David Nelson, President and Chief Executive Officer of the Company, commented, "We had a strong third quarter with continued improvements in net interest income and net interest margin while prudently managing our noninterest expenses. We see opportunities for further improvement in earnings and our best-in-class credit quality metrics continue to be extremely strong. We had no loans on nonaccrual status and no loans past due greater than 30 days at September 30, 2025."
David Nelson added, "West Bank remains focused on executing our strategic goals and mission objectives. Building strong relationships and ensuring our customers and communities receive outstanding care and support continues to be the backbone of our culture. We are excited about upcoming enhancements to our treasury management services and digital banking capabilities, initiatives that support our customer-centric approach to delivering financial solutions."
Third Quarter 2025 Financial Highlights
Quarter Ended September 30, 2025
Quarter Ended June 30, 2025
Quarter Ended September 30, 2024
Net income (in thousands)
$9,314
$7,979
$5,952
Return on average equity
15.25
%
13.65
%
10.41
%
Return on average assets
0.92
%
0.80
%
0.60
%
Efficiency ratio (a non-GAAP measure)
54.06
%
56.45
%
63.28
%
Nonperforming assets to total assets
0.00
%
0.00
%
0.01
%
Third Quarter 2025 Compared to Second Quarter 2025 Overview
Loans increased $42.5 million, or 1.4 percent, in the third quarter of 2025, primarily due to an increase in commercial real estate loans and commercial loans, partially offset by a decline in construction loans.
No credit loss expense on loans was recorded in either the third or second quarter of 2025.
The allowance for credit losses to total loans was 1.01 percent at September 30, 2025, compared to 1.03 percent at June 30, 2025. There were no nonaccrual loans at September 30, 2025 or June 30, 2025. Watch list loans increased from $10.8 million as of June 30, 2025 to $38.7 million as of September 30, 2025. This increase was primarily due to one customer relationship. We believe, as of September 30, 2025, the loans within this relationship are sufficiently collateralized.
Deposits decreased $85.5 million, or 2.5 percent, in the third quarter of 2025. Brokered deposits totaled $204.8 million at September 30, 2025, compared to $208.3 million at June 30, 2025, a decrease of $3.5 million. Excluding brokered deposits, deposits decreased $82.0 million, or 2.6 percent, during the third quarter of 2025. The decline in deposits was primarily due to normal and anticipated cash flow fluctuations in core public fund deposits. As of September 30, 2025, estimated uninsured deposits, which exclude deposits in a reciprocal deposit network, brokered deposits and public funds protected by state programs, accounted for approximately 28.6 percent of total deposits.
Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.36 percent for the third quarter of 2025, compared to 2.27 percent for the second quarter of 2025. Net interest income for the third quarter of 2025 was $22.5 million, compared to $21.4 million for the second quarter of 2025. The increase in net interest income was primarily due to an increase in interest income on loans and short-term assets consisting of deposits with banks and securities purchased under agreements to resell.
The efficiency ratio (a non-GAAP measure) was 54.06 percent for the third quarter of 2025, compared to 56.45 percent for the second quarter of 2025. The improvement in the efficiency ratio was primarily due to the increase in net interest income.
The tangible common equity ratio was 6.40 percent as of September 30, 2025, compared to 5.94 percent as of June 30, 2025. The increase in the tangible common equity ratio was due to growth in retained earnings and a decrease in accumulated other comprehensive loss.
Income tax expense decreased $225 thousand in the third quarter of 2025 compared to the second quarter of 2025. This was primarily due to a change in estimate of energy-related investment tax credits in the third quarter of 2025.
Third Quarter 2025 Compared to Third Quarter 2024 Overview
Loans decreased $12.3 million at September 30, 2025, or 0.4 percent, compared to September 30, 2024. The decrease was primarily due to the decrease in construction loans, partially offset by an increase in commercial real estate loans.
Deposits increased $28.0 million, or 0.9 percent, at September 30, 2025, compared to September 30, 2024. Included in deposits were brokered deposits totaling $204.8 million at September 30, 2025, compared to $425.9 million at September 30, 2024. Excluding brokered deposits, deposits increased $249.0 million, or 8.7 percent, as of September 30, 2025, compared to September 30, 2024. In the second quarter of 2025, a local municipal customer deposited approximately $243.0 million of bond proceeds that are expected to be withdrawn over 24 months.
Borrowed funds decreased to $389.1 million at September 30, 2025, compared to $438.8 million at September 30, 2024. The decrease was primarily attributable to a decrease of $45.0 million in Federal Home Loan Bank advances. The reduction in Federal Home Loan Bank advances was due to the repayment of advances at maturity.
