SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



x☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the quarterly period ended September 30, ~~2017~~2023

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.



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



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

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.

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).

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).

As of October 25, ~~2017,~~2023, there were ~~16,215,672~~16,725,094 shares of common stock, no par value, outstanding.

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

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)	September 30, 2023		December 31, 2022
ASSETS
Cash and due from banks	$	18,819	$	24,896
Interest-bearing deposits	1,802		1,643
Cash and cash equivalents	20,621		26,539
Securities available for sale, at fair value	609,365		664,115
Federal Home Loan Bank stock, at cost	26,691		19,336
Loans	2,849,777		2,742,836
Allowance for credit losses	(28,147)		(25,473)
Loans, net	2,821,630		2,717,363
Premises and equipment, net	75,675		53,124
Accrued interest receivable	13,598		11,988
Bank-owned life insurance	43,589		44,573
Deferred tax assets, net	41,592		36,609
Other assets	49,139		39,571
Total assets	$	3,701,900	$	3,613,218

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand	$	551,688	$	693,563
Interest-bearing demand	417,802		536,226
Savings and money market	1,348,591		1,237,954
Time	437,448		412,665
Total deposits	2,755,529		2,880,408
Federal funds purchased and other short-term borrowings	261,510		200,000
Subordinated notes, net	79,566		79,369
Federal Home Loan Bank advances	315,000		155,000
Long-term debt	48,986		51,486
Accrued expenses and other liabilities	37,376		35,843
Total liabilities	3,497,967		3,402,106
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized 50,000,000 shares; no shares issued and outstanding at September 30, 2023 and December 31, 2022	—		—
Common stock, no par value; authorized 50,000,000 shares; 16,725,094 and 16,640,413 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively	3,000		3,000
Additional paid-in capital	33,487		32,021
Retained earnings	271,025		267,562
Accumulated other comprehensive loss	(103,579)		(91,471)
Total stockholders' equity	203,933		211,112
Total liabilities and stockholders' equity	$	3,701,900	$	3,613,218

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Consolidated Statements of Income

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Interest income:
Loans, including fees	$	36,756	$	28,102	$	104,715	$	76,236
Securities:
Taxable	3,427		3,147		10,175		9,126
Tax-exempt	880		890		2,648		2,640
Interest-bearing deposits	29		30		84		179
Total interest income	41,092		32,169		117,622		88,181
Interest expense:
Deposits	17,156		6,289		46,772		11,586
Federal funds purchased and other short-term borrowings	3,165		655		7,508		812
Subordinated notes	1,113		1,106		3,328		1,748
Federal Home Loan Bank advances	2,329		649		5,212		1,914
Long-term debt	695		466		2,132		1,050
Total interest expense	24,458		9,165		64,952		17,110
Net interest income	16,634		23,004		52,670		71,071
Credit loss expense (benefit)	200		—		200		(2,500)
Net interest income after credit loss expense (benefit)	16,434		23,004		52,470		73,571
Noninterest income:
Service charges on deposit accounts	463		553		1,383		1,718
Debit card usage fees	495		498		1,492		1,477
Trust services	831		780		2,286		2,031
Increase in cash value of bank-owned life insurance	262		246		769		709
Gain from bank-owned life insurance	—		—		691		—
Loan swap fees	431		835		431		835

Other income	340		364		1,116		1,173
Total noninterest income	2,822		3,276		8,168		7,943
Noninterest expense:
Salaries and employee benefits	6,696		6,578		20,592		19,286
Occupancy and equipment	1,359		1,315		4,008		3,643
Data processing	703		644		2,067		1,924
Technology and software	573		651		1,665		1,619
FDIC insurance	439		127		1,275		753
Professional fees	254		250		791		669
Director fees	196		209		652		599
Other expenses	1,685		1,684		5,400		4,893
Total noninterest expense	11,905		11,458		36,450		33,386
Income before income taxes	7,351		14,822		24,188		48,128
Income taxes	1,445		3,220		4,576		10,675
Net income	$	5,906	$	11,602	$	19,612	$	37,453

Basic earnings per common share	$	0.35	$	0.70	$	1.17	$	2.25
Diluted earnings per common share	$	0.35	$	0.69	$	1.17	$	2.23

West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Income
(unaudited)
Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2017 2016 2017 2016
Interest income:
Loans, including fees $ 15,854
$ 14,898
$ 46,865
$ 42,667
Investment securities:
Taxable 1,489
991
3,755
3,222
Tax-exempt 1,081
780
2,674
2,482
Federal funds sold 136
27
223
58
Total interest income 18,560
16,696
53,517
48,429
Interest expense:

Deposits 2,108
872
5,084
2,401
Federal funds purchased 4
1
24
4
Short-term borrowings 9
8
58
39
Subordinated notes 232
169
667
533
Federal Home Loan Bank advances 972
894
2,837
2,645
Long-term debt 204
31
334
114
Total interest expense 3,529
1,975
9,004
5,736
Net interest income 15,031
14,721
44,513
42,693
Provision for loan losses —
200
—
900
Net interest income after provision for loan losses 15,031
14,521
44,513
41,793
Noninterest income:

Service charges on deposit accounts 715
632
1,946
1,847
Debit card usage fees 435
450
1,333
1,372
Trust services 436
355
1,264
946
Increase in cash value of bank-owned life insurance 167
160
484
492
Gain from bank-owned life insurance —
—
307
443
Realized investment securities gains, net 197
—
423
60
Other income 314
322
983
892
Total noninterest income 2,264
1,919
6,740
6,052
Noninterest expense:

Salaries and employee benefits 4,430
4,154
13,216
12,644
Occupancy 1,087
1,038
3,315
2,972
Data processing 635
643
2,031
1,849
FDIC insurance 151
272
514
714
Professional fees 184
189
725
619
Director fees 240
202
697
672
Other expenses 1,293
1,495
3,737
4,141
Total noninterest expense 8,020
7,993
24,235
23,611
Income before income taxes 9,275
8,447
27,018
24,234
Income taxes 2,870
2,634
8,142
7,249
Net income $ 6,405
$ 5,813
$ 18,876
$ 16,985

Basic earnings per common share $ 0.40
$ 0.36
$ 1.17
$ 1.05
Diluted earnings per common share $ 0.39
$ 0.36
$ 1.16
$ 1.05
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 (Loss)

(unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Net income	$	5,906	$	11,602	$	19,612	$	37,453
Other comprehensive income (loss):
Unrealized gains (losses) on securities:
Unrealized holding losses arising during the period	(23,391)		(42,621)		(20,561)		(141,629)



Income tax benefit	5,819		10,558		5,100		35,607
Other comprehensive loss on securities	(17,572)		(32,063)		(15,461)		(106,022)
Unrealized gains on derivatives:
Unrealized holding gains arising during the period	5,303		8,637		11,771		23,239
Plus: reclassification adjustment for net (gains) losses realized in net income	(2,903)		(259)		(7,328)		1,428

Income tax expense	(590)		(2,051)		(1,090)		(6,172)
Other comprehensive income on derivatives	1,810		6,327		3,353		18,495
Total other comprehensive loss	(15,762)		(25,736)		(12,108)		(87,527)
Comprehensive income (loss)	$	(9,856)	$	(14,134)	$	7,504	$	(50,074)

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 September 30, 2023
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, June 30, 2023	$	—	16,725,094	$	3,000	$	32,642	$	269,301	$	(87,817)	$	217,126
Net income	—		—	—		—		5,906		—		5,906
Other comprehensive loss, net of tax	—		—	—		—		—		(15,762)		(15,762)
Cash dividends declared, $0.25 per common share	—		—	—		—		(4,182)		—		(4,182)
Stock-based compensation costs	—		—	—		845		—		—		845

Balance, September 30, 2023	$	—	16,725,094	$	3,000	$	33,487	$	271,025	$	(103,579)	$	203,933


	Three Months Ended September 30, 2022
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, June 30, 2022	$	—	16,640,413	$	3,000	$	30,283	$	255,334	$	(72,428)	$	216,189
Net income	—		—	—		—		11,602		—		11,602
Other comprehensive loss, net of tax	—		—	—		—		—		(25,736)		(25,736)
Cash dividends declared, $0.25 per common share	—		—	—		—		(4,160)		—		(4,160)
Stock-based compensation costs	—		—	—		869		—		—		869

Balance, September 30, 2022	$	—	16,640,413	$	3,000	$	31,152	$	262,776	$	(98,164)	$	198,764

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)

	Nine Months Ended September 30, 2023
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, December 31, 2022	$	—	16,640,413	$	3,000	$	32,021	$	267,562	$	(91,471)	$	211,112
Cumulative effect of change in accounting principle(1)	—		—	—		—		(3,626)		—		(3,626)
Net income	—		—	—		—		19,612		—		19,612
Other comprehensive loss, net of tax	—		—	—		—		—		(12,108)		(12,108)
Cash dividends declared, $0.75 per common share	—		—	—		—		(12,523)		—		(12,523)
Stock-based compensation costs	—		—	—		2,401		—		—		2,401
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes	—		84,681	—		(935)		—		—		(935)
Balance, September 30, 2023	$	—	16,725,094	$	3,000	$	33,487	$	271,025	$	(103,579)	$	203,933


	Nine Months Ended September 30, 2022
										Accumulated
						Additional				Other
	Preferred		Common Stock			Paid-In		Retained		Comprehensive
	Stock		Shares	Amount		Capital		Earnings		Income (Loss)		Total
Balance, December 31, 2021	$	—	16,554,846	$	3,000	$	30,183	$	237,782	$	(10,637)	$	260,328
Net income	—		—	—		—		37,453		—		37,453
Other comprehensive loss, net of tax	—		—	—		—		—		(87,527)		(87,527)
Cash dividends declared, $0.75 per common share	—		—	—		—		(12,459)		—		(12,459)
Stock-based compensation costs	—		—	—		2,488		—		—		2,488
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes	—		85,567	—		(1,519)		—		—		(1,519)
Balance, September 30, 2022	$	—	16,640,413	$	3,000	$	31,152	$	262,776	$	(98,164)	$	198,764

(1)Cumulative effect adjustment pursuant to adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. See Note 1 for additional information.

See Notes to Consolidated Financial Statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Consolidated Statements of Cash Flows

(unaudited)

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~~.2022 filed with the SEC on February 23, 2023. 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 30, ~~2017~~2023 and December 31, ~~2016~~,2022, and net income, ~~and~~ comprehensive income (loss) and changes in stockholders' equity for the three and nine months ended September 30, ~~2017~~2023 and ~~2016,~~2022, and cash flows for the nine months ended September 30, ~~2017~~2023 and ~~2016.~~2022. 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~~credit 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.

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

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

In December 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326). This update amended 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~~periods. Early adoption was 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 was not required to 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 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. Early adoption is permitted, including adoption in an interim period. The Company does not expect the guidance to have a material impact on the Company's consolidated financial statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The Company adopted ASU No. 2016-13 using the modified retrospective method for financial assets measured at amortized cost and off-balance-sheet credit exposures. Results for the periods beginning after January 1, 2023 are presented under ASU No. 2016-13, while prior period amounts are reported in accordance with the previously applicable accounting standards. The Company recorded a reduction to retained earnings of $3,626 upon adoption of ASU No. 2016-13. The transition adjustment included an increase to the allowance for credit losses on loans of $2,458 and established an allowance for credit losses on off-balance sheet credit exposures of $2,344. There was no allowance for credit losses recorded for available-for-sale debt securities. The transition adjustment included corresponding increases in deferred tax assets of $1,176.

The following table illustrates the impact of ASC 326 adoption.


	January 1, 2023
	Pre-ASC 326 Adoption		Impact of ASC 326 Adoption		As Reported Under ASC 326
Assets:
Commercial	$	4,804	$	677	$	5,481
Real estate:
Construction, land and land development	3,548		(234)		3,314
1-4 family residential first mortgages	357		121		478
Home equity	101		(8)		93
Commercial	16,575		1,911		18,486
Consumer and other	88		(9)		79
Allowance for credit losses on loans	$	25,473	$	2,458	$	27,931

Liabilities:
Liability for off-balance sheet credit exposures	$	—	$	2,344	$	2,344

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. They provide 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 were effective for all entities as of March 12, 2020 through December 31, 2022. 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 iswere effective for ~~annual periods beginning after~~all entities as of March 12, 2020 through December ~~15, 2018, with early adoption permitted, including~~31, 2022. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendment in ~~an interim period.~~this update extends the period of time preparers can utilize reference rate reform relief guidance in Topic 848, discussed above. ASU No. 2022-06 defers the sunset date from December 31, 2022 to December 31, 2024. The ~~amendments' presentation and disclosure guidance is required on a prospective basis. The~~ Company ~~is currently assessing the impact of this guidance, but~~ does not expect the ~~guidance~~updates within Topic 848 to have a material impact on our financial statements.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

In March 2023, the FASB issued ASU No. 2023-02, Investments - Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using Proportional Amortization Method. The ASU is intended to improve the accounting and disclosures for investments in tax credit structures. It allows reporting entities to elect to adopt for qualifying tax equity investments using the proportional amortization method, regardless of the program giving rise to the related income tax credits. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The Company is currently evaluating the impact of the ASU 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 months ended September 30, ~~2017~~2023 and ~~2016~~2022 are presented in the following table.


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	2023		2022		2023		2022
Net income	$	5,906	$	11,602	$	19,612	$	37,453

Weighted average common shares outstanding	16,725		16,640		16,697		16,613
Weighted average effect of restricted stock units outstanding	43		154		45		200
Diluted weighted average common shares outstanding	16,768		16,794		16,742		16,813

Basic earnings per common share	$	0.35	$	0.70	$	1.17	$	2.25
Diluted earnings per common share	$	0.35	$	0.69	$	1.17	$	2.23
Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation	408		183		413		112

Three Months Ended September 30, Nine Months Ended September 30,
(in thousands, except per share data) 2017 2016 2017 2016
Net income $ 6,405
$ 5,813
$ 18,876
$ 16,985

Weighted average common shares outstanding 16,213
16,135
16,186
16,110
Weighted average effect of restricted stock units outstanding 118
51
127
47
Diluted weighted average common shares outstanding 16,331
16,186
16,313
16,157

Basic earnings per common share $ 0.40
$ 0.36
$ 1.17
$ 1.05
Diluted earnings per common share $ 0.39
$ 0.36
$ 1.16
$ 1.05
Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation 24
88
14
106

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 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

Collateralized mortgage obligations (1)

Mortgage-backed securities (1)

Collateralized mortgage obligations (1)

Mortgage-backed securities (1)

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

~~Investment securities~~

Securities with an amortized cost of approximately ~~$123,457~~$458,126 and ~~$141,995~~$293,017 as of September 30, ~~2017~~2023 and December 31, ~~2016~~,2022, respectively, were pledged to secure access to ~~the~~Federal Home Loan Bank (FHLB) advances and Federal Reserve ~~discount window,~~credit programs, 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 30, ~~2017,~~2023, 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, 2023
	Amortized Cost		Fair Value


Due after five years through ten years	$	73,386	$	66,209
Due after ten years	219,180		164,341
	292,566		230,550
Collateralized mortgage obligations and mortgage-backed securities	476,094		378,815
	$	768,660	$	609,365

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.~~

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

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)

There were no sales of securities available for sale during the three and nine months ended September 30, 2023 and 2022.

