West Bancorporation (NASDAQ: WTBA) outlines 2025 growth, capital and key risks
Filing Impact
Filing Sentiment
Form Type
10-K
Rhea-AI Filing Summary
West Bancorporation, Inc. reports modest 2025 balance sheet growth while detailing its business model and regulatory environment. Total assets reached $4.1 billion, up 3.2% from $4.0 billion, and deposits rose to $3.5 billion, a 3.3% increase, reflecting continued customer expansion in Iowa and Minnesota markets.
The company emphasizes commercial and commercial real estate lending, noting high CRE concentrations that require heightened risk management. It paid $1.00 per share in 2025 dividends and declared a $0.25 quarterly dividend for early 2026. The tangible common equity ratio improved to 6.42% from 5.68%, and management highlights strong capital, extensive regulation, cybersecurity and AI-related risks, human capital initiatives, and a wide range of macroeconomic and credit risks that could affect future performance.
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
| (Mark One) | |||||
| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |||||
For the fiscal year ended | |||||
| or | |||||
| 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
| (Exact name of registrant as specified in its charter) | |||||
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | ||||
| (Address of principal executive offices) | (Zip Code) | ||||
Registrant’s telephone number, including area code: (515) 222-2300
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes o No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
Yes o No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No o
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No o
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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 | |||||||
| ☒ | ||||||||
| Non-accelerated filer | o | |||||||
| Smaller reporting company | ||||||||
| Emerging growth company | ||||||||
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 has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. o
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2025, was approximately $317,424,991 (based on the closing price on the Nasdaq Global Select Market on that date of $19.63).
Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the most recent practicable date, February 25, 2026.
DOCUMENTS INCORPORATED BY REFERENCE
The definitive proxy statement of West Bancorporation, Inc., which will be filed on or before March 3, 2026, is incorporated by reference into Part III hereof to the extent indicated in such Part.
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| FORM 10-K | ||||||||
| TABLE OF CONTENTS | ||||||||
"SAFE HARBOR" CONCERNING FORWARD-LOOKING STATEMENTS | 5 | |||||||
| PART I | ||||||||
| ITEM 1. | BUSINESS | 5 | ||||||
| ITEM 1A. | RISK FACTORS | 18 | ||||||
| ITEM 1B. | UNRESOLVED STAFF COMMENTS | 30 | ||||||
| ITEM 1C. | CYBERSECURITY | 31 | ||||||
| ITEM 2. | PROPERTIES | 32 | ||||||
| ITEM 3. | LEGAL PROCEEDINGS | 32 | ||||||
| ITEM 4. | MINE SAFETY DISCLOSURES | 32 | ||||||
| PART II | ||||||||
| ITEM 5. | MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES | 33 | ||||||
| ITEM 6. | RESERVED | 35 | ||||||
| ITEM 7. | MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 35 | ||||||
| ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 54 | ||||||
| ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 55 | ||||||
| ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 99 | ||||||
| ITEM 9A. | CONTROLS AND PROCEDURES | 99 | ||||||
| ITEM 9B. | OTHER INFORMATION | 99 | ||||||
| ITEM 9C. | DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION | 100 | ||||||
| PART III | ||||||||
| ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE | 101 | ||||||
| ITEM 11. | EXECUTIVE COMPENSATION | 101 | ||||||
| ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | 101 | ||||||
| ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE | 102 | ||||||
| ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES | 103 | ||||||
| PART IV | ||||||||
| ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES | 103 | ||||||
| ITEM 16. | FORM 10-K SUMMARY | 106 | ||||||
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“SAFE HARBOR” CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company’s business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words “believes,” “expects,” “intends,” “anticipates,” “projects,” “future,” “confident,” “may,” “should,” “will,” “strategy,” “plan,” “opportunity,” “will be,” “will likely result,” “will continue” or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as credit unions, “fintech” companies and digital asset service providers; technological changes implemented by us and other parties, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company’s loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current Federal Deposit Insurance Corporation (FDIC) insurance limits; the threat or imposition of domestic or foreign tariffs or other governmental policies impacting the global supply chain and the value of products produced by our commercial borrowers; changes in local, national and international economic conditions, including the level and impact of inflation, and future monetary policies of the Federal Reserve or executive orders in response thereto; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks; changes in legal and regulatory requirements, limitations and costs; changes in customers’ acceptance of the Company’s products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners’ information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade, foreign and other regulatory policies of the U.S. government; military conflicts, acts of war or terrorism or threats thereof, including the Israeli-Palestinian conflict, recent military activity in Venezuela and the Russian invasion of Ukraine; widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies under the Trump administration; new or revised accounting policies or practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; talent and labor shortages and employee turnover; and any other risks described in the “Risk Factors” sections of reports filed by the Company with the Securities and Exchange Commission. 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.
PART I
ITEM 1. BUSINESS
General Development of Business
West Bancorporation, Inc. (the Company or West Bancorporation) is an Iowa corporation and a financial holding company registered under the Bank Holding Company Act of 1956, as amended (BHCA). The Company was formed in 1984 to own West Bank, an Iowa-chartered bank headquartered in West Des Moines, Iowa. West Bank is a business-focused community bank that was organized in 1893. The Company’s primary activity during 2025 was the ownership of West Bank. The Company’s and West Bank’s only business is banking, and therefore, no segment information is presented in this report. For additional information regarding the Company’s segment reporting, see Note 1 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K .
As a financial holding company, the Company has additional flexibility to engage in a broader range of financial activities through affiliates than are permissible for bank holding companies that are not financial holding companies. While the Company does not currently have a plan to engage in any new activities, as a financial holding company, it has the ability to respond more quickly to market developments and opportunities.
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The Company currently operates in the following markets: central Iowa, which is generally the greater Des Moines metropolitan area; eastern Iowa, which includes the area surrounding Iowa City and Coralville; and southern Minnesota, which includes the cities of Rochester, Owatonna, Mankato and St. Cloud.
The Company continues to grow, as total assets at the end of 2025 totaled $4.1 billion compared to $4.0 billion at the end of 2024, an increase of 3.2 percent. Total deposits at the end of 2025 totaled $3.5 billion compared to $3.4 billion at the end of 2024, an increase of 3.3 percent. The Company continues to focus on expanding existing and entering into new customer relationships while maintaining strong credit quality.
The Company declared and paid cash dividends on its common stock totaling $1.00 per share in 2025 and declared a $0.25 quarterly dividend on January 28, 2026, payable on February 25, 2026, to stockholders of record on February 11, 2026. The Company expects to continue paying regular quarterly dividends in the future. In the opinion of management, the capital position of the Company is strong. At December 31, 2025, the Company’s tangible common equity ratio was 6.42 percent compared to 5.68 percent at December 31, 2024. As of December 31, 2025 and 2024, the Company had no intangible assets or preferred stock outstanding. Additional information on capital can be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Description of the Company’s Business
West Bank provides full-service community banking and trust services to customers located primarily in the following metropolitan areas: Des Moines, Coralville and Iowa City, Iowa, and Rochester, Owatonna, Mankato and St. Cloud, Minnesota. West Bank has six offices in the Des Moines area, one office in Coralville, Iowa and one office in each of our four Minnesota markets. West Bank offers many types of credit to its customers, including commercial, real estate and consumer loans. West Bank offers trust services, including the administration of estates, conservatorships, personal trusts and agency accounts.
West Bank offers a full range of commercial and consumer deposit services, including checking, savings and money market accounts and time certificates of deposit. West Bank also offers online banking, mobile banking and treasury management services, which help to meet the banking needs of its customers. Treasury management services offered to business customers include online and mobile cash management, client-generated automated clearing house transactions, remote deposit capture, lock box and fraud protection services. Also offered are merchant card processing and corporate credit cards.
West Bank’s business strategy emphasizes strong business and personal relationships between West Bank and its customers and the delivery of products and services that meet the individualized needs of those customers. West Bank also emphasizes strong cost controls, while striving to achieve an above average return on equity. To accomplish these goals, West Bank focuses on small- to medium-sized businesses in its local markets that traditionally wish to develop an exclusive relationship with a single bank. West Bank has the size to provide the personal attention required by local business owners and the financial expertise and entrepreneurial attitude to help businesses meet their financial service needs.
As of December 31, 2025, we conducted banking operations through 11 locations in central and eastern Iowa and southern Minnesota. The economies in our market areas are well diversified. We believe that an important factor contributing to our historical performance and our ability to execute our strategic priorities is the vibrancy of our markets. Our markets are home to major financial services companies, healthcare systems, educational institutions, technology and agribusiness companies, and state and local governments. Our markets host major employers such as Principal Financial Group, Wells Fargo, Hy-Vee, John Deere, Mayo Clinic, University of Iowa, University of Iowa Health Care, MercyOne, UnityPoint Health, CentraCare Health Systems and IBM.
The markets in which we operate have generally experienced population growth over the past five years. Des Moines-West Des Moines is the largest metropolitan statistical area (MSA) in Iowa, while Iowa City and Coralville make up the fourth largest MSA in Iowa. Rochester and St. Cloud are the third and fourth largest MSAs in Minnesota, respectively. We believe our markets are economically stable. Unemployment rates in all our markets are below the national unemployment rate of 4.4 percent as of December 31, 2025, according to data from the U.S. Bureau of Labor Statistics.
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The market areas served by West Bank are highly competitive with respect to both loans and deposits. West Bank competes with other commercial banks, credit unions, mortgage companies and other financial service providers, including financial technology (FinTech) companies. According to the Federal Deposit Insurance Corporation’s (FDIC) Summary of Deposits as of June 30, 2025, West Bank ranked seventh in the state of Iowa in terms of deposit share. Some of West Bank’s competitors are locally controlled, while others are regional, national or international companies. The larger, international, national or regional banks have certain competitive advantages due to their ability to undertake substantial advertising campaigns and allocate their investment assets to out-of-market geographic regions with potentially higher returns. Such banks also offer certain services, such as international and conduit financing transactions, which are not offered directly by West Bank. These larger banking organizations also have much higher legal lending limits than West Bank, and therefore, may be better able to service large regional, national and global commercial customers. The financial services industry has become even more competitive in recent years as a result of legislative, regulatory and technological changes and continued consolidation. Technology has lowered barriers to entry and made it possible for non-banks, such as FinTech companies, to offer deposit and loan products and services traditionally provided by banks.
In order to compete to the fullest extent possible with the other financial institutions in its primary market areas, West Bank uses the flexibility and knowledge of its local management, Board of Directors and community advisors. West Bank has a group of community advisors in each of its markets who provide insight to management on current business activity levels and trends. West Bank seeks to capitalize on customers who desire to do business with a local institution. This includes emphasizing specialized services, local promotional activities, and personal contacts by West Bank’s officers, directors and employees. In particular, West Bank competes for loans primarily by offering competitive interest rates, experienced lending personnel with local decision-making authority, flexible loan arrangements, quality products and services, and proactive relationship management. West Bank competes for deposits principally by offering depositors a variety of straight-forward deposit products along with online and mobile access and other personalized services.
West Bank also competes with the general financial markets for funds. Yields on corporate and government debt securities and commercial paper affect West Bank’s ability to attract and hold deposits. West Bank also competes for funds with money market accounts and similar investment vehicles offered by brokerage firms, mutual fund companies, internet banks and others. The competition for these funds is based almost exclusively on yields to customers.
Human Capital Management
We believe that the success of our business is largely due to the quality of our employees, the development of each employee's full potential and the Company's ability to provide timely and satisfying rewards. We encourage and support the development of our employees and, whenever possible, strive to fill vacancies with internal candidates. We invest in education and development programs, including tuition reimbursement for courses and degree programs and fees paid for certifications. We encourage employees to seek educational opportunities for both industry knowledge and professional development.
We continue to invest in initiatives aimed at the growth and readiness of our workforce, including our West Bank Women’s Impact Network (WIN). WIN connects and expands relationships among women at West Bank with women in our communities and our customers. The network builds a system of sponsors and mentors to provide more opportunities for women in leadership at West Bank and furthers our impact on the community through support and sponsorship of women’s leadership initiatives. 20 percent of West Bank’s current executive management team and 41 percent of West Bank officers and department managers are women. Currently, women comprise 30 percent of the directors on our Board of Directors.
As part of our compensation philosophy, we believe that we must offer and maintain market competitive compensation and benefit programs for our employees in order to attract and retain talent. The goal of our compensation program is to create superior long-term value for our stockholders by attracting, motivating and retaining outstanding employees who serve our customers while generating financial performance that is consistently better than our peers. Our business model allows us to operate with fewer employees than the typical commercial bank of our size because we emphasize teamwork, sound practices and a focus on business banking. Because we have fewer people, we need to have the right people and ensure that we offer what we consider to be above average pay in exchange for above average performance. Our employees are provided a formal performance evaluation annually that includes discussion of the opportunity for advancement and career development.
In addition to competitive base wages, additional programs include annual bonus opportunities, Company-matched 401(k) and discretionary 401(k) contributions, stock award opportunities, educational expense reimbursement, insurance benefits, paid time off, family leave and employee assistance programs. Our best-in-class health care plans, including medical, dental, vision, short-term and long-term disability and life insurance, reflect a sincere investment in our colleagues’ physical, emotional and financial well-being. Offering premium coverage through our health insurance provider, our employees are afforded a large network of doctors and the Company pays 75 percent of monthly medical premiums for employees enrolled.
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Our approach also promotes longevity in our workforce. The average tenure of our employees is nine years and the average tenure of bank officers is over 12 years. Approximately 17 percent of employees have been with West Bank for 10-15 years and approximately 22 percent of employees have been with West Bank for over 15 years. Non-teller turnover was approximately 7 percent in both 2025 and 2024. We conduct periodic company-wide employee engagement surveys to assess employee satisfaction and engagement.
Succession planning and talent development are important at all levels within our organization. The Board oversees executive management’s succession plan for our named executive officers. The Board’s succession planning activities are ongoing. In addition, the CEO annually provides the Board with his assessment of senior leaders and their potential to succeed at key senior management positions.
SUPERVISION AND REGULATION
General
Banking institutions insured by the Federal Deposit Insurance Corporation (FDIC), together with their holding companies and affiliates, are extensively regulated under federal and state law. As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various banking agencies, including the Iowa Division of Banking (IDOB), the Board of Governors of the Federal Reserve System (Federal Reserve), the FDIC and federal and state consumer financial protection agencies. Furthermore, taxation laws administered by the Internal Revenue Service (IRS) and state taxing authorities, accounting rules developed by the Financial Accounting Standards Board (FASB), securities laws administered by the U.S. Securities and Exchange Commission (SEC) and state securities authorities, and anti-money laundering and sanctions laws enforced by the U.S. Department of the Treasury (Treasury) have an impact on our business. The effect of these statutes, regulations, regulatory policies and accounting rules are significant to our operations and results.
Federal and state banking laws impose a comprehensive system of supervision, regulation and enforcement on the operations of FDIC-insured institutions, their holding companies and affiliates that is intended primarily for the protection of the FDIC-insured deposits and depositors of banks, rather than stockholders. These federal and state laws, and the regulations of the banking agencies issued under them, affect, among other things, the scope of our business; the kinds and amounts of investments that we may make; required capital levels relative to our assets; the nature and amount of collateral for loans; the establishment of branches; our ability to merge, consolidate and acquire; dealings with our insiders and affiliates; and our payment of dividends. In response to the global financial crisis and particularly following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), we experienced heightened regulatory requirements and scrutiny. Although the reforms primarily targeted large banking organizations and other systemically important financial institutions, their influence filtered down in varying degrees to community banks over time and caused our compliance and risk management processes, and the costs thereof, to increase. The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (Regulatory Relief Act) clarified the inapplicability of certain Dodd-Frank Act reforms to community banking organizations, including relieving us of any requirement to engage in mandatory stress tests, maintain a risk committee, or comply with the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds.
Over the past year, the federal banking agencies have continued efforts to reduce regulatory burden on banking organizations, including community banks, through various supervisory, regulatory, and policy initiatives. These efforts have included rescission or revision of certain rulemakings and proposals, initiatives to streamline examination and application processes, and efforts to increase transparency and consistency in supervisory expectations. Congress also has considered additional measures aimed at easing specific compliance obligations for community banks, although no reforms comparable in scope to the Regulatory Relief Act have been enacted to date. These regulatory developments may be favorable to our operations; however, future changes in laws, regulations, or supervisory priorities, and their impacts on our business, remain uncertain.
The supervisory framework applicable to U.S. banking organizations subjects banks and bank holding companies to regular examination by their respective banking agencies. These examinations result in confidential examination reports and supervisory ratings that may impact an institution’s operations, capital levels, growth, and strategic initiatives. Examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality, management performance, earnings, liquidity, and overall risk profile, among other things. The banking agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine that such operations are unsafe or unsound, violate applicable law, or are otherwise inconsistent with laws and regulations. Changes in supervisory approach or emphasis may materially affect our operations and financial results.
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In recent supervisory communications, rulemakings, and policy statements, federal banking agencies have indicated an increased focus on core, material financial risks (rather than risk management processes), greater transparency in supervisory expectations, and efforts to reduce examination burden, particularly for community banks. For example, the FDIC, West Bank’s primary federal regulator, has proposed or implemented initiatives: (i) to clarify standards for unsafe or unsound practices; (ii) to enhance supervisory appeals processes; (iii) to streamline examination procedures; and (iv) to revise standards governing the termination of enforcement actions. These initiatives may enable management to focus more effectively on growth opportunities and the management of material financial risks.
The following is a summary of the material elements of the supervisory and regulatory framework applicable to the Company and West Bank. It does not describe all of the statutes, regulations, and regulatory policies that apply, nor does it restate all of the requirements of those that are described. The descriptions are qualified in their entirety by reference to the particular statutory and regulatory provision.
Supervision and Regulation of the Company
General. The Company, as the sole stockholder of West Bank, is a bank holding company that has elected financial holding company status. As a bank holding company, we are registered with, and subject to regulation by, the Federal Reserve under the Bank Holding Company Act of 1956, as amended (BHCA). We are legally obligated to act as a source of financial and managerial strength to West Bank and to commit resources to support West Bank in circumstances where we might not otherwise do so. Under the BHCA, we are subject to periodic examination by the Federal Reserve and are required to file with the Federal Reserve periodic reports of our operations and such additional information regarding our operations as the Federal Reserve may require.
Acquisitions and Activities. The primary purpose of a bank holding company is to control and manage banks. The BHCA generally requires the prior approval of the Federal Reserve for any merger involving a bank holding company or any acquisition by a bank holding company of another bank or bank holding company. Pursuant to the BHCA and the Dodd-Frank Act, the Federal Reserve may permit a well-capitalized and well-managed bank holding company to acquire banks located in any U.S. state, subject to federal deposit concentration limits, applicable nondiscriminatory state deposit-cap laws, and state minimum-existence requirements for target banks (not exceeding five years).
The BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than five percent of the outstanding voting shares of any nonbanking entity, and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries. This general prohibition is subject to a number of exceptions. The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority would permit the Company to engage in a variety of banking-related businesses, including, among other things, the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development), and mortgage banking and brokerage services. The BHCA does not place formal territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies. In addition to approval from the Federal Reserve in certain circumstances, prior approval for the establishment or acquisition of nonbank subsidiaries by a bank holding company may be required from other agencies, such as the IDOB or agencies that regulate such nonbank company.
Financial Holding Company Election. Bank holding companies that meet certain BHCA eligibility requirements and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that: (i) the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity; or (ii) the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.
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In the third quarter of 2016, we elected to operate as a financial holding company. To maintain our status as a financial holding company, both the Company and West Bank must be well-capitalized and well-managed, and West Bank must have at least a satisfactory CRA rating. If the Federal Reserve determines that either the Company or West Bank is not well-capitalized or well-managed, the Federal Reserve will provide a period of time in which to re-achieve compliance with those requirements, but, during the period of noncompliance, the Federal Reserve may place any limitations on the Company that it deems appropriate. Furthermore, if the Federal Reserve determines that West Bank has not achieved a satisfactory CRA rating, we would not be able to commence any new financial activities or acquire a company that engages in such activities. As of December 31, 2025, we retained our election as a financial holding company, but we have not engaged in any activity, and do not own any assets, for which financial holding company designation is required. The election affords us the ability to respond more quickly to market developments and opportunities.
Change in Control. Federal law prohibits any person or company from acquiring “control” of an FDIC-insured depository institution or its holding company without prior notice to the appropriate federal banking agencies. Control is conclusively determined to exist upon the acquisition of 25 percent or more of the outstanding voting securities of a bank or bank holding company, but may be presumed to arise under certain circumstances between 10 percent and 24.99 percent ownership.
Company Capital Requirements. The Company is subject to complex consolidated capital requirements of the Basel III Rule (as defined below), see “—the Basel III Rule” below.
Dividend Payments. Our ability to pay dividends to our stockholders may be affected by both general corporate law considerations and policies and capital requirements of the Federal Reserve applicable to bank holding companies. As an Iowa corporation, we are subject to the limitations of Iowa law, which allows us to pay dividends unless, after such dividend, (i) we would not be able to pay our debts as they become due in the usual course of business or (ii) our total assets would be less than the sum of our total liabilities plus any amount that would be needed if we were to be dissolved at the time of the dividend payment, to satisfy the preferential rights upon dissolution of stockholders whose rights are superior to the rights of the stockholders receiving the distribution.
As a general matter, the Federal Reserve has indicated that the board of directors of a bank holding company should eliminate, defer or significantly reduce dividends to stockholders if: (i) the company’s net income available to stockholders for the past four quarters, net of dividends previously paid during that period, is not sufficient to fully fund the dividends; (ii) the prospective rate of earnings retention is inconsistent with the company’s capital needs and overall current and prospective financial condition; or (iii) the company will not meet, or is in danger of not meeting, its minimum regulatory capital adequacy ratios. The Federal Reserve also possesses enforcement powers over bank holding companies and their nonbank subsidiaries to prevent or remedy actions that represent unsafe or unsound practices or violations of applicable statutes and regulations. Among these powers is the ability to proscribe the payment of dividends by banks and bank holding companies. Finally, the Basel III Rule imposes consolidated capital requirements on banking organizations. As a result, banking organizations must hold a capital conservation buffer of 2.5 percent of risk-weighted assets in Common Equity Tier 1 Capital above the minimum risk-based capital requirements to avoid regulatory limits on dividends and other capital distributions. See “-the Basel III Rule” below.
Monetary Policy. The monetary policy of the Federal Reserve has a significant effect on the operating results of bank holding companies and their subsidiaries. Among the tools available to the Federal Reserve to affect the money supply are open market transactions in U.S. government securities and changes in the discount rate on bank borrowings. These means are used in varying combinations to influence overall growth and distribution of bank loans, investments and deposits, and their use may affect interest rates charged on loans or paid on deposits, which may impact our business and operations.
Federal Securities Regulation. Our common stock is registered with the SEC under the Securities Exchange Act of 1934, as amended (Exchange Act). Consequently, we are subject to the information, proxy solicitation, insider trading and other restrictions and requirements of the SEC under the Exchange Act.
Corporate Governance. The Dodd-Frank Act addressed many investor protection, corporate governance and executive compensation matters that will affect most U.S. publicly traded companies. It increased stockholder influence over boards of directors by requiring companies to give stockholders a nonbinding vote on executive compensation and so-called “golden parachute” payments, and authorized the SEC to promulgate rules that would allow stockholders to nominate and solicit voters for their own candidates using a company’s proxy materials.
The Dodd-Frank Act also directed the Federal Reserve, in coordination with the other federal banking and financial services agencies, to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded. Although several agencies have made repeated efforts to implement rules under this provision of the Dodd-Frank Act-including a proposal issued most recently in May 2024, which was subsequently withdrawn-no final rule has been adopted at this time.
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Supervision and Regulation of West Bank
General. West Bank is an Iowa-chartered, nonmember bank. The deposit accounts of West Bank are insured by the FDIC’s Deposit Insurance Fund (DIF) to the maximum extent provided under federal law and FDIC regulations, currently $250,000 per insured depositor, per ownership category. Ongoing policy discussions at the federal level have focused on potential changes to deposit insurance coverage, including possible adjustments to coverage limits, although no definitive changes have been enacted.
West Bank is subject to the examination, supervision, reporting, and enforcement requirements of the IDOB, its chartering authority, and the FDIC, which is designated by federal law as the primary federal regulator of insured state banks that, like West Bank, are not members of the Federal Reserve System.
Deposit Insurance Assessments. As an FDIC-insured institution, West Bank is required to pay deposit insurance premium assessments to the FDIC. The FDIC has adopted a risk-based assessment system whereby FDIC-insured institutions pay insurance premiums at rates based on their risk classification. For institutions, like West Bank, that are not considered large and highly complex banking organizations, assessments are based on examination ratings and financial ratios. For small institutions that have been insured for more than five years, the total base assessment rates, effective as of January 1, 2023, generally range from 2.5 basis points (for the lowest risk institutions) to 32 basis points or beyond (for higher risk institutions).
At least semi-annually, the FDIC updates its loss and income projections for the DIF and, if needed, increases or decreases the assessment rates, following notice and comment on proposed rulemaking. For this purpose, the reserve ratio is the DIF balance divided by estimated insured deposits. In response to the global financial crisis, the Dodd-Frank Act increased the minimum reserve ratio from 1.15% to 1.35% of the estimated amount of total insured deposits. In a May 2025 report, the FDIC stated that the reserve ratio likely will reach the statutory minimum by the September 30, 2028 deadline, and no adjustments to the base assessment rates are currently projected.
In addition, because the cost of the failures of Silicon Valley Bank and Signature Bank attributable to the systemic risk exception was approximately $16.7 billion, the FDIC adopted a special assessment applicable to bank organizations with total assets of $5 billion or more. The base for the special assessment is equal to an insured depository institution’s estimated uninsured deposits for the December 31, 2022 reporting period, adjusted to exclude the first $5 billion in estimated uninsured deposits. Because the Company does not have $5 billion or more in assets, this special assessment does not apply.
Supervisory Assessments. All Iowa banks are required to pay supervisory assessments to the IDOB to fund the operations of that agency. The amount of the assessment is calculated on the basis of West Bank’s total assets and the costs and expenses incurred in the discharge of the IDOB’s examination, supervisory, and regulatory duties.
Bank Capital Requirements. Regulatory capital represents the net assets of a banking organization available to absorb losses. Because of the risks attendant to their business, FDIC-insured institutions, such as banks, as well as their holding companies (i.e., banking organizations) generally are required to hold more capital than other businesses, which directly affects the Company’s and West Bank’s earnings capabilities. Although capital has historically been one of the key measures of the financial health of both bank holding companies and banks, its role became fundamentally more important in the wake of the 2007-2008 global financial crisis, as the banking agencies recognized that the amount and quality of capital held by banking organizations prior to that crisis was insufficient to absorb losses during periods of severe stress.
Capital Levels. Banking organizations have been required to hold minimum levels of capital based on guidelines established by the banking agencies since 1983. The minimum capital levels for banking organizations have been expressed in terms of ratios of “capital” divided by “total assets.” The capital guidelines for U.S. banking organizations beginning in 1989 have been based upon international capital accords (known as the “Basel” accords) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as interpreted and implemented by the U.S. federal banking agencies on an interagency basis. These accords recognized that bank assets for the purpose of the capital ratio calculations needed to be risk weighted (the theory being that riskier assets should require more capital) and that off-balance sheet exposures needed to be factored into the calculations. Following the global financial crisis, the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, announced an agreement on a strengthened set of capital requirements for banking organizations around the world, known as the Basel III accords, to address deficiencies recognized in connection with the global financial crisis.
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The Basel III Rule. The U.S. federal banking agencies adopted the U.S. Basel III regulatory capital reforms, and, at the same time, effected changes required by the Dodd-Frank Act, in regulations that were effective in 2015 (with certain phase-ins) (the Basel III Rule). The Basel III Rule established capital standards for banks and bank holding companies that are meaningfully more stringent than those established previously and are still in effect today. The Basel III Rule increased the required quantity and quality of capital and required a more complex, detailed and calibrated assessment of risk in the calculation of risk weightings for bank assets. The Basel III Rule is applicable to all banking organizations that are subject to minimum capital requirements, including national and state banks and savings and loan associations, as well as to most bank and savings and loan holding companies. Thus, West Bank and the Company are subject to the Basel III Rule as described below.
Not only did the Basel III Rule increase most of the required minimum capital ratios in effect prior to January 1, 2015, but, by requiring that capital instruments be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital (CET1), which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and CET1 minority interests, subject to certain regulatory adjustments and deductions. The Basel III Rule also changed the definition of regulatory capital by establishing more stringent criteria for instruments to qualify as Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations). In addition, the Basel III Rule limited the inclusion of minority interests, mortgage-servicing assets, and deferred tax assets in regulatory capital and required deductions from CET1 if such assets exceeded prescribed thresholds.
The Basel III Rule requires banking organizations to maintain minimum capital ratios to be deemed “adequately capitalized,” as follows:
•A ratio of CET1 equal to 4.5% of risk-weighted assets;
•A ratio of Tier 1 Capital equal to 6% of risk-weighted assets;
•A ratio of Total Capital (Tier 1 plus Tier 2 Capital) equal to 8% of risk-weighted assets; and
•A Tier 1 leverage ratio (calculated as Tier 1 Capital divided by average total quarterly) assets equal to 4% of risk-weighted assets.
In addition, banking organizations that want to make capital distributions (including dividends and share repurchases) and pay discretionary bonuses to executive officers without restriction must maintain 2.5% of CET1 in the form of a capital conservation buffer. The purpose of the conservation buffer is to ensure that banking organizations maintain a cushion of capital that can be used to absorb losses during periods of financial and economic stress. Factoring in the capital conservation buffer increases the minimum ratios described above to 7% for CET1, 8.5% for Tier 1 Capital, and 10.5% for Total Capital.
Well Capitalized Requirements. The capital ratios described above represent minimum standards for banking organizations to be considered “adequately capitalized.” Banking agencies uniformly encourage banking organizations to maintain capital levels above these minimums and to be classified as “well-capitalized.” To that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital in excess of minimum regulatory requirements. For example, a well-capitalized banking organization may: (i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain activities; (ii) receive expedited processing of other required notices or applications; and (iii) accept, roll-over, or renew brokered deposits.
In addition, the banking agencies may require higher capital levels where warranted by an institution’s specific risk profile or operating circumstances. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, risks, such as interest rate risk, or risks associated with credit concentration, nontraditional activities, or securities trading activities. Further, any banking organization experiencing or anticipating significant growth would be expected to maintain capital ratios, including tangible capital positions (i.e., Tier 1 Capital less all intangible assets), well above the minimum regulatory levels.
Under the FDIC and the Federal Reserve regulations, in order to be well‑capitalized, West Bank and the Company must maintain:
•A CET1 ratio to risk-weighted assets of 6.5% or more;
•A ratio of Tier 1 Capital to total risk-weighted assets of 8% or more;
•A ratio of Total Capital to total risk-weighted assets of 10% or more; and
•A Tier 1 leverage ratio of 5% or greater.
