UNITED
      STATES


SECURITIES
      AND EXCHANGE COMMISSION


WASHINGTON,
      D.C. 20549





**FORM
      10-Q**





(Mark
      One)





**x**
            **QUARTERLY
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
                ACT OF
                1934**


For
      the
      quarterly period ended June 30, 2008





or





**o**
            **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)





IOWA
            
            42-1230603(State
                of Incorporation)
            
            (I.R.S.
                Employer Identification No.)





1601
      22 nd Street,
      West Des Moines, Iowa 50266





Telephone
      Number (515) 222-2300





Indicate
      by check mark whether the registrant (1) has filed all reports required 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 x No o





Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      See definition of “large accelerated filer,” “accelerated filer” and “smaller
      reporting company” in Rule 12b-2 of the Exchange Act.





Large
                accelerated filer o
            Accelerated
                filer xNon-accelerated
                filer o
            Smaller
                reporting company o





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act).


Yes o No x





As
      of
      July 31, 2008, there were 17,403,882 shares of common stock, no par value
      outstanding.





PART
      I –
FINANCIAL INFORMATION


Item
      1.
      Financial Statements





West
      Bancorporation, Inc. and Subsidiaries


Consolidated
      Balance Sheets


(unaudited)





June
                30,
            
            December
                31,2008
            
            2007(in
                thousands, except share data)AssetsCash
                and due from banks
            
            $
            55,657
            
            $
            49,529Federal
                funds sold and other short-term investments
            
            
            6,453
            
            
            414Cash
                and cash equivalents
            
            
            62,110
            
            
            49,943Securities
                available for sale
            
            
            169,805
            
            
            231,427Federal
                Home Loan Bank stock, at cost
            
            
            8,580
            
            
            5,951Total
                securities
            
            
            178,385
            
            
            237,378Loans
                held for sale
            
            
            2,229
            
            
            1,858Loans
            
            
            1,057,830
            
            
            983,565Allowance
                for loan losses
            
            
            (10,557
            )
            
            (8,935
            )Loans,
                net
            
            
            1,047,273
            
            
            974,630Premises
                and equipment, net
            
            
            5,043
            
            
            5,181Accrued
                interest receivable
            
            
            6,199
            
            
            7,829Goodwill
            
            
            24,930
            
            
            24,930Other
                intangible assets
            
            
            1,772
            
            
            2,131Bank-owned
                life insurance
            
            
            24,790
            
            
            24,341Other
                assets
            
            
            16,136
            
            
            11,747Total
                assets
            
            $
            1,368,867
            
            $
            1,339,968Liabilities
                and Stockholders' EquityLiabilitiesDeposits:Noninterest-bearing
                demand
            
            $
            189,596
            
            $
            196,698Interest-bearing
                demand
            
            
            88,868
            
            
            85,027Savings
            
            
            226,574
            
            
            243,405Time
                of $100,000 or more
            
            
            264,836
            
            
            160,936Other
                time
            
            
            168,597
            
            
            224,859Total
                deposits
            
            
            938,471
            
            
            910,925Federal
                funds purchased and securities sold under agreements to
                repurchase
            
            
            122,833
            
            
            166,930Other
                short-term borrowings
            
            
            1,500
            
            
            2,672Accrued
                expenses and other liabilities
            
            
            15,111
            
            
            14,216Subordinated
                notes
            
            
            20,619
            
            
            20,619Long-term
                borrowings
            
            
            152,500
            
            
            103,000Total
                liabilities
            
            
            1,251,034
            
            
            1,218,362Stockholders'
                EquityCommon
                stock, no par value; authorized 50,000,000 shares; 17,403,882 and
                17,462,182 shares issued and outstanding at June 30, 2008, and December
                31, 2007, respectively
            
            
            3,000
            
            
            3,000Additional
                paid-in capital
            
            
            32,000
            
            
            32,000Retained
                earnings
            
            
            86,614
            
            
            87,084Accumulated
                other comprehensive loss
            
            
            (3,781
            )
            
            (478
            )Total
                stockholders' equity
            
            
            117,833
            
            
            121,606Total
                liabilities and stockholders' equity
            
            $
            1,368,867
            
            $
            1,339,968





See
      accompanying notes to consolidated financial statements.


2


West
      Bancorporation, Inc. and Subsidiaries


Consolidated
      Statements of Income


(unaudited)





Three Months Ended June 30,
            
            Six Months Ended June 30,(in
                thousands, except per share data)
            
            2008
            
            2007
            
            2008
            
            2007Interest
                income:Loans,
                including fees
            
            $
            15,313
            
            $
            17,932
            
            $
            31,690
            
            $
            35,036Securities:Government
                agencies and corporations
            
            
            536
            
            
            1,491
            
            
            1,521
            
            
            2,987States
                and political subdivisions
            
            
            967
            
            
            936
            
            
            1,910
            
            
            1,906Other
            
            
            439
            
            
            388
            
            
            837
            
            
            777Federal
                funds sold and other short-term investments
            
            
            75
            
            
            271
            
            
            235
            
            
            560Total
                interest income
            
            
            17,330
            
            
            21,018
            
            
            36,193
            
            
            41,266Interest
                expense:Demand
                deposits
            
            
            233
            
            
            452
            
            
            523
            
            
            777Savings
                deposits
            
            
            926
            
            
            1,841
            
            
            2,419
            
            
            3,556Time
                deposits
            
            
            3,379
            
            
            5,390
            
            
            7,568
            
            
            10,922Federal
                funds purchased and securities sold under agreements to
                repurchase
            
            
            714
            
            
            1,780
            
            
            1,978
            
            
            3,455Other
                short-term borrowings
            
            
            5
            
            
            63
            
            
            34
            
            
            71Subordinated
                notes
            
            
            367
            
            
            367
            
            
            734
            
            
            730Long-term
                borrowings
            
            
            1,471
            
            
            1,337
            
            
            2,826
            
            
            2,656Total
                interest expense
            
            
            7,095
            
            
            11,230
            
            
            16,082
            
            
            22,167Net
                interest income
            
            
            10,235
            
            
            9,788
            
            
            20,111
            
            
            19,099Provision
                for loan losses
            
            
            1,000
            
            
            350
            
            
            6,600
            
            
            650Net
                interest income after provision for loan losses
            
            
            9,235
            
            
            9,438
            
            
            13,511
            
            
            18,449Noninterest
                income:Service
                charges on deposit accounts
            
            
            1,250
            
            
            1,211
            
            
            2,296
            
            
            2,339Trust
                services
            
            
            204
            
            
            188
            
            
            398
            
            
            369Investment
                advisory fees
            
            
            1,960
            
            
            2,043
            
            
            3,898
            
            
            4,002Increase
                in cash value of bank-owned life insurance
            
            
            257
            
            
            219
            
            
            449
            
            
            435Net
                realized gains (losses) from sales of securities available for
                sale
            
            
            -
            
            
            (13
            )
            
            5
            
            
            (9
            )Other
                income
            
            
            498
            
            
            387
            
            
            959
            
            
            769Total
                noninterest income
            
            
            4,169
            
            
            4,035
            
            
            8,005
            
            
            7,905Noninterest
                expense:Salaries
                and employee benefits
            
            
            3,634
            
            
            3,355
            
            
            7,365
            
            
            6,971Occupancy
            
            
            899
            
            
            897
            
            
            1,799
            
            
            1,831Data
                processing
            
            
            498
            
            
            473
            
            
            990
            
            
            940Other
                expenses
            
            
            1,918
            
            
            1,183
            
            
            3,464
            
            
            2,620Total
                noninterest expense
            
            
            6,949
            
            
            5,908
            
            
            13,618
            
            
            12,362Income
                before income taxes
            
            
            6,455
            
            
            7,565
            
            
            7,898
            
            
            13,992Income
                taxes
            
            
            1,941
            
            
            2,438
            
            
            2,010
            
            
            4,421Net
                income
            
            $
            4,514
            
            $
            5,127
            
            $
            5,888
            
            $
            9,571Earnings
                per share, basic
            
            $
            0.26
            
            $
            0.29
            
            $
            0.34
            
            $
            0.55Cash
                dividends per share
            
            $
            0.16
            
            $
            0.16
            
            $
            0.32
            
            $
            0.32





See
      accompanying notes to consolidated financial statements.


3





West
      Bancorporation, Inc. and Subsidiaries


Consolidated
      Statements of Stockholders' Equity


(unaudited)





Six Months Ended June 30,(in
                thousands, except per share data)
            
            2008
            
            2007Common
                stock:Beginning
                of year balance
            
            $
            3,000
            
            $
            3,000End
                of period balance
            
            
            3,000
            
            
            3,000Additional
                paid-in capital:Beginning
                of year balance
            
            
            32,000
            
            
            32,000End
                of period balance
            
            
            32,000
            
            
            32,000Retained
                earnings:Beginning
                of year balance
            
            
            87,084
            
            
            80,397Net
                income
            
            
            5,888
            
            
            9,571Dividends
                  on common stock; per share amounts 2008
                  and 2007 - $0.32
            
            
            (5,570
            )
            
            (5,611
            )Shares
                reacquired under the common stock repurchase plan
            
            
            (788
            )
            
            -End
                of period balance
            
            
            86,614
            
            
            84,357Accumulated
                other comprehensive loss:Beginning
                of year balance
            
            
            (478
            )
            
            (1,585
            )Unrealized
                losses on securities, net of tax
            
            
            (3,303
            )
            
            (1,418
            )End
                of period balance
            
            
            (3,781
            )
            
            (3,003
            )Total
                stockholders' equity
            
            $
            117,833
            
            $
            116,354





West
      Bancorporation, Inc. and Subsidiaries


Consolidated
      Statements of Comprehensive Income


(unaudited)





Six Months Ended June 30,(in
                thousands)
            
            2008
            
            2007Net
                income
            
            $
            5,888
            
            $
            9,571Other
                comprehensive loss, unrealized losses on securities, net of
                reclassification adjustment, net of tax
            
            
            (3,303
            )
            
            (1,418
            )Comprehensive
                income
            
            $
            2,585
            
            $
            8,153





See
      accompanying notes to consolidated financial statements.


