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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q



|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended September 30, 2007 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

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.)

41 West Riverside, Suite 400

Spokane, Washington 99201-0813

(Address of principal executive offices,
including zip code)

(509) 467-6993

(Registrants telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report.)

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 ̈

Indicate by a check mark whether the registrant is large accelerated filer, an accelerated filer, or a non-accelerated filer, (as defined in Rule 12b-2 of the Act).

Large Accelerated filer ̈Accelerated filer  x        Non-accelerated filer ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).    Yes ̈No  x

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date.



|             |  |                               
|------------ |  | ------------------------------
|Class        |  | Number of Shares Outstanding  
|Common Stock |  | 17,195,834 at November 1, 2007



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##### Table of Contents

AMERICANWEST BANCORPORATION

INDEX TO QUARTERLY REPORT ON FORM 10-Q

September 30, 2007

Table of Contents



|                             |  |            |  |                                                                                                   |  |     
|---------------------------- |  | ---------- |  | ------------------------------------------------------------------------------------------------- |  | ----
|                             |  |            |  |                                                                                                   |  | Page
|                             | 
|Part I Financial Information |  |           
|                             |  |            | 
|                             |  | Item 1.    |  | Financial Statements                                                                              |  |     
|                             |  |            | 
|                             |  |            |  | Consolidated Statement of Condition as of September 30, 2007 and December 31, 2006                |  | 3   
|                             |  |            | 
|                             |  |            |  | Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2007 and 2006 |  | 4   
|                             |  |            | 
|                             |  |            |  | Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2007 and 2006       |  | 5   
|                             |  |            | 
|                             |  |            |  | Notes to Consolidated Financial Statements                                                        |  | 6   
|                             |  |            | 
|                             |  | Item 2.    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations             |  | 14  
|                             |  |            | 
|                             |  | Item 3.    |  | Quantitative and Qualitative Disclosures About Market Risk                                        |  | 26  
|                             |  |            | 
|                             |  | Item 4.    |  | Controls and Procedures                                                                           |  | 26  
|                             | 
|Part II Other Information    |  |           
|                             |  |            | 
|                             |  | Item 1.    |  | Legal Proceedings                                                                                 |  | 27  
|                             |  |            | 
|                             |  | Item 1A.   |  | Risk Factors                                                                                      |  | 27  
|                             |  |            | 
|                             |  | Item 2.    |  | Unregistered Sales of Equity Securities and Use of Proceeds                                       |  | 27  
|                             |  |            | 
|                             |  | Item 3.    |  | Defaults Upon Senior Securities                                                                   |  | 27  
|                             |  |            | 
|                             |  | Item 4.    |  | Submission of Matters to a Vote of Security Holders                                               |  | 27  
|                             |  |            | 
|                             |  | Item 5.    |  | Other Information                                                                                 |  | 27  
|                             |  |            | 
|                             |  | Item 6.    |  | Exhibits                                                                                          |  | 28  
|                             |  |           
|                             |  | Signatures |  | 29                                                                                               



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AMERICANWEST BANCORPORATION

CONSOLIDATED STATEMENT OF CONDITION

(unaudited)

($ in thousands)



