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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2023
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission File Number:  0-49677

WEST BANCORPORATION, INC.
(Exact Name of Registrant as Specified in its Charter)
Iowa42-1230603
(State of Incorporation)(I.R.S. Employer Identification No.)
1601 22nd Street, West Des Moines, Iowa
50266
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code:  (515) 222-2300

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

Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stock, no par valueWTBAThe Nasdaq Global Select Market

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

Yes  ☒                      No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☒                      No  o

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐                      No  ☒

As of July 26, 2023, there were 16,725,094 shares of common stock, no par value, outstanding.


WEST BANCORPORATION, INC.
INDEX
Page
PART I.
Item 1.
Item 2.
Item 3.
Item 4.
PART II.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
3

PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
West Bancorporation, Inc. and Subsidiary
Consolidated Balance Sheet
(unaudited)


(in thousands, except share and per share data)June 30, 2023December 31, 2022
ASSETS
Cash and due from banks$29,776 $24,896 
Interest-bearing deposits1,968 1,643 
Cash and cash equivalents31,744 26,539 
Securities available for sale, at fair value645,091 664,115 
Federal Home Loan Bank stock, at cost22,488 19,336 
Loans2,807,075 2,742,836 
Allowance for credit losses(27,938)(25,473)
Loans, net2,779,137 2,717,363 
Premises and equipment, net66,683 53,124 
Accrued interest receivable11,785 11,988 
Bank-owned life insurance43,328 44,573 
Deferred tax assets, net36,106 36,609 
Other assets42,193 39,571 
Total assets$3,678,555 $3,613,218 
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Noninterest-bearing demand$568,029 $693,563 
Interest-bearing demand459,030 536,226 
Savings and money market1,416,610 1,237,954 
Time392,656 412,665 
Total deposits2,836,325 2,880,408 
Federal funds purchased and other short-term borrowings184,150 200,000 
Subordinated notes, net79,500 79,369 
Federal Home Loan Bank advances280,000 155,000 
Long-term debt50,236 51,486 
Accrued expenses and other liabilities31,218 35,843 
Total liabilities3,461,429 3,402,106 
COMMITMENTS AND CONTINGENCIES (NOTE 8)
STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value; authorized 50,000,000 shares; no shares issued and outstanding at June 30, 2023 and December 31, 2022
— — 
Common stock, no par value; authorized 50,000,000 shares; 16,725,094
    and 16,640,413 shares issued and outstanding at June 30, 2023
    and December 31, 2022, respectively
3,000 3,000 
Additional paid-in capital32,642 32,021 
Retained earnings269,301 267,562 
Accumulated other comprehensive loss(87,817)(91,471)
Total stockholders' equity217,126 211,112 
Total liabilities and stockholders' equity$3,678,555 $3,613,218 

See Notes to Consolidated Financial Statements.
4



West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Income
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except per share data)2023202220232022
Interest income:
Loans, including fees$35,011 $24,848 $67,959 $48,134 
Securities:
Taxable3,432 3,090 6,748 5,979 
Tax-exempt883 892 1,768 1,750 
Interest-bearing deposits 25 67 55 149 
Total interest income39,351 28,897 76,530 56,012 
Interest expense:  
Deposits16,277 3,146 29,616 5,297 
Federal funds purchased and other short-term borrowings2,264 157 4,343 157 
Subordinated notes1,109 394 2,215 642 
Federal Home Loan Bank advances1,621 635 2,883 1,265 
Long-term debt739 326 1,437 584 
Total interest expense22,010 4,658 40,494 7,945 
Net interest income17,341 24,239 36,036 48,067 
Credit loss expense (benefit)— (1,750)— (2,500)
Net interest income after credit loss expense (benefit)17,341 25,989 36,036 50,567 
Noninterest income:  
Service charges on deposit accounts458 585 920 1,165 
Debit card usage fees511 507 997 979 
Trust services749 622 1,455 1,251 
Increase in cash value of bank-owned life insurance250 236 507 463 
Gain from bank-owned life insurance— — 691 — 
Other income421 328 776 809 
Total noninterest income2,389 2,278 5,346 4,667 
Noninterest expense:  
Salaries and employee benefits7,029 6,410 13,896 12,708 
Occupancy and equipment1,322 1,242 2,649 2,328 
Data processing729 656 1,364 1,280 
Technology and software579 492 1,092 968 
FDIC insurance420 289 836 626 
Professional fees287 202 537 419 
Director fees251 222 456 390 
Other expenses1,857 1,753 3,715 3,209 
Total noninterest expense12,474 11,266 24,545 21,928 
Income before income taxes7,256 17,001 16,837 33,306 
Income taxes1,394 4,334 3,131 7,455 
Net income$5,862 $12,667 $13,706 $25,851 
 