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 30, ~~2017~~2023 and December 31, ~~2016.~~2022.

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 )

The Company adopted ASU No. 2016-13 effective January 1, 2023 which requires credit losses on available-for-sale securities to be recorded in an allowance for credit losses. If the Company intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis, then the security is written down to fair value through income. As of September 30, ~~2017,~~2023, the ~~available~~Company did not have the intent to sell, nor was it more likely than not that we would be required to sell any of the securities in an unrealized loss position prior to recovery. As of September 30, 2023, the Company also determined that no individual securities in an unrealized loss position represented credit losses that would require an allowance for ~~sale and held to maturity securities with~~credit losses. The Company concluded that the unrealized losses were primarily attributable to increases in market interest rates since these securities were purchased and other market conditions. Accrued interest receivable is not included ~~one U.S. government agency~~in available-for-sale security ~~89 state~~balances and ~~political subdivision~~is presented in the "Accrued interest receivable" line of the Consolidated Balance Sheets. Interest receivable on securities was $3,588 as of September 30, ~~collateralized mortgage obligation securities, eight mortgage-backed securities, three asset-backed securities, one trust preferred security~~2023, and ~~two corporate notes. The~~was excluded from the estimate of credit losses.

As of December 31, 2022, the Company believed the unrealized losses on ~~investments~~securities available for sale ~~and held to maturity as of~~ ~~September 30, 2017~~ were due to market conditions rather than reduced estimated cash flows. ~~The~~At December 31, 2022, 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, under the accounting principles effective at December 31, 2022, the Company did not consider these ~~investments~~securities to have ~~OTTI~~other than temporary impairment as of ~~September 30, 2017~~.December 31, 2022.

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~~Credit Losses

Loans consisted of the following segments as of September 30, ~~2017~~2023 and December 31, ~~2016~~.2022.

Real estate loans of approximately ~~$710,000~~$1,380,000 and ~~$680,000~~$1,190,000 were pledged as security for ~~Federal Home Loan Bank (FHLB)~~FHLB advances as of September 30, ~~2017~~2023 and December 31, ~~2016~~,2022, 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.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

Allowance for Credit Losses for Loans

The Company adopted ASU No. 2016-13 on January 1, 2023, at which time the Company implemented the current expected credit loss (CECL) model in estimating the allowance for credit losses (ACL) valuation account. The following tables detail the changes in the ACL by loan segment for the three and nine months ended September 30, 2023.


	Three Months Ended September 30, 2023
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	5,496	$	3,284	$	472	$	110	$	18,469	$	107	$	27,938

Charge-offs	—		—		—		—		—		—		—
Recoveries	8		—		—		1		—		—		9
Provision for credit loss expense(1)	(221)		467		97		—		(143)		—		200
Ending balance	$	5,283	$	3,751	$	569	$	111	$	18,326	$	107	$	28,147

	Nine Months Ended September 30, 2023
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	4,804	$	3,548	$	357	$	101	$	16,575	$	88	$	25,473
Adoption of CECL	677		(234)		121		(8)		1,911		(9)		2,458
Charge-offs	(18)		—		—		—		—		—		(18)
Recoveries	29		—		1		4		—		—		34
Provision for credit loss expense(1)	(209)		437		90		14		(160)		28		200
Ending balance	$	5,283	$	3,751	$	569	$	111	$	18,326	$	107	$	28,147

(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, improvement in qualitative risk factors related to those portfolio segments and/or changes in economic forecasts.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

Prior to the adoption of ASU No. 2016-13 on January 1, 2023, the Company calculated the allowance for loan losses using the incurred loss methodology. The following tables present the activity in the allowance for loan losses by segment for the three and nine months ended September 30, 2022.


	Three Months Ended September 30, 2022
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	4,661	$	4,043	$	373	$	95	$	16,189	$	73	$	25,434

Charge-offs	—		—		(31)		—		—		—		(31)
Recoveries	9		—		1		1		4		—		15
Provision for loan losses(1)	429		(557)		20		9		82		17		—
Ending balance	$	5,099	$	3,486	$	363	$	105	$	16,275	$	90	$	25,418

	Nine Months Ended September 30, 2022
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Beginning balance	$	4,776	$	3,646	$	339	$	91	$	19,466	$	46	$	28,364
Charge-offs	—		—		(31)		—		(451)		—		(482)
Recoveries	21		—		2		3		10		—		36
Provision for loan losses(1)	302		(160)		53		11		(2,750)		44		(2,500)
Ending balance	$	5,099	$	3,486	$	363	$	105	$	16,275	$	90	$	25,418

(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.

The following tables present a breakdown of the allowance for credit losses by segment, disaggregated based on the evaluation method as of September 30, 2023 and December 31, 2022.


	September 30, 2023
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:
Individually evaluated for credit losses	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for credit losses	5,283		3,751		569		111		18,326		107		28,147
Total	$	5,283	$	3,751	$	569	$	111	$	18,326	$	107	$	28,147

	December 31, 2022
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:
Individually evaluated for impairment	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Collectively evaluated for impairment	4,804		3,548		357		101		16,575		88		25,473
Total	$	4,804	$	3,548	$	357	$	101	$	16,575	$	88	$	25,473

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, exclusive of unamortized fees and costs, disaggregated based on the evaluation method by segment as of September 30, 2023 and December 31, 2022.


	September 30, 2023
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:
Individually evaluated for credit losses	$	—	$	—	$	303	$	—	$	—	$	—	$	303
Collectively evaluated for credit losses	529,293		399,253		89,410		12,429		1,812,816		10,123		2,853,324
Total	$	529,293	$	399,253	$	89,713	$	12,429	$	1,812,816	$	10,123	$	2,853,627


	December 31, 2022
			Real Estate
	Commercial		Construction and Land		1-4 Family Residential		Home Equity		Commercial		Consumer and Other		Total
Ending balance:
Individually evaluated for impairment	$	—	$	—	$	322	$	—	$	—	$	—	$	322
Collectively evaluated for impairment	519,196		363,014		74,889		10,322		1,771,940		7,292		2,746,653
Total	$	519,196	$	363,014	$	75,211	$	10,322	$	1,771,940	$	7,292	$	2,746,975

Under the CECL model, the ACL is a valuation account estimated at each balance sheet date and deducted from the amortized cost basis of loans to present the net amount expected to be collected. The Company estimates the ACL based on the underlying loans' amortized cost basis, which is the amount at which the loan is originated or acquired, adjusted for collection of cash and charge-offs, as well as applicable accretion or amortization of premiums, discounts, and net deferred fees or costs. The Company's estimate of the ACL reflects losses expected over the remaining contractual life of the assets. The contractual term does not consider extensions, renewals or modifications unless the Company has identified an expected restructuring. In the event that collection of principal becomes uncertain, the Company has policies in place to reverse accrued interest in a timely manner. Therefore, the Company has made a policy election to exclude accrued interest from the measurement of the ACL.

Accrued interest on loans of $10,005 and $8,665 at September 30, 2023 and December 31, 2022, respectively, was included in accrued interest receivable on the balance sheet and was excluded from the estimate of credit losses.

Expected credit losses are reflected in the allowance for credit losses through a charge to credit loss expense. When the Company deems all or a portion of a loan to be uncollectible, the appropriate amount is written off and the ACL is reduced by the same amount. The Company applies judgment to determine when a loan is deemed uncollectible; however, generally speaking, a loan will be considered uncollectible no later than when all efforts at collection have been exhausted. Subsequent recoveries, if any, are credited to the ACL when received.

The Company measures expected credit losses of loans on a collective (pool) basis when the loans share similar risk characteristics and uses a cash flow based method to estimate expected credit losses for each of these pools. The Company's methodology for estimating the ACL considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts. The methodologies apply historical loss information, adjusted for asset-specific characteristics, economic conditions at the measurement date, and forecasts about future economic conditions expected to exist through the contractual lives of the financial assets that are reasonable and supportable, to the identified pools of financial assets with similar risk characteristics for which the historical experience was observed.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

The Company uses the cash flow based model to estimate expected credit losses for all loan segments. For each of the loan segments, the Company calculates a cash flow projection using contractual terms, estimated prepayment speeds, estimated curtailment rates, and other relevant data. The Company uses regression analysis that links historical losses of the Company and its peer group to two economic metrics: national unemployment rate and 10-year treasury rate over 2-year treasury rate spread to establish the loss rates applied to the projected cash flows. For all loan segments, the Company uses a forecast period of four quarters and reverts to a historical rate after four quarters. When estimating prepayment speed and curtailment rates, the modeling is based on historical internal data.

Nonaccrual Loans and Delinquency Status

Delinquencies are determined based on the payment terms of the individual loan agreements. The accrual of interest on past due and other ~~impaired~~individually evaluated 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.~~income. 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 following table presents the ~~Company separately concludes that a borrower is experiencing financial difficulties~~amortized cost basis of loans on nonaccrual status, loans on nonaccrual status with no allowance for credit losses recorded, 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 past due 90 days ~~if they are not performing~~or more and still accruing by loan segment.


	Total Nonaccrual				Nonaccrual with no Allowance for Credit Losses				90 Days or More Past Due and Accruing
	September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022		September 30, 2023		December 31, 2022
Commercial	$	—	$	—	$	—	$	—	$	—	$	—
Real estate:
Construction, land and land
development	—		—		—		—		—		—
1-4 family residential first
mortgages	303		322		303		322		—		—
Home equity	—		—		—		—		—		—
Commercial	—		—		—		—		—		—
Consumer and other	—		—		—		—		—		—
Total	$	303	$	322	$	303	$	322	$	—	$	—

There was no interest income recognized on loans that were on nonaccrual for the nine months ended September 30, 2023 and September 30, 2022.

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 ~~restructured~~delinquency status of the amortized cost of loans as of September 30, 2023 and December 31, 2022.


	September 30, 2023
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans
Commercial	$	—	$	—	$	—	$	—	$	529,293	$	529,293
Real estate:
Construction, land and
land development	—		—		—		—		399,253		399,253
1-4 family residential
first mortgages	—		—		—		—		89,713		89,713
Home equity	—		—		—		—		12,429		12,429
Commercial	—		—		—		—		1,812,816		1,812,816
Consumer and other	—		—		—		—		10,123		10,123
Total	$	—	$	—	$	—	$	—	$	2,853,627	$	2,853,627


	December 31, 2022
	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans
Commercial	$	—	$	—	$	—	$	—	$	519,196	$	519,196
Real estate:
Construction, land and
land development	—		—		—		—		363,014		363,014
1-4 family residential
first mortgages	—		—		—		—		75,211		75,211
Home equity	—		—		—		—		10,322		10,322
Commercial	—		—		—		—		1,771,940		1,771,940
Consumer and other	—		—		—		—		7,292		7,292
Total	$	—	$	—	$	—	$	—	$	2,746,975	$	2,746,975

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

Loan Restructurings Made to Borrowers Experiencing Financial Difficulty

As of September 30, 2023 and December 31, 2022, the Company had no loan restructurings made to borrowers experiencing financial difficulty. There were no loan restructurings made to borrowers experiencing financial difficulty for which there was a payment default within twelve months following the modification during the three and nine months ended September 30, 2023 and 2022. A loan is considered to be in payment default once it is 30 days contractually past due under the modified terms.

Credit Quality Indicators

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~~analyzed individually to ~~collect all contractual principal and interest payments due in accordance with the terms of~~categorize the loan ~~agreement. Impaired loans are measured based on~~to 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 allowance for loan losses.appropriate credit risk category.

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

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

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

~~Table of Contents~~

~~West Bancorporation, Inc. and Subsidiary~~

~~Notes to Consolidated Financial Statements~~

~~(unaudited)~~

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

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)~~

September 30, 2017

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
Real estate:
Construction, land and
land development —
—
—
—
249,453
—
249,453
1-4 family residential
first mortgages —
—
—
—
49,275
94
49,369
Home equity 3
—
—
3
14,502
53
14,558
Commercial —
—
—
—
819,774
370
820,144
Consumer and other —
—
—
—
8,235
—
8,235
Total $ 3
$ —
$ —
$ 3
$ 1,457,955
$ 517
$ 1,458,475

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)~~

September 30, 2017
Pass Watch Substandard Doubtful Total
Commercial $ 314,078
$ 560
$ 2,078
$ —
$ 316,716
Real estate:
Construction, land and land development 249,308
145
—
—
249,453
1-4 family residential first mortgages 48,564
552
253
—
49,369
Home equity 14,377
56
125
—
14,558
Commercial 800,622
18,246
1,276
—
820,144
Consumer and other 8,196
39
—
—
8,235
Total $ 1,435,145
$ 19,598
$ 3,732
$ —
$ 1,458,475

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.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

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~~by 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.

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~~present the ~~changes in~~amortized cost basis of loans by loan segment, credit quality indicator and origination year, and the ~~allowance for~~current period gross write-off by loan ~~losses by~~ segment ~~for~~and origination year, based on the ~~three and nine months ended~~analysis performed as of September 30, ~~2017~~2023 and ~~2016.~~December 31, 2022.