|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | ---------
|                                                                                                                                                                                          |  | September 30,2007 |           |   | December 31,2006
|ASSETS                                                                                                                                                                                    |  |                   |           |   |                  |   |          
|Cash and due from banks                                                                                                                                                                   |  | $                 | 50,818    |   |                  | $ | 45,866   
|Overnight interest bearing deposits with other banks                                                                                                                                      |  |                   | 1,485     |   |                  |   | 9,863    
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|Cash and cash equivalents                                                                                                                                                                 |  |                   | 52,303    |   |                  |   | 55,729   
|Securities, available-for-sale at fair value                                                                                                                                              |  |                   | 70,674    |   |                  |   | 39,518   
|Loans, net of allowance for loan losses of $21,023 and $15,136, respectively                                                                                                              |  |                   | 1,700,895 |   |                  |   | 1,204,519
|Loans, held for sale                                                                                                                                                                      |  |                   | 10,624    |   |                  |   | 2,913    
|Accrued interest receivable                                                                                                                                                               |  |                   | 13,927    |   |                  |   | 8,311    
|FHLB stock                                                                                                                                                                                |  |                   | 7,801     |   |                  |   | 6,319    
|Premises and equipment, net                                                                                                                                                               |  |                   | 45,182    |   |                  |   | 30,484   
|Foreclosed real estate and other foreclosed assets                                                                                                                                        |  |                   | 298       |   |                  |   | 644      
|Bank owned life insurance                                                                                                                                                                 |  |                   | 28,829    |   |                  |   | 19,716   
|Goodwill                                                                                                                                                                                  |  |                   | 129,155   |   |                  |   | 33,073   
|Intangible assets                                                                                                                                                                         |  |                   | 18,005    |   |                  |   | 7,506    
|Other assets                                                                                                                                                                              |  |                   | 5,784     |   |                  |   | 7,796    
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|TOTAL ASSETS                                                                                                                                                                              |  | $                 | 2,083,477 |   |                  | $ | 1,416,528
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|LIABILITIES                                                                                                                                                                               |  |                   |           |   |                  |   |          
|Non-interest bearing demand deposits                                                                                                                                                      |  | $                 | 362,387   |   |                  | $ | 236,375  
|Interest bearing deposits:                                                                                                                                                                |  |                   |           |   |                  |   |          
|NOW, savings account and money market accounts                                                                                                                                            |  |                   | 698,887   |   |                  |   | 476,852  
|Time, $100,000 and over                                                                                                                                                                   |  |                   | 307,326   |   |                  |   | 217,508  
|Other time                                                                                                                                                                                |  |                   | 228,612   |   |                  |   | 193,204  
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|TOTAL DEPOSITS                                                                                                                                                                            |  |                   | 1,597,212 |   |                  |   | 1,123,939
|Federal Home Loan Bank advances                                                                                                                                                           |  |                   | 109,516   |   |                  |   | 105,759  
|Other borrowings and capital lease obligations                                                                                                                                            |  |                   | 21,671    |   |                  |   | 307      
|Junior subordinated debt                                                                                                                                                                  |  |                   | 41,239    |   |                  |   | 20,620   
|Accrued interest payable                                                                                                                                                                  |  |                   | 5,937     |   |                  |   | 4,270    
|Other liabilities                                                                                                                                                                         |  |                   | 19,749    |   |                  |   | 9,596    
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|TOTAL LIABILITIES                                                                                                                                                                         |  |                   | 1,795,324 |   |                  |   | 1,264,491
|STOCKHOLDERS EQUITY                                                                                                                                                                      |  |                   |           |   |                  |   |          
|Common stock, no par, shares authorized 50 million; 17,284,255 issued and 17,195,834 outstanding at September 30, 2007; 11,467,648 issued
and 11,388,315 outstanding at December 31, 2006 |  |                   | 253,266   |   |                  |   | 127,396  
|Retained earnings                                                                                                                                                                         |  |                   | 34,934    |   |                  |   | 24,576   
|Accumulated other comprehensive (loss) income, net of tax                                                                                                                                 |  |                   | (47       | ) |                  |   | 65       
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                                |  |                   | 288,153   |   |                  |   | 152,037  
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                |  | $                 | 2,083,477 |   |                  | $ | 1,416,528
|                                                                                                                                                                                          |  |                   |           |   |                  |   |          

The accompanying notes are an integral part of these statements.



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AMERICANWEST BANCORPORATION

CONSOLIDATED STATEMENTS OF INCOME

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(unaudited)

($ in thousands, except per share
amounts)