Basic earnings per common share$0.35 $0.76 $0.82 $1.56 
Diluted earnings per common share$0.35 $0.75 $0.82 $1.54 

See Notes to Consolidated Financial Statements.
5



West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income (Loss)
(unaudited)
 Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Net income$5,862 $12,667 $13,706 $25,851 
Other comprehensive income (loss):  
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during the period(8,837)(44,413)2,830 (99,008)
Income tax (expense) benefit2,192 11,236 (719)25,049 
Other comprehensive income (loss) on securities(6,645)(33,177)2,111 (73,959)
Unrealized gains (losses) on derivatives:
Unrealized holding gains arising during the period8,102 4,066 6,468 14,602 
Plus: reclassification adjustment for net (gains) losses realized in net income(2,467)642 (4,425)1,687 
Income tax expense(1,382)(1,191)(500)(4,121)
Other comprehensive income on derivatives4,253 3,517 1,543 12,168 
Total other comprehensive income (loss)(2,392)(29,660)3,654 (61,791)
Comprehensive income (loss)$3,470 $(16,993)$17,360 $(35,940)

See Notes to Consolidated Financial Statements.
 
6



West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
(unaudited)
(in thousands, except share and per share data)
Three Months Ended June 30, 2023
Accumulated
AdditionalOther
PreferredCommon StockPaid-InRetainedComprehensive
StockSharesAmountCapitalEarningsIncome (Loss)Total
Balance, March 31, 2023$— 16,712,257 $3,000 $31,797 $267,620 $(85,425)$216,992 
Net income
— — — — 5,862 — 5,862 
Other comprehensive loss, net of tax— — — — — (2,392)(2,392)
Cash dividends declared, $0.25 per common share
— — — — (4,181)— (4,181)
Stock-based compensation costs
— — — 845 — — 845 
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes— 12,837 — — — — — 
Balance, June 30, 2023$— 16,725,094 $3,000 $32,642 $269,301 $(87,817)$217,126 
Three Months Ended June 30, 2022
Accumulated
AdditionalOther
PreferredCommon StockPaid-InRetainedComprehensive
StockSharesAmountCapitalEarningsIncome (Loss)Total
Balance, March 31, 2022$— 16,631,413 $3,000 $29,421 $246,827 $(42,768)$236,480 
Net income— — — — 12,667 — 12,667 
Other comprehensive loss, net of tax— — — — — (29,660)(29,660)
Cash dividends declared, $0.25 per common share
— — — — (4,160)— (4,160)
Stock-based compensation costs
— — — 862 — — 862 
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes— 9,000 — — — — — 
Balance, June 30, 2022$— 16,640,413 $3,000 $30,283 $255,334 $(72,428)$216,189 
See Notes to Consolidated Financial Statements.
7



West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
(unaudited)
(in thousands, except share and per share data)
Six Months Ended June 30, 2023
Accumulated
AdditionalOther
PreferredCommon StockPaid-InRetainedComprehensive
StockSharesAmountCapitalEarningsIncome (Loss)Total
Balance, December 31, 2022$— 16,640,413 $3,000 $32,021 $267,562 $(91,471)$211,112 
Cumulative effect of change in accounting principle(1)
— — — — (3,626)— (3,626)
Net income
— — — — 13,706 — 13,706 
Other comprehensive income,
   net of tax
— — — — — 3,654 3,654 
Cash dividends declared, $0.50 per common share
— — — — (8,341)— (8,341)
Stock-based compensation costs
— — — 1,556 — — 1,556 
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes— 84,681 — (935)— — (935)
Balance, June 30, 2023$— 16,725,094 $3,000 $32,642 $269,301 $(87,817)$217,126 
Six Months Ended June 30, 2022
Accumulated
AdditionalOther
PreferredCommon StockPaid-InRetainedComprehensive
StockSharesAmountCapitalEarningsIncome (Loss)Total
Balance, December 31, 2021$— 16,554,846 $3,000 $30,183 $237,782 $(10,637)$260,328 
Net income
— — — — 25,851 — 25,851 
Other comprehensive loss, net of tax— — — — — (61,791)(61,791)
Cash dividends declared, $0.50 per common share
— — — — (8,299)— (8,299)
Stock-based compensation costs
— — — 1,619 — — 1,619 
Issuance of common stock upon vesting of restricted stock units, net of shares withheld for payroll taxes
— 85,567 — (1,519)— — (1,519)
Balance, June 30, 2022$— 16,640,413 $3,000 $30,283 $255,334 $(72,428)$216,189 
(1)Cumulative effect adjustment pursuant to adoption of ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. See Note 1 for additional information.