	Term Loans by Origination Year
As of September 30, 2023	2023		2022		2021		2020		2019		Prior		Revolving Loans		Total
Commercial
Pass	$	130,239	$	119,579	$	51,124	$	36,264	$	7,519	$	44,657	$	139,911	$	529,293
Watch	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	130,239	$	119,579	$	51,124	$	36,264	$	7,519	$	44,657	$	139,911	$	529,293
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	18	$	—	$	—	$	18
Real estate:
Construction, land and land development
Pass	$	73,148	$	129,426	$	86,261	$	20,208	$	1,484	$	—	$	88,687	$	399,214
Watch	—		39		—		—		—		—		—		39
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	73,148	$	129,465	$	86,261	$	20,208	$	1,484	$	—	$	88,687	$	399,253
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family residential first mortgages
Pass	$	27,824	$	20,732	$	20,370	$	12,032	$	3,798	$	3,858	$	611	$	89,225
Watch	145		—		—		—		—		—		—		145
Substandard	—		40		—		—		303		—		—		343
Doubtful	—		—		—		—		—		—		—		—
Total	$	27,969	$	20,772	$	20,370	$	12,032	$	4,101	$	3,858	$	611	$	89,713
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Home equity
Pass	$	591	$	243	$	529	$	367	$	116	$	68	$	10,515	$	12,429
Watch	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	591	$	243	$	529	$	367	$	116	$	68	$	10,515	$	12,429
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Pass	$	166,083	$	521,330	$	455,800	$	365,665	$	87,301	$	198,585	$	18,052	$	1,812,816
Watch	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	166,083	$	521,330	$	455,800	$	365,665	$	87,301	$	198,585	$	18,052	$	1,812,816
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Consumer and other
Pass	$	1,296	$	299	$	533	$	61	$	25	$	371	$	7,538	$	10,123
Watch	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	1,296	$	299	$	533	$	61	$	25	$	371	$	7,538	$	10,123
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

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 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)


	Term Loans by Origination Year
As of December 31, 2022	2022		2021		2020		2019		2018		Prior		Revolving Loans		Total
Commercial
Pass	$	166,177	$	65,148	$	64,103	$	9,926	$	23,771	$	24,103	$	165,968	$	519,196
Watch	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	166,177	$	65,148	$	64,103	$	9,926	$	23,771	$	24,103	$	165,968	$	519,196
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Real estate:
Construction, land and land development
Pass	$	151,963	$	96,486	$	39,604	$	1,562	$	196	$	—	$	73,156	$	362,967
Watch	47		—		—		—		—		—		—		47
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	152,010	$	96,486	$	39,604	$	1,562	$	196	$	—	$	73,156	$	363,014
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
1-4 family residential first mortgages
Pass	$	24,777	$	24,042	$	14,879	$	4,229	$	1,283	$	4,267	$	1,176	$	74,653
Watch	—		148		—		—		—		—		—		148
Substandard	88		—		—		322		—		—		—		410
Doubtful	—		—		—		—		—		—		—		—
Total	$	24,865	$	24,190	$	14,879	$	4,551	$	1,283	$	4,267	$	1,176	$	75,211
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	31	$	—	$	31
Home equity
Pass	$	413	$	613	$	512	$	130	$	169	$	—	$	8,485	$	10,322
Watch	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	413	$	613	$	512	$	130	$	169	$	—	$	8,485	$	10,322
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Commercial
Pass	$	543,138	$	440,150	$	405,935	$	92,304	$	54,723	$	169,055	$	12,599	$	1,717,904
Watch	22,553		30,573		—		910		—		—		—		54,036
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	565,691	$	470,723	$	405,935	$	93,214	$	54,723	$	169,055	$	12,599	$	1,771,940
Current period gross writeoffs	$	—	$	451	$	—	$	—	$	—	$	—	$	—	$	451
Consumer and other
Pass	$	1,176	$	1,082	$	136	$	86	$	272	$	72	$	4,468	$	7,292
Watch	—		—		—		—		—		—		—		—
Substandard	—		—		—		—		—		—		—		—
Doubtful	—		—		—		—		—		—		—		—
Total	$	1,176	$	1,082	$	136	$	86	$	272	$	72	$	4,468	$	7,292
Current period gross writeoffs	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—

~~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 30, 2017 and December 31, 2016.~~

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 30, 2017~~ ~~and~~ ~~December 31, 2016~~.

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 $ —
$ —
$ 94
$ 53
$ 370
$ —
$ 517
Collectively evaluated for impairment 316,716
249,453
49,275
14,505
819,774
8,235
1,457,958
Total $ 316,716
$ 249,453
$ 49,369
$ 14,558
$ 820,144
$ 8,235
$ 1,458,475

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)

Collateral Dependent Loans

~~5. Long-Term Debt~~

~~On May 25, 2017,~~Loans that do not share risk characteristics are evaluated on an individual basis. For collateral dependent loans where the Company ~~entered into a~~has determined that foreclosure of the collateral is probable, or where the borrower is experiencing financial difficulty and the Company expects repayment of the loans to be provided substantially through the operation or sale of the collateral, the ACL is measured based on the difference between the fair value of the collateral and the amortized cost basis of the loan as of the measurement date. When repayment is expected to be from the operation of the collateral, expected credit ~~agreement with a commercial bank and borrowed $25,000. This~~losses are calculated as the amount by which the amortized cost basis of the loan exceeds the present value of expected cash flows from the operation of collateral. When repayment is expected to be from the sale of the collateral, expected credit ~~agreement replaced a prior credit agreement with~~losses are calculated as the ~~same commercial bank that had a remaining outstanding principal balance~~amount by which the amortized cost basis of ~~$3,000.~~the loan exceeds the fair value of the underlying collateral less estimated cost to sell. The ~~additional borrowing was used to make a capital injection into~~ACL may be zero if the ~~Company's subsidiary, West Bank. Principal and interest under~~fair value of the ~~term note are payable quarterly over five years. Required quarterly principal payments are $625, with~~collateral at the ~~balance due at maturity. The Company may make additional principal payments without penalty. The interest rate is variable at 1.95 percent over~~measurement date exceeds 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~~amortized cost basis of the loan.

The ~~loan~~following table presents the amortized cost basis of collateral dependent loans, by primary collateral type, which are individually evaluated to determine expected credit losses, and the related ACL allocated to these loans.


	As of September 30, 2023
	Primary Type of Collateral
	Real Estate		Equipment		Other		Total		ACL Allocation



1-4 family residential first mortgages	$	303	$	—	$	—	$	303	$	—



Total	$	303	$	—	$	—	$	303	$	—


	As of December 31, 2022
	Primary Type of Collateral
	Real Estate		Equipment		Other		Total		ACL Allocation



1-4 family residential first mortgages	$	322	$	—	$	—	$	322	$	—



Total	$	322	$	—	$	—	$	322	$	—

Allowance for Credit Losses on Off-Balance-Sheet Credit Exposures

The Company estimates expected credit losses over the contractual period in which the Company is ~~secured~~exposed to credit risk via a contractual obligation to extend credit, unless that obligation is unconditionally cancellable by ~~100 percent~~the Company. The estimate includes consideration of the ~~stock~~likelihood that funding will occur and an estimate of ~~West Bank.~~expected credit losses on commitments expected to be funded over its estimated life. The Company's allowance for credit losses for unfunded commitments was $2,344 as of September 30, 2023. The allowance for credit losses for off-balance-sheet credit exposures is presented in the "Accrued expenses and other liabilities" line of the Consolidated Balance Sheets. Changes in the allowance for credit losses for off-balance-sheet credit exposures is reflected in the "Credit loss expense " line of the Consolidated Statements of Income. There were no changes to the allowance for credit losses for off-balance-sheet credit exposures during the nine months ended September 30, 2023.

6.5. 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 ~~FHLB advances~~risk exposure on certain loans, borrowings and ~~junior subordinated notes~~deposits due to ~~fixed~~interest rate ~~debt~~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.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

Interest Rate Swaps Designated as ~~of forward-starting dates.~~a Cash Flow Hedge: The ~~swap transactions were~~Company had interest rate swaps designated as cash flow ~~hedges. Interest rate~~hedges with total notional amounts of $445,000 and $310,000 at September 30, 2023 and December 31, 2022, respectively. As of September 30, 2023, the Company had swaps with a total notional amount of ~~$70,000 were terminated~~$295,000 that hedge the interest payments of rolling one-month funding consisting of FHLB advances or brokered deposits. Also as of September 30, 2023, the Company had swaps with a total notional amount of $40,000 that effectively converts variable-rate long-term debt to fixed-rate debt and swaps with a total notional amount of $110,000 that hedge the interest payments of certain deposit accounts.

Derivatives Not Designated as Accounting Hedges: To accommodate customer needs, the 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 table below identifies the balance sheet category and fair values of the Company's derivative instruments as of September 30, 2023 and December 31, 2022.


	September 30, 2023			December 31, 2022
Cash Flow Hedges:
Gross notional amount	$	445,000		$	310,000
Fair value in other assets	20,726			16,284

Weighted-average floating rate received	5.64		%	4.53		%
Weighted-average fixed rate paid	3.04		%	2.25		%
Weighted-average maturity in years	2.9			3.3

Non-Hedging Derivatives:
Gross notional amount	$	294,819		$	254,369
Fair value in other assets	18,512			15,309
Fair value in other liabilities	(18,512)			(15,309)

The following table identifies the pre-tax gains or losses recognized on the Company's derivative instruments designated as cash flow hedges for the three and nine months ended September 30, 2023 and 2022.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Pre-tax gain recognized in other comprehensive
income	$	5,303	$	8,637	$	11,771	$	23,239
Reclassification from AOCI into income:
Increase (decrease) in interest expense	$	(2,903)	$	(259)	$	(7,328)	$	1,428

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in ~~2015, subject to termination fees totaling $541.~~ thousands, except per share data)

The ~~termination fees are being~~Company estimates there will be approximately $11,575 reclassified from accumulated other comprehensive income to interest expense over the remaining life of the underlying cash flows through June 2020. An interest rate swap with a notional amount of $30,000 became effective in December 2015. Another interest rate swap, with a notional amount of $20,000, has a forward-starting date in September 2018. No ~~amount of ineffectiveness was included in net income for the~~ ~~nine months~~ ~~ended~~ ~~September 30, 2017~~ ~~or 2016, and the Company estimates there will be approximately $373 of cash payments and reclassification from accumulated other comprehensive income to~~reduce interest expense through the 12 months ~~ended~~ending September 30, ~~2018.~~2024 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 30, ~~2017~~2023 and December 31, ~~2016,~~2022, the Company pledged ~~$470~~$0 of collateral to the ~~counterparty~~counterparties in the form of cash on ~~deposit with a third party. The Company's counterparty was required to pledge $720 and $1,070 at~~deposit. As of September 30, ~~2017~~2023 and December 31, ~~2016, respectively.~~

~~The table below identifies the balance sheet category and fair values of~~2022, the Company's ~~derivative instruments designated as~~counterparties pledged $40,670 and $31,560, respectively, of collateral to the Company in the form of cash ~~flow hedges as of September 30, 2017~~on deposit. The interest rate swap product with the borrower is cross-collateralized with the underlying loan and ~~December 31, 2016.~~therefore there is no pledged cash collateral under swap contracts with customers.

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 30, ~~2017~~2023 and December 31, ~~2016~~. 2022.


	September 30, 2023		December 31, 2022
Deferred tax assets:
Allowance for credit losses	$	7,471	$	6,241
Net unrealized losses on securities available for sale	39,665		34,544

Lease liabilities	912		1,147
Accrued expenses	202		434
Restricted stock unit compensation	1,006		1,038
State net operating loss carryforward	1,686		1,476

Other	174		156
	51,116		45,036
Deferred tax liabilities:
Right-of-use assets	868		1,099
Deferred loan costs	257		249

Net unrealized gains on interest rate swaps	5,097		4,003
Premises and equipment	1,124		1,219
New markets tax credit loan	366		303
Other	126		78
	7,838		6,951
Net deferred tax assets before valuation allowance	43,278		38,085
Valuation allowance	(1,686)		(1,476)
Net deferred tax assets	$	41,592	$	36,609

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~~2023 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 months ended September 30, ~~2017~~2023 and ~~2016.~~2022.


	Unrealized		Unrealized		Accumulated
	Gains		Gains		Other
	(Losses) on		(Losses) on		Comprehensive
	Securities		Derivatives		Income (Loss)
Balance, December 31, 2022	$	(103,680)	$	12,209	$	(91,471)
Other comprehensive income (loss) before reclassifications	(15,441)		8,879		(6,562)
Amounts reclassified from accumulated other comprehensive income	(20)		(5,526)		(5,546)
Net current period other comprehensive income (loss)	(15,461)		3,353		(12,108)
Balance, September 30, 2023	$	(119,141)	$	15,562	$	(103,579)

Balance, December 31, 2021	$	(5,021)	$	(5,616)	$	(10,637)
Other comprehensive income (loss) before reclassifications	(106,011)		17,486		(88,525)
Amounts reclassified from accumulated other comprehensive income (loss)	(11)		1,009		998
Net current period other comprehensive income (loss)	(106,022)		18,495		(87,527)
Balance, September 30, 2022	$	(111,043)	$	12,879	$	(98,164)

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 adopted ASU No. 2016-13 effective January 1, 2023 which requires an allowance for credit losses on off-balance sheet credit exposure. See Note 4 for additional information. The Company's commitments consisted of the following ~~approximate~~ amounts as of September 30, ~~2017~~2023 and December 31, ~~2016.~~ 2022.


						September 30, 2023		December 31, 2022
	September 30, 2017		December 31, 2016
Commitments to extend credit	$	597,325	$	614,681
Commitments to fund real estate construction loans					Commitments to fund real estate construction loans	$	444,205	$	336,900
Other commitments to extend credit					Other commitments to extend credit	673,123		727,666
Standby letters of credit	5,424		5,487		Standby letters of credit	16,600		20,557
	$	602,749	$	620,168		$	1,133,928	$	1,085,123

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~~$20,854 and ~~$112,084~~$23,337 at September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively.

Contractual commitments: The Company ~~has~~had remaining commitments to invest in qualified affordable housing projects totaling ~~$6,253~~$1,811 and ~~$5,768~~$3,431 as of September 30, ~~2017~~2023 and December 31, ~~2016,~~2022, respectively.

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

West Bank entered into a construction contract in 2022 for the construction of a new headquarters building in West Des Moines, Iowa. West Bank will pay the contractor a contract price consisting of the cost of work plus a fee, subject to a guaranteed maximum price of $42,309, with anticipated construction completed in 2024. As of September 30, 2023, there was a remaining commitment of $18,625 under this contract. West Bank is also building a new office in Mankato, Minnesota to be completed in the fourth quarter of 2023, which had a remaining commitment of $2,023 as of September 30, 2023.

Concentrations of credit risk: Substantially all of the Company's loans, commitments to extend credit and standby letters of credit have been granted to customers in the Company's market areas. The concentrations of credit by type of loan are set forth in Note 4. The distribution by type of loan of commitments to extend credit approximates the distribution by type of loan outstanding. Standby letters of credit were granted primarily to commercial borrowers.

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.

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 no transfers between ~~Levels~~levels of the fair value hierarchy during the nine months ended September 30, ~~2017~~.2023.

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~~hierarchy.

Table of ~~the end of the period covered by this report.~~Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

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 30, ~~2017~~2023 and December 31, ~~2016.~~2022.