|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|----------------------------------------------------- |  | ------------------------------- | ---------- | ------------------------------ | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                                      |  | Three Months EndedSeptember 30, |            | Nine Months EndedSeptember 30,
|                                                      |  | 2007                            |            | 2006                           |   | 2007       |  | 2006
|INTEREST INCOME                                       |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Interest and fees on loans                            |  | $                               | 36,378     |                                | $ | 24,447     |  | $    | 95,532     |  | $ | 66,839    
|Interest on securities                                |  |                                 | 814        |                                |   | 494        |  |      | 2,120      |  |   | 1,410     
|Other interest income                                 |  |                                 | 159        |                                |   | 44         |  |      | 315        |  |   | 123       
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|TOTAL INTEREST INCOME                                 |  |                                 | 37,351     |                                |   | 24,985     |  |      | 97,967     |  |   | 68,372    
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|INTEREST EXPENSE                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Interest on deposits                                  |  |                                 | 11,054     |                                |   | 7,281      |  |      | 29,808     |  |   | 18,868    
|Interest on borrowings                                |  |                                 | 2,807      |                                |   | 1,993      |  |      | 6,934      |  |   | 5,057     
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|TOTAL INTEREST EXPENSE                                |  |                                 | 13,861     |                                |   | 9,274      |  |      | 36,742     |  |   | 23,925    
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|NET INTEREST INCOME                                   |  |                                 | 23,490     |                                |   | 15,711     |  |      | 61,225     |  |   | 44,447    
|Provision for credit losses                           |  |                                 | 1,250      |                                |   | 3,681      |  |      | 3,000      |  |   | 5,167     
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES |  |                                 | 22,240     |                                |   | 12,030     |  |      | 58,225     |  |   | 39,280    
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|NON-INTEREST INCOME                                   |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Fees and service charges on deposits                  |  |                                 | 2,588      |                                |   | 1,467      |  |      | 6,476      |  |   | 4,021     
|Fees on mortgage loan sales                           |  |                                 | 940        |                                |   | 452        |  |      | 2,286      |  |   | 1,137     
|Other                                                 |  |                                 | 922        |                                |   | 845        |  |      | 2,780      |  |   | 1,552     
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|TOTAL NON-INTEREST INCOME                             |  |                                 | 4,450      |                                |   | 2,764      |  |      | 11,542     |  |   | 6,710     
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|NON-INTEREST EXPENSE                                  |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Salaries and employee benefits                        |  |                                 | 11,007     |                                |   | 7,748      |  |      | 30,834     |  |   | 22,015    
|Equipment expense                                     |  |                                 | 1,699      |                                |   | 988        |  |      | 4,733      |  |   | 2,828     
|Occupancy expense, net                                |  |                                 | 1,490      |                                |   | 1,064      |  |      | 4,105      |  |   | 3,006     
|Intangible assets amortization                        |  |                                 | 1,063      |                                |   | 294        |  |      | 2,417      |  |   | 688       
|State business and occupation tax                     |  |                                 | 335        |                                |   | 383        |  |      | 962        |  |   | 949       
|Foreclosed real estate and other foreclosed assets    |  |                                 | 45         |                                |   | 52         |  |      | 167        |  |   | 559       
|Other                                                 |  |                                 | 3,137      |                                |   | 2,716      |  |      | 8,289      |  |   | 7,552     
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|TOTAL NON-INTEREST EXPENSE                            |  |                                 | 18,776     |                                |   | 13,245     |  |      | 51,507     |  |   | 37,597    
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|INCOME BEFORE PROVISION FOR INCOME TAX                |  |                                 | 7,914      |                                |   | 1,549      |  |      | 18,260     |  |   | 8,393     
|PROVISION FOR INCOME TAX                              |  |                                 | 2,565      |                                |   | 587        |  |      | 6,185      |  |   | 3,014     
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|NET INCOME                                            |  | $                               | 5,349      |                                | $ | 962        |  | $    | 12,075     |  | $ | 5,379     
|                                                      |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Basic earnings per common share                       |  | $                               | 0.31       |                                | $ | 0.08       |  | $    | 0.79       |  | $ | 0.48      
|Diluted earnings per common share                     |  | $                               | 0.31       |                                | $ | 0.08       |  | $    | 0.78       |  | $ | 0.48      
|Basic weighted average shares outstanding             |  |                                 | 17,197,656 |                                |   | 11,373,559 |  |      | 15,283,810 |  |   | 11,114,884
|Diluted weighted average shares outstanding           |  |                                 | 17,268,007 |                                |   | 11,530,546 |  |      | 15,387,443 |  |   | 11,295,170

The accompanying notes are an integral part of these statements.