4





West
      Bancorporation, Inc. and Subsidiaries


Consolidated
      Statements of Cash Flows


(unaudited)





Six Months Ended June 30,(in
                thousands)
            
            2008
            
            2007Cash
                Flows from Operating Activities:Net
                income
            
            $
            5,888
            
            $
            9,571Adjustments
                to reconcile net income to net cash provided by operating
                activities:Provision
                for loan losses
            
            
            6,600
            
            
            650Net
                amortization and accretion
            
            
            468
            
            
            759Loss
                on disposition of fixed assets
            
            
            23
            
            
            28Net
                (gains) losses from sales of securities available for sale
            
            
            (5
            )
            
            9Net
                gains from sales of loans held for sale
            
            
            (220
            )
            
            (38
            )Proceeds
                from sales of loans held for sale
            
            
            16,934
            
            
            4,205Originations
                of loans held for sale
            
            
            (17,086
            )
            
            (4,592
            )Increase
                in value of bank-owned life insurance
            
            
            (449
            )
            
            (435
            )Depreciation
            
            
            457
            
            
            458Deferred
                income taxes
            
            
            (539
            )
            
            (53
            )Change
                in assets and liabilities:Decrease
                (increase) in accrued interest receivable
            
            
            1,630
            
            
            (377
            )Increase
                (decrease) in accrued expenses and other liabilities
            
            
            895
            
            
            (459
            )Net
                cash provided by operating activities
            
            
            14,596
            
            
            9,726Cash
                Flows from Investing Activities:Proceeds
                from sales, calls, and maturities of securities available for
                sale
            
            
            104,176
            
            
            10,624Purchases
                of securities available for sale
            
            
            (47,983
            )
            
            (2,159
            )Acquisition
                of Federal Home Loan Bank stock
            
            
            (4,929
            )
            
            (3,205
            )Proceeds
                from redemption of Federal Home Loan Bank stock
            
            
            2,299
            
            
            320Net
                change in loans
            
            
            (79,923
            )
            
            (32,926
            )Proceeds
                from sale of premises and equipment
            
            
            10
            
            
            29Purchases
                of premises and equipment
            
            
            (353
            )
            
            (351
            )Change
                in other assets
            
            
            (1,145
            )
            
            643Net
                cash used in investing activities
            
            
            (27,848
            )
            
            (27,025
            )Cash
                Flows from Financing Activities:Net
                change in deposits
            
            
            27,546
            
            
            (67,630
            )Net
                change in federal funds purchased and securities sold under agreements
                to
                repurchase
            
            
            (44,097
            )
            
            34,714Net
                change in other short-term borrowings
            
            
            (1,172
            )
            
            38,932Proceeds
                from long-term borrowings
            
            
            75,000
            
            
            30,000Principal
                payments on long-term borrowings
            
            
            (25,500
            )
            
            (11,900
            )Payment
                for shares reacquired under common stock repurchase plan
            
            
            (788
            )
            
            -Cash
                dividends
            
            
            (5,570
            )
            
            (5,611
            )Net
                cash provided by financing activities
            
            
            25,419
            
            
            18,505Net
                increase in cash and cash equivalents
            
            
            12,167
            
            
            1,206Cash
                and Cash Equivalents:Beginning
            
            
            49,943
            
            
            35,678End
            
            $
            62,110
            
            $
            36,884Supplemental
                Disclosures of Cash Flow InformationCash
                payments for:Interest
            
            $
            16,044
            
            $
            22,799Income
                taxes
            
            
            3,751
            
            
            3,989





See
      accompanying notes to consolidated financial statements.


5





West
      Bancorporation, Inc.


Notes
      to
      Consolidated Financial Statements


(unaudited)


(in
      thousands, except per share information)





1.
      Basis
      of Presentation





The
      accompanying consolidated statements of income for the three and six months
      ended June 30, 2008 and 2007, and the consolidated statements of stockholders’
equity, comprehensive income, and cash flows for the six months ended June
      30,
      2008 and 2007, and the consolidated balance sheets as of June 30, 2008 and
      December 31, 2007, include the accounts of the Holding Company, West Bank,
      West
      Bank’s wholly-owned subsidiary, WB Funding Corporation (which owns an interest
      in a partnership), and WB Capital Management Inc. All significant intercompany
      transactions and balances have been eliminated in consolidation. In accordance
      with Financial Accounting Standards Board (FASB) Interpretation No. 46, *Consolidation
      of Variable Interest Entities* ,
      a
      subsidiary, West Bancorporation Capital Trust I (the Trust) is not consolidated
      with the Company. The results of the Trust are recorded on the books of the
      Company using the equity method of accounting.





The
      accompanying consolidated financial statements have been prepared by the Company
      pursuant to the rules and regulations of the Securities and Exchange Commission.
      Certain information and footnote disclosures normally included in financial
      statements prepared in accordance with generally accepted accounting principles
      have been condensed or omitted pursuant to such rules and regulations. Although
      management believes that the disclosures are adequate to make the information
      presented not misleading, it is suggested that these interim consolidated
      financial statements be read in conjunction with the Company's most recent
      audited financial statements and notes thereto. In the opinion of management,
      the accompanying consolidated financial statements contain all adjustments
      (consisting of only normal recurring accruals) necessary to present fairly
      the
      financial position as of June 30, 2008, the results of operations for the three
      and six months ended June 30, 2008 and 2007, and cash flows for the six months
      ended June 30, 2008 and 2007.




The
      results for these interim periods may not be indicative of results for the
      entire year or for any other period.





2.
      Earnings per Common Share





Earnings
      per share represent income available to common shareholders divided by the
      weighted average number of common shares outstanding during the period. The
      Company has no common equivalent shares that could cause dilution. The weighted
      average number of shares outstanding for the three and six months ended June
      30,
      2008 was 17,403,882 and 17,406,473 respectively, and for the three and six
      months ended June 30, 2007 was 17,536,682.





3.
      Commitments





In
      the
      normal course of business, the Company enters into commitments to extend credit
      in the form of loan commitments and standby letters of credit to meet the
      financing needs of its customers. These commitments expose the Company to
      varying degrees of credit and market risk and are subject to the same credit
      policies as are loans recorded on the balance sheet. For additional information
      on credit extension commitments and the characteristics of these obligations,
      see Note 13 of the Company’s 2007 consolidated financial statements (pages 53-55
      of Appendix to Proxy Statement). The Company’s commitments as of the dates shown
      are approximately as follows:





June 30, 2008
            
            December 31, 2007Commitments
                to extend credit
            
            $
            311,210
            
            $
            330,769Standby
                letters of credit
            
            
            18,188
            
            
            22,682$
            329,398
            
            $
            353,451


6


4.
      Impaired Loans and Allowance for Loan Losses





A
      loan is
      impaired when it is probable West Bank will be unable to collect all contractual
      principal and interest payments due in accordance with the terms of the loan
      agreement. Impaired loans are measured based on the present value of expected
      future cash flows discounted at the loan’s effective interest rate or at the
      fair value of the collateral if the loan is collateral dependent. The amount
      of
      impairment is included in the allowance for loan losses. The following is a
      recap of impaired loans at June 30, 2008 and December 31, 2007:


June 30, 2008
              
              December 31, 2007Impaired
                  loans without an allowance
              
              $
              22,961
              
              $
              5,469Impaired
                  loans with an allowance
              
              
              2,139
              
              
              -Total
                  impaired loans
              
              $
              25,100
              
              $
              5,469Allowance
                  for loan losses related to impaired loans
              
              $
              1,208
              
              $
              -




The
      following table reconciles the balance of non-accrual loans with impaired loans
      carried at fair value as of June 30, 2008:





Non-accrual
                loans
            
            $
            13,332Other
                impaired loans still accruing interest
            
            
            11,768Total
                impaired loans
            
            $
            25,100





Changes
      in the allowance for loan losses were as follows for the three and six months
      ended June 30, 2008 and 2007:





Three
                months ended June 30,
            
            Six
                months ended June 30,2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            ChangeBalance
                at beginning of period
            
            $
            14,260
            
            $
            8,743
            
            $
            5,517
            
            $
            8,935
            
            $
            8,494
            
            $
            441Charge-offs
            
            
            (4,740
            )
            
            (331
            )
            
            (4,409
            )
            
            (5,121
            )
            
            (486
            )
            
            (4,635
            )Recoveries
            
            
            37
            
            
            17
            
            
            20
            
            
            143
            
            
            121
            
            
            22Net
                charge-offs
            
            
            (4,703
            )
            
            (314
            )
            
            (4,389
            )
            
            (4,978
            )
            
            (365
            )
            
            (4,613
            )Provision
                charged to operations
            
            
            1,000
            
            
            350
            
            
            650
            
            
            6,600
            
            
            650
            
            
            5,950Balance
                at end of period
            
            $
            10,557
            
            $
            8,779
            
            $
            1,778
            
            $
            10,557
            
            $
            8,779
            
            $
            1,778





5.
      Segment Information





An
      operating segment is generally defined as a component of a business for which
      discrete financial information is available and whose operating results are
      regularly reviewed by the chief operating decision-maker. The Company’s primary
      business segments are banking and investment advisory services. The banking
      segment generates revenue primarily through interest and fees on loans, service
      charges on deposit accounts, interest on investment securities, and fees for
      trust services. The banking segment includes West Bank, the Holding Company,
      and
      related elimination entries between the two, as the Holding Company’s operation
      is similar to that of West Bank. The investment advisory segment generates
      revenue by providing investment portfolio management services to individuals,
      retirement plans, corporations, foundations, endowments, and public entities.
      The investment advisory segment consists of WB Capital Management Inc. The
      “Other” column represents the elimination of intercompany balances. Selected
      financial information on the Company’s segments is presented below for the three
      and six months ended June 30, 2008 and 2007.


7





Three
                months ended June 30,2008
            
            2007Segments
            
            SegmentsInvestment
            
            
            
            
            
            
            
            InvestmentBanking
            
            Advisory
            
            Other
            
            Consolidated
            
            Banking
            
            Advisory
            
            Other
            
            ConsolidatedInterest
                income
            
            $
            17,330
            
            $
            -
            
            $
            -
            
            $
            17,330
            
            $
            21,018
            
            $
            -
            
            $
            -
            
            $
            21,018Interest
                expense
            
            
            7,095
            
            
            -
            
            
            -
            
            
            7,095
            
            
            11,230
            
            
            -
            
            
            -
            
            
            11,230Net
                interest income
            
            
            10,235
            
            
            -
            
            
            -
            
            
            10,235
            
            
            9,788
            
            
            -
            
            
            -
            
            
            9,788Provision
                for loan losses
            
            
            1,000
            
            
            -
            
            
            -
            
            
            1,000
            
            
            350
            
            
            -
            
            
            -
            
            
            350Net
                interest income after provision for loan losses
            
            
            9,235
            
            
            -
            
            
            -
            
            
            9,235
            
            
            9,438
            
            
            -
            
            
            -
            
            
            9,438Noninterest
                income
            
            
            2,209
            
            
            2,007
            
            
            (47
            )
            
            4,169
            
            
            1,977
            
            
            2,112
            
            
            (54
            )
            
            4,035Noninterest
                expense
            
            
            5,229
            
            
            1,767
            
            
            (47
            )
            
            6,949
            
            
            4,130
            
            
            1,832
            
            
            (54
            )
            
            5,908Income
                before income taxes
            
            
            6,215
            
            
            240
            
            
            -
            
            
            6,455
            
            
            7,285
            
            
            280
            
            
            -
            
            
            7,565Income
                taxes
            
            
            1,840
            
            
            101
            
            
            -
            
            
            1,941
            
            
            2,324
            
            
            114
            
            
            -
            
            
            2,438Net
                income
            
            $
            4,375
            
            $
            139
            
            $
            -
            
            $
            4,514
            
            $
            4,961
            
            $
            166
            
            $
            -
            
            $
            5,127Depreciation
                and amortization
            
            $
            238
            
            $
            176
            
            $
            -
            
            $
            414
            
            $
            216
            
            $
            230
            
            $
            -
            
            $
            446





Six
                months ended June 30,2008
            
            2007Segments
            
            SegmentsInvestment
            
            
            
            
            
            
            