	September 30, 2023
	Total		Level 1		Level 2		Level 3
Financial assets:
Securities available for sale:
State and political subdivisions	$	182,007	$	—	$	182,007	$	—
Collateralized mortgage obligations	252,702		—		252,702		—
Mortgage-backed securities	126,113		—		126,113		—
Collateralized loan obligations	37,530		—		37,530		—
Corporate notes	11,013		—		11,013		—
Derivative instruments, interest rate swaps	39,238		—		39,238		—

Financial liabilities:
Derivative instruments, interest rate swaps	$	18,512	$	—	$	18,512	$	—

September 30, 2017
Total Level 1 Level 2 Level 3
Financial assets:
Investment securities available for sale:
U.S. government agencies and corporations $ 2,489
$ —
$ 2,489
$ —
State and political subdivisions 134,256
—
134,256
—
Collateralized mortgage obligations 149,367
—
149,367
—
Mortgage-backed securities 54,787
—
54,787
—
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
—

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

Table of Contents

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
$ —
West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

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). As of both September 30, ~~2017~~2023 and December 31, ~~2016, impaired~~2022, there were no individually evaluated loans ~~for which~~with a fair value ~~adjustment was recorded were recorded at a net~~adjustment. Individually evaluated loans are classified within Level 3 of the fair value ~~of $0. Impaired loans~~hierarchy and are evaluated and valued at the lower of cost or fair value when the loan is ~~identified as impaired.~~individually evaluated. Fair value is ~~measured~~ based on the value of the collateral securing these loans. ~~The types of collateral vary widely and could include accounts receivables, inventory, a variety of equipment and real estate. Evaluations~~

In determining the estimated net realizable value of the underlying ~~assets~~collateral of individually evaluated 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 ~~completed~~routinely made in the appraisal process by the appraisers to adjust for ~~each impaired loan with a specific reserve. Collateral evaluations~~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 ~~reviewed~~periodically further adjusted by the Company in consideration of charges that may be incurred in the event of foreclosure and ~~discounted as appropriate~~are based on management’s historical knowledge, changes in business factors and changes in market conditions. Because of the ~~specific type~~high degree of ~~collateral. In~~judgment required in estimating the ~~case~~fair value of ~~real estate, an independent appraisal may be obtained. Types of discounts considered included aging of receivables, condition~~collateral underlying individually evaluated loans and because of the ~~collateral, potential~~relationship between fair value and general economic conditions, the Company considers the fair value of individually evaluated loans to be highly sensitive to changes in 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.conditions.

~~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 September 30, 2023 and ~~financial liabilities are discussed below.~~December 31, 2022.

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

~~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.


	September 30, 2023
	Carrying Amount		Approximate Fair Value		Level 1		Level 2		Level 3
Financial assets:
Cash and due from banks	$	18,819	$	18,819	$	18,819	$	—	$	—
Interest-bearing deposits	1,802		1,802		1,802		—		—
Securities available for sale	609,365		609,365		—		609,365		—
Federal Home Loan Bank stock	26,691		26,691		26,691		—		—
Loans, net	2,821,630		2,680,671		—		2,680,671		—
Accrued interest receivable	13,598		13,598		13,598		—		—
Interest rate swaps	39,238		39,238		—		39,238		—
Financial liabilities:
Deposits	$	2,755,529	$	2,755,917	$	—	$	2,755,917	$	—
Federal funds purchased and other short-term borrowings	261,510		261,510		261,510		—		—
Subordinated notes, net	79,566		62,828		—		62,828		—
Federal Home Loan Bank advances	315,000		315,000		—		315,000		—
Long-term debt	48,986		48,986		—		48,986		—
Accrued interest payable	6,869		6,869		6,869		—		—
Interest rate swaps	18,512		18,512		—		18,512		—
Off-balance sheet financial instruments:
Commitments to extend credit	—		—		—		—		—
Standby letters of credit	—		—		—		—		—

Table of Contents

West Bancorporation, Inc. and Subsidiary

Notes to Consolidated Financial Statements

(unaudited)

(dollars in thousands, except per share data)

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,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate ~~risk;~~risk, including the effects of recent and potential additional rate increases by the Federal Reserve; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive ~~pressures;~~pressures, including from non-bank competitors such as "fintech" companies and digital asset service providers; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the ~~Company's~~Company’s loan ~~and investment portfolios,~~portfolio, including declines in commercial or residential real estate values or changes in the allowance for ~~loan~~credit losses dictated by new market conditions, accounting standards (including as a result of the implementation of the CECL accounting standard) or regulatory requirements; ~~actions~~the concentration of ~~bank and nonbank competitors;~~large deposits from certain clients, who have balances above current FDIC insurance limits; changes in local, national and international economic ~~conditions;~~conditions, including rising rates of inflation and possible recession; the effects of recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time at Silicon Valley Bank, Signature Bank and First Republic Bank that resulted in failure of those institutions; changes in legal and regulatory requirements, limitations and ~~costs;~~costs, including in response to the recent failures of Silicon Valley Bank, Signature Bank and First Republic Bank; changes in ~~customers'~~customers’ acceptance of the ~~Company's~~Company’s products and services; ~~cyber-attacks;~~the occurrence of fraudulent activity, breaches or failures of our information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, such as the COVID-19 pandemic, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their business; changes to U.S. tax laws, regulations and guidance; talent and labor shortages; the new 1 percent excise tax on stock buybacks by publicly traded companies; 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,~~2022, as filed with the ~~Securities~~SEC on February 23, 2023. The Company adopted ASU 2016-13 on January 1, 2023 and ~~Exchange Commission on March 1, 2017. There have been no significant changes~~replaced the allowance for loan losses "incurred loss" model discussed in the ~~critical accounting policies or the assumptions and judgments utilized in applying these policies since~~Form 10-K for the year ended December 31, ~~2016.~~2022 with the allowance for credit losses "current expected credit loss" model, referred to as the CECL model. Refer to Note 1 and 4 for additional information and accounting policies related to the CECL model.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

NON-GAAP FINANCIAL MEASURES

This report contains references to financial measures that are not defined in GAAP. Such non-GAAP financial measures include the Company’s presentation of net interest income and net interest margin on a fully taxable equivalent (FTE) basis, and the presentation of the efficiency ratio on an adjusted and FTE basis, excluding certain income and expenses. Management believes these non-GAAP financial measures provide useful information to both management and investors to analyze and evaluate the Company’s financial performance. These measures are considered standard measures of comparison within the banking industry. Additionally, management believes providing measures on a FTE basis enhances the comparability of income arising from taxable and nontaxable sources. Limitations associated with non-GAAP financial measures include the risks that persons might disagree as to the appropriateness of items included in these measures and that different companies might calculate these measures differently. These non-GAAP disclosures should not be considered an alternative to the Company’s GAAP results.

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


														Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended September 30,						Nine Months Ended September 30,							2023			2022			2023			2022
	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)	$	16,634		$	23,004		$	52,670		$	71,071
Tax-equivalent adjustment ⁽¹⁾	677			639			1,892			1,994			Tax-equivalent adjustment (1)	113			270			396			925
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)	16,747			23,274			53,066			71,996
Average interest-earning assets	$	1,882,837		$	1,745,878		$	1,820,997		$	1,699,703		Average interest-earning assets	3,478,053			3,322,521			3,458,606			3,371,915
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)	1.91		%	2.78		%	2.05		%	2.85		%

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)	$	16,747		$	23,274		$	53,066		$	71,996
Noninterest income	2,264			1,919			6,740			6,052			Noninterest income	2,822			3,276			8,168			7,943
Less: realized investment securities gains, net	(197		)	—			(423		)	(60		)
Plus: losses on disposal of premises and equipment, net	10			—			25			—

Adjustment for losses on disposal of premises and equipment, net													Adjustment for losses on disposal of premises and equipment, net	3			—			5			27
Adjusted income	$	17,785		$	17,279		$	52,747		$	50,679		Adjusted income	19,572			26,550			61,239			79,966
Noninterest expense	$	8,020		$	7,993		$	24,235		$	23,611		Noninterest expense	11,905			11,458			36,450			33,386
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)	60.83		%	43.16		%	59.52		%	41.75		%

(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. A lower ratio is more desirable.

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 months ended September 30, ~~2017~~2023 are compared to the results for the same periods in ~~2016~~,2022, and the consolidated financial condition of the Company as of September 30, ~~2017~~2023 is compared to that as of December 31, ~~2016~~. 2022. 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, 2022, filed with the SEC on February 23, 2023.

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, ~~Minnesota area.~~Owatonna, Mankato and St. Cloud.

Net income for the three months ended September 30, ~~2017~~2023 was ~~$6,405,~~$5,906, or ~~$0.39~~$0.35 per diluted common share, compared to ~~$5,813,~~$11,602, or ~~$0.36~~$0.69 per diluted common share, for the three months ended September 30, ~~2016.~~2022. The Company's annualized return on average assets and return on average equity for the three months ended September 30, ~~2017~~2023 were ~~1.29~~0.64 percent and ~~14.41~~10.89 percent, respectively, compared to ~~1.26~~1.32 percent and ~~14.20~~21.01 percent, respectively, for the three months ended September 30, ~~2016.~~2022.

~~Table of Contents~~

~~West Bancorporation, Inc.~~

~~Management's Discussion and Analysis~~

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

The ~~increase~~decrease 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 steady2023 compared to the same period in ~~2016.~~2022 was primarily due to a decrease in net interest income and loan swap fees and an increase in credit loss expense and FDIC insurance expense.

Net interest income for the three months ended September 30, ~~2017 grew $310,~~2023 decreased $6,370, or ~~2.1~~27.7 percent, compared to the three months ended September 30, ~~2016.~~2022. The ~~increase~~decrease in net interest income was ~~driven by a $47,008, or 3.4 percent,~~primarily due to the increase in ~~average loans outstanding~~interest expense on deposits and ~~a $68,071, or 19.7 percent,~~other borrowings resulting from rapidly rising short-term interest rates and an inverted yield curve, and changes in funding mix, partially offset by an increase in ~~average investment securities held~~interest income on loans and securities.

Noninterest income decreased $454 for the three months ended September 30, ~~2017~~2023, compared to the same ~~time~~ period in ~~2016. Partially offsetting the increase in interest income was an increase of $1,236 in interest expense on deposits,~~2022 primarily due to ~~higher interest rates paid on certain deposit products. The Company recorded no provision for~~a decrease in loan ~~losses for the three months ended September 30, 2017 compared to a $200 provision~~swap fees, partially offset by an increase in ~~the three months ended September 30, 2016.~~

trust services revenue. Noninterest ~~income grew $345, or 18.0 percent,~~expense increased $447 during the three months ended September 30, ~~2017~~2023 compared to the ~~same time period~~three months ended September 30, 2022, primarily due to increases in ~~2016, mainly as the result of net gains on sales of investment securities~~salaries and ~~an increase in trust revenue.~~employee benefits and FDIC insurance expense.

Net income for the nine months ended September 30, ~~2017~~2023 was ~~$18,876,~~$19,612, or ~~$1.16~~$1.17 per diluted common share, compared to ~~$16,985,~~$37,453, or ~~$1.05~~$2.23 per diluted common share, for the nine months ended September 30, ~~2016.~~2022. The Company's annualized return on average assets and return on average equity for the nine months ended September 30, ~~2017~~2023 were ~~1.32~~0.72 percent and ~~14.69~~12.22 percent, respectively, compared to ~~1.26~~1.43 percent and ~~14.29~~21.57 percent, respectively, for the ~~first~~ nine months ~~of 2016.~~ended September 30, 2022.

The ~~increase~~decrease in net income for the nine months ended September 30, ~~2017~~2023 compared to the same period in ~~2016~~2022 was primarily due to ~~growth~~a decrease 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 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~~credit loss expense, salaries and employee benefits, occupancy costs and FDIC insurance expense, partially offset by an increase in ~~noninterest expense.~~trust services revenue and a gain from bank-owned life insurance.

Net interest income for the nine months ended September 30, ~~2017 grew $1,820,~~2023 declined $18,401, or ~~4.3~~25.9 percent, compared to the nine months ended September 30, ~~2016.~~2022. The ~~increase~~decrease in net interest income was primarily due to the ~~$113,699~~ increase in ~~average~~interest expense on deposits and other borrowings resulting from rapidly rising short-term interest rates and an inverted yield curve, and changes in funding mix, partially offset by an increase in interest income on loans ~~outstanding~~and securities.

Noninterest income increased $225 for ~~the first nine months of 2017 compared to the first nine months of 2016. During~~ the nine months ended September 30, ~~2017, interest~~2023 compared to the same period in 2022 primarily due to a gain from bank-owned life insurance and an increase in trust services revenue, partially offset by a decrease in loan swap fees. Noninterest expense ~~on deposits~~ increased ~~$2,683~~$3,064 during the nine months ended September 30, 2023 compared to the nine months ended September 30, 2016, mainly due to increased interest rates on certain money market deposit products and certificates of deposit as a result of rising market rates. The Company recorded no provision for loan losses for the nine months ended September 30, 2017 compared to a $900 provision in the nine months ended September 30, 2016. During 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.

Noninterest income increased $688, or 11.4 percent, during the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016, mainly due to net gains on sales of investment securities, an increase in trust revenue and a nonrecurring gain on an asset sale. Noninterest expense grew $624 during the first nine months of 2017,2022, primarily due to ~~an increase~~increases in salaries and ~~benefit costs.~~employee benefits, occupancy and equipment expense and FDIC insurance expense.

Total loans outstanding increased $57,035, or 4.1 percent, during the first nine months of 2017. Management believes the loan pipeline is strong and that loan growth will continue in all three of our markets during the remainder 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. As of September 30, 2017, the allowance for loan losses was 1.12 percent of outstanding loans, and management believed the allowance was adequate to absorb any losses inherent in the loan portfolio.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

~~Each quarter throughout~~Total loans outstanding increased $106,941, or 3.9 percent, during the ~~year,~~first nine months of 2023. The credit quality of the loan portfolio remained strong, as evidenced by the Company's ~~four~~ratio of nonperforming loans to total assets of 0.01 percent as of both September 30, 2023 and December 31, 2022. As of September 30, 2023, the allowance for credit losses was 0.99 percent of total outstanding loans, compared to 0.93 percent as of December 31, 2022. Management believed the allowance for credit losses at September 30, 2023 was adequate to absorb expected losses in the loan portfolio as of that date.

On a quarterly basis, the Company compares three key performance metrics ~~are compared~~ to those of our identified peer group. The peer group for 2023 consists of ~~16 companies. The group of 16~~22 Midwestern, publicly traded ~~peer~~ financial institutions, ~~against which we compare our performance each quarter consists of BankFinancial~~including Bank First Corporation, Bridgewater Bancshares Inc., ChoiceOne Financial Services, Inc., 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., HBT Financial Inc., Hills Bancorporation, ~~Horizon Bancorp,~~ Isabella Bank Corporation, LCNB Corp., Macatawa Bank Corporation, Mercantile Bank Corporation, ~~MidWestOne~~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.~~nonperforming assets to total assets. 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(2)
	As of and for the nine months ended September 30, 2023	As of and for the six months ended June 30, 2023	As of and for the six months ended June 30, 2023
Return on average equity	12.22%	12.90%	2.83% - 17.82%
Efficiency ratio(1)	59.52%	58.91%	44.96% - 68.04%
Nonperforming assets to total assets	0.01%	0.01%	0.00% - 0.48%

(1) The efficiency ratio is a non-GAAP financial measure. For further information, refer to the Non-GAAP Financial Measures section of this report.

