AmericanWest Bancorporation Announces Second Quarter 2009 Financial Results

AmericanWest Bancorporation (NASDAQ:AWBC) today announced second quarter financial results which included the following:

• Total available liquidity increased with $167 million of liquid assets at June 30, 2009 as compared to $130 million at March 31, 2009 and $132 million at year end 2008.
• Net loans ended the quarter at $1.44 billion, a reduction of $80 million, or 5%, from March 31, 2009 and a reduction of $295 million, or 17%, over the past year.
• Total deposits remained stable at $1.52 billion at June 30, 2009 as compared to $1.54 billion at March 31, 2009.
• Net interest margin was 3.35% for the second quarter of 2009 as compared to 3.31% for the first quarter of 2009 and 4.19% in the second quarter of 2008.
• Provision for loan losses was $11.8 million for the second quarter of 2009 as compared to $13.7 million for the first quarter of 2009 and $16.4 million for the second quarter of 2008.
• Non-performing loans remained stable at $122.2 million while non-performing assets increased $12.2 million, or 8%, to $157.5 million from the first quarter.
• Mortgage banking revenue reached $3.2 million for the second quarter, an increase of 64% over the prior quarter and 151% compared to the second quarter of 2008.
• Total non-interest expense was $19.6 million for the second quarter as compared to $20.6 million for the first quarter 2009, a decrease of 5% as compared to the prior quarter.

For the quarter ended June 30, 2009, the Company reported a net loss of $10.5 million, or $0.61 per share, as compared to a loss of $14.5 million, or $0.84 per share, for the first quarter of 2009 and a loss of $6.2 million, or $0.36 per share, for the second quarter of 2008.

For the six months ended June 30, 2009, the Company reported a net loss of $25.1 million, or $1.46 per share, as compared with a net loss of $37.8 million, or $2.19 per share, for the six months ended June 30, 2008. Excluding a $27.0 million goodwill impairment charge during the first six months of 2008, the net loss would have been $10.8 million or $0.63 per share.

“Our second quarter financial results reflect continued progress on a number of fronts, despite an unacceptable bottom line result,” remarked Patrick J. Rusnak, Chief Executive Officer. “Pre-provision income was enhanced by stronger non-interest revenue, driven principally by mortgage operations, expense control and net interest margin expansion. These factors, combined with a dramatic reduction in the growth of non-performing assets and continued stability of our deposit base, are indicators that things are headed in the right direction, albeit at a much slower pace than we would like.”

Capital:

At June 30, 2009, total shareholders’ equity was $65.4 million and total tangible shareholders’ equity was $34.5 million, or $2.01 per share. The Company’s tangible equity ratio (tangible equity divided by tangible assets) was 1.98% as of June 30, 2009.

AmericanWest Bank’s regulatory capital ratios as of June 30, 2009 exceeded the threshold for “adequately capitalized” status in two of the three measures, with the total risk-based capital ratio falling into the “significantly under capitalized” range. All three of the Company’s consolidated regulatory capital ratios as of June 30, 2009 were in the “under capitalized” classification.

The Company is continuing to explore all available options with respect to restoration of regulatory capital levels, including a private placement of equity securities and the divestiture of branch assets and liabilities.

Net Interest Margin:

The tax-equivalent net interest margin for the second quarter of 2009 was 3.35%, as compared to 3.31% in the first quarter, and 4.19% for the second quarter of 2008. The 4 basis point increase from the prior quarter is primarily due to the decrease in the cost of funds of 23 basis points, offset by a decrease in the yield on earning assets of 15 basis points.

The average yield on loans for the second quarter was 5.62%, a decrease of 2 basis points from the prior quarter, and a decrease of 107 basis points from the previous year. The loan yield for the second quarter of 2009 was reduced by 94 basis points due to the total impact of non-accrual loans, including both reversed and forgone interest, as compared to an impact of 65 basis points in the first quarter 2009. The average prime rate (the base index for approximately 33% of the Company’s loan portfolio) for the first and second quarters of 2009 was 3.25% as compared to 5.09% for the second quarter of 2008.

