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UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





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FORM 10-Q





(Mark One)


|x |  | QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE
|- |  | --------------------------------------------------

| |  | SECURITIES EXCHANGE ACT OF 1934
| |  | -------------------------------




| |  | For the quarterly period ended March 31, 2002 or
| |  | ------------------------------------------------




| ̈ |  | 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 000-18561





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AMERICANWEST BANCORPORATION


(Exact Name of Registrant as Specified in Its Charter)





Washington

91-1259511(State or Other Jurisdiction of Incorporation or
Organization)

(I.R.S. Employer Identification No.)





9506 North Newport Highway, Spokane, WA 99218-1200


(Address of Principal Executive Offices)





(509) 467-6949


(Registrants Telephone Number, Including Area Code)





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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed 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  ̈





The issuer has one class of capital stock, that being common stock. On April 18, 2002, there were 7,843,309 shares of such stock outstanding.





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AMERICANWEST BANCORPORATION





INDEX TO QUARTERLY REPORT ON FORM 10-Q


March 31, 2002





Table of Contents





PagePart I

Financial InformationItem 1.

Financial StatementsCondensed Consolidated Statements of ConditionMarch 31, 2002 and December 31, 2001

3Condensed Consolidated Statements of IncomeThree Months Ended March 31, 2002 and 2001

4Condensed Consolidated Statements of Cash FlowsThree Months Ended March 31, 2002 and 2001

5Notes to Consolidated Financial Statements

6-8Item 2.

Managements Discussion and Analysis of Financial Condition and Results of Operations

8-10Item 3.

Quantitative and Qualitative Disclosures About Market Risk

10Part II

Other InformationItem 6.

Exhibits and Reports on Form 8-K

10Signatures

10




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AMERICANWEST BANCORPORATION





AmericanWest Bancorporation and AmericanWest Bank


Condensed Consolidated Statements of Condition





March 31, 2002

December 31, 2001($ In thousands)ASSETSCash and due from banks

$
21,076

$
24,421Overnight interest bearing deposits with other banks


19,814


535Cash and cash equivalents


40,890


24,956Securities


14,085


15,550Loans, net of allowance for loan losses of $6,380 in 2002 and $6,624 in 2001


602,337


580,899Accrued interest receivable


5,388


5,368Premises and equipment, net


13,879


13,488Foreclosed real estate and other foreclosed assets


1,427


1,616Life insurance and salary continuation assets


10,594


10,519Goodwill


3,872


3,872Intangible assets


1,070


1,098Other assets


1,922


1,975TOTAL ASSETS

$
695,464

$
659,341LIABILITIESNoninterest bearingdemand deposits

$
96,439

$
98,280Interest bearing:NOW and savings accounts


223,123


207,397Time, $100,000 and over


117,735


81,508Other time


142,120


145,052TOTAL DEPOSITS


579,417


532,237Short-term borrowings


40,228


52,974Capital lease obligations


617


627Accrued interest payable


1,386


1,439Other liabilities


4,038


3,858TOTAL LIABILITIES


625,686


591,135STOCKHOLDERS' EQUITYCommon stock, no par, shares authorized 15,000,000; issued and outstanding 7,849,809 in 2002 and 7,905,366 in 2001


61,108


61,540Retained earnings


8,627


6,584Accumulated other comprehensive income, net of tax


43


82TOTAL STOCKHOLDERS' EQUITY


69,778


68,206TOTAL LIABILITIES and STOCKHOLDERS' EQUITY

$
695,464

$
659,341





The accompanying notes are an integral part of these statements.