Under the Basel III Rule, a banking organization may be considered “well capitalized” while not complying with the capital conservation buffer requirements described above.
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As of December 31, 2025: (i) West Bank was not subject to a directive from IDOB or the FDIC to increase its capital; and (ii) West Bank was well-capitalized, as defined by FDIC regulations. As of December 31, 2025, the Company had regulatory capital in excess of the Federal Reserve’s requirements and met the Basel III Rule requirements to be well-capitalized. West Bank and the Company also were in compliance with the capital conservation buffer.
Basel III Endgame Proposal. Previously, federal banking agencies proposed a “Basel III Endgame Rule” to complete the implementation of certain aspects of the Basel III accords; however, the proposal was not adopted, in part due to stakeholder concerns regarding potential economic impacts, data transparency, and the alignment of certain provisions with statutory tailoring requirements. Based on public statements from federal agency officials, it is anticipated that a revised proposal may be issued in the future. Any re-proposal of the Basel III Endgame Rule is expected to primarily affect large, complex banking organizations.
Prompt Corrective Action. The concept of a banking organization being “adequately capitalized” or “well capitalized,” as defined above, is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution. The extent of the banking agencies’ powers depends on whether the banking organization in question is “adequately capitalized,” “undercapitalized,” “significantly undercapitalized” or “critically undercapitalized,” in each case as defined by regulation. Depending upon the capital category to which a banking organization is assigned, the banking agencies’ corrective powers include: (i) requiring the institution to submit a capital restoration plan; (ii) limiting the institution’s asset growth and restricting its activities; (iii) requiring the institution to issue additional capital stock (including additional voting stock) or to sell itself; (iv) restricting transactions between the institution and its affiliates; (v) restricting the interest rate that the institution may pay on deposits; (vi) ordering a new election of directors of the institution; (vii) requiring that senior executive officers or directors be dismissed; (viii) prohibiting the institution from accepting deposits from correspondent banks; (ix) requiring the institution to divest certain subsidiaries; (x) prohibiting the payment of principal or interest on subordinated debt; and (xi) ultimately, appointing a receiver for the institution.
Community Bank Capital Simplification. Community banking organizations have long raised concerns with federal banking agencies about the regulatory burden, complexity, and costs associated with certain provisions of the Basel III Rule. In response, Congress provided an “off-ramp” for institutions, like us, with total consolidated assets of less than $10 billion as part of the Regulatory Relief Act. Section 201 of the Regulatory Relief Act specifically instructed the federal banking agencies to establish a single “Community Bank Leverage Ratio” (CBLR) of between 8 and 10%. Under the final rule, a community banking organization is eligible to elect to comply with its capital requirements under the CBLR framework if it has: (i) less than $10 billion in total consolidated assets, (ii) limited amounts of certain assets and off-balance sheet exposures, and (iii) a CBLR greater than 9%. In late 2025, the federal banking agencies proposed changes to the CBLR framework intended to encourage broader adoption, including reducing the required leverage ratio from 9.0% to 8.0%; however, the proposal has not yet been finalized. We have not elected to use the CBLR framework at this time.
Liquidity Requirements. Liquidity is a measure of the ability and ease with which bank assets may be converted to meet financial obligations, such as deposits or other funding sources. Banks are required to implement liquidity risk management frameworks that ensure they maintain sufficient liquidity, including a cushion of unencumbered, high-quality liquid assets, to withstand a range of stress events. The level and speed of deposit outflows contributing to the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 was unprecedented and contributed to acute liquidity and funding strain, underscoring the importance of liquidity risk management and contingency funding planning by insured depository institutions like West Bank, as highlighted in a 2023 addendum to existing interagency guidance on funding and liquidity risk management.
The primary role of liquidity risk management is to: (i) prospectively assess the need for funds to meet financial obligations; and (ii) ensure the availability of cash or collateral to fulfill those needs at the appropriate time by coordinating the various sources of funds available to the institution under normal and stressed conditions. The Basel III Rule includes a liquidity framework that requires the largest banking organizations to measure their liquidity against specific liquidity tests. One test, referred to as the Liquidity Coverage Ratio, or LCR, is designed to ensure that the banking organization has an adequate stock of unencumbered high-quality liquid assets that can be converted easily and immediately in private markets into cash to meet liquidity needs for a 30-calendar day liquidity stress scenario. The other test, known as the Net Stable Funding Ratio, or NSFR, is designed to promote more medium- and long-term funding of the assets and activities of FDIC-insured institutions over a one-year horizon. These tests provide an incentive for banks and bank holding companies to increase their holdings in Treasury securities and other sovereign debt as a component of assets, increase the use of long-term debt as a funding source and rely on stable funding like core deposits (in lieu of brokered deposits).
Although these tests do not apply to West Bank, we continue to review our liquidity risk management policies in light of regulatory requirements and industry developments.
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Dividend Payments. The primary source of funds for the Company is dividends from West Bank. Under the Iowa Banking Act, Iowa-chartered banks generally may pay dividends only out of undivided profits. The IDOB may restrict the declaration or payment of a dividend by an Iowa-chartered bank, such as West Bank. The payment of dividends by any FDIC-insured institution is affected by the requirement to maintain adequate capital pursuant to applicable capital adequacy guidelines and regulations, and an FDIC-insured institution generally is prohibited from paying any dividends if, following payment thereof, the institution would be undercapitalized. As described above, West Bank exceeded its capital requirements under applicable guidelines as of December 31, 2025. Notwithstanding the availability of funds for dividends, however, the FDIC and the IDOB may prohibit the payment of dividends by West Bank if either agency determines that such payment would constitute an unsafe or unsound practice. In addition, under the Basel III Rule, banking organizations that want to pay dividends must maintain 2.5 percent in CET1 attributable to the capital conservation buffer. See “—Bank Capital Requirements” above.
State Bank Investments, Activities, and Acquisitions. West Bank is permitted to make investments and engage in activities directly or through subsidiaries as authorized under Iowa law. However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments that are not permissible for a national bank. Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries from engaging as principal in any activity that is not permitted for a national bank, unless they meet and continue to meet minimum regulatory capital requirements and the FDIC determines that the activity would not pose a significant risk to the DIF. These restrictions have not had, and are not currently expected to have, a material impact on the operations of West Bank.
West Bank may be required to obtain approval from the IDOB, the FDIC, and other applicable banking or financial services agencies before engaging in certain acquisitions or mergers under applicable state and federal law. In 2025, the federal banking agencies rescinded certain prior administrative actions regarding the review and approval of mergers and acquisitions, with the intent of streamlining and expediting the regulatory review of certain merger and acquisition applications. With respect to interstate mergers and acquisitions, federal law permits state banks to merge with out-of-state banks subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law requirements that the merging bank has been in existence for a minimum period of time (not to exceed five years), prior to the merger.
Branching Authority. Iowa banks, such as West Bank, have the authority under Iowa law to establish branches anywhere in the State of Iowa, subject to receipt of all required regulatory approvals. The Dodd-Frank Act permits well-capitalized and well-managed banks to establish new interstate branches or the acquisition of individual branches of a bank in another state (rather than the acquisition of an out-of-state bank in its entirety) without impediments.
Affiliate and Insider Transactions. West Bank is subject to certain restrictions imposed by federal law on “covered transactions” between West Bank and its “affiliates.” The Company is an affiliate of West Bank for purposes of these restrictions. Covered transactions subject to these restrictions include extensions of credit to the Company, investments in the stock or other securities of the Company, and the acceptance of the Company’s stock or other securities as collateral for loans made by West Bank. The Dodd-Frank Act enhanced these requirements by expanding the definition of “covered transactions” and extending the period for which collateral requirements for such transactions must be maintained.
Certain limitations and reporting requirements also apply to extensions of credit by West Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal stockholders of the Company, and to “related interests” of such directors, officers and principal stockholders under state and federal law. In addition, federal law and regulations may govern the terms on which any person who is a director or officer of the Company or West Bank, or a principal stockholder of the Company, may obtain credit from banks with which West Bank maintains a correspondent relationship.
Safety and Soundness Standards/Risk Management. FDIC-insured institutions are expected to operate in a safe and sound manner. The federal banking agencies have adopted operational and managerial standards to promote the safety and soundness of such institutions that address internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate exposure, asset growth, compensation, fees and benefits, asset quality and earnings. These standards generally prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals.
If an institution fails to operate in a safe and sound manner its primary federal regulator may require the submission of a plan to achieve and maintain compliance. Failure to submit an acceptable compliance plan, or to implement a plan in any material respect, may result in formal agency orders directing the institution to cure deficiencies. Until such deficiencies are resolved, the agency may restrict the institution’s rate of growth, require additional capital, limit deposit rates, or take other corrective action as deemed appropriate. Operating in an unsafe or unsound manner also will constitute grounds for other enforcement action by the federal banking agencies, including cease and desist orders and civil money penalty assessments.
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Federal banking agencies have emphasized the importance of sound risk management processes and strong internal controls when evaluating the activities of the FDIC-insured institutions. In 2025, however, the agencies signaled a shift toward focusing on the identification and management of material financial risks, rather than primarily on adherence to prescriptive operational processes. Although effective risk management, internal controls, and board and management oversight remain important, supervisory attention may increasingly center on whether specific practices pose material harm to the institution’s financial condition or create a risk of loss to the DIF. Despite this potential shift in focus, the agencies continue to evaluate a broad spectrum of risks including credit, market, liquidity, operational, and legal risks, emphasizing their potential impact on safety and soundness. Notably, the federal banking agencies have indicated that they intend to remove reputation risk from consideration, citing concerns about its use in restricting banking services to certain industries or groups. The key risk themes identified for 2025 are discussed under Risk Factors.
West Bank is expected to have active board and senior management oversight; adequate policies, procedures and limits; adequate risk measurement, monitoring and management information systems; and comprehensive internal controls. The federal banking agencies also issued guidance on specific risk management topics, including third-party relationships, in response to the proliferation of relationships between banking organizations and financial technology companies (although the guidance applies more broadly).
Privacy and Cybersecurity. West Bank is subject to numerous U.S. federal and state laws and regulations aimed at protecting the non-public, confidential information of its customers. These laws require West Bank to periodically disclose its privacy policies and practices regarding the sharing of non-public customer information, and in certain circumstances, permit consumers to opt out of the sharing of information with unaffiliated third parties. They also limit West Bank’s ability to share certain information with affiliates and non-affiliates for marketing or non-marketing purposes. In addition, as a part of its operational risk mitigation, West Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to protect the security and confidentiality of customer records and information, and to require the same of its service providers. These security and privacy policies and procedures are applied consistently across all business lines and geographic locations.
West Bank and the Company are also subject to federal and state laws and regulations requiring notifications and disclosures regarding certain cybersecurity incidents. In addition, West Bank must consider and address cybersecurity risks as part of its risk management processes, including implementing and maintaining appropriate safeguards, monitoring and testing systems, and overseeing the cybersecurity practices of its service providers. Regulatory guidance emphasizes the cybersecurity should be integrated into overall enterprise risk management and business continuity planning.
Community Reinvestment Act Requirements. The Community Reinvestment Act (CRA) imposes on West Bank a continuing and affirmative obligation, consistent with safe and sound operations, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The FDIC regularly assesses West Bank’s record of meeting these credit needs through periodic CRA examinations. West Bank’s CRA ratings derived from these examinations can have significant impacts on the activities in which West Bank and the Company may engage. For example, a low CRA rating may impact the review of applications for acquisitions by West Bank or the Company’s financial holding company status.
In October 2023, the federal banking agencies issued a final rule intended to strengthen and modernize the CRA regulations (the CRA Rule). The CRA Rule was subsequently challenged in court, which prevented it from taking effect. In 2025, the federal banking agencies issued a proposed rule to rescind the CRA Rule and reinstate the prior CRA regulatory framework adopted in 1995.
Additionally, the FDIC has determined to lengthen the period between CRA examinations for certain banks with less than $3 billion in assets; however, this change is not expected to impact West Bank, which has more than $3 billion in total assets.
Anti-Money Laundering/Sanctions. The Bank Secrecy Act (BSA) is a U.S. federal statutory framework, as amended by subsequent laws and implemented through regulations, which is designed to combat money laundering, terrorist financing, and other illicit financial activity. The BSA and related anti-money laundering/countering the financing of terrorism (AML/CFT) laws and regulations are intended to prevent terrorists and criminals from accessing the U.S. financial system and have significant implications for FDIC-insured institutions and other businesses involved in the transmission of funds. Together, this regulatory framework provides a foundation to promote financial transparency and deter and detect efforts to misuse the U.S. financial system to launder criminal proceeds, finance terrorist acts, or facilitate other illicit conduct.
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The BSA and related regulations require financial institutions to establish and maintain policies and procedures addressing: (i) customer identification and due diligence; (ii) the prevention and detection of money laundering and terrorist financing; (iii) the identification and reporting of suspicious activities and certain currency transactions; (iv) compliance with laws relating to currency crimes; and (v) cooperation with law enforcement authorities. West Bank also must comply with stringent economic and trade sanctions regimes administered and enforced by the Office of Foreign Assets Control.
Although core AML/CFT statutory requirements and expectations remain unchanged, federal banking agencies and the Financial Crimes Enforcement Network (FinCEN) have recently pursued or considered efforts to modernize and streamline BSA/AML compliance through a more risk-based approach, including targeted regulatory relief, revised examination expectations, and efforts to reduce certain reporting and compliance burden, particularly for lower-risk and community banking organizations.
Concentrations in Commercial Real Estate. Concentration risk exists when FDIC-insured institutions allocate a disproportionate amount of assets to a single industry or economic segment. Concentration in commercial real estate (CRE) lending is one area of regulatory focus, which has been subject to additional scrutiny by federal banking agencies as well as the SEC (for publicly-traded banking organizations) in recent years. The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance (CRE Guidance) provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying institutions with potentially significant CRE loan concentrations that may warrant greater supervisory attention. These indicators include: (i) total CRE loans exceeding 300 percent of capital and increasing 50 percent or more in the preceding three years; or (ii) construction and land development loans exceeding 100 percent of capital.
The CRE Guidance does not establish binding limits on CRE lending activities, but rather is intended to inform supervisory assessments of whether an institution’s risk profile, earnings capacity, and capital levels are commensurate with its CRE exposure. In recent years, the federal banking agencies have issued statements to reinforce prudent risk-management practices related to CRE lending in response to observed growth in CRE markets, increased competitive pressures, rising CRE concentrations, and an easing of CRE underwriting standards. In other statements, the agencies reminded FDIC-insured institutions to maintain underwriting discipline and to identify, measure, monitor, and manage the risks arising from CRE lending, including by holding capital commensurate with those risks.
West Bank historically has exceeded, and continues to exceed, the 300 percent guideline for CRE loans. Additional monitoring processes have been implemented to manage this increased risk.
Consumer Financial Services. The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the Consumer Financial Protection Bureau (CFPB) commenced operations to supervise and enforce consumer protection laws. The CFPB has broad rulemaking authority for a wide range of consumer protection laws that apply to all providers of consumer products and services, including West Bank, as well as the authority to prohibit “unfair, deceptive or abusive” acts and practices. The CFPB has examination and enforcement authority over providers with more than $10 billion in assets. FDIC-insured institutions with $10 billion or less in assets, like West Bank, continue to be examined by their applicable primary federal banking regulators.
In response to mortgage-related abuses that contributed to the global financial crisis, the Dodd-Frank Act and CFPB rulemaking significantly expanded underwriting, disclosure, and anti-predatory lending requirements for residential mortgage loans, including by imposing ability-to-repay standards and establishing a presumption of compliance for certain “qualified mortgages.” The CFPB has continued to refine these requirements through additional rulemaking addressing qualified mortgages and ability-to-repay standards. Over the last several years, the CFPB has taken an aggressive approach to the regulation (and supervision, where applicable) of providers of consumer financial products and services. More recently, changes in leadership and policy direction have led to: (i) shifts in regulatory priorities, including the rescission or reconsideration of certain CFPB guidance and rules; (ii) a reduction in CFPB enforcement activity; and (iii) constraints on the CFPB’s budget and resources, although the CFPB continues to retain broad statutory authority to administer, supervise, and enforce federal consumer financial protection laws. In addition, state banking and other financial services regulatory agencies retain authority to administer and enforce state consumer financial protection laws and could increase supervisory or enforcement activity in response to changes in federal regulatory priorities.
The CFPB’s rules have not had a significant impact on West Bank’s operations, except for higher compliance costs. West Bank also must comply with certain state consumer protection laws and requirements in the states in which it operates.
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ADDITIONAL INFORMATION
The principal executive offices of the Company are located at 3330 Westown Parkway, West Des Moines, Iowa 50266. The Company’s telephone number is (515) 222-2300, and its internet address is www.westbankstrong.com. Copies of the Company’s annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and any amendments thereto are available for viewing or downloading free of charge from the Investor Relations section of the Company’s website as soon as reasonably practicable after the documents are filed with or furnished to the SEC. Copies of the Company’s filings with the SEC are also available from the SEC’s website (www.sec.gov) free of charge.
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ITEM 1A. RISK FACTORS
West Bancorporation’s business is conducted almost exclusively through West Bank. West Bancorporation and West Bank are subject to many of the common risks that challenge publicly traded, regulated financial institutions. An investment in West Bancorporation’s common stock is also subject to the following specific risks. In addition to the risks and uncertainties described below, other risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and results of operations.
Risks Related to Credit Quality
We must effectively manage the credit risks of our loan portfolio.
The largest component of West Bank’s income is interest received on loans. Our business depends on the creditworthiness of our customers. There are risks inherent in making loans, including risks of nonpayment, risks resulting from uncertainties of the future value of collateral, and risks resulting from changes in economic and industry conditions. We attempt to reduce our credit risk through prudent loan application, underwriting and approval procedures, including internal loan reviews before and after proceeds have been disbursed, careful monitoring of the concentration of our loans within specific industries, and collateral and guarantee requirements. These procedures cannot, however, be expected to completely eliminate our credit risks, and we can make no guarantees concerning the strength of our loan portfolio.
The information that we use in managing our credit risk may be inaccurate or incomplete, which may result in an increased risk of default and otherwise have an adverse effect on our business, results of operations and financial condition.
In deciding whether to extend credit or enter into other transactions with clients and counterparties, we may rely on information furnished by or on behalf of clients and counterparties, including financial statements and other financial information. We also may rely on representations of clients and counterparties as to the accuracy and completeness of that information and, with respect to financial statements, on reports of independent auditors. Although we regularly review our credit exposure to specific clients and counterparties and to specific industries that we believe may present credit concerns, default risk may arise from events or circumstances that are difficult to detect, such as fraud or catastrophic events affecting certain industries. Moreover, such circumstances may become more likely to occur or be detected in periods of general economic uncertainty. We may also fail to receive full information with respect to the risks of a counterparty. In addition, in cases where we have extended credit against collateral, we may find that we are under-secured, for example, as a result of sudden declines in market values that reduce the value of collateral or due to fraud with respect to such collateral. If such events or circumstances were to occur, it could result in potential loss of revenue and have an adverse effect on our business, results of operations and financial condition.
Our loan portfolio includes commercial loans, which involve risks specific to commercial borrowers.
West Bank’s loan portfolio includes a significant amount of commercial real estate loans, construction and land development loans, commercial lines of credit and commercial term loans. West Bank’s typical commercial borrower is a small- or medium-sized, privately owned Iowa or Minnesota business entity. Commercial loans often have large balances, and repayment usually depends on the borrowers’ successful business operations. Commercial loans also are generally not fully repaid over the loan period and thus may require refinancing or a large payoff at maturity. If the general 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. Also, when credit markets tighten due to adverse developments in specific markets or the general economy, opportunities for refinancing may become more expensive or unavailable, resulting in loan defaults.
Our loan portfolio includes commercial real estate loans, which involve risks specific to real estate values.
Commercial real estate loans were a significant portion of our total loan portfolio as of December 31, 2025. The market value of real estate can fluctuate significantly in a short period of time as a result of market conditions in the geographic area in which the real estate is located. Adverse developments affecting real estate values in one or more of our markets could increase the credit risk associated with our loan portfolio. Additionally, commercial real estate lending typically involves higher loan principal amounts, and repayment of the loans is generally dependent, in large part, on sufficient income from the properties securing the loans to cover operating expenses and debt service. Economic events, including governmental regulations outside of the control of the borrower or lender, could negatively impact the future cash flows and market values of the affected properties.
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If the loans that are collateralized by real estate become troubled and the value of the real estate has been significantly impaired, we may not be able to recover the full contractual amount of principal and interest that we anticipated at the time of originating the loans, which could cause us to charge off all or a portion of the loans. This could lead to an increased provision for credit losses and adversely affect our operating results and financial condition.
The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny.
The federal banking regulators have promulgated joint guidance on sound risk management practices for financial institutions with concentrations in commercial real estate lending. Under the CRE Guidance, a financial institution that, like West Bank, is actively involved in commercial real estate lending should perform a risk assessment to identify concentrations. A financial institution may have a concentration in commercial real estate lending if, among other factors (i) total reported loans for construction, land development, and other land represent 100 percent or more of total risk-based capital, or (ii) total reported loans secured by multifamily and non-farm non-residential properties, loans for construction, land development and other land, and loans otherwise sensitive to the general commercial real estate market, including loans to commercial real estate related entities, represent 300 percent or more of total risk-based capital. Based on these criteria, West Bank had concentrations of 89 percent and 398 percent, respectively, as of December 31, 2025. The purpose of the CRE Guidance is to assist banks in developing risk management practices and capital levels commensurate with the level and nature of commercial real estate concentrations. The CRE Guidance states that management should employ heightened risk management practices, including board and management oversight, strategic planning, development of underwriting standards, and risk assessment and monitoring through market analysis and stress testing. West Bank believes that its current risk management processes adequately address the regulatory guidance; however, there can be no guarantee of the effectiveness of the risk management processes on an ongoing basis.
We are subject to environmental liability risk associated with real estate collateral securing our loans.
A significant portion of our loan portfolio is secured by real property. Under certain circumstances, we may take title to the real property collateral through foreclosure or other means. As the titleholder of the property, we may be responsible for environmental risks, such as hazardous materials, which attach to the property. For these reasons, prior to extending credit, we have an environmental risk assessment program to identify any known environmental risks associated with the real property that will secure our loans. In addition, we routinely inspect properties following the taking of title. When environmental risks are found, environmental laws and regulations may prescribe our approach to remediation. As a result, while we have ownership of a property, we may incur substantial expense and bear potential liability for any damages caused. The environmental risks may also materially reduce the property’s value or limit our ability to use or sell the property. We also cannot guarantee that our environmental risk assessment will detect all environmental issues relating to a property, which could subject us to additional liability.
Risks Related to Accounting Policies and Estimates
Our allowance for credit losses may be insufficient to absorb potential losses in our loan portfolio.
We maintain an allowance for credit losses at a level we believe adequate to absorb current expected credit losses based on an analysis of the loan portfolio. The level of the allowance reflects management’s estimate of current expected losses in the portfolio as of the balance sheet date and is based on a cash flow-based model that considers available relevant information about the collectability of cash flows, including information about past events, current conditions, and reasonable and supportable forecasts.
Determination of the allowance is inherently subjective as it requires significant estimates and management’s judgment of credit risks and future trends, all of which may undergo material changes. Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for credit losses. In addition, bank regulatory agencies periodically review our allowance and may require an increase in the provision for credit losses or the recognition of additional loan charge-offs, based on judgments different from those of management. Also, if charge-offs in future periods exceed the allowance for credit losses, we will need additional provisions to increase the allowance. Any increases in provisions will result in a decrease in net income and capital and may have a material adverse effect on our financial condition and results of operations.
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Our accounting policies and methods are the basis for how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain.
Our accounting policies and methods are fundamental to how we record and report our financial condition and results of operations. Our management must exercise judgment in selecting and applying many of these accounting policies and methods in order to ensure they comply with U.S. generally accepted accounting principles (GAAP) and reflect management’s judgment as to the most appropriate manner in which to record and report our financial condition and results of operations. In some cases, management must select the accounting policy or method to apply from two or more alternatives, any of which might be reasonable under the circumstances. The application of the chosen accounting policy or method might result in us reporting different amounts than would have been reported under a different alternative. If management’s estimates or assumptions are incorrect, the Company may experience a material loss.
Changes in accounting policies or standards could materially impact our financial statements.
From time to time, the FASB and the SEC change the financial accounting and reporting standards or the interpretation of those standards that govern the preparation of our financial statements. Such changes may result in us being subject to new or changing accounting and reporting standards. In addition, trends in financial and business reporting, including new disclosure requirements, could require us to incur additional reporting expense. These changes are beyond our control, can be difficult to predict and could have a material adverse impact on our financial condition and results of operations.
If a significant portion of any unrealized losses in our portfolio of investment securities were to incur credit losses, we would recognize a material charge to our earnings, and our capital ratios would be adversely impacted.
Factors beyond our control can significantly influence the fair value of investment securities in our portfolio and can cause potential adverse changes to the fair value of those securities. These factors include, but are not limited to, changes in interest rates, rating agency downgrades of the securities, defaults by the issuer or individual mortgagors with respect to the underlying securities, and instability in the credit markets. Any of the foregoing factors could result in realized losses in future periods.
We analyze our investment securities quarterly to determine whether, in the opinion of management, any of the securities have credit losses. To the extent that any portion of the unrealized losses in our portfolio of investment securities is determined to have credit losses, we will recognize a charge to our earnings in the quarter during which such determination is made, and our capital ratios will be adversely impacted. 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.
At December 31, 2025, we had $93.3 million of net unrealized losses in our securities portfolio. If we are forced to liquidate any of those investments prior to maturity, including because of a lack of liquidity, we would recognize as a charge to earnings the losses attributable to those securities.
Failure to maintain effective internal controls over financial reporting could impair our ability to accurately and timely report our financial results and could increase the risk of fraud.
Effective internal controls over financial reporting are necessary to provide reliable financial reports and prevent fraud. Management believes that our internal controls over financial reporting are currently effective. While management will continue to assess our controls and procedures and take immediate action to remediate any future perceived issues, there can be no guarantee of the effectiveness of these controls and procedures on an ongoing basis. Any failure to maintain an effective internal control environment could impact our ability to report our financial results on an accurate and timely basis, which could result in regulatory actions, loss of investor confidence, and an adverse impact on our business operations and stock price.
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Risks Related to Information Security and Business Interruption
The occurrence of fraudulent activity, breaches or failures of our information security controls or cybersecurity-related incidents could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
As a bank, we are susceptible to fraudulent activity, information security breaches and cybersecurity-related incidents that may be committed against us, our third-party partners or our clients, which may result in financial losses or increased costs to us or our customers, disclosure or misuse of our information or our client information, misappropriation of assets, privacy breaches against our customers, litigation or damage to our reputation. Such fraudulent activity may take many forms, including check fraud, electronic fraud, wire fraud, phishing, social engineering and other dishonest acts. Information security breaches and cybersecurity-related incidents may include fraudulent or unauthorized access to systems used by us, our customers or third-party vendors, denial or degradation of service attacks, and malware or other cyber attacks.
There continues to be a rise in electronic fraudulent activity, security breaches and cyber attacks within the financial services industry, especially in the commercial banking sector due to cyber-criminals targeting commercial bank accounts, and as a result of increasingly sophisticated methods of conducting cyber attacks, including those employing artificial intelligence. Moreover, in recent periods, several large corporations, including financial institutions, third party partners specializing in providing services to financial institutions, and retail companies, have suffered major data breaches, in some cases exposing not only confidential and proprietary corporate information, but also sensitive financial and other personal information of their customers and employees and subjecting them to potential fraudulent activity. Some of our customers may have been affected by these breaches, which could increase their risks of identity theft and other fraudulent activity that could involve their accounts with us.
Information pertaining to us and our customers is maintained, and transactions are executed, on networks and systems maintained by us and certain third-party partners, such as our online banking, mobile banking and core deposit and loan recordkeeping systems. The secure maintenance and transmission of confidential information, as well as execution of transactions over these systems, are essential to protect us and our customers against fraud and security breaches and to maintain the confidence of our customers. Breaches of information security also may occur through intentional or unintentional acts by those having access to our systems or the confidential information of our customers, including employees. In addition, increases in criminal authorized activity levels and sophistication, advances in computer capabilities, new discoveries, vulnerabilities in third-party technologies (including browsers and operating systems), or other developments could result in a compromise or breach of the technology, processes and controls that we use to prevent fraudulent transactions and to protect data about us, our customers and underlying transactions, as well as the technology used by our customers to access our systems. Our third-party partners’ inability to anticipate, or failure to adequately mitigate, breaches of security could result in a number of negative events, including losses to us or our customers, loss of business or customers, damage to our reputation, the incurrence of additional expenses, disruption to our business, additional regulatory scrutiny or penalties, or our exposure to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Furthermore, there has been heightened legislative and regulatory focus on privacy, data protection and information security. New or revised laws and regulations, including with respect to the use of artificial intelligence by financial institutions and service providers, may significantly impact our current and planned privacy, data protection and information security-related practices, the collection, use, retention and safeguarding of customer and employee information, and current or planned business activities. Compliance with current or future privacy, data protection and information security laws could result in higher compliance and technology costs and could restrict our ability to provide certain products and services, which could adversely affect our business, financial condition or results of operations.
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Issues with the use of artificial intelligence in our marketplace may result in reputational harm or liability, or could otherwise adversely affect our business.
Artificial intelligence, including generative artificial intelligence, is or may be enabled by or integrated into our products or those developed by our third-party partners. As with many developing technologies, artificial intelligence presents risks and challenges that could affect its further development, adoption, and use, and therefore our business. Artificial intelligence algorithms may be flawed, for example datasets may contain biased information or otherwise be insufficient; and inappropriate or controversial data practices could impair the acceptance of artificial intelligence solutions and result in burdensome new regulations. If the analyses that products incorporating artificial intelligence assist in producing for us or our third-party partners are deficient, biased or inaccurate, we could be subject to competitive harm, potential legal liability and brand or reputational harm. The use of artificial intelligence may also present ethical issues. If we or our third-party partners offer artificial intelligence enabled products that are controversial because of their purported or real impact on human rights, privacy, or other issues, we may experience competitive harm, potential legal liability and brand or reputational harm. In addition, we expect that governments will continue to assess and implement new laws and regulations concerning the use of artificial intelligence, which may affect or impair the usability or efficiency of our products and services and those developed by our third-party partners.
We depend on information technology and telecommunications systems of third parties, and any systems failures, interruptions or data breaches involving these systems could adversely affect our operations and financial condition.
