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What changed in WEST BANCORPORATION INC's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of WEST BANCORPORATION INC's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+321 added−340 removedSource: 10-K (2026-02-26) vs 10-K (2025-02-20)

Top changes in WEST BANCORPORATION INC's 2025 10-K

321 paragraphs added · 340 removed · 252 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

100 edited+38 added−45 removed61 unchanged
Biggest changeIn addition to approval from the Federal Reserve in certain circumstances, prior approval for acquisitions may be required from other agencies, such as the Iowa Division of Banking or other agencies that regulate the target company of an acquisition. 9 Table of Contents West Bancorporation, Inc. and Subsidiary Additionally, bank holding companies that meet certain eligibility requirements prescribed by the BHCA and elect to operate as financial holding companies may engage in, or own shares in companies engaged in, a wider range of nonbanking activities, including securities and insurance underwriting and sales, merchant banking and any other activity that the Federal Reserve, in consultation with the Secretary of the Treasury, determines by regulation or order is financial in nature or incidental to any such financial activity or that the Federal Reserve determines by order to be complementary to any such financial activity, as long as the activity does not pose a substantial risk to the safety or soundness of FDIC-insured institutions or the financial system generally.
Biggest changeBank 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. 9 Table of Contents West Bancorporation, Inc. and Subsidiary In the third quarter of 2016, we elected to operate as a financial holding company.
Deposit Insurance . 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.
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.
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 (with certain phase-ins) in 2015 (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).
If the Federal Reserve determines that either the Company or West Bank is not well-capitalized or well-managed, the Federal Reserve will provide a period of time in which to re-achieve compliance with those requirements, but, during the period of noncompliance, the Federal Reserve may place any limitations on us that it deems appropriate.
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.
The historical structure of federal consumer protection regulation applicable to all providers of consumer financial products and services changed significantly on July 21, 2011, when the CFPB commenced operations to supervise and enforce consumer protection laws.
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.
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.
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.
As of December 31, 2024, 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.
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.
As of December 31, 2024, 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 .
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 .
In addition, federal law and regulations may affect the terms on which any person who is a director or officer of the Company or West Bank, or a principal stockholder of the Company, may obtain credit from banks with which West Bank maintains a correspondent relationship. Safety and Soundness Standards/Risk Management .
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 .
According to the Federal Deposit Insurance Corporation’s (FDIC) Summary of Deposits as of June 30, 2024, 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.
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.
Control is conclusively presumed to exist upon the acquisition of 25 percent or more of the outstanding voting securities of a bank or bank holding company, but may arise under certain circumstances between 10 percent and 24.99 percent ownership. Company Capital Requirements .
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 .
In addition, as a part of its operational risk mitigation, West Bank is required to implement a comprehensive information security program that includes administrative, technical, and physical safeguards to ensure the security and confidentiality of customer records and information and to require the same of its service providers.
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.
Currently, women comprise 27 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.
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.
West Bank is an Iowa-chartered bank. The deposit accounts of West Bank are insured by the FDIC’s Deposit Insurance Fund (DIF) to the maximum extent provided under federal law and FDIC regulations, currently $250,000 per insured depositor category.
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.
The BHCA does not place territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.
The BHCA does not place formal territorial restrictions on the domestic activities of nonbank subsidiaries of bank holding companies.
West Bank is a business-focused community bank that was organized in 1893. The Company’s primary activity during 2024 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.
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.
As a result, our growth and earnings performance may be affected not only by management decisions and general economic conditions, but also by the requirements of federal and state statutes and by the regulations and policies of various banking agencies, including the Iowa Division of Banking, the Board of Governors of the Federal Reserve System (Federal Reserve), the FDIC and the Consumer Financial Protection Bureau (CFPB).
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.
The network builds a system of sponsors and mentors to provide more opportunities for women in leadership at West Bank and furthers our impact on the community through support and sponsorship of women’s leadership initiatives. 20 percent of West Bank’s current executive management team, 45 percent of West Bank officers and 48 percent of department managers are women.
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.
In reaction to the global financial crisis and particularly following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), we experienced heightened regulatory requirements and scrutiny.
In response to the global financial crisis and particularly following passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act), we experienced heightened regulatory requirements and scrutiny.
The principal exception allows bank holding companies to engage in, and to own shares of companies engaged in, certain businesses found by the Federal Reserve prior to November 11, 1999 to be “so closely related to banking ... as to be a proper incident thereto.” This authority would permit us to engage in a variety of banking-related businesses, including the ownership and operation of a savings association, or any entity engaged in consumer finance, equipment leasing, the operation of a computer service bureau (including software development) and mortgage banking and brokerage services.
The 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 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.
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 .
Not only did the Basel III Rule increase most of the required minimum capital ratios in effect prior to January 1, 2015, but, in requiring that forms of capital be of higher quality to absorb loss, it introduced the concept of Common Equity Tier 1 Capital, which consists primarily of common stock, related surplus (net of Treasury stock), retained earnings, and Common Equity Tier 1 minority interests subject to certain regulatory adjustments.
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.
Treasury management services offered to business customers include cash management, client-generated automated clearing house transactions, remote deposit, lock box and fraud protection services. Also offered are merchant credit card processing and corporate credit cards.
Treasury management services offered to business customers include online and mobile cash management, client-generated automated clearing house transactions, remote deposit capture, lock box and fraud protection services. Also offered are merchant card processing and corporate credit cards.
For example, a banking organization that is well-capitalized may: (i) qualify for exemptions from prior notice or application requirements otherwise applicable to certain types of activities; (ii) qualify for expedited processing of other required notices or applications; and (iii) accept, roll-over or renew brokered deposits.
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.
We believe our markets are economically stable. Unemployment rates in all our markets are below the national unemployment rate of 4.1 percent as of December 31, 2024, according to data from the U.S.
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.
These restrictions have not had, and are not currently expected to have, a material impact on the operations of West Bank. West Bank may be required to seek approval from the Iowa Division of Banking, the FDIC and other banking or financial services agencies before engaging in certain acquisitions or mergers under applicable state and federal law.
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.
The federal banking agencies also have released specific risk management guidance on certain topics, including third-party relationships, in response to the proliferation of relationships between banking organizations and financial technology companies (although the guidance applies more broadly). Privacy and Cybersecurity .
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 .
Certain limitations and reporting requirements are also placed on extensions of credit by West Bank to its directors and officers, to directors and officers of the Company and its subsidiaries, to principal stockholders of the Company and to “related interests” of such directors, officers and principal stockholders under state and federal law.
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.
The banking agencies generally have broad discretion to impose restrictions and limitations on the operations of a regulated entity where the agencies determine, among other things, that such operations are unsafe or unsound, fail to comply with applicable law or are otherwise inconsistent with laws and regulations.
The 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.
The concept of a banking organization being “well-capitalized” is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution.
The concept of a banking organization being “adequately capitalized” or “well capitalized,” as defined above, is part of a regulatory enforcement regime that provides the federal banking agencies with broad power to take “prompt corrective action” to resolve the problems of depository institutions based on the capital level of each particular institution.