(2) Latest data available.

~~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.

At its meeting on October 25, ~~2017,~~2023, the Company's Board of Directors declared a regular quarterly cash dividend of ~~$0.18~~$0.25 per common share. The dividend is payable on November 22, ~~2017,~~2023, to stockholders of record ~~as of~~on 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.~~2023.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

RESULTS OF OPERATIONS

The following table shows selected financial results and measures for the three and nine months ended September 30, ~~2017~~2023 compared with the same periods in ~~2016.~~2022.


	Three Months Ended September 30,											Nine Months Ended September 30,												Three Months Ended September 30,											Nine Months Ended September 30,
	2017			2016			Change			Change %		2017			2016			Change			Change %			2023			2022			Change			Change %		2023			2022			Change			Change %
Net income	$	6,405		$	5,813		$	592		10.18	%	$	18,876		$	16,985		$	1,891		11.13	%	Net income	$	5,906		$	11,602		$	(5,696)		(49.09)	%	$	19,612		$	37,453		$	(17,841)		(47.64)	%
Average assets	1,969,547			1,838,125			131,422			7.15	%	1,911,391			1,794,777			116,614			6.50	%	Average assets	3,679,541			3,475,894			203,647			5.86	%	3,647,777			3,507,796			139,981			3.99	%
Average stockholders' equity	176,308			162,867			13,441			8.25	%	171,827			158,821			13,006			8.19	%	Average stockholders' equity	215,230			219,065			(3,835)			(1.75)	%	214,599			232,177			(17,578)			(7.57)	%

Return on average assets	1.29		%	1.26		%	0.03		%			1.32		%	1.26		%	0.06		%			Return on average assets	0.64		%	1.32		%	(0.68)		%			0.72		%	1.43		%	(0.71)		%
Return on average equity	14.41		%	14.20		%	0.21		%			14.69		%	14.29		%	0.40		%			Return on average equity	10.89		%	21.01		%	(10.12)		%			12.22		%	21.57		%	(9.35)		%
Net interest margin ⁽¹⁾	3.31		%	3.50		%	(0.19		)%			3.41		%	3.51		%	(0.10		)%			Net interest margin (1)	1.91		%	2.78		%	(0.87)		%			2.05		%	2.85		%	(0.80)		%
Efficiency ratio ^{(1) (2)}	45.10		%	46.25		%	(1.15		)%			45.95		%	46.59		%	(0.64		)%			Efficiency ratio (1) (2)	60.83		%	43.16		%	17.67		%			59.52		%	41.75		%	17.77		%
Dividend payout ratio	45.57		%	47.19		%	(1.62		)%			45.46		%	47.43		%	(1.97		)%			Dividend payout ratio	70.79		%	35.86		%	34.93		%			63.85		%	33.27		%	30.58		%
Average equity to average assets ratio	8.95		%	8.86		%	0.09		%			8.99		%	8.85		%	0.14		%			Average equity to average assets ratio	5.85		%	6.30		%	(0.45)		%			5.88		%	6.62		%	(0.74)		%

												As of September 30,																							As of September 30,
												2017			2016			Change																	2023			2022			Change
Texas ratio ⁽²⁾												0.27		%	0.55		%	(0.28		)%
Nonperforming assets to total assets (2)																							Nonperforming assets to total assets (2)												0.01		%	0.01		%	—		%
Equity to assets ratio												8.77		%	9.03		%	(0.26		)%			Equity to assets ratio												5.51		%	5.65		%	(0.14)		%
Tangible common equity ratio	Tangible common equity ratio											8.77		%	9.03		%	(0.26		)%			Tangible common equity ratio												5.51		%	5.65		%	(0.14)		%

(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~~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.

~~Texas~~•Average equity to average assets ratio - average equity divided by average assets.

•Nonperforming assets to total assets - total nonperforming assets divided by ~~tangible common equity plus the allowance for loan losses.~~total assets.

•Equity to assets ratio - equity divided by assets.

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

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 ana FTE basis.


Data for the three months ended September 30:	Data for the three months ended September 30:																								Data for the three months ended September 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			2023		2022		Change		Change- %		2023		2022		Change		Change- %		2023		2022		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	$	525,596	$	498,268	$	27,328	5.48	%	$	8,332	$	6,144	$	2,188	35.61	%	6.29	%	4.89	%	1.40	%
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)	2,278,129		2,074,692		203,437		9.81	%	28,310		21,981		6,329		28.79	%	4.93	%	4.20	%	0.73	%
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	9,488		6,902		2,586		37.47	%	173		86		87		101.16	%	7.24	%	5.01	%	2.23	%
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	2,813,213		2,579,862		233,351		9.05	%	36,815		28,211		8,604		30.50	%	5.19	%	4.34	%	0.85	%

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	514,488		584,721		(70,233)		(12.01)	%	3,427		3,147		280		8.90	%	2.66	%	2.15	%	0.51	%
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)	148,531		153,187		(4,656)		(3.04)	%	934		1,051		(117)		(11.13)	%	2.52	%	2.74	%	(0.22)	%
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	663,019		737,908		(74,889)		(10.15)	%	4,361		4,198		163		3.88	%	2.63	%	2.28	%	0.35	%

Federal funds sold	42,663		20,783		21,880			105.28	%	136		26		110			423.08	%	1.27	%	0.51	%	0.76	%
Interest-bearing deposits																									Interest-bearing deposits	1,821		4,751		(2,930)		(61.67)	%	29		30		(1)		(3.33)	%	6.36	%	2.51	%	3.85	%
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)	$	3,478,053	$	3,322,521	$	155,532	4.68	%	41,205		32,439		8,766		27.02	%	4.70	%	3.87	%	0.83	%

Interest-bearing liabilities:																									Interest-bearing liabilities:
Deposits:																									Deposits:
Interest-bearing demand,
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	%
Interest-bearing demand																									Interest-bearing demand	$	434,649	$	476,145	$	(41,496)	(8.71)	%	1,680		679		1,001		147.42	%	1.53	%	0.57	%	0.96	%
Savings and money market																									Savings and money market	1,329,963		1,327,935		2,028		0.15	%	11,080		4,461		6,619		148.37	%	3.31	%	1.33	%	1.98	%
Time deposits	159,949		110,223		49,726			45.11	%	422		194		228			117.53	%	1.04	%	0.70	%	0.34	%	Time deposits	427,545		343,862		83,683		24.34	%	4,396		1,149		3,247		282.59	%	4.08	%	1.33	%	2.75	%
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	2,192,157		2,147,942		44,215		2.06	%	17,156		6,289		10,867		172.79	%	3.10	%	1.16	%	1.94	%
Other borrowed funds	150,548		132,583		17,965			13.55	%	1,421		1,103		318			28.83	%	3.75	%	3.31	%	0.44	%
Borrowed Funds:																									Borrowed Funds:
Federal funds purchased and																									Federal funds purchased and
other short-term borrowings																									other short-term borrowings	248,065		105,431		142,634		135.29	%	3,165		655		2,510		383.21	%	5.06	%	2.46	%	2.60	%
Subordinated notes, net																									Subordinated notes, net	79,533		79,285		248		0.31	%	1,113		1,106		7		0.63	%	5.55	%	5.54	%	0.01	%
Federal Home Loan Bank																									Federal Home Loan Bank
advances																									advances	302,119		125,000		177,119		141.70	%	2,329		649		1,680		258.86	%	3.06	%	2.06	%	1.00	%
Long-term debt																									Long-term debt	49,448		51,486		(2,038)		(3.96)	%	695		466		229		49.14	%	5.57	%	3.60	%	1.97	%
Total borrowed funds																									Total borrowed funds	679,165		361,202		317,963		88.03	%	7,302		2,876		4,426		153.89	%	4.27	%	3.16	%	1.11	%
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	$	2,871,322	$	2,509,144	$	362,178	14.43	%	24,458		9,165		15,293		166.86	%	3.38	%	1.45	%	1.93	%

Tax-equivalent net interest income (FTE) ⁽⁴⁾										$	15,708	$	15,360	$	348		2.27	%
Net interest income (FTE) (4)																									Net interest income (FTE) (4)									$	16,747	$	23,274	$	(6,527)	(28.04)	%
Net interest spread (FTE)																			3.04	%	3.29	%	(0.25	)%	Net interest spread (FTE)																	1.32	%	2.42	%	(1.10)	%
Net interest margin (FTE) ⁽⁴⁾	Net interest margin (FTE) ⁽⁴⁾																		3.31	%	3.50	%	(0.19	)%	Net interest margin (FTE) (4)																	1.91	%	2.78	%	(0.87)	%

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)


Data for the nine months ended September 30:

	Average Balance								Interest Income/Expense								Yield/Rate
	2023		2022		Change		Change- %		2023		2022		Change		Change- %		2023		2022		Change
Interest-earning assets:
Loans: (1) (2)
Commercial	$	524,231	$	479,723	$	44,508	9.28	%	$	23,867	$	15,751	$	8,116	51.53	%	6.09	%	4.39	%	1.70	%
Real estate (3)	2,247,851		2,037,779		210,072		10.31	%	80,584		60,678		19,906		32.81	%	4.79	%	3.98	%	0.81	%
Consumer and other	8,852		5,154		3,698		71.75	%	453		173		280		161.85	%	6.84	%	4.50	%	2.34	%
Total loans	2,780,934		2,522,656		258,278		10.24	%	104,904		76,602		28,302		36.95	%	5.04	%	4.06	%	0.98	%

Securities:
Taxable	526,259		611,647		(85,388)		(13.96)	%	10,175		9,126		1,049		11.49	%	2.58	%	1.99	%	0.59	%
Tax-exempt (3)	149,497		160,226		(10,729)		(6.70)	%	2,855		3,199		(344)		(10.75)	%	2.55	%	2.66	%	(0.11)	%
Total securities	675,756		771,873		(96,117)		(12.45)	%	13,030		12,325		705		5.72	%	2.57	%	2.13	%	0.44	%

Interest-bearing deposits	1,916		77,386		(75,470)		(97.52)	%	84		179		(95)		(53.07)	%	5.86	%	0.31	%	5.55	%
Total interest-earning assets (3)	$	3,458,606	$	3,371,915	$	86,691	2.57	%	118,018		89,106		28,912		32.45	%	4.56	%	3.53	%	1.03	%

Interest-bearing liabilities:
Deposits:
Interest-bearing demand	$	472,729	$	513,106	$	(40,377)	(7.87)	%	4,882		1,253		3,629		289.62	%	1.38	%	0.33	%	1.05	%
Savings and money market	1,332,933		1,505,834		(172,901)		(11.48)	%	30,714		8,520		22,194		260.49	%	3.08	%	0.76	%	2.32	%
Time	420,513		248,628		171,885		69.13	%	11,176		1,813		9,363		516.44	%	3.55	%	0.97	%	2.58	%
Total deposits	2,226,175		2,267,568		(41,393)		(1.83)	%	46,772		11,586		35,186		303.69	%	2.81	%	0.68	%	2.13	%
Borrowed funds:
Federal funds purchased and
other short-term borrowings	207,034		50,796		156,238		307.58	%	7,508		812		6,696		824.63	%	4.85	%	2.14	%	2.71	%
Subordinated notes, net	79,466		43,955		35,511		80.79	%	3,328		1,748		1,580		90.39	%	5.60	%	5.32	%	0.28	%
Federal Home Loan Bank
advances	249,011		125,000		124,011		99.21	%	5,212		1,914		3,298		172.31	%	2.80	%	2.05	%	0.75	%
Long-term debt	50,538		51,490		(952)		(1.85)	%	2,132		1,050		1,082		103.05	%	5.64	%	2.73	%	2.91	%
Total borrowed funds	586,049		271,241		314,808		116.06	%	18,180		5,524		12,656		229.11	%	4.15	%	2.72	%	1.43	%
Total interest-bearing
liabilities	$	2,812,224	$	2,538,809	$	273,415	10.77	%	64,952		17,110		47,842		279.61	%	3.09	%	0.90	%	2.19	%

Net interest income (FTE) (4)									$	53,066	$	71,996	$	(18,930)	(26.29)	%
Net interest spread (FTE)																	1.47	%	2.63	%	(1.16)	%
Net interest margin (FTE) (4)																	2.05	%	2.85	%	(0.80)	%

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

(2)Interest income on loans includes amortization of loan fees and costs and prepayment penalties collected, which are not material.

(3)Tax-exempt income has been adjusted to a tax-equivalent basis using a federal income tax rate of 21 percent and is adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans.

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

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 )%

Table of Contents


~~(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.~~

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

The Company's largest component of net income is net interest income, which is the difference between interest earned on interest-earning assets, consisting primarily of loans and ~~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 also 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 the ~~targeted~~target federal funds interest rate by 25a total of 425 basis points in ~~each~~2022 and an additional 100 basis points during the first nine months of ~~December 2016, March 2017~~2023. At this time the extent to which additional target federal funds interest rate changes may occur during the remainder of 2023 is unknown. The increases that occurred throughout 2022 and ~~June 2017.~~2023 have had a significant impact on the comparability of net interest income between 2023 and 2022.

~~Table of Contents~~

~~West Bancorporation, Inc.~~

~~Management's Discussion and Analysis~~

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

Net interest margin on a FTE basis, a non-GAAP financial measure, is a measure of the net return on interest-earning assets and is computed by dividing annualized tax-equivalent net interest income by total average interest-earning assets for the period. The net interest margin for the three and nine months ended September 30, ~~2017 declined 19~~2023 decreased by 87 and 1080 basis points, respectively, compared to the three and nine months ended September 30, ~~2016.~~2022. The primary ~~drivers~~driver of the ~~decline~~decrease in the net interest margin ~~were~~was an increase in ~~interest~~ rates paid on ~~certain deposit categories~~deposits and borrowed funds, which have repriced faster than loans and securities, and an increase in ~~the variable rates paid on other~~average borrowed funds ~~partially offset by an increase in yield on loans and investment securities. Despite the decline in the net interest margin, tax-equivalent~~balances. Tax-equivalent net interest income for the three and nine months ended September 30, ~~2017 increased $348~~2023 decreased $6,527 and ~~$1,718,~~$18,930, respectively, compared to the same time periods in ~~2016.~~2022. The ~~increase~~decrease in net interest income for the three and nine months ended September 30, ~~2017~~2023 compared to the three and nine months ended September 30, ~~2016~~2022 was ~~largely~~primarily due to the increase in rates paid on deposits and borrowed funds and increases in average outstanding loans and an increase in yield on investment 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.borrowed funds balances.