            InvestmentBanking
            
            Advisory
            
            Other
            
            Consolidated
            
            Banking
            
            Advisory
            
            Other
            
            ConsolidatedInterest
                income
            
            $
            36,193
            
            $
            -
            
            $
            -
            
            $
            36,193
            
            $
            41,266
            
            $
            -
            
            $
            -
            
            $
            41,266Interest
                expense
            
            
            16,082
            
            
            -
            
            
            -
            
            
            16,082
            
            
            22,167
            
            
            -
            
            
            -
            
            
            22,167Net
                interest income
            
            
            20,111
            
            
            -
            
            
            -
            
            
            20,111
            
            
            19,099
            
            
            -
            
            
            -
            
            
            19,099Provision
                for loan losses
            
            
            6,600
            
            
            -
            
            
            -
            
            
            6,600
            
            
            650
            
            
            -
            
            
            -
            
            
            650Net
                interest income after provision for loan losses
            
            
            13,511
            
            
            -
            
            
            -
            
            
            13,511
            
            
            18,449
            
            
            -
            
            
            -
            
            
            18,449Noninterest
                income
            
            
            4,104
            
            
            3,996
            
            
            (95
            )
            
            8,005
            
            
            3,888
            
            
            4,125
            
            
            (108
            )
            
            7,905Noninterest
                expense
            
            
            10,190
            
            
            3,523
            
            
            (95
            )
            
            13,618
            
            
            8,676
            
            
            3,794
            
            
            (108
            )
            
            12,362Income
                before income taxes
            
            
            7,425
            
            
            473
            
            
            -
            
            
            7,898
            
            
            13,661
            
            
            331
            
            
            -
            
            
            13,992Income
                taxes
            
            
            1,811
            
            
            199
            
            
            -
            
            
            2,010
            
            
            4,285
            
            
            136
            
            
            -
            
            
            4,421Net
                income
            
            $
            5,614
            
            $
            274
            
            $
            -
            
            $
            5,888
            
            $
            9,376
            
            $
            195
            
            $
            -
            
            $
            9,571Depreciation
                and amortization
            
            $
            468
            
            $
            349
            
            $
            -
            
            $
            817
            
            $
            421
            
            $
            465
            
            $
            -
            
            $
            886Goodwill
            
            $
            13,376
            
            $
            11,554
            
            $
            -
            
            $
            24,930
            
            $
            13,376
            
            $
            11,554
            
            $
            -
            
            $
            24,930Total
                assets
            
            $
            1,355,443
            
            $
            14,219
            
            $
            (795
            )
            $
            1,368,867
            
            $
            1,280,432
            
            $
            14,654
            
            $
            (352
            )
            $
            1,294,734





6.
      Fair
      Value Measurements





Effective
      January 1, 2008, the Company partially adopted SFAS No. 157, *Fair
      Value Measurements* ,
      which
      requires disclosures for those assets and liabilities carried in the balance
      sheet on a fair value basis. The Financial Accounting Standard Board (FASB)
      has
      deferred the effective date of SFAS No. 157 until 2009 for nonfinancial assets
      and liabilities which are recognized at fair value on a nonrecurring basis.
      For
      the Company, this deferral applies to other real estate owned, goodwill and
      intangible assets.





Three
      categories of the Company’s balance sheet contain assets and liabilities that
      are recorded at fair value. Those categories are: 1) securities available for
      sale, 2) other assets and 3) other liabilities. Within other assets and other
      liabilities, equity indexed certificate of deposit derivatives are recorded
      at
      fair value.


8





SFAS
      No.
      157 requires that assets and liabilities carried at fair value also be
      classified and disclosed according to the process for determining fair value.
      There are three levels of determining fair value.





Level
      1
      uses quoted market prices in active markets for identical assets or
      liabilities.





Level
      2
      uses observable market based inputs or unobservable inputs that are corroborated
      by market data.





Level
      3
      uses unobservable inputs that are not corroborated by market data.





The
      following table presents the balances of assets and liabilities measured at
      fair
      value on a recurring basis by level as of June 30, 2008:





Quoted Pricesin Active Markets
            
            Significant Other
            
            Significantfor Identical Assets
            
            Observable Inputs
            
            Unobservable InputsDescription
            
            Total
            
            (Level 1)
            
            (Level 2)
            
            (Level 3)Assets:Securities
                available for sale
            
            $
            169,805
            
            $
            -
            
            $
            169,805
            
            $
            -Equity
                indexed CD options
            
            
            5,289
            
            
            -
            
            
            -
            
            
            5,289Total
            
            $
            175,094
            
            $
            -
            
            $
            169,805
            
            $
            5,289Liabilities:Equity
                indexed CD options
            
            $
            5,289
            
            $
            -
            
            $
            -
            
            $
            5,289Total
            
            $
            5,289
            
            $
            -
            
            $
            -
            
            $
            5,289





Certain
      assets are measured at fair value on a nonrecurring basis; that is, they are
      subject to fair value adjustments in certain circumstances (for example, when
      there is evidence of impairment). The following table presents the assets
      carried on the balance sheet by caption and by level with the SFAS No. 157
      valuation hierarchy as of June 30, 2008:





Quoted Pricesin Active Markets
            
            Significant Other
            
            Significantfor Identical Assets
            
            Observable Inputs
            
            Unobservable InputsDescription
            
            Total
            
            (Level 1)
            
            (Level 2)
            
            (Level 3)Assets:Loans
            
            $
            25,100
            
            $
            -
            
            $
            -
            
            $
            25,100Total
            
            $
            25,100
            
            $
            -
            
            $
            -
            
            $
            25,100





Loans
      in
      the table above consist of impaired loans held for investment. Impaired loans
      are measured based on the present value of expected future cash flows discounted
      at the loan’s effective interest rate or at the fair value of the collateral if
      the loan is collateral dependent. Management uses original or updated appraised
      values and adjusts for trends observed in the market.





7.
      Current Accounting Developments





In
      March
      2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161, *Disclosures
      about Derivative Instruments and Hedging Activities* .
      SFAS
      No. 161 requires enhanced disclosures about how and why an entity uses
      derivative instruments; how derivative instruments are accounted for under
      SFAS
      No. 133 and its related interpretations; and how derivative instruments and
      related hedged items affect an entity’s financial position, results of
      operations, and cash flows. This Statement is effective for the Company
      beginning on January 1, 2009. Earlier application is permitted, but is not
      required. The Company does not expect the adoption of this Statement to have
      a
      material impact on its financial position or results of operations as the
      Company has limited derivative instrument activity.


9


In
      April
      2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, *Determination
      of the Useful Life of Intangible Assets.* This FSP
      is an amendment of SFAS No. 142, *Goodwill
      and Other Intangible Assets.* FSP
      FAS
      142-3 amends the factors that should be considered in developing renewal or
      extension assumptions used to determine the useful life of a recognized
      intangible asset. The objective of the FSP is to improve the consistency between
      the useful life of a recognized intangible asset and the period of expected
      cash
      flows. This FSP is effective for the Company beginning January 1, 2009. The
      Company does not expect the adoption of this Statement will have a material
      impact on its financial position or results of operations.





8.
      Use of
      Estimates in the Preparation of Financial Statements





The
      consolidated financial statements have been prepared in conformity with
      generally accepted accounting principles. In preparing the financial statements,
      management is required to make estimates and assumptions that affect the
      reported amounts of assets and liabilities and disclosure of contingent assets
      and liabilities at the date of the financial statements and the reported amounts
      of revenues and expenses for the reported period. Actual results could differ
      from those estimates. Material estimates that are particularly susceptible
      to
      significant change in the near term are the allowance for loan losses (including
      the determination of the value of impaired loans), fair value of financial
      instruments, and the goodwill impairment assessment.





9.
      Critical Accounting Policies





Management
      has identified its most critical accounting policy to be that related to the
      allowance for loan losses. The allowance for loan losses is established through
      a provision for loan losses charged to expense. Loans are charged against the
      allowance for loan losses when management believes that collectibility of the
      principal is unlikely. The Company has policies and procedures for evaluating
      the overall credit quality of its loan portfolio, including timely
      identification of potential problem credits. On a quarterly basis, management
      reviews the appropriate level for the allowance for loan losses incorporating
      a
      variety of risk considerations, both quantitative and qualitative. Quantitative
      factors include the Company’s historical loss experience, delinquency and
      charge-off trends, collateral values, known information about individual loans,
      and other factors. Qualitative factors include the general economic environment
      in the Company’s market areas and the expected trend of those economic
      conditions. To the extent actual results differ from forecasts and management’s
      judgment, the allowance for loan losses may be greater or less than future
      charge-offs.





Item
      2.
      Management's Discussion and Analysis of Financial Condition and Results of
      Operations.





"SAFE
      HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM
      ACT





The
      information contained in this report may contain forward-looking statements
      about the Company’s growth and acquisition strategies, new products and
      services, and future financial performance, including earnings and dividends
      per
      share, return on average assets, return on average equity, efficiency ratio
      and
      capital ratio. Certain statements in this report constitute “forward-looking
      statements” within the meaning of the Private Securities Litigation Reform Act
      of 1995, including statements preceded by, followed by or that include the
      words
“believes,” “expects,” “should,” or “anticipates,” or references to estimates or
      similar expressions. Such forward-looking statements are based upon certain
      underlying assumptions, risks and uncertainties. Because of the possibility
      of
      change in the underlying assumptions, actual results could differ materially
      from these forward-looking statements. Risks and uncertainties that may affect
      future results include: interest rate risk; competitive pressures; pricing
      pressures on loans and deposits; changes in credit and other risks posed by
      the
      Company’s loan and investment portfolios, including declines in commercial or
      residential real estate values or changes in the allowance for loan losses
      dictated by new market conditions or regulatory requirements; actions of bank
      and non-bank competitors; changes in local and national economic conditions;
      changes in regulatory requirements, including actions of the Securities and
      Exchange Commission and/or the Federal Reserve Board; and customers’ acceptance
      of the Company’s products and services. The Company undertakes no obligation to
      revise or update such forward-looking statements to reflect current events
      or
      circumstances after the date hereof or to reflect the occurrence of
      unanticipated events.


10







THREE
      AND
      SIX MONTHS ENDED JUNE 30, 2008


(dollars
      in thousands, except per share amounts)





OVERVIEW





The
      following discussion describes the consolidated operations of the Company,
      including its wholly-owned subsidiaries, West Bank and WB Capital Management
      Inc. (“WB Capital”), and West Bank’s wholly-owned subsidiary, WB Funding
      Corporation. Consolidated results of operations for the three and six months
      ended June 30, 2008, are compared to the results for the same periods in 2007
      and the consolidated financial condition of the Company at June 30, 2008, is
      compared to the December 31, 2007, position.





Net
      income for the three months ended June 30, 2008, was $4,514 compared to $5,127
      for the three months ended June 30, 2007. Earnings per share were $0.26 and
      $0.29, respectively, for the same periods. The Company’s annualized return on
      average equity and return on average assets for the three months ended June
      30,
      2008, were 15.23 percent and 1.39 percent, respectively, compared to 17.80
      percent and 1.55 percent, respectively, for the three months ended June 30,
      2007.





Net
      income for the three months ended June 30, 2008, was $613 lower than the same
      period last year primarily due to a higher provision for loan losses and higher
      noninterest expenses. The provision for loan losses was $650 higher than the
      same period last year and noninterest expenses were $1,041 higher than in the
      three months ended June 30, 2007. Noninterest expense for the three months
      ended
      June 30, 2007, included net gains on the sale of other real estate owned. These
      increases were somewhat tempered by an increase in net interest income of
      $447.