A concentration in commercial real estate (CRE) is one example of regulatory concern, which has been subject to additional scrutiny by federal banking agencies as well as the SEC (for publicly-traded banking organizations) in recent years.
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 BHCA generally prohibits the Company from acquiring direct or indirect ownership or control of more than five percent of the voting shares of any company that is not a bank and from engaging in any business other than that of banking, managing and controlling banks or furnishing services to banks and their subsidiaries.
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.
The purpose of the conservation buffer is to ensure that banking institutions maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress. Factoring in the conservation buffer increases the minimum ratios depicted above to 7% for Common Equity Tier 1 Capital, 8.5% for Tier 1 Capital and 10.5% for Total Capital.
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.
The Basel III Rule also changed the definition of capital by establishing more stringent criteria that instruments must meet to be considered Additional Tier 1 Capital (primarily non-cumulative perpetual preferred stock that meets certain requirements) and Tier 2 Capital (primarily other types of preferred stock and subordinated debt, subject to limitations).
The Basel III Rule also 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).
Federal law and FDIC regulations also prohibit FDIC-insured state banks and their subsidiaries, subject to certain exceptions, from engaging as principal in any activity that is not permitted for a national bank unless West Bank meets, and continues to meet, its minimum regulatory capital requirements and the FDIC determines that the activity would not pose a significant risk to the DIF.
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.
As of December 31, 2024, 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. Prompt Corrective Action .
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 .
The Economic Growth, Regulatory Relief and Consumer Protection Act of 2018 (Regulatory Relief Act) eliminated questions about the applicability of certain Dodd-Frank Act reforms to community bank systems, including relieving us of any requirement to engage in mandatory stress tests, maintain a risk committee or comply with the Volcker Rule’s complicated prohibitions on proprietary trading and ownership of private funds.
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.
The capital guidelines for U.S. banking organizations beginning in 1989 have been based upon international capital accords (known as “Basel” accords) adopted by the Basel Committee on Banking Supervision, a committee of central banks and bank supervisors that acts as the primary global standard-setter for prudential regulation, as implemented by the U.S. federal banking agencies on an interagency basis.
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.
In addition, because the total cost of the failures of Silicon Valley Bank and Signature Bank was approximately $24.1 billion, the FDIC adopted a special assessment applicable to bank organizations with total assets of $5 billion or more.
In 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.
As described above, West Bank exceeded its capital requirements under applicable guidelines as of December 31, 2024. Notwithstanding the availability of funds for dividends, however, the FDIC and the Iowa Division of Banking may prohibit the payment of dividends by West Bank if either or both determine such payment would constitute an unsafe or unsound practice.
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.
The capital ratios described above are minimum standards in order for banking organizations to be considered “adequately capitalized.” Banking agencies uniformly encourage banking organizations to hold more capital and be “well-capitalized” and, to that end, federal law and regulations provide various incentives for banking organizations to maintain regulatory capital at levels in excess of minimum regulatory requirements.
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.
Under the BHCA, we are subject to periodic examination by the Federal Reserve and are required to file with the Federal Reserve periodic reports of our operations and such additional information regarding our operations as the Federal Reserve may require. Acquisitions and Activities/Financial Holding Company Election .
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.
Non-teller turnover was approximately 7 percent in 2024, compared to 10 percent in 2023. 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.
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 its October 2024 semiannual update, the FDIC stated that the reserve ratio likely will reach the statutory minimum by the September 30, 2028 deadline, and no adjustments to the base assessment rates are currently projected.
In 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.
On December 18, 2015, and again in recent years, the federal banking agencies have issued statements to reinforce prudent risk-management practices related to CRE lending, having observed substantial growth in many CRE asset and lending markets, increased competitive pressures, rising CRE concentrations in banks, and an easing of CRE underwriting standards.
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.
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 Iowa Division of Banking may restrict the declaration or payment of a dividend by an Iowa-chartered bank, such as 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.
In the third quarter of 2016, we elected to operate as a financial holding company. In order to maintain our status as a financial holding company, both the Company and West Bank must be well-capitalized and well-managed, and West Bank must have at least a satisfactory CRA rating.
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.
These examinations consider not only compliance with applicable laws and regulations, but also capital levels, asset quality and risk, management ability and performance, earnings, liquidity and various other factors.
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 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.
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.
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).
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).
As an Iowa-chartered FDIC-insured bank, West Bank is subject to the examination, supervision, reporting and enforcement requirements of the Iowa Division of Banking, the chartering authority for Iowa banks, and the FDIC, designated by federal law as the primary federal regulator of insured state banks that, like West Bank, are not members of the Federal Reserve System (nonmember banks).
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 .
Because of the risks attendant to their business, FDIC-insured institutions, such as banks, as well as their holding companies (i.e., banking organizations) generally are required to hold more capital than other businesses, which directly affects our earnings capabilities.
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.
In addition, banking organizations that want to make capital distributions (including for dividends and repurchases of stock) and pay discretionary bonuses to executive officers without restriction must also maintain 2.5% in Common Equity Tier 1 Capital attributable to a capital conservation buffer.
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.
Community Reinvestment Act Requirements . The CRA requires West Bank to have a continuing and affirmative obligation in a safe and sound manner to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The FDIC regularly assesses West Bank’s record of meeting the credit needs of its communities in dedicated examinations.
The Community Reinvestment Act (CRA) imposes on West Bank a continuing and affirmative obligation, consistent with safe and sound operations, to help meet the credit needs of its entire community, including low- and moderate-income neighborhoods. The FDIC regularly assesses West Bank’s record of meeting these credit needs through periodic CRA examinations.
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”.
Capital Levels . Banking organizations have been required to hold minimum levels of capital based on guidelines established by the banking agencies since 1983.
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.
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.
In addition, federal law permits state and national banks to merge with banks in other states subject to: (i) regulatory approval; (ii) federal and state deposit concentration limits; and (iii) state law limitations requiring the merging bank to have been in existence for a minimum period of time (not to exceed five years) prior to the merger.
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 .
Our approach also promotes longevity in our workforce. The average tenure of our employees is nine years and the average tenure of bank officers is over 12 years. Approximately 17 percent have been with West Bank for 10-15 years and approximately 22 percent have been with West Bank for over 15 years.
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.
West Bank must also comply with certain state consumer protection laws and requirements in the states in which it operates. 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.
West Bank also must comply with certain state consumer protection laws and requirements in the states in which it operates. 16 Table of Contents West Bancorporation, Inc. and Subsidiary ADDITIONAL INFORMATION The principal executive offices of the Company are located at 3330 Westown Parkway, West Des Moines, Iowa 50266.
The Basel III Rule requires banking organizations to maintain minimum capital ratios, as follows: • A ratio of Common Equity Tier 1 Capital equal to 4.5% of risk-weighted assets; • A ratio of Tier 1 Capital equal to 6% of risk-weighted assets; • A continuation of the minimum required amount of Total Capital (Tier 1 plus Tier 2) at 8% of risk-weighted assets; and • A leverage ratio of Tier 1 Capital to total quarterly average assets equal to 4% in all circumstances.
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.