Our business is highly dependent on the successful and uninterrupted functioning of our information technology and telecommunications systems, third-party servicers, accounting systems, mobile and online banking platforms and financial intermediaries. We outsource to third parties many of our major systems, such as data processing and mobile and online banking. The failure of these systems, or the termination of a third-party software license or service agreement on which any of these systems is based, could interrupt our operations. Because our information technology and telecommunications systems interface with and depend on third-party systems, we could experience service denials if demand for such services exceeds capacity or such third-party systems fail or experience interruptions. A system failure or service denial could result in a deterioration of our ability to process loans or gather deposits and provide customer service, compromise our ability to operate effectively, result in potential noncompliance with applicable laws or regulations, damage our reputation, result in a loss of customer business or subject us to additional regulatory scrutiny and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations and growth prospects. In addition, failures of third parties to comply with applicable laws and regulations, or fraud or misconduct on the part of employees of any of these third parties, could disrupt our operations or adversely affect our reputation.
It may be difficult for us to replace some of our third-party vendors, particularly vendors providing our core banking and information services, in a timely manner if they are unwilling or unable to provide us with these services in the future for any reason, and even if we are able to replace them, it might be at higher cost or result in the loss of customers. Any such events could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
Our operations rely heavily on the secure processing, storage and transmission of information and the monitoring of a large number of transactions on a minute-by-minute basis, and even a short interruption in service could have significant consequences. We also interact with and rely on retailers, for whom we process transactions, as well as financial counterparties and regulators. Each of these third parties may be targets of the same types of fraudulent activity, computer break-ins and other cybersecurity breaches described above, and the cybersecurity measures that they maintain to mitigate the risk of such activity may be different than our own and may be inadequate.
As a result of financial entities and technology systems becoming more interdependent and complex, a cyber incident, information breach or loss, or technology failure that compromises the systems or data of one or more financial entities could have a material impact on counterparties or other market participants, including ourselves. As a result of the foregoing, our ability to conduct business may be adversely affected by any significant disruptions to us or to third parties with whom we interact.
Other Risks Related to West Bank’s Operations and the Economy
We are subject to liquidity risks.
West Bank maintains liquidity primarily through customer deposits and other short-term funding sources, including advances from the Federal Home Loan Bank (FHLB) and the Federal Reserve discount window, brokered deposits and purchased federal funds.
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If economic influences change so that we do not have access to short-term credit, or our depositors withdraw a substantial amount of their funds for other uses, West Bank might experience liquidity issues. Our efforts to monitor and manage liquidity risk may not be successful or sufficient to deal with dramatic or unanticipated reductions in our liquidity. If this were to occur and additional short-term borrowings or debt are needed for liquidity purposes in the future, there can be no assurance that such borrowings or debt would be available or, if available, would be on favorable terms. If we increase our short-term borrowings or debt, our cost of funds will increase, thereby reducing our net interest income, or we may need to sell a portion of our investment portfolio, which, depending upon market conditions, could result in the Company or West Bank realizing losses. At December 31, 2025, our borrowed funds decreased to $376.4 million, compared to $392.6 million at December 31, 2024. Although we believe West Bank’s current sources of funds are adequate for its liquidity needs, there can be no assurance in this regard for the future.
The competition for banking and financial services in our market areas is high, which could adversely affect our financial condition and results of operations.
We operate in highly competitive markets and face strong competition in originating loans, attracting deposits and offering our other services. We also compete in recruiting and retaining talented employees. The Des Moines metropolitan market area, in particular, has attracted many new financial institutions within the last two decades. We also compete with nonbank financial service providers, such as financial technology companies, many of which are not subject to the same regulatory restrictions that we are and may be able to compete more effectively as a result.
Customer loyalty can be influenced by a competitor’s new products, especially if those offerings are priced lower than our products. Some of our competitors may also be better able to attract customers because they provide products and services over a larger geographic area than we serve. This competitive climate can make it more difficult to establish and maintain relationships with new and existing customers, lower the rate that we are able to charge on loans, and affect our charges for other services. Our growth and profitability depend on our continued ability to compete effectively within our markets, and our inability to do so could have a material adverse effect on our financial condition and results of operations.
Loss of customer deposits due to increased competition could increase our funding costs.
We rely on customer deposits to be a low cost and stable source of funding. We compete with banks and other financial services companies, including digital asset service providers, for deposits. If our competitors raise the rates they pay on deposits, we may need to raise our rates to avoid losing deposits. Deposit balances can decrease when customers perceive alternative investments, such as money market funds, treasury securities, and certificates of deposit at other financial institutions as providing a better risk/return trade-off. If customers move money out of bank deposits and into other investments, we could lose a relatively low cost source of funds, which would require us to seek other, potentially more expensive funding alternatives. Higher funding costs could reduce our net interest margin and net interest income and could have a material adverse effect on our financial condition and results of operations.
Damage to our reputation could adversely affect our business.
Our business depends upon earning and maintaining the trust and confidence of our customers, stockholders and employees. Damage to our reputation could cause significant harm to our business. Harm to our reputation can arise from numerous sources, including employee misconduct, vendor nonperformance, cybersecurity breaches, compliance failures, litigation or governmental investigations, among other things. In addition, a failure to deliver appropriate standards of service, or a failure or perceived failure to treat customers and clients fairly, can result in customer dissatisfaction, litigation, and heightened regulatory scrutiny, all of which can lead to lost revenue, higher operating costs and harm to our reputation. Adverse publicity about West Bank, whether or not true, may also result in harm to our business. Should any events or circumstances that could undermine our reputation occur, there can be no assurance that any lost revenue from customers opting to move their business to another institution and the additional costs and expenses that we may incur in addressing such issues would not adversely affect our financial condition and results of operations.
We are subject to various legal claims and litigation.
We are periodically involved in routine litigation incidental to our business. Regardless of whether these claims and legal actions are founded or unfounded, if such legal actions are not resolved in a manner favorable to us, they may result in significant financial liability and/or adversely affect the Company’s reputation. In addition, litigation can be costly. Any financial liability, litigation costs or reputational damage caused by these legal claims could have a material adverse impact on our business, financial condition and results of operations.
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The soundness of other financial institutions could adversely affect us.
Financial services institutions are interrelated as a result of trading, clearing, counterparty or other relationships. We have exposure to many different industries and counterparties, and we routinely execute transactions with counterparties in the financial services industry, including brokers and dealers, commercial banks, investment banks and other institutional clients. Many of these transactions expose us to credit risk in the event of default by our counterparty or client. In addition, our credit risk may be exacerbated when the collateral held by us cannot be realized or is liquidated at prices not sufficient to recover the full amount of the loan or derivative exposure due us. There is no assurance that any such losses would not materially and adversely affect our results of operations or earnings. Additionally, we may be negatively affected by brand or reputational harm to other community banks or to the community banking industry.
We may experience difficulties in managing our growth.
In the future, we may decide to expand into additional communities or attempt to strengthen our position in our current markets through opportunistic acquisitions of all or part of other financial institutions or related businesses or through the hiring of teams of bankers from other financial institutions that we believe provide a strategic fit with our business, or by opening new locations. To the extent that we undertake acquisitions or new office openings, we are likely to experience the effects of higher operating expense relative to operating income from the new operations, which may have an adverse effect on our overall levels of reported net income, return on average equity and return on average assets. To the extent we hire teams of bankers from other financial institutions, our salaries and employee benefits expense will likely increase, which may have an adverse effect on our net income, without any guarantee that the new banking team will be successful in generating new business. Other effects of engaging in such growth strategies may include potential diversion of our management’s time and attention and general disruption to our business.
To the extent that we grow through acquisitions or office openings, we cannot provide assurance that we will be able to adequately or profitably manage such growth. Acquiring other banks and businesses will involve risks similar to those commonly associated with new office openings, but may also involve additional risks. These additional risks include potential exposure to unknown or contingent liabilities of banks and businesses we acquire, exposure to potential asset quality issues of the acquired bank or related business, difficulty and expense of integrating the operations and personnel of banks and businesses we acquire, and the possible loss of key employees and customers of the banks and businesses we acquire.
Maintaining or increasing our market share may depend on lowering prices and the adoption of new products and services.
Our success depends, in part, on our ability to adapt our products and services to evolving industry standards and customer needs. There may be increased pressure to provide products and services at lower prices. Lower prices can reduce our net interest margin and revenues from our fee-based products and services. In addition, the widespread adoption of new technologies could require us to make substantial expenditures to modify or adapt our existing products and services. Also, these and other capital investments in our business may not produce expected growth in earnings anticipated at the time of the expenditure. We may not be successful in introducing new products and services, achieving market acceptance of our products and services, or developing and maintaining loyal customers.
The loss of the services of any of our senior executive officers or key personnel could cause our business to suffer.
Much of our success is due to our ability to attract and retain senior management and key personnel experienced in banking and financial services who are very involved in the communities we currently serve. Our continued success depends to a significant extent upon the continued services of relatively few individuals. In addition, our success depends in significant part upon our senior management’s ability to develop and implement our business strategies. The loss of services of a few of our senior executive officers or key personnel, or the inability to recruit and retain qualified personnel in the future, could have an adverse effect on our business, financial condition or results of operations, at least in the short term.
Labor shortages and a failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.
A number of factors may adversely affect the labor force available to us or increase labor costs, including changes in unemployment levels and decreased labor force size and participation rates. Although we have not experienced any material labor shortage to date, we have recently observed an overall tightening and increasingly competitive local labor market. A sustained labor shortage or increased turnover rates within our employee base could lead to increased costs, such as increased compensation expense to attract and retain employees.
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In addition, if we are unable to hire and retain employees capable of performing at a high-level, or if mitigation measures we take to respond to a decrease in labor availability have unintended negative effects, our business could be adversely affected. An overall labor shortage, lack of skilled labor, increased turnover or labor-driven inflation, caused by general macroeconomic factors, could have a material adverse impact on our business, results of operations and financial condition.
Changes in interest rates could negatively impact our financial condition and results of operations.
Our earnings and cash flows are largely dependent on our net interest income, which is the difference between the interest income we earn on interest-earning assets, such as loans, investment securities and short-term investments, and the interest expense that we pay on interest-bearing liabilities, such as deposits and borrowings. Additionally, changes in interest rates also affect our ability to fund our operations with client deposits and the fair value of securities in our investment portfolio and derivatives portfolio. Therefore, any change in general market interest rates, including changes in federal fiscal and monetary policies, can have a significant effect on our net interest income and results of operations. Interest rates are sensitive to many factors, including government monetary and fiscal policies, domestic and international economic and political conditions and competition.
Our interest-earning assets and interest-bearing liabilities may react in different degrees to changes in market interest rates. Interest rates on some types of assets and liabilities may fluctuate prior to changes in broader market interest rates, while rates on other types of assets and liabilities may lag behind. The result of these changes to rates may cause differing spreads on interest-earning assets and interest-bearing liabilities. We cannot control or accurately predict changes in market rates of interest.
It is currently expected that, during 2026, the Federal Open Market Committee of the Federal Reserve (“FOMC”) will continue to closely monitor interest rates, in part to manage the rate of inflation to its preferred level. In the fourth quarter of 2025, the FOMC decreased the target range for the federal funds rate to a range of 3.50 percent to 3.75 percent, following a series of significant increases beginning in 2022. If the FOMC further alters the targeted federal funds rates, overall interest rates likely will continue to change, which may impact the entire national economy. Changes in interest rates directly impact the Company’s net interest income and also may affect the demand for loans and the value of fixed-rate investment securities. These effects from interest rate changes or from other sustained economic stress or a recession, among other matters, could have a material adverse effect on the Company’s business, financial condition, liquidity and results of operations.
In addition, the Company could be prevented from altering the interest rates charged on loans or from maintaining the interest rates offered on deposits and money market savings accounts due to “price” competition from other banks and financial institutions with which the Company competes. As of December 31, 2025, the Company had $540.4 million of non-maturity, noninterest-bearing deposit accounts and $2.4 billion of non-maturity interest-bearing deposit accounts. The Company does not know what market rates will be throughout 2026, including the frequency and significance with which the FOMC may continue to change the target range for the federal funds rate. If the Company fails to offer interest at a sufficient level to keep these non-maturity deposits, core deposits may be reduced, which would require the Company to obtain funding in other ways or risk slowing future asset growth.
Our business is subject to domestic and, to a lesser extent, international economic conditions and other factors, many of which are beyond our control and could materially and adversely affect us.
Our financial performance generally, and in particular the ability of customers to pay interest on and repay principal on outstanding loans and the value of collateral securing those loans, as well as demand for loans and other products and services we offer, is highly dependent upon the business environment, not only in the markets where we operate, but also in the states of Iowa and Minnesota, generally, in the United States as a whole, and internationally. A favorable business environment is generally characterized by, among other factors, economic growth, efficient capital markets, low inflation, low unemployment, high business and investor confidence, and strong business earnings. Unfavorable or uncertain economic and market conditions can be caused by declines in economic growth, business activity, or investor or business confidence; limitations on the availability or increases in the cost of credit and capital; inflation or changes in interest rates; high unemployment; changes in U.S. trade and foreign policies, legislation, treaties and tariffs; natural disasters; military conflicts and acts of war or terrorism; immigration enforcement, widespread disease or pandemics; or a combination of these or other factors. Such unfavorable conditions could materially and adversely affect us.
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The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflicts, including the current conflicts between Russia and Ukraine and between Israel and Palestine and recent military activity in Venezuela, which are increasing volatility in commodity and energy prices, creating supply chain issues and causing instability in financial markets and political systems. Sanctions imposed by the United States and other countries in response to such conflicts could further adversely impact the financial markets and the global economy, and any economic countermeasures by the affected countries or others could exacerbate market and economic instability. The specific consequences of the conflicts on our business are difficult to predict at this time, but in addition to inflationary pressures affecting our operations and those of our customers and borrowers, we may also experience an increase in cyberattacks against us, our customers and borrowers, service providers and other third parties.
Continued elevated levels of inflation could adversely impact our business, results of operations and financial condition.
The United States has experienced elevated levels of inflation in recent years, with the consumer price index climbing approximately 2.7 percent in 2025, before seasonal adjustment. Continued elevated levels of inflation could have complex effects on our business, results of operations and financial condition, some of which could be materially adverse. For example, while we generally expect any inflation-related increases in our interest expense to be offset by increases in our interest revenue, inflation-driven increases in our levels of noninterest expense could negatively impact our results of operations. Elevated levels of inflation could also cause increased volatility and uncertainty in the business environment, which could adversely affect loan demand and our clients’ ability to repay indebtedness. It is also possible that governmental responses to elevated inflation rates could adversely affect our business, such as changes to monetary and fiscal policy that are too strict, or the imposition or threatened imposition of price controls. The duration and severity of the current inflationary period cannot be estimated with precision.
We are required to maintain capital to meet regulatory requirements, and if we fail to maintain sufficient capital, whether due to an inability to raise capital, operational losses, or otherwise, our financial condition, liquidity and results of operations, as well as our ability to maintain regulatory compliance, could be adversely affected.
The Company and West Bank are required by federal and state regulatory authorities to maintain adequate levels of capital to support their operations. The ability to raise additional capital, when and if needed, will depend on conditions in the capital markets, economic conditions, and a number of other factors, including investor perceptions regarding the banking industry and market conditions, and governmental activities, many of which are outside of our control, as well as on our financial condition and performance. Accordingly, we cannot provide assurance that we will be able to raise additional capital, if needed, or do so on terms acceptable to us. Failure to meet these capital and other regulatory requirements could affect customer confidence, our ability to grow, our costs of funds, FDIC insurance costs, our ability to pay dividends on common stock and to make distributions on our junior subordinated debentures, our ability to make acquisitions, our ability to make certain discretionary bonus payments to executive officers, and our results of operations and financial condition.
Risks Related to the Supervision and Regulation of the Banking Industry and Government Policies
We may be materially and adversely affected by the highly regulated environment in which we operate.
We are subject to extensive federal and state regulation, supervision and examination. A more detailed description of the primary federal and state banking laws and regulations that affect us is contained in Item 1 of this Form 10-K in the section captioned “Supervision and Regulation.” Banking regulations are primarily intended to protect depositors’ funds, FDIC funds, customers and the banking system as a whole, rather than our stockholders. These regulations affect our lending practices, capital structure, investment practices, dividend policy and growth, among other things.
As a financial holding company, we are subject to extensive regulation and supervision and undergo periodic examinations by our regulators, who have extensive discretion and authority to prevent or remedy unsafe or unsound practices or violations of law by banks and financial holding companies. Failure to comply with applicable laws, regulations or policies could result in sanctions by regulatory agencies, civil monetary penalties and/or damage to our reputation, which could have a material adverse effect on us. Although we have policies and procedures designed to mitigate the risk of any such violations, there can be no assurance that such violations will not occur.
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Current or proposed regulatory or legislative changes to laws applicable to the financial industry may impact the profitability of our business activities and may change certain of our business practices, including our ability to offer new products, obtain financing, attract deposits, make loans and achieve satisfactory interest spreads, and could expose us to additional costs, including increased compliance costs. In addition, political developments, including the possible implementation of policies proposed by the presidential administration, including tariffs, mass deportations and tax or financial regulations or the appointment of new personnel in regulatory agencies, add uncertainty to the implementation, scope and timing of regulatory reforms. These changes may also require us to invest significant management attention and resources to make any necessary changes to operations in order to comply and could therefore materially and adversely affect our business, financial condition and results of operations.
Monetary policies and regulations of the Federal Reserve could adversely affect our business, financial condition and results of operations.
In addition to being affected by general economic conditions, our earnings and growth are affected by the policies of the Federal Reserve. An important function of the Federal Reserve is to regulate the money supply and credit conditions. Among the options available to the Federal Reserve to implement these objectives are open market operations in U.S. government securities, adjustments of the discount rate, and changes in reserve requirements against bank deposits. These monetary policy options are used in varying combinations to influence overall economic growth and the distribution of credit, bank loans, investments and deposits. Their use also affects interest rates charged on loans or paid on deposits.
Following a series of significant increases to the target federal funds rate made by the Federal Reserve throughout 2022 and 2023 as part of an effort to combat elevated levels of inflation that affected the U.S. economy, the Federal Reserve enacted several rate cuts in 2024 and 2025. The occurrence or significance of additional changes in the target federal funds interest rate in 2026 and beyond is not known at this time.
The monetary policies and regulations of the Federal Reserve have had a significant effect on our operating results and those of commercial banks in the past and are expected to continue to do so in the future. The specific impact of such policies upon our business, financial condition and results of operations cannot be predicted.
Other Risks Related to the Banking Industry in General
Technology is changing rapidly and may put us at a competitive disadvantage.
The banking industry is undergoing rapid technological changes with frequent introductions of new technology-driven products and services. Effective use of technology increases efficiency and enables banks to better serve customers. Our future success depends, in part, on our ability and the ability of our third-party partners to effectively implement new technology. The widespread adoption of new technologies, including mobile banking services, artificial intelligence, cryptocurrencies and payment systems, could require us in the future to make substantial expenditures to modify or adapt our existing products and services as we grow and develop new products to satisfy our customers’ expectations and comply with regulatory guidance. Many of our larger competitors have substantially greater resources than we do to invest in technological improvements. As a result, they may be able to offer, or more quickly offer, additional or superior products that could put West Bank at a competitive disadvantage.
Consumers may decide not to use banks to complete their financial transactions, which could adversely affect our business and results of operations.
Technology and other changes are allowing parties to complete financial transactions that historically have involved banks through alternative methods. For example, consumers can maintain funds that would have historically been held as bank deposits in brokerage accounts or mutual funds. Consumers can also complete transactions such as paying bills and transferring funds directly without the assistance of banks.
While we do not offer products relating to digital assets, including cryptocurrencies, stablecoins or other similar assets, there has been a significant increase in digital asset adoption globally over the past several years. Certain characteristics of digital asset transactions, such as the speed with which such transactions can be conducted, the ability to transact without the involvement of regulated intermediaries, the ability to engage in transactions across multiple jurisdictions, and the anonymous nature of the transactions, are appealing to certain consumers notwithstanding the various risks posed by such transactions. Accordingly, digital asset service providers which, at present are not subject to the same degree of scrutiny and oversight as banking organizations and other financial institutions, are becoming active competitors to more traditional financial institutions.
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The process of eliminating banks as intermediaries, known as “disintermediation”, could result in the loss of fee income, as well as the loss of customer deposits and the related income generated from deposits. The loss of these revenue streams and the lower cost deposits as a source of funds could have a material adverse effect on our business, financial condition and results of operations. Potential partnerships with digital asset companies, moreover, could also entail significant investment.
Climate change could adversely affect our business, affect client activity levels and damage our reputation.
Concerns over the long-term impacts of climate change have led and will continue to lead to governmental efforts around the world to mitigate those impacts. Consumers and businesses also may change their behavior on their own as a result of these concerns. New governmental regulations or guidance relating to climate change, as well as changes in consumers’ and businesses’ behaviors and business preferences, may affect whether and on what terms and conditions we will engage in certain activities or offer certain products or services. The governmental and supervisory focus on climate change could also result in our becoming subject to new or heightened regulatory requirements, such as requirements relating to operational resiliency or stress testing for various climate stress scenarios. Any such new or heightened requirements could result in increased regulatory, compliance or other costs or higher capital requirements. In connection with the transition to a low carbon economy, legislative or public policy changes and changes in consumer sentiment could negatively impact the businesses and financial condition of our clients, which may decrease revenues from those clients and increase the credit risk associated with loans and other credit exposures to those clients. Our business, reputation and ability to attract and retain employees may also be harmed if our response to climate change is perceived to be ineffective or insufficient.
Furthermore, the long-term impacts of climate change could have a negative impact on our customers and their businesses, as well as the stability of our deposit base. Physical risks include extreme storms and other weather related events that damage or destroy property and inventory securing loans we make, or may interrupt our customers’ business operations, putting them in financial difficulty, and increasing the risk of default. Our customers are also facing changes in energy and commodity prices driven by climate change, as well as new regulatory requirements resulting in increased operational costs.
Risks Related to West Bancorporation’s Common Stock
Our stock is relatively thinly traded.
Although our common stock is traded on the Nasdaq Global Select Market, the average daily trading volume of our common stock is relatively small compared to many public companies. The desired market characteristics of depth, liquidity, and orderliness require the substantial presence of willing buyers and sellers in the marketplace at any given time. In our case, this presence depends on the individual decisions of a relatively small number of investors and general economic and market conditions over which we have no control. Due to the relatively small trading volume of our common stock, significant sales of our common stock, or the expectation of these sales, could cause the stock price to fall more than would be justified by the inherent worth of the Company. Conversely, attempts to purchase a significant amount of our stock could cause the market price to rise above the reasonable inherent worth of the Company.
The stock market can be volatile, and fluctuations in our operating results and other factors could cause our stock price to decline.
The stock market has experienced, and may continue to experience, fluctuations that significantly impact the market prices of securities issued by many companies. Market fluctuations could adversely affect our stock price. These fluctuations have often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations, as well as general economic, systemic, political and market conditions, such as recessions, loss of investor confidence, interest rate changes, government shutdowns, actions taken by the federal government, elections, international trade wars or international currency fluctuations may negatively affect the market price of our common stock. Moreover, our operating results may fluctuate and vary from period to period due to the risk factors set forth herein. As a result, period-to-period comparisons should not be relied upon as an indication of future performance. Our stock price could fluctuate significantly in response to the impact of these risk factors.
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Issuing additional common or preferred stock may adversely affect the market price of our common stock, and capital may not be available when needed.
The Company may issue additional shares of common or preferred stock in order to raise capital at some date in the future to support continued growth, either internally generated or through acquisitions. Common shares have been and will be issued through the Company’s 2017 Equity Incentive Plan and the Company’s 2021 Equity Incentive Plan as grants of restricted stock units vest. As additional shares of common or new shares of preferred stock are issued, the ownership interests of our existing stockholders may be diluted. The market price of our common stock might decline or fail to increase in response to issuing additional common or new preferred stock. Our ability to raise additional capital, if needed, will depend on conditions in the capital markets at that time, which are outside of our control. Accordingly, we cannot provide any assurance that we will be able to raise additional capital, if needed, on acceptable terms. If we cannot raise additional capital when needed, our ability to further expand our operations could be materially impaired and our financial condition and liquidity could be materially and adversely affected.
The holders of our 5.25% Fixed-to-Floating Rate Subordinated Notes due in 2032 and the holders of our junior subordinated debentures have rights that are senior to those of our common stockholders.
As of December 31, 2025, the Company had $20.6 million in junior subordinated debentures outstanding that were issued to the Company’s subsidiary trust, West Bancorporation Capital Trust I, and $60.0 million aggregate principal amount outstanding of the Company’s 5.25% Fixed-to-Floating Rate Subordinated Notes due in 2032 (the Notes). The junior subordinated debentures and the Notes are senior in order of payment to the Company’s shares of common stock. As a result, the Company must make payments on the junior subordinated debentures (and the related trust preferred securities (TPS)) and the Notes before any dividends can be paid on its common stock, and in the event of the Company’s bankruptcy, dissolution or liquidation, the holders of the debentures and the Notes must be satisfied before any distributions can be made to the holders of the common stock. The Company has the right to defer distributions on the junior subordinated debentures (and the related TPS) for up to five years during which time no dividends may be paid to holders of the Company’s common stock. The Company’s ability to pay future distributions depends upon the earnings of West Bank and the issuance of dividends from West Bank to the Company, which may be inadequate to service the obligations. Interest payments on the junior subordinated debentures underlying the TPS are classified as “dividends” by the Federal Reserve supervisory policies and therefore are subject to applicable restrictions and approvals imposed by the Federal Reserve Board.
Our ability to pay dividends is subject to certain limitations and restrictions, and there is no guarantee that we will be able to continue paying the same level of dividends in the future that we have paid in the past or that we will be able to pay future dividends at all.
Holders of our common stock are entitled to receive only such dividends as our board of directors may declare out of funds legally available for such payments. Our board of directors may, in its sole discretion, change the amount or frequency of dividends or discontinue the payment of dividends entirely. The timing, declaration, amount and payment of future cash dividends, if any, will be within the discretion of our board of directors and will depend upon then-existing conditions, including our results of operations, financial condition, capital requirements, investment opportunities, growth opportunities, any legal, regulatory, contractual or other limitations on our ability to pay dividends and other factors our board of directors may deem relevant.
As a non-operating entity, we are dependent on distributions from West Bank to fund dividend payments to our shareholders. The ability of West Bank to pay dividends to us is limited by its obligations to maintain sufficient capital and liquidity and by other general restrictions on dividends that are applicable to the bank, including the requirement under the Iowa Banking Act that West Bank may not pay dividends in excess of its undivided profits. If these regulatory requirements are not met, West Bank will not be able to pay dividends to us, and we may be unable to pay dividends on our common stock.
In addition, as a bank holding company, our ability to declare and pay dividends is subject to the guidelines of the Federal Reserve regarding capital adequacy and dividends. It is the policy of the Federal Reserve that bank holding companies should generally pay dividends on common stock only out of earnings, and only if prospective earnings retention is consistent with the organization’s expected future needs, asset quality and financial condition, and that bank holding companies should inform and consult with the Federal Reserve in advance of declaring and paying a dividend that exceeds earnings for the period for which the dividend is being paid. Any future payment of dividends will depend on the Bank’s ability to make distributions and payments to us, as these distributions and payments are our principal source of funds to pay dividends.
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Also, banking institutions that do not maintain a capital conservation buffer, comprised of Common Equity Tier 1 Capital, of 2.5% above the regulatory minimum capital requirements will face constraints on the payment of dividends, stock repurchases and discretionary bonus payments to executive officers based on the amount of the shortfall, unless prior regulatory approval is obtained.
ITEM 1B. UNRESOLVED STAFF COMMENTS
There are no unresolved comments from the SEC staff.
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ITEM 1C. CYBERSECURITY
We rely extensively on various information systems and other electronic resources to operate our business. In addition, nearly all of our customers, service providers and other business partners on whom we depend, including the providers of our online banking, mobile banking and accounting systems, use their own electronic information systems. Any of these systems can be compromised, including by employees, customers and other individuals who are authorized to use them, and bad actors using sophisticated and constantly evolving sets of software, tools and strategies to do so. The nature of our business, as a financial-services provider, and our relative size, make us and our business partners high-value targets for these bad actors to pursue. See “Risks Related to Information Security and Business Interruption” section of the Risk Factors included in Item 1A of this Form 10-K for additional information.
•Implementing an Information Security Program that establishes policies and procedures for security operations and governance;
•Establishing an Information Security Committee that is responsible for security administration, including conducting regular assessments of our information systems, existing controls, vulnerabilities and potential improvements;
•Implementing layers of controls and not allowing excessive reliance on any single control;
•Employing a variety of preventative and detective tools designed to monitor, block and provide alerts regarding suspicious activity;
•Continuously evaluating tools that can detect and help respond to cybersecurity threats in real-time;
•Leveraging people, processes and technology to manage and maintain cybersecurity controls;
•Maintaining a third-party risk management program designed to identify, assess and manage risks associated with external service providers;
•Engaging third-party cybersecurity consultants, who conduct periodic penetration testing, vulnerability assessments and other procedures to identify potential weaknesses in our systems and processes; and
The Information Security Program is a key part of our overall risk management system, which is administered by our Information Security Committee. The program includes administrative, technical and physical safeguards to help protect the security and confidentiality of customer records and information.
The Company’s management team is responsible for the day-to-day management of cybersecurity risks we face and oversees the Information Security Committee. The Information Security Committee manages the oversight of the information security assessment, development of policies, standards and procedures, testing, training and security report processes for West Bank. The Information Security Committee is comprised of officers with the appropriate expertise and authority to oversee the Information Security Program.
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ITEM 2. PROPERTIES
The corporate office of the Company is located in the headquarters building of West Bank, at 3330 Westown Parkway in West Des Moines, Iowa, 50266. West Bank operates ten branch offices in addition to its headquarters office. Four branch offices in the Des Moines, Iowa, metropolitan area are leased. Three of these branch offices are full-service locations, while one is a drive-up only, express location. West Bank owns six full-service branch offices in Coralville and Waukee, Iowa, and Rochester, St. Cloud, Mankato and Owatonna, Minnesota. We believe each of our facilities is adequate to meet our needs.
ITEM 3. LEGAL PROCEEDINGS
Neither the Company nor West Bank is party to any material pending legal proceedings, other than ordinary litigation incidental to West Bank’s business, and no property of these entities is the subject of any such proceeding. The Company does not know of any proceedings contemplated by a governmental authority against the Company or West Bank.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES
West Bancorporation common stock is traded on the Nasdaq Global Select Market under the symbol “WTBA”. There were 125 holders of record of the Company’s common stock as of February 13, 2026, and an estimated 6,900 additional beneficial holders whose stock was held in street name by brokerages or fiduciaries. The closing price of the Company’s common stock was $25.55 on February 13, 2026.