For
      the
      first six months of 2008, net income was $5,888 compared to $9,571 for the
      first
      six months of 2007. Earnings per share were $0.34 and $0.55, respectively.
      The
      annualized return on average equity and return on average assets for the six
      months ended June 30, 2008, were 9.83 percent and 0.90 percent, respectively,
      compared to 16.84 percent and 1.47 percent, respectively, for the six months
      ended June 30, 2007.





The
      decline in year-to-date net income compared to the prior year is primarily
      due
      to the $5,950 increase in provision for loan losses. Partially offsetting the
      increase in provision for loan losses was a $1,012 increase in net interest
      income as the net interest margin improved by 18 basis points to 3.47
      percent.





Year-to-date
      noninterest income was 1.3 percent higher than last year as an increase in
      gain
      on sale of residential mortgages sold into the secondary market and higher
      debit
      card and trust fees exceeded declines in investment advisory fees and service
      charges.





Non-interest
      expense increased 10.2 percent in the first six months of 2008 compared to
      2007.
      The increase included higher salaries and benefits, the impact of writing down
      the value of one other real estate owned property compared to gains on the
      sale
      of other real estate in the prior year, increases in professional fees and
      marketing expenses, and the re-establishment of the FDIC
      assessment.





WB
      Capital’s year-to-date net income was $274 for the six months ended June 30,
      2008 compared to $195 for the same period in 2007. Revenues were lower than
      a
      year ago because of reduced asset levels. Operating expenses at WB Capital
      were
      $271 lower during the first half of 2008 compared to the same 2007 period.
      This
      was accomplished through a concerted effort to reduce operating costs. WB
      Capital’s net income for the three months ended June 30, 2008, was $27 lower
      than in the same period of 2007 due to lower revenues.


11





RESULTS
      OF OPERATIONS





The
      following table shows selected financial results and measures for the three
      and
      six months ended June 30, 2008, compared with the same periods in
      2007.





Three months ended June 30,
            
            
            Six months ended June 30,2008
            
            
            2007
            
            
            Change
            
            
            Change-%
            
            
            2008
            
            
            2007
            
            
            Change
            
            
            Change-%Net
                income
            
            $
            4,514
            
            
            $
            5,127
            
            
            $
            (613
            )
            
            
            -12.0
            %
            
            $
            5,888
            
            
            $
            9,571
            
            
            $
            (3,683
            )
            
            
            -38.5
            %Average
                assets
            
            
            1,302,161
            
            
            
            1,323,901
            
            
            
            (21,740
            )
            
            
            -1.6
            %
            
            
            1,312,684
            
            
            
            1,314,146
            
            
            
            (1,462
            )
            
            
            -0.1
            %Average
                    stockholders' equity
            
            
            119,178
            
            
            
            115,535
            
            
            
            3,643
            
            
            
            3.2
            %
            
            
            120,444
            
            
            
            114,608
            
            
            
            5,836
            
            
            
            5.1
            %Return
                on assets
            
            
            1.39
            %
            
            
            1.55
            %
            
            
            -0.16
            %
            
            
            
            
            
            
            0.90
            %
            
            
            1.47
            %
            
            
            -0.57
            %Return
                on equity
            
            
            15.23
            %
            
            
            17.80
            %
            
            
            -2.57
            %
            
            
            
            
            
            
            9.83
            %
            
            
            16.84
            %
            
            
            -7.01
            %Efficiency
                ratio
            
            
            46.65
            %
            
            
            41.54
            %
            
            
            5.11
            %
            
            
            
            
            
            
            46.87
            %
            
            
            44.46
            %
            
            
            2.41
            %Dividend
                payout ratio
            
            
            61.69
            %
            
            
            54.72
            %
            
            
            6.97
            %
            
            
            
            
            
            
            94.59
            %
            
            
            58.63
            %
            
            
            35.96
            %Equity
                to assets ratio
            
            
            9.15
            %
            
            
            8.73
            %
            
            
            0.42
            %
            
            
            
            
            
            
            9.18
            %
            
            
            8.72
            %
            
            
            0.45
            %




Definitions
      of ratios:





Return
      on
      assets – annualized net income divided by average assets.


Return
      on
      equity – annualized net income divided by average stockholders’
equity.


Efficiency
      ratio – noninterest expense divided by noninterest income (excluding securities
      gains) plus taxable equivalent net interest income.


Dividend
      payout ratio – dividends paid divided by net income.


Equity
      to
      assets ratio – average equity divided by average assets.




Net
      Interest Income





The
      following tables show average balances and related interest income or interest
      expense, with the resulting average yield or rate by category of
      interest-earning assets or interest-bearing liabilities. Interest income and
      the
      resulting net interest income are shown on a fully taxable
      basis.


12


Data
      for
      the three months ended June 30:





Average Balance
            
            
            Interest Income/Expense
            
            
            Yield/Rate2008
            
            2007
            
            Change
            
            Change-%
            
            
            2008
            
            2007
            
            Change
            
            Change-%
            
            
            2008
            
            2007
            
            ChangeInterest-earning
                assets:Loans:Commercial
            
            $
            367,983
            
            $
            348,949
            
            $
            19,034
            
            
            5.45
            %
            
            $
            5,175
            
            $
            6,961
            
            $
            (1,786
            )
            
            -25.66
            %
            
            
            5.66
            %
            
            8.00
            %
            
            -2.34
            %Real
                estate
            
            
            641,854
            
            
            583,496
            
            
            58,358
            
            
            10.00
            %
            
            
            10,034
            
            
            10,799
            
            
            (765
            )
            
            -7.08
            %
            
            
            6.29
            %
            
            7.42
            %
            
            -1.13
            %Consumer
                and other
            
            
            14,537
            
            
            14,141
            
            
            396
            
            
            2.80
            %
            
            
            219
            
            
            257
            
            
            (38
            )
            
            -14.79
            %
            
            
            6.07
            %
            
            7.28
            %
            
            -1.21
            %Total
                loans
            
            
            1,024,374
            
            
            946,586
            
            
            77,788
            
            
            8.22
            %
            
            
            15,428
            
            
            18,017
            
            
            (2,589
            )
            
            -14.37
            %
            
            
            6.06
            %
            
            7.63
            %
            
            -1.57
            %Investment
                securities:Taxable
            
            
            84,022
            
            
            169,612
            
            
            (85,590
            )
            
            -50.46
            %
            
            
            1,070
            
            
            1,975
            
            
            (905
            )
            
            -45.82
            %
            
            
            5.09
            %
            
            4.66
            %
            
            0.43
            %Tax-exempt
            
            
            87,808
            
            
            87,288
            
            
            520
            
            
            0.60
            %
            
            
            1,249
            
            
            1,142
            
            
            107
            
            
            9.37
            %
            
            
            5.69
            %
            
            5.23
            %
            
            0.46
            %Total
                investment securities
            
            
            171,830
            
            
            256,900
            
            
            (85,070
            )
            
            -33.11
            %
            
            
            2,319
            
            
            3,117
            
            
            (798
            )
            
            -25.60
            %
            
            
            5.40
            %
            
            4.85
            %
            
            0.55
            %Federal
                    funds sold and short-term investments
            
            
            13,565
            
            
            20,472
            
            
            (6,907
            )
            
            -33.74
            %
            
            
            75
            
            
            271
            
            
            (196
            )
            
            -72.32
            %
            
            
            2.23
            %
            
            5.30
            %
            
            -3.07
            %Total
                interest-earning assets
            
            $
            1,209,769
            
            $
            1,223,958
            
            $
            (14,189
            )
            
            -1.16
            %
            
            
            17,822
            
            
            21,405
            
            
            (3,583
            )
            
            -16.74
            %
            
            
            5.92
            %
            
            7.01
            %
            
            -1.09
            %Interest-bearing
                liabilities:Deposits:Checking
                    with interest, savings and money markets
            
            $
            324,312
            
            $
            306,375
            
            $
            17,937
            
            
            5.85
            %
            
            
            1,159
            
            
            2,293
            
            
            (1,134
            )
            
            -49.45
            %
            
            
            1.44
            %
            
            3.00
            %
            
            -1.56
            %Time
                deposits
            
            
            354,778
            
            
            424,504
            
            
            (69,726
            )
            
            -16.43
            %
            
            
            3,379
            
            
            5,390
            
            
            (2,011
            )
            
            -37.31
            %
            
            
            3.83
            %
            
            5.09
            %
            
            -1.26
            %Total
                deposits
            
            
            679,090
            
            
            730,879
            
            
            (51,789
            )
            
            -7.09
            %
            
            
            4,538
            
            
            7,683
            
            
            (3,145
            )
            
            -40.93
            %
            
            
            2.69
            %
            
            4.22
            %
            
            -1.53
            %Other
                borrowed funds
            
            
            309,531
            
            
            279,809
            
            
            29,722
            
            
            10.62
            %
            
            
            2,557
            
            
            3,547
            
            
            (990
            )
            
            -27.91
            %
            
            
            3.32
            %
            
            5.09
            %
            
            -1.77
            %Total
                interest-bearing liabilities
            
            $
            988,621
            
            $
            1,010,688
            
            $
            (22,067
            )
            
            -2.18
            %
            
            
            7,095
            
            
            11,230
            
            
            (4,135
            )
            
            -36.82
            %
            
            
            2.89
            %
            
            4.46
            %
            
            -1.57
            %Tax-equivalent
                net interest income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            10,727
            
            $
            10,175
            
            $
            552
            
            
            5.43
            %Net
                interest spread
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3.03
            %
            
            2.55
            %
            
            0.48
            %Net
                interest margin
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3.56
            %
            
            3.33
            %
            
            0.23
            %





Data
      for
      the six months ended June 30:




Average Balance
            
            
            Interest Income/Expense
            
            
            Yield/Rate2008
            
            2007
            
            Change
            
            Change-%
            
            
            2008
            
            2007
            
            Change
            
            Change-%
            
            
            2008
            
            2007
            
            ChangeInterest-earning
                assets:Loans:Commercial
            
            $
            364,130
            
            $
            343,431
            
            $
            20,699
            
            
            6.03
            %
            
            $
            11,048
            
            $
            13,601
            
            $
            (2,553
            )
            
            -18.77
            %
            
            
            6.10
            %
            
            7.99
            %
            
            -1.89
            %Real
                estate
            
            
            634,060
            
            
            579,195
            
            
            54,865
            
            
            9.47
            %
            
            
            20,412
            
            
            21,072
            
            
            (660
            )
            
            -3.13
            %
            
            
            6.47
            %
            
            7.34
            %
            
            -0.87
            %Consumer
                and other
            
            
            14,113
            
            
            14,496
            
            
            (383
            )
            
            -2.64
            %
            
            
            455
            
            
            536
            
            
            (81
            )
            
            -15.11
            %
            
            
            6.49
            %
            
            7.46
            %
            
            -0.97
            %Total
                loans
            
            
            1,012,303
            
            
            937,122
            
            
            75,181
            
            
            8.02
            %
            
            
            31,915
            
            
            35,209
            
            
            (3,294
            )
            