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AMERICANWEST BANCORPORATION





AmericanWest Bancorporation and AmericanWest Bank


Condensed Consolidated Statements of Income





Three Months Ended March 31,2002

2001($ In thousands, except per share)INTEREST INCOMEInterest and fees on loans and leases

$
12,730

$
12,501Interest on securities


216


777Other interest income


40


41TOTAL INTEREST INCOME


12,986


13,319INTEREST EXPENSEInterest on deposits


3,185


5,099Interest on borrowings


312


462TOTAL INTEREST EXPENSE


3,497


5,561NET INTEREST INCOME


9,489


7,758Provision for loan losses


810


421NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES


8,679


7,337NONINTEREST INCOMEFees and service charges


808


580Insurance commissions


11


310Securities gains





4Other


243


357TOTAL NONINTEREST INCOME


1,062


1,251NONINTEREST EXPENSESalaries and employee benefits


3,678


3,503Occupancy expense, net


490


520Equipment expense


473


404Intangible assets amortization


28


84Other operating expense


1,363


1,350TOTAL NONINTEREST EXPENSE


6,032


5,861INCOME BEFORE INCOME TAX EXPENSE


3,709


2,727INCOME TAX EXPENSE


1,194


907NET INCOME

$
2,515

$
1,820Basic earnings per common share


$0.32


$0.22Diluted earnings per common share


$0.31


$0.21Basic weighted average shares outstanding


7,904,009


8,429,012Diluted weighted average shares outstanding


8,003,117


8,502,078





The accompanying notes are an integral part of these statements.




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AMERICANWEST BANCORPORATION





AmericanWest Bancorporation and AmericanWest Bank


Condensed Consolidated Statements of Cash Flows


Year-To-Date March 31, 2002 and 2001


($ in thousands)





2002


2001Cash flows from operating activities:Net income

$
2,515


$
1,820Provision for loan losses


810



421Depreciation and amortization


345



266(Increase)/decrease in assets and liabilities:Accrued interest receivable


(20
)


(502
)Life insurance and salary continuation assets


(75
)


(3
)Other assets


82



1,213Accrued interest payable


(53
)


321Other liabilities


180



(891
)Net cash provided by operating activities


3,784



2,645Cash flows from investing activities:Securities:Maturities


1,488



6,656Sales






645Purchases


(62
)


(14,199
)Net increase in loans


(22,248
)


(19,386
)Purchases of premises and equipment


(736
)


(517
)Foreclosed real estate activity


189



(32
)Net cash change in investing activities


(21,369
)


(26,833
)Cash flows from financing activities:Net change in deposits


47,180



16,437Short-term borrowings activity


(12,746
)


7,967Principal payments on capital lease obligations


(10
)


(9
)Cash payments for stock repurchases


(1,351
)


(1,191
)Cash received from stock sales


446



251Net cash provided by financing activities


33,519



23,455Net change in cash and cash equivalents


15,934



(733
)Cash and cash equivalents, beginning of year


24,956



29,827Cash and cash equivalents, end of quarter

$
40,890


$
29,094





The accompanying notes are an integral part of these statements.




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AMERICANWEST BANCORPORATION





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1.     Management Statement





The consolidated financial statements include AmericanWest Bancorporation and its wholly owned subsidiary (AWBC), AmericanWest Bank,
after eliminating all significant intercompany balances and transactions.





The interim unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with instructions to Form 10-Q and
Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring accruals necessary for a fair presentation of the financial condition, the results of operations, and cash flows for the interim periods
included herein have been made. The consolidated statement of condition of AWBC as of December 31, 2001 has been derived from the audited consolidated statement of condition of AWBC as of that date. The results of operations for the three months
ended March 31, 2002, are not necessarily indicative of results to be anticipated for the year ending December 31, 2002. For additional information, refer to the consolidated financial statements and footnotes thereto included in AWBCs annual
report on Form 10-K for the year ended December 31, 2001.