See Notes to Consolidated Financial Statements.

8



West Bancorporation, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(unaudited)
Six Months Ended June 30,
(in thousands)20232022
Cash Flows from Operating Activities:
Net income$13,706 $25,851 
Adjustments to reconcile net income to net cash provided by operating activities:
Credit loss expense (benefit)— (2,500)
Net amortization and accretion1,638 1,409 
Stock-based compensation1,556 1,619 
Increase in cash value of bank-owned life insurance(507)(463)
Gain from bank-owned life insurance(691)— 
Depreciation808 680 
Provision for deferred income taxes462 1,885 
Change in assets and liabilities:
(Increase) decrease in accrued interest receivable203 (473)
(Increase) decrease in other assets(947)1,448 
Increase (decrease) in accrued expenses and other liabilities(5,964)4,189 
Net cash provided by operating activities10,264 33,645 
Cash Flows from Investing Activities:  
Proceeds from principal paydowns, maturities and calls of securities available for sale20,326 46,529 
Purchases of securities available for sale— (120,077)
Purchases of Federal Home Loan Bank stock(60,394)(21,003)
Proceeds from redemption of Federal Home Loan Bank stock57,242 15,436 
Net increase in loans(64,232)(117,363)
Purchases of premises and equipment(15,000)(8,548)
Proceeds of principal and earnings from bank-owned life insurance2,458 — 
Net cash used in investing activities(59,600)(205,026)
Cash Flows from Financing Activities:  
Net decrease in deposits(44,083)(173,554)
Net increase (decrease) in federal funds purchased and other short-term borrowings(15,850)130,120 
Proceeds from issuance of subordinated debt, net of issuance costs— 58,783 
Net increase in Federal Home Loan Bank advances125,000 — 
Principal payments on long-term debt(1,250)(35)
Common stock dividends paid(8,341)(8,299)
Restricted stock units withheld for payroll taxes (935)(1,519)
Net cash provided by financing activities54,541 5,496 
Net increase (decrease) in cash and cash equivalents5,205 (165,885)
Cash and Cash Equivalents:
Beginning26,539 192,825 
Ending$31,744 $26,940 
Supplemental Disclosures of Cash Flow Information:
Cash payments for:
Interest$39,277 $7,526 
Income taxes2,250 3,890 
See Notes to Consolidated Financial Statements.

9


West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)

1.  Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by West Bancorporation, Inc. (the Company) pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to such rules and regulations. Although management believes that the disclosures are adequate to make the information presented understandable, it is suggested that these interim consolidated financial statements be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023. In the opinion of management, the accompanying consolidated financial statements of the Company contain all adjustments necessary to fairly present its financial position as of June 30, 2023 and December 31, 2022, and net income, comprehensive income (loss) and changes in stockholders' equity for the three and six months ended June 30, 2023 and 2022, and cash flows for the six months ended June 30, 2023 and 2022. The results for these interim periods may not be indicative of results for the entire year or for any other period.

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

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

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

In December 2019, the FASB issued ASU No. 2019-10, Financial Instruments-Credit Losses (Topic 326). This update amended the effective date of ASU No. 2016-13 for certain entities, including smaller reporting companies until fiscal years beginning after December 15, 2022, including interim periods within those fiscal periods. Early adoption was permitted. The one-time determination date for identifying as a smaller reporting company was November 15, 2019. The Company met the definition of a smaller reporting company as of that date and was not required to adopt the standard until January 1, 2023.


10


West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)



In March 2022, the FASB issued ASU No. 2022-02, Financial Instruments - Credit Losses (ASC 326): Troubled Debt Restructurings and Vintage Disclosures. The amendments in this ASU improve the usefulness of information provided to investors about certain loan refinancings, restructurings, and write-offs. The amendments eliminate the accounting guidance for troubled debt restructurings (TDRs) by creditors that have adopted ASU No. 2016-13. It also enhances disclosure requirements for certain loan refinancings and restructurings by creditors made to borrowers experiencing financial difficulty. Lastly, the amendments require that a public business entity disclose current-period gross write-offs by year of origination for financing receivables and net investment in leases.

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

The following table illustrates the impact of ASC 326 adoption.