The Company’s cost of funds has benefited from the decline in prevailing market interest rates over the past year to historic lows. The average cost of interest bearing deposits for the second quarter was 2.18%, a decrease of 33 basis points from the first quarter of 2009 and a decrease of 55 basis points from the second quarter of 2008. The cost of borrowed funds, including FHLB advances and subordinated debt, was 3.82% for the second quarter of 2009, an increase of 63 basis points from the first quarter of 2009 due to the mix of borrowings, and a decrease of 50 basis points from the second quarter of 2008. The average cost of interest bearing liabilities for the second quarter of 2009 was 2.38%, as compared to 2.61% for the first quarter of 2009, and 2.99% for the second quarter of 2008. The Company’s cost of funds inclusive of non-interest bearing deposits was 1.98% for the second quarter of 2009 as compared to 2.17% for the first quarter of 2009, and 2.46% for the same period of 2008.

The tax-equivalent net interest margin for the six months ended June 30, 2009 was 3.33%, as compared to 4.41% for the similar period of the prior year. The decrease is principally due to a 150 basis point decrease in the yield on interest earning assets, partially offset by a decline in the cost of funds of 67 basis points. The average yield on loans was 5.63% for the first six months of 2009, a decrease of 142 basis points from the same period of the prior year. The total impact of non-accrual loans, including both reversed and forgone interest, was 79 basis points for the six months ended June 30, 2009 as compared to 18 basis points for the similar period of the prior year. The cost of interest bearing deposits was 2.34% for the six months ended June 30, 2009, a decrease of 53 basis points from the similar period of the prior year.

Loans:

Total outstanding loans as of June 30, 2009 were $1.47 billion, as compared to $1.56 billion at March 31, 2009 and $1.62 billion at December 31, 2008. The linked-quarter reduction was principally driven by a decline of $67 million in construction and development loans and $32 million in commercial and industrial loans, inclusive of $15.3 million in gross charge-offs during the quarter. Agricultural loans increased $15 million from March 31, 2009 due to seasonality. Total average loans outstanding for the second quarter of 2009 were $1.5 billion, a decrease of $74 million from the prior quarter and $252 million from the same period of the prior year.

Asset Quality:

Total non-performing assets, net of government guarantees on loans, were 8.86% of total assets at June 30, 2009 as compared to 7.96% of total assets at March 31, 2009, and 5.74% of total assets at December 31, 2008. Non-performing loans, net of government guaranteed amounts, represented 8.29% of total loans at June 30, 2009 as compared to 7.86% of total loans at March 31, 2009 and 5.65% of total loans at December 31, 2008. Non-performing loans reported as of June 30, 2009 reflected cumulative charge-offs of $46.9 million, of which $15.2 million was recognized during the second quarter of 2009.

“Our conservative approach to the identification, classification, and valuation of problem loans, was initiated early in the current economic cycle, over 18 months ago,” remarked Rusnak. “Total non-performing assets increased by only 8% during the second quarter, compared to an average increase of 32% for the preceding four quarters, and half of the second quarter increase has been reduced by repayments and sales proceeds received so far during July. This, combined with a delinquent loan ratio of 43 basis points as of June 30, indicates the worst – in terms of non-performing asset levels – is hopefully behind us.”

Foreclosed assets at June 30, 2009 totaled $35.2 million and consisted of 30 properties as compared to $23 million (36 properties) at March 31, 2009, and $16 million (22 properties) as of December 31, 2008. The value of the largest property being carried at June 30, 2009 is $8.3 million and is related to a completed commercial office condominium complex. During the second quarter of 2009, 16 foreclosed properties with an aggregate carrying value of $7.8 million were sold resulting in a pre-tax gain of $428 thousand. In addition, during the second quarter of 2009, $1.5 million of impairment charges were recognized on foreclosed real estate. Foreclosure action has been initiated on substantially all real estate secured non-performing loans, and the Company expects to obtain ownership of approximately $30 million of additional real estate collateral during the third quarter of 2009. Further, management expects to complete the sale of approximately $12 million of foreclosed property during the third quarter of 2009, without incurring any material losses. “The fact that the carrying value of our $35 million foreclosed real estate portfolio was already reduced by aggregate pre-foreclosure charge-offs of more than $34 million provides us a significant measure of comfort with respect to this outlook,” noted Rusnak.