Total cash dividends paid to common stockholders in both 2025 and 2024 were $1.00 per common share. Dividend declarations are evaluated and determined by the Board on a quarterly basis, and the dividends are paid quarterly. The Company intends to continue its policy of paying quarterly dividends; however, the ability of the Company to pay dividends in the future will depend primarily upon the earnings of West Bank and its ability to pay dividends to the Company, as well as regulatory requirements of the Federal Reserve relating to the payment of dividends by bank holding companies. The ability of West Bank to pay dividends is governed by various statutes. These statutes provide that a bank may pay dividends only out of undivided profits. In addition, applicable bank regulatory authorities have the power to require any bank to suspend the payment of dividends until the bank complies with all requirements that may be imposed by such authorities.
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The following performance graph provides information regarding the cumulative, five-year return on an indexed basis of the common stock of the Company as compared with the Nasdaq Composite Index and the S&P U.S. BMI Banks - Midwest Region Index prepared by S&P Global Market Intelligence. The indices assume the investment of $100 on December 31, 2020, in the common stock of the Company, the Nasdaq Composite Index and the S&P U.S. BMI Banks - Midwest Region Index, with all dividends reinvested. The Company’s common stock price performance shown in the following graph is not indicative of future stock price performance.
| Period Ending | ||||||||||||||||||||
| Index | 12/31/2020 | 12/31/2021 | 12/31/2022 | 12/31/2023 | 12/31/2024 | 12/31/2025 | ||||||||||||||
| West Bancorporation, Inc. | 100.00 | 166.46 | 142.45 | 124.81 | 134.46 | 144.77 | ||||||||||||||
| Nasdaq Composite Index | 100.00 | 122.18 | 82.43 | 119.22 | 154.48 | 187.14 | ||||||||||||||
| S&P U.S. BMI Banks - Midwest Region Index | 100.00 | 132.12 | 114.02 | 116.40 | 142.02 | 159.02 | ||||||||||||||
*Source: S&P Global Market Intelligence. Used with permission. All rights reserved.
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ITEM 6. Reserved.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollars in thousands, except per share amounts)
INTRODUCTION
The Company’s financial highlights and key performance measures are presented in the table below.
| As of and for the Years Ended December 31, | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Performance Ratios | ||||||||||||||||||||
| Return on average assets | 0.81 | % | 0.61 | % | 0.66 | % | ||||||||||||||
| Return on average equity | 13.47 | % | 10.71 | % | 11.42 | % | ||||||||||||||
Efficiency ratio (1)(2) | 54.11 | % | 63.25 | % | 60.73 | % | ||||||||||||||
Nonperforming assets/total assets (1) | 0.00 | % | 0.00 | % | 0.01 | % | ||||||||||||||
Net interest margin(2) | 2.35 | % | 1.91 | % | 2.01 | % | ||||||||||||||
| Dividends and Per Share Data | ||||||||||||||||||||
| Basic earnings per common share | $ | 1.92 | $ | 1.43 | $ | 1.44 | ||||||||||||||
| Diluted earnings per common share | 1.92 | 1.42 | 1.44 | |||||||||||||||||
| Cash dividends per common share | 1.00 | 1.00 | 1.00 | |||||||||||||||||
| Dividend payout ratio | 51.95 | % | 69.88 | % | 69.21 | % | ||||||||||||||
| Dividend yield | 4.51 | % | 4.62 | % | 4.72 | % | ||||||||||||||
| Operating Results and Year-End Balances | ||||||||||||||||||||
| Net income | $ | 32,560 | $ | 24,050 | $ | 24,137 | ||||||||||||||
| Total assets | 4,142,244 | 4,014,991 | 3,825,758 | |||||||||||||||||
| Securities available for sale | 468,447 | 544,565 | 623,919 | |||||||||||||||||
| Loans | 3,001,690 | 3,004,860 | 2,927,535 | |||||||||||||||||
| Deposits | 3,468,470 | 3,357,596 | 2,973,779 | |||||||||||||||||
| Borrowings | 376,406 | 392,629 | 592,637 | |||||||||||||||||
| Stockholders’ equity | 265,985 | 227,875 | 225,043 | |||||||||||||||||
| Average equity to average assets ratio | 6.02 | % | 5.65 | % | 5.77 | % | ||||||||||||||
Definition of ratios:
•Return on average assets - net income divided by average assets.
•Return on average equity - net income divided by average equity.
•Efficiency ratio - noninterest expense (excluding other real estate owned expense and write-down of premises) divided by noninterest income (excluding net securities gains/losses and gains/losses on disposition of premises and equipment) plus tax-equivalent net interest income.
•Nonperforming assets to total assets - total nonperforming assets divided by total assets.
•Net interest margin - tax-equivalent net interest income divided by average interest-earning assets.
•Dividend payout ratio - dividends paid to common stockholders divided by net income.
•Dividend yield - dividends per share paid to common stockholders divided by closing year-end stock price.
•Average equity to average assets ratio - average equity divided by average assets.
(1) A lower ratio is more desirable.
(2) As presented, this is a non-GAAP financial measure. For further information, refer to the section "Non-GAAP Financial Measures" of this item.
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(dollars in thousands, except per share amounts)
The Company’s 2025 net income was $32,560, compared to $24,050 in 2024. Basic and diluted earnings per common share for 2025 were $1.92 and $1.92, respectively, compared to $1.43 and $1.42, respectively, in 2024. During 2025, we paid our common stockholders $16,914 ($1.00 per common share) in dividends compared to $16,806 ($1.00 per common share) in 2024. The dividend declared and paid in the first quarter of 2026 was $0.25 per common share.
Total assets were $4,142,244 at December 31, 2025, compared to $4,014,991 at December 31, 2024, a 3.2 percent increase. Our loan portfolio declined to $3,001,690 as of December 31, 2025, from $3,004,860 as of December 31, 2024. Deposits increased to $3,468,470 as of December 31, 2025, from $3,357,596 as of December 31, 2024.
The Company compares three key performance metrics to those of an identified peer group for evaluating its results. The peer group for 2025 consists of 20 Midwestern, publicly traded financial institutions including Bank First Corporation, Bridgewater Bancshares, Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., German American Bancorp, Inc., HBT Financial, Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, MidWestOne Financial Group, Inc., Nicolet Bankshares, Inc., Peoples Bancorp, Inc., and Southern Missouri Bancorp, Inc. The Company is in the middle of the group in terms of asset size. The Company's goal is to perform at or near the top of this peer group relative to what we consider to be three key metrics: return on average equity, efficiency ratio and nonperforming assets to total assets. We believe these measures encompass the factors that define the performance of a community bank. Company and peer results for the key financial performance measures are summarized below.
| West Bancorporation, Inc. | Peer Group Range | ||||||||||
| As of and for the year ended December 31, 2025 | As of and for the year ended December 31, 2025 | ||||||||||
| Return on average equity | 13.47% | 3.40%-15.25% | |||||||||
Efficiency ratio(1) | 54.11% | 45.67%-69.11% | |||||||||
| Nonperforming assets to total assets | 0.00% | 0.10%-1.07% | |||||||||
(1) The efficiency ratio is a non-GAAP financial measure. For further information, refer to the Non-GAAP Financial Measures section of this report.
The following discussion describes the consolidated operations and financial condition of the Company, including its subsidiary West Bank and West Bank’s special purpose subsidiaries. Results of operations for the year ended December 31, 2025 are compared to the results for the year ended December 31, 2024 and the consolidated financial condition of the Company as of December 31, 2025 is compared to December 31, 2024. Results of operations and financial condition for the year ended December 31, 2024 compared to the year ended December 31, 2023 can be found in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 2024 annual report on Form 10-K filed with the SEC on February 20, 2025.
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(dollars in thousands, except per share amounts)
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
This report is based on the Company’s audited consolidated financial statements that have been prepared in accordance with GAAP established by the FASB. The preparation of the Company’s financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, income and expenses. These estimates are based upon historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
The Company’s significant accounting policies are described in the Notes to Consolidated Financial Statements. Based on its consideration of accounting policies that involve the most complex and subjective estimates and judgments, management has identified its most critical accounting policies to be those related to the allowance for credit losses.
Expected credit losses on loans are reflected in the allowance for credit losses (ACL) 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 on loans on a collective (pool) basis when the loans share similar risk characteristics and uses a cash flow based model 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 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. Loans that do not share risk characteristics are evaluated on an individual basis.
The Company uses a 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 a 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 loss rate after four quarters. When estimating prepayment speed and curtailment rates, the modeling is based on historical internal data. In addition to the historical loss information, the Company utilizes qualitative factors to adjust the ACL as appropriate. Qualitative factors are based on management’s judgment of the changes in underlying loan composition of specific portfolios, trends relating to credit quality and collateral values, company-specific data, or effects of other factors such as market competition or legal and regulatory requirements.
The allowance for credit losses as of December 31, 2025 was $30,525, or 1.02 percent of outstanding loans, compared to $30,432, or 1.01 percent of outstanding loans as of December 31, 2024.
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(dollars in thousands, except per share amounts)
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 an 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 fully taxable equivalent basis and efficiency ratio on an adjusted and FTE basis, to their most directly comparable measures under GAAP.
| As and for the Years Ended December 31 | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
Reconciliation of net interest income and net interest margin on an FTE basis to GAAP: | ||||||||||||||||||||
| Net interest income (GAAP) | $ | 88,981 | $ | 71,362 | $ | 69,031 | ||||||||||||||
Tax-equivalent adjustment(1) | 256 | 182 | 491 | |||||||||||||||||
Net interest income on an FTE basis (non-GAAP) | 89,237 | 71,544 | 69,522 | |||||||||||||||||
| Average interest-earning assets | 3,800,582 | 3,747,528 | 3,465,964 | |||||||||||||||||
| Net interest margin on an FTE basis (non-GAAP) | 2.35 | % | 1.91 | % | 2.01 | % | ||||||||||||||
Reconciliation of efficiency ratio on an FTE basis to GAAP: | ||||||||||||||||||||
| Net interest income on an FTE basis (non-GAAP) | $ | 89,237 | $ | 71,544 | $ | 69,522 | ||||||||||||||
| Noninterest income | 6,264 | 8,434 | 10,066 | |||||||||||||||||
| Adjustment for realized securities losses, net | 3,959 | 1,172 | 431 | |||||||||||||||||
Adjustment for losses on disposal of premises and equipment, net | 8 | 47 | 29 | |||||||||||||||||
| Adjusted income | 99,468 | 81,197 | 80,048 | |||||||||||||||||
| Noninterest expense | 53,827 | 51,353 | 48,611 | |||||||||||||||||
Efficiency ratio on an adjusted and FTE basis (non-GAAP)(2) | 54.11 | % | 63.25 | % | 60.73 | % | ||||||||||||||
(1) Computed on a tax-equivalent basis using a federal income tax rate of 21 percent, adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the financial results, as it enhances the comparability of income arising from taxable and nontaxable sources.
(2) The efficiency ratio expresses noninterest expense as a percent of fully taxable equivalent net interest income and noninterest income, excluding specific noninterest income and expenses. Management believes the presentation of this non-GAAP measure provides supplemental useful information for proper understanding of the Company’s financial performance. It is a standard measure of comparison within the banking industry. A lower ratio is more desirable.
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(dollars in thousands, except per share amounts)
RESULTS OF OPERATIONS - 2025 COMPARED TO 2024
OVERVIEW
Net income for the year ended December 31, 2025 was $32,560, compared to $24,050 for the year ended December 31, 2024. Basic and diluted earnings per common share for 2025 were $1.92 and $1.92, respectively, and for 2024 were $1.43 and $1.42, respectively.
The increase in net income in 2025 compared to 2024 was primarily due to an increase in net interest income, partially offset by a decrease in noninterest income and an increase in noninterest expense. Net interest income increased $17,619, or 24.7 percent, in 2025 compared to 2024. The increase in net interest income was primarily due to the increase in interest income on short-term assets consisting of deposits with banks and securities purchased under agreements to resell and decrease in interest expense on deposits and borrowed funds, partially offset by a decrease in interest income on securities.
The Company recorded no credit loss expense in 2025, compared to a credit loss expense of $1,000 in 2024. The credit loss expense recorded in 2024 included a $2,000 increase in the allowance for credit losses related to loans, which was offset by a $1,000 decrease to the allowance for credit losses related to unfunded commitments.
Noninterest income decreased $2,170, or 25.7 percent, in 2025 compared to 2024, primarily due to an increase in realized losses on the sales of securities, partially offset by a one-time third party contract incentive included in other income. Noninterest expense increased $2,474, or 4.8 percent, in 2025 compared to 2024, primarily due to increases in salaries and employee benefits, occupancy and equipment expense and technology and software expense, partially offset by a decrease in data processing expense and FDIC insurance.
The Company’s ratio of nonperforming assets to total assets was 0.00 percent as of both December 31, 2025 and 2024. For more discussion on loan quality, see the “Loan Portfolio” and “Summary of the Allowance for Credit Losses” sections in this Item of this Form 10-K.
Net Interest Income
Net interest income increased to $88,981 for 2025 from $71,362 for 2024, as the impact of the growth in average balances of interest-earning assets and decline in average rate paid on interest-bearing liabilities exceeded the effects of the increase in average balances of interest-bearing liabilities. The net interest margin for 2025 increased 44 basis points to 2.35 percent, compared to 1.91 percent for 2024. The average yield on earning assets declined by 2 basis points, while the average rate paid on interest-bearing liabilities decreased by 53 basis points. For additional analysis of net interest income, see the section captioned “Distribution of Assets, Liabilities and Stockholders’ Equity; Interest Rates; and Interest Differential” in this Item of this Form 10-K.
Credit Loss Expense
No credit loss expense was recorded in 2025, compared to a net credit loss expense of $1,000 in 2024. The credit loss expense recorded in 2024 included a $2,000 increase in the allowance for credit losses related to loans, which was offset by a $1,000 decrease to the allowance for credit losses related to unfunded commitments. The credit loss expense associated with loans recorded in 2024 was primarily due to changes in forecasted loss rates, driven by an increase in forecasted unemployment rate, and an adjustment to qualitative factors within the commercial real estate segment. The negative $1,000 credit loss expense recorded in 2024 related to unfunded commitments was primarily due to a decrease in the balance of unfunded commitments, primarily from the funding of construction loans. Management believed the allowance for credit losses on loans at December 31, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.
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(dollars in thousands, except per share amounts)
Noninterest Income
The following table shows the variance from the prior year in the noninterest income categories shown in the Consolidated Statements of Income.
| Years ended December 31 | |||||||||||||||||||||||
| Noninterest income: | 2025 | 2024 | Change | Change % | |||||||||||||||||||
| Service charges on deposit accounts | $ | 1,941 | $ | 1,843 | $ | 98 | 5.3 | % | |||||||||||||||
| Debit card interchange income | 1,894 | 1,919 | (25) | (1.3) | % | ||||||||||||||||||
| Trust services | 3,436 | 3,449 | (13) | (0.4) | % | ||||||||||||||||||
| Increase in cash value of bank-owned life insurance | 1,202 | 1,126 | 76 | 6.7 | % | ||||||||||||||||||
| Realized securities losses, net | (3,959) | (1,172) | (2,787) | (237.8) | % | ||||||||||||||||||
| Other income | 1,750 | 1,269 | 481 | 37.9 | % | ||||||||||||||||||
| Total noninterest income | $ | 6,264 | $ | 8,434 | $ | (2,170) | (25.7) | % | |||||||||||||||
In 2025, the Company sold $63,690 of securities from the available for sale securities portfolio and realized a net loss of $3,959, compared to sales of $11,841 of securities available for sale and a realized net loss of $1,172 in 2024. The transaction in 2025 improves balance sheet flexibility and will be used to improve our long-term earnings profile through redeployment of the proceeds into higher-earning assets or repayment of higher-costing borrowings.
The increase in other income was primarily due to a one-time third party contract incentive.
Noninterest Expense
The following table shows the variance from the prior year in the noninterest expense categories shown in the Consolidated Statements of Income. In addition, accounts within the “Other expenses” category that represent a significant portion of the total or a significant variance are shown.
| Years ended December 31 | |||||||||||||||||||||||
| Noninterest expense: | 2025 | 2024 | Change | Change % | |||||||||||||||||||
| Salaries and employee benefits | $ | 29,383 | $ | 27,588 | $ | 1,795 | 6.5 | % | |||||||||||||||
| Occupancy and equipment | 8,170 | 7,320 | 850 | 11.6 | % | ||||||||||||||||||
| Data processing | 2,596 | 2,991 | (395) | (13.2) | % | ||||||||||||||||||
| Technology and software | 3,160 | 2,896 | 264 | 9.1 | % | ||||||||||||||||||
| FDIC insurance | 2,369 | 2,560 | (191) | (7.5) | % | ||||||||||||||||||
| Professional fees | 1,211 | 1,041 | 170 | 16.3 | % | ||||||||||||||||||
| Other expenses: | |||||||||||||||||||||||
| Business development | 898 | 803 | 95 | 11.8 | % | ||||||||||||||||||
| Insurance expense | 925 | 821 | 104 | 12.7 | % | ||||||||||||||||||
| Director fees | 778 | 828 | (50) | (6.0) | % | ||||||||||||||||||
| Trust | 763 | 663 | 100 | 15.1 | % | ||||||||||||||||||
| Consulting fees | 608 | 262 | 346 | 132.1 | % | ||||||||||||||||||
| Marketing | 87 | 97 | (10) | (10.3) | % | ||||||||||||||||||
| Low income housing projects amortization | 526 | 571 | (45) | (7.9) | % | ||||||||||||||||||
| New markets tax credit project amortization and management fees | 267 | 919 | (652) | (70.9) | % | ||||||||||||||||||
| All other | 2,086 | 1,993 | 93 | 4.7 | % | ||||||||||||||||||
| Total other | 6,938 | 6,957 | (19) | (0.3) | % | ||||||||||||||||||
| Total noninterest expense | $ | 53,827 | $ | 51,353 | $ | 2,474 | 4.8 | % | |||||||||||||||
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(dollars in thousands, except per share amounts)
Salaries and employee benefits increased in 2025 compared to 2024 primarily due to an increase in incentive compensation related accruals and normal merit increases. Occupancy and equipment expense increased in 2025 compared to 2024, as 2025 was the first full year of occupancy in both the new headquarters building in West Des Moines, Iowa and the new Owatonna, Minnesota office. Insurance expense increased in 2025 due to increased coverage related to these new bank buildings and general increases in insurance costs.
Data processing expense decreased in 2025 compared to 2024 due to contract adjustments. Technology and software expense increased in 2025 compared to 2024 due to ongoing updates in information technology and security solutions. Professional fees increased in 2025 compared to 2024 due to a one-time tax related consulting project. Consulting fees increased in 2025 compared to 2024 primarily due to a one-time contract consulting fee recorded in the fourth quarter of 2025. New markets tax credit project amortization declined with the expiration of the related tax credit.
Income Taxes
The Company records a provision for income tax expense currently payable, along with a provision for those taxes payable or refundable in the future (deferred taxes). Deferred taxes arise from differences in the timing of certain items for financial statement reporting compared to income tax reporting and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Federal income tax expense for 2025 and 2024 was $6,928 and $1,928, respectively, while state income tax expense was $1,930 and $1,465, respectively. The effective rate of income tax expense as a percent of income before income taxes was 21.3 percent and 12.3 percent, respectively, for 2025 and 2024. In 2024, income tax expense included a $1,842 tax benefit for an energy-related investment tax credit associated with the construction of the Company’s new headquarters building. In 2025, the Company recorded an additional tax benefit of $614 due to a change in estimate of this same 2024 energy-related investment tax credit.
The effective income tax rates differ from the federal statutory income tax rates primarily due to tax-exempt interest income, the tax-exempt increase in cash value of bank-owned life insurance, disallowed interest expense, stock compensation, state income taxes and the investment tax credit mentioned above. The effective tax rate for both 2025 and 2024 was also impacted by federal low income housing and new markets tax credits of approximately $660 and $1,508, respectively. The decrease in these federal income tax credits was primarily due to the expiration of the new markets tax credit at the end of 2024. The Company continues to maintain a valuation allowance against the tax effect of state net operating losses carryforwards as management believes it is likely that a portion of such carryforwards will expire without being utilized.
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(dollars in thousands, except per share amounts)
DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS’ EQUITY; INTEREST RATES; AND INTEREST DIFFERENTIAL
Average Balances and an Analysis of Average Rates Earned and Paid
The following table shows average balances and interest income or interest expense, with the resulting average yield or rate by category of average interest-earning assets or interest-bearing liabilities for the years indicated. Interest income and the resulting net interest income are shown on a fully taxable basis. Interest expense includes the effect of interest rate swaps, if applicable.
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Revenue/ Expense | Yield/ Rate | Average Balance | Revenue/ Expense | Yield/ Rate | Average Balance | Revenue/ Expense | Yield/ Rate | |||||||||||||||||||||||||||||||||||||||||||||
| Assets | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Loans: (1) (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commercial | $ | 512,116 | $ | 32,985 | 6.44 | % | $ | 519,568 | $ | 34,423 | 6.63 | % | $ | 520,116 | $ | 32,067 | 6.17 | % | |||||||||||||||||||||||||||||||||||
Real estate (3) | 2,452,633 | 132,509 | 5.40 | % | 2,451,830 | 130,829 | 5.34 | % | 2,270,662 | 110,431 | 4.86 | % | |||||||||||||||||||||||||||||||||||||||||
| Consumer and other | 22,204 | 1,473 | 6.64 | % | 14,425 | 1,065 | 7.38 | % | 9,478 | 665 | 7.02 | % | |||||||||||||||||||||||||||||||||||||||||
| Total loans | 2,986,953 | 166,967 | 5.59 | % | 2,985,823 | 166,317 | 5.57 | % | 2,800,256 | 143,163 | 5.11 | % | |||||||||||||||||||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | 419,914 | 10,471 | 2.49 | % | 472,351 | 13,030 | 2.76 | % | 516,118 | 13,696 | 2.65 | % | |||||||||||||||||||||||||||||||||||||||||
Tax-exempt (3) | 122,480 | 3,034 | 2.48 | % | 141,033 | 3,306 | 2.34 | % | 146,734 | 3,768 | 2.57 | % | |||||||||||||||||||||||||||||||||||||||||
| Total securities | 542,394 | 13,505 | 2.49 | % | 613,384 | 16,336 | 2.66 | % | 662,852 | 17,464 | 2.63 | % | |||||||||||||||||||||||||||||||||||||||||
| Deposits with banks | 217,708 | 9,359 | 4.30 | % | 148,321 | 7,595 | 5.12 | % | 2,856 | 169 | 5.94 | % | |||||||||||||||||||||||||||||||||||||||||
| Securities purchased under | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| agreements to resell | 53,527 | 2,650 | 4.95 | % | — | — | — | % | — | — | — | % | |||||||||||||||||||||||||||||||||||||||||
Total interest-earning assets (3) | 3,800,582 | 192,481 | 5.06 | % | 3,747,528 | 190,248 | 5.08 | % | 3,465,964 | 160,796 | 4.64 | % | |||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 23,359 | 23,699 | 23,139 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Premises and equipment, net | 109,744 | 101,413 | 67,281 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other, less allowance for | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| credit losses | 84,298 | 99,110 | 106,194 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total noninterest-earning assets | 217,401 | 224,222 | 196,614 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 4,017,983 | $ | 3,971,750 | $ | 3,662,578 | |||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing demand | $ | 493,800 | 7,894 | 1.60 | % | $ | 466,238 | 8,684 | 1.86 | % | $ | 467,174 | 6,984 | 1.49 | % | ||||||||||||||||||||||||||||||||||||||
| Savings and money market | 1,752,797 | 55,450 | 3.16 | % | 1,560,136 | 57,140 | 3.66 | % | 1,357,675 | 43,569 | 3.21 | % | |||||||||||||||||||||||||||||||||||||||||
| Time | 586,022 | 24,406 | 4.16 | % | 639,278 | 31,460 | 4.92 | % | 424,320 | 16,243 | 3.83 | % | |||||||||||||||||||||||||||||||||||||||||
| Total deposits | 2,832,619 | 87,750 | 3.10 | % | 2,665,652 | 97,284 | 3.65 | % | 2,249,169 | 66,796 | 2.97 | % | |||||||||||||||||||||||||||||||||||||||||
| Borrowed funds: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Federal funds purchased and | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| other short-term borrowings | — | — | — | % | 75,736 | 4,248 | 5.61 | % | 194,802 | 9,532 | 4.89 | % | |||||||||||||||||||||||||||||||||||||||||
| Subordinated notes, net | 80,025 | 4,425 | 5.53 | % | 79,760 | 4,431 | 5.55 | % | 79,501 | 4,442 | 5.59 | % | |||||||||||||||||||||||||||||||||||||||||
| Federal Home Loan Bank | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| advances | 270,000 | 9,102 | 3.37 | % | 312,363 | 10,313 | 3.30 | % | 265,644 | 7,694 | 2.90 | % | |||||||||||||||||||||||||||||||||||||||||
| Long-term debt | 39,940 | 1,967 | 4.93 | % | 45,055 | 2,428 | 5.39 | % | 49,938 | 2,810 | 5.63 | % | |||||||||||||||||||||||||||||||||||||||||
| Total borrowed funds | 389,965 | 15,494 | 3.97 | % | 512,914 | 21,420 | 4.18 | % | 589,885 | 24,478 | 4.15 | % | |||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 3,222,584 | 103,244 | 3.20 | % | 3,178,566 | 118,704 | 3.73 | % | 2,839,054 | 91,274 | 3.21 | % | |||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing liabilities: | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Demand deposits | 515,389 | 528,391 | 586,903 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 38,313 | 40,308 | 25,218 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 241,697 | 224,485 | 211,403 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| stockholders’ equity | $ | 4,017,983 | $ | 3,971,750 | $ | 3,662,578 | |||||||||||||||||||||||||||||||||||||||||||||||
Net interest income (4)/net interest spread (3) | $ | 89,237 | 1.86 | % | $ | 71,544 | 1.35 | % | $ | 69,522 | 1.43 | % | |||||||||||||||||||||||||||||||||||||||||
Net interest margin (3) (4) | 2.35 | % | 1.91 | % | 2.01 | % | |||||||||||||||||||||||||||||||||||||||||||||||
(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 section “Non-GAAP Financial Measures” of this Item.
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(dollars in thousands, except per share amounts)
Net Interest Income
The Company’s largest component of net income is net interest income, which is the difference between interest earned on interest-earning assets, consisting primarily of loans and securities, and interest paid on interest-bearing liabilities, consisting of deposits and borrowings. Fluctuations in net interest income can result from the combination of changes in the average balances of asset and liability categories and changes in interest rates. Interest rates earned and paid are also affected by general economic conditions, particularly changes in market interest rates, and by competitive factors, government policies and the actions of regulatory authorities. The FOMC decreased the target federal funds interest rate by a total of 100 basis points from September through December of 2024, and an additional 75 basis points from September through December of 2025, which impacted the comparability of the net interest margin between 2025 and 2024.
Net interest margin on an 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. For the years ended December 31, 2025, 2024 and 2023, the Company’s net interest margin on a tax-equivalent basis was 2.35, 1.91 and 2.01 percent, respectively. Tax-equivalent net interest income increased $17,693 in 2025 compared to 2024.
Rate and Volume Analysis
The rate and volume analysis shown below, on a tax-equivalent basis, is used to determine how much of the change in interest income or expense is the result of a change in volume or a change in interest yield or rate. The change in interest that is due to both volume and rate has been allocated to the change due to volume and the change due to rate in proportion to the absolute value of the change in each.
| 2025 Compared to 2024 | 2024 Compared to 2023 | ||||||||||||||||||||||||||||||||||
| Volume | Rate | Total | Volume | Rate | Total | ||||||||||||||||||||||||||||||
| Interest Income | |||||||||||||||||||||||||||||||||||
Loans: (1) | |||||||||||||||||||||||||||||||||||
| Commercial | $ | (489) | $ | (949) | $ | (1,438) | $ | (34) | $ | 2,390 | $ | 2,356 | |||||||||||||||||||||||
Real estate (2) | 43 | 1,637 | 1,680 | 9,197 | 11,201 | 20,398 | |||||||||||||||||||||||||||||
| Consumer and other | 525 | (117) | 408 | 364 | 36 | 400 | |||||||||||||||||||||||||||||
| Total loans (including fees) | 79 | 571 | 650 | 9,527 | 13,627 | 23,154 | |||||||||||||||||||||||||||||
| Securities: | |||||||||||||||||||||||||||||||||||
| Taxable | (1,372) | (1,187) | (2,559) | (1,193) | 527 | (666) | |||||||||||||||||||||||||||||
Tax-exempt (2) | (452) | 180 | (272) | (142) | (320) | (462) | |||||||||||||||||||||||||||||
| Total securities | (1,824) | (1,007) | (2,831) | (1,335) | 207 | (1,128) | |||||||||||||||||||||||||||||
| Deposits with banks | 3,129 | (1,365) | 1,764 | 7,452 | (26) | 7,426 | |||||||||||||||||||||||||||||
| Securities purchased under | |||||||||||||||||||||||||||||||||||
| agreements to resell | 2,650 | — | 2,650 | — | — | — | |||||||||||||||||||||||||||||
Total interest income (2) | 4,034 | (1,801) | 2,233 | 15,644 | 13,808 | 29,452 | |||||||||||||||||||||||||||||
| Interest Expense | |||||||||||||||||||||||||||||||||||
| Deposits: | |||||||||||||||||||||||||||||||||||
| Interest-bearing demand | 492 | (1,282) | (790) | (14) | 1,714 | 1,700 | |||||||||||||||||||||||||||||
| Savings and money market | 6,599 | (8,289) | (1,690) | 6,969 | 6,602 | 13,571 | |||||||||||||||||||||||||||||
| Time | (2,479) | (4,575) | (7,054) | 9,731 | 5,486 | 15,217 | |||||||||||||||||||||||||||||
| Total deposits | 4,612 | (14,146) | (9,534) | 16,686 | 13,802 | 30,488 | |||||||||||||||||||||||||||||
| Borrowed funds: | |||||||||||||||||||||||||||||||||||
| Federal funds purchased and | |||||||||||||||||||||||||||||||||||
| other short-term borrowings | (4,248) | — | (4,248) | (6,514) | 1,230 | (5,284) | |||||||||||||||||||||||||||||
| Subordinated debt, net | 15 | (21) | (6) | 14 | (25) | (11) | |||||||||||||||||||||||||||||
| Federal Home Loan Bank advances | (1,424) | 213 | (1,211) | 1,459 | 1,160 | 2,619 | |||||||||||||||||||||||||||||
| Long-term debt | (262) | (199) | (461) | (267) | (115) | (382) | |||||||||||||||||||||||||||||
| Total borrowed funds | (5,919) | (7) | (5,926) | (5,308) | 2,250 | (3,058) | |||||||||||||||||||||||||||||
| Total interest expense | (1,307) | (14,153) | (15,460) | 11,378 | 16,052 | 27,430 | |||||||||||||||||||||||||||||
Net interest income (2) (3) | $ | 5,341 | $ | 12,352 | $ | 17,693 | $ | 4,266 | $ | (2,244) | $ | 2,022 | |||||||||||||||||||||||
(1)Average balances of nonaccrual loans were included for computational purposes.