West Bank is subject to certain restrictions imposed by federal law on “covered transactions” between West Bank and its “affiliates.” The Company is an affiliate of West Bank for purposes of these restrictions, and covered transactions subject to the restrictions include extensions of credit to the Company, investments in the stock or other securities of the Company, and the acceptance of the stock or other securities of the Company as collateral for loans made by West Bank.
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.
These security and privacy policies and procedures are in effect across all business lines and geographic locations. West Bank and the Company also are subject to a number of federal and state laws and regulations requiring notifications and disclosures regarding certain cybersecurity incidents. In addition, West Bank must consider and address cybersecurity considerations as part of its risk management processes.
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.
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). 13 Table of Contents West Bancorporation, Inc. and Subsidiary Although these tests do not apply to West Bank, we continue to review our liquidity risk management policies in light of regulatory requirements and industry developments.
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).
West Bank is permitted to make investments and engage in activities directly or through subsidiaries as authorized by Iowa law. However, under federal law and FDIC regulations, FDIC-insured state banks are prohibited, subject to certain exceptions, from making or retaining equity investments of a type, or in an amount, that are not permissible for a national bank.
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.
Higher capital levels could also be required if warranted by the particular circumstances or risk profiles of individual banking organizations. For example, the Federal Reserve’s capital guidelines contemplate that additional capital may be required to take adequate account of, among other things, interest rate risk, or the risks posed by concentrations of credit, nontraditional activities or securities trading activities.
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.
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.
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.
All Iowa banks are required to pay supervisory assessments to the Iowa Division of Banking to fund the operations of that agency. The amount of the assessment is calculated on the basis of West Bank’s total assets. Bank Capital Requirements . Regulatory capital represents the net assets of a banking organization available to absorb losses.
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 .
In addition, under the Basel III Rule, banking organizations that want to pay dividends will have to maintain 2.5 percent in Common Equity Tier 1 Capital attributable to the capital conservation buffer. See “—Bank Capital Requirements” above. State Bank Investments, Activities and Acquisitions .
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.
These laws require West Bank to periodically disclose its privacy policies and practices relating to sharing such information and permit consumers to opt out of their ability to share information with unaffiliated third parties under certain circumstances.
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.
It is possible under the Basel III Rule to be well-capitalized while remaining out of compliance with the capital conservation buffer discussed above. As of December 31, 2024: (i) West Bank was not subject to a directive from Iowa Division of Banking or the FDIC to increase its capital and (ii) West Bank was well-capitalized, as defined by FDIC regulations.
Under the Basel III Rule, a banking organization may be considered “well capitalized” while not complying with the capital conservation buffer requirements described above. 12 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
The interagency Concentrations in Commercial Real Estate Lending, Sound Risk Management Practices guidance (CRE Guidance) provides supervisory criteria, including the following numerical indicators, to assist bank examiners in identifying banks with potentially significant CRE loan concentrations that may warrant greater supervisory scrutiny: (i) CRE loans exceeding 300 percent of capital and increasing 50 percent or more in the preceding three years; or (ii) construction and land development loans exceeding 100 percent of capital.
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.
The Basel III Rule also constrained the inclusion of minority interests, mortgage-servicing assets, and deferred tax assets in capital and required deductions from Common Equity Tier 1 Capital if such assets exceeded a percentage of a banking organization’s Common Equity Tier 1 Capital.
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.
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. 10 Table of Contents West Bancorporation, Inc. and Subsidiary The Dodd-Frank Act also directed the Federal Reserve, together with the other federal banking and financial services agencies, to promulgate rules prohibiting excessive compensation paid to executives of bank holding companies, regardless of whether such companies are publicly traded.
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.
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.
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.
These events have further underscored the importance of liquidity risk management and contingency funding planning by insured depository institutions like West Bank, as highlighted in a 2023 addendum to existing interagency guidance on funding and liquidity risk management.
The level and speed of deposit outflows contributing to the failures of Silicon Valley Bank, Signature Bank, and First Republic Bank in 2023 was unprecedented and contributed to acute liquidity and funding strain, underscoring the importance of liquidity risk management and contingency funding planning by insured depository institutions like West Bank, as highlighted in a 2023 addendum to existing interagency guidance on funding and liquidity risk management.
Our employees are provided a formal performance evaluation annually that includes discussion of the opportunity for advancement and career development. 7 Table of Contents West Bancorporation, Inc. and Subsidiary In addition to competitive base wages, additional programs include annual bonus opportunities, Company-matched 401(k) and discretionary 401(k) contributions, stock award opportunities, educational expense reimbursement, insurance benefits, paid time off, family leave and employee assistance programs.
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.
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.
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.
Operating in an unsafe or unsound manner will also constitute grounds for other enforcement action by the federal banking agencies, including cease and desist orders and civil money penalty assessments.
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. 14 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
West Bank is subject to many U.S. federal and state laws and regulations governing requirements for maintaining policies and procedures to protect non-public confidential information of their customers.
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.
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. 14 Table of Contents West Bancorporation, Inc. and Subsidiary In general, the safety and soundness standards prescribe the goals to be achieved in each area, and each institution is responsible for establishing its own procedures to achieve those goals.
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.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

42 edited+13 added−16 removed150 unchanged
Biggest changeWe operate in highly competitive markets and face strong competition in originating loans, seeking deposits and offering our other services. We compete in making loans, attracting deposits, and recruiting and retaining talented employees. The Des Moines metropolitan market area, in particular, has attracted many new financial institutions within the last two decades.
Biggest changeThe 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.
In addition, political developments, including the possible implementation of policies proposed by the new 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.
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.
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. 18 Table of Contents West Bancorporation, Inc. and Subsidiary If the loans that are collateralized by real estate become troubled and the value of the real estate has been significantly impaired, then 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.
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. 18 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
As of December 31, 2024, 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).
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).
Commercial real estate loans were a significant portion of our total loan portfolio as of December 31, 2024. 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.
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.
If this were to occur and additional short-term borrowings or debt is 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 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.
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 and investment securities, and the interest expense that we pay on interest-bearing liabilities, such as deposits and borrowings.
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.
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, 2024, we had $128.8 million of net unrealized losses in our securities portfolio.
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.
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, presidential elections, international trade wars or international currency fluctuations may negatively affect the market price of our common stock.
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.
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.
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.
Based on these criteria, West Bank had concentrations of 110 percent and 422 percent, respectively, as of December 31, 2024. 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.
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.
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. 28 Table of Contents West Bancorporation, Inc. and Subsidiary Risks Related to West Bancorporation’s Common Stock Our stock is relatively thinly traded.
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.
The junior subordinated debentures and the Notes are senior to the Company’s shares of common stock.
The junior subordinated debentures and the Notes are senior in order of payment to the Company’s shares of 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.
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.
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. 23 Table of Contents West Bancorporation, Inc. and Subsidiary We are subject to various legal claims and litigation.
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.
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 affecting the U.S. economy, the Federal Reserve began enacting incremental rate cuts at the end of 2024.
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 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 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.
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. 24 Table of Contents West Bancorporation, Inc. and Subsidiary Labor shortages and a failure to attract and retain qualified employees could negatively impact our business, results of operations and financial condition.
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.
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.
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.