Tax-equivalent interest income on loans increased $901 for the three months ended September 30, 2017 compared to the three months ended September 30, 2016. For the nine months ended September 30, 2017, tax-equivalent interest income on loans increased $4,097 compared to the same time period in 2016. The improvement for both time periods was primarily due to the increase in average loan balances outstanding. The average yields on loans increased by nine$8,604 and ~~four basis points, respectively,~~$28,302 for the three and nine months ended September 30, ~~2017~~2023 compared to the three and nine months ended September 30, ~~2016.~~2022. This increase in interest income on loans was driven by a combination of an increase in the average balance of loans and an increase in loan yields. The average balances of loans for the three and nine months ended September 30, 2023 increased $233,351 and $258,278, respectively, compared to the three and nine months ended September 30, 2022, while loan yields increased 85 and 98 basis points, respectively. Rising market interest rates have resulted in increasing rates on variable-rate loans and higher interest rates on renewed and originated loans. 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 yield on the loan portfolio is expected to increase in flat and rising rate environments as variable-rate loans reprice at higher rates and renewals and new originations are priced at prevailing market rates, which exceed the roll-off rate of principal repayments on existing loans. 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~~deposits increased $44,215 for the three months ended September 30, ~~2017 than during~~2023 compared to the same period in ~~2016 as a result of significant investment purchase activity during~~2022, while the ~~second and third quarters of 2017. The~~ average balance of ~~investment securities was slightly lower during~~deposits for the nine months ended September 30, ~~2017 than during~~2023 decreased $41,393 compared to the same period in ~~2016.~~2022. The ~~purchase activity in 2017 focused~~rates paid on ~~higher yielding bonds within the existing risk profile~~deposits increased 194 and was the result of growth in deposits and the reinvestment of proceeds from sales and principal paydowns of investment securities. In certain cases, securities were sold and the funds were reinvested 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 30213 basis points ~~respectively,~~ for the three and nine months ended September 30, ~~2017~~2023 compared to the same periods ~~last year.~~in 2022. The increase in the cost of deposits was primarily due to increases in deposit interest rates in response to increases in the target federal funds rate and market interest rates, increased competition for deposit balances, and changes in deposit mix. The Federal Reserve increased the target federal funds rate by a total of 425 basis points in 2022 and an additional 100 basis points in the first nine months of 2023. These increases have had an adverse impact on the cost of deposits and have increased market competition.

~~The average balance of interest-bearing demand, savings~~Interest expense on borrowed funds increased $4,426 and ~~money market deposits increased~~$12,656 for the three and nine months ended September 30, ~~2017~~2023 compared to the three and nine months ended September 30, 2016, partially due to an increase in average balances of money market accounts, including public 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.2022. The average ~~rate paid on interest-bearing demand, savings~~balance of borrowed funds increased $317,963 and ~~money market deposits~~$314,808 for the three and nine months ended September 30, ~~2017 increased 33 and 26 basis points, respectively,~~2023 compared to the three and nine months ended September 30, ~~2016.~~2022. The ~~increase~~Company issued $60,000 of subordinated debt 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. The~~June 2022. Additionally, average ~~balance~~balances of ~~time deposits~~federal funds purchased and other short-term borrowings increased $142,634 and $156,238 for the three and nine months ended September 30, ~~2017~~2023 compared to the same periods in ~~2016.~~2022. The ~~increase was primarily due to the shift of demand~~average rate on federal funds purchased and ~~savings account balances to higher interest rate time deposits. Interest rates on time deposits~~other short-term borrowings increased 34by 260 and 25271 basis points ~~respectively, for~~in the three and nine months ended September 30, ~~2017 compared to the same periods in 2016, primarily due to higher market interest rates paid at the time new and renewed time deposits were issued.~~

~~The average rate paid on other borrowed funds increased 44 and 37 basis points, respectively, for the three and nine months ended September 30, 2017~~2023 compared to the three and nine months ended September 30, ~~2016. The~~2022. This increase in average rates paid on federal funds purchased and other short-term borrowings was driven by the increases in the target federal funds rate by the Federal Reserve. The average ~~rate paid~~balances of FHLB advances increased by $177,119 and $124,011 for the three and nine months ended September 30, 2023 compared to the three and nine months ended September 30, 2022. This increase in average balances was primarily due to ~~increases in rates for variable rate~~additional rolling one-month 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~~added in the ~~average balance~~first nine months of ~~other borrowed funds.~~

2023 that are hedged with long-term interest rate swap agreements to provide fixed cost wholesale funding.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

~~Provision for Loan Losses~~Credit Loss Expense and the Related Allowance for ~~Loan~~Credit Losses

The ~~provision~~Company adopted ASU No. 2016-13 effective January 1, 2023 using the modified retrospective method for ~~loan losses~~financial assets measured at amortized cost and off-balance-sheet credit exposures. See Notes 1 and 4 to the Financial Statements for additional information.

The credit loss expense recorded on the income statement represents ~~charges~~a charge made to earnings to maintain an adequate allowance for ~~loan~~credit losses. The adequacy of the allowance for ~~loan~~credit losses is evaluated quarterly by management and reviewed by the Board of Directors. The allowance for ~~loan~~credit losses is management's ~~best~~ estimate of ~~probable~~expected lifetime losses ~~inherent~~ in the loan portfolio as of the balance sheet date. ~~Based upon the evaluation, no provision~~There 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~~loss expense of $200 for the three and nine months ended September 30, ~~2016~~2023, compared to a credit loss expense of $0 and negative $2,500 for the three and nine months ended September 30, 2022. The credit loss expense recorded in 2023 was ~~$200 and $900, respectively.~~directly associated with loan growth. The negative credit loss expense recorded in 2022 was due to sustained improvement in the performance of loans. Management believed the allowance for credit losses at September 30, 2023 was adequate to absorb expected losses in the loan portfolio as of that date.

Factors ~~considered~~management considers in establishing an appropriate allowance include: the borrower's financial condition; the value and adequacy of loan collateral; the condition of the local economy and the borrower's specific industry; the levels and trends of loans by segment; and a review of delinquent and classified loans. The quarterly evaluation of the allowance focuses on factors such as specific loan reviews, changes in the components of the loan portfolio given the current and forecasted economic conditions, and historical loss experience. Any one of the following conditions may result in the review of a specific loan: concern about whether the customer's cash flow or net worth is sufficient to repay the loan; delinquency status; criticism of the loan in a regulatory examination; the suspension of interest accrual; or other factors, including whether the loan has other special or unusual characteristics that suggest special monitoring is warranted. The Company's concentration risks include geographic ~~concentration~~concentrations in central and eastern Iowa and ~~southeastern~~southern Minnesota. The local economies in those markets are composed primarily of major financial service ~~industries~~companies, healthcare providers, educational institutions, technology and agribusiness companies, and state and ~~county~~local governments.

West Bank has a significant portion of its loan portfolio in commercial real estate loans, commercial lines of credit, commercial term loans, and construction and land development loans. West Bank's typical commercial borrower is a small- or medium-sized, privately owned business entity. ~~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~~credit losses. Such agencies may require West Bank to recognize additional charge-offs or provision for credit 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~~Commercially reasonable efforts are made to maximize subsequent recoveries. The following table summarizes the activity in the Company's allowance for ~~loan~~credit losses on loans for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022 and related ratios.


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023			2022			Change		2023			2022			Change
Balance at beginning of period	$	27,938		$	25,434		$	2,504	$	25,473		$	28,364		$	(2,891)
Adoption of CECL	—			—			—		2,458			—			2,458
Charge-offs	—			(31)			31		(18)			(482)			464
Recoveries	9			15			(6)		34			36			(2)
Net (charge-offs) recoveries	9			(16)			25		16			(446)			462
Provision for credit losses charged
(credited) to operations	200			—			200		200			(2,500)			2,700
Balance at end of period	$	28,147		$	25,418		$	2,729	$	28,147		$	25,418		$	2,729

Average loans outstanding	$	2,813,213		$	2,579,862				$	2,780,934		$	2,522,656

Ratio of annualized net (charge-offs)
recoveries during the period to average
loans outstanding	0.00		%	0.00		%			0.00		%	(0.02)		%

Ratio of allowance for credit losses for
loans to average loans outstanding	1.00		%	0.99		%			1.01		%	1.01		%

Ratio of allowance for credit losses for
for loans to total loans at end of period	0.99		%	0.97		%			0.99		%	0.97		%

Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 Change 2017 2016 Change
Balance at beginning of period $ 16,486
$ 15,829
$ 657
$ 16,112
$ 14,967
$ 1,145
Charge-offs (179 ) (171 ) (8 ) (372 ) (264 ) (108 )
Recoveries 51
100
(49 ) 618
355
263
Net (charge-offs) recoveries (128 ) (71 ) (57 ) 246
91
155
Provision for loan losses charged to operations —
200
(200 ) —
900
(900 )
Balance at end of period $ 16,358
$ 15,958
$ 400
$ 16,358
$ 15,958
$ 400

Average loans outstanding $ 1,426,115
$ 1,379,107
$ 1,434,956
$ 1,321,257

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

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

In general, the U.S. economy is growing, but at a slower rate than was considered normal before the financial crisis. Average monthly job growth through August 2017 was approximately 177,000, while the national unemployment rate has declined slightly to 4.2 percent as of September 30, 2017, the lowest level since May 2007. The U.S. economy lost 33,000 jobs in September 2017, primarily in the leisure and hospitality industries, that were attributed to Hurricanes Irma and Harvey. Activity in the housing market continues at a moderate pace. Interest rates are expected to continue to gradually rise. The economic environments in Iowa and Minnesota continue to improve. Based on the current economic indicators, the Company decided to maintain the economic factors within the allowance for loan losses evaluation at the same levels used in 2016. In the first nine months of 2017, the Company continued to use experience 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 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 inherent in the loan portfolio at the end of the quarter.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Noninterest Income

The following tables show the variance from the prior year in the noninterest income categories shown in the Consolidated Statements of Income. ~~In addition, accounts within the “Other income” category that represent a significant portion of the total or a significant variance are shown below.~~


	Three Months Ended September 30,
Noninterest income:	2023		2022		Change		Change %
Service charges on deposit accounts	$	463	$	553	$	(90)	(16.27)	%
Debit card usage fees	495		498		(3)		(0.60)	%
Trust services	831		780		51		6.54	%
Increase in cash value of bank-owned life insurance	262		246		16		6.50	%
Loan swap fees	431		835		(404)		(48.38)	%
Other income:
All other income	340		364		(24)		(6.59)	%
Total other income	340		364		(24)		(6.59)	%
Total noninterest income	$	2,822	$	3,276	$	(454)	(13.86)	%

	Nine Months Ended September 30,
Noninterest income:	2023		2022		Change		Change %
Service charges on deposit accounts	$	1,383	$	1,718	$	(335)	(19.50)	%
Debit card usage fees	1,492		1,477		15		1.02	%
Trust services	2,286		2,031		255		12.56	%
Increase in cash value of bank-owned life insurance	769		709		60		8.46	%
Gain from bank-owned life insurance	691		—		691		N/A
Loan swap fees	431		835		(404)		(48.38)	%
Other income:
All other income	1,116		1,173		(57)		(4.86)	%
Total other income	1,116		1,173		(57)		(4.86)	%
Total noninterest income	$	8,168	$	7,943	$	225	2.83	%

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~~decline in service charges on deposit accounts was primarily attributable to a higher earnings credit rate on commercial accounts. Revenue from trust services was higher for the three and nine months ended September 30, ~~2017~~2023 compared to the three and nine months ended September 30, ~~2016 was driven by the March~~2022 primarily due to increases in one-time estate fees. An increase in trust assets 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~~accounts since September 30, 2022 also contributed to the ~~same period~~increase 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 due to the combination of a higher amount of one-time estate fees and asset growth achieved through ongoing business development efforts.

~~Gain~~service fees. The gain from bank-owned life insurance ~~was recognized~~ for ~~both~~ the nine months ended September 30, ~~2017~~2023 was the result of a death benefit claim. Loan swap fees in 2023 and ~~2016, but not during the three months ended September 30, 2017 and 2016.~~

~~The Company recognized net gains on sales~~2022 consist of ~~investment securities~~fees earned 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 at gains and reinvested the proceeds in higher yielding securities with similar risk profiles and slightly longer durations.back-to-back swap program.

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 the variance from the prior year periods in the noninterest expense categories shown in the Consolidated Statements of Income. In addition, accounts within the ~~“Other~~“other expenses” category that represent a significant portion of the total or a significant variance are shown below.


	Three Months Ended September 30,
Noninterest expense:	2023		2022		Change		Change %
Salaries and employee benefits	$	6,696	$	6,578	$	118	1.79	%
Occupancy and equipment	1,359		1,315		44		3.35	%
Data processing	703		644		59		9.16	%
Technology and software	573		651		(78)		(11.98)	%
FDIC insurance	439		127		312		245.67	%
Professional fees	254		250		4		1.60	%
Director fees	196		209		(13)		(6.22)	%
Other expenses:
Business development	287		305		(18)		(5.90)	%
Insurance expense	178		198		(20)		(10.10)	%
Trust	159		137		22		16.06	%
Charitable contributions	60		—		60		N/A
Consulting fees	56		66		(10)		(15.15)	%
Marketing	34		60		(26)		(43.33)	%
Low income housing projects amortization	136		116		20		17.24	%
New markets tax credit project amortization and management fees	230		230		—		—	%
All other	545		572		(27)		(4.72)	%
Total other expenses	1,685		1,684		1		0.06	%
Total noninterest expense	$	11,905	$	11,458	$	447	3.90	%

	Nine Months Ended September 30,
Noninterest expense:	2023		2022		Change		Change %
Salaries and employee benefits	$	20,592	$	19,286	$	1,306	6.77	%
Occupancy and equipment	4,008		3,643		365		10.02	%
Data processing	2,067		1,924		143		7.43	%
Technology and software	1,665		1,619		46		2.84	%
FDIC insurance	1,275		753		522		69.32	%
Professional fees	791		669		122		18.24	%
Director fees	652		599		53		8.85	%
Other expenses:
Business development	1,035		832		203		24.40	%
Insurance expense	610		505		105		20.79	%
Trust	462		412		50		12.14	%
Charitable contributions	180		—		180		N/A
Consulting fees	175		241		(66)		(27.39)	%
Marketing	115		184		(69)		(37.50)	%
Low income housing projects amortization	469		388		81		20.88	%
New markets tax credit project amortization and management fees	689		689		—		—	%
All other	1,665		1,642		23		1.40	%
Total other expenses	5,400		4,893		507		10.36	%
Total noninterest expense	$	36,450	$	33,386	$	3,064	9.18	%

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 months ended September 30, ~~2017~~2023 when compared to the three and nine months ended September 30, ~~2016, mainly as the result of~~2022, due to wage increases in response to market conditions and competition in retaining and recruiting talent. Additionally, there has been an increase in full-time equivalent employees with growth in our commercial banking team and information technology department. Occupancy and equipment expense increased for the ~~price of Company common stock,~~nine months ended September 30, 2023 compared to the same period in 2022 primarily due to an increase in depreciation expense related to the new bank building in St. Cloud, Minnesota which opened in March 2022 and scheduled increases in rent expense on existing leases. FDIC insurance expense increased ~~stock-based employee compensation costs.~~

~~When compared with~~during the three and nine months ended September 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~~2023 when compared to the same time ~~period~~periods in ~~2016 was~~2022 primarily ~~because of costs associated with upgrading credit analysis software, one-time costs associated with revising~~due to the ~~retail checking account products, ongoing enhancements and monitoring tools for maintaining security, and an annual-inflation-rate-based contractual~~FDIC's 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~~minimum assessment rate, ~~calculation includes a series of risk-based factors. As a result~~which was announced in 2022 and effective as of the ~~May 2017 capital injection~~first quarter 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 2018.2023.

