| Item 1.01 | Entry into a Material Definitive Agreement. |
On December 15, 2021, West
Bancorporation, Inc. (the “Company”) entered into a Credit Agreement (the “Agreement”) and related promissory
note (the “Promissory Note”) with National Exchange Bank & Trust (the “Lender”). The Agreement provides for
the Lender to make a term loan to the Company in the amount of $40.0 million (the “Term Loan”). The Term Loan matures
on February 5, 2027 (the “Maturity Date”).
The Agreement provides for
a floating interest rate equal to the Wall Street Journal Prime Rate plus -1.000% and floor of 2.250% per annum. The Company can prepay
the Term Loan in whole or in part at any time; provided, however, that any prepayment in whole or in part pursuant to a refinancing with
another institution is subject to a prepayment premium as described in the Agreement.
Under the terms of the Agreement,
the Company is required to pay quarterly payments of interest on the unpaid principal balance of the Term Loan. The Company is required
to make quarterly principal payments beginning on May 5, 2023. All unpaid principal of and accrued interest on the Term Loan is due and
payable on the Maturity Date.
The obligations of the Company
under the Agreement are secured by a first priority security interest in all of the capital stock of the Company’s subsidiary bank,
West Bank (the “Bank”), pursuant to a Commercial Pledge Agreement, dated as of December 15, 2021, between the Company and
the Lender (the “Pledge Agreement”).
The Agreement, the Promissory
Note, and Pledge Agreement contain customary representations, warranties, and covenants for a term loan, including certain financial covenants
and capital ratio requirements. The financial covenants in the Agreement include, among others, covenants requiring that (a) the
Bank maintain minimum Common Equity Tier 1 Capital of at least $250,000,000, (b) the Company’s Total Risk Based Capital Ratio must
be at least that percentage as the applicable regulatory agency may establish of a “well-capitalized” institution, (c) the
Bank’s Tier 1 Leverage Ratio, Tier 1 Risk Based Capital Ratio and the Bank’s Total Risk Based Capital Ratio must be at least
that percentage as the applicable regulatory agency may establish of a “well-capitalized” institution and (d) the Bank must
maintain a minimum of 1.00% return on assets, on a trailing twelve months basis.
The Agreement, the Promissory
Note, and the Pledge Agreement also provide for certain events of default, including, among other things, payment defaults, breaches of
representations and warranties and bankruptcy or insolvency proceedings, the occurrence of which, after any applicable cure period, would
permit Lender, among other things, to accelerate payment of all amounts outstanding under the Agreement and the Promissory Note, as applicable,
and to exercise its remedies with respect to the shares of capital stock of the Bank subject to the Pledge Agreement.
The foregoing descriptions
of the Agreement, the Promissory Note, and the Pledge Agreement do not purport to be complete and are qualified in their entirety by reference
to the full text of the Agreement, the Promissory Note, and the Pledge Agreement, which are filed as Exhibits 10.1, 10.2, and 10.3, respectively,
to this Current Report on Form 8-K and incorporated herein by reference.