(2)Tax-exempt income has been converted to a tax-equivalent basis using a federal income tax rate of 21 percent and is adjusted for the effect of the nondeductible interest expense associated with owning tax-exempt securities and loans.
(3)Net interest income (FTE) is a non-GAAP financial measure. For further information, refer to the section “Non-GAAP Financial Measures” of this Item.
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(dollars in thousands, except per share amounts)
Tax-equivalent interest income and fees on loans increased $650 for the year ended December 31, 2025, compared to 2024. The improvement was driven by a combination of an increase in the average balance of total loans and an increase in the total loan yield in 2025 compared to 2024. The average balance of total loans increased $1,130 in 2025 compared to 2024, while total loan yield increased by 2 basis points in 2025 compared to 2024. Loan originations and renewals for the fixed-rate loan portfolio continued to reprice at prevailing market rates in 2025, which exceeded the current weighted average portfolio rate. This repricing benefit in the fixed-rate loan portfolio was partially offset by a decrease in loan yields on the variable-rate loan portfolio. The decrease in the yield on variable-rate loans was primarily due to reductions in the prime rate and Secured Overnight Financing Rates (SOFR) driven by the reductions in the federal funds target rate that occurred in 2024 and 2025.
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 and maturities of existing loans. In a declining rate environment, the yield on variable-rate loans will decline; however, as long as market rates remain higher than the yield on the fixed-rate portfolio, renewals and originations will continue to increase the yield on the fixed-rate portfolio, which is what we experienced in 2025. The political and economic environments can also influence the volume of new loan originations and the mix of variable-rate versus fixed-rate loans.
Tax-equivalent interest income on securities decreased $2,831 for the year ended December 31, 2025, compared to 2024. The average balance of securities available for sale in 2025 was $70,990 lower than in 2024, primarily due to principal paydowns and sales of securities. The proceeds from principal paydowns and sales of securities have increased liquidity and improved balance sheet flexibility to allow for improvement in our long-term earnings profile. Additionally, the yield on available for sale securities decreased by 17 basis points in 2025 compared to 2024.
Interest income on deposits with banks increased $1,764 in 2025 compared to 2024. This was primarily due to the increase in the average balances of interest-earning deposits with banks, partially offset by a decline in rates. This increase in balance sheet liquidity was driven by the growth in average customer deposit balances and the decline in average balance of securities available for sale. Additionally, the Company began investing in securities purchased under agreements to resell in 2025. These produced interest income of $2,650 in 2025.
Interest expense on deposits decreased $9,534 for the year ended December 31, 2025, compared to 2024. The rates paid on deposits decreased 55 basis points in 2025 compared to 2024, while the average balance of interest-bearing deposits increased $166,967. The decrease in cost of deposits was primarily driven by the reductions in the federal funds target rate since September 2024.
Interest expense on borrowed funds decreased $5,926 for the year ended December 31, 2025, compared to 2024, due to a combination of lower average balances of borrowed funds and lower average rate paid on borrowed funds. The average balance of borrowed funds decreased $122,949 in 2025 compared to 2024. The average balance of federal funds purchased and other short-term borrowings decreased $75,736 in 2025 compared to 2024 primarily due to increases in average customer deposits and decline in average balance of securities available for sale. The average balance of FHLB advances declined by $42,363 in 2025 compared to 2024. This decline in average balances was primarily due to FHLB advances with a total balance of $45,000 maturing in the fourth quarter of 2024.
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SECURITIES PORTFOLIO
The balance of securities available for sale decreased by $76,118 as of December 31, 2025, compared to December 31, 2024. This decrease was primarily due to principal paydowns on securities and the sale of $63,690 of securities in the fourth quarter of 2025, partially offset by a decrease in unrealized losses on securities since December 31, 2024. The proceeds from the sale in December 2025 improve balance sheet flexibility and will be used to improve our long-term earnings profile through redeployment of the net proceeds into higher-earning assets or repayment of higher-cost borrowings.
As of December 31, 2025, approximately 62 percent of the available for sale securities portfolio consisted of government agency guaranteed collateralized mortgage obligations and mortgage-backed securities. We believe those securities have little to no credit risk and provide cash flows for liquidity and repricing opportunities. All collateralized mortgage obligations and mortgage-backed securities consist of residential and commercial mortgage pass-through securities and collateralized mortgage obligations guaranteed by the Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA), Government National Mortgage Association (GNMA), or the Small Business Administration (SBA). The securities issued by state and political subdivisions are diversified among municipalities in 25 states.
The following table sets forth the weighted average yield by contractual maturity by security type as of December 31, 2025. Expected maturities may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. The collateralized mortgage obligations and mortgage-backed securities have monthly paydowns that are not reflected in the table.
| Within one year | After one year but within five years | After five years but within ten years | After ten years | Total | ||||||||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||||||||||
State and political subdivisions (1) | — | % | — | % | 1.86 | % | 2.05 | % | 2.04 | % | ||||||||||||||||||||||
| Collateralized mortgage obligations | — | — | — | 1.48 | 1.48 | |||||||||||||||||||||||||||
| Mortgage-backed securities | — | 1.20 | 1.72 | 1.68 | 1.66 | |||||||||||||||||||||||||||
| Collateralized loan obligations | — | — | 5.50 | — | 5.50 | |||||||||||||||||||||||||||
| Corporate notes | — | — | 3.26 | — | 3.26 | |||||||||||||||||||||||||||
| — | % | 1.20 | % | 2.35 | % | 1.72 | % | 1.78 | % | |||||||||||||||||||||||
(1) Yields on tax-exempt obligations have been computed on a tax-equivalent basis using a federal income tax rate of 21 percent and are adjusted to reflect the effect of the nondeductible interest expense associated with owning tax-exempt investment securities.
Total gross unrealized losses in the securities available for sale portfolio were $93,270 at December 31, 2025 compared to $128,838 at December 31, 2024. As of December 31, 2025, the 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 December 31, 2025, the Company also determined that no individual securities in an unrealized loss position represented credit losses that would require an allowance for credit losses. Management concluded that the unrealized losses in the portfolio 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.
For additional information regarding the Company’s securities portfolio, see Note 3 and Note 18 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
LOAN PORTFOLIO
The Company seeks to create growth in commercial lending, which primarily includes commercial real estate, multi-family, and commercial and industrial lending, by offering customer-focused products and competitive pricing and by capitalizing on the positive trends in its market areas. It is the objective of the Company’s credit policies to diversify the commercial loan portfolio to limit concentrations in any single industry. As of December 31, 2025, total loans were approximately 86.5 percent of total deposits and 72.5 percent of total assets.
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Loans outstanding at the end of 2025 decreased 0.1 percent compared to the end of 2024. Changes in the loan portfolio during 2025 included decreases of $81,314 in construction, land and land development loans and $9,173 in commercial and industrial loans and an increase of $68,571 in commercial real estate loans. The Company continues to focus on business development efforts in all of its markets. The political and economic environments could influence the volume of future loan originations and the mix of variable-rate versus fixed-rate loans.
For a description of the loan segments, see Note 4 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K. The interest rates charged on loans vary with the degree of risk and the amount and terms of the loan. Competitive pressures, the creditworthiness of the borrower, market interest rates, the availability of funds, and government regulations further influence the rate charged on a loan.
The Company follows a loan policy approved by West Bank’s Board of Directors. The loan policy is reviewed at least annually and is updated as considered necessary. The policy establishes lending limits, review criteria and other guidelines for loan administration and the allowance for credit losses, among other things. Loans are approved in accordance with the applicable guidelines and underwriting policies. Loans to any one borrower are limited by state banking laws. Loan officer lending authorities vary according to the individual loan officer’s experience and expertise.
As of December 31, 2025 and 2024, there were no loans that were past due 30 days or more.
Nonperforming loans declined to $0 at December 31, 2025, compared to $133 at December 31, 2024. The decrease was due to a full payoff on the single loan included in nonperforming loans as of December 31, 2024.
The watch classification of loans increased to $52,227 as of December 31, 2025 from $8,349 as of December 31, 2024. The increase in the balance of watch classification loans was primarily due to additions of loans within the commercial and commercial real estate loan segments and associated with the transportation and trucking industry.
Loans Secured by Real Estate
The commercial real estate market continues to be a significant source of business for West Bank. Management places a strong emphasis on monitoring the composition of the Company’s commercial real estate loan portfolio. The Company has an established lending policy which includes a number of underwriting factors to be considered in making a commercial real estate loan, including, but not limited to, location, loan-to-value ratio (LTV), cash flow and debt service coverage, collateral and the credit history and expertise of the borrower. The lending policy also includes guidelines for real estate appraisals and evaluations, including minimum appraisal and evaluation standards.
Although repayment risk exists on all loans, different factors influence repayment risk for each type of loan. The primary risks associated with commercial real estate loans are the quality of the borrower’s management and the health of the national and regional economies. Underwriting on commercial properties is primarily based on the economic viability of the project with heavy consideration given to the creditworthiness and experience of the borrower. Recognizing that debt is paid via cash flow, the projected cash flows of the project are critical in underwriting because these determine the ultimate value of the property and the ability to service debt. Therefore, in most commercial real estate projects, we generally require a minimum stabilized debt service coverage ratio of 1.20 to 1.35, depending on the real estate type. Exceptions to this policy can be made for certain borrowers that exhibit other credit quality strengths. Exceptions to the policy are monitored by management. Our strategy with respect to the management of these types of risks is to consistently follow prudent loan policies and underwriting practices.
The Company recognizes that a diversified loan portfolio contributes to reducing risk. The specific loan portfolio mix is subject to change based on loan demand, the business environment and various economic factors. The Company actively monitors concentrations within the loan portfolio to ensure appropriate diversification is maintained. In addition, management tracks the level of owner occupied commercial real estate loans versus non-owner occupied commercial real estate loans. Owner occupied commercial real estate loans are generally considered to have less risk than non-owner occupied commercial real estate loans.
In accordance with regulatory guidelines, the Company exercises heightened risk management practices when non-owner occupied commercial real estate lending exceeds 300 percent of total risk-based capital or construction, land development, and other land loans exceed 100 percent of total risk-based capital. Although the Company’s loan portfolio is heavily concentrated in real estate and its real estate portfolio levels exceed these regulatory guidelines, it has established risk management policies and procedures to regularly monitor the commercial real estate portfolio.
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The Bank’s Executive Loan Committee (ELC), which is made up of the Chief Executive Officer, Bank President, Chief Risk Officer, Minnesota Group President, Chief Credit Officer and Credit Department Manager, approves all commercial loan relationships in excess of $500 in total credit exposure and annually reviews all commercial loan relationships of $1,000 and greater. Credit approval authorities for individual officers are reviewed, at least annually, by the ELC and approved by the Board of Directors.
Executive management regularly reviews available market data. Commercial real estate portfolio monitoring practices include quarterly stress testing and quarterly trend analysis of underwriting exceptions, average loan-to-value and average debt service coverage for significant real estate segments.
The Company maintains an annual independent loan review program. The Company engages a third party to evaluate credit quality, assigned risk ratings, underwriting standards and collateral documentation. The review covers a significant portion of the loan portfolio and is carried out on a semi-annual basis. Findings are reported to the ELC and the Board of Directors. The Company also maintains an internal loan audit department that performs certain pre- and post-closing procedural and documentation reviews. The internal findings are reported quarterly to the ELC.
Commercial loans secured by real estate, including construction, land and land development, totaled $2,356,599, or 78.4 percent of total loans, at December 31, 2025. Non-owner occupied commercial real estate loan concentrations and the weighted average LTV by property type as of December 31, 2025 and 2024 are shown in the following table. LTV is determined using the maximum credit exposure of the loan compared to the most recent appraisal data on the property obtained in accordance with the Company’s lending policies.
| As of December 31 | ||||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | |||||||||||||||||||||||||||||||||||||
| Balance | % of Non-owner Occupied CRE | Weighted Average LTV | Balance | % of Non-owner Occupied CRE | Weighted Average LTV | |||||||||||||||||||||||||||||||||
| Non-owner occupied: | ||||||||||||||||||||||||||||||||||||||
| Multifamily | $ | 581,106 | 31.2 | % | 67 | % | $ | 542,322 | 28.5 | % | 69 | % | ||||||||||||||||||||||||||
| Medical & senior care facilities | 129,870 | 7.0 | 62 | 180,144 | 9.5 | 64 | ||||||||||||||||||||||||||||||||
| Warehouse & trucking | 170,673 | 9.2 | 62 | 160,783 | 8.4 | 60 | ||||||||||||||||||||||||||||||||
| Hotels | 252,962 | 13.6 | 63 | 253,939 | 13.3 | 64 | ||||||||||||||||||||||||||||||||
| Mixed use | 106,494 | 5.7 | 68 | 98,988 | 5.2 | 67 | ||||||||||||||||||||||||||||||||
| Offices | 107,512 | 5.8 | 63 | 126,270 | 6.6 | 68 | ||||||||||||||||||||||||||||||||
| Land for development | 97,942 | 5.2 | 55 | 89,974 | 4.7 | 56 | ||||||||||||||||||||||||||||||||
| All other | 415,410 | 22.3 | not available | 452,772 | 23.8 | not available | ||||||||||||||||||||||||||||||||
| $ | 1,861,969 | 100.0 | % | $ | 1,905,192 | 100.0 | % | |||||||||||||||||||||||||||||||
The following table summarizes non-owner occupied commercial real estate loans by property type and risk rating as of December 31, 2025. Risk ratings are defined in Note 4 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
| As of December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| Risk Rating | |||||||||||||||||||||||||||||||||||||||||
| Total | 1-3 | 4 | 5 | 6 | 7 | 8 | |||||||||||||||||||||||||||||||||||
| Non-owner occupied: | |||||||||||||||||||||||||||||||||||||||||
| Multifamily | $ | 581,106 | $ | 40,863 | $ | 433,049 | $ | 95,793 | $ | 11,401 | $ | — | $ | — | |||||||||||||||||||||||||||
| Medical & senior care facilities | 129,870 | 17,796 | 95,715 | 16,359 | — | — | — | ||||||||||||||||||||||||||||||||||
| Warehouse & trucking | 170,673 | 96,281 | 63,426 | 10,966 | — | — | — | ||||||||||||||||||||||||||||||||||
| Hotel | 252,962 | — | 195,956 | 57,006 | — | — | — | ||||||||||||||||||||||||||||||||||
| Mixed use | 106,494 | 27,517 | 52,997 | 25,980 | — | — | — | ||||||||||||||||||||||||||||||||||
| Offices | 107,512 | 8,824 | 89,577 | 9,111 | — | — | — | ||||||||||||||||||||||||||||||||||
| Land for development | 97,942 | 7,515 | 88,924 | 1,503 | — | — | — | ||||||||||||||||||||||||||||||||||
| All other | 415,410 | 81,432 | 237,349 | 96,629 | — | — | — | ||||||||||||||||||||||||||||||||||
| $ | 1,861,969 | $ | 280,228 | $ | 1,256,993 | $ | 313,347 | $ | 11,401 | $ | — | $ | — | ||||||||||||||||||||||||||||
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As of December 31, 2025, there were no non-owner occupied commercial real estate loans that were past due 30 days or more.
Maturities of Loans
The contractual maturities of the Company’s loan portfolio are shown in the following tables. Actual repayments may differ from contractual maturities because individual borrowers may have the right to prepay loans with or without prepayment penalties.
| As of December 31, 2025 | ||||||||||||||||||||||||||||||||
| Within one year | After one but within five years | After five but within 15 years | After 15 years | Total | ||||||||||||||||||||||||||||
| Commercial | $ | 174,094 | $ | 267,526 | $ | 63,439 | $ | — | $ | 505,059 | ||||||||||||||||||||||
| Real estate: | ||||||||||||||||||||||||||||||||
| Construction, land and land development | 276,777 | 147,975 | 2,081 | — | 426,833 | |||||||||||||||||||||||||||
| 1-4 family residential first mortgages | 23,573 | 69,273 | 276 | — | 93,122 | |||||||||||||||||||||||||||
| Home equity | 10,555 | 15,533 | — | — | 26,088 | |||||||||||||||||||||||||||
| Commercial | 382,944 | 1,226,597 | 298,040 | 22,185 | 1,929,766 | |||||||||||||||||||||||||||
| Consumer and other | 8,281 | 15,093 | — | — | 23,374 | |||||||||||||||||||||||||||
| $ | 876,224 | $ | 1,741,997 | $ | 363,836 | $ | 22,185 | $ | 3,004,242 | |||||||||||||||||||||||
| After one but within five years | After five but within 15 years | After 15 years | ||||||||||||||||||||||||||||||
| Loan maturities after one year with: | ||||||||||||||||||||||||||||||||
| Fixed rates | ||||||||||||||||||||||||||||||||
| Commercial | $ | 201,049 | $ | 13,057 | $ | — | ||||||||||||||||||||||||||
| Real estate: | ||||||||||||||||||||||||||||||||
| Construction, land and land development | 11,699 | — | — | |||||||||||||||||||||||||||||
| 1-4 family residential first mortgages | 67,323 | 276 | — | |||||||||||||||||||||||||||||
| Home equity | 4,981 | — | — | |||||||||||||||||||||||||||||
| Commercial | 1,056,813 | 118,523 | — | |||||||||||||||||||||||||||||
| Consumer and other | 14,389 | — | — | |||||||||||||||||||||||||||||
| Total fixed-rate loans | 1,356,254 | 131,856 | — | |||||||||||||||||||||||||||||
| Variable rates | ||||||||||||||||||||||||||||||||
| Commercial | 66,477 | 50,382 | — | |||||||||||||||||||||||||||||
| Real estate: | ||||||||||||||||||||||||||||||||
| Construction, land and land development | 136,276 | 2,081 | — | |||||||||||||||||||||||||||||
| 1-4 family residential first mortgages | 1,950 | — | — | |||||||||||||||||||||||||||||
| Home equity | 10,552 | — | — | |||||||||||||||||||||||||||||
| Commercial | 169,784 | 179,517 | 22,185 | |||||||||||||||||||||||||||||
| Consumer and other | 704 | — | — | |||||||||||||||||||||||||||||
| Total variable-rate loans | 385,743 | 231,980 | 22,185 | |||||||||||||||||||||||||||||
| $ | 1,741,997 | $ | 363,836 | $ | 22,185 | |||||||||||||||||||||||||||
SUMMARY OF THE ALLOWANCE FOR CREDIT LOSSES
The credit loss expense recorded on the income statement includes charges made to earnings to maintain an adequate allowance for credit losses. The adequacy of the allowance for credit losses is evaluated quarterly by management and reviewed by the Board. The allowance for credit losses is management’s estimate of expected lifetime losses in the loan portfolio as of the balance sheet date.
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Factors considered by management 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 focuses on factors such as specific loan reviews, changes in the components of the loan portfolio given 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 borrower’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 in central and eastern Iowa and southern Minnesota. The local economies are composed primarily of major financial services companies, healthcare providers, educational institutions, technology and agribusiness companies, and state and local governments.
West Bank has a significant portion of its loan portfolio in commercial real estate loans, commercial lines of credit, commercial term loans, and construction and land development loans. West Bank’s typical commercial borrower is a small- or medium-sized, privately owned business entity. Compared to residential mortgages or consumer loans, commercial loans typically have larger balances and repayment usually depends on the borrowers’ successful business operations. Commercial loans also generally are not fully repaid over the loan period and, thus, may require refinancing or a large payoff at maturity. When the general 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 credit losses, further reduction in the carrying amounts of loans may be necessary based on changes in circumstances, changes in the overall economy in the markets we currently serve, or later acquired information. Identifiable sectors within the general economy are subject to additional volatility, which at any time may have a substantial impact on the loan portfolio. In addition, regulatory agencies, as integral parts of their examination processes, periodically review the credit quality of the loan portfolio and the level of the allowance for credit losses. Such agencies may require West Bank to recognize additional charge-offs or provisions for credit losses based on such agencies’ review of information available to them at the time of their examinations.
The following table shows the ratio of net (charge-offs) recoveries to loans outstanding, broken out by loan segment, along with ratios of the allowance and nonaccrual loans to total loans at the end of the period.
| Analysis of the Allowance for Credit Losses for the Years Ended December 31 | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Ratio of net (charge-offs) recoveries during the | |||||||||||||||||
| period to average loans outstanding by segment: | |||||||||||||||||
| Commercial | — | % | — | % | — | % | |||||||||||
| Real estate: | |||||||||||||||||
| Construction, land and land development | — | — | — | ||||||||||||||
| 1-4 family residential first mortgages | — | — | — | ||||||||||||||
| Home equity | — | — | — | ||||||||||||||
| Commercial | — | — | — | ||||||||||||||
| Consumer and other | — | — | — | ||||||||||||||
| Total | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||
| Ratio of allowance for credit losses to total | |||||||||||||||||
| loans at the end of period | 1.02 | % | 1.01 | % | 0.97 | % | |||||||||||
| Ratio of nonaccrual loans to total loans at | |||||||||||||||||
| end of period | 0.00 | % | 0.00 | % | 0.01 | % | |||||||||||
| Ratio of allowance for credit losses to total | |||||||||||||||||
| nonaccrual loans at the end of period | N/A | 22,881.20 | % | 9,575.00 | % | ||||||||||||
| Ratio of net (charge-offs) recoveries to total | |||||||||||||||||
| loans at end of period | 0.00 | % | 0.00 | % | 0.00 | % | |||||||||||
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Nonperforming loans at December 31, 2025 totaled $0, a slight decrease from $133, or 0.00 percent of total loans, at December 31, 2024. The decrease in nonperforming loans at December 31, 2025, compared to December 31, 2024, was due to a full payoff on the single loan included in the nonaccrual balance on December 31, 2024. Nonperforming loans include loans on nonaccrual status, loans past due 90 days or more and still accruing interest, and loans that have been considered to be loan restructurings made to borrowers experiencing financial difficulty. The Company held no other real estate owned properties as of December 31, 2025 or 2024.
The following table sets forth information concerning the Company’s allocation of the allowance for credit losses by loan segment as of the dates indicated.
| As of December 31 | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | %* | Amount | %* | Amount | %* | ||||||||||||||||||||||||||||||
| Balance at end of | |||||||||||||||||||||||||||||||||||
| period applicable to: | |||||||||||||||||||||||||||||||||||
| Commercial | $ | 5,700 | 16.81 | % | $ | 5,489 | 17.10 | % | $ | 5,291 | 18.13 | % | |||||||||||||||||||||||
| Real estate: | |||||||||||||||||||||||||||||||||||
| Construction, land | |||||||||||||||||||||||||||||||||||
| and land development | 3,744 | 14.21 | 4,354 | 16.89 | 3,668 | 14.11 | |||||||||||||||||||||||||||||
| 1-4 family residential | |||||||||||||||||||||||||||||||||||
| first mortgages | 687 | 3.10 | 650 | 2.92 | 704 | 3.64 | |||||||||||||||||||||||||||||
| Home equity | 274 | 0.87 | 200 | 0.64 | 142 | 0.50 | |||||||||||||||||||||||||||||
| Commercial | 19,795 | 64.23 | 19,544 | 61.88 | 18,420 | 63.25 | |||||||||||||||||||||||||||||
| Consumer and other | 325 | 0.78 | 195 | 0.57 | 117 | 0.37 | |||||||||||||||||||||||||||||
| $ | 30,525 | 100.00 | % | $ | 30,432 | 100.00 | % | $ | 28,342 | 100.00 | % | ||||||||||||||||||||||||
* Percent of loans in each category to total loans.
As of December 31, 2025 and 2024, there was no allowance for credit losses related to loans individually evaluated for credit losses. The portion of the allowance for credit losses related to loans collectively evaluated for credit losses increased to $30,525, or 1.02 percent of outstanding loans as of December 31, 2025, compared to $30,432, or 1.01 percent of outstanding loans as of December 31, 2024. The increase was primarily due to net recoveries for the year ended December 31, 2025. Management believed the allowance for credit losses as of December 31, 2025 was adequate to absorb the expected losses in the portfolio as of that date.
DEPOSITS
Deposits totaled $3,468,470 as of December 31, 2025, which was an increase of 3.3 percent compared to December 31, 2024. Deposit growth in 2025 included a mix of public funds and commercial and consumer deposits. Deposit inflows and outflows are influenced by prevailing market interest rates, competition, local and national economic conditions, and fluctuations in our business customers’ own liquidity needs.
At December 31, 2025, the Company had $154,564 in brokered deposits, compared to $266,418 at December 31, 2024. Brokered deposits included fixed-rate time deposits with maturities through September 2026 and variable-rate deposits with terms through February 2027. The decrease in brokered deposits during 2025 was primarily due to core deposit growth. When necessary, brokered deposits are utilized, along with other wholesale funding sources, to fund loan growth and offset core deposit outflows.
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The following table sets forth the average balances for each major category of deposits and the weighted average interest rate paid for those deposits during the years indicated.
| Years ended December 31 | |||||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Average | Average | Average | Average | Average | Average | ||||||||||||||||||||||||||||||
| Balance | Rate | Balance | Rate | Balance | Rate | ||||||||||||||||||||||||||||||
| Noninterest-bearing demand | $ | 515,389 | — | % | $ | 528,391 | — | % | $ | 586,903 | — | % | |||||||||||||||||||||||
| Interest-bearing demand: | |||||||||||||||||||||||||||||||||||
| Insured cash sweep | 188,737 | 2.78 | 150,774 | 3.44 | 137,027 | 2.48 | |||||||||||||||||||||||||||||
| Other interest-bearing demand | 305,063 | 0.87 | 315,464 | 1.11 | 330,147 | 1.09 | |||||||||||||||||||||||||||||
| Money market: | |||||||||||||||||||||||||||||||||||
| Insured cash sweep | 272,709 | 3.33 | 241,444 | 4.00 | 249,574 | 3.58 | |||||||||||||||||||||||||||||
| Other money market | 1,294,197 | 3.34 | 1,161,566 | 3.85 | 973,853 | 3.47 | |||||||||||||||||||||||||||||
| Savings | 185,891 | 1.66 | 157,126 | 1.73 | 134,248 | 0.61 | |||||||||||||||||||||||||||||
| Time | 586,022 | 4.16 | 639,278 | 4.92 | 424,320 | 3.83 | |||||||||||||||||||||||||||||
| $ | 3,348,008 | $ | 3,194,043 | $ | 2,836,072 | ||||||||||||||||||||||||||||||
Management reduced interest rates on deposits in 2024 and 2025 as a result of the reductions in the target federal funds rate by the Federal Reserve in 2024 and 2025. Any deposit rate changes in 2026 will be dependent on market rates, liquidity needs and competition for deposit balances. To limit the Company’s exposure to market interest rate changes, interest rate swaps are in place on $70,000 of deposit balances that effectively convert certain customer deposits with variable rates to fixed-rate instruments.
Additionally, in 2025, the Company entered into three interest rate collar agreements with a total notional amount of $100,000 to mitigate interest rate risk on certain customer deposits. The structure of the interest rate collars is such that the Company pays the counterparty an incremental amount if the index rate falls below the floor rate. Conversely, the Company receives an incremental amount if the index rate rises above the cap rate.
Approximately 99 percent of the total time deposits issued by West Bank mature in the next year, including brokered time deposits. It is anticipated that a significant portion of the core time deposits will be renewed. In the event a substantial volume of core time deposits are not renewed, management believes the Company has sufficient liquid assets and funding sources to offset the potential runoff.
The following table shows the amounts and remaining maturities of time deposits with balances of $100 or more as of December 31, 2025.
| 3 months or less | $ | 165,091 | |||
| Over 3 through 6 months | 153,292 | ||||
| Over 6 through 12 months | 160,234 | ||||
| Over 12 months | 1,224 | ||||
| $ | 479,841 | ||||
West Bank participates in a reciprocal deposit network, which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount. We consider these reciprocal deposits to be in-market deposits as distinguished from traditional out-of-market brokered deposits. Time deposits as of December 31, 2025 and 2024, included $155,150 and $162,148, respectively, of reciprocal deposits. Included in total deposits as of December 31, 2025 and 2024, were $244,476 and $220,627, respectively, of reciprocal interest-bearing checking and $264,033 and $273,126, respectively, of reciprocal money market deposits.
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(dollars in thousands, except per share amounts)
Total estimated uninsured deposits were $1,744,989, $1,562,981 and $1,435,406 as of December 31, 2025, 2024 and 2023, respectively. The uninsured deposit amounts are estimated based on the methodologies and assumptions used for regulatory reporting requirements and include collateralized public unit deposits. The following table shows the amount of time deposits in excess of the insurance limit by maturity.
| 3 months or less | $ | 72,426 | |||
| Over 3 through 6 months | 47,797 | ||||
| Over 6 through 12 months | 81,774 | ||||
| $ | 201,997 | ||||
BORROWED FUNDS
The Company had $270,000 of FHLB advances outstanding at December 31, 2025, and 2024. As of December 31, 2025, all FHLB advances were hedged with long-term interest rate swaps as part of the Company’s rolling funding program. These interest rate swaps have maturity dates ranging from July 2026 through June 2029 and fixed rates ranging from 1.86 percent to 4.32 percent. This strategy of hedging short-term rolling funding effectively provides fixed cost wholesale funding through the maturity dates of the various interest rate swaps.
The Company has a credit agreement with an unaffiliated commercial bank. As of December 31, 2025, this borrowing had a balance of $26,250. Interest is payable quarterly. Required quarterly principal payments are $1,250, with the remaining balance due February 2027. The Company may make additional principal payments without penalty. The interest rate is variable at the Wall Street Journal Prime Rate minus 1.00 percent, which was 5.75 percent as of December 31, 2025. The Company has an interest rate swap contract that effectively converts $20,000 of this borrowing to a fixed rate of 6.40 percent through its maturity date.
In June 2022, the Company issued $60,000 of subordinated notes (Notes). The Notes initially bear interest at 5.25 percent per annum, with interest payable semi-annually for the first five years of the Notes. Beginning June 15, 2027, the interest rate will reset quarterly to a floating rate per annum that will be three-month term SOFR plus 2.41 percent, with payments due quarterly. The Company may redeem the Notes, in whole or in part, on and after June 15, 2027 at a price equal to 100 percent of the principal amount of the Notes being redeemed plus accrued and unpaid interest. The Notes will mature on June 15, 2032 if they are not earlier redeemed.
The Company has $20,619 in junior subordinated debentures which mature in 2033 and carry a variable interest rate. The Company has an interest rate swap with a notional amount of $20,000 which converts the variable-rate subordinated debentures to fixed-rate debt based on the 3-month term SOFR plus 0.26161 percent tenor spread adjustment plus 3.05 percent. This interest rate swap has a fixed rate of 4.81 percent and matures in September 2026.