            -9.36
            %
            
            
            6.34
            %
            
            7.58
            %
            
            -1.24
            %Investment
                securities:Taxable
            
            
            101,825
            
            
            169,945
            
            
            (68,120
            )
            
            -40.08
            %
            
            
            2,547
            
            
            3,956
            
            
            (1,409
            )
            
            -35.62
            %
            
            
            5.00
            %
            
            4.66
            %
            
            0.34
            %Tax-exempt
            
            
            86,802
            
            
            89,102
            
            
            (2,300
            )
            
            -2.58
            %
            
            
            2,442
            
            
            2,331
            
            
            111
            
            
            4.76
            %
            
            
            5.63
            %
            
            5.23
            %
            
            0.40
            %Total
                investment securities
            
            
            188,627
            
            
            259,047
            
            
            (70,420
            )
            
            -27.18
            %
            
            
            4,989
            
            
            6,287
            
            
            (1,298
            )
            
            -20.65
            %
            
            
            5.29
            %
            
            4.85
            %
            
            0.44
            %Federal
                    funds sold and short-term investments
            
            
            18,403
            
            
            21,439
            
            
            (3,036
            )
            
            -14.16
            %
            
            
            235
            
            
            560
            
            
            (325
            )
            
            -58.04
            %
            
            
            2.57
            %
            
            5.26
            %
            
            -2.69
            %Total
                interest-earning assets
            
            $
            1,219,333
            
            $
            1,217,608
            
            $
            1,725
            
            
            0.14
            %
            
            
            37,139
            
            
            42,056
            
            
            (4,917
            )
            
            -11.69
            %
            
            
            6.12
            %
            
            6.96
            %
            
            -0.84
            %Interest-bearing
                liabilities:Deposits:Checking
                    with interest, savings and money markets
            
            $
            325,787
            
            $
            297,762
            
            $
            28,025
            
            
            9.41
            %
            
            
            2,942
            
            
            4,333
            
            
            (1,391
            )
            
            -32.10
            %
            
            
            1.82
            %
            
            2.93
            %
            
            -1.11
            %Time
                deposits
            
            
            365,820
            
            
            432,846
            
            
            (67,026
            )
            
            -15.49
            %
            
            
            7,568
            
            
            10,922
            
            
            (3,354
            )
            
            -30.71
            %
            
            
            4.16
            %
            
            5.09
            %
            
            -0.93
            %Total
                deposits
            
            
            691,607
            
            
            730,608
            
            
            (39,001
            )
            
            -5.34
            %
            
            
            10,510
            
            
            15,255
            
            
            (4,745
            )
            
            -31.10
            %
            
            
            3.06
            %
            
            4.21
            %
            
            -1.15
            %Other
                borrowed funds
            
            
            307,957
            
            
            273,719
            
            
            34,238
            
            
            12.51
            %
            
            
            5,572
            
            
            6,912
            
            
            (1,340
            )
            
            -19.39
            %
            
            
            3.64
            %
            
            5.09
            %
            
            -1.45
            %Total
                interest-bearing liabilities
            
            $
            999,564
            
            $
            1,004,327
            
            $
            (4,763
            )
            
            -0.47
            %
            
            
            16,082
            
            
            22,167
            
            
            (6,085
            )
            
            -27.45
            %
            
            
            3.24
            %
            
            4.45
            %
            
            -1.21
            %Tax-equivalent
                net interest income
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            $
            21,057
            
            $
            19,889
            
            $
            1,168
            
            
            5.87
            %Net
                interest spread
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            2.88
            %
            
            2.51
            %
            
            0.37
            %Net
                interest margin
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            
            3.47
            %
            
            3.29
            %
            
            0.18
            %





13





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. Net
      interest margin is a measure of the net return on interest-earning assets and
      is
      computed by dividing annualized tax-equivalent net interest income by the
      average of total interest-earning assets for the period. The net interest margin
      for the three months ended June 30, 2008, was 3.56 percent, an increase of
      23
      basis points compared to the same quarter last year and 18 basis points higher
      than the first quarter of 2008. The increase from the prior quarter was due to a
      decline in deposit and borrowing rates which exceeded the decline in yields
      on
      loans, along with a significant change in the mix of earning assets. The
      Company’s tax-equivalent net interest income for the three months ended June 30,
      2008, increased $552 compared to the three months ended June 30,
      2007.





For
      the
      six months ended June 30, 2008, the net interest margin increased to 3.47
      percent, which was an 18 basis point improvement compared to the six months
      ended June 30, 2007. The result was a $1,168 increase in tax-equivalent net
      interest income for the six months ended June 30, 2008, compared to the six
      months ended June 30, 2007.





Tax-equivalent
      interest income and fees on loans declined $3,294 in the first six months of
      2008 compared to the same period in 2007, as the drop in market rates exceeded
      the $75.2 million increase in the volume of outstanding loans. The average
      yield
      on loans declined to 6.34 percent for the first six months of 2008, compared
      to
      7.58 percent for the same period in 2007. In general, market interest rates
      began to decline in September 2007 and continued to drop through April 2008.
      The
      yield on the Company’s loan portfolio is affected by the mix of the portfolio,
      the effects of competition, the interest rate environment, and the amount of
      non-accrual loans. The interest rate environment can influence the volume of
      new
      loan originations and the mix of variable rate versus fixed rate loans. Loan
      pricing in the Company’s market areas remains very competitive.





For
      the
      first six months of 2008, the average balance of investment securities was
      $70.4
      million lower than in the first six months of 2007, while the yield increased
      44
      basis points. Investment securities totaling approximately $104 million matured
      or were called in the first six months of 2008 and approximately $48 million
      of
      investment securities were purchased during the same period.





The
      average rate paid on deposits for the first six months of 2008 declined to
      3.06
      percent from 4.21 percent for the same period last year. This decrease is
      primarily the result of a significant decline in market interest rates on
      interest-bearing checking, money market savings, and certificates of deposit.
      The average balance of time deposits declined in the first six months of 2008
      compared to the same time period in 2007, as the Company has not been renewing
      maturing wholesale certificates of deposit as the cost of those deposits was
      higher than the cost of Federal Home Loan Bank (FHLB) advances. By the end
      of
      June 2008, West Bank had resumed bidding on public funds as a source of
      funding.





The
      average balance of borrowings for the first six months of 2008 was $34.2 million
      higher than a year ago. Overnight borrowings in the form of federal funds
      purchased from correspondent banks and securities sold under agreements to
      repurchase averaged $4.6 million more than during the first six months of last
      year. The average rate paid on those borrowings declined 225 basis points in
      2008 compared to the first six months of 2007. Average long-term borrowings
      increased $30.2 million, while the rates paid on those additional borrowings
      declined 75 basis points compared to 2007.




14


Provision
      for Loan Losses and the Related Allowance for Loan Losses





The
      following table sets forth the activity in the allowance for loan losses for
      the
      three and six months ended June 30, 2008 and 2007, as well as common ratios
      related to the allowance for loan losses.





Three months ended June 30,
            
            Six months ended June 30,2008
            
            2007
            
            Change
            
            2008
            
            2007
            
            ChangeBalance
                at beginning of period
            
            $
            14,260
            
            $
            8,743
            
            $
            5,517
            
            $
            8,935
            
            $
            8,494
            
            $
            441Charge-offs
            
            
            (4,740
            )
            
            (331
            )
            
            (4,409
            )
            
            (5,121
            )
            
            (486
            )
            
            (4,635
            )Recoveries
            
            
            37
            
            
            17
            
            
            20
            
            
            143
            
            
            121
            
            
            22Net
                charge-offs
            
            
            (4,703
            )
            
            (314
            )
            
            (4,389
            )
            
            (4,978
            )
            
            (365
            )
            
            (4,613
            )Provision
                charged to operations
            
            
            1,000
            
            
            350
            
            
            650
            
            
            6,600
            
            
            650
            
            
            5,950Balance
                at end of period
            
            $
            10,557
            
            $
            8,779
            
            $
            1,778
            
            $
            10,557
            
            $
            8,779
            
            $
            1,778Average
                loans outstanding
            
            $
            1,024,374
            
            $
            946,586
            
            
            
            
            $
            1,012,303
            
            $
            937,122Ratio
                of net charge-offs during the period to average loans
                outstanding
            
            
            0.46
            %
            
            0.03
            %
            
            
            
            
            0.49
            %
            
            0.04
            %Ratio
                of allowance for loan losses to average loans outstanding
            
            
            1.03
            %
            
            0.93
            %
            
            
            
            
            1.04
            %
            
            0.94
            %





The
      provision for loan losses represents charges made to earnings to maintain an
      adequate allowance for loan losses. The allowance for loan losses is
      management’s best estimate of probable losses inherent in the loan portfolio as
      of the balance sheet date. Factors considered in establishing an appropriate
      allowance include: an assessment of the financial condition of the borrower;
      a
      realistic determination of value and adequacy of underlying collateral; the
      condition of the local economy and the condition of the specific industry of
      the
      borrower; an analysis of the levels and trends of loan categories; and a review
      of delinquent and classified loans.





The
      provision for loan losses has increased significantly compared to a year ago.
      In
      April 2008, Iowa’s largest homebuilder and developer suspended business. As a
      result of the developer’s decision to cease operations, West Bank increased the
      allowance for loan losses by $5 million as of March 31, 2008. West Bank does
      not
      have any loans directly to the developer. However, West Bank had approximately
      $22 million in loans to closely related entities and individuals. Approximately
      $4 million of the loans are unsecured. The fact the developer has ceased
      operations limits the owners’ ability to repay the $4 million in unsecured
      loans, and the lack of availability of additional collateral led West Bank
      to
      the decision to charge them off during the three months ended June 30, 2008.
      Collection of these loans is being pursued through legal actions. Approximately
      $18 million of the loans are secured by first real estate mortgages, limited
      guarantees from parties related to the developer, and limited guarantees from
      parties not related to the developer.





During
      the three months ended June 30, 2008 an additional $1 million was added to
      the
      provision. This is $650 more than the second quarter of last year. The provision
      is higher this year because of the slow down in the residential and commercial
      real estate markets.





Net
      charge-offs during the first six months of 2008 were $4.6 million higher than
      in
      the same period in 2007. The majority of the charge-offs consisted of seven
      commercial loans totaling $4.5 million, including the $4 million discussed
      in
      the previous paragraph. The net charge-off ratio for the six months ended June
      30, 2008, was 0.49 percent compared to 0.04 percent for the six months ended
      June 30, 2007. Significant efforts continue to be made to maximize recovery
      efforts.





The
      allowance for loan losses represented 78.0 percent of non-accrual loans and
      loans past due more than 90 days at June 30, 2008, compared to 152.0 percent
      at
      December 31, 2007. The ratio has declined due to the increase in non-accrual
      loans.





The
      adequacy of the allowance for loan losses is evaluated quarterly by management
      and reviewed by West Bank’s Board of Directors. This evaluation focuses on
      specific loan reviews, changes in the type and volume of the loan portfolio
      given the current and forecasted economic conditions, and historical loss
      experience. Any one of the following conditions may result in the review of
      a
      specific loan: concern about whether the customer’s cash flow or net worth is
      sufficient to repay the loan; delinquency status; criticism of the loan in
      a
      regulatory examination; the suspension of interest accrual; or other reasons
      including whether the loan has other special or unusual characteristics that
      suggest special monitoring is warranted.