The financial markets and the global economy may also be adversely affected by the current or anticipated impact of military conflict, including the current conflicts between Russia and Ukraine and between Israel and Palestine, which are increasing volatility in commodity and energy prices, creating supply chain issues and causing instability in financial markets and political systems.
Such unfavorable conditions could materially and adversely affect us. 25 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
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.
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. 29 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
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 interest rates; recent developments and events in the financial services industry, including the large-scale deposit withdrawals over a short period of time that resulted in several bank failures; high unemployment; uncertainty in U.S. trade policies, legislation, treaties and tariffs; natural disasters; acts of war or terrorism; widespread disease or pandemics; or a combination of these or other factors.
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.
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.
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.
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.
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. 26 Table of Contents West Bancorporation, Inc. and Subsidiary 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, 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.
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. 24 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
Larger institutions generally have more diversified sources of noninterest income. 25 Table of Contents West Bancorporation, Inc. and Subsidiary 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 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.
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. 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.
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. 23 Table of Contents West Bancorporation, Inc. and Subsidiary The soundness of other financial institutions could adversely affect us.
Interest rates are sensitive to many factors, including government monetary and fiscal policies, domestic and international economic and political conditions and competition.
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.
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.
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.
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.
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.
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. 26 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
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.
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. Our securities portfolio has an average duration of 6.4 years, so we expect an increase in unrealized losses in rising interest rate environments.
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.
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.
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.
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.
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.
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.
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. 27 Table of Contents West Bancorporation, Inc. and Subsidiary 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 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.
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.
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.
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.
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. 29 Table of Contents West Bancorporation, Inc. and Subsidiary 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.
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.
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.
Although we have not experienced any material labor shortage to date, we have recently observed an overall tightening and increasingly competitive local labor market.
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.
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.
Continued elevated levels of inflation could adversely impact our business, results of operations and financial condition. The United States recently experienced elevated levels of inflation throughout 2022 and 2023. Inflationary pressures moderated in 2024, but future inflation metrics are uncertain for 2025 and onward.
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.
We are subject to extensive federal and state regulation, supervision and examination.
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.
Removed
At December 31, 2024, our borrowed funds decreased to $392.6 million, compared to $592.6 million at December 31, 2023. The overall decrease included reductions of $150.3 million in federal funds purchased and other short-term borrowings, $25.0 million in FHLB advances associated with long-term interest rate swaps and $20.0 million in FHLB advances with a fixed interest rate.
Added
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.
Removed
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.
Added
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.
Removed
While additional rate cuts are anticipated in 2025, the occurrence or significance of changes in interest rates cannot be predicted. Our interest-earning assets and interest-bearing liabilities may react in different degrees to changes in market interest rates.
Added
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.
Removed
A large percentage of our securities have fixed interest rates and are classified as available for sale. As is the case with many financial institutions, our emphasis on increasing the development of core deposits, those with no stated maturity date, has resulted in our interest-bearing liabilities having a shorter duration than our interest-earning assets.
Added
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.
Removed
This imbalance can create significant earnings volatility because interest rates change over time. As interest rates have increased in recent periods, our cost of funds has increased more rapidly than the yields on a substantial portion of our interest-earning assets. In addition, the market value of our securities portfolio has declined in recent periods.
Added
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.
Removed
At December 31, 2024, we had $128.8 million of net unrealized losses in the securities portfolio.
Added
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.
Removed
In line with the foregoing, we have experienced and may continue to experience an increase in the cost of interest-bearing liabilities, primarily due to raising the rates we pay on some of our deposit products to stay competitive within our market, and an increase in borrowing costs stemming from increases in the federal funds rate.
Added
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.
Removed
Community banks, such as West Bank, rely more heavily than larger institutions on net interest income as a revenue source.
Added
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.
Removed
Such unfavorable conditions could materially and adversely affect us.
Added
Their use also affects interest rates charged on loans or paid on deposits.
Removed
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 began enacting incremental rate cuts in 2024.
Added
The occurrence or significance of additional changes in the target federal funds interest rate in 2026 and beyond is not known at this time.
Removed
While additional rate cuts are anticipated in 2025, the occurrence or significance of changes in interest rates cannot be predicted.
Added
Our future success depends, in part, on our ability and the ability of our third-party partners to effectively implement new technology.
Removed
Given the complex factors affecting the strength of the U.S. economy, including uncertainties regarding the persistence of inflation, geopolitical developments such as the conflicts in the Middle East and the Russian invasion of Ukraine and resulting disruptions in the global energy market, tight labor market conditions domestically, supply chain issues both domestically and internationally and the potential effects of the new presidential administration, including the possible implementation of new tariffs, mass deportations and changes to tax or other financial regulations, there is a meaningful risk that the Federal Reserve and other central banks may maintain high interest rates or elect to make fewer or smaller interest rate cuts than anticipated, thereby limiting economic growth and potentially causing an economic recession or other political instability.
Added
Our stock price could fluctuate significantly in response to the impact of these risk factors. 28 Table of Contents West Bancorporation, Inc. and Subsidiary Issuing additional common or preferred stock may adversely affect the market price of our common stock, and capital may not be available when needed.
Removed
This could decrease loan demand, harm the credit characteristics of our existing loan portfolio, impact our net interest income, impact the value of our investment securities portfolio, and decrease the value of collateral securing loans.
Added
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.
Removed
The specific impact of such policies upon our business, financial condition and results of operations cannot be predicted. 27 Table of Contents West Bancorporation, Inc. and Subsidiary Other Risks Related to the Banking Industry in General Technology is changing rapidly and may put us at a competitive disadvantage.
Removed
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.
Removed
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.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

2 edited+0 added−0 removed10 unchanged
Biggest changeTo carry out their duties, the Board receives updates from the Risk Committee regarding cybersecurity risks and the Company’s efforts to prevent, detect, mitigate and remediate any cybersecurity incidents on at least a quarterly basis. 31 Table of Contents West Bancorporation, Inc. and Subsidiary
Biggest changeTo carry out their duties, the directors receive updates from the Risk Committee regarding cybersecurity risks and the Company’s efforts to prevent, detect, mitigate and remediate any cybersecurity incidents on at least a quarterly basis. 31 Table of Contents West Bancorporation, Inc. and Subsidiary
From time-to-time, we have identified cybersecurity threats that require us to make changes to our processes and to implement additional safeguards.
From time-to-time, we have identified minor cybersecurity threats that require us to make changes to our processes and to implement additional safeguards.

Item 2. Properties

Properties — owned and leased real estate

0 edited+0 added−1 removed2 unchanged
Removed
In 2023, West Bank purchased land in Owatonna, Minnesota for the purpose of constructing a full-service office. West Bank completed construction and opened this new office in January 2025, upon which time the leased office in Owatonna, Minnesota was vacated.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+0 added−0 removed4 unchanged
Biggest changeThe Company’s common stock price performance shown in the following graph is not indicative of future stock price performance. Period Ending Index 12/31/2019 12/31/2020 12/31/2021 12/31/2022 12/31/2023 12/31/2024 West Bancorporation, Inc. 100.00 78.82 131.21 112.28 98.38 105.98 Nasdaq Composite Index 100.00 144.92 177.06 119.45 172.77 223.87 S&P U.S.