Net interest margin, on a fully tax-equivalent basis (a non-GAAP measure), was 2.36 percent for the third quarter of 2025, compared to 1.91 percent for the third quarter of 2024. Net interest income for the third quarter of 2025 was $22.5 million, compared to $18.0 million for the third quarter of 2024. The increase in net interest margin and net interest income was primarily due to the decrease in interest expense on deposits and borrowed funds. The cost of deposits and cost of borrowed funds decreased by 63 and 11 basis points, respectively, in the third quarter of 2025 compared to the third quarter of 2024. Also contributing to the improvement was an increase in average deposit balances of $93.0 million, in comparing the same time periods, which resulted in the reduction of higher-cost borrowed funds and an increase in interest-earning deposits with banks and securities purchased under agreements to resell.
The efficiency ratio (a non-GAAP measure) was 54.06 percent for the third quarter of 2025, compared to 63.28 percent for the third quarter of 2024. The improvement in the efficiency ratio in the third quarter of 2025 compared to the third quarter of 2024 was primarily due to the increase in net interest income, partially offset by an increase in noninterest expense.
The tangible common equity ratio was 6.40 percent as of September 30, 2025, compared to 5.90 percent as of September 30, 2024. The increase in the tangible common equity ratio was due to growth in retained earnings and a decrease in accumulated other comprehensive loss.
The Company filed its report on Form 10-Q with the Securities and Exchange Commission today. Please refer to that document for a more in-depth discussion of the Company's financial results. The Form 10-Q is available on the Investor Relations section of West Bank's website at www.westbankstrong.com.
The Company will discuss its results in a conference call scheduled for 2:00 p.m. Central Time on Thursday, October 23, 2025. The telephone number for the conference call is 800-715-9871. The conference ID for the conference call is 7846129. A recording of the call will be available until November 6, 2025, by dialing 800-770-2030. The conference ID for the replay call is 7846129.
About West Bancorporation, Inc. (NASDAQ:WTBA)
West Bancorporation, Inc. is headquartered in West Des Moines, Iowa. Serving customers since 1893, West Bank, a wholly-owned subsidiary of West Bancorporation, Inc., is a community bank that focuses on lending, deposit services, and trust services for small- to medium-sized businesses and consumers. West Bank has six offices in the Des Moines, Iowa metropolitan area, one office in Coralville, Iowa, and four offices in Minnesota in the cities of Rochester, Owatonna, Mankato and St. Cloud.
Certain statements in this report, other than purely historical information, including estimates, projections, statements relating to the Company's business plans, objectives and expected operating results, and the assumptions upon which those statements are based, are "forward-looking statements" within the meanings of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements may appear throughout this report. These forward-looking statements are generally identified by the words "believes," "expects," "intends," "anticipates," "projects," "future," "confident," "may," "should," "will," "strategy," "plan," "opportunity," "will be," "will likely result," "will continue" or similar references, or references to estimates, predictions or future events. Such forward-looking statements are based upon certain underlying assumptions, risks and uncertainties. Because of the possibility that the underlying assumptions are incorrect or do not materialize as expected in the future, actual results could differ materially from these forward-looking statements. Risks and uncertainties that may affect future results include: interest rate risk, including the effects of changes in interest rates; fluctuations in the values of the securities held in our investment portfolio, including as a result of changes in interest rates; competitive pressures, including from non-bank competitors such as credit unions, "fintech" companies and digital asset service providers; technological changes implemented by us and other parties, including third-party vendors, which may be more difficult to implement or more expensive than anticipated or which may have unforeseen consequences to us and our customers, including the development and implementation of tools incorporating artificial intelligence; pricing pressures on loans and deposits; our ability to successfully manage liquidity risk; changes in credit and other risks posed by the Company's loan portfolio, including declines in commercial or residential real estate values or changes in the allowance for credit losses dictated by new market conditions, accounting standards or regulatory requirements; the concentration of large deposits from certain clients, including those who have balances