15





While
      management uses available information to recognize potential losses on loans,
      further reduction in the carrying amounts of loans may be necessary based on
      changes in circumstances or later acquired information. Futhermore, the general
      level of economic activity is always uncertain. Identifiable sectors within
      the
      general economy are subject to additional volatility, which at any time may
      have
      a substantial impact on the loan portfolio. In addition, regulatory agencies,
      as
      an integral part of their examination process, periodically review the estimated
      losses on loans. Such agencies may require the Company to recognize additional
      losses based on their judgment about information available to them at the time
      of their examination.





Noninterest
      Income





The
      following table shows the variance from the prior year in the noninterest income
      categories shown in the Consolidated Statements of Income. In addition, accounts
      within the “Other income” category that represent significant variances are
      shown.





Three months ended June 30,Noninterest income
            
            2008
            
            2007
            
            Change
            
            Change-%Service
                charges on deposit accounts
            
            $
            1,250
            
            $
            1,211
            
            $
            39
            
            
            3.2
            %Trust
                services
            
            
            204
            
            
            188
            
            
            16
            
            
            8.5
            %Investment
                advisory fees
            
            
            1,960
            
            
            2,043
            
            
            (83
            )
            
            -4.1
            %Increase
                in cash value of bank-owned life insurance
            
            
            257
            
            
            219
            
            
            38
            
            
            17.4
            %Net
                realized gains (losses) from sales of securities
            
            
            -
            
            
            (13
            )
            
            13
            
            
            100.0
            %Other:Debit
                card usage fees
            
            
            109
            
            
            87
            
            
            22
            
            
            25.3
            %Check
                printing fees
            
            
            30
            
            
            31
            
            
            (1
            )
            
            -3.2
            %VISA/MasterCard
                income
            
            
            55
            
            
            53
            
            
            2
            
            
            3.8
            %Gain
                on sale of residential mortgages
            
            
            135
            
            
            25
            
            
            110
            
            
            440.0
            %All
                other
            
            
            169
            
            
            191
            
            
            (22
            )
            
            -11.5
            %Total
                other
            
            
            498
            
            
            387
            
            
            111
            
            
            28.7
            %Total
                noninterest income
            
            $
            4,169
            
            $
            4,035
            
            $
            134
            
            
            3.3
            %





Six months ended June 30,Noninterest income
            
            2008
            
            2007
            
            Change
            
            Change-%Service
                charges on deposit accounts
            
            $
            2,296
            
            $
            2,339
            
            $
            (43
            )
            
            -1.8
            %Trust
                services
            
            
            398
            
            
            369
            
            
            29
            
            
            7.9
            %Investment
                advisory fees
            
            
            3,898
            
            
            4,002
            
            
            (104
            )
            
            -2.6
            %Increase
                in cash value of bank-owned life insurance
            
            
            449
            
            
            435
            
            
            14
            
            
            3.2
            %Net
                realized gains (losses) from sales of securities
            
            
            5
            
            
            (9
            )
            
            14
            
            
            155.6
            %Other:Debit
                card usage fees
            
            
            204
            
            
            169
            
            
            35
            
            
            20.7
            %Check
                printing fees
            
            
            63
            
            
            67
            
            
            (4
            )
            
            -6.0
            %VISA/MasterCard
                income
            
            
            94
            
            
            107
            
            
            (13
            )
            
            -12.2
            %Gain
                on sale of residential mortgages
            
            
            220
            
            
            38
            
            
            182
            
            
            479.0
            %All
                other
            
            
            378
            
            
            388
            
            
            (10
            )
            
            -2.6
            %Total
                other
            
            
            959
            
            
            769
            
            
            190
            
            
            24.7
            %Total
                noninterest income
            
            $
            8,005
            
            $
            7,905
            
            $
            100
            
            
            1.3
            %




16





Service
      charges on deposit accounts for the three months ended June 30, 2008, increased
      compared to the prior year. Lower market interest rates resulted in a lower
      earnings credit on commercial checking accounts which translates to higher
      service charge revenue. For the first six months of 2008 return check charges
      have declined more than the increase in commercial service charges as some
      customers have modified their check-writing habits resulting in fewer checks
      presented against non-sufficient funds.





Trust
      fees have increased compared to the prior year due to new business and
      additional assets added to existing accounts.





Investment
      advisory fees are fees earned by WB Capital. The slight decline in 2008 fees
      compared to 2007 was the result of lower fees from the Vintage mutual funds
      due
      to lower asset levels in the funds.





Debit
      card usage fees continued to improve as a result of higher utilization of this
      convenient payment method. In April 2008, West Bank began offering a new product
      which encourages the use of electronic payments and is expected to continue
      to
      add to this revenue source. Year-to-date VISA/MasterCard income declined as
      a
      result of lower transaction volumes in the first six months of 2008 compared
      to
      the same time period in 2007. However, income was up slightly in the three
      months ended June 30, 2008 compared to 2007.





The
      volume of originations of residential mortgages sold into the secondary market
      has increased significantly compared to 2007. The growth of this line of
      business is expected to continue as the result of hiring two additional loan
      originators in 2008.





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 significant
      variances are shown.





Three months ended June 30,Noninterest expense:
            
            2008
            
            2007
            
            Change
            
            Change-%Salaries
                and employee benefits
            
            $
            3,634
            
            $
            3,355
            
            $
            279
            
            
            8.3
            %Occupancy
            
            
            899
            
            
            897
            
            
            2
            
            
            0.2
            %Data
                processing
            
            
            498
            
            
            473
            
            
            25
            
            
            5.3
            %Other
                expenses:Insurance
            
            
            58
            
            
            66
            
            
            (8
            )
            
            -12.1
            %Training
            
            
            55
            
            
            21
            
            
            34
            
            
            161.9
            %Marketing
            
            
            232
            
            
            154
            
            
            78
            
            
            50.6
            %Professional
                fees
            
            
            294
            
            
            152
            
            
            142
            
            
            93.4
            %Director
                fees
            
            
            83
            
            
            76
            
            
            7
            
            
            9.2
            %FDIC
                expense
            
            
            153
            
            
            28
            
            
            125
            
            
            446.4
            %Other
                real estate owned expense
            
            
            105
            
            
            (263
            )
            
            368
            
            
            139.9
            %Intangible
                amortization
            
            
            183
            
            
            214
            
            
            (31
            )
            
            -14.5
            %All
                other
            
            
            755
            
            
            735
            
            
            20
            
            
            2.7
            %Total
                other
            
            
            1,918
            
            
            1,183
            
            
            735
            
            
            62.1
            %Total
                noninterest expense
            
            $
            6,949
            
            $
            5,908
            
            $
            1,041
            
            
            17.6
            %




17





Six months ended June 30,Noninterest
                expense:
            
            2008
            
            2007
            
            Change
            
            Change-%Salaries
                and employee benefits
            
            $
            7,365
            
            $
            6,971
            
            $
            394
            
            
            5.7
            %Occupancy
            
            
            1,799
            
            
            1,831
            
            
            (32
            )
            
            -1.7
            %Data
                processing
            
            
            990
            
            
            940
            
            
            50
            
            
            5.3
            %Other
                expenses:Insurance
            
            
            121
            
            
            139
            
            
            (18
            )
            
            -12.9
            %Training
            
            
            110
            
            
            46
            
            
            64
            
            
            139.1
            %Marketing
            
            
            419
            
            
            258
            
            
            161
            
            
            62.4
            %Professional
                fees
            
            
            538
            
            
            357
            
            
            181
            
            
            50.7
            %Director
                fees
            
            
            149
            
            
            119
            
            
            30
            
            
            25.2
            %FDIC
                expense
            
            
            185
            
            
            58
            
            
            127
            
            
            219.0
            %Other
                real estate owned expense
            
            
            91
            
            
            (244
            )
            
            335
            
            
            137.3
            %Intangible
                amortization
            
            
            360
            
            
            428
            
            
            (68
            )
            
            -15.9
            %All
                other
            
            
            1,491
            
            
            1,459
            
            
            32
            
            
            2.2
            %Total
                other
            
            
            3,464
            
            
            2,620
            
            
            844
            
            
            32.2
            %Total
                noninterest expense
            
            $
            13,618
            
            $
            12,362
            
            $
            1,256
            
            
            10.2
            %




The
      increase in salaries and benefits resulted from hiring 14 new employees since
      June 30, 2007, 11 of whom are in business development roles, along with
      annual merit increases.





Occupancy
      expenses declined in the six months ended June 30, 2008, due to closing one
      lower traffic office in the Des Moines metropolitan area in the second quarter
      of 2007 and lower equipment depreciation. West Bank also discontinued renting
      space at a mall for three ATM’s. The Company continues to market excess space
      available in the facility in which WB Capital is located in West Des Moines.
      A
      portion of the space has been leased and rental payments began in April 2008.
      A
      site for a new office in Waukee has been leased, with groundbreaking occurring
      in July 2008 and an expected opening in February 2009.





Training
      expense has increased because of beginning an extensive sales training program
      for consumer branch bankers, commercial bankers, and the investment advisory
      sales force. Marketing expenses are up as a result of a retail sales campaign
      and a new product offering.





Professional
      fees increased due to legal fees and external audit and tax compliance related
      fees. Director fees increased in 2008 as the result of an April 2007 increase
      in
      quarterly retainer and meeting fees.





FDIC
      expense increased as a result of the re-establishment of the FDIC assessment.
      West Bank’s share of a one-time assessment credit was almost fully utilized by
      March 31, 2008.





Other
      real estate owned expense increased due to a write-down taken on one piece
      of
      property in the second quarter of 2008 and 2007 expense included gains on the
      sale of several other real estate properties. One sale of farmland in eastern
      Iowa resulted in a gain of $250 in the second quarter of 2007.





Income
      Tax Expense





The
      Company incurred income tax expense of $2.0 million for the six months ended
      June 30, 2008, compared with $4.4 million for the six months ended June 30,
      2007. The effective income tax rates as a percent of income before taxes for
      the
      three months ended June 30, 2008 and 2007, was 30.0 percent and 32.2 percent,
      respectively, and was 25.4 percent and 31.6 percent, respectively, for the
      six
      months ended June 30, 2008 and 2007. The reduction in the effective rate was
      due
      to the sharp decline in income before income taxes in the first three months
      of
      2008 combined with the effect of tax-exempt interest income and a Federal new
      market tax credit. In the second half of 2007, West Bank invested in a qualified
      community development entity which qualified West Bank for the credit. The
      credit, totaling $2,730, reduces income tax expense over a seven-year
      period.


18




FINANCIAL
      CONDITION





Total
      assets as of June 30, 2008, were approximately $1.4 billion, which was a 2.2
      percent increase compared to December 31, 2007. Certain components of the
      balance sheet have changed significantly and are described in the following
      paragraphs.





Investment
      Securities





Investment
      securities available for sale declined approximately $61.6 million from December
      31, 2007, to $169.8 million at June 30, 2008. The decline was primarily the
      result of bonds being called due to the lower interest rate environment. West
      Bank purchased agency and municipal securities in the second quarter to
      partially offset the calls and scheduled maturities.