 January 1, 2023
Pre-ASC 326 AdoptionImpact of ASC 326 AdoptionAs Reported Under ASC 326
Assets:
    Commercial$4,804 $677 $5,481 
    Real estate:
    Construction, land and land development3,548 (234)3,314 
    1-4 family residential first mortgages357 121 478 
    Home equity101 (8)93 
    Commercial16,575 1,911 18,486 
    Consumer and other88 (9)79 
Allowance for credit losses on loans$25,473 $2,458 $27,931 
Liabilities:
  Liability for off-balance sheet credit exposures$— $2,344 $2,344 

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendments in this update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. They provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments in this update were effective for all entities as of March 12, 2020 through December 31, 2022. In January 2021, the FASB issued ASU No. 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments in this update refine the scope for certain optional expedients and exceptions for contract modifications and hedge accounting to apply to derivative contracts and certain hedging relationships affected by the discounting transition. The amendments in this update were effective for all entities as of March 12, 2020 through December 31, 2022. In December 2022, the FASB issued ASU No. 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848. The amendment in this update extends the period of time preparers can utilize reference rate reform relief guidance in Topic 848, discussed above. ASU No. 2022-06 defers the sunset date from December 31, 2022 to December 31, 2024. The Company does not expect the updates within Topic 848 to have a material impact on our financial statements.


11


West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)



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

2.  Earnings per Common Share

Basic earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflect the potential dilution that could occur if the Company's outstanding restricted stock units were vested. The dilutive effect was computed using the treasury stock method, which assumes all stock-based awards were exercised and the hypothetical proceeds from exercise were used by the Company to purchase common stock at the average market price during the period. The incremental shares, to the extent they would have been dilutive, were included in the denominator of the diluted earnings per common share calculation. The calculations of earnings per common share and diluted earnings per common share for the three and six months ended June 30, 2023 and 2022 are presented in the following table.

Three Months Ended June 30,Six Months Ended June 30,
(in thousands, except per share data)2023202220232022
Net income$5,862 $12,667 $13,706 $25,851 
 
Weighted average common shares outstanding16,722 16,638 16,683 16,599 
Weighted average effect of restricted stock units outstanding
34 145 46 218 
Diluted weighted average common shares outstanding16,756 16,783 16,729 16,817 
     
Basic earnings per common share$0.35 $0.76 $0.82 $1.56 
Diluted earnings per common share$0.35 $0.75 $0.82 $1.54 
Number of anti-dilutive common stock equivalents excluded from diluted earnings per share computation411 182 416 88 
12


West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)



3.  Securities Available for Sale

The following tables show the amortized cost, gross unrealized gains and losses, and fair value of securities available for sale, by security type as of June 30, 2023 and December 31, 2022.
 June 30, 2023
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
(Losses)		Fair
Value
Securities available for sale:
State and political subdivisions$241,579 $4 $(44,187)$197,396 
Collateralized mortgage obligations (1)
324,003 — (59,169)264,834 
Mortgage-backed securities (1)
163,713 — (28,133)135,580 
Collateralized loan obligations37,948 — (685)37,263 
Corporate notes13,750 — (3,732)10,018 
 $780,993 $4 $(135,906)$645,091 
 December 31, 2022
 Amortized
Cost		Gross
Unrealized
Gains		Gross
Unrealized
(Losses)		Fair
Value
Securities available for sale:
State and political subdivisions$242,823 $4 $(49,472)$193,355 
Collateralized mortgage obligations (1)
338,875 — (57,247)281,628 
Mortgage-backed securities (1)
169,451 — (29,171)140,280 
Collateralized loan obligations37,948 — (1,137)36,811 
Corporate notes13,750 — (1,709)12,041 
 $802,847 $4 $(138,736)$664,115 
(1)Collateralized mortgage obligations and mortgage-backed securities consist of residential and commercial mortgage pass-through securities and collateralized mortgage obligations guaranteed by FNMA, FHLMC, GNMA and SBA.

Securities with an amortized cost of approximately $464,361 and $293,017 as of June 30, 2023 and December 31, 2022, respectively, were pledged to secure access to FHLB advances and Federal Reserve credit programs, for public fund deposits, and for other purposes as required or permitted by law or regulation.