At June 30, 2009, the Company had approximately $70 million of loans which were not classified as non-performing but were internally identified as potential problem loans due to management’s concerns about the borrower’s financial condition. This represented approximately 4.7% of total outstanding loans, which is substantially unchanged from March 31, 2009.

The Company recognized a provision for loan losses of $11.8 million, or 3.07% of average loans on an annualized basis, for the quarter ended June 30, 2009, as compared to $13.7 million, or 3.44% of average loans on an annualized basis, for the quarter ended March 31, 2009. For the quarter ended June 30, 2008, the Company recognized a provision for loan losses of $16.4 million, or 3.68% of average loans on an annualized basis. For the quarter ended June 30, 2009, net charge-offs were $19.8 million, or 5.15% of average loans annualized, as compared to $17.7 million, or 4.45% of average loans annualized for the quarter ended March 31, 2009 and $11.7 million, or 2.63% of average loans annualized, for the second quarter of 2008.

For the six months ended June 30, 2009, the Company recognized a provision for loan losses of $25.5 million, or 3.26% of average loans annualized, as compared to $29.2 million and 3.29% for the prior year period.

It is the Company’s general policy to recognize as charge-offs any specific loan impairments for known losses in lieu of carrying such amounts as a loan specific component of the allowance for credit losses. However, due to administrative reasons, the Company may carry specific reserves over a quarter-end. The allowance for credit losses, which is comprised of the allowance for loan losses and reserve for unfunded commitments, was $33.2 million, or 2.25% of total loans at June 30, 2009, a decrease of 40 basis points from March 31, 2009 and an increase of 39 basis points from June 30, 2008. The decrease from March 31, 2009 is partly due to charge-offs of $6.8 million that were carried as specific reserves at the prior quarter-end.

Deposits and Liquidity:

Total average interest bearing deposits for the second quarter of 2009 were $1.3 billion as compared to $1.2 billion in the first quarter of 2009 and $1.3 billion in the second quarter of 2008. Total average non-interest bearing demand deposits for the second quarter of 2009 were $286 million, a decline of $10 million, or 3%, as compared to the first quarter, and a $38 million, or 12%, decrease from the similar quarter of the prior year. Total average savings and money market balances declined $17 million, or 4%, during the quarter and $122 million, or 23%, over the last 12 months. The average balance of certificates of deposit increased $23 million, or 4%, during the second quarter of 2009 and were up $87 million, or 14%, as compared to the second quarter of 2008.

Total deposits as of June 30, 2009 were $1.5 billion, a decrease of 1% from March 31, 2009 and a decrease of 3% from December 31, 2008. Total brokered certificates of deposit at June 30, 2009 were $2.5 million, a reduction of $25.0 million from the prior quarter and a reduction of $50.0 million from December 31, 2008. The reduction in brokered certificates of deposit was principally replaced with retail certificates of deposit with maturities ranging from five months to one year with an average rate of 2.22%.

The reduction in loans and the continued stability of the deposit base has lowered the Company’s reliance on borrowings to fund its liquidity needs over the past year. Total FHLB and other borrowings at June 30, 2009 were $125.1 million, a decrease of $18.7 million from March 31, 2009 and a decrease of $17.8 million from December 31, 2008.

As of June 30, 2009, AmericanWest Bank had total available secured borrowing capacity of approximately $169.3 million through facilities at the FHLB and the Federal Reserve Bank of San Francisco (Fed) Discount Window program. As of June 30, 2009, AmericanWest Bank had no borrowings from the Fed Discount Window.

Non-interest Income:

Non-interest income was $7.0 million for the quarter ended June 30, 2009, as compared to $5.8 million for the quarter ended March 31, 2009 and $5.1 million for the same period of the prior year. Fees on mortgage loan sales increased $1.2 million, or 64%, from the preceding quarter and $1.9 million, or 151%, as compared to the second quarter of 2008. This substantial increase in mortgage activity was largely driven by the attractive rate environment coupled with additional internal efforts to market mortgage lending and refinancing services to the Bank’s customer base. Fees and service charges on deposits increased $119 thousand, or 5%, as compared to the prior quarter due to increased overdraft and debit card fees. Fees and service charges on deposits decreased $520 thousand, or 18%, as compared to the similar quarter of the prior year due mainly to overdraft fees which declined $459 thousand. Included in other non-interest income for the first and second quarters of 2009 were state excise tax refunds of $977 thousand and $335 thousand, respectively, related to prior years.

