WEST BANCORPORATION INC

The following discussion describes the consolidated operations and financial condition of the Company, West Bank and West Bank's special purpose subsidiaries (which are invested in new markets tax credit activities). Results of operations for the three months ended March 31, 2025 are compared to the results for the same period in 2024, and the consolidated financial condition of the Company as of March 31, 2025 is compared to that as of December 31, 2024. This discussion and analysis should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 20, 2025.

The Company conducts business from its headquarters building in West Des Moines, Iowa and through its branch offices in central Iowa, which is generally the greater Des Moines metropolitan area; eastern Iowa, which is the area including and surrounding Iowa City and Coralville; and southern Minnesota, which includes the cities of Rochester, Owatonna, Mankato and St. Cloud.

Net income for the three months ended March 31, 2025 was $7,842, or $0.46 per diluted common share, compared to $5,809, or $0.35 per diluted common share, for the three months ended March 31, 2024. The Company's annualized return on average assets and return on average equity for the three months ended March 31, 2025 were 0.81 percent and 13.84 percent, respectively, compared to 0.61 percent and 10.63 percent, respectively, for the three months ended March 31, 2024.

Net interest income for the three months ended March 31, 2025 increased $4,105, or 24.5 percent, compared to the three months ended March 31, 2024. The increase in net interest income was primarily due to increases in interest income on loans and interest-bearing deposits at other financial institutions and a decrease in interest expense on short term borrowed funds. Growth in average deposit balances provided for a reduction in average short term borrowings and an increase in average interest bearing deposits in other financial institutions. Interest expense on deposits declined slightly, as growth in deposit balances was offset by a reduction in deposit interest rates. A reduction in the interest rates on interest bearing cash deposits, short term borrowings and deposits have been driven by the Federal Reserve's 100 basis point reduction of the federal funds rate in September through December of 2024.

Noninterest income decreased $56 for the three months ended March 31, 2025 compared to the same period in 2024. Noninterest expense increased $1,195 during the three months ended March 31, 2025 compared to the three months ended March 31, 2024, primarily due to increases in salaries and employee benefits and occupancy and equipment expense.

Total loans outstanding increased $11,611, or 0.4 percent, to $3,016,471 during the first three months of 2025. The credit quality of the loan portfolio remained strong, as evidenced by the Company's ratio of nonperforming loans to total assets of 0.00 percent as of both March 31, 2025 and December 31, 2024. As of both March 31, 2025 and December 31, 2024, the allowance for credit losses was 1.01 percent of total outstanding loans. Management believed the allowance for credit losses at March 31, 2025 was adequate to absorb expected losses in the loan portfolio as of that date.

On a quarterly basis, the Company compares three key performance metrics to those of our identified peer group. 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. The Company is in the middle of the group in terms of asset size. The Company's goal is to perform at or near the top of this peer group relative to what we consider to be three key metrics: return on average equity, efficiency ratio and nonperforming assets to total assets. We believe these measures encompass the factors that define the performance of a community bank. Company and peer results for the key financial performance measures are summarized below.

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

(2) Latest data available.

At its meeting on April 23, 2025, the Company's Board of Directors declared a regular quarterly cash dividend of $0.25 per common share. The dividend is payable on May 21, 2025, to stockholders of record on May 7, 2025.