Biggest changeThe 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 prepared by S&P Global Market Intelligence. The indices assume the investment of $100 on December 31, 2019, 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.
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.
Total cash dividends paid to common stockholders in both 2024 and 2023 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.
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.
There were 133 holders of record of the Company’s common stock as of February 14, 2025, and an estimated 4,300 additional beneficial holders whose stock was held in street name by brokerages or fiduciaries. The closing price of the Company’s common stock was $22.20 on February 14, 2025.
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.
BMI Banks - Midwest Region Index 100.00 85.98 113.59 98.03 100.08 122.10 *Source: S&P Global Market Intelligence. Used with permission. All rights reserved. 34 Table of Contents West Bancorporation, Inc. and Subsidiary ITEM 6. Reserved.
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. 34 Table of Contents West Bancorporation, Inc. and Subsidiary ITEM 6. Reserved.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

3 edited+0 added−0 removed0 unchanged
Biggest changeOTHER INFORMATION 100 ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTION 101 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE 102 ITEM 11. EXECUTIVE COMPENSATION 102 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS 102 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE 103 ITEM 14.
Biggest changeOTHER 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.
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 100 ITEM 9A. CONTROLS AND PROCEDURES 100 ITEM 9B.
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.
PRINCIPAL ACCOUNTANT FEES AND SERVICES 104 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 104
PRINCIPAL ACCOUNTANT FEES AND SERVICES 103 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES 103

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

97 edited+18 added−26 removed72 unchanged
Biggest changeInterest expense includes the effect of interest rate swaps, if applicable. 2024 2023 2022 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 $ 519,568 $ 34,423 6.63 % $ 520,116 $ 32,067 6.17 % $ 487,151 $ 22,742 4.67 % Real estate (3) 2,451,830 130,829 5.34 % 2,270,662 110,431 4.86 % 2,061,777 84,523 4.10 % Consumer and other 14,425 1,065 7.38 % 9,478 665 7.02 % 5,748 282 4.91 % Total loans 2,985,823 166,317 5.57 % 2,800,256 143,163 5.11 % 2,554,676 107,547 4.21 % Securities: Taxable 472,351 13,030 2.76 % 516,118 13,696 2.65 % 592,186 12,524 2.11 % Tax-exempt (3) 141,033 3,306 2.34 % 146,734 3,768 2.57 % 155,803 4,197 2.69 % Total securities 613,384 16,336 2.66 % 662,852 17,464 2.63 % 747,989 16,721 2.24 % Interest-bearing deposits 148,321 7,595 5.12 % 2,856 169 5.94 % 58,426 203 0.35 % Total interest-earning assets (3) 3,747,528 190,248 5.08 % 3,465,964 160,796 4.64 % 3,361,091 124,471 3.70 % Noninterest-earning assets: Cash and due from banks 23,699 23,139 23,842 Premises and equipment, net 101,413 67,281 43,299 Other, less allowance for credit losses 99,110 106,194 80,553 Total noninterest-earning assets 224,222 196,614 147,694 Total assets $ 3,971,750 $ 3,662,578 $ 3,508,785 Liabilities and Stockholders’ Equity Interest-bearing liabilities: Deposits: Interest-bearing demand $ 466,238 8,684 1.86 % $ 467,174 6,984 1.49 % $ 505,889 2,458 0.49 % Savings and money market 1,560,136 57,140 3.66 % 1,357,675 43,569 3.21 % 1,452,034 15,814 1.09 % Time 639,278 31,460 4.92 % 424,320 16,243 3.83 % 291,732 4,357 1.49 % Total deposits 2,665,652 97,284 3.65 % 2,249,169 66,796 2.97 % 2,249,655 22,629 1.01 % Borrowed funds: Federal funds purchased and other short-term borrowings 75,736 4,248 5.61 % 194,802 9,532 4.89 % 62,901 1,764 2.80 % Subordinated notes, net 79,760 4,431 5.55 % 79,501 4,442 5.59 % 52,873 2,867 5.42 % Federal Home Loan Bank advances 312,363 10,313 3.30 % 265,644 7,694 2.90 % 128,863 2,669 2.07 % Long-term debt 45,055 2,428 5.39 % 49,938 2,810 5.63 % 51,489 1,680 3.26 % Total borrowed funds 512,914 21,420 4.18 % 589,885 24,478 4.15 % 296,126 8,980 3.03 % Total interest-bearing liabilities 3,178,566 118,704 3.73 % 2,839,054 91,274 3.21 % 2,545,781 31,609 1.24 % Noninterest-bearing liabilities: Demand deposits 528,391 586,903 708,667 Other liabilities 40,308 25,218 30,284 Stockholders’ equity 224,485 211,403 224,053 Total liabilities and stockholders’ equity $ 3,971,750 $ 3,662,578 $ 3,508,785 Net interest income (4) /net interest spread (3) $ 71,544 1.35 % $ 69,522 1.43 % $ 92,862 2.46 % Net interest margin (3) (4) 1.91 % 2.01 % 2.76 % (1) Average loan balances include nonaccrual loans.
Biggest changeInterest 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.
Fluctuations in net interest income can result from the combination of changes in the 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.
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 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, tax-exempt gain from bank-owned life insurance, disallowed interest expense, stock compensation, state income taxes and the investment tax credit mentioned above.
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.
Non-owner occupied commercial real estate loan concentrations and the weighted average LTV by property type as of December 31, 2024 and 2023 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.
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.
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, 2024 or 2023.
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.
As of December 31, 2024, 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.
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.
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 and Federal Reserve Bank, other wholesale funding and funds provided by operations. Liquidity management is conducted on both a daily and a long-term basis.
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.
As of December 31, 2024, 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 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, 2024, 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.
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.
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, 2024, this borrowing had a balance of $31,250. Interest is payable quarterly.
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.
Brokered deposits included fixed-rate time deposits with maturities through September 2025 and variable-rate deposits with terms through February 2026. The decrease in brokered deposits during 2024 was primarily due to core deposit growth.
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.
Results of operations and financial condition for the year ended December 31, 2023 compared to the year ended December 31, 2022 can be found in Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations of the Company’s 2023 annual report on Form 10-K/A filed with the SEC on February 23, 2024. 36 Table of Contents (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.
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. 36 Table of Contents (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.
As of December 31, 2024, the Company also determined that no individual securities in an unrealized loss position represented credit losses that would require an allowance for credit losses.
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 believed the allowance for credit losses at December 31, 2024 was adequate to absorb expected losses in the loan portfolio as of that date. 39 Table of Contents (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.
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. 39 Table of Contents (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.
Results of operations for the year ended December 31, 2024 are compared to the results for the year ended December 31, 2023 and the consolidated financial condition of the Company as of December 31, 2024 is compared to December 31, 2023.
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.