OFF-BALANCE SHEET ARRANGEMENTS
In the normal course of business, West Bank commits to extend credit in the form of loan commitments and standby letters of credit in order to meet the financing needs of its customers. These commitments expose West Bank to varying degrees of credit and market risks in excess of the amounts recognized in the consolidated balance sheets and are subject to the same credit policies as are the loans recorded on the balance sheets.
West Bank’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. West Bank uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to lend are subject to borrowers’ continuing compliance with existing credit agreements. Off-balance sheet commitments are more fully discussed in Note 17 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
As of December 31, 2025, the allowance for credit losses related to off-balance sheet commitments was $1,544, which was unchanged from December 31, 2024. 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.
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(dollars in thousands, except per share amounts)
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 securities, principal payments on amortizing securities, federal funds purchased, advances from the FHLB, other wholesale funding and funds provided by operations. Liquidity management is conducted on both a daily and a long-term basis. Investments in liquid assets are adjusted based on expected loan demand, projected loan and securities maturities and payments, expected deposit flows and the objectives set by West Bank’s asset-liability management policy. The Company had liquid assets (cash and cash equivalents) of $471,086 as of December 31, 2025 compared with $243,478 as of December 31, 2024.
Our deposit growth strategy emphasizes core deposit growth. Deposit inflows and outflows can vary widely and are influenced by prevailing market interest rates, competition, local and national economic conditions, operating cycles of public fund deposits and fluctuations in our business customers’ own liquidity needs. The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth. Brokered deposits are obtained through various programs with third party brokers. At December 31, 2025, the Company had $154,564 in brokered deposits, which included fixed-rate time deposits with maturities through September 2026 and variable-rate deposits with terms through February 2027.
As of December 31, 2025, West Bank had additional borrowing capacity available from the FHLB of approximately $649,000, as well as approximately $38,341 through the Federal Reserve discount window and $75,000 through unsecured federal funds lines of credit. Net cash from continuing operating activities contributed $46,479, $39,808 and $25,249 to liquidity for the years ended December 31, 2025, 2024 and 2023, respectively. Management believed that the combination of high levels of liquid and potentially liquid assets, unencumbered securities, cash flows from operations and additional borrowing capacity provided the Company with sufficient liquidity as of December 31, 2025.
The Company’s total stockholders’ equity increased to $265,985 as of December 31, 2025 from $227,875 as of December 31, 2024. The increase was primarily the result of growth in retained earnings and the increase in the market value of our available for sale investment portfolio. While accumulated other comprehensive losses reduce tangible common equity, they have no impact on regulatory capital. At December 31, 2025, tangible common equity as a percent of tangible assets was 6.42 percent compared to 5.68 percent as of December 31, 2024. As of December 31, 2025 and 2024, the Company had no intangible assets.
The Company and West Bank are subject to various regulatory capital requirements administered by federal and state banking agencies. Capital requirements are more fully discussed under the heading “Supervision and Regulation” included in Item 1 and in Note 16 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K. As of December 31, 2025, the Company and West Bank met all capital adequacy requirements to which they were subject, and the Company’s and West Bank’s capital ratios were in excess of the requirements to be considered well-capitalized under capital regulations. Also, as of December 31, 2025, the ratios for the Company and West Bank were sufficient to meet the capital conservation buffer.
EFFECTS OF NEW STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS
A discussion of the effects of new financial accounting standards and developments as they relate to the Company is located in Note 1 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K.
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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company’s market risk is composed primarily of interest rate risk arising from its core banking activities of lending and deposit taking. Interest rate risk 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, or more often when deemed necessary, to review the interest rate sensitivity position and develop various strategies for managing interest rate risk. Measuring and maintaining interest rate risk is a dynamic process that management performs with the objective of maximizing net interest margin while maintaining interest rate risk within acceptable tolerances. This process relies primarily on the simulation of net interest income over multiple interest rate scenarios. The Company engages a third party that utilizes a modeling program to measure the Company’s exposure to potential interest rate changes. For various assumed hypothetical changes in market interest rates, this analysis measures the estimated change in net interest income. The simulations allow for ongoing assessment of interest rate sensitivity and can include the impact of potential new business strategies. The modeled scenarios begin with a base case in which rates are unchanged and can include parallel and nonparallel rate shocks. The model includes deposit beta assumptions which are estimates of changes in interest-bearing deposit pricing for a given change in market interest rates. The results of the rate shocks are measured in two forms: first, the impact on the net interest margin and earnings over one and two year time frames; and second, the impact on the market value of equity. The results of the simulation are compared against approved policy limits.
The following table presents the estimated change in net interest income over a one year time horizon under several scenarios of assumed interest rate changes for the rate shock levels shown. The changes in each interest rate scenario represent the difference between estimated net interest income in the unchanged interest rate scenario, or the base case, and the estimated net interest income in each of the alternative interest rate scenarios. The net interest income in each scenario is based on immediate parallel yield curve changes in the interest rates applied to a static balance sheet. This analysis does not represent a forecast and should not be relied upon as being indicative of expected operating results.
| At December 31, 2025 | ||||||||||||||
| Sensitivity of Net Interest Income Over One Year Horizon | ||||||||||||||
| Change in Interest Rates | $ Change | % Change | ||||||||||||
| 300 basis points rising | $ | (3,116) | (2.97) | % | ||||||||||
| 200 basis points rising | (2,152) | (2.05) | ||||||||||||
| 100 basis points rising | (1,336) | (1.27) | ||||||||||||
| 100 basis points falling | 912 | 0.87 | ||||||||||||
| 200 basis points falling | 685 | 0.65 | ||||||||||||
| 300 basis points falling | 302 | 0.29 | ||||||||||||
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 timing, magnitude and frequency of interest rate changes as well as changes in market conditions and customer behavior. Further, the computations do not contemplate any actions the Company may undertake in response to changes in interest rates.
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West Bancorporation, Inc. and Subsidiary
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of West Bancorporation, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of West Bancorporation, Inc. and its subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes to the consolidated financial statements (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013, and our report dated February 25, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
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West Bancorporation, Inc. and Subsidiary
Allowance for Credit Losses for Loans
As described in Note 1 and Note 4 to the consolidated financial statements, the allowance for credit losses for loans (allowance) totaled $30.5 million at December 31, 2025. The allowance is a valuation account that is deducted from the amortized cost basis of loans to present the net amount of loans expected to be collected. The Company’s allowance reflects losses expected over the remaining contractual life of the loans. The Company’s allowance is measured on a collective (pool) basis when similar risk characteristics exist. Loans that do not share similar risk characteristics are evaluated on an individual basis at the balance sheet date. At December 31, 2025 the reserve on loans collectively evaluated totaled $30.5 million and there was no reserve on loans individually evaluated. The measurement of the reserve is based on 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 the 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. The Company uses a 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 a 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. Qualitative factors are based on management’s judgment of the changes in underlying loan composition of specific portfolio, trends relating to credit quality and collateral values, company-specific data, or effects of other factors such as market competition or legal and regulatory requirements. The evaluation of these qualitative factors and forecasts requires that management make significant judgments and are highly sensitive to changes in significant assumptions.
We identified the qualitative factors and forecasts applied to the allowance as a critical audit matter as auditing management’s determination of the qualitative factors and forecasts required significant auditor judgment as the estimate is highly sensitive to changes in significant assumptions.
Our audit procedures related to the Company’s qualitative factors and forecasts in the allowance included the following, among others:
•We obtained an understanding of the relevant controls related to management’s evaluation and establishment of the qualitative factors and forecasts of the allowance and tested such controls for design and operating effectiveness, including controls relating to management’s review and approval of the qualitative factors and forecasts and the underlying data used in determining those factors.
•We tested management’s process and evaluated the reasonableness of their judgements and assumptions to develop the qualitative factors and forecasts, which included:
◦Testing the relevancy and consistency of the data inputs used by management as a basis for the adjustments for qualitative factors and forecasts by comparing to internal and external, independently sourced data, including data related to current and forecasted periods.
◦Evaluating the magnitude and directional consistency of the adjustments with trends in the loan portfolio, economy and various other relevant measures.
◦Evaluating whether management’s conclusions were consistent with Company provided internal data and external, independently sourced data and agreeing the impact to the allowance calculation.
/s/ RSM US LLP
We have served as the Company’s auditor since 1998.
February 25, 2026
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West Bancorporation, Inc. and Subsidiary
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of West Bancorporation, Inc.
Opinion on the Internal Control Over Financial Reporting
We have audited West Bancorporation, Inc.’s (the Company) internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission in 2013.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, 2025 and 2024, and the related consolidated statements of income, comprehensive income, stockholders’ equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes to the consolidated financial statements of the Company and our report dated February 25, 2026 expressed an unqualified opinion.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting in the accompanying Managements’ Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ RSM US LLP
Des Moines, Iowa
February 25, 2026
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West Bancorporation, Inc. and Subsidiary
West Bancorporation, Inc. and Subsidiary
Consolidated Balance Sheets
December 31, 2025 and 2024
| (dollars in thousands, except per share data) | 2025 | 2024 | ||||||||||||
| ASSETS | ||||||||||||||
| Cash and due from banks | $ | $ | ||||||||||||
| Interest-earning deposits with banks | ||||||||||||||
| Securities purchased under agreements to resell | ||||||||||||||
| Cash and cash equivalents | ||||||||||||||
| Securities available for sale, at fair value | ||||||||||||||
| Federal Home Loan Bank stock, at cost | ||||||||||||||
| Loans | ||||||||||||||
| Allowance for credit losses | ( | ( | ||||||||||||
| Loans, net | ||||||||||||||
| Premises and equipment, net | ||||||||||||||
| Accrued interest receivable | ||||||||||||||
| Bank-owned life insurance | ||||||||||||||
| Deferred tax assets, net | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| LIABILITIES | ||||||||||||||
| Deposits: | ||||||||||||||
| Noninterest-bearing demand | $ | $ | ||||||||||||
| Interest-bearing demand | ||||||||||||||
| Savings and money market | ||||||||||||||
| Time | ||||||||||||||
| Total deposits | ||||||||||||||
| Subordinated notes, net | ||||||||||||||
| Federal Home Loan Bank advances | ||||||||||||||
| Long-term debt | ||||||||||||||
| Accrued expenses and other liabilities | ||||||||||||||
| Total liabilities | ||||||||||||||
| COMMITMENTS AND CONTINGENCIES (Note 17) | ||||||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||
Preferred stock, $ | ||||||||||||||
Common stock, | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||||||
See Notes to Consolidated Financial Statements.
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West Bancorporation, Inc. and Subsidiary
West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Income
Years Ended December 31, 2025, 2024 and 2023
| (dollars in thousands, except per share data) | 2025 | 2024 | 2023 | |||||||||||||||||
| Interest income: | ||||||||||||||||||||
| Loans, including fees | $ | $ | $ | |||||||||||||||||
| Securities: | ||||||||||||||||||||
| Taxable | ||||||||||||||||||||
| Tax-exempt | ||||||||||||||||||||
| Deposits with banks | ||||||||||||||||||||
| Securities purchased under agreements to resell | ||||||||||||||||||||
| Total interest income | ||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||
| Deposits | ||||||||||||||||||||
| Federal funds purchased and other short-term borrowings | ||||||||||||||||||||
| Subordinated notes | ||||||||||||||||||||
| Federal Home Loan Bank advances | ||||||||||||||||||||
| Long-term debt | ||||||||||||||||||||
| Total interest expense | ||||||||||||||||||||
| Net interest income | ||||||||||||||||||||
| Credit loss expense | ||||||||||||||||||||
| Net interest income after credit loss expense | ||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||
| Service charges on deposit accounts | ||||||||||||||||||||
| Debit card interchange income | ||||||||||||||||||||
| Trust services | ||||||||||||||||||||
| Increase in cash value of bank-owned life insurance | ||||||||||||||||||||
| Gain from bank-owned life insurance | ||||||||||||||||||||
| Loan swap fees | ||||||||||||||||||||
| Realized securities losses, net | ( | ( | ( | |||||||||||||||||
| Other income | ||||||||||||||||||||
| Total noninterest income | ||||||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||
| Salaries and employee benefits | ||||||||||||||||||||
| Occupancy and equipment | ||||||||||||||||||||
| Data processing | ||||||||||||||||||||
| Technology and software | ||||||||||||||||||||
| FDIC insurance | ||||||||||||||||||||
| Professional fees | ||||||||||||||||||||
| Other expenses | ||||||||||||||||||||
| Total noninterest expense | ||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||
| Income taxes | ||||||||||||||||||||
| Net income | $ | $ | $ | |||||||||||||||||
| Basic earnings per common share | $ | $ | $ | |||||||||||||||||
| Diluted earnings per common share | $ | $ | $ | |||||||||||||||||
See Notes to Consolidated Financial Statements.
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West Bancorporation, Inc. and Subsidiary
West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income
Years Ended December 31, 2025, 2024 and 2023
| (dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Net income | $ | $ | $ | |||||||||||||||||
| Other comprehensive income (loss): | ||||||||||||||||||||
| Unrealized gains (losses) on securities: | ||||||||||||||||||||
| Unrealized holding gains (losses) arising during the period | ( | |||||||||||||||||||
| Plus: reclassification adjustment for net losses realized in net income | ||||||||||||||||||||
| Income tax (expense) benefit | ( | ( | ||||||||||||||||||
| Other comprehensive income (loss) on securities | ( | |||||||||||||||||||
| Unrealized gains (losses) on derivatives: | ||||||||||||||||||||
| Unrealized holding gains (losses) arising during the period | ( | |||||||||||||||||||
| Plus: reclassification adjustment for net gains realized in net income | ( | ( | ( | |||||||||||||||||
| Income tax benefit | ||||||||||||||||||||
| Other comprehensive loss on derivatives | ( | ( | ( | |||||||||||||||||
| Total other comprehensive income (loss) | ( | |||||||||||||||||||
| Comprehensive income | $ | $ | $ | |||||||||||||||||
See Notes to Consolidated Financial Statements.
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West Bancorporation, Inc. and Subsidiary
West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Stockholders’ Equity
Years Ended December 31, 2025, 2024 and 2023
| 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, 2022 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
Cumulative effect of change in accounting principle(1) | — | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation costs | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2023 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss, net of tax | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation costs | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2024 | ( | |||||||||||||||||||||||||||||||||||||||||||
| Net income | ||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income, net of tax | ||||||||||||||||||||||||||||||||||||||||||||
Cash dividends declared, $ | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation costs | ||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance, December 31, 2025 | $ | $ | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||||||
(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.
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West Bancorporation, Inc. and Subsidiary
West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Cash Flows
Years Ended December 31, 2025, 2024 and 2023
| (dollars in thousands) | 2025 | 2024 | 2023 | |||||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||||||
| Net income | $ | $ | $ | |||||||||||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||||||||||
| Credit loss expense | ||||||||||||||||||||
| Net amortization and accretion | ||||||||||||||||||||
| Securities losses, net | ||||||||||||||||||||
| Stock-based compensation | ||||||||||||||||||||
| Increase in cash value of bank-owned life insurance | ( | ( | ( | |||||||||||||||||
| Gain from bank-owned life insurance | ( | |||||||||||||||||||
| Depreciation | ||||||||||||||||||||
| Provision for deferred income taxes | ||||||||||||||||||||
| Change in assets and liabilities: | ||||||||||||||||||||
| (Increase) decrease in accrued interest receivable | ( | |||||||||||||||||||
| (Increase) decrease in other assets | ( | ( | ||||||||||||||||||
| Increase (decrease) in accrued expenses and other liabilities | ( | ( | ||||||||||||||||||
| Net cash provided by operating activities | ||||||||||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||||||
| Proceeds from sales of securities available for sale | ||||||||||||||||||||
| Proceeds from principal paydowns, maturities and calls of securities available for sale | ||||||||||||||||||||
| Purchases of Federal Home Loan Bank stock | ( | ( | ( | |||||||||||||||||
| Proceeds from redemption of Federal Home Loan Bank stock | ||||||||||||||||||||
| Net increase in loans | ( | ( | ( | |||||||||||||||||
| Proceeds of principal and earnings from bank-owned life insurance | ||||||||||||||||||||
| Purchases of premises and equipment | ( | ( | ( | |||||||||||||||||
| Net cash provided by (used in) investing activities | ( | ( | ||||||||||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||||||
| Net increase in deposits | ||||||||||||||||||||
| Net decrease in federal funds purchased and other short-term borrowings | ( | ( | ||||||||||||||||||
| Net increase (decrease) in Federal Home Loan Bank advances | ( | |||||||||||||||||||
| Principal payments on long-term debt | ( | ( | ( | |||||||||||||||||
| Common stock dividends paid | ( | ( | ( | |||||||||||||||||
| Restricted stock units withheld for payroll taxes | ( | ( | ( | |||||||||||||||||
| Net cash provided by financing activities | ||||||||||||||||||||
| Net increase in cash and cash equivalents | ||||||||||||||||||||
| Cash and Cash Equivalents: | ||||||||||||||||||||
| Beginning | ||||||||||||||||||||
| Ending | $ | $ | $ | |||||||||||||||||
| Supplemental Disclosure of Cash Flow Information: | ||||||||||||||||||||
| Cash payments for interest | $ | $ | $ | |||||||||||||||||
| Income Taxes Paid: | ||||||||||||||||||||
| US Federal | ||||||||||||||||||||
| US State and Local | ||||||||||||||||||||
| Iowa | ||||||||||||||||||||
| Minnesota | ||||||||||||||||||||
See Notes to Consolidated Financial Statements.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 1. Organization and Nature of Business and Summary of Significant Accounting Policies
Organization and nature of business: West Bancorporation, Inc. operates in the commercial banking industry through its wholly-owned subsidiary, West Bank. West Bank is a state chartered bank and has its main office in West Des Moines, Iowa, with five additional offices located in the Des Moines, Iowa, metropolitan area, one office located in Coralville, Iowa, and four offices located in Minnesota, in the cities of Rochester, Owatonna, Mankato and St. Cloud. As used herein, the term “Company” refers to West Bancorporation, Inc., or if the context dictates, West Bancorporation, Inc. and its subsidiary.
Significant accounting policies:
Accounting estimates and assumptions: 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 CodificationTM, 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 of financial instruments and the allowance for credit losses.
Segment information: An operating segment is generally defined as a component of a business for which discrete financial information is available and whose operating results are regularly reviewed by the chief operating decision maker. As a community-oriented financial institution, substantially all of West Bank’s operations involve the delivery of loan and deposit products to customers. The chief operating decision maker makes operating decisions and assesses performance based on an ongoing review of the community banking activities, which constitutes the Company’s only operating segment for financial reporting purposes. The Company’s single segment is managed on a consolidated basis by the chief operating decision maker, which is the Company’s chief executive officer.
Cash and cash equivalents and cash flows: For statement of cash flow purposes, the Company considers cash, due from banks, interest-earning deposits with banks and securities purchased under agreements to resell to be cash and cash equivalents. Securities purchased under agreements to resell are short-term investments with maturities of 30 days. Cash inflows and outflows from loans, deposits, federal funds purchased and short-term borrowings and FHLB advances with maturities less than 30 days are reported on a net basis.
Securities Available for Sale: Securities that may be sold for general liquidity needs, in response to market interest rate fluctuations, implementation of asset-liability management strategies, funding loan demand, changes in securities prepayment risk or other similar factors are classified as available for sale and reported at fair value, with unrealized gains and losses reported as a separate component of accumulated other comprehensive income (AOCI), net of deferred income taxes. Realized gains and losses on sales of securities are computed on a specific identification basis based on amortized cost.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The amortized cost of securities available for sale is adjusted for accretion of discounts to maturity and amortization of premiums over the estimated life of each security or, in the case of callable securities, through the first call date, using the effective yield method. Such amortization and accretion is included in interest income. Interest income on securities is recognized using the interest method according to the terms of the security.
Federal Home Loan Bank stock: West Bank, as a member of the FHLB system, is required to maintain an investment in capital stock of the FHLB according to a predetermined formula as required to support borrowing activities. No ready market exists for the FHLB stock, and it has no quoted market value. The Company evaluates this asset for impairment on a quarterly basis and determined there was no impairment as of December 31, 2025. All shares of FHLB stock are issued and redeemed at par value.
Delinquencies are determined based on the payment terms of the individual loan agreements. The accrual of interest on past due and other impaired loans is generally discontinued at 90 days past due or when, in the opinion of management, the borrower may be unable to make all payments pursuant to contractual terms. Unless considered collectible, all interest accrued but not collected for loans that are placed on nonaccrual or charged off is reversed against interest income, if accrued in the current year, or charged to the allowance for credit losses, if accrued in a prior year. Generally, all payments received while a loan is on nonaccrual status are applied to the principal balance of the loan. Loans are returned to accrual status when all principal and interest amounts contractually due are brought current and future payments are reasonably assured.
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. If it is determined that a loan on the Watch List no longer shares risk characteristics with the pooled loans, it will be individually evaluated for credit losses. For collateral dependent loans where the Company 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. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan.
Allowance for credit losses: The allowance for credit losses 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. 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.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The Company measures the ACL of loans on a collective (pool) basis when the loans share similar risk characteristics and uses a cash flow-based model 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. In addition to the historical loss information, the Company utilizes qualitative factors to adjust the ACL as appropriate. Qualitative factors are based on management’s judgment of the changes in underlying loan composition of specific portfolios, trends relating to credit quality and collateral values, company-specific data, or effects of other factors such as market competition or legal and regulatory requirements. Loans that do not share similar risk characteristics with the pooled loans are evaluated for credit losses on an individual basis. In addition, regulatory agencies, as integral parts of their examination processes, periodically review the Company’s allowance for credit 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.
Premises and equipment: Premises and equipment are stated at cost less accumulated depreciation. The straight-line method of depreciation and amortization is used for calculating expense. The estimated useful lives of premises and equipment range up to 40 years for buildings, up to 10 years for furniture and equipment, and the shorter of the estimated useful life or lease term for leasehold improvements.
The Company reviews its property and equipment whenever events indicate that the carrying amount of an asset group may not be recoverable. An impairment loss is recorded when the sum of the undiscounted future cash flows is less than the carrying amount of the asset group. An impairment loss is measured as the amount by which the carrying amount of the asset group exceeds its fair value.
Bank-owned life insurance: The carrying amount of bank-owned life insurance consists of the initial premium paid, plus increases in cash value, less the carrying amount associated with any death benefit received. Death benefits paid in excess of the applicable carrying amount are recognized as income. Increases in cash value and the portion of death benefits recognized as income are exempt from income taxes.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Derivatives: The Company uses derivative financial instruments, which consist of interest rate swaps and interest rate collars, to assist in its interest rate risk management. All derivatives are measured and reported at fair value on the Company’s consolidated balance sheet as other assets or other liabilities. The Company records cash flow hedges at the inception of the derivative contract based on the Company’s intentions and belief as to likely effectiveness as a hedge. The Company documents the strategy for entering into the transactions and the method of assessing ongoing effectiveness. Cash flow hedges represent a hedge of a forecasted transaction or the variability of cash flows to be received or paid related to a recognized asset or liability. For a cash flow hedge that is effective, the gain or loss on the derivative is reported in other comprehensive income and is reclassified into earnings in the same periods during which the hedged transaction affects earnings. The changes in the fair value of derivatives that are not highly effective in hedging the changes in expected cash flows of the hedged item are recognized immediately in current earnings. All of the Company’s cash flow hedges qualify for hedge accounting and are considered highly effective.
Net cash settlements on derivatives that qualify for hedge accounting are recorded in interest income or interest expense, based on the item being hedged. Cash flows on hedges are classified in the cash flow statement the same as the cash flows of the items being hedged. To determine fair value, the Company uses third-party pricing models that incorporate assumptions about market conditions and risks that are current at the reporting date. The Company does not use derivative instruments for trading or speculative purposes.
The Company formally assesses, both at the hedge’s inception and on an ongoing basis, whether the derivative instruments that are used are highly effective in offsetting changes in cash flows of the hedged items. The Company discontinues hedge accounting when it determines that the derivative is no longer effective in offsetting changes in the fair value or cash flows of the hedged item, the derivative is settled or terminates, a hedged forecasted transaction is no longer probable, a hedged firm commitment is no longer firm, or treatment of the derivative as a hedge is no longer appropriate or intended. When hedge accounting is discontinued, subsequent changes in fair value of the derivative are recorded as noninterest income. When a cash flow hedge is discontinued but the hedged cash flows or forecasted transactions are still expected to occur, gains or losses that were accumulated in other comprehensive income are amortized into earnings over the same periods in which the hedged transactions will affect earnings.
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 customer accommodations and any offsetting swaps are treated as non-hedging derivative instruments which do not qualify for hedge accounting.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Income taxes: The Company files a consolidated federal income tax return. Income tax expense is generally allocated as if the Company and its subsidiary file separate income tax returns. Deferred taxes are provided on an asset and liability method whereby deferred tax assets are recognized for deductible temporary differences, capital losses and net operating losses, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
When tax returns are filed, it is highly certain that some tax positions taken will be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the positions taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the consolidated financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. The evaluation of a tax position taken is considered by itself and is not offset or aggregated with other positions. Tax positions that meet the more likely than not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. Management does not believe the Company has any material uncertain tax positions to disclose.
Interest and penalties, if any, related to income taxes are recorded as other noninterest expense in the consolidated income statements in the year assessed.
Current accounting developments: In October 2023, the FASB issued ASU No. 2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative. The ASU incorporates certain SEC disclosure requirements into the FASB Accounting Standards CodificationTM.. The amendments in the ASU are expected to clarify or improve disclosure presentation requirements of a variety of Codification Topics, allow users to more easily compare entities subject to the SEC’s existing disclosures with those entities that were not previously subject to the requirements, and align the requirements in the Codification with the SEC’s regulations. For entities subject to the SEC’s existing disclosure requirements and for entities required to file or furnish financial statements with or to the SEC in preparation for the sale of or for purposes of issuing securities that are not subject to contractual restrictions on transfer, the effective date for each amendment will be the date on which the SEC removes that related disclosure from its rules. For all other entities, the amendments will be effective two years later. However, if by June 30, 2027, the SEC has not removed the related disclosure from its regulations, the amendments will be removed from the Codification and not become effective for any entity. These amendments have not had an impact to the Company as of December 31, 2025.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU is intended to improve the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the rate reconciliation table and income taxes paid to be disaggregated by jurisdiction. It also includes certain amendments to improve the effectiveness of income tax disclosures. For public business entities, the amendments are effective for fiscal years beginning after December 15, 2024. The Company adopted this guidance effective January 1, 2025. Refer to Note 12 and the Consolidated Statements of Cash Flows for additional information.
In November 2024, the FASB issued ASU No. 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The amendments in this ASU require public companies to disclose, in the notes to the financial statements, specified information about certain costs and expenses at each interim and annual reporting period. Additionally, in January 2025, the FASB issued ASU No. 2025-01, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This ASU amends the effective date of ASU No. 2024-03 to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of ASU No. 2024-03 is permitted. The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.
In November 2025, the FASB issued ASU No. 2025-08, Financial Instruments-Credit Losses (Topic 326): Purchased Loans. The ASU expands the population of acquired financial assets accounted for using the “gross-up approach” when recording the initial allowance for credit losses through an adjustment to the initial amortized cost basis. Acquired loans are deemed purchased seasoned loans and accounted for using the gross-up approach upon acquisition if criteria established by the new guidance are met. This change aims to enhance comparability, consistency and better reflect the economics of acquiring financial assets. This ASU is effective for annual reporting periods beginning after December 15, 2026 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.
In November 2025, the FASB issued ASU No. 2025-09, Derivatives and Hedging (Topic 815): Hedge Accounting Improvements. The ASU enables entities to apply hedge accounting to a greater number of highly effective economic hedges in multiple areas. The ASU expands the hedged risks permitted to be aggregated in a group of individual forecasted transactions, enabling entities to apply hedge accounting to potentially broader portfolios of forecasted transactions. The ASU is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. The ASU clarifies the applicability of the interim reporting guidance, the types of interim reporting, and the form and content of interim financial statements in accordance with generally accepted accounting principles. The amendments in this ASU are effective for public business entities for interim periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The amendments can be applied either prospectively or retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.
In December 2025, the FASB issued ASU No. 2025-12, Codification Improvements. The amendments in this ASU update the FASB Accounting Standards Codification for a broad range of topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. The amendments in this ASU are effective for all entities for annual periods beginning after December 15, 2026, and interim periods within those annual periods. Early adoption is permitted in both interim and annual periods in which financial statements have not yet been issued or made available for issuance. An entity may elect to adopt the amendments on an issue-by-issue basis. The Company is currently evaluating the impact of the ASU on the Company’s consolidated financial statements.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 2. Earnings per Common Share
The calculation of earnings per common share and diluted earnings per common share is presented below for the years ended December 31, 2025, 2024 and 2023.
| (in thousands, except per share data) | 2025 | 2024 | 2023 | ||||||||||||||
| Net income | $ | $ | $ | ||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||
| Weighted average effect of restricted stock units outstanding | |||||||||||||||||
| Diluted weighted average common shares outstanding | |||||||||||||||||
| Basic earnings per common share | $ | $ | $ | ||||||||||||||
| Diluted earnings per common share | $ | $ | $ | ||||||||||||||
Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation | |||||||||||||||||
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 3. Securities Available for Sale
The following tables show the amortized cost, gross unrealized gains and losses and fair value of securities available for sale, by security type as of December 31, 2025 and 2024.
| 2025 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Securities available for sale: | |||||||||||||||||||||||
| State and political subdivisions | $ | $ | $ | ( | $ | ||||||||||||||||||
Collateralized mortgage obligations (1) | ( | ||||||||||||||||||||||
Mortgage-backed securities (1) | ( | ||||||||||||||||||||||
| Collateralized loan obligations | ( | ||||||||||||||||||||||
| Corporate notes | ( | ||||||||||||||||||||||
| $ | $ | $ | ( | $ | |||||||||||||||||||
| 2024 | |||||||||||||||||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||||||||||
| Securities available for sale: | |||||||||||||||||||||||
| State and political subdivisions | $ | $ | $ | ( | $ | ||||||||||||||||||
Collateralized mortgage obligations (1) | ( | ||||||||||||||||||||||
Mortgage-backed securities (1) | ( | ||||||||||||||||||||||
| Collateralized loan obligations | |||||||||||||||||||||||
| Corporate notes | ( | ||||||||||||||||||||||
| $ | $ | $ | ( | $ | |||||||||||||||||||
(1)Collateralized mortgage obligations and mortgage-backed securities consist of residential and commercial mortgage pass-through securities and collateralized mortgage obligations guaranteed by FNMA, FHLMC, GNMA and SBA.
Securities with a fair value of approximately $418,670 and $455,825 as of December 31, 2025 and 2024, respectively, were pledged as collateral for borrowings and public fund deposits, and for other purposes as required or permitted by law or regulation.
