A West Bancorporation Inc. official continued to raise concerns about the office sector in the Greater Des Moines area but assured investors and others that the properties in the institution’s loan portfolio are performing well.

“Office property in our Des Moines market, like many larger communities, is in a distressed situation,” Harlee Olafson, the bank’s chief risk officer and executive vice president, said during Thursday’s second-quarter earnings call. “We are aware of numerous properties that have significant vacancy problems. Since there’s more space available than there are tenants, it depresses the entire office market.”

In April, Olafson described the office market as “deteriorating.”

In the second quarter, 17.2% of office space in the Des Moines area was vacant, according to CBRE’s second-quarter market report. In the first quarter, 15.8% of office space was vacant. In the central business district, the office vacancy rate was 26.9% in the second quarter.

A large percentage of office properties in West Bancorporation’s loan portfolio are owner-occupied, Olafson said. The few multi-tenant office properties in the financial institution’s portfolio are “performing well. Some have leases that will expire and their future health will depend on keeping their tenants,” he said.

In the second quarter, West Bancorporation saw its loan balance decrease $50.1 million to $2.935 billion from $2.985 billion in the first quarter. Officials attributed the decrease to decreases in commercial and commercial real estate loans.

In the second quarter, which ended June 30, West Bancorporation reported:

• Net income of nearly $8 million, or 47 cents per diluted common share. In the first quarter, the institution reported net income of $7.8 million, or 46 cents per diluted share. A year ago, West Bank reported net income of $5.2 million, or 31 cents per diluted share.
• A quarterly dividend of 25 cents per share that will be payable to stockholders of record on Aug. 20.
• A $67.5 million increase in deposits, from $3.325 billion in the first quarter to $3.392 billion in the second quarter. West Bank’s deposit mix includes 52% of funds in savings and money market accounts; 15% in non-interest-bearing accounts; 14% in interest-bearing demand accounts; 13% in timed accounts such as certificates of deposit; and 6% in brokered accounts.

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