Analysis of the Allowance for Credit Losses for the Years Ended December 31 2024 2023 2022 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 — — (0.02) % Consumer and other — — — Total 0.00 % 0.00 % (0.02) % Ratio of allowance for credit losses to total loans at the end of period 1.01 % 0.97 % 0.93 % Ratio of nonaccrual loans to total loans at end of period 0.00 % 0.01 % 0.01 % Ratio of allowance for credit losses to total nonaccrual loans at the end of period 22,881.20 % 9,575.00 % 7,910.87 % Ratio of net (charge-offs) recoveries to total loans at end of period 0.00 % 0.00 % (0.01) % 49 Table of Contents (dollars in thousands, except per share amounts) Nonperforming loans at December 31, 2024 totaled $133, or 0.00 percent of total loans, a slight decrease from $296, or 0.01 percent of total loans, at December 31, 2023.
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 % 49 Table of Contents (dollars in thousands, except per share amounts) Nonperforming loans at December 31, 2025 totaled $0, a slight decrease from $133, or 0.00 percent of total loans, at December 31, 2024.
Any deposit rate changes in 2025 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 $110,000 of deposit balances that effectively convert certain customer deposits with variable rates to fixed-rate instruments.
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.
Also, as of December 31, 2024, the ratios for the Company and West Bank were sufficient to meet the capital conservation buffer.
Also, as of December 31, 2025, the ratios for the Company and West Bank were sufficient to meet the capital conservation buffer.
Beginning June 15, 2027, the interest rate will reset quarterly to a floating rate per annum that will be three-month term Secured Overnight Financing Rate (SOFR) plus 2.41 percent, with payments due quarterly.
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 peer group for 2024 consists of 21 Midwestern, publicly traded financial institutions including Bank First Corporation, Bridgewater Bancshares, Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., CrossFirst Bankshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., German American Bancorp, Inc., HBT Financial, Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, MidWest One Financial Group, Inc., Nicolet Bankshares, Inc., Peoples Bancorp, Inc., and Southern Missouri Bancorp, Inc.
The peer group for 2025 consists of 20 Midwestern, publicly traded financial institutions including Bank First Corporation, Bridgewater Bancshares, Inc., ChoiceOne Financial Services, Inc., Civista Bancshares, Inc., Equity Bancshares, Inc., Farmers National Banc Corp., Farmers & Merchants Bancorp., First Business Financial Services, Inc., First Financial Corp., First Mid Bancshares, Inc., German American Bancorp, Inc., HBT Financial, Inc., Hills Bancorporation, Isabella Bank Corporation, LCNB Corp., Mercantile Bank Corporation, MidWest One Financial Group, Inc., Nicolet Bankshares, Inc., Peoples Bancorp, Inc., and Southern Missouri Bancorp, Inc.
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 A credit loss expense of $1,000 was recorded in 2024, compared to a credit loss expense of $700 in 2023.
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.
As of December 31, 2024 and 2023 there was no allowance for credit losses related to loans individually evaluated for credit losses.
As of December 31, 2025 and 2024, there was no allowance for credit losses related to loans individually evaluated for credit losses.
(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. 35 Table of Contents (dollars in thousands, except per share amounts) The Company’s 2024 net income was $24,050, compared to $24,137 in 2023.
(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. 35 Table of Contents (dollars in thousands, except per share amounts) The Company’s 2025 net income was $32,560, compared to $24,050 in 2024.
For further information, refer to the section “Non-GAAP Financial Measures” of this Item. 43 Table of Contents (dollars in thousands, except per share amounts) Tax-equivalent interest income and fees on loans increased $23,154 for the year ended December 31, 2024, compared to 2023.
For further information, refer to the section “Non-GAAP Financial Measures” of this Item. 43 Table of Contents (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.
Net cash from continuing operating activities contributed $39,808, $25,249 and $59,439 to liquidity for the years ended December 31, 2024, 2023 and 2022, respectively. Management believed that the combination of high levels of potentially liquid assets, unencumbered securities, cash flows from operations and additional borrowing capacity provided the Company with sufficient liquidity as of December 31, 2024.
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.
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 $243,478 as of December 31, 2024 compared with $65,357 as of December 31, 2023.
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.
A lower ratio is more desirable. 38 Table of Contents (dollars in thousands, except per share amounts) RESULTS OF OPERATIONS - 2024 COMPARED TO 2023 OVERVIEW Net income for the year ended December 31, 2024 was $24,050, compared to $24,137 for the year ended December 31, 2023.
A lower ratio is more desirable. 38 Table of Contents (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.
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 6.50 percent as of December 31, 2024.
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 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 $1,128 for the year ended December 31, 2024, compared to 2023.
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 allowance for credit losses as of December 31, 2024 was $30,432, or 1.01 percent of outstanding loans, compared to $28,342, or 0.97 percent of outstanding loans as of December 31, 2023. 37 Table of Contents (dollars in thousands, except per share amounts) NON-GAAP FINANCIAL MEASURES This report contains references to financial measures that are not defined in GAAP.
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. 37 Table of Contents (dollars in thousands, except per share amounts) NON-GAAP FINANCIAL MEASURES This report contains references to financial measures that are not defined in GAAP.
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 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.
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. 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 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. 52 Table of Contents (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.
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.
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.
Basic and diluted earnings per common share for 2024 were $1.43 and $1.42, respectively, compared to $1.44 and $1.44, respectively, in 2023. During 2024, we paid our common stockholders $16,806 ($1.00 per common share) in dividends compared to $16,704 ($1.00 per common share) in 2023.
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.
For the years ended December 31, 2024, 2023 and 2022, the Company’s net interest margin on a tax-equivalent basis was 1.91, 2.01 and 2.76 percent, respectively. Tax-equivalent net interest income increased $2,022 in 2024 compared to 2023.
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.
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, 2024 and 2023, included $162,148 and $152,160, respectively, of reciprocal deposits.
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.
Deposits increased to $3,357,596 as of December 31, 2024, from $2,973,779 as of December 31, 2023. The Company compares three key performance metrics to those of an identified peer group for evaluating its results.
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 net interest margin for 2024 decreased 10 basis points to 1.91 percent, compared to 2.01 percent for 2023. The average yield on earning assets increased by 44 basis points, while the average rate paid on interest-bearing liabilities increased by 52 basis points.
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.
As of December 31, 2024, West Bank had additional borrowing capacity available from the FHLB of approximately $610,000, as well as approximately $116,840 through the Federal Reserve discount window and $75,000 through unsecured federal funds lines of credit.
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.
As of December 31 2024 2023 2022 Amount %* Amount %* Amount %* Balance at end of period applicable to: Commercial $ 5,489 17.10 % $ 5,291 18.13 % $ 4,804 18.90 % Real estate: Construction, land and land development 4,354 16.89 3,668 14.11 3,548 13.21 1-4 family residential first mortgages 650 2.92 704 3.64 357 2.74 Home equity 200 0.64 142 0.50 101 0.38 Commercial 19,544 61.88 18,420 63.25 16,575 64.50 Consumer and other 195 0.57 117 0.37 88 0.27 $ 30,432 100.00 % $ 28,342 100.00 % $ 25,473 100.00 % * Percent of loans in each category to total loans.
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.
Total gross unrealized losses in the securities available for sale portfolio were $128,838 at December 31, 2024 compared to $121,806 at December 31, 2023.