Non-interest income for the six months ended June 30, 2009 was $12.8 million, as compared to $9.3 million for the similar period of the prior year. Mortgage loan sale income increased $3.0 million due to higher volumes of activity and the market for residential loans. Other non-interest income increased $1.4 million due mainly to refunds received related to prior year state excise taxes of $1.3 million, an increase in foreclosed asset gains of $304 thousand and an increase in asset sale income of $263 thousand. These increases were partially offset by the fees and service charges on deposits which declined $865 thousand due mainly to a decrease in overdraft fees of $786 thousand.

Non-interest Expense:

Non-interest expense for the three months ended June 30, 2009 was $19.6 million, as compared to $20.6 million for the three months ended March 31, 2009 and $19.2 million for the second quarter of 2008. The decrease in non-interest expense compared to the first quarter of 2009 is principally due to the decline in FDIC assessment expense of $2.6 million. The first quarter of 2009 included over-accruals for estimated FDIC assessments of approximately $1.0 million, which resulted in a reversing adjustment during the second quarter. This decrease was partially offset by an increase in foreclosed assets expense of $1.5 million due mainly to charge-downs of carrying values based upon updated appraisals.

Non-interest expense for the six months ended June 30, 2009 was $40.2 million, an increase of $2.2 million from the prior year (excluding the $27.0 million goodwill impairment charge). The increase is related to the FDIC assessment expense, which increased $4.0 million due to the special assessment and increased quarterly assessments, and foreclosed assets expense which increased $1.8 million, due mainly to $1.7 million of charge-downs taken during the year. These increases were partially offset by a reduction in salaries and employee benefits of $3.2 million, which is a result of the ongoing cost savings initiatives.

The efficiency ratio for the quarter ended June 30, 2009 was 90%, as compared to 101% in the prior quarter and 75% for the similar quarter of the prior year.

Income Taxes:

As a result of the Company’s current going concern status since December 31, 2008, all tax benefits from operating losses in 2009 have been deferred and all deferred taxes have been fully reserved, and therefore, the Company has not shown any tax benefit for operating losses in the first six months of 2009. If the Company is successful in raising additional capital and future operating profitability is probable, it is likely the going concern status will be rescinded and the valuation reserve for deferred tax asset reversed, significantly enhancing the regulatory capital ratios of both the Bank and the Company.

About AmericanWest Bancorporation:

AmericanWest Bancorporation is a bank holding company whose principal subsidiary is AmericanWest Bank which includes Far West Bank in Utah operating as an integrated division of AmericanWest Bank. AmericanWest Bank is a community bank with 58 financial centers located in Washington, Northern Idaho and Utah. For further information on the Company, please visit our web site at www.awbank.net/IR.

The press release contains certain non-GAAP measures related to eliminating the effects of goodwill impairment on certain amounts and ratios presented herein. Management believes these measures are meaningful as they provide a comparable basis to other periods presented.

This press release includes forward-looking statements, and AmericanWest Bancorporation intends for such statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements describe AmericanWest Bancorporation’s expectations regarding future events, including the Company’s ability to improve its regulatory capital ratios and the Company’s projections regarding foreclosed assets activity. Future events are difficult to predict and are subject to risk and uncertainty which could cause actual results to differ materially and adversely. Additional information regarding risks and uncertainties is included in AmericanWest Bancorporation’s periodic filings on Forms 10-K and 10-Q with the Securities and Exchange Commission. AmericanWest Bancorporation undertakes no obligation to revise or amend any forward-looking statements to reflect subsequent events or circumstances.