NOTE
2.    Securities





The securities are classified as available-for-sale and are stated at fair value, and
unrealized holding gains and losses, net of related deferred taxes, are reported as a separate component of stockholders equity. Gains or losses on available-for-sale securities sales are reported as part of noninterest income based on the net
proceeds and the adjusted carrying amount of the securities sold, using the specific identification method. Carrying amount and fair values at March 31, 2002 and December 31, 2001 were as follows:





March 31, 2002

December 31, 2001Amortized Cost

Fair Value

Amortized Cost

Fair Value($ in thousands)U.S. Treasury securities

$
501

$
532

$
1,001

$
1,043Obligations of federal government agencies


3,299


3,314


4,531


4,564Mortgage backed securities


1,979


2,009


2,688


2,730Obligations of states, municipalities andpolitical subdivisions


1,246


1,282


1,255


1,297Other securities


6,993


6,948


5,951


5,916Total

$
14,018

$
14,085

$
15,426

$
15,550




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AMERICANWEST BANCORPORATION





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)







NOTE 3.    Loans





Loan detail by category as of March 31, 2002 and December 31, 2001 were as follows:





March 31, 2002


December 31, 2001($ in thousands)Commercial and industrial

$
441,109


$
411,197Agricultural


80,709



88,121Real estate mortgage


42,855



40,084Real estate construction


16,830



17,201Installment


22,181



26,311Bank cards and other


5,400



5,062Total loans


609,084



587,976Allowance for loan losses


(6,380
)


(6,624
)Deferred loan fees, net of deferred costs


(367
)


(453
)Net loans

$
602,337


$
580,899





NOTE 4.    Allowance for loan losses





The allowance for loan loss is maintained at levels considered adequate by management to provide for possible loan losses. The allowance is based on
managements assessment of various factors affecting the loan portfolio, including problem loans, business conditions and loss experience, and an overall evaluation of the quality of the underlying collateral. Changes in the allowance for loan
losses during the three months ended March 31, 2002 and 2001 were as follows:





Three Months Ended March 31,2002


2001($ in thousands)Balance, beginning of period

$
6,624


$
4,948Provision for loan losses


810



421Loan charge-offs


(1,104
)


(109
)Loan recoveries


50



16Balance, end of period

$
6,380


$
5,276





NOTE 5.    Goodwill





In accordance with Statement of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, in January 2002 AWBC performed an impairment test of goodwill resulting in
no impairment. As a result, goodwill of $3,872,000 ceased to be amortized. AWBC will continue to periodically evaluate goodwill for impairment.





NOTE
6.    Subsequent event





On April 1, 2002 AWBC announced a definitive agreement to merge with Latah
Bancorporation of Latah, Washington and its commercial bank subsidiary Bank of Latah. Bank of Latah operates eight offices, located in Eastern Washington and Northern Idaho. As of December 31, 2001 it had approximately $128 million in assets, $85
million in loans, $109 million in deposits, and $6.6 million in stockholders equity. The transaction value is approximately $17.6 million with 80% paid in cash and 20% in




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AMERICANWEST BANCORPORATION





NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS(Continued)







AWBC stock to Latah shareholders. The purchase method of accounting will be used
for recording this transaction.





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





The following discussion contains a review of the results of operations and financial condition for first quarter 2002 and 2001. This information should be read in conjunction with the financial statements and related notes appearing in
this report. The reader is assumed to have access to AWBCs Form 10-K for the year ended December 31, 2001, which contains additional information.





This discussion may contain certain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain
risks and uncertainties that could cause actual results to differ materially from those stated. Readers are cautioned not to place undue reliance on these forward-looking statements.





Overview





A performance summary and detailed discussion regarding the first quarter for
2002 and 2001 follows.





AMERICANWEST BANCORPORATION AND AMERICANWEST BANK


PERFORMANCE SUMMARY





Three Months Ended March 31,2002

2001

% Change($ in thousands, except per share)Interest income

$
12,986

$
13,319

-2.5
%Interest expense


3,497


5,561

-37.1
%Net interest income


9,489


7,758

22.3
%Provision for loan losses


810


421

92.4
%Net interest income after provision for loan losses


8,679


7,337

18.3
%Noninterest income


1,062


1,251

-15.1
%Noninterest expense


6,032


5,861

2.9
%Income before income taxes


3,709


2,727

36.0
%Income taxes


1,194


907

31.6
%Net income

$
2,515

$
1,820

38.2
%Basic earnings per common share

$
0.32

$
0.22

45.5
%Diluted earnings per common share

$
0.31

$
0.21

47.6
%





Net Income





AWBC reported net income of $2,515,000 for the first quarter of 2002 compared to $1,820,000 for the same period in 2001. Diluted earnings per
share were $.31 in 2002 and $.21 in 2001.