The
      credit markets are in considerable stress, due to the sub-prime turmoil and
      related negative developments. Investors seem to be hesitant to invest in any
      credit product except Treasuries and agencies until more stability returns
      to
      the market, thus contributing to pricing fluctuations. In many cases, bond
      prices may be the result of distressed selling rather than normal market
      transactions. Management believes some price fluctuations have more to do with
      the environment surrounding the credit markets than the inability to receive
      full principal payments.





On
      a
      quarterly basis, the investment securities portfolio is reviewed for
      other-than-temporary impairment. As of June 30, 2008, existing unrealized losses
      are considered to be temporary in nature due to market interest rate
      fluctuations, not in estimated cash flows, and the Company has the ability
      and
      the intent to hold securities with unrealized losses for a period of time
      sufficient to allow for a recovery, which may be at maturity. Therefore, no
      other-than-temporary impairment adjustment has been recorded as of June 30,
      2008.





At
      June
      30, 2008, West Bank had a pooled trust preferred security that had a carrying
      value of $1.25 million after a pre-tax fair market value adjustment of $3.75
      million. In accordance with Statement of Financial Accounting Standards number
      115, the decline in fair market value has been charged against capital on an
      after income tax basis. Based on a cash flow analysis, management has concluded
      this security is not other than temporarily impaired. If subsequent cash flow
      analyses would indicate insufficient cash flow to repay the outstanding
      principal and interest or the credit rating of this security declined to BBB-,
      we would conclude the security is other than temporarily impaired and incur
      an
      impairment loss equal to the difference between original cost and the fair
      market value. The impairment loss would negatively impact net income; however,
      as previously noted, the fair market value adjustment at June 30, 2008, has
      already been recorded against capital.





Loans
      and
      Non-performing Assets





Loans
      outstanding increased approximately $74 million from December 31, 2007, to
      June
      30, 2008. The increase was attributable to growth in commercial ($34.8 million),
      commercial real estate ($21.4 million), and one-to-four-family real estate
      construction loans ($15.3 million). West Bank has new loans in process which
      should result in similar loan growth in the third quarter of
      2008.


19





The
      following table sets forth the amount of non-performing loans and assets carried
      by the Company and common ratio measurements of those items.





June 30, 2008
            
            December 31, 2007
            
            ChangeNon-accrual
                loans
            
            $
            13,332
            
            $
            5,469
            
            $
            7,863Loans
                past due 90 days and still accruing interest
            
            
            204
            
            
            408
            
            
            (204
            )Total
                non-performing loans
            
            
            13,536
            
            
            5,877
            
            
            7,659Other
                real estate owned
            
            
            621
            
            
            155
            
            
            466Total
                non-performing assets
            
            $
            14,157
            
            $
            6,032
            
            $
            8,125Non-performing
                loans to total loans
            
            
            1.28
            %
            
            0.60
            %
            
            0.68
            %Non-performing
                assets to total loans
            
            
            1.34
            %
            
            0.61
            %
            
            0.73
            %Non-performing
                assets to total assets
            
            
            1.03
            %
            
            0.45
            %
            
            0.58
            %




Total
      non-performing assets have increased 134.7 percent since the end of 2007. The
      non-accrual category increased by $7.9 million during the first six months
      of
      2008, with the majority of the increase related to loans to commercial real
      estate and construction developers. Loans transferred to non-accrual status
      during the three months ended June 30, 2008, included two loans totaling $3.4
      million related to the defunct home builder discussed earlier in this report
      and
      a $1.7 million loan to a biofuels plant. The biofuels loan is a participation
      from another bank. The loan is performing, however, regulatory examiners at
      the
      originating bank recently required the loan to be placed on non-performing
      status. Other real estate owned increased by $.5 million as the result of the
      foreclosure of a townhouse construction project. The project is approximately
      80
      percent complete and a sale is pending. The value of the asset was written
      down
      approximately $70 in June 2008 to reduce the carrying value to the amount of
      the
      expected proceeds.





Reference
      is also made to the information and discussion earlier in this report under
      the
      heading of “Provision for Loan Losses and the Related Allowance for Loan Losses”
and Notes 4 and 6.





Deposits





Total
      deposits as of June 30, 2008, were approximately $938 million compared with
      $911
      million as of December 31, 2007, an increase of 3.0 percent. Time deposits
      of
      $100,000 or more increased approximately $103.9 million as West Bank increased
      its reliance on public unit deposits to fund the increase in loans. Meanwhile,
      the majority of the reduction in other time deposits was attributable to the
      maturity of other wholesale deposits. In order to maintain core deposits, the
      Bank began an extensive sales campaign in April 2008, for a new product called
      “Reward Me Checking.” The new product pays a certificate of deposit-like rate if
      the customer performs a certain number of electronic banking transactions and
      agrees to receive his or her monthly statements electronically. In addition,
      West Bank is the banking partner for a new savings program called SmartyPig.
      SmartyPig is an innovative, internet-based savings and rewards program developed
      by SmartyPig, LLC. In return for assisting with the development efforts, West
      Bank has an 18 percent ownership interest in SmartyPig, LLC. An additional
      strategy for gathering and retaining core deposits was added in July 2008.
      New
      and current customers with a primary checking account at West Bank are eligible
      for a 50 basis point higher rate on time certificates.


20




Borrowings





The
      balance of federal funds purchased and securities sold under agreements to
      repurchase was $122.8 million at June 30, 2008, down from $166.9 million at
      December 31, 2007. The reduction was primarily in federal funds purchased,
      which
      includes federal funds purchased from regional and national correspondent banks
      as necessary for short-term liquidity needs and funds sold to West Bank by
      approximately 25 banks throughout Iowa as part of the correspondent bank
      services provided by West Bank. The balance of federal funds purchased from
      correspondent banks throughout Iowa will fluctuate depending upon the loan
      demand and investment strategy of those banks. The balance of other short-term
      borrowings consisted of Treasury, Tax, and Loan option notes. Long-term
      borrowings increased $49.5 million compared to December 31, 2007. The increase
      consisted of a $25 million, 10-year FHLB advance with an interest rate of 2.70
      percent that is callable after three years, and a $25 million, 5-year FHLB
      advance with an interest rate of 2.17 percent that is callable after three
      months. The advances were used to fund loan growth and are being used as a
      lower
      cost alternative to wholesale deposits.





Liquidity
      and Capital Resources





The
      objective of liquidity management is to ensure the availability of sufficient
      cash flows to meet all corporate financial commitments and to capitalize on
      opportunities for profitable business expansion. The Company’s principal source
      of funds is deposits, which include demand, money market, savings, and
      certificates of deposit. Other sources include principal repayments on loans,
      proceeds from the maturity and sale of investment securities, federal funds
      purchased, repurchase agreements, advances from the FHLB, and funds provided
      by
      operations. Liquidity management is conducted on both a daily and a long-term
      basis. Investments in liquid assets are adjusted based on expected loan demand,
      projected loan maturities and payments, expected deposit flows, and the
      objectives set by the Company’s asset-liability management policy. The Company
      had liquid assets (cash and cash equivalents) of $62.1 million as of June 30,
      2008, compared with $49.9 million as of December 31, 2007. West Bank had
      additional borrowing capacity available from the FHLB of approximately $28.6
      million at June 30, 2008, and the Company has a $5.0 million unsecured line
      of
      credit through a large regional correspondent bank. In addition, West Bank
      has
      $110 million in borrowing capacity available through unsecured federal funds
      lines of credit with correspondent banks. West Bank had borrowed $24 million
      on
      those lines of credit at June 30, 2008. The combination of high levels of
      potentially liquid assets, cash flows from operations, and additional borrowing
      capacity provided strong liquidity for the Company at June 30,
      2008.





The
      Company’s total stockholders’ equity declined to $117.8 million at June 30,
      2008, from $121.6 million at December 31, 2007. Total equity declined as
      earnings were only slightly above the amount of dividends paid, the Company
      repurchased stock, and accumulated comprehensive loss increased due to lower
      market values of available for sale securities. Total stockholders' equity
      was
      8.61 percent and 9.08 percent of total assets as of June 30, 2008, and December
      31, 2007, respectively. No material capital expenditures or material changes
      in
      the capital resource mix are anticipated at this time.





Quantitative
      measures established by regulation to ensure capital adequacy require the
      Company and West Bank to maintain minimum amounts and ratios (set forth in
      the
      following table) of total and Tier 1 capital to risk-weighted assets and of
      Tier
      1 capital to average assets. Management believes the capital levels of the
      Company and West Bank met all capital adequacy requirements to which they were
      subject at June 30, 2008.


21





Regulatoryrequirements to be:
            
            Actual RegulatoryAdequately
            
            Well-
            
            Capital Ratios as of:Capitalized
            
            Capitalized
            
            June 30, 2008
            
            December 31, 2007Total
                risk-based capital as % of risk-weighted assetsConsolidated
            
            
            8.0
            %
            
            n/a
            
            
            10.7
            %
            
            11.1
            %West
                Bank
            
            
            8.0
            %
            
            10.0
            %
            
            10.4
            %
            
            10.8
            %Tier
                1 capital as % of risk-weighted assets:Consolidated
            
            
            4.0
            %
            
            n/a
            
            
            9.8
            %
            
            10.3
            %West
                Bank
            
            
            4.0
            %
            
            6.0
            %
            
            8.7
            %
            
            9.1
            %Tier
                1 capital as % average assetsConsolidated
            
            
            4.0
            %
            
            n/a
            
            
            9.0
            %
            
            8.9
            %West
                Bank
            
            
            4.0
            %
            
            5.0
            %
            
            8.0
            %
            
            7.9
            %





On
      April
      16, 2008, the Company’s Board of Directors authorized $5 million to be used
      during the following 12 months for the buy-back of Company common stock. During
      the six months ended June 30, 2008, 58,300 shares of its common stock were
      repurchased at an average price of $13.53 per share under a previous
      authorization.





Market
      Risk Management





Market
      risk is the risk of earnings volatility that results from adverse changes in
      interest rates and market prices. The Company's market risk is primarily
      interest rate risk arising from its core banking activities of lending and
      deposit taking. Interest rate risk is the risk that changes in market interest
      rates may adversely affect the Company's net interest income. Management
      continually develops and implements strategies to mitigate this risk. The
      analysis of the Company’s interest rate risk was presented in the Form 10-K
      filed with the Securities and Exchange Commission on March 7, 2008, and is
      incorporated herein by reference. The Company has not experienced any material
      changes to its market risk position since December 31, 2007. Management does
      not
      believe the Company's primary market risk exposures and how those exposures
      were
      managed in the first six months of 2008 changed compared to 2007.





Effects
      of New Statements of Financial Accounting Standards





Effective
      January 1, 2008, the Company partially adopted SFAS No. 157, *Fair
      Value Measurements* ,
      which
      requires disclosures for those assets and liabilities carried in the balance
      sheet on a fair value basis. The Financial Accounting Standard Board (FASB)
      has
      deferred the effective date of SFAS No. 157 until 2009 for nonfinancial assets
      and liabilities which are recognized at fair value on a nonrecurring basis.
      For
      the Company, this deferral applies to other real estate owned, goodwill, and
      intangible assets. The Company does not expect the final adoption of this
      Statement to have a material impact on its financial position or results of
      operations as the Company has limited derivative instrument
      activity.