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AMERICANWEST BANCORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

NINE MONTHS ENDED SEPTEMBER 30, 2007 AND 2006

(unaudited)

($ in thousands)



|                                                                                                                        |  |                                |          |   |      |   |         |  
|----------------------------------------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | ------- | -
|                                                                                                                        |  | Nine months endedSeptember 30, |         
|                                                                                                                        |  | 2007                           |          |   | 2006 |  
|CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                                                             |  |                                |          |   |      |   |         |  
|Net Income                                                                                                              |  | $                              | 12,075   |   |      | $ | 5,379   |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                       |  |                                |          |   |      |   |         |  
|Provision for credit losses and foreclosed real estate and other foreclosed assets                                      |  |                                | 3,000    |   |      |   | 5,511   |  
|Depreciation and amortization                                                                                           |  |                                | 4,957    |   |      |   | 2,446   |  
|Stock-based compensation                                                                                                |  |                                | 893      |   |      |   | 695     |  
|(Gain)/Loss on sale of other premises and equipment, investments and foreclosed real estate and other foreclosed assets |  |                                | (684     | ) |      |   | 36      |  
|Loss on impairment of facilities                                                                                        |  |                                | 219      |   |      |   | 473     |  
|Originations of loans held for sale                                                                                     |  |                                | (125,185 | ) |      |   | (58,820 | )
|Proceeds from loans sold                                                                                                |  |                                | 124,117  |   |      |   | 54,543  |  
|Changes in assets and liabilities:                                                                                      |  |                                |          |   |      |   |         |  
|Accrued interest receivable                                                                                             |  |                                | (2,528   | ) |      |   | (1,066  | )
|Bank owned life insurance                                                                                               |  |                                | (734     | ) |      |   | (354    | )
|Other assets                                                                                                            |  |                                | 2,918    |   |      |   | (1,180  | )
|Accrued interest payable                                                                                                |  |                                | 1,259    |   |      |   | 1,453   |  
|Other liabilities                                                                                                       |  |                                | 3,577    |   |      |   | (130    | )
|                                                                                                                        |  |                                |          |   |      |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                               |  |                                | 23,884   |   |      |   | 8,986   |  
|                                                                                                                        |  |                                |          |   |      |   |         |  
|CASH FLOWS USED IN INVESTING ACTIVITIES                                                                                 |  |                                |          |   |      |   |         |  
|Securities available-for-sale:                                                                                          |  |                                |          |   |      |   |         |  
|Maturities, calls, sales and principal payments                                                                         |  |                                | 23,512   |   |      |   | 6,486   |  
|Purchases                                                                                                               |  |                                | (24,462  | ) |      |   | (1,854  | )
|Cash acquired in merger, net of cash consideration paid                                                                 |  |                                | 351      |   |      |   | 17,858  |  
|Purchased securities of Capital Trust Subsidiaries                                                                      |  |                                | (619     | ) |      |   | (217    | )
|Net increase in loans                                                                                                   |  |                                | (158,163 | ) |      |   | (81,119 | )
|Purchases of premises and equipment                                                                                     |  |                                | (4,721   | ) |      |   | (5,167  | )
|Proceeds from sale of premises and equipment                                                                            |  |                                | 708      |   |      |   | 356     |  
|Proceeds from sale of foreclosed real estate and other foreclosed assets                                                |  |                                | 1,620    |   |      |   | 1,859   |  
|                                                                                                                        |  |                                |          |   |      |   |         |  
|NET CASH USED IN INVESTING ACTIVITIES                                                                                   |  |                                | (161,774 | ) |      |   | (61,798 | )
|                                                                                                                        |  |                                |          |   |      |   |         |  
|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                                                                             |  |                                |          |   |      |   |         |  
|Net increase in deposits                                                                                                |  |                                | 89,887   |   |      |   | 27,349  |  
|Proceeds from Federal Home Loan Bank advances                                                                           |  |                                | 280,000  |   |      |   | 90,000  |  
|Repayments of Federal Home Loan Bank advances and other borrowing activity                                              |  |                                | (254,879 | ) |      |   | (86,338 | )
|Proceeds from issuances of common stock under equity incentive plans                                                    |  |                                | 554      |   |      |   | 2,383   |  
|Proceeds from issuance of junior subordinated debt                                                                      |  |                                | 20,619   |   |      |   | 7,217   |  
|Payment of cash dividend                                                                                                |  |                                | (1,717   | ) |      |   | (680    | )
|                                                                                                                        |  |                                |          |   |      |   |         |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                               |  |                                | 134,464  |   |      |   | 39,931  |  
|                                                                                                                        |  |                                |          |   |      |   |         |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                                 |  |                                | (3,426   | ) |      |   | (12,881 | )
|Cash and cash equivalents, beginning of year                                                                            |  | $                              | 55,729   |   |      | $ | 51,944  |  
|                                                                                                                        |  |                                |          |   |      |   |         |  
|Cash and cash equivalents, end of period                                                                                |  | $                              | 52,303   |   |      | $ | 39,063  |  
|                                                                                                                        |  |                                |          |   |      |   |         |  
|Supplemental Disclosures:                                                                                               |  |                                |          |   |      |   |         |  
|Cash paid during the period for:                                                                                        |  |                                |          |   |      |   |         |  
|Interest                                                                                                                |  | $                              | 35,483   |   |      | $ | 17,415  |  
|Income taxes                                                                                                            |  | $                              | 7,092    |   |      | $ | 4,211   |  
|Non-cash Investing and Financing Activities:                                                                            |  |                                |          |   |      |   |         |  
|Foreclosed real estate acquired in settlement of loans                                                                  |  | $                              | 955      |   |      | $ | 447     |  
|Fair value of assets acquired                                                                                           |  | $                              | 547,353  |   |      | $ | 229,972 |  
|Stock-based consideration issued for acquisition                                                                        |  | $                              | (124,423 | ) |      | $ | (20,593 | )
|Liabilities assumed in acquisition                                                                                      |  | $                              | 391,796  |   |      | $ | 190,418 |  