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
Consolidated Statements of Loss:
	For the three months ended:
INTEREST INCOME	6/30/2009				3/31/2009				6/30/2008
Interest and fees on loans	$	21,588			$	22,464			$	29,784
Interest on securities		691				752				862
Other interest income		62				35				93
TOTAL INTEREST INCOME		22,341				23,251				30,739
INTEREST EXPENSE
Interest on deposits		6,809				7,557				8,630
Interest on borrowings		1,620				1,757				2,591
TOTAL INTEREST EXPENSE		8,429				9,314				11,221
NET INTEREST INCOME		13,912				13,937				19,518
Loan loss provision		11,800				13,680				16,400
NET INTEREST INCOME AFTER LOAN LOSS PROVISION		2,112				257				3,118
NON-INTEREST INCOME
Fees and service charges on deposits		2,327				2,208				2,847
Fees on mortgage loan sales, net		3,154				1,924				1,258
Other		1,515				1,668				1,000
TOTAL NON-INTEREST INCOME		6,996				5,800				5,105
NON-INTEREST EXPENSE
Salaries and employee benefits		8,863				8,893				10,146
FDIC assessment		856				3,475				312
Equipment expense		1,880				1,992				2,139
Occupancy expense, net		1,758				1,954				1,765
Amortization of intangible assets		716				716				863
Foreclosed real estate and other foreclosed assets expense		1,768				287				233
Impairment of premises and securities		52				59				-
State business and occupation tax		320				20				304
Other		3,422				3,196				3,479
TOTAL NON-INTEREST EXPENSE		19,635				20,592				19,241
LOSS BEFORE PROVISION FOR INCOME TAX		(10,527	)			(14,535	)			(11,018	)
BENEFIT FOR INCOME TAX		-				-				(4,806	)
NET LOSS	$	(10,527	)		$	(14,535	)		$	(6,212	)
Basic loss per common share	$	(0.61	)		$	(0.84	)		$	(0.36	)
Diluted loss per common share	$	(0.61	)		$	(0.84	)		$	(0.36	)
Basic weighted average shares outstanding		17,213				17,213				17,211
Diluted weighted average shares outstanding		17,213				17,213				17,211
Ending book value per share	$	3.80			$	4.38			$	14.16
Ending tangible book value per share	$	2.01			$	2.54			$	7.42
Ending shares outstanding		17,213				17,213				17,211

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
Consolidated Statements of Loss:
	For the six months ended:
INTEREST INCOME	6/30/2009				6/30/2008
Interest and fees on loans	$	44,052			$	62,568
Interest on securities		1,443				1,689
Other interest income		97				152
TOTAL INTEREST INCOME		45,592				64,409
INTEREST EXPENSE
Interest on deposits		14,366				17,682
Interest on borrowings		3,377				5,922
TOTAL INTEREST EXPENSE		17,743				23,604
NET INTEREST INCOME		27,849				40,805
Loan loss provision		25,480				29,200
NET INTEREST INCOME AFTER LOAN LOSS PROVISION		2,369				11,605
NON-INTEREST INCOME
Fees and service charges on deposits		4,535				5,400
Fees on mortgage loan sales, net		5,078				2,120
Other		3,183				1,805
TOTAL NON-INTEREST INCOME		12,796				9,325
NON-INTEREST EXPENSE
Salaries and employee benefits		17,756				20,932
FDIC assessment		4,331				364
Equipment expense		3,872				3,984
Occupancy expense, net		3,712				3,620
Foreclosed real estate and other foreclosed assets expense		2,055				296
Amortization of intangible assets		1,432				1,748
State business and occupation tax		340				592
Impairment of premises and securities		111				-
Impairment of goodwill		-				27,000
Other		6,618				6,488
TOTAL NON-INTEREST EXPENSE		40,227				65,024
LOSS BEFORE PROVISION FOR INCOME TAX		(25,062	)			(44,094	)
BENEFIT FOR INCOME TAX		-				(6,325	)
NET LOSS	$	(25,062	)		$	(37,769	)
Basic loss per common share	$	(1.46	)		$	(2.19	)
Diluted loss per common share	$	(1.46	)		$	(2.19	)
Basic weighted average shares outstanding		17,213				17,208
Diluted weighted average shares outstanding		17,213				17,208
Ending book value per share	$	3.80			$	14.16
Ending tangible book value per share	$	2.01			$	7.42
Ending shares outstanding		17,213				17,211