The amortized cost and fair value of securities available for sale as of December 31, 2025, 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 and 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 and mortgage-backed securities are not included in the maturity categories within the following maturity summary.
| 2025 | |||||||||||
| Amortized Cost | Fair Value | ||||||||||
| Due after five years through ten years | $ | $ | |||||||||
| Due after ten years | |||||||||||
| Collateralized mortgage obligations and mortgage-backed securities | |||||||||||
| $ | $ | ||||||||||
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The details of the sales of securities available for sale for the years ended December 31, 2025, 2024 and 2023 are summarized in the following table.
| 2025 | 2024 | 2023 | |||||||||||||||
| Proceeds from sales | $ | $ | $ | ||||||||||||||
| Gross gains on sales | |||||||||||||||||
| Gross losses on sales | |||||||||||||||||
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 December 31, 2025 and 2024.
| 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | $ | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Collateralized loan obligations | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate notes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | $ | ( | $ | $ | ( | $ | $ | ( | |||||||||||||||||||||||||||||||||||||||||
| Collateralized mortgage obligations | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities | ( | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||
| Corporate notes | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||
| $ | $ | ( | $ | $ | ( | $ | $ | ( | ||||||||||||||||||||||||||||||||||||||||||
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 4. Loans and Allowance for Credit Losses
Loans consisted of the following segments as of December 31, 2025 and 2024.
| 2025 | 2024 | ||||||||||
| Commercial | $ | $ | |||||||||
| Real estate: | |||||||||||
| Construction, land and land development | |||||||||||
| 1-4 family residential first mortgages | |||||||||||
| Home equity | |||||||||||
| Commercial | |||||||||||
| Consumer and other | |||||||||||
| Net unamortized fees and costs | ( | ( | |||||||||
| $ | $ | ||||||||||
The loan portfolio included $1,828,208 and $1,878,063 of fixed-rate loans and $1,176,034 and $1,129,950 of variable-rate loans as of December 31, 2025 and 2024, respectively.
Real estate loans of approximately $1,540,000 and $1,470,000 were pledged as security for FHLB advances as of December 31, 2025 and 2024, respectively.
The Company has had, and may be expected to have in the future, banking transactions in the ordinary course of business with directors, executive officers, their immediate families, and affiliated companies in which they are principal stockholders or executive officers (commonly referred to as related parties), all of which have been originated, in the opinion of management, on the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with unrelated parties. None of these loans are past due, on nonaccrual status or restructured to provide a reduction or deferral of interest or principal because of deterioration in the financial position of the borrower. There were no loans to a related party that the Company considered adversely classified at December 31, 2025 or 2024. Loan transactions with related parties were as follows for the years ended December 31, 2025, 2024 and 2023.
| 2025 | 2024 | 2023 | |||||||||||||||
| Balance, beginning of year | $ | $ | $ | ||||||||||||||
| New loans | |||||||||||||||||
| Repayments | ( | ( | ( | ||||||||||||||
| Effect of change in director status | ( | ||||||||||||||||
| Balance, end of year | $ | $ | $ | ||||||||||||||
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Allowance for Credit Losses for Loans
The following tables detail the changes in the ACL by loan segment for the years ended December 31, 2025, 2024 and 2023.
| 2025 | |||||||||||||||||||||||||||||||||||||||||
| Real Estate | |||||||||||||||||||||||||||||||||||||||||
| Commercial | Construction and Land | 1-4 Family Residential | Home Equity | Commercial | Consumer and Other | Total | |||||||||||||||||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||
Provision for credit loss expense(1) | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||||||||||||||
| Real Estate | |||||||||||||||||||||||||||||||||||||||||
| Commercial | Construction and Land | 1-4 Family Residential | Home Equity | Commercial | Consumer and Other | Total | |||||||||||||||||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||
Provision for credit loss expense (1) | ( | ||||||||||||||||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| 2023 | |||||||||||||||||||||||||||||||||||||||||
| Real Estate | |||||||||||||||||||||||||||||||||||||||||
| Commercial | Construction and Land | 1-4 Family Residential | Home Equity | Commercial | Consumer and Other | Total | |||||||||||||||||||||||||||||||||||
| Beginning balance | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| Adoption of CECL | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||
| Charge-offs | ( | ( | ( | ( | |||||||||||||||||||||||||||||||||||||
| Recoveries | |||||||||||||||||||||||||||||||||||||||||
Provision for credit loss expense (1) | ( | ( | |||||||||||||||||||||||||||||||||||||||
| Ending balance | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
(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.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The following tables present a breakdown of the allowance for credit losses by segment, disaggregated based on the evaluation method as of December 31, 2025 and 2024.
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
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 December 31, 2025 and 2024.
| December 31, 2025 | |||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
74
Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
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 principal balance outstanding, adjusted by any partial charge-offs and net of deferred loan costs and fees. 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 $9,341 and $9,835 at December 31, 2025 and 2024, 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 basis for pools of loans with similar risk characteristics and uses a cash flow-based model 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. In addition to the historical loss information, the Company utilizes qualitative factors to adjust the ACL as appropriate. Qualitative factors are based on management’s judgment of the changes in underlying loan composition of specific portfolios, trends relating to credit quality and collateral values, company-specific data, or effects of other factors such as market competition or legal and regulatory requirements.
The Company uses a 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 a 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.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share 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 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. 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.
The following table presents the amortized cost basis of loans on nonaccrual status, loans on nonaccrual status with no allowance for credit losses recorded, and loans past due 90 days 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 | |||||||||||||||||||||||||||||||||
| December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | December 31, 2025 | December 31, 2024 | ||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Real estate: | |||||||||||||||||||||||||||||||||||
| Construction, land and land | |||||||||||||||||||||||||||||||||||
| development | |||||||||||||||||||||||||||||||||||
| 1-4 family residential first | |||||||||||||||||||||||||||||||||||
| mortgages | |||||||||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||
| Consumer and other | |||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
There was $18 and $91 interest income recognized on loans that were on nonaccrual for the years ended December 31, 2025 and 2024, respectively.
Interest income forgone on nonaccrual loans was $5 , $19 and $15 , respectively, during the years ended December 31, 2025, 2024 and 2023.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The following tables provide an analysis of the delinquency status of the amortized cost of loans as of December 31, 2025 and 2024.
| December 31, 2025 | ||||||||||||||||||||||||||||||||||||||
| 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Total Past Due | Current | Total Loans | |||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Real estate: | ||||||||||||||||||||||||||||||||||||||
| Construction, land and | ||||||||||||||||||||||||||||||||||||||
| land development | ||||||||||||||||||||||||||||||||||||||
| 1-4 family residential | ||||||||||||||||||||||||||||||||||||||
| first mortgages | ||||||||||||||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||||||||
| Consumer and other | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||||||||
| 30-59 Days Past Due | 60-89 Days Past Due | 90 Days or More Past Due | Total Past Due | Current | Total Loans | |||||||||||||||||||||||||||||||||
| Commercial | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Real estate: | ||||||||||||||||||||||||||||||||||||||
| Construction, land and | ||||||||||||||||||||||||||||||||||||||
| land development | ||||||||||||||||||||||||||||||||||||||
| 1-4 family residential | ||||||||||||||||||||||||||||||||||||||
| first mortgages | ||||||||||||||||||||||||||||||||||||||
| Home equity | ||||||||||||||||||||||||||||||||||||||
| Commercial | ||||||||||||||||||||||||||||||||||||||
| Consumer and other | ||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||
Loan Restructurings Made to Borrowers Experiencing Financial Difficulty
As of December 31, 2025 and 2024, the Company had no no
77
Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
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. If it is determined that a loan on the Watch List no longer shares risk characteristics with the pooled loans, it will be individually evaluated for credit losses.
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.
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.
Risk rating 7: The loan is inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any. Well-defined weaknesses exist that jeopardize the liquidation of the debt. The Company is inadequately protected by the valuation or paying capacity of the collateral pledged. If deficiencies are not corrected, there is a distinct possibility that a loss will be sustained.
Risk rating 8: All the characteristics of rating 7 exist with the added condition that the loan is past due more than 90 days or there is reason to believe the Company will not receive its principal and interest according to the terms of the loan agreement.
Risk rating 9: All the weaknesses inherent in risk ratings 7 and 8 exist with the added condition that collection or liquidation, on the basis of currently known facts, conditions and values, is highly questionable and improbable. A loan reaching this category would most likely be charged off.
Credit quality indicators for all loans and the Company's risk rating process are dynamic and updated on a continuous basis. Risk ratings are updated as circumstances that could affect the repayment of an individual loan are brought to management's attention through an established internal credit monitoring process. 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 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.
78
Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
In all portfolio segments, the primary risks are that a borrower's income stream diminishes to the point that the borrower is not able to make scheduled principal and interest payments and any collateral securing the loan declines in value. The risk of declining collateral values is present for most types of loans.
Commercial loans consist primarily of loans to businesses for various purposes, including revolving lines to finance current operations, inventory and accounts receivable, and capital expenditure loans to finance equipment and other fixed assets. These loans generally have short maturities, have either adjustable or fixed interest rates, and are either unsecured or secured by inventory, accounts receivable and/or fixed assets. For commercial loans, the primary source of repayment is from the operation of the business.
Real estate loans include various types of loans for which the Company holds real property as collateral, and consist of loans on commercial properties and single and multifamily residences. Real estate loans are typically structured to mature or reprice every five to ten years with payments based on amortization periods up to 30 years. The majority of construction loans are to contractors and developers for construction of commercial buildings or residential real estate. These loans typically have maturities of up to 24 months. The Company's loan policy includes minimum appraisal and other credit guidelines.
Consumer loans include loans extended to individuals for household, family and other personal expenditures not secured by real estate. The majority of the Company's consumer lending is for vehicles, consolidation of personal debts and household improvements. The repayment source for consumer loans, including 1-4 family residential and home equity loans, is typically wages.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The following tables present the amortized cost basis of loans by loan segment, credit quality indicator and origination year, and the current period gross charge-off by loan segment and origination year, based on the analysis performed as of December 31, 2025 and 2024.
| Term Loans by Origination Year | |||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2025 | 2025 | 2024 | 2023 | 2022 | 2021 | Prior | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Real estate: | |||||||||||||||||||||||||||||||||||||||||||||||
| Construction, land and land development | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| 1-4 family residential first mortgages | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Consumer and other | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
| Term Loans by Origination Year | |||||||||||||||||||||||||||||||||||||||||||||||
| December 31, 2024 | 2024 | 2023 | 2022 | 2021 | 2020 | Prior | Revolving Loans | Total | |||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Real estate: | |||||||||||||||||||||||||||||||||||||||||||||||
| Construction, land and land development | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| 1-4 family residential first mortgages | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Home equity | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Commercial | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Consumer and other | |||||||||||||||||||||||||||||||||||||||||||||||
| Pass | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Watch | |||||||||||||||||||||||||||||||||||||||||||||||
| Substandard | |||||||||||||||||||||||||||||||||||||||||||||||
| Doubtful | |||||||||||||||||||||||||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
| Current period gross charge-offs | $ | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Collateral Dependent Loans
Loans that do not share risk characteristics are evaluated on an individual basis. For collateral dependent loans where the Company 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 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 losses are calculated as the amount by which the amortized cost basis of the loan exceeds the fair value of the underlying collateral less estimated cost to sell. The ACL may be zero if the fair value of the collateral at the measurement date exceeds the amortized cost basis of the loan.
The 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 December 31, 2025 and 2024.
| As of December 31, 2025 | |||||||||||||||||||||||||||||
| Primary Type of Collateral | |||||||||||||||||||||||||||||
| Real Estate | Equipment | Other | Total | ACL Allocation | |||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| As of December 31, 2024 | |||||||||||||||||||||||||||||
| Primary Type of Collateral | |||||||||||||||||||||||||||||
| Real Estate | Equipment | Other | Total | ACL Allocation | |||||||||||||||||||||||||
| 1-4 family residential first mortgages | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
| Total | $ | $ | $ | $ | $ | ||||||||||||||||||||||||
Allowance for Credit Losses on Off-Balance Sheet Credit Exposures
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 5. Premises and Equipment, Net
Premises and equipment consisted of the following as of December 31, 2025 and 2024.
| 2025 | 2024 | ||||||||||
| Land | $ | $ | |||||||||
| Buildings | |||||||||||
| Right-of-use assets under operating leases | |||||||||||
| Leasehold improvements | |||||||||||
| Furniture and equipment | |||||||||||
| Accumulated depreciation | ( | ( | |||||||||
| $ | $ | ||||||||||
Note 6. Operating Leases
The Company leases real estate for four branch offices. The lease agreements have maturity dates ranging from September 2030 to September 2036, some of which include options to renew at the Company's discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the measurement of the right-of-use asset and lease liability. The weighted average remaining lives of the lease terms used in the measurement of the operating lease liability were 8.7 years and 9.6 years as of December 31, 2025 and 2024, respectively.
The discount rate used in determining the lease liability at lease commencement or extension is the FHLB fixed advance rate which corresponds with the remaining lease term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019, was used. The weighted average discount rates used in the measurement of the operating lease liabilities were 4.07 percent and 4.06 percent as of December 31, 2025 and 2024, respectively.
Operating lease right-of-use assets are included in premises and equipment. Operating lease liabilities of $4,140 and $4,551 were included in other liabilities as of December 31, 2025 and 2024, respectively. Rent expense related to these leases was $573 , $972 and $1,510 , for the years ended December 31, 2025, 2024 and 2023, respectively.
Total estimated rental commitments for the operating leases were as follows as of December 31, 2025.
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| Thereafter | |||||
| Total lease payments | |||||
| Less: present value discount | ( | ||||
| Present value of lease liabilities | $ | ||||
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 7. Deposits
The scheduled maturities of time deposits were as follows as of December 31, 2025.
| 2026 | $ | ||||
| 2027 | |||||
| 2028 | |||||
| 2029 | |||||
| 2030 | |||||
| $ | |||||
Note 8. Subordinated Notes
In July 2003, the Company issued $20,619 in junior subordinated debentures to the Company’s subsidiary trust, West Bancorporation Capital Trust I. The junior subordinated debentures are senior to the Company’s common stock. As a result, the Company must make payments on the junior subordinated debentures (and the related trust preferred securities) before any dividends can be paid on its common stock, and, in the event of the Company’s bankruptcy, dissolution or liquidation, the holders of the debentures must be satisfied before any distribution can be made to the holders of the common stock. The Company has the right to defer distributions on the junior subordinated debentures (and the related trust preferred securities) for up to five years , during which time no dividends may be paid to holders of the Company’s common stock. The junior subordinated debentures have a 30-year term, do not require any principal amortization, and are callable at the issuer’s option. The interest rate is a variable rate based on the 3-month term Secured Overnight Financing Rate (SOFR) plus 0.26161 percent tenor spread adjustment plus 3.05 percent. At December 31, 2025, the interest rate was 7.00 percent. Interest is payable quarterly , unless deferred. The Company has never deferred an interest payment. The effective cost of the junior subordinated debentures at December 31, 2025, including amortization of issuance costs, was 7.06 percent. Holders of the trust preferred securities associated with the junior subordinated debentures have no voting rights, are unsecured, and rank junior in priority to all the Company’s indebtedness and senior to the Company’s common stock. The junior subordinated debentures were reported net of unamortized debt issuance costs of $101 and $114 as of December 31, 2025 and 2024, respectively. The Company has an interest rate swap contract that effectively converts $20,000 of the variable-rate junior subordinated debentures to a fixed rate of 4.81 percent. See Note 11 for additional information on the interest rate swap. In addition, the junior subordinated debentures qualify as additional Tier 1 capital of the Company for regulatory purposes.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 9. Federal Home Loan Bank Advances and Other Borrowings
The Company had fixed-rate FHLB advances totaling $270,000 3.95 percent and 4.62 percent as of December 31, 2025 and December 31, 2024, respectively. The weighted average effective rate for these advances, which includes adjustments for the interest rate swaps, when applicable, was 3.39
The FHLB advances are collateralized by FHLB stock and real estate loans, as required by the FHLB’s collateral policy. West Bank had additional borrowing capacity of approximately $649,000 at the FHLB as of December 31, 2025.
Note 10. Long-Term Debt
In December 2021, the Company entered into a credit agreement with a commercial bank and borrowed $40,000 . Interest under the term note is payable quarterly over five years. Required quarterly principal payments are $1,250 , with the remaining balance due February 2027. The Company may make additional principal payments without penalty. The interest rate is variable at the Wall Street Journal Prime Rate minus 1.00 percent, which totaled 5.75 percent as of December 31, 2025. The Company has an interest rate swap contract that effectively converts $20,000 of the borrowings to a fixed rate of 6.40 percent. See Note 11 for additional information on the interest rate swap. In the event of default, the unaffiliated commercial bank may accelerate payment of the loan. The outstanding principal balance of the loan was $26,250 and $31,250 as of December 31, 2025 and 2024, respectively. The loan is secured by 100 percent of West Bank’s stock.
Future required principal payments for long-term debt as of December 31, 2025 are shown in the table below.
| 2026 | $ | ||||
| 2027 | |||||
| $ | |||||
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 11. Derivatives
The Company has entered into various interest rate swap and interest rate collar agreements as part of its interest rate risk management strategy. The Company uses interest rate derivatives to manage its interest rate risk exposure on certain loans, borrowings, and deposits due to interest rate movements. The notional amounts of the interest rate derivatives do not represent amounts exchanged by the counterparties, but rather, the notional amount is used to determine, along with other terms of the derivative, the amounts to be exchanged between the counterparties.
Interest Rate Derivatives Designated as Cash Flow Hedges: The Company had interest rate derivatives designated as cash flow hedges with total notional amounts of $380,000 and $420,000 at December 31, 2025 and 2024, respectively. As of December 31, 2025, the Company had interest rate swaps with a total notional amount of $270,000 that hedge the interest payments of rolling fixed-rate one-month funding consisting of FHLB advances or brokered deposits. Also, as of December 31, 2025, the Company had interest rate swaps with a total notional amount of $40,000 that effectively convert variable-rate long-term debt to fixed-rate debt and swaps with a total notional amount of $70,000 that hedge the interest payments of certain deposit accounts.
The Company had interest rate collars designated as cash flow hedges with total notional amounts of $100,000 and $0 as of December 31, 2025 and 2024, respectively. The Company enters into interest rate collars to mitigate interest rate risk on certain customer deposits. The structure of the interest rate collars is such that the Company pays the counterparty an incremental amount if the index rate falls below the floor rate. Conversely, the Company receives an incremental amount if the index rises above the cap rate.
At the inception of each hedge transaction, the Company represented that the underlying principal balance would remain outstanding throughout the hedge transaction, making it probable that sufficient interest payments would exist through the maturity date of the derivatives. The cash flow hedges were determined to be fully effective during the remaining terms of the derivatives. Therefore, the aggregate fair value of the derivatives is recorded in other assets or other liabilities with changes in market value recorded in OCI, net of deferred taxes. See Note 18 for additional fair value information and disclosures. The amounts included in AOCI will be reclassified to interest expense should the hedge no longer be considered effective.
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.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The table below identifies the balance sheet category and fair values of the Company’s derivative instruments as of December 31, 2025 and 2024.
| December 31, 2025 | December 31, 2024 | ||||||||||
| Cash Flow Hedges: | |||||||||||
Interest Rate Swaps: | |||||||||||
Gross notional amount | $ | $ | |||||||||
Fair value in other assets | |||||||||||
Fair value in other liabilities | ( | ( | |||||||||
Weighted-average floating rate received | % | % | |||||||||
Weighted-average fixed rate paid | % | % | |||||||||
Weighted-average maturity in years | |||||||||||
Interest Rate Collars: | |||||||||||
Gross notional amount | $ | $ | |||||||||
Fair value in other assets | |||||||||||
Fair value in other liabilities | ( | ||||||||||
Weighted-average maturity in years | |||||||||||
| Non-Hedging Derivatives: | |||||||||||
Gross notional amount | $ | $ | |||||||||
Fair value in other assets | |||||||||||
Fair value in other liabilities | ( | ( | |||||||||
The following table identifies the pre-tax gains or losses recognized on the Company’s derivative instruments designated as cash flow hedges for the years ended December 31, 2025, 2024 and 2023.
| 2025 | 2024 | 2023 | |||||||||||||||
| Pre-tax gain (loss) recognized in other comprehensive income | $ | ( | $ | $ | |||||||||||||
| Decrease in interest expense | ( | ( | ( | ||||||||||||||
The Company estimates there will be approximately $2,028 reclassified from accumulated other comprehensive income to reduce interest expense through December 31, 2026 related to cash flow hedges. The Company will continue to assess the effectiveness of hedges on a quarterly basis.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 12. Income Taxes
The Company files income tax returns in the U.S. federal and various state jurisdictions. Income tax returns for the years 2022 through 2025 remain open to examination by federal and state taxing authorities. No
The following table shows the components of income taxes for the years ended December 31, 2025, 2024 and 2023.
| 2025 | 2024 | 2023 | |||||||||||||||
| Current: | |||||||||||||||||
| Federal | $ | $ | ( | $ | |||||||||||||
| State | |||||||||||||||||
| Deferred: | |||||||||||||||||
| Federal | |||||||||||||||||
| State | |||||||||||||||||
| Income taxes | $ | $ | $ | ||||||||||||||
Total income taxes for the years ended December 31, 2025, 2024 and 2023 differed from the amount computed by applying the U.S. federal income tax rate of 21 percent to income before income taxes, as shown in the following table.
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Amount | Percent of Pretax Income | Amount | Percent of Pretax Income | Amount | Percent of Pretax Income | ||||||||||||||||||||||||||||||
| Income taxes at statutory federal tax rate | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||
| State income tax expense, net of | |||||||||||||||||||||||||||||||||||
| federal income tax benefit | |||||||||||||||||||||||||||||||||||
| Tax credits | |||||||||||||||||||||||||||||||||||
| Low income housing credits | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| New markets tax credit | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Energy-related investment tax credit | ( | ( | ( | ( | |||||||||||||||||||||||||||||||
| Nontaxable or Nondeductible Items | |||||||||||||||||||||||||||||||||||
| Tax-exempt interest income | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Nondeductible interest expense to | |||||||||||||||||||||||||||||||||||
| own tax-exempt securities | |||||||||||||||||||||||||||||||||||
| Tax-exempt increase in cash value of | |||||||||||||||||||||||||||||||||||
| life insurance and gains | ( | ( | ( | ( | ( | ( | |||||||||||||||||||||||||||||
| Stock compensation | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Other, net | |||||||||||||||||||||||||||||||||||
| Income taxes | $ | % | $ | % | $ | % | |||||||||||||||||||||||||||||
In 2024, the Company recorded a tax benefit of $1,842 for an energy-related investment tax credit associated with the construction of the Company’s new headquarters building. The Company accounted for the investment tax credit using the flow-through method, recognizing the full benefit in 2024. In 2025, the Company recorded an additional tax benefit of $614 due to a change in estimate of the 2024 energy-related investment tax credit.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
On July 4, 2025, the One Big Beautiful Bill Act (the Act) was enacted into law. The Act introduces significant changes to U.S. federal income tax provisions, including:
•Permanent reinstatement of 100 percent bonus depreciation for qualifying property placed in service after January 19, 2025.
•Immediate expensing of domestic research and experimental expenditures, effective for tax years beginning after December 31, 2024.
•IRC Section 139L provided for a 25 percent exclusion of gross interest income on eligible loans. For the tax year December 31, 2025, no eligible loans were identified.
•Under ASC 740, the effects of new tax legislation are recognized in the period that includes the enactment date. Accordingly, the Company included the recognized impact of these legislative changes as of the enactment date. These provisions did not have a material impact on the consolidated financial statements.
Net deferred tax assets consisted of the following components as of December 31, 2025 and 2024.
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | $ | |||||||||
| Net unrealized losses on securities available for sale | |||||||||||
| Lease liabilities | |||||||||||
| Accrued expenses | |||||||||||
| Restricted stock unit compensation | |||||||||||
| State net operating loss carryforward | |||||||||||
| Other | |||||||||||
| Deferred tax liabilities: | |||||||||||
| Right-of-use assets | |||||||||||
| Deferred loan costs | |||||||||||
| Net unrealized gains on interest rate swaps | |||||||||||
| Premises and equipment | |||||||||||
| New markets tax credit loan | |||||||||||
| Other | |||||||||||
| Net deferred tax assets before valuation allowance | |||||||||||
| Valuation allowance for deferred tax assets | ( | ( | |||||||||
| Net deferred tax assets | $ | $ | |||||||||
As of December 31, 2025, the Company had approximately $58,134 of Iowa net operating loss carryforwards available to offset future Iowa taxable income. The Company has recorded a valuation allowance against the tax effect of the Iowa net operating loss carryforwards, as management believes it is more likely than not that a portion of such carryforwards will expire without being utilized. No Iowa net operating loss carryforwards expired in 2025 . Iowa net operating losses incurred on or before 2022 have a 20-year carryforward period. Iowa net operating losses incurred in or after 2023 do not expire.
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Table of Contents
West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 13. Stock Compensation Plans
The West Bancorporation, Inc. 2021 Equity Incentive Plan (as amended, the 2021 Plan) was originally approved by the stockholders in April 2021. The 2021 Plan replaced the West Bancorporation, Inc. 2017 Equity Incentive Plan (the 2017 Plan). Upon approval of the 2021 Plan, the 2017 Plan was frozen and no new grants will be made under that plan. Outstanding awards under the 2017 Plan will continue pursuant to their terms and provisions. The 2021 and 2017 Plans are administered by the Compensation Committee of the Board of Directors, which determines the specific individuals who will be granted awards under the 2021 Plan and the type and amount of any such awards. The 2021 Plan was originally approved at the April 2021 annual stockholders’ meeting and authorized 625,000 shares, and at the April 2024 annual stockholders’ meeting, the Company obtained stockholder approval to increase the number of shares of common stock authorized for issuance under the 2021 Plan by 550,000 shares, from 625,000 shares to 1,175,000 shares. All employees and directors of the Company and its subsidiary are eligible to become participants in the 2021 Plan. Under the terms of the 2021 Plan, the Company may grant a total of 1,175,000 shares of the Company’s common stock as stock awards and cash incentive awards. As of December 31, 2025, 515,311 shares of the Company’s common stock remained available for future awards under the 2021 Plan.
Under the 2021 Plan, the Company may grant RSU awards, as determined by the Compensation Committee, that vest upon the completion of future service requirements or specified performance criteria. All RSUs granted through December 31, 2025 under the 2021 and 2017 Plans were at no cost to the participants, and the participants will not be entitled to receive or accrue dividends until the RSUs have vested. Each RSU entitles the participant to receive, to the extent earned, one share of common stock on the vesting date or upon the participant’s termination due to death or disability, for time-based RSUs, upon a change in control of the Company if the RSUs are not fully assumed or if the RSUs are assumed and the participant’s employment is thereafter terminated by the Company without cause or by the participant for good reason, or, for performance-based RSUs, upon a change in control of the Company. If a participant terminates employment prior to the end of the continuous service period other than due to death, disability or retirement, the award is forfeited. If a participant terminates service due to retirement, the RSUs will continue to vest, subject to provisions of the 2021 and 2017 Plans. The Company grants time-based and performance-based RSU awards. The time-based RSU awards granted to employees vest 20 percent per year over a five year period and have a one to three year post-vesting holding period, applicable to 50 percent of the shares. The time-based RSU awards granted to directors vest after one year and have a three year post-vesting holding period, applicable to 50 percent of the shares. The performance based RSU awards granted to employees cliff vest at the end of a three year performance period based upon the Company meeting certain performance metrics and have a three year post-vesting holding period applicable to 50 percent of the shares.
The following table includes a summary of nonvested RSU activity for the years ended December 31, 2025, 2024 and 2023.
| 2025 | 2024 | 2023 | |||||||||||||||||||||||||||||||||
| Weighted | Weighted | Weighted | |||||||||||||||||||||||||||||||||
| Average | Average | Average | |||||||||||||||||||||||||||||||||
| Grant Date | Grant Date | Grant Date | |||||||||||||||||||||||||||||||||
| Fair Value | Fair Value | Fair Value | |||||||||||||||||||||||||||||||||
| (actual amounts, not in thousands) | Shares | Per Share | Shares | Per Share | Shares | Per Share | |||||||||||||||||||||||||||||
| Nonvested shares, beginning balance | $ | $ | $ | ||||||||||||||||||||||||||||||||
| Granted | |||||||||||||||||||||||||||||||||||
| Vested | ( | ( | ( | ||||||||||||||||||||||||||||||||
| Forfeited | ( | ( | |||||||||||||||||||||||||||||||||
| Nonvested shares, ending balance | $ | $ | $ | ||||||||||||||||||||||||||||||||
The fair value of RSU awards that vested during 2025, 2024 and 2023 was $3,274 , $2,916 and $2,509 , respectively. Total compensation costs, including director compensation, recorded for the RSUs were $2,744 , $2,509 and $3,111 for the years ended December 31, 2025, 2024 and 2023, respectively. The tax benefit related to vesting of RSUs totaled $85 and $2 for the years ended December 31, 2025 and 2024, respectively. The tax expense related to the vesting of RSUs totaled $5 for the year ended December 31, 2023. As of December 31, 2025, there was $3,473 of unrecognized compensation cost related to nonvested RSUs, and the weighted average period over which these remaining costs are expected to be recognized was approximately 1.4 years.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 14. 401(k) Retirement Plan and Employee Stock Ownership Plan
The Company has a combined defined contribution plan and employee stock ownership plan covering substantially all of its employees. Matching and discretionary contributions are determined annually by the Board. The Company matched 100 six four 1,652 , $1,273 and $1,207 , respectively.
As of December 31, 2025 and 2024, the plan held 350,160 and 326,523 shares, respectively, of the Company’s common stock. These shares are included in the computation of earnings per share. Dividends on shares held in the plan may be reinvested in Company common stock or paid in cash to the participants, at the election of the participants.