The amortized cost and fair value of securities available for sale as of June 30, 2023, by contractual maturity, are shown below. Certain securities have call features that allow the issuer to call the securities prior to maturity. Expected maturities may differ from contractual maturities for collateralized mortgage obligations and mortgage-backed securities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Therefore, collateralized mortgage obligations and mortgage-backed securities are not included in the maturity categories within the following maturity summary.
 June 30, 2023
 Amortized CostFair Value
Due after five years through ten years$72,800 $65,002 
Due after ten years220,477 179,675 
 293,277 244,677 
Collateralized mortgage obligations and mortgage-backed securities487,716 400,414 
 $780,993 $645,091 
13


West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)



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

The following tables show the fair value and gross unrealized losses, aggregated by investment type and length of time that individual securities have been in a continuous loss position, as of June 30, 2023 and December 31, 2022.
June 30, 2023
 Less than 12 months12 months or longerTotal
 Fair
Value		Gross
Unrealized
(Losses)		No. of SecuritiesFair
Value		Gross
Unrealized
(Losses)		No. of SecuritiesFair
Value		Gross
Unrealized
(Losses)
Securities available for sale:
State and political subdivisions$9,853 $(273)14$186,848 $(43,914)102$196,701 $(44,187)
Collateralized mortgage obligations— — —264,834 (59,169)79264,834 (59,169)
Mortgage-backed securities— — —135,580 (28,133)27135,580 (28,133)
Collateralized loan obligations— — —37,263 (685)637,263 (685)
Corporate notes— — —10,018 (3,732)810,018 (3,732)
 $9,853 $(273)14$634,543 $(135,633)222$644,396 $(135,906)
       
 December 31, 2022
 Less than 12 months12 months or longerTotal
 Fair
Value		Gross
Unrealized
(Losses)		No. of SecuritiesFair
Value		Gross
Unrealized
(Losses)		No. of SecuritiesFair
Value		Gross
Unrealized
(Losses)
Securities available for sale:
State and political subdivisions$74,676 $(11,556)74$118,487 $(37,916)43$193,163 $(49,472)
Collateralized mortgage obligations107,449 (14,484)48174,179 (42,763)31281,628 (57,247)
Mortgage-backed securities31,350 (4,556)8108,930 (24,615)19140,280 (29,171)
Collateralized loan obligations14,468 (480)322,343 (657)336,811 (1,137)
Corporate notes9,185 (1,315)52,856 (394)312,041 (1,709)
 $237,128 $(32,391)138$426,795 $(106,345)99$663,923 $(138,736)

The Company adopted ASU No. 2016-13 effective January 1, 2023 which requires credit losses on available-for-sale securities to be recorded in an allowance for credit losses. If the Company intends to sell, or it is more likely than not that it will be required to sell the security before recovery of its amortized cost basis, then the security is written down to fair value through income. As of June 30, 2023, 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 June 30, 2023, the Company also determined that no individual securities in an unrealized loss position represented credit losses that would require an allowance for credit losses. The Company concluded that the unrealized losses were primarily attributable to increases in market interest rates since these securities were purchased and other market conditions. Accrued interest receivable is not included in available-for-sale security balances and is presented in the "Accrued interest receivable" line of the Consolidated Balance Sheets. Interest receivable on securities was $3,354 as of June 30, 2023, and is excluded from the estimate of credit losses.

As of December 31, 2022, the Company believed the unrealized losses on securities available for sale were due to market conditions rather than reduced estimated cash flows. At December 31, 2022, the Company did not intend to sell these securities, did not anticipate that these securities will be required to be sold before anticipated recovery, and expected full principal and interest to be collected. Therefore, under the accounting principles effective at December 31, 2022, the Company did not consider these securities to have other than temporary impairment as of December 31, 2022.
14


West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)




4. Loans and Allowance for Credit Losses

Loans consisted of the following segments as of June 30, 2023 and December 31, 2022.
 June 30, 2023December 31, 2022
Commercial$535,085 $519,196 
Real estate:
Construction, land and land development351,461 363,014 
1-4 family residential first mortgages80,998 75,211 
Home equity12,625 10,322 
Commercial1,820,718 1,771,940 
Consumer and other10,289 7,292 
 2,811,176 2,746,975 
Net unamortized fees and costs(4,101)(4,139)
 $2,807,075 $2,742,836 

Real estate loans of approximately $1,390,000 and $1,190,000 were pledged as security for Federal Home Loan Bank (FHLB) advances as of June 30, 2023 and December 31, 2022, respectively.

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


15


West Bancorporation, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(unaudited)
(dollars in thousands, except per share data)



Allowance for Credit Losses for Loans

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

Three Months Ended June 30, 2023
Real Estate
CommercialConstruction and Land1-4 Family ResidentialHome EquityCommercialConsumer and OtherTotal
Beginning balance$5,497 $3,166