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
Consolidated Statement of Condition:
	6/30/2009				3/31/2009				12/31/2008				6/30/2008
ASSETS
Cash and due from banks	$	36,195			$	55,129			$	40,927			$	50,469
Overnight interest bearing deposits with other banks		75,027				14,430				26,058				8,031
Cash and cash equivalents		111,222				69,559				66,985				58,500
Securities, available-for-sale at fair value		55,540				60,360				65,270				70,245
Loans, net of allowance for loan losses		1,439,707				1,519,507				1,577,106				1,734,318
Loans, held for sale		11,898				16,986				12,265				14,134
Accrued interest receivable		7,337				7,620				8,193				10,080
FHLB stock		10,267				10,267				8,286				8,790
Premises and equipment, net		38,009				39,921				41,385				45,802
Foreclosed real estate and other foreclosed assets		35,240				22,552				15,781				2,962
Bank owned life insurance		30,701				30,443				30,193				29,660
Goodwill		18,852				18,852				18,852				100,852
Intangible assets		12,035				12,751				13,467				15,194
Other assets		6,810				17,279				16,840				18,965
TOTAL ASSETS	$	1,777,618			$	1,826,097			$	1,874,623			$	2,109,502
LIABILITIES
Non-interest bearing demand deposits	$	284,096			$	288,248			$	321,552			$	321,102
Interest bearing deposits:
NOW, savings accounts and MMDA		573,997				574,229				559,666				655,138
Time, $100,000 and over		213,778				281,999				342,022				425,200
Other time		449,395				393,545				350,293				207,350
TOTAL DEPOSITS		1,521,266				1,538,021				1,573,533				1,608,790
FHLB advances		122,193				140,680				139,668				190,623
Other borrowings		2,933				3,130				3,294				599
Junior subordinated debt		41,239				41,239				41,239				41,239
Accrued interest payable		5,810				7,806				7,677				6,147
Other liabilities		18,763				19,836				19,424				18,315
TOTAL LIABILITIES		1,712,204				1,750,712				1,784,835				1,865,713
STOCKHOLDERS' EQUITY
Preferred stock, no par		-				-				-				-
Common stock, no par		253,411				253,399				253,450				253,388
Accumulated deficit		(188,826	)			(178,299	)			(163,764	)			(9,173	)
Accumulated other comprehensive income (loss), net of tax		829				285				102				(426	)
TOTAL STOCKHOLDERS' EQUITY		65,414				75,385				89,788				243,789
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	1,777,618			$	1,826,097			$	1,874,623			$	2,109,502

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
	Three Months Ended
Quarterly Financial Ratios, annualized:	6/30/2009		3/31/2009		6/30/2008
Return on average assets	-2.34%		-3.18%		-1.18%
Return on average equity	-59.45%		-66.70%		-9.91%
Return on tangible average equity	-106.11%		-104.51%		-18.43%
Efficiency ratio	90.49%		100.70%		74.64%
Non-interest income to average assets	1.55%		1.27%		0.97%
Non-interest expenses to average assets	4.36%		4.50%		3.66%
Net interest margin to average earning assets (2)	3.35%		3.31%		4.19%
	Six Months Ended
			Non-GAAP (1)		GAAP
Year to Date Financial Ratios, annualized:	6/30/2009		6/30/2008		6/30/2008
Return on average assets	-2.76%		-1.02%		-3.59%
Return on average equity	-63.45%		-8.10%		-28.40%
Return on tangible average equity	-105.19%		-15.79%		-55.39%
Efficiency ratio	95.45%		72.36%		126.22%
Non-interest income to average assets	1.41%		0.89%		0.89%
Non-interest expenses to average assets	4.43%		3.61%		6.18%
Net interest margin to average earning assets (2)	3.33%		4.41%		4.41%
(1) Excludes goodwill impairment.
(2) Presented on a tax equivalent basis for tax exempt securities.