The accompanying notes are an integral part of these statements.



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AMERICANWEST BANCORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Basis of Presentation

The foregoing unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the
disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and the accompanying notes included in the annual report on Form 10-K for the year ended December 31, 2006. In the opinion of management, the unaudited interim consolidated financial statements furnished
herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. The results of operations for the three and nine month periods ended September 30,
2007 and 2006 are not necessarily indicative of the operating results for the full year.

The preparation of financial statements in accordance with
accounting principles generally accepted in the United States of America requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities known to exist as of
the date the financial statements are published, and the reported amounts of revenues and expenses during the reporting period. Uncertainties with respect to such estimates and assumptions are inherent in the preparation of AmericanWest
Bancorporations (Company) consolidated financial statements; accordingly, it is possible that the actual results could differ from these estimates and assumptions, which could have a material effect on the reported amounts of the
Companys consolidated financial position and results of operations.

NOTE 2. Securities

All securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses, net of tax, are excluded from earnings and reported as a
separate component of stockholders equity. Gains or losses on the sale of available-for-sale securities are determined using the specific identification method. Premiums and discounts are recognized in interest income using the effective
interest method over the period to maturity. Carrying amounts and fair values at September 30, 2007 and December 31, 2006 were as follows:



|                                                                 |  |                    |        |                   |   |               |  |            |        |  |   |       
|---------------------------------------------------------------- |  | ------------------ | ------ | ----------------- | - | ------------- |  | ---------- | ------ |  | - | ------
|                                                                 |  | September 30, 2007 |        | December 31, 2006
|($ in thousands)                                                 |  | AmortizedCost      |        | Fair Value        |   | AmortizedCost |  | Fair Value
|Obligations of Federal Government Agencies                       |  | $                  | 18,231 |                   | $ | 18,228        |  | $          | 11,927 |  | $ | 11,857
|Mortgage-backed securities                                       |  |                    | 24,980 |                   |   | 25,066        |  |            | 14,680 |  |   | 14,739
|Obligations of states, municipalities and political subdivisions |  |                    | 21,922 |                   |   | 21,848        |  |            | 9,016  |  |   | 9,062 
|Corporate securities                                             |  |                    | 1,499  |                   |   | 1,488         |  |            | 1,498  |  |   | 1,481 
|Other securities                                                 |  |                    | 4,114  |                   |   | 4,044         |  |            | 2,297  |  |   | 2,379 
|                                                                 |  |                    |        |                   |   |               |  |            |        |  |   |       
|Total                                                            |  | $                  | 70,746 |                   | $ | 70,674        |  | $          | 39,418 |  | $ | 39,518
|                                                                 |  |                    |        |                   |   |               |  |            |        |  |   |       