In
      March
      2008, the FASB issued SFAS No. 161, *Disclosures
      about Derivative Instruments and Hedging Activities* .
      SFAS
      No. 161 requires enhanced disclosures about how and why an entity uses
      derivative instruments; how derivative instruments are accounted for under
      SFAS
      No. 133 and its related interpretations; and how derivative instruments and
      related hedged items affect an entity’s financial position, results of
      operations, and cash flows. This Statement is effective for the Company
      beginning on January 1, 2009. Earlier application is permitted, but is not
      required. The Company does not expect the adoption of this Statement to have
      a
      material impact on its financial position or results of operations as the
      Company has limited derivative instrument activity.


22





In
      April
      2008, the FASB issued FASB Staff Position (FSP) FAS 142-3, *Determination
      of the Useful Life of Intangible Assets.* This FSP
      is an amendment of SFAS No. 142, *Goodwill
      and Other Intangible Assets.* FSP
      FAS
      142-3 amends the factors that should be considered in developing renewal or
      extension assumptions used to determine the useful life of a recognized
      intangible asset. The objective of the FSP is to improve the consistency between
      the useful life of a recognized intangible asset and the period of expected
      cash
      flows. This FSP is effective for the Company beginning January 1, 2009. The
      Company does not expect the adoption of this Statement will have a material
      impact on its financial position or results of operations.





Item
      3.
      Quantitative and Qualitative Disclosures about Market Risk





The
      information appearing above under the heading “Market Risk Management” is
      incorporated herein by reference.





Item
      4.
      Controls and Procedures





a.
      Evaluation of disclosure controls and procedures. As of the end of the period
      covered by this report, an evaluation of the effectiveness of the Company’s
      disclosure controls and procedures (as defined in Exchange Act Rule
      240.13a-15(f)) was performed under the supervision and with the participation
      of
      the Company’s Chief Executive Officer and Chief Financial Officer. Based on that
      evaluation, the Chief Executive Officer and the Chief Financial Officer have
      concluded that the Company’s current disclosure controls and procedures are
      effective to ensure that information required to be disclosed by the Company
      in
      the reports that it files or submits under the Exchange Act is recorded,
      processed, summarized, and reported within the time periods specified in the
      Securities and Exchange Commission’s rules and forms.





b.
      Changes in internal controls over financial reporting. There were no changes
      in
      the Company's internal control over financial reporting that occurred during
      the
      period covered by this report that have materially affected, or are reasonably
      likely to materially affect, the Company’s internal control over financial
      reporting.





Part
      II – OTHER INFORMATION





Item
      1.
      Legal Proceedings





The
      Company and its subsidiaries are not parties to any material pending legal
      proceedings (other than ordinary litigation incidental to the entities’
businesses) and no property of these entities is the subject of any such
      proceeding. The Company does not know of any proceeding contemplated by a
      governmental authority against the Company, its subsidiaries, or any related
      property.





Item
      1A.
      Risk Factors





Management
      of the Company does not believe there have been any material changes in the
      risk
      factors that were disclosed in the Form 10-K filed with the Securities and
      Exchange Commission on March 7, 2008.





Item
      2.
      Unregistered Sales of Equity Securities and Use of Proceeds





There
      were no purchases of the Company’s common shares during the second quarter of
      2008 under the $5 million stock buy-back plan approved by the Board of Directors
      on April 16, 2008. On a year-to-date basis, 58,300 shares have been repurchased
      at a total cost of $788,805.





Item
      4.
      Submission of Matters to a Vote of Security Holders





The
      Company’s annual meeting of shareholders was held on April 17, 2008. The record
      date for determination of shareholders entitled to vote at the meeting was
      February 14, 2008. There were 17,403,882 shares outstanding as of that date,
      each such share being entitled to one vote. At the shareholders’ meeting the
      holders of 15,820,348 shares or approximately 90.9 percent of the outstanding
      shares, were represented in person or by proxy, which constituted a quorum.
      The
      following proposals were voted on at the meeting:


23





Proposal
      I – Election of Directors





Eight
      directors were elected to serve for a one year term or until their successors
      shall have been elected and qualified. At the shareholders’ meeting, the
      individuals received the number of votes set opposite their names:





VoteFor
            
            WithheldFrank
                W. Berlin
            
            
            15,617,026
            
            
            203,321Wendy
                L. Carlson
            
            
            15,615,030
            
            
            205,317Orville
                E. Crowley
            
            
            14,190,295
            
            
            1,630,052George
                D. Milligan
            
            
            15,622,122
            
            
            198,225Robert
                G. Pulver
            
            
            15,619,974
            
            
            200,373Thomas
                E. Stanberry
            
            
            14,186,938
            
            
            1,633,409Jack
                G. Wahlig
            
            
            14,189,976
            
            
            1,630,371Connie
                Wimer
            
            
            13,608,641
            
            
            2,211,706





Proposal
      II – Ratify the Appointment of Independent Registered Public Accounting
      Firm





VoteFor
            
            Against
            
            WithheldMcGladrey
                & Pullen, LLP
            
            
            15,779,369
            
            
            36,212
            
            
            4,767




24


Item
      6.
      Exhibits





The
      following exhibits are filed as part of this report:




Exhibit No.
              
              Description3.1
              
              Restated
                  Articles of Incorporation of the Company*(incorporated
                  herein by reference to Exhibit 3.1 filed with the Form 10 on March
                  11,
                  2002.)*3.2
              
              Amendment
                  to Bylaws of the Company*(incorporated
                  herein by reference to Exhibit 99 filed with the Form 8-K on November
                  13,
                  2007.)*10.1
              
              Lease
                  for Main Bank Facility*(incorporated
                  herein by reference to Exhibit 10.1 filed with the Form 10 on March
                  11,
                  2002.)*10.2
              
              Supplemental
                  Agreement to Lease for Main Bank Facility*(incorporated
                  herein by reference to Exhibit 10.2 filed with the Form 10 on March
                  11,
                  2002.)*10.3
              
              Short-term
                  Lease related to Main Bank Facility*(incorporated
                  herein by reference to Exhibit 10.3 filed with the Form 10 on March
                  11,
                  2002.)*10.4
              
              Assignment*(incorporated
                  herein by reference to Exhibit 10.4 filed with the Form 10 on March
                  11,
                  2002.)*10.5
              
              Lease
                  Modification Agreement No. 1 for Main Bank Facility*(incorporated
                  herein by reference to Exhibit 10.5 filed with the Form 10 on March
                  11,
                  2002.)*10.6
              
              Memorandum
                  of Real Estate Contract*(incorporated
                  herein by reference to Exhibit 10.6 filed with the Form 10 on March
                  11,
                  2002.)*10.7
              
              Affidavit*(incorporated
                  herein by reference to Exhibit 10.7 filed with the Form 10 on March
                  11,
                  2002.)*10.8
              
              Addendum
                  to Lease for Main Bank Facility*(incorporated
                  herein by reference to Exhibit 10.8 filed with the Form 10 on March
                  11,
                  2002.)*10.9
              
              Data
                  Processing Contract*(incorporated
                  herein by reference to Exhibit 10.9 filed with the Form 10 on March
                  11,
                  2002.)*10.10
              
              Employment
                  Contract*(incorporated
                  herein by reference to Exhibit 10.10 filed with the Form 10 on
                  March 11,
                  2002.)*10.11
              
              Data
                  Processing Contract Amendment*(incorporated
                  herein by reference to Exhibit 10.12 filed with the Form 10-K on
                  March 26,
                  2003.)*10.12
              
              The
                  Employee Savings and Stock Ownership Plan, as amended*(incorporated
                  herein by reference to Exhibit 4.1 filed with the Form S-8 on October
                  29,
                  2004.)*10.13
              
              Amendment
                  to Lease Agreement*(incorporated
                  herein by reference to Exhibit 10.16 filed with the Form 10-K on
                  March 3,
                  2005.)*10.14
              
              Employment
                  Agreement with Scott D. Eltjes*(incorporated
                  herein by reference to Exhibit 10.17 filed with the Form 10-K on
                  March 3,
                  2005.)*10.15
              
              Consulting
                  Agreement with David L. Miller*(incorporated
                  herein by reference to Exhibit 10.18 filed with the Form 10-Q on
                  May 6,
                  2005.)*10.16
              
              West
                  Bancorporation, Inc. Restricted Stock Compensation Plan*(incorporated
                  herein by reference to Exhibit B of the definitive proxy statement
                  14A
                  filed on March 10, 2005.)*10.17
              
              Employment
                  Agreement between Investors Management Group Ltd. and Jeff Lorenzen*(incorporated
                  herein by reference to Exhibit 99 filed with the Form 8-K on February
                  22,
                  2006.)*10.18
              
              Assignment
                  and Assumption of Lease and Consent to Assignment*(incorporated
                  herein by reference to Exhibit 10.21 filed with the Form 10-K on
                  March 8,
                  2006.)*10.19
              
              2007
                  Amendment to Lease Agreement*(incorporated
                  herein by reference to Exhibit 10.22 filed with the Form 10-Q on
                  May 4,
                  2007.)*10.20
              
              Employment
                  Agreement with Thomas E. Stanberry*(incorporated
                  herein by reference to Exhibit 10.24 filed with the Form 8-K on
                  May 23,
                  2008.)*10.21
              
              Employment
                  Agreement with Douglas R. Gulling*(incorporated
                  herein by reference to Exhibit 10.25 filed with the Form 8-K on
                  May 23,
                  2008.)*10.22
              
              Employment
                  Agreement with Brad L. Winterbottom*(incorporated
                  herein by reference to Exhibit 10.26 filed with the Form 8-K on
                  May 23,
                  2008.)*31.1
              
              Certification
                  of Chief Executive Officer under Section 302 of the Sarbanes-Oxley
                  Act of
                  200231.2
              
              Certification
                  of Chief Financial Officer under Section 302 of the Sarbanes-Oxley
                  Act of
                  200232.1
              
              Certification
                  of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
                  as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  200232.2
              
              Certification
                  of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
                  as Adopted
                  Pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002
 25




SIGNATURES





Pursuant
      to the requirements of the Securities Exchange Act of 1934, the registrant
      has
      duly caused this report to be signed on its behalf by the undersigned, thereunto
      duly authorized.





West
      Bancorporation, Inc.


(Registrant)





July
                31, 2008
            By:
            /s/
                Thomas E. StanberryDate
            
            Thomas
                E. StanberryChairman,
                President and Chief Executive OfficerJuly
                31, 2008
            By:
            /s/
                Douglas R. GullingDate
            
            Douglas
                R. GullingExecutive
                Vice President and Chief Financial Officer(Principal
                Accounting Officer)




26




EXHIBIT
      INDEX





The
      following exhibits are filed herewith:





Exhibit No.
            
            Description
            
            Page Number31.1
            
            Certification
                of Chief Executive Officer under Section 302 of the Sarbanes-Oxley
                Act of
                2002
            
            2831.2
            
            Certification
                of Chief Financial Officer under Section 302 of the Sarbanes-Oxley
                Act of
                2002
            
            2932.1
            
            Certification
                of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as
                Adopted
                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            3032.2
            
            Certification
                of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as
                Adopted
                Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
            
            31




27