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
Loan Portfolio:	6/30/2009				3/31/2009				12/31/2008				6/30/2008
Commercial real estate	$	641,274			$	634,718			$	630,540			$	604,246
Construction, land development and other land		275,528				342,564				388,381				497,467
Commercial and industrial		170,997				203,401				215,776				282,733
Residential real estate		196,039				202,312				200,047				176,045
Agricultural		165,501				150,479				160,944				167,125
Installment and other		24,997				28,922				28,777				41,296
Total loans		1,474,336				1,562,396				1,624,465				1,768,912
Allowance for loan losses		(32,690	)			(40,675	)			(44,722	)			(31,768	)
Deferred loan fees, net of deferred costs		(1,939	)			(2,214	)			(2,637	)			(2,826	)
Net loans	$	1,439,707			$	1,519,507			$	1,577,106			$	1,734,318
Non-performing Assets:
Accruing loans over 90 days past due (1)	$	0			$	285			$	0			$	0
Non-accrual loans (1)		122,246				122,442				91,744				69,632
Total non-performing loans	$	122,246			$	122,727			$	91,744			$	69,632
Foreclosed real estate and other foreclosed assets		35,240				22,552				15,781				2,962
Total non-performing assets	$	157,486			$	145,279			$	107,525			$	72,594
Allowance for Credit Losses:
Allowance for loan losses	$	32,690			$	40,675			$	44,722			$	31,768
Reserve for unfunded commitments		470				660				660				1,172
Allowance for credit losses	$	33,160			$	41,335			$	45,382			$	32,940
Credit Quality Ratios:
Non-performing loans to total gross loans (1)		8.29	%			7.86	%			5.65	%			3.94	%
Non-performing assets to total assets (1)		8.86	%			7.96	%			5.74	%			3.44	%
Allowance for loan loss to total gross loans		2.22	%			2.60	%			2.75	%			1.80	%
Allowance for credit losses to total gross loans		2.25	%			2.65	%			2.79	%			1.86	%
Allowance for credit losses to non-performing loans (1)		27.13	%			33.68	%			49.47	%			47.31	%
(1) Amounts and ratios shown net of government guarantees on non-performing loans of $1.7 million, $1.4 million, $1.6 million, and $1.1 million, respectively.

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
	Three Months Ended												Six Months Ended
Allowance for Loan Losses:	6/30/2009				3/31/2009				6/30/2008				6/30/2009				6/30/2008
Balance, beginning of period	$	40,675			$	44,722			$	27,089			$	44,722			$	25,258
Loan loss provision		11,800				13,680				16,400				25,480				29,200
Loans charged-off		(20,229	)			(17,943	)			(12,201	)			(38,172	)			(23,289	)
Recoveries		444				216				480				660				599
Balance, end of period	$	32,690			$	40,675			$	31,768			$	32,690			$	31,768
Reserve for Unfunded Commitments:
Balance, beginning of period	$	660			$	660			$	1,272			$	660			$	1,374
Provision for unfunded commitments		(190	)			-				(100	)			(190	)			(202	)
Balance, end of period	$	470			$	660			$	1,172			$	470			$	1,172
Net charge-offs to average gross loans (1)		5.15	%			4.45	%			2.63	%			4.80	%			2.56	%
Provision for loan losses to average
gross loans (1)		3.07	%			3.44	%			3.68	%			3.26	%			3.29	%
(1) Ratios are annualized.