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AMERICANWEST BANCORPORATION

NOTE 3. Loans and Allowance for Loan Losses

Loan detail by category as of September 30, 2007 and
December 31, 2006 were as follows:



|                                          |  |                   |           |   |                  |   |           |  
|----------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|($ in thousands)                          |  | September 30,2007 |           |   | December 31,2006 |  
|Commercial real estate                    |  | $                 | 821,844   |   |                  | $ | 651,386   |  
|Commercial and industrial                 |  |                   | 471,771   |   |                  |   | 283,889   |  
|Agricultural                              |  |                   | 152,149   |   |                  |   | 141,646   |  
|Residential construction                  |  |                   | 123,343   |   |                  |   | 47,235    |  
|Residential mortgage                      |  |                   | 110,940   |   |                  |   | 74,222    |  
|Installment and other                     |  |                   | 45,502    |   |                  |   | 22,508    |  
|                                          |  |                   |           |   |                  |   |           |  
|Total Loans                               |  | $                 | 1,725,549 |   |                  | $ | 1,220,886 |  
|                                          |  |                   |           |   |                  |   |           |  
|Allowance for loan losses                 |  |                   | (21,023   | ) |                  |   | (15,136   | )
|Deferred loan fees, net of deferred costs |  |                   | (3,631    | ) |                  |   | (1,231    | )
|                                          |  |                   |           |   |                  |   |           |  
|Net Loans                                 |  | $                 | 1,700,895 |   |                  | $ | 1,204,519 |  
|                                          |  |                   |           |   |                  |   |           |  

The allowance for loan loss and reserve for unfunded commitments are maintained at levels considered adequate by
management to provide for possible loan losses as of the consolidated statement of condition reporting dates. The allowance and reserve for unfunded commitments are 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 and the reserve for unfunded commitments during the three
and nine months ended September 30, 2007 and 2006 were as follows:

Allowance for Loan Losses



|                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------ |  | ------------------------------- | ------ | - | ------------------------------ | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                 |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|($ in thousands)                                 |  | 2007                            |        |   | 2006                           |   |        | 2007 |  |   | 2006   |  
|Balance, beginning of period                     |  | $                               | 21,830 |   |                                | $ | 13,863 |      |  | $ | 15,136 |   |  | $ | 13,895 |  
|Provision for loan losses                        |  |                                 | 1,231  |   |                                |   | 3,629  |      |  |   | 2,736  |   |  |   | 4,917  |  
|Allowance related to acquired loans              |  |                                 |       |   |                                |   |       |      |  |   | 7,529  |   |  |   | 2,068  |  
|Loans charged-off                                |  |                                 | (2,148 | ) |                                |   | (3,006 | )    |  |   | (4,768 | ) |  |   | (6,650 | )
|Recoveries                                       |  |                                 | 110    |   |                                |   | 275    |      |  |   | 390    |   |  |   | 531    |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Balance, end of period                           |  | $                               | 21,023 |   |                                | $ | 14,761 |      |  | $ | 21,023 |   |  | $ | 14,761 |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|                                                 |  |                                 |        |  
|Reserve for Unfunded Commitments                 |  |                                 |        |   |                                |   |        |      |  |   |        |  
|                                                 |  |                                
|                                                 |  | Three Months EndedSeptember 30, |        |   | Nine Months EndedSeptember 30, |  
|($ in thousands)                                 |  | 2007                            |        |   | 2006                           |   |        | 2007 |  |   | 2006   |  
|Balance, beginning of period                     |  | $                               | 1,383  |   |                                | $ | 664    |      |  | $ | 881    |   |  | $ | 466    |  
|Provision for unfunded commitments               |  |                                 | 19     |   |                                |   | 52     |      |  |   | 264    |   |  |   | 250    |  
|Reserve related to acquired unfunded commitments |  |                                 |       |   |                                |   |       |      |  |   | 257    |   |  |   |       |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  
|Balance, end of period                           |  | $                               | 1,402  |   |                                | $ | 716    |      |  | $ | 1,402  |   |  | $ | 716    |  
|                                                 |  |                                 |        |   |                                |   |        |      |  |   |        |   |  |   |        |  

The provision for credit losses on the Consolidated Statements of Income includes the provision for loan losses
and the provision for unfunded commitments.

