An official at West Bancorporation Inc. this week raised concerns about the office market, joining others who have noted the increased weakening in the sector.

“Office property is deteriorating,” Harlee Olafson, the bank’s chief risk officer and executive vice president, said during Thursday’ first-quarter earnings call. “There is significant office property that is vacant or nearly vacant.

“We do not have any property that is currently not performing, but with the amount of vacant property, our customers who have multiple tenants with pending lease expirations will not be dealing from a position of strength.”

Recently released office market reports for the Des Moines area and new property valuations reinforce Olafson’s concerns.   

Office vacancy rates in the Des Moines-area in the first quarter increased to 15.8%, up from 13.7% in 2024, according to CBRE’s office market report that was released in early April.

Bryon Tack, chief deputy for the Polk County Assessor’s Office, recently told the Business Record that large office properties throughout Polk County are suffering. “Large office buildings, regardless of where they’re located, don’t seem to be doing as well as the smaller office buildings,” Tack said. Valuations of office properties with 20,000 square feet or more of space did not change between 2023 and 2025, he said.

During the earning’s call, Olafson emphasized that West Bancorporation’s “commercial real estate portfolio continues to perform well.”

The bank saw loans in the first quarter increase by $11.6 million to $2.98 billion. The increase was primarily due to a rise in commercial loans and commercial real estate loans, the bank said in a news release.

In the first quarter, which ended March 31, West Bancorporation reported:

• Net income of nearly $7.8 million, or 46 cents per diluted common share. In the fourth quarter of 2024, the institution reported net income of $7.1 million, or 42 cents per diluted share, and a year ago, it reported net income of $5.8 million, or 35 cents per diluted share.
• A quarterly dividend of 25 cents per share that will be payable to stockholders of record on May 7.
• A $33.1 million decrease in deposits, from $3.35 billion in the fourth quarter to $3.32 billion in the first quarter of 2025. The decline in deposits was due to normal cash flow fluctuations of our core depositors, the bank said in a news release.

West Bancorporation is the parent company of West Bank, which has 11 locations in Iowa and Minnesota. For more information about West Bancorporation’s first-quarter earnings, click here.