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AMERICANWEST BANCORPORATION










Net Interest Income





Year 2002 net interest income grew 22% to $9,489,000 compared to $7,758,000 in 2001. The growth in net interest income was partly due to loan volume growth, which on an average basis
grew 20% to $598 million in 2002 from $500 million in 2001. In addition the net interest margin to average earning assets grew from 5.66% in 2001 to 6.18% in 2002.





Provision for Loan Losses





The
allowance for possible loan losses is based on AWBCs Credit Managements evaluation of the loan portfolio. The allowance for loan losses is 1.05% of loans as of March 31, 2002 and 1.03% as of March 31, 2001. Net loan charge-offs were $1.1
million in first quarter 2002 based on an evaluation of the loan portfolio by Management. The provision for loan losses charged to expense for 2002 was 92% higher at $810,000 compared to $421,000 in
2001.





Noninterest Income





Noninterest income decreased by 15% in 2002 due to the nonrecurring 2001 sales of TransAlliance and the Insurance Agency. Insurance commissions have
declined in 2002 due to the sale of the Insurance Agency. Fees and service charges on deposit accounts increased by $228,000 or 39% over 2001 as AWBC improved its collection of overdraft and NSF
fees.





Noninterest Expense





Noninterest expense increased only 3% to $6,032,000 in 2002 from $5,861,000 in 2001. The increase was primarily due to loan officer incentive expense.





Nonperforming Assets





Total nonperforming assets increased to $16.4 million or 2.36% of total assets in the first quarter of 2002 compared to $10.2 million or 1.63% the year before. The majority of the nonperforming assets involve six borrowers totaling $12.3
million. Management believes it is secured on a $4 million retail/office complex and $5 million on two ice skating complexes, all in Spokane. Two apple orchards, each with $1 million owing in the Yakima area, should have no further loss. The sixth
loan is also in Yakima for $1.3 million on a nursery and commercial real estate. The allowance for loan losses was $6.4 million, equal to 1.05% of total loans and 42.62% of nonperforming loans at March 31, 2002.




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AMERICANWEST BANCORPORATION










Subsequent Event





On April 1, 2002 AWBC announced a definitive agreement to merge with Latah Bancorporation of Latah, Washington and its commercial bank subsidiary Bank of Latah. Bank of Latah operates
eight offices, located in Eastern Washington and Northern Idaho. As of December 31, 2001 it had approximately $128 million in assets, $85 million in loans, $109 million in deposits, and $6.6 million in stockholders equity. The transaction
value is approximately $17.6 million with 80% paid in cash and 20% in AWBC stock to Latah shareholders. The purchase method of accounting will be used for recording this
transaction.





Item 3.Quantitative and Qualitative Disclosures About Market Risk.





Management considers interest
rate risk to be a market risk that could have a significant effect on the financial condition of AWBC. There have been no material changes in reported market risks faced by AWBC since the end of the most recent fiscal year.





Part II





Other Information





Item 6.Exhibits and Reports on Form 8-K





(a)  Exhibits





None in first quarter 2002.





(b)  Reports on Form 8-K





None in first quarter 2002.





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 on April 18, 2002.





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AMERICANWEST BANCORPORATION/s/    WES COLLEYWes Colley, President and Chief Executive Officer/s/    DAN MURRAYDan Murray, Senior Vice President and Credit Administrator/s/    CHAD GALLOWAYChad Galloway, Vice President and Chief Financial
Officer




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