~~Professional fees~~Business development expenses increased for the nine months ended September 30, ~~2017~~2023 compared to the same time period in ~~2016, chiefly~~2022 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~~an increase in the size of our commercial banking team and a general increase in sponsorships and business development activity. Insurance expense increased 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~~2023 compared to the same ~~time periods~~period in ~~2016 due to the accrual of the normal annual contribution to the West Bancorporation Foundation.~~

The increase in trust expense in the three and nine months ended September 30, 2017 compared to the three and nine months ended September 30, 2016 is commensurate with 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 of litigation costs was received in the fourth quarter of 2016.

~~All other expenses declined for the three and nine months ended September 30, 2017 compared to the same periods in 2016,~~2022 primarily due to ~~the elimination of certain~~insurance costs related to ~~a retail deposit product, and first quarter 2016 included a one-time cost associated with a bank-owned life insurance claim.~~bank buildings that are under construction.

~~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~~$1,445 (19.7 percent of pre-tax income) and ~~$8,142 (30.1~~$4,576 (18.9 percent of pre-tax income) for the three and nine months ended September 30, ~~2017, respectively,~~2023, compared with ~~$2,634 (31.2~~$3,220 (21.7 percent of pre-tax income) and ~~$7,249 (29.9~~$10,675 (22.2 percent of pre-tax income) for the three and nine months ended September 30, ~~2016.~~2022. The Company's consolidated income tax rate differs from the federal statutory income tax rate in each period, primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, tax-exempt gain onfrom bank-owned life insurance, disallowed interest expense, and state income taxes.

~~Two other items significantly impacted~~ For the ~~effective~~nine months ended September 30, 2022, income tax expense included a one-time increase in state income tax expense related to the June 2022 enactment of changes in the Iowa bank franchise tax rates. This legislation reduced the Iowa bank franchise tax rate applied to apportioned income for 2023 and future years. The future reduction in the state tax rate required the Company to reduce net deferred tax assets by $671 and in turn caused the one-time increase in 2022 tax expense.

Additionally, for the nine months ended September 30, ~~2017 compared to~~2023 a tax expense of $5 was recorded as a result of 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 increasedecrease 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~~period. For the nine months ended September 30, ~~2017,~~2022, a tax benefit of ~~$285~~$385 was recorded as a result of ~~this change~~the increase in ~~accounting method. By comparison,~~fair value of restricted stock over the ~~tax benefit recorded in additional paid-in capital for the nine months ended September 30, 2016 was $105.~~vesting period. The tax ~~rate~~rates for the first nine months of ~~2017~~2023 and ~~2016 was~~2022 were also impacted by year-to-date federal low income housing tax credits and a new markets tax credit of approximately ~~$308~~$1,123 and ~~$262,~~$1,101, respectively.

FINANCIAL CONDITION

The Company had total assets of ~~$2,030,348~~$3,701,900 as of September 30, ~~2017, an increase of 9.5 percent~~2023, compared to total assets of ~~$1,854,204~~$3,613,218 as of December 31, ~~2016. The most significant changes~~2022. Fluctuations in the balance sheet ~~were~~included increases in ~~investment~~loans, premises and equipment, and borrowed funds and decreases in securities available for sale ~~loans, deposits, short-term borrowings~~ and ~~long-term debt, and a decline in cash and cash equivalents. A summary of changes in the balance sheet components is provided below.~~deposits.

~~Investment~~ Securities

~~The balance of investment securities~~Securities available for sale ~~increased~~decreased by ~~$157,737~~$54,750 during the nine months ended September 30, ~~2017. State and political subdivision securities increased by $69,920, corporate notes increased by $19,152, and government agency guaranteed collateralized mortgage obligations, mortgage-backed~~2023. This decrease was due to principal paydowns on securities and ~~asset-backed securities increased by a total~~the decline in fair value of ~~$68,319 during~~ the ~~nine months ended September 30, 2017. The Company purchased $267,133 of investment~~ securities available for sale ~~during~~resulting from the ~~nine months ended September 30, 2017. Securities sold totaled $74,224,~~increase in market interest rates since December 31, 2022. Management concluded the unrealized losses are the result of increases in risk-free market interest rates since the securities were purchased and are not an indication of declining credit quality. Unrealized losses are recorded in accumulated other comprehensive loss, net of tax. The Company expects the securities portfolio as a percentage of total assets to decrease over time as the proceeds ~~were primarily reinvested in higher yielding securities that have a similar risk profile. The remaining purchases included the reinvestment of normal principal~~from paydowns ~~calls~~ and maturities ~~as well as investing the~~may be used for loan growth ~~in deposits. The overall mix~~or repayment of ~~the entire investment portfolio did not change significantly as a result of this activity.~~borrowed funds.

As of September 30, ~~2017,~~2023, approximately 6062 percent of the available for sale ~~investment~~ securities portfolio consisted of government agency guaranteed collateralized mortgage obligations and mortgage-backed ~~securities and asset-backed~~ securities. ~~Management believes~~We believe these securities ~~provide relatively good yields,~~ have little to no credit risk and provide ~~fairly consistent~~ cash ~~flows.~~flows for liquidity and repricing opportunities.

~~Loans and Nonperforming Assets~~

Loans outstanding increased $57,035, from $1,399,870 as of December 31, 2016 to $1,456,905 as of September 30, 2017. Growth in the loan portfolio during the first nine months of 2017 was primarily the result of increases of $43,843 in construction loans and $32,144 in commercial real estate loans. This growth was partially offset by a decrease of $17,298 in commercial loans that included a $16,556 reduction in public company floating rate loans purchased from a third-party asset manager. The Company continues to focus on business development efforts in all of its markets. Management believes loan growth will continue in all three of our markets during the remainder of 2017.

Credit quality of the Company's loan portfolio remains strong and stable. 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 percent as of September 30, 2017, compared to 0.56 percent as of December 31, 2016. The ratio for both dates was significantly better than the June 30, 2017 peer group average (latest data available), which was approximately 8.57 percent, according to data in the June 2017 Bank Holding Company Performance Report prepared by the Division of Supervision and Regulation of the Federal Reserve.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Loans and Nonperforming Assets

Loans outstanding increased $106,941 from $2,742,836 as of December 31, 2022 to $2,849,777 as of September 30, 2023. Changes in the loan portfolio during the first nine months of 2023 included increases of $40,876 in commercial real estate loans and $36,239 in construction, land and land development loans. The Company continues to focus on business development efforts in all of its markets.

In accordance with regulatory guidelines, the Company exercises heightened risk management practices when non-owner occupied commercial real estate lending exceeds 300 percent of total risk-based capital or construction, land development, and other land loans exceed 100 percent of total risk-based capital. Although the commercial real estate portfolio exceeded these regulatory guidelines as of September 30, 2023, they were within the Company's established policy limits and management believes that the Company has appropriate risk management policies and procedures to regularly monitor the commercial real estate portfolio. An analysis of the Company's non-owner occupied commercial real estate portfolio as of December 31, 2022 was presented in the Company's Form 10-K filed with the SEC on February 23, 2023, and the Company has not experienced any material changes to that portfolio since December 31, 2022.

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


	September 30, 2023			December 31, 2022			Change
Nonaccrual loans	$	303		$	322		$	(19)
Loans past due 90 days and still accruing interest	—			—			—
Loan restructurings (1)	—			—			—
Total nonperforming loans	303			322			(19)
Other real estate owned	—			—			—
Total nonperforming assets	$	303		$	322		$	(19)

Nonperforming loans to total loans	0.01		%	0.01		%	—		%
Nonperforming assets to total assets	0.01		%	0.01		%	—		%

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 loan restructurings made to borrowers experiencing financial difficulty (loan restructurings) are commonly reported by the industry as nonperforming, those not classified in the nonaccrual category are accruing interest due to payment performance. Loan restructurings on nonaccrual status are categorized as nonaccrual. There were no loan restructurings categorized as nonaccrual as of September 30, 2023 or December 31, 2022.

~~(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~~Premises and Equipment

The Company purchased land in the first quarter of 2022 for its new corporate headquarters to ~~“Provision for Loan Losses~~be located in West Des Moines, Iowa and construction began in the ~~Related Allowance for Loan Losses”~~second quarter of 2022. Construction is expected to be completed in ~~this section,~~the second quarter of 2024. Additionally, construction of a new office in Mankato, Minnesota also began in the first quarter of 2022 and ~~Notes 4 and 10~~is expected to be completed in the ~~financial statements.~~fourth quarter of 2023.

Deposits

Deposits ~~increased $104,661~~decreased $124,879, or 4.3 percent, during the first nine months of ~~2017, or 6.8 percent, compared~~2023. A portion of this decrease was attributable to a decrease in brokered deposits. Brokered deposits decreased to $237,047 at September 30, 2023, from $272,692 at December 31, ~~2016. Interest-bearing demand accounts increased $45,564, and noninterest-bearing demand accounts declined $94,686, from December 31, 2016 to September 30, 2017. Savings~~2022. Excluding brokered deposits, ~~which include money market and insured cash sweep money market accounts, increased $108,233~~

from December 31, 2016 to September 30, 2017. Approximately $76,000 of noninterest-bearing accounts was reclassified to interest-bearing accounts in April 2017 as part of a retail deposit product restructuring. Other 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~~decreased $89,234, or 3.4 percent, during the first nine months of ~~2017, primarily due to customers moving balances from savings accounts, including money~~2023. Deposit inflows and outflows are influenced by prevailing market ~~accounts, to higher~~interest rates, competition, local and national economic conditions, fluctuations in our business customers' own liquidity needs and recent developments in the financial services industry. In particular, significant competition for deposits driven by high interest rate ~~time~~alternatives for depositors is currently impacting deposit fluctuations and increasing our cost of deposits.

West Bank participates in the IntraFi® ICS and CDARS reciprocal deposit network which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount. As of September 30, ~~2017, a significant related party relationship maintained total deposit balances with West Bank of approximately $146,000.~~

~~Borrowings~~

~~Short-term borrowings,~~2023, estimated uninsured deposits, which excludes deposits in the ~~form~~IntraFi® reciprocal network, brokered deposits and public funds protected by state programs, were approximately 28.0 percent of overnight funding, increased to $48,000 as of September 30, 2017 from $0 as of December 31, 2016. The need for overnight funding is primarily dependent on corporate customer deposit fluctuations, loan fundings and loan repayments. The investment portfolio was increased during the third quarter of 2017 in anticipation of known deposit increases coming in the fourth quarter. Overnight borrowings funded those investments in the interim.total deposits.

Long-term debt increased $19,069 during the first nine months of 2017. 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 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.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Borrowed Funds

Federal funds purchased and other short-term borrowings increased from $200,000 at December 31, 2022 to $261,510 as of September 30, 2023. The fluctuations in the balances of federal funds purchased and other short-term borrowings is based on customer loan and deposit activity and the Company's balance sheet management objectives, which from time to time may require the Company to draw on the federal funds purchased lines with our correspondent banks, FHLB advances or other liquidity sources.

The Company had $315,000 of FHLB advances outstanding at September 30, 2023, $295,000 of which are one-month rolling advances hedged with long-term interest rate swaps. In the first nine months of 2023, the Company entered into seven additional long-term interest rate swap agreements hedging interest payments of one-month rolling funding with a total notional amount of $140,000. As of September 30, 2023, the Company had long-term interest rate swap agreements with a total notional amount of $295,000 to hedge the interest payments of one-month rolling funding consisting of FHLB advances or brokered deposits. These interest rate swaps have maturity dates ranging from August 2024 through June 2029 and fixed rates ranging from 1.69 percent to 4.65 percent. This strategy of hedging short-term rolling funding effectively provides fixed cost wholesale funding through the maturity dates of the various interest rate swaps.

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~~amortizing securities, federal funds purchased, advances from the FHLB, other wholesale funding and funds provided by operations. Liquidity management is conducted on both a daily and a long-term basis. Investments in liquid assets are adjusted based on expected loan demand, projected loan and ~~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~~$20,621 as of September 30, ~~2017~~2023 compared with ~~$76,836~~$26,539 as of December 31, ~~2016.~~2022.

Our deposit growth strategy emphasizes core deposit growth. Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions, fluctuations in our business customers' own liquidity needs and recent developments in the financial services industry. The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth. Brokered deposits are obtained through various programs administered by IntraFi®, including IntraFi® Network Deposits and IntraFi® Funding, and through other third parties. At September 30, 2023, the Company had $237,047 in brokered deposits, which included fixed-rate deposits with terms through September 2024 and variable-rate deposits with terms through February 2025.

As of September 30, ~~2017,~~2023, West Bank had additional borrowing capacity available from the FHLB of approximately ~~$255,000,~~$408,000, as well as ~~$67,000~~approximately $3,000 through the Federal Reserve discount window, $35,000 through unsecured federal funds lines of credit with correspondent ~~banks.~~banks, and approximately $97,000 through the new Federal Reserve Bank Term Funding Program. The Bank Term Funding Program was established by the Federal Reserve in March 2023 to provide an additional source of liquidity against high-quality securities. As of September 30, 2023, West Bank had pledged approximately $97,000 in eligible securities to facilitate participation in the program. No funds were borrowed from the Federal Reserve discount window or Bank Term Funding Program during the nine months ended September 30, 2023. Net cash from operating activities contributed ~~$21,979~~$18,044 to liquidity for the nine months ended September 30, ~~2017.~~2023. Management believed that the combination of high levels of potentially liquid assets, unencumbered securities, cash flows from operations, and additional borrowing capacity ~~provided the~~are sufficient to meet our liquidity and capital needs.