Note 15. 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 years ended December 31, 2025, 2024 and 2023.
| Unrealized | Accumulated | ||||||||||||||||
| Unrealized | Gains | Other | |||||||||||||||
| Gains (Losses) | (Losses) on | Comprehensive | |||||||||||||||
| on Securities | Derivatives | Income (Loss) | |||||||||||||||
| Balance, December 31, 2022 | $ | ( | $ | $ | ( | ||||||||||||
| Other comprehensive income before reclassifications | |||||||||||||||||
| Amounts reclassified from accumulated other | |||||||||||||||||
| comprehensive income | ( | ( | |||||||||||||||
| Net current period other comprehensive income (loss) | ( | ||||||||||||||||
| Balance, December 31, 2023 | ( | ( | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||
| Amounts reclassified from accumulated other | |||||||||||||||||
| comprehensive income | ( | ( | |||||||||||||||
| Net current period other comprehensive loss | ( | ( | ( | ||||||||||||||
| Balance, December 31, 2024 | ( | ( | |||||||||||||||
| Other comprehensive income (loss) before reclassifications | ( | ||||||||||||||||
| Amounts reclassified from accumulated other | |||||||||||||||||
| comprehensive income | ( | ( | |||||||||||||||
| Net current period other comprehensive income (loss) | ( | ||||||||||||||||
| Balance, December 31, 2025 | $ | ( | $ | $ | ( | ||||||||||||
Note 16. Regulatory Capital Requirements
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 requirements. 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 December 31, 2025.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
The Company’s and West Bank’s capital ratios are presented in the following table as of December 31, 2025 and 2024.
| 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 December 31, 2025: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Capital (to Risk-Weighted Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 Capital (to Risk-Weighted Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| As of December 31, 2024: | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total Capital (to Risk-Weighted Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | $ | % | $ | % | $ | % | $ | % | ||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 Capital (to Risk-Weighted Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Common Equity Tier 1 Capital (to Risk-Weighted Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| Tier 1 Capital (to Average Assets) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Consolidated | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
| West Bank | % | % | % | % | ||||||||||||||||||||||||||||||||||||||||||||||
The Company and West Bank are subject to the rules of the Basel III regulatory capital framework and related Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules include the implementation of a 2.5 percent capital conservation buffer that is added to the minimum requirements for capital adequacy purposes. A banking organization with a 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 December 31, 2025, the capital ratios for the Company and West Bank were sufficient to meet the capital conservation buffer.
The ability of the Company to pay dividends to its stockholders is dependent upon dividends paid by its subsidiary, West Bank. There are currently no additional restrictions on such dividends other than the general restrictions imposed on all Iowa state-chartered banks by applicable law.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 17. Commitments and Contingencies
| 2025 | 2024 | ||||||||||
| Commitments to fund real estate construction loans | $ | $ | |||||||||
| Other commitments to extend credit | |||||||||||
| Standby letters of credit | |||||||||||
| $ | $ | ||||||||||
Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract and generally expire within one year. Commitments to extend credit of approximately $149,250 at December 31, 2025, had terms expiring beyond one year. Since many of the commitments are expected to expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s creditworthiness on a case-by-case basis. The amount of collateral obtained is based on management’s credit evaluation of the party. Collateral held varies, but may include accounts receivable, inventory, equipment, and residential and commercial real estate.
Standby letters of credit are conditional commitments issued by the Company to guarantee the performance of a customer to a third party and generally expire within one year. Those guarantees are primarily issued to support public and private borrowing arrangements. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers. Collateral held varies as specified above and is required in instances the Company deems necessary. In the event the customer does not perform in accordance with the terms of the third-party agreement, West Bank would be required to fund the commitment. The maximum potential amount of future payments West Bank could be required to make is represented by the contractual amount for letters of credit shown in the table above. If the commitment is funded, West Bank would be entitled to seek recovery from the customer. At December 31, 2025 and 2024, no
West Bank previously executed 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. The term of the most recent Commitment was through January 16, 2015 and was not renewed. The outstanding balance of mortgage loans sold under the MPF Program was $14,411 and $17,032 at December 31, 2025 and 2024, respectively.
The Company had commitments to invest in qualified affordable housing projects totaling $1,383 and $861 as of December 31, 2025 and 2024, respectively.
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 of loans outstanding. Standby letters of credit were granted primarily to commercial borrowers.
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 18. Fair Value Measurements
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the market in which the reporting entity transacts business. The Company’s balance sheet contains securities available for sale and derivative instruments that are recorded at fair value on a recurring basis. The three-level valuation hierarchy for disclosure of fair value is as follows:
Level 1 uses quoted market prices in active markets for identical assets or liabilities.
Level 2 uses observable market-based inputs or unobservable inputs that are corroborated by market data.
Level 3 uses unobservable inputs that are not corroborated by market data.
The following is a description of valuation methodologies used for financial assets and liabilities recorded at fair value on a recurring basis.
Securities available for sale: When available, quoted market prices are used to determine the fair value of 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 (Level 2). The fair values of these securities are determined by pricing models that consider observable market data such as interest rate volatilities, yield curves, credit spreads, prices from market makers and live trading systems.
Management obtains the fair value of 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 the process was valid as of December 31, 2025. On a quarterly basis, management corroborates the fair values of the portfolio by obtaining pricing from an independent financial market data vendor and compares the two sets of fair values. Any significant variances are reviewed and investigated. For a sample of securities, the fair values are further validated by management, 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 securities were properly classified in the fair value hierarchy.
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Notes to Consolidated Financial Statements
(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 December 31, 2025 and 2024.
| 2025 | ||||||||||||||||||||||||||
| Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||||
| State and political subdivisions | $ | $ | $ | $ | ||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||
| Mortgage-backed securities | ||||||||||||||||||||||||||
| Collateralized loan obligations | ||||||||||||||||||||||||||
| Corporate notes | ||||||||||||||||||||||||||
| Derivative instruments | ||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||
| Derivative instruments | $ | $ | $ | $ | ||||||||||||||||||||||
| 2024 | ||||||||||||||||||||||||||
| Description | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||
| Securities available for sale: | ||||||||||||||||||||||||||
| State and political subdivisions | $ | $ | $ | $ | ||||||||||||||||||||||
| Collateralized mortgage obligations | ||||||||||||||||||||||||||
| Mortgage-backed securities | ||||||||||||||||||||||||||
| Collateralized loan obligations | ||||||||||||||||||||||||||
| Corporate notes | ||||||||||||||||||||||||||
| Derivative instruments | ||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||
| Derivative instruments | $ | $ | $ | $ | ||||||||||||||||||||||
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). Individually evaluated loans that are deemed to have impairment are classified within Level 3 of the fair value hierarchy and are recorded at fair value, which is based on the value of the collateral securing these loans. As of both December 31, 2025 and 2024, there were no individually evaluated loans with a fair value adjustment.
In determining the estimated net realizable value of the underlying 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 routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available and include consideration of variations in location, size, and income production capacity of the property. Additionally, the appraisals are periodically further adjusted by the Company in consideration of charges that may be incurred in the event of foreclosure and are based on management’s historical knowledge, changes in business factors and changes in market conditions. Because of the high degree of judgment required in estimating the fair value of collateral underlying individually evaluated loans and because of the 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 conditions.
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Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
| December 31, 2025 | ||||||||||||||||||||||||||||||||
| Carrying Amount | Approximate Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | 25,171 | $ | $ | — | $ | — | ||||||||||||||||||||||||
| Interest-bearing deposits with banks | 324,502 | — | — | |||||||||||||||||||||||||||||
| Securities purchased under agreements to resell | 121,413 | — | — | |||||||||||||||||||||||||||||
| Securities available for sale | 468,447 | — | — | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 15,167 | — | — | |||||||||||||||||||||||||||||
| Loans, net | 2,953,867 | — | — | |||||||||||||||||||||||||||||
| Accrued interest receivable | 11,982 | — | ||||||||||||||||||||||||||||||
| Derivative instruments | 12,785 | — | — | |||||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| Deposits | $ | $ | 3,468,215 | $ | — | $ | $ | — | ||||||||||||||||||||||||
| Subordinated notes, net | 74,660 | — | — | |||||||||||||||||||||||||||||
| Federal Home Loan Bank advances | 270,000 | — | — | |||||||||||||||||||||||||||||
| Long-term debt | 26,250 | — | — | |||||||||||||||||||||||||||||
| Accrued interest payable | 5,319 | — | ||||||||||||||||||||||||||||||
| Derivative instruments | 10,916 | — | — | |||||||||||||||||||||||||||||
| December 31, 2024 | ||||||||||||||||||||||||||||||||
| Carrying Amount | Approximate Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||
| Financial assets: | ||||||||||||||||||||||||||||||||
| Cash and due from banks | $ | $ | 28,750 | $ | $ | — | $ | — | ||||||||||||||||||||||||
| Interest-bearing deposits with banks | 214,728 | — | — | |||||||||||||||||||||||||||||
| Securities available for sale | 544,565 | — | — | |||||||||||||||||||||||||||||
| Federal Home Loan Bank stock | 15,129 | — | — | |||||||||||||||||||||||||||||
| Loans, net | 2,905,574 | — | — | |||||||||||||||||||||||||||||
| Accrued interest receivable | 12,825 | — | — | |||||||||||||||||||||||||||||
| Derivative instruments | 24,181 | — | — | |||||||||||||||||||||||||||||
| Financial liabilities: | ||||||||||||||||||||||||||||||||
| Deposits | $ | $ | 3,357,219 | $ | — | $ | $ | — | ||||||||||||||||||||||||
| Subordinated notes, net | 68,522 | — | — | |||||||||||||||||||||||||||||
| Federal Home Loan Bank advances | 270,000 | — | — | |||||||||||||||||||||||||||||
| Long-term debt | 42,736 | — | — | |||||||||||||||||||||||||||||
| Accrued interest payable | 8,396 | — | — | |||||||||||||||||||||||||||||
| Derivative instruments | 14,554 | — | — | |||||||||||||||||||||||||||||
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
Note 19. West Bancorporation, Inc. (Parent Company Only) Condensed Financial Statements
| Balance Sheets | ||||||||||||||
| December 31, 2025 and 2024 | ||||||||||||||
| 2025 | 2024 | |||||||||||||
| ASSETS | ||||||||||||||
| Cash | $ | $ | ||||||||||||
| Investment in West Bank | ||||||||||||||
| Investment in West Bancorporation Capital Trust I | ||||||||||||||
| Other assets | ||||||||||||||
| Total assets | $ | $ | ||||||||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||
| LIABILITIES | ||||||||||||||
| Accrued expenses and other liabilities | $ | $ | ||||||||||||
| Subordinated notes, net | ||||||||||||||
| Long-term debt | ||||||||||||||
| Total liabilities | ||||||||||||||
| STOCKHOLDERS’ EQUITY | ||||||||||||||
| Preferred stock | ||||||||||||||
| Common stock | ||||||||||||||
| Additional paid-in capital | ||||||||||||||
| Retained earnings | ||||||||||||||
| Accumulated other comprehensive loss | ( | ( | ||||||||||||
| Total stockholders’ equity | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | $ | ||||||||||||
| Statements of Income | ||||||||||||||||||||
| Years Ended December 31, 2025, 2024 and 2023 | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Operating income: | ||||||||||||||||||||
| Equity in net income of West Bank | $ | $ | $ | |||||||||||||||||
| Equity in net income of West Bancorporation Capital Trust I | ||||||||||||||||||||
| Total operating income | ||||||||||||||||||||
| Operating expenses: | ||||||||||||||||||||
| Interest on subordinated notes | ||||||||||||||||||||
| Interest on long-term debt | ||||||||||||||||||||
| Other expenses | ||||||||||||||||||||
| Total operating expenses | ||||||||||||||||||||
| Income before income taxes | ||||||||||||||||||||
| Income tax benefit | ( | ( | ( | |||||||||||||||||
| Net income | $ | $ | $ | |||||||||||||||||
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West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(dollars in thousands, except per share data)
| Statements of Cash Flows | ||||||||||||||||||||
| Years Ended December 31, 2025, 2024 and 2023 | ||||||||||||||||||||
| 2025 | 2024 | 2023 | ||||||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||||||
| Net income | $ | $ | $ | |||||||||||||||||
| Adjustments to reconcile net income to net cash provided by | ||||||||||||||||||||
| operating activities: | ||||||||||||||||||||
| Equity in net income of West Bank | ( | ( | ( | |||||||||||||||||
| Equity in net income of West Bancorporation Capital Trust I | ( | ( | ( | |||||||||||||||||
| Dividends received from West Bank | ||||||||||||||||||||
| Dividends received from West Bancorporation Capital Trust I | ||||||||||||||||||||
| Amortization | ||||||||||||||||||||
| Deferred income taxes | ||||||||||||||||||||
| Change in assets and liabilities: | ||||||||||||||||||||
| (Increase) decrease in other assets | ( | |||||||||||||||||||
| Increase (decrease) in accrued expenses and other liabilities | ( | |||||||||||||||||||
| Net cash provided by operating activities | ||||||||||||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||||||
| Principal payments on long-term debt | ( | ( | ( | |||||||||||||||||
| Common stock cash dividends | ( | ( | ( | |||||||||||||||||
| Net cash used in financing activities | ( | ( | ( | |||||||||||||||||
| Net increase (decrease) in cash | ( | ( | ||||||||||||||||||
| Cash: | ||||||||||||||||||||
| Beginning | ||||||||||||||||||||
| Ending | $ | $ | $ | |||||||||||||||||
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Within the two years prior to the date of the most recent financial statements, there have been no changes in or disagreements with accountants of the Company.
ITEM 9A. CONTROLS AND PROCEDURES
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 current disclosure controls and procedures were effective to ensure that 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 SEC’s rules and forms.
Management’s Report on Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). The Company’s internal control system is a process designed to provide reasonable assurance to the Company’s management and Board of Directors regarding the preparation and fair presentation of published financial statements.
Internal control over financial reporting of the Company includes those policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s consolidated financial statements.
Because of inherent limitations in any system of internal control, no matter how well designed, misstatements due to error or fraud may occur and not be detected, including the possibility of the circumvention or overriding of controls. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance with respect to financial statement preparation. Further, because of changes in conditions, internal control effectiveness may vary over time.
Management assessed the Company’s internal control over financial reporting as of December 31, 2025. This assessment was based on criteria for effective internal control over financial reporting set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework in 2013. Based on this assessment, the Chief Executive Officer and Chief Financial Officer assert that the Company maintained effective internal control over financial reporting as of December 31, 2025 based on the specified criteria.
The Company’s independent registered public accounting firm, which audited the consolidated financial statements included in this annual report, has issued an attestation report on the Company’s internal control over financial reporting as of December 31, 2025 that appears in Item 8 of this Form 10-K and is incorporated into this item by reference.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the fourth fiscal quarter of 2025 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
During the fiscal quarter ended December 31, 2025, 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.”
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ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION
Not applicable.
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE
The information for directors and executive officers as required pursuant to Item 401 and item 405(a) of Regulation S-K can be found under the captions “Proposal 1. Election of Directors” and “Governance and Board of Directors—Executive Officers of the Company” in the Company’s definitive Proxy Statement on Form DEF 14A, which will be filed with the SEC on or before March 3, 2026, and is incorporated herein by reference.
Code of Ethics
We have a Code of Conduct in place that applies to all of our directors, officers and employees. The Code of Conduct sets forth the standard of ethics that we expect all of our directors, officers and employees to follow, including our Chief Executive Officer and Chief Financial Officer. The Code of Conduct may be viewed on the Company’s website (www.westbankstrong.com) under Investor Relations — Overview — Corporate Governance. We intend to satisfy the disclosure requirements under Item 5.05 of Form 8-K regarding any amendment to or waiver of the Code of Conduct with respect to our Chief Executive Officer and Chief Financial Officer, and persons performing similar functions, by posting such information on our website.
Stockholder Recommendations for Nominees to the Board of Directors
The information required pursuant to Item 407(c)(3) of Regulation S-K can be found under the caption “General Matters—2027 Stockholder Proposals” in the Company’s definitive Proxy Statement on Form DEF 14A, which will be filed with the SEC on or before March 3, 2026, and is incorporated herein by reference.
Identification of Audit Committee and Audit Committee Financial Expert
The Company has a standing Audit Committee that consists of James W. Noyce, Chair, Rosemary Parson, John K. Sorensen and Therese M. Vaughan. The Board has determined that Mr. Noyce and Dr. Vaughan are audit committee financial experts. The full Board has determined that all members of the Audit Committee are independent directors.
ITEM 11. EXECUTIVE COMPENSATION
The information required pursuant to Item 402, Item 407(e)(4) and Item 407(e)(5) of Regulation S-K can be found under the captions “Governance and Board of Directors—Director Compensation” and “Executive Compensation” in the Company’s definitive Proxy Statement on Form DEF 14A, which will be filed with the SEC on or before March 3, 2026, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Effective as of the 2021 annual meeting of stockholders, the West Bancorporation, Inc. 2021 Equity Incentive Plan (2021 Plan) was adopted by the Board of Directors and approved by our stockholders. The 2021 Plan was amended at the April 2024 annual stockholders’ meeting, upon which the Company obtained shareholder approval to increase the number of shares of common stock authorized for issuance under the 2021 Plan by 550,000 shares, from 625,000 to 1,175,000 shares. The prior 2017 Equity Incentive Plan (2017 Plan) was frozen with respect to future grants upon approval of the 2021 Plan. At the time the 2017 Plan was frozen, 196,535 shares remain unissued under the original authorization for that plan. Awards outstanding under the 2017 Plan will remain subject to the 2017 Plan as long as they remain outstanding. Under the terms of the 2021 Plan, as amended, the Company may grant a total of 1,175,000 shares of the Company’s common stock as nonqualified and incentive stock options, stock appreciation rights and stock awards. All employees and directors of the Company and its subsidiary are eligible to become participants in the 2021 Plan. Additional information regarding our equity incentive plans is presented in Note 13 of the Notes to the Consolidated Financial Statements included in Item 8 of this Form 10-K. The following table sets forth information regarding outstanding restricted stock units and shares available for future issuance under these plans as of December 31, 2025.
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| Plan Category | Number of shares to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (a)) (c) | ||||||||||||||||||||
Equity compensation plans approved by stockholders (1) | 445,342 | — | 515,311 | `(2) | |||||||||||||||||||
| Equity compensation plans not approved by stockholders | — | — | — | ||||||||||||||||||||
| Total | 445,342 | — | 515,311 | ||||||||||||||||||||
(1)Includes the West Bancorporation, Inc. 2017 Equity Incentive Plan approved by stockholders on April 27, 2017, and the West Bancorporation, Inc. 2021 Equity Incentive Plan, as amended, approved by stockholders on April 25, 2024.
(2)Reflects the number of shares available for issuance under the West Bancorporation, Inc. 2021 Equity Incentive Plan as stock awards.
The information required pursuant to Item 403 of Regulation S-K can be found under the captions “Governance and Board of Directors—Security Ownership of Certain Beneficial Owners and Executive Officers,” “Governance and Board of Directors—Other Beneficial Owners” and “Governance and Board of Directors—Changes in Control” in the Company’s definitive Proxy Statement on Form DEF 14A, which will be filed with the SEC on or before March 3, 2026, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required pursuant to Item 404 and Item 407(a) of Regulation S-K can be found under the captions “General Matters—Certain Relationships and Related Transactions” and “Governance and Board of Directors” in the Company’s definitive Proxy Statement on Form DEF 14A, which will be filed with the SEC on or before March 3, 2026, and is incorporated herein by reference.
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ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information required pursuant to Item 9(e) of Schedule 14A can be found under the caption “Proposal 3. Ratify the Appointment of Independent Registered Public Accounting Firm” in the Company’s definitive Proxy Statement on Form DEF 14A, which will be filed with the SEC on or before March 3, 2026, and is incorporated herein by reference. The PCAOB ID Number for our Independent Registered Public Accounting Firm is 49 .
PART IV
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits and financial statement schedules of the Company are filed as part of this report:
(a)1. Financial Statements
The consolidated financial statements that appear in Item 8 of this Form 10-K are incorporated herein by reference.
| Page | |||||
Report of Independent Registered Accounting Firm (PCAOB ID 49) | 55 | ||||
| Consolidated Balance Sheets as of December 31, 2025 and 2024 | 58 | ||||
| Consolidated Statements of Income for the years ended December 31, 2025, 2024 and 2023 | 59 | ||||
| Consolidated Statements of Comprehensive Income for the years ended December 31, 2025, 2024 and 2023 | 60 | ||||
| Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2025, 2024 and 2023 | 61 | ||||
| Consolidated Statements of Cash Flows for the years ended December 31, 2025, 2024 and 2023 | 62 | ||||
| Notes to Consolidated Financial Statements | 63 | ||||
2. Financial Statement Schedules
All schedules are omitted because they are not applicable, not required, or because the required information is included in the consolidated financial statements or notes thereto.
3. Exhibits (not covered by independent registered public accounting firms’ reports)
| 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) | ||||
| 4.1 | Description of Capital Stock (incorporated herein by reference to Exhibit 4 filed with the Form 10-K on February 27, 2020) | ||||
| 4.2 | Indenture, dated June 14, 2022, between West Bancorporation, Inc. and Wilmington Trust, National Association, as trustee (incorporated herein by reference to Exhibit 4.1 filed with the Form 8-K on June 14, 2022) | ||||
| 4.3 | First Supplemental Indenture, dated June 14, 2022, between West Bancorporation, Inc. and Wilmington Trust, National Association, as trustee (incorporated herein by reference to Exhibit 4.2 filed with the Form 8-K on June 14, 2022) | ||||
| 4.4 | Form of 5.25% Fixed-to-Floating Rate Subordinated Notes due 2032 (incorporated herein by reference to Exhibit 4.3 filed with the Form 8-K on June 14, 2022) | ||||
| 10.1* | Employment Agreement dated July 23, 2012, between West Bancorporation, Inc. and David D. Nelson (incorporated herein by reference to Exhibit 10.1 filed with the Form 8-K on July 25, 2012) | ||||
| 10.2* | Employment Agreement dated July 23, 2012, between West Bancorporation, Inc. and Brad L. Winterbottom (incorporated herein by reference to Exhibit 10.2 filed with the Form 8-K on July 25, 2012) | ||||
| 10.3* | Employment Agreement dated July 23, 2012, between West Bancorporation, Inc. and Harlee N. Olafson (incorporated herein by reference to Exhibit 10.3 filed with the Form 8-K on July 25, 2012) | ||||
| 10.4* | Employment Agreement dated April 29, 2021 between West Bancorporation, Inc. and Bradley P. Peters (incorporated herein by reference to Exhibit 10.2 filed with the Form 8-K on April 30, 2021) | ||||
| 10.5* | Employment Agreement dated May 27, 2021 between West Bancorporation, Inc. and Jane M. Funk (incorporated herein by reference to Exhibit 10.2 filed with the Form 8-K on May 27, 2021) | ||||
| 10.6* | West Bancorporation, Inc. Deferred Compensation Plan (as Amended and Restated November 20, 2024) (incorporated herein by reference to Exhibit 10.6 filed with the Form 10-K on February 20, 2025) | ||||
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| 10.7* | West Bancorporation, Inc. Employee Savings and Stock Ownership Plan, as amended (incorporated herein by reference to Exhibit 10.20 filed with the Form 10-K on March 6, 2014) | ||||
| 10.8* | Amendment No. 1 to West Bancorporation, Inc. Employee Savings and Stock Ownership Plan, Effective January 1, 2015 (incorporated herein by reference to Exhibit 10.1 filed with the Form 10-Q/A on August 11, 2020) | ||||
| 10.9* | Amendment No. 2 to West Bancorporation, Inc. Employee Savings and Stock Ownership Plan, Effective January 1, 2016 (incorporated herein by reference to Exhibit 10.2 filed with the Form 10-Q/A on August 11, 2020) | ||||
| 10.10* | Amendment No. 3 to West Bancorporation, Inc. Employee Savings and Stock Ownership Plan, Effective January 1, 2018 (incorporated herein by reference to Exhibit 10.3 filed with the Form 10-Q/A on August 11, 2020) | ||||
| 10.11* | Interim Amendment to West Bancorporation, Inc. Employee Savings and Stock Ownership Plan, Effective April 1, 2018 (incorporated herein by reference to Exhibit 10.4 filed with the Form 10-Q/A on August 11, 2020) | ||||
| 10.12* | West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit A of the definitive proxy statement on Schedule 14A filed on March 1, 2017) | ||||
| 10.13* | Form of Restricted Stock Unit Award Agreement under the West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.2 filed with the Form S-8 on April 28, 2017) | ||||
| 10.14* | Form of Restricted Stock Award Agreement under the West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.3 filed with the Form S-8 on April 28, 2017) | ||||
| 10.15* | Form of Nonqualified Stock Option Award Agreement under the West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.4 filed with the Form S-8 on April 28, 2017) | ||||
| 10.16* | Form of Incentive Stock Option Award Agreement under the West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.5 filed with the Form S-8 on April 28, 2017) | ||||
| 10.17* | Form of Stock Appreciation Right Award Agreement under the West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.6 filed with the Form S-8 on April 28, 2017) | ||||
| 10.18* | Form of Restricted Stock Unit Award Agreement under the West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.19 filed with the Form 10-K on March 1, 2021) | ||||
| 10.19* | Form of Performance Based Restricted Stock Unit Award Agreement under the West Bancorporation, Inc. 2017 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.20 filed with the Form 10-K on March 1, 2021) | ||||
| 10.20 | Amended and Restated Lease Agreement Dated February 20, 2018 (incorporated herein by reference to Exhibit 10.16 filed with the Form 10-K on March 1, 2018) | ||||
| 10.21* | West Bancorporation Inc. 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit A to the Company’s definitive proxy statement filed with the Securities and Exchange Commission on March 1, 2021) | ||||
| 10.22* | Form of West Bancorporation, Inc. 2021 Equity Incentive Plan Restricted Stock Unit Award Agreement (with holding period) (incorporated herein by reference to Exhibit 4.4 filed with the Form S-8 on April 30, 2021) | ||||
| 10.23* | Form of West Bancorporation, Inc. 2021 Equity Incentive Plan Restricted Stock Unit Award Agreement (without holding period) (incorporated herein by reference to Exhibit 4.5 filed with the Form S-8 on April 30, 2021) | ||||
| 10.24* | Form of West Bancorporation, Inc. 2021 Equity Incentive Plan Performance-Based Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 4.6 filed with the Form S-8 on April 30, 2021) | ||||
| 10.25* | Form of West Bancorporation, Inc. 2021 Equity Incentive Plan Cash-Settled Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 4.7 filed with the Form S-8 on April 30, 2021) | ||||
| 10.26* | Form of West Bancorporation, Inc. 2021 Equity Incentive Plan Director Restricted Stock Unit Award Agreement (incorporated herein by reference to Exhibit 4.8 filed with the Form S-8 on April 30, 2021) | ||||
| 10.27* | First Amendment of the West Bancorporation, Inc. 2021 Equity Incentive Plan (incorporated herein by reference to Exhibit A to the Company’s definitive proxy statement filed with the Securities Exchange Commission on March 5, 2024) | ||||
| 10.28 | Credit Agreement, dated as of December 15, 2021, by and between West Bancorporation, Inc. and National Exchange Bank & Trust (incorporated herein by reference to Exhibit 10.1 filed with the Form 8-K on June 6, 2022) | ||||
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| 10.29 | Promissory Note, dated as of December 15, 2021, made by West Bancorporation, Inc., to and in favor of National Exchange Bank & Trust (incorporated herein by reference to Exhibit 10.2 filed with the Form 8-K on June 6, 2022) | ||||
| 10.30 | Commercial Pledge Agreement, dated as of December 15, 2021, by and between West Bancorporation, Inc. and National Exchange Bank & Trust (incorporated herein by reference to Exhibit 10.3 filed with the Form 8-K on June 6, 2022) | ||||
| 19 | Insider Trading Policy | ||||
| 21 | Subsidiaries | ||||
| 23 | Consent of Independent Registered Public Accounting Firm | ||||
| 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 | ||||
| 97.1 | West Bancorporation, Inc. Clawback Policy (incorporated herein by reference to Exhibit 97.1 filed with the Form 10-K on February 20, 2025) | ||||
| 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) | ||||
| * Indicates management contract or compensatory plan or arrangement. | |||||
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ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
| February 26, 2026 | By: | /s/ David D. Nelson | ||||||
| David D. Nelson | ||||||||
| Chief Executive Officer and President | ||||||||
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| February 26, 2026 | By: | /s/ David D. Nelson | ||||||
| David D. Nelson | ||||||||
| Chief Executive Officer, Director and President | ||||||||
| (Principal Executive Officer and Director) | ||||||||
| February 26, 2026 | By: | /s/ Jane M. Funk | ||||||
| Jane M. Funk | ||||||||
| Executive Vice President, Treasurer and Chief Financial Officer | ||||||||
| (Principal Financial Officer) | ||||||||
| BOARD OF DIRECTORS | ||||||||
| February 26, 2026 | By: | /s/ Sean P. McMurray | ||||||
| Sean P. McMurray | ||||||||
| Chairman of the Board | ||||||||
| February 26, 2026 | By: | /s/ Lisa J. Elming | ||||||
| Lisa J. Elming | ||||||||
| February 26, 2026 | By: | /s/ Steven K. Gaer | ||||||
| Steven K. Gaer | ||||||||
| February 26, 2026 | By: | /s/ Douglas R. Gulling | ||||||
| Douglas R. Gulling | ||||||||
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| February 26, 2026 | By: | /s/ George D. Milligan | ||||||
| George D. Milligan | ||||||||
| February 26, 2026 | By: | /s/ James W. Noyce | ||||||
| James W. Noyce | ||||||||
| February 26, 2026 | By: | /s/ Rosemary Parson | ||||||
| Rosemary Parson | ||||||||
| February 26, 2026 | By: | /s/ John K. Sorensen | ||||||
| John K. Sorensen | ||||||||
| February 26, 2026 | By: | /s/ Therese M. Vaughan | ||||||
| Therese M. Vaughan | ||||||||
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FAQ
How did West Bancorporation (WTBA) grow its balance sheet in 2025?
West Bancorporation modestly expanded in 2025, with total assets rising to $4.1 billion from $4.0 billion and deposits reaching $3.5 billion from $3.4 billion. Growth came mainly from business-focused community banking in Iowa and Minnesota.
What dividends did West Bancorporation (WTBA) pay and declare for 2025-2026?
West Bancorporation paid $1.00 per share in cash dividends during 2025 and declared a $0.25 quarterly dividend on January 28, 2026, payable February 25, 2026. Management states it expects to continue regular quarterly dividends, subject to capital and regulatory considerations.
How strong is West Bancorporation’s (WTBA) capital position at year-end 2025?
Management describes capital as strong, with the tangible common equity ratio improving to 6.42% at December 31, 2025, from 5.68% a year earlier. The company reports being well-capitalized under Basel III standards and in compliance with required capital conservation buffers.
What are the main business markets for West Bancorporation (WTBA)?
West Bancorporation operates through West Bank in central and eastern Iowa and southern Minnesota, including Des Moines, Iowa City/Coralville, and cities such as Rochester, Owatonna, Mankato and St. Cloud. These markets feature diversified economies and unemployment below the 4.4% national rate.
What key risks does West Bancorporation (WTBA) highlight in its 10-K?
The company cites risks from commercial and commercial real estate lending, credit quality, high CRE concentrations, interest rate changes, regulatory changes, cybersecurity and fraud (including AI-driven attacks), liquidity pressures, and potential credit losses that could raise its allowance and reduce earnings.
How does West Bancorporation (WTBA) describe its human capital strategy?
West Bancorporation emphasizes employee development, competitive pay and benefits, and long tenures. It highlights initiatives like the West Bank Women’s Impact Network, above-average compensation expectations, strong health benefits, annual performance reviews, and relatively low non-teller turnover of about 7% in 2025 and 2024.
West Bancorporation Inc