NOTE 4. Business Combinations

Far West Bancorporation

On April 1, 2007, the Company acquired Far West Bancorporation (FWBC) and its
wholly-owned subsidiary, Far West Bank, in an acquisition accounted for under the purchase method of accounting. The acquisition was consistent with the Companys strategic plan to expand into high growth markets. The financial results of FWBC
have been included in the Companys consolidated financial statements since that date.

The aggregate purchase price was approximately $155,559,000
and included cash of $30,004,000, common stock of $124,423,000 and direct merger costs of $1,132,000. The value of the 5,744,197 shares issued was determined based on the $21.66 average closing market price of the Companys common stock for the
two trading days before and after the measurement date of March 28, 2007 when the number of shares to be issued was determined. Total transaction expenses of $1,499,000 included $1,132,000 of direct expenses noted above and $367,000 of other
miscellaneous merger expenses.



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The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition.



|                                        |  |   |        
|--------------------------------------- |  | - | -------
|($ in thousands)                        |  |  
|Assets acquired:                        |  |   |        
|Cash and cash equivalents               |  | $ | 31,485 
|Securities                              |  |   | 30,217 
|Loans, net of allowance for loan losses |  |   | 341,904
|Goodwill                                |  |   | 96,082 
|Core deposit intangible                 |  |   | 12,915 
|Premises and equipment, net             |  |   | 13,241 
|Other assets                            |  |   | 21,509 
|                                        |  |   |        
|Total assets                            |  | $ | 547,353
|                                        |  |   |        
|Liabilities assumed:                    |  |   |        
|Deposits                                |  |   | 383,386
|Other liabilities                       |  |   | 8,410  
|                                        |  |   |        
|Total liabilities                       |  | $ | 391,796
|                                        |  |   |        
|Net assets acquired                     |  | $ | 155,557
|                                        |  |   |        

The core deposit intangible of $12,915,000 is being amortized on an accelerated basis over 10 years. Goodwill of
$96,082,000 is not amortized but will be reviewed for potential impairment on an annual basis, or if events or circumstances indicate a potential impairment. An insignificant amount of the goodwill recorded is expected to be deductible for tax
purposes. Additional adjustments to the purchase price allocation may occur as certain items are based on preliminary estimates at the time of acquisition, including taxes, direct costs and compensation adjustments.



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The following table presents unaudited pro forma results of operations related to the acquisition consummated on April 1, 2007, for the nine months ended September 30, 2007 and 2006. The cost savings and
revenue enhancements already realized by the Company as a result of the FWBC merger are included in the AWBC column for the nine months ended September 30, 2007. Additional cost savings and revenue enhancements anticipated are not reflected in
the pro forma consolidated condensed statements of income. No assurance can be given with respect to the ultimate level of such cost savings or revenue enhancements. The AWBC column reflects the Companys actual results reported for the periods
shown. The FWBC column reflects the actual results for the periods shown, prior to the acquisition date. The pro forma column represents purchase adjustments which would have occurred during the periods shown if the acquisition would have occurred
on January 1, 2006. The pro forma results do not necessarily indicate the results that would have been obtained had the acquisition actually occurred on January 1, 2006.

For the nine months ended September 30, 2007



|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|------------------------------------------- |  | ---- | ---------- | ---- | - | -------------------- |  | - | ----------------- | ----- |  | - | ----------
|($ in thousands, except per share amounts)  |  | AWBC |            | FWBC |   | Pro FormaAdjustments |  |   | Pro FormaCombined
|Net interest income                         |  | $    | 61,225     |      | $ | 8,718                |  | $ | (368              | ) (a) |  | $ | 69,575    
|Provision for loan losses                   |  |      | 3,000      |      |   | 2,005                |  |   |                   |       |  | $ | 5,005     
|Noninterest income                          |  |      | 11,542     |      |   | 2,413                |  |   |                   |       |  | $ | 13,955    
|Noninterest expense                         |  |      | 51,507     |      |   | 8,099                |  |   | 272               | (b)   |  | $ | 59,878    
|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|Income before provision for income tax      |  |      | 18,260     |      |   | 1,027                |  |   | (640              | )     |  |   | 18,647    
|Provision for income taxes                  |  |      | 6,185      |      |   | 387                  |  |   | (224              | ) (c) |  |   | 6,348     
|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|Net Income                                  |  | $    | 12,075     |      | $ | 640                  |  | $ | (416              | )     |  | $ | 12,299    
|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|Basic earnings per share                    |  | $    | 0.79       |      |   |                      |  |   |                   |       |  | $ | 0.72      
|Diluted earnings per share                  |  | $    | 0.78       |      |   |                      |  |   |                   |       |  | $ | 0.71      
|Basic weighted average shares outstanding   |  |      | 15,283,810 |      |   |                      |  |   |                   |       |  |   | 17,198,542
|Diluted weighted average shares outstanding |  |      | 15,387,443 |      |   |                      |  |   |                   |       |  |   | 17,302,175



