	$	1,546,605	$	1,546,307
Federal funds purchased	Level 1	925		925		9,690		9,690
Short-term borrowings	Level 1	48,000		48,000		—		—
Subordinated notes, net	Level 2	20,408		14,021		20,398		12,703
Federal Home Loan Bank advances, net	Level 2	101,005		101,113		99,886		99,959
Long-term debt, net	Level 2	24,195		24,134		5,126		5,054
Accrued interest payable	Level 1	616		616		280		280
Interest rate swap	Level 2	351		351		496		496
Off-balance-sheet financial instruments:
Commitments to extend credit	Level 3	—		—		—		—
Standby letters of credit	Level 3	—		—		—		—



	Actual				For Capital Adequacy Purposes With Capital Conservation Buffer				To Be Well-Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
As of September 30, 2017:
Total Capital (to Risk-Weighted Assets)
Consolidated	$	214,373	12.01	%	$	165,070	9.25	%	N/A		N/A
West Bank	235,067		13.18	%	164,963		9.25	%	$	178,339	10.00	%

Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	198,015		11.10	%	129,379		7.25	%	N/A		N/A
West Bank	218,709		12.26	%	129,295		7.25	%	142,671		8.00	%

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	178,015		9.98	%	102,611		5.75	%	N/A		N/A
West Bank	218,709		12.26	%	102,545		5.75	%	115,920		6.50	%

Tier 1 Capital (to Average Assets)
Consolidated	198,015		10.06	%	78,738		4.00	%	N/A		N/A
West Bank	218,709		11.12	%	78,694		4.00	%	98,368		5.00	%

As of December 31, 2016:
Total Capital (to Risk-Weighted Assets)
Consolidated	$	202,530	11.87	%	$	147,108	8.625	%	N/A		N/A
West Bank	186,118		11.04	%	145,414		8.625	%	$	168,597	10.00	%

Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	186,418		10.93	%	112,996		6.625	%	N/A		N/A
West Bank	170,006		10.08	%	111,695		6.625	%	134,877		8.00	%

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	166,418		9.76	%	87,412		5.125	%	N/A		N/A
West Bank	170,006		10.08	%	86,406		5.125	%	109,588		6.50	%

Tier 1 Capital (to Average Assets)
Consolidated	186,418		10.14	%	73,530		4.00	%	N/A		N/A
West Bank	170,006		9.34	%	72,807		4.00	%	91,009		5.00	%