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 and for the Years Ended December 31, 2024 2023 2022 Performance Ratios Return on average assets 0.61 % 0.66 % 1.32 % Return on average equity 10.71 % 11.42 % 20.71 % Efficiency ratio (1)(2) 63.25 % 60.73 % 43.70 % Nonperforming assets/total assets (1) 0.00 % 0.01 % 0.01 % Net interest margin (2) 1.91 % 2.01 % 2.76 % Dividends and Per Share Data Basic earnings per common share $ 1.43 $ 1.44 $ 2.79 Diluted earnings per common share 1.42 1.44 2.76 Cash dividends per common share 1.00 1.00 1.00 Dividend payout ratio 69.88 % 69.21 % 35.82 % Dividend yield 4.62 % 4.72 % 3.91 % Operating Results and Year-End Balances Net income $ 24,050 $ 24,137 $ 46,399 Total assets 4,014,991 3,825,758 3,613,218 Securities available for sale 544,565 623,919 664,115 Loans 3,004,860 2,927,535 2,742,836 Deposits 3,357,596 2,973,779 2,880,408 Borrowings 392,629 592,637 485,855 Stockholders’ equity 227,875 225,043 211,112 Average equity to average assets ratio 5.65 % 5.77 % 6.39 % 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.
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.
The estimated earn back period of the 2024 transaction is approximately two years. 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.
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.
The dividend declared and paid in the first quarter of 2025 was $0.25 per common share. Total assets were $4,014,991 at December 31, 2024, compared to $3,825,758 at December 31, 2023, a 4.9 percent increase. Our loan portfolio grew to $3,004,860 as of December 31, 2024, from $2,927,535 as of December 31, 2023.
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.
Net Interest Income Net interest income increased to $71,362 for 2024 from $69,031 for 2023, as the impact of the growth of interest-earning assets and increases in average yields on interest-earning assets exceeded the effects of an increase in average balances of interest-bearing liabilities and increase in average rate paid on interest-bearing liabilities.
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.
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).
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.
As and for the Years Ended December 31 2024 2023 2022 Reconciliation of net interest income and net interest margin on an FTE basis to GAAP: Net interest income (GAAP) $ 71,362 $ 69,031 $ 91,740 Tax-equivalent adjustment (1) 182 491 1,122 Net interest income on an FTE basis (non-GAAP) 71,544 69,522 92,862 Average interest-earning assets 3,747,528 3,465,964 3,361,091 Net interest margin on an FTE basis (non-GAAP) 1.91 % 2.01 % 2.76 % Reconciliation of efficiency ratio on an FTE basis to GAAP: Net interest income on an FTE basis (non-GAAP) $ 71,544 $ 69,522 $ 92,862 Noninterest income 8,434 10,066 10,208 Adjustment for realized securities losses, net 1,172 431 — Adjustment for losses on disposal of premises and equipment, net 47 29 29 Adjusted income 81,197 80,048 103,099 Noninterest expense 51,353 48,611 45,051 Efficiency ratio on an adjusted and FTE basis (non-GAAP) (2) 63.25 % 60.73 % 43.70 % (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.
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.
Federal income tax expense for 2024 and 2023 was $1,928 and $3,711, respectively, while state income tax expense was $1,465 and $1,938, respectively. The effective rate of income tax expense as a percent of income before income taxes was 12.3 percent and 18.9 percent, respectively, for 2024 and 2023.
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.
The timing and extent of additional interest rate changes by the Federal Reserve is not known at this time. 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.
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.
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, 2024, the Company had $266,418 in brokered deposits, compared to $305,411 at December 31, 2023.
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.
Loan officer lending authorities vary according to the individual loan officer’s experience and expertise. As of December 31, 2024 and 2023, there were no loans that were past due 30 days or more. 45 Table of Contents (dollars in thousands, except per share amounts) Nonperforming loans declined to $133 at December 31, 2024, compared to $296 at December 31, 2023.
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.
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.
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.
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.
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.
Actual repayments may differ from contractual maturities because individual borrowers may have the right to prepay loans with or without prepayment penalties.
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.
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) — % — % 1.73 % 2.06 % 2.03 % Collateralized mortgage obligations — — 2.27 1.64 1.64 Mortgage-backed securities — 1.36 1.61 1.55 1.55 Collateralized loan obligations — — 6.53 — 6.53 Corporate notes — — 3.26 — 3.26 — % 1.36 % 3.09 % 1.77 % 1.92 % (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.
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.
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 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 decrease was due to a payoff on the single loan included in nonperforming loans as of December 31, 2023, partially offset by the addition of one loan as of December 31, 2024. The watch classification of loans increased to $8,349 as of December 31, 2024 from $144 as of December 31, 2023.
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.
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.
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.
The decrease in nonperforming loans at December 31, 2024, compared to December 31, 2023, was due a payoff on the single loan included in the nonaccrual balance on December 31, 2023, partially offset by the addition of one loan as of 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.
The improvement was driven by a combination of an increase in the average balance of loans and an increase in loan yields in 2024 compared to 2023. The average balance of loans increased $185,567 in 2024 compared to 2023, while loan yields increased by 46 basis points in 2024 compared to 2023.
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.
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, and fluctuations in our business customers’ and municipal customers’ own liquidity needs. The Company utilizes brokered deposits and other wholesale funding to supplement core deposit fluctuations and loan growth.
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.
As of December 31 2024 2023 Balance % of Non-owner Occupied CRE Weighted Average LTV Balance % of Non-owner Occupied CRE Weighted Average LTV Non-owner occupied: Multifamily $ 542,322 28.5 % 69 % $ 453,958 24.2 % 69 % Medical & senior care facilities 180,144 9.5 64 225,314 12.0 63 Warehouse & trucking 160,783 8.4 60 167,030 8.9 63 Hotels 253,939 13.3 64 251,497 13.4 66 Mixed use 98,988 5.2 67 96,488 5.2 67 Offices 126,270 6.6 68 137,468 7.4 70 Land for development 89,974 4.7 56 110,874 5.9 64 All other 452,772 23.8 not available 430,515 23.0 not available $ 1,905,192 100.0 % $ 1,873,144 100.0 % The following table summarizes non-owner occupied commercial real estate loans by property type and risk rating as of December 31, 2024.
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.
Years ended December 31 2024 2023 2022 Average Average Average Average Average Average Balance Rate Balance Rate Balance Rate Noninterest-bearing demand $ 528,391 — % $ 586,903 — % $ 708,667 — % Interest-bearing demand: Insured cash sweep 150,774 3.44 137,027 2.48 139,807 0.80 Other interest-bearing demand 315,464 1.11 330,147 1.09 366,082 0.37 Money market: Insured cash sweep 241,444 4.00 249,574 3.58 323,970 1.01 Other money market 1,161,566 3.85 973,853 3.47 967,953 1.26 Savings 157,126 1.73 134,248 0.61 160,111 0.24 Time 639,278 4.92 424,320 3.83 291,732 1.49 $ 3,194,043 $ 2,836,072 $ 2,958,322 Management reduced interest rates on deposits in the fourth quarter of 2024 as a result of the reductions in the target federal funds rate by the Federal Reserve.
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.