above current FDIC insurance limits; the threat or imposition of domestic or foreign tariffs or other governmental policies impacting the global supply chain and the value of products produced by our commercial borrowers; changes in local, national and international economic conditions, including the level and impact of inflation, and future monetary policies of the Federal Reserve in response thereto, and possible recession; the impact of bank failures or adverse developments at other banks and related negative publicity about the banking industry in general on investor and depositor sentiment regarding the stability and liquidity of banks; changes in legal and regulatory requirements, limitations and costs; changes in customers' acceptance of the Company's products and services; the occurrence of fraudulent activity, breaches or failures of our or our third-party partners' information security controls or cyber-security related incidents, including as a result of sophisticated attacks using artificial intelligence and similar tools; unexpected outcomes of existing or new litigation involving the Company; the monetary, trade and other regulatory policies of the U.S. government; acts of war or terrorism, including the ongoing Israeli-Palestinian conflict and the Russian invasion of Ukraine, widespread disease or pandemics, or other adverse external events; risks related to climate change and the negative impact it may have on our customers and their businesses; changes to U.S. tax laws, regulations and guidance; potential changes in federal policy and at regulatory agencies as a result of the 2024 presidential election; new or revised accounting policies and practices, as may be adopted by state and federal regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission or the Public Company Accounting Oversight Board; the impact of a continued shutdown of the U.S. government; talent and labor shortages and employee turnover; and any other risks described in the "Risk Factors" sections of reports filed by the Company with the Securities and Exchange Commission. The Company undertakes no obligation to revise or update such forward-looking statements to reflect current or future events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
CONDENSED BALANCE SHEETS
September 30, 2025
June 30, 2025
March 31, 2025
December 31, 2024
September 30, 2024
Assets
Cash and due from banks
$
26,875
$
35,796
$
39,253
$
28,750
$
34,157
Interest-earning deposits with banks
109,265
212,450
171,357
214,728
123,646
Securities purchased under agreements to resell
96,792
96,955
—
—
—
Securities available for sale, at fair value
537,856
536,709
546,619
544,565
597,745
Federal Home Loan Bank stock, at cost
15,190
15,311
15,216
15,129
17,195
Loans
3,008,888
2,966,357
3,016,471
3,004,860
3,021,221
Allowance for credit losses
(30,515
)
(30,539
)
(30,526
)
(30,432
)
(29,419
)
Loans, net
2,978,373
2,935,818
2,985,945
2,974,428
2,991,802
Premises and equipment, net
109,212
109,806
110,270
109,985
106,771
Bank-owned life insurance
45,875
45,567
45,272
44,990
44,703
Other assets
66,042
68,257
72,737
82,416
72,547
Total assets
$
3,985,480
$
4,056,669
$
3,986,669
$
4,014,991
$
3,988,566
Liabilities and Stockholders' Equity
Deposits
$
3,306,517
$
3,391,993
$
3,324,518
$
3,357,596
$
3,278,553
Other borrowings
389,076
390,260
391,445
392,629
438,814
Other liabilities
34,754
33,486
32,833
36,891
35,846
Stockholders' equity
255,133
240,930
237,873
227,875
235,353
Total liabilities and stockholders' equity
$
3,985,480
$
4,056,669
$
3,986,669
$
4,014,991
$
3,988,566
For the Quarter Ended
AVERAGE BALANCES
September 30, 2025
June 30, 2025
March 31, 2025
December 31, 2024
September 30, 2024
Assets
$
4,004,769
$
4,016,490
$
3,944,789
$
4,135,049
$
3,973,824
Loans
2,959,962
2,989,638
3,016,119
3,007,558
2,991,272
Deposits
3,333,800
3,353,982
3,284,394
3,434,234
3,258,669
Stockholders' equity
242,245
234,399
229,874
230,720
227,513
WEST BANCORPORATION, INC. AND SUBSIDIARY
Financial Information (unaudited)
(in thousands)
As of
LOANS
September 30, 2025
June 30, 2025
March 31, 2025
December 31, 2024
September 30, 2024
Commercial
$
511,316
$
500,854
$
531,267
$
514,232
$
512,884
Real estate:
Construction, land and land development
448,660
459,037
451,230
508,147
520,516
1-4 family residential first mortgages
87,784
86,173
86,292
87,858
89,749
Home equity
27,083
24,285
21,961
19,294
17,140
Commercial
1,912,235
1,875,857
1,909,330
1,861,195
1,870,132
Consumer and other
24,697
22,900
19,323
17,287
14,261
3,011,775
2,969,106
3,019,403
3,008,013
3,024,682
Net unamortized fees and costs
(2,887
)
(2,749
)
(2,932
)
(3,153
)
(3,461
)
Total loans
$
3,008,888
$
2,966,357
$
3,016,471
$
3,004,860
$
3,021,221
Less: allowance for credit losses
(30,515
)
(30,539
)
(30,526
)
(30,432
)
(29,419
)
Net loans
$
2,978,373
$
2,935,818
$
2,985,945
$
2,974,428
$
2,991,802
CREDIT QUALITY
Pass
$
2,973,103
$
2,958,318
$
3,011,231
$
2,999,531
$
3,016,493
Watch
38,672
10,788
7,991
8,349
7,956
Substandard
—
—
181
133
233
Doubtful
—
—