The Company ~~with strong liquidity~~had remaining commitments to invest in qualified affordable housing projects totaling $1,811 and $3,431 as of September 30, ~~2017.~~2023 and December 31, 2022, respectively.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

Capital

The Company's total stockholders' equity ~~increased~~decreased to ~~$178,087~~$203,933 at September 30, ~~2017~~2023 from ~~$165,376~~$211,112 at December 31, ~~2016.~~2022. The ~~increase~~decrease was primarily the result of ~~net income less dividends paid, and an~~the increase in accumulated other comprehensive ~~income.~~

loss and the adjustment made upon the adoption of ASU 2016-13, partially offset by net income less dividends paid. The increase in accumulated other comprehensive loss is primarily the result of the negative effect that rising interest rates have had on the unrealized market value adjustment of our available for sale investment portfolio. While accumulated other comprehensive losses reduce tangible common equity, they have no impact on regulatory capital. At September 30, ~~2017,~~2023, the Company's tangible common equity as a percent of tangible assets was ~~8.77~~5.51 percent compared to ~~8.92~~5.84 percent as of December 31, ~~2016.~~2022.

The Company and West Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Failure to meet minimum capital requirements (as shown in the following table) can result in certain mandatory and possibly additional discretionary actions by regulators, which, if undertaken, could have a direct material effect on the Company's consolidated financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and West Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Company's and West Bank's capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors. Management believed the Company and West Bank met all capital adequacy requirements to which they were subject as of September 30, ~~2017.~~2023.

Table of Contents

West Bancorporation, Inc.

Management's Discussion and Analysis

(in thousands, except share and per share data)

The Company's and West Bank's capital amounts and ratios are presented in the following table.


	Actual				For Capital Adequacy Purposes				For Capital Adequacy Purposes With Capital Conservation Buffer				To Be Well-Capitalized
	Amount		Ratio		Amount		Ratio		Amount		Ratio		Amount		Ratio
As of September 30, 2023
Total Capital (to Risk-Weighted Assets)
Consolidated	$	418,004	11.96	%	$	279,615	8.00	%	$	366,995	10.50	%	$	349,519	10.00	%
West Bank	450,074		12.89	%	279,438		8.00	%	366,762		10.50	%	349,297		10.00	%

Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	327,512		9.37	%	209,711		6.00	%	297,091		8.50	%	279,615		8.00	%
West Bank	419,582		12.01	%	209,578		6.00	%	296,902		8.50	%	279,438		8.00	%

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	307,512		8.80	%	157,283		4.50	%	244,663		7.00	%	227,187		6.50	%
West Bank	419,582		12.01	%	157,184		4.50	%	244,508		7.00	%	227,043		6.50	%

Tier 1 Capital (to Average Assets)
Consolidated	327,512		8.58	%	152,692		4.00	%	152,692		4.00	%	190,865		5.00	%
West Bank	419,582		11.00	%	152,619		4.00	%	152,619		4.00	%	190,774		5.00	%

As of December 31, 2022
Total Capital (to Risk-Weighted Assets)
Consolidated	$	408,056	12.08	%	$	270,221	8.00	%	$	354,665	10.50	%	$	337,776	10.00	%
West Bank	441,628		13.08	%	270,053		8.00	%	354,445		10.50	%	337,566		10.00	%

Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	322,583		9.55	%	202,666		6.00	%	287,110		8.50	%	270,221		8.00	%
West Bank	416,155		12.33	%	202,540		6.00	%	286,931		8.50	%	270,053		8.00	%

Common Equity Tier 1 Capital (to Risk-Weighted Assets)
Consolidated	302,583		8.96	%	151,999		4.50	%	236,443		7.00	%	219,555		6.50	%
West Bank	416,155		12.33	%	151,905		4.50	%	236,296		7.00	%	219,418		6.50	%

Tier 1 Capital (to Average Assets)
Consolidated	322,583		8.81	%	146,439		4.00	%	146,439		4.00	%	183,049		5.00	%
West Bank	416,155		11.37	%	146,367		4.00	%	146,367		4.00	%	182,958		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. The new rules included 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 30, ~~2017,~~2023, 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.

Table of Contents

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~~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 refers to the exposure arising from changes in interest rates. Fluctuations in interest rates have a significant impact not only upon net income, but also upon the 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 rates and the interest rate sensitivity of our interest-earning assets and interest-bearing liabilities. Management continually develops and applies strategies to mitigate this risk.

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 has 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 maintaining interest rate risk is a dynamic process that management performs with the ~~change~~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, ~~may adversely affect~~this analysis measures the ~~Company's~~estimated change in net interest income. ~~Management continually develops~~The simulations allow for ongoing assessment of interest rate sensitivity and ~~implements strategies to mitigate this risk.~~can include the impact of potential new business strategies. The ~~analysis~~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 ~~Company's~~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 ~~risk as of December 31, 2016 was presented~~changes for the rate shock levels shown. The changes in each interest rate scenario represents the difference between estimated net interest income 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~~unchanged interest rate ~~risk position since December 31, 2016. Management does not believe that~~scenario, or the ~~Company's primary market risk exposure~~base case, and ~~management~~the estimated net interest income in each of ~~that exposure~~the alternative interest rate scenarios. The net interest income in each scenario is based on immediate parallel yield curve changes in the ~~first nine months~~interest rates applied to a static balance sheet. These do not reflect earnings expectations of ~~2017 materially changed compared~~management.


	Net Interest Income at September 30, 2023
Change in Interest Rates	$ Change	% Change
300 basis points rising	$(10,761)	(14.24)%
200 basis points rising	(6,727)	(8.90)
100 basis points rising	(3,792)	(5.02)
100 basis points falling	3,907	5.17
200 basis points falling	6,564	8.69

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 results may differ from those projections set forth above due to ~~those~~timing, magnitude and frequency of interest rate changes as well as changes in market conditions and customer behavior. Further, the ~~year ended December 31, 2016.~~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 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.~~February 23, 2023.

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.~~During the fiscal quarter ended September 30, 2023, none of the Company's directors or executive officers adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any "non-Rule 10b5-1 trading arrangement."

~~Table of Contents~~

Item 6. Exhibits

The following exhibits are filed as part of this report:



Exhibits			Description
~~31.1~~3.1			Restatement of the Restated Articles of Incorporation of West Bancorporation, Inc. (incorporated herein by reference to Exhibit 3.1 filed with the Form 10-K on March 1, 2017)
3.2			Amended and Restated Bylaws of West Bancorporation, Inc. as of January 23, 2019 (incorporated herein by reference to Exhibit 3.1 filed with the Form 8-K on January 24, 2019)
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)


October 26, 2023			By:	/s/ David D. Nelson
Date				David D. Nelson
				Chief Executive Officer and President
				(Principal Executive Officer)

~~West Bancorporation, Inc.~~October 26, 2023			By:	/s/ Jane M. Funk
~~(Registrant)~~Date				Jane M. Funk


~~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~~	~~By:~~	~~/s/ Marie I. Roberts~~
~~Date~~		~~Marie I. Roberts~~
		~~Senior Vice President, Controller~~ and ~~Chief Accounting Officer~~
		~~(Principal~~ Accounting Officer)


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


					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~~2023 and December 31, ~~2016~~2022		4

			Consolidated Statements of Income for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		5

			Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		6

			Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		7

			Consolidated Statements of Cash Flows for the nine months ended September 30, ~~2017~~2023 and ~~2016~~2022		89

			Notes to Consolidated Financial Statements		910

Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations		3033

			"Safe Harbor" C~~oncerning~~Concerning Forward-Looking Statements		3033

			Critical Accounting Policies		3033

			Non-GAAP Financial Measures		3134

			Overview		3135

			Results of Operations		3437

			Financial Condition		4445

Item 3.			Quantitative and Qualitative Disclosures About Market Risk		4850

Item 4.			Controls and Procedures		4850

PART II.			OTHER INFORMATION

Item 1.			Legal Proceedings		4851

Item 1A.			Risk Factors		4851

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds		4851

Item 3.			Defaults Upon Senior Securities		4851

Item 4.			Mine Safety Disclosures		4851

Item 5.			Other Information		4851

Item 6.			Exhibits		4851

			Signatures		5052

	~~Exhibit~~ ~~Index~~	X


West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
	Nine Months Ended September 30,							Nine Months Ended September 30,
(in thousands)	2017			2016			(in thousands)	2023		2022
Cash Flows from Operating Activities:							Cash Flows from Operating Activities:
Net income	$	18,876		$	16,985		Net income	$	19,612	$	37,453
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
Credit loss expense (benefit)							Credit loss expense (benefit)	200		(2,500)
Net amortization and accretion	2,921			3,293			Net amortization and accretion	2,499		2,247
Investment securities gains, net	(423		)	(60		)

Stock-based compensation	1,932			1,278			Stock-based compensation	2,401		2,488
Increase in cash value of bank-owned life insurance	(484		)	(492		)	Increase in cash value of bank-owned life insurance	(769)		(709)
Gain from bank-owned life insurance	(307		)	(443		)	Gain from bank-owned life insurance	(691)		—

Depreciation	1,007			740			Depreciation	1,189		1,091
Deferred income taxes	413			253
Provision for deferred income taxes							Provision for deferred income taxes	207		1,928
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	(1,610)		(1,896)
(Increase) decrease in other assets	(125		)	248			(Increase) decrease in other assets	(1,936)		930
Increase (decrease) in accrued expenses and other liabilities	(516		)	152			Increase (decrease) in accrued expenses and other liabilities	(3,058)		7,889
Net cash provided by operating activities	21,979			22,312			Net cash provided by operating activities	18,044		48,921
Cash Flows from Investing Activities:							Cash Flows from Investing Activities:
Proceeds from sales of securities available for sale	74,224			1,544
Proceeds from maturities and calls of investment securities	38,529			46,190

Proceeds from principal paydowns, maturities and calls of securities available for sale							Proceeds from principal paydowns, maturities and calls of securities available for sale	31,886		63,353
Purchases of securities available for sale	(267,133		)	—			Purchases of securities available for sale	—		(120,077)
Purchases of Federal Home Loan Bank stock	(16,794		)	(16,907		)	Purchases of Federal Home Loan Bank stock	(90,194)		(46,884)
Proceeds from redemption of Federal Home Loan Bank stock	15,309			16,887			Proceeds from redemption of Federal Home Loan Bank stock	82,839		38,499
Net increase in loans	(56,789		)	(136,116		)	Net increase in loans	(106,925)		(158,395)

Purchases of premises and equipment	(866		)	(10,201		)	Purchases of premises and equipment	(24,699)		(12,056)
Proceeds of principal and earnings from bank-owned life insurance	451			812			Proceeds of principal and earnings from bank-owned life insurance	2,458		—
Net cash used in investing activities	(213,069		)	(97,791		)	Net cash used in investing activities	(104,635)		(235,560)
Cash Flows from Financing Activities:							Cash Flows from Financing Activities:
Net increase in deposits	104,661			50,927
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 decrease in deposits							Net decrease in deposits	(124,879)		(193,158)
Net increase in federal funds purchased and other short-term borrowings							Net increase in federal funds purchased and other short-term borrowings	61,510		201,620
Proceeds from issuance of subordinated debt, net of issuance costs							Proceeds from issuance of subordinated debt, net of issuance costs	—		58,756
Net increase in Federal Home Loan Bank advances							Net increase in Federal Home Loan Bank advances	160,000		—
Principal payments on long-term debt	(2,934		)	(2,458		)	Principal payments on long-term debt	(2,500)		(35)
Common stock dividends paid	(8,580		)	(8,057		)	Common stock dividends paid	(12,523)		(12,459)
Restricted stock units withheld for payroll taxes	(631		)	(394		)	Restricted stock units withheld for payroll taxes	(935)		(1,519)
Net cash provided by financing activities	153,751			53,678			Net cash provided by financing activities	80,673		53,205
Net (decrease) in cash and cash equivalents	(37,339		)	(21,801		)
Net decrease in cash and cash equivalents							Net decrease in cash and cash equivalents	(5,918)		(133,434)
Cash and Cash Equivalents:							Cash and Cash Equivalents:
Beginning	76,836			72,651			Beginning	26,539		192,825
Ending	$	39,497		$	50,850		Ending	$	20,621	$	59,391

Supplemental Disclosures of Cash Flow Information:							Supplemental Disclosures of Cash Flow Information:
Cash payments for:							Cash payments for:
Interest	$	8,667		$	5,742		Interest	$	61,342	$	15,259
Income taxes	6,410			5,160			Income taxes	3,890		7,490



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


	September 30, 2023
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
Securities available for sale:
State and political subdivisions	$	240,954	$	—	$	(58,947)	$	182,007
Collateralized mortgage obligations (1)	315,803		—		(63,101)		252,702
Mortgage-backed securities (1)	160,291		—		(34,178)		126,113
Collateralized loan obligations	37,862		—		(332)		37,530
Corporate notes	13,750		—		(2,737)		11,013
	$	768,660	$	—	$	(159,295)	$	609,365


	December 31, 2022
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Fair Value
Securities available for sale:
State and political subdivisions	$	242,823	$	4	$	(49,472)	$	193,355
Collateralized mortgage obligations (1)	338,875		—		(57,247)		281,628
Mortgage-backed securities (1)	169,451		—		(29,171)		140,280

Collateralized loan obligations	37,948		—		(1,137)		36,811
Corporate notes	13,750		—		(1,709)		12,041
	$	802,847	$	4	$	(138,736)	$	664,115


~~(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.~~


	September 30, 2023
	Less than 12 months					12 months or longer					Total
	Fair Value		Gross Unrealized (Losses)		No. of Securities	Fair Value		Gross Unrealized (Losses)		No. of Securities	Fair Value		Gross Unrealized (Losses)
Securities available for sale:
State and political
subdivisions	$	8,083	$	(674)	15	$	173,924	$	(58,273)	103	$	182,007	$	(58,947)
Collateralized mortgage
obligations	—		—		—	252,702		(63,101)		79	252,702		(63,101)
Mortgage-backed securities	—		—		—	126,113		(34,178)		27	126,113		(34,178)
Collateralized loan obligations	—		—		—	37,530		(332)		6	37,530		(332)
Corporate notes	—		—		—	11,013		(2,737)		8	11,013		(2,737)
	$	8,083	$	(674)	15	$	601,282	$	(158,621)	223	$	609,365	$	(159,295)


	December 31, 2022
	Less than 12 months					12 months or longer					Total
	Fair Value		Gross Unrealized (Losses)		No. of Securities	Fair Value		Gross Unrealized (Losses)		No. of Securities	Fair Value		Gross Unrealized (Losses)
Securities available for sale:
State and political
subdivisions	$	74,676	$	(11,556)	74	$	118,487	$	(37,916)	43	$	193,163	$	(49,472)
Collateralized mortgage
obligations	107,449		(14,484)		48	174,179		(42,763)		31	281,628		(57,247)
Mortgage-backed securities	31,350		(4,556)		8	108,930		(24,615)		19	140,280		(29,171)

Collateralized loan obligations	14,468		(480)		3	22,343		(657)		3	36,811		(1,137)
Corporate notes	9,185		(1,315)		5	2,856		(394)		3	12,041		(1,709)
	$	237,128	$	(32,391)	138	$	426,795	$	(106,345)	99	$	663,923	$	(138,736)



	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



	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	%