The following table shows the amounts and remaining maturities of time deposits with balances of $100 or more as of December 31, 2024. 3 months or less $ 246,691 Over 3 through 6 months 166,024 Over 6 through 12 months 183,137 Over 12 months 2,038 $ 597,890 West Bank participates in the IntraFi ® ICS and CDARS reciprocal deposit network, which enables depositors to receive FDIC insurance coverage on deposits otherwise exceeding the maximum insurable amount.
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.
Brokered deposits are obtained through various programs administered by IntraFi® and through other third party brokers. At December 31, 2024, the Company had $266,418 in brokered deposits, which included fixed-rate time deposits with maturities through September 2025 and variable-rate deposits with terms through February 2026.
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.
Loan originations and renewals in 2024 continued to reprice at prevailing market rates which exceeded the current weighted average portfolio rate. 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 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 portion of the allowance for credit losses related to loans collectively evaluated for credit losses increased to $30,432, or 1.01 percent of outstanding loans as of December 31, 2024, compared to $28,342, or 0.97 percent of outstanding loans as of December 31, 2023.
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.
Peer Group Range As of and for the year ended December 31, 2024 As of and for the year ended December 31, 2024 Return on average equity 10.71% (11.08%)-14.44% Efficiency ratio (1) 63.25% 46.23%-73.19% Nonperforming assets to total assets 0.00% 0.01%-0.80% (1) The efficiency ratio is a non-GAAP financial measure.
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 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.
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.
Included in total deposits as of December 31, 2024 and 2023, were $220,627 and $165,858, respectively, of reciprocal interest-bearing checking and $273,126 and $254,504, respectively, of reciprocal money market deposits. Total estimated uninsured deposits were $1,562,981, $1,435,406 and $1,412,955 as of December 31, 2024, 2023 and 2022, respectively.
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. 51 Table of Contents (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.
Changes in the loan portfolio during 2024 included an increase of $94,670 in construction, land and land development loans and decreases of $18,830 in 1-4 family residential first mortgage loans and $17,362 in commercial and industrial loans. The Company continues to focus on business development efforts in all of its markets.
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.
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.
Management places a strong emphasis on monitoring the composition of the Company’s commercial real estate loan portfolio.
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. 2024 Compared to 2023 2023 Compared to 2022 Volume Rate Total Volume Rate Total Interest Income Loans: (1) Commercial $ (34) $ 2,390 $ 2,356 $ 1,625 $ 7,700 $ 9,325 Real estate (2) 9,197 11,201 20,398 9,125 16,783 25,908 Consumer and other 364 36 400 230 153 383 Total loans (including fees) 9,527 13,627 23,154 10,980 24,636 35,616 Securities: Taxable (1,193) 527 (666) (1,746) 2,918 1,172 Tax-exempt (2) (142) (320) (462) (238) (191) (429) Total securities (1,335) 207 (1,128) (1,984) 2,727 743 Interest-bearing deposits 7,452 (26) 7,426 (366) 332 (34) Total interest income (2) 15,644 13,808 29,452 8,630 27,695 36,325 Interest Expense Deposits: Interest-bearing demand (14) 1,714 1,700 (202) 4,728 4,526 Savings and money market 6,969 6,602 13,571 (1,092) 28,847 27,755 Time 9,731 5,486 15,217 2,677 9,209 11,886 Total deposits 16,686 13,802 30,488 1,383 42,784 44,167 Borrowed funds: Federal funds purchased and other short-term borrowings (6,514) 1,230 (5,284) 5,732 2,036 7,768 Subordinated debt, net 14 (25) (11) 1,485 90 1,575 Federal Home Loan Bank advances 1,459 1,160 2,619 3,654 1,371 5,025 Long-term debt (267) (115) (382) (52) 1,182 1,130 Total borrowed funds (5,308) 2,250 (3,058) 10,819 4,679 15,498 Total interest expense 11,378 16,052 27,430 12,202 47,463 59,665 Net interest income (2) (3) $ 4,266 $ (2,244) $ 2,022 $ (3,572) $ (19,768) $ (23,340) (1) Average balances of nonaccrual loans were included for computational purposes.
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.
The effective tax rate for both 2024 and 2023 was also impacted by federal income tax credits, including low income housing tax credits and a new markets tax credit from West Bank’s investment in a qualified community development entity, of approximately $1,508 and $1,498, respectively.
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 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.
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. 46 Table of Contents (dollars in thousands, except per share amounts) 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.
The average balance of borrowed funds decreased $76,971 in 2024 compared to 2023. The average balance of federal funds purchased and other short-term borrowings decreased $119,066 in 2024 compared to 2023 primarily due to increases in deposits. The average balance of FHLB advances increased by $46,719 in 2024 compared to 2023.
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.
Years ended December 31 Noninterest expense: 2024 2023 Change Change % Salaries and employee benefits $ 27,588 $ 27,060 $ 528 2.0 % Occupancy and equipment 7,320 5,507 1,813 32.9 % Data processing 2,991 2,790 201 7.2 % Technology and software 2,896 2,341 555 23.7 % FDIC insurance 2,560 1,750 810 46.3 % Professional fees 1,041 1,026 15 1.5 % Director fees 828 892 (64) (7.2) % Other expenses: Insurance expense 821 793 28 3.5 % Business development 803 1,263 (460) (36.4) % Trust 663 622 41 6.6 % Consulting fees 262 257 5 1.9 % Marketing 97 163 (66) (40.5) % Charitable contributions — 180 (180) (100.0) % Low income housing projects amortization 571 589 (18) (3.1) % New markets tax credit project amortization and management fees 919 919 — — % All other 1,993 2,459 (466) (19.0) % Total other 6,129 7,245 (1,116) (15.4) % Total noninterest expense $ 51,353 $ 48,611 $ 2,742 5.6 % 40 Table of Contents (dollars in thousands, except per share amounts) Occupancy and equipment expense increased in 2024 compared to 2023 primarily due to an increase in occupancy costs related to bank buildings, including the Company’s new headquarters building.
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 % 40 Table of Contents (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.
The Federal Reserve increased the target federal funds interest rate by a total of 425 basis points in 2022 and an additional 100 basis points in 2023. In 2024, the Federal Reserve decreased the target federal funds rate by a total of 100 basis points.
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.
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.
The collateralized mortgage obligations and mortgage-backed securities have monthly paydowns that are not reflected in the table.
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. 52 Table of Contents (dollars in thousands, except per share amounts) As of December 31, 2024, the allowance for credit losses related to off-balance sheet commitments was $1,544.
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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−0 removed11 unchanged
Biggest changeAt December 31, 2024 Sensitivity of Net Interest Income Over One Year Horizon Change in Interest Rates $ Change % Change 300 basis points rising $ (8,155) (8.54) % 200 basis points rising (5,060) (5.30) 100 basis points rising (2,928) (3.06) 100 basis points falling 2,165 2.27 200 basis points falling 3,333 3.49 300 basis points falling 4,075 4.27 Computations of the prospective effects of hypothetical interest rate changes are based on numerous assumptions.
Biggest changeAt 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.
Actual results may differ from the computations 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. 54 Table of Contents West Bancorporation, Inc. and Subsidiary
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. 54 Table of Contents West Bancorporation, Inc. and Subsidiary
The change in each interest rate scenario represents 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 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.

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