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
Quarter to Date Net Interest Margin:	Three Months Ended
	June 30, 2009									March 31, 2009									June 30, 2008
($ in thousands)	Average									Average									Average
Assets	Balance			Interest			%			Balance			Interest			%			Balance			Interest			%
Loans (1)	$	1,540,177		$	21,588		5.62	%		$	1,614,190		$	22,464		5.64	%		$	1,791,902		$	29,784		6.69	%
Taxable securities		39,960			507		5.09	%			45,589			560		4.98	%			52,572			655		5.01	%
Non-taxable securities (2)		18,279			277		6.08	%			19,106			292		6.20	%			20,517			313		6.14	%
FHLB Stock		10,267			-		0.00	%			9,586			-		0.00	%			9,212			42		1.83	%
Overnight deposits with other banks and other		69,634			62		0.36	%			31,097			35		0.46	%			7,603			51		2.70	%
Total interest earning assets		1,678,317			22,434		5.36	%			1,719,568			23,351		5.51	%			1,881,806			30,845		6.59	%
Non-interest earning assets		126,367									134,719									229,959
Total assets	$	1,804,684								$	1,854,287								$	2,111,765
Liabilities
Interest bearing demand deposits	$	153,608		$	156		0.41	%		$	131,007		$	132		0.41	%		$	137,774		$	183		0.53	%
Savings and MMDA deposits		408,872			1,444		1.42	%			426,313			1,768		1.68	%			530,890			2,508		1.90	%
Time deposits		687,698			5,209		3.04	%			664,369			5,657		3.45	%			601,158			5,939		3.97	%
Total interest bearing deposits		1,250,178			6,809		2.18	%			1,221,689			7,557		2.51	%			1,269,822			8,630		2.73	%
Overnight borrowings		45,219			108		0.96	%			94,242			214		0.92	%			30,194			191		2.54	%
Junior subordinated debt		41,239			643		6.25	%			41,239			641		6.30	%			41,239			655		6.39	%
Other borrowings		83,825			869		4.16	%			87,721			902		4.17	%			169,998			1,745		4.13	%
Total interest bearing liabilities		1,420,461			8,429		2.38	%			1,444,891			9,314		2.61	%			1,511,253			11,221		2.99	%
Non-interest bearing demand deposits		285,888									295,854									324,142
Other non-interest bearing liabilities		27,311									25,168									24,347
Total liabilities		1,733,660									1,765,913									1,859,742
Stockholders' Equity		71,024									88,374									252,023
Total liabilities and stockholders' equity	$	1,804,684								$	1,854,287								$	2,111,765
Net interest income and spread				$	14,005		2.98	%					$	14,037		2.90	%					$	19,624		3.60	%
Net interest margin to average earning assets							3.35	%								3.31	%								4.19	%
(1) Includes loans held for sale and non-performing loans in average loans. Interest income includes loan fee income.
(2) Tax-exempt securities income has been presented using a tax equivalent basis and an assumed tax rate of 34%.

AmericanWest Bancorporation
Selected Consolidated Financial Highlights
($ in thousands, except per share data and ratios; unaudited)
Year to Date Net Interest Margin:	Six Months Ended
	June 30, 2009									June 30, 2008
($ in thousands)	Average									Average
Assets	Balance			Interest			%			Balance			Interest			%
Loans (1)	$	1,576,979		$	44,052		5.63	%		$	1,785,447		$	62,568		7.05	%
Taxable securities		42,760			1,068		5.04	%			52,214			1,302		5.01	%
Non-taxable securities (2)		18,690			568		6.13	%			19,218			586		6.13	%
FHLB Stock		9,928			-		0.00	%			9,450			62		1.32	%
Overnight deposits with other banks and other		50,414			97		0.39	%			5,213			90		3.47	%
Total interest earning assets		1,698,771			45,785		5.44	%			1,871,542			64,608		6.94	%
Non-interest earning assets		130,576									245,046
Total assets	$	1,829,347								$	2,116,588
Liabilities
Interest bearing demand deposits	$	142,370		$	288		0.41	%		$	138,046		$	372		0.54	%
Savings and MMDA deposits		417,544			3,212		1.55	%			538,576			5,462		2.04	%
Time deposits		676,098			10,866		3.24	%			562,560			11,848		4.24	%
Total interest bearing deposits		1,236,012			14,366		2.34	%			1,239,182			17,682		2.87	%
Overnight borrowings		69,595			322		0.93	%			57,810			1,013		3.52	%
Junior subordinated debt		41,239			1,284		6.28	%			41,239			1,392		6.79	%
Other borrowings		85,762			1,771		4.16	%			160,834			3,517		4.40	%
Total interest bearing liabilities		1,432,608			17,743		2.50	%			1,499,065			23,604		3.17	%
Non-interest bearing demand deposits		290,843									326,550
Other non-interest bearing liabilities		26,247									23,571
Total liabilities		1,749,698									1,849,186
Stockholders' Equity		79,649									267,402
Total liabilities and stockholders' equity	$	1,829,347								$	2,116,588
Net interest income and spread				$	28,042		2.94	%					$	41,004		3.77	%
Net interest margin to average earning assets							3.33	%								4.41	%
(1) Includes loans held for sale and non-performing loans in average loans. Interest income includes loan fee income.
(2) Tax-exempt securities income has been presented using a tax equivalent basis and an assumed tax rate of 34%.