|(a) | Amount represents amortization of purchase adjustments and interest expense on junior subordinated debt issuance.
|--- | -----------------------------------------------------------------------------------------------------------------



|(b) | Amount represents amortization of intangibles.
|--- | ----------------------------------------------



|(c) | Income tax effect of pro forma adjustments.
|--- | -------------------------------------------

For the nine months ended
September 30, 2006



|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|------------------------------------------- |  | ---- | ---------- | ---- | - | -------------------- |  | - | ----------------- | ----- |  | - | ----------
|($ in thousands, except per share amounts)  |  | AWBC |            | FWBC |   | Pro FormaAdjustments |  |   | Pro FormaCombined
|Net interest income                         |  | $    | 44,447     |      | $ | 23,752               |  | $ | (964              | ) (a) |  | $ | 67,235    
|Provision for loan losses                   |  |      | 5,167      |      |   | 1,493                |  |   |                   |       |  | $ | 6,660     
|Noninterest income                          |  |      | 6,710      |      |   | 5,883                |  |   |                   |       |  | $ | 12,593    
|Noninterest expense                         |  |      | 37,597     |      |   | 14,507               |  |   | 2,380             | (b)   |  | $ | 54,484    
|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|Income before provision for income tax      |  |      | 8,393      |      |   | 13,635               |  |   | (3,344            | )     |  |   | 18,684    
|Provision for income taxes                  |  |      | 3,014      |      |   | 4,929                |  |   | (1,170            | ) (c) |  | $ | 6,773     
|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|Net Income                                  |  | $    | 5,379      |      | $ | 8,706                |  | $ | (2,174            | )     |  | $ | 11,911    
|                                            |  |      |            |      |   |                      |  |   |                   |       |  |   |           
|Basic earnings per share                    |  | $    | 0.48       |      |   |                      |  |   |                   |       |  | $ | 0.71      
|Diluted earnings per share                  |  | $    | 0.48       |      |   |                      |  |   |                   |       |  | $ | 0.70      
|Basic weighted average shares outstanding   |  |      | 11,114,884 |      |   |                      |  |   |                   |       |  |   | 16,859,081
|Diluted weighted average shares outstanding |  |      | 11,295,170 |      |   |                      |  |   |                   |       |  |   | 17,039,367



|(a) | Amount represents amortization of purchase adjustments and interest expense on junior subordinated debt issuance.
|--- | -----------------------------------------------------------------------------------------------------------------



|(b) | Amount represents amortization of intangibles.
|--- | ----------------------------------------------



|(c) | Income tax effect of pro forma adjustments.
|--- | -------------------------------------------

Columbia Trust Bancorp

On March 15, 2006 the Company acquired Columbia Trust Bancorp (CTB) and its wholly-owned subsidiaries, Columbia Trust Bank and Columbia Trust
Statutory Trust I, in an acquisition accounted for under the purchase method of accounting. The results of CTB have been included in the consolidated financial statements since that date.



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The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition.



|                                        |  |   |        
|--------------------------------------- |  | - | -------
|($ in thousands)                        |  |  
|Assets acquired:                        |  |   |        
|Cash and cash equivalents               |  | $ | 36,820 
|Securities                              |  |   | 15,937 
|Loans, net of allowance for loan losses |  |   | 143,444
|Goodwill                                |  |   | 21,023 
|Other intangibles                       |  |   | 6,097  
|Premises and equipment, net             |  |   | 3,022  
|Other assets                            |  |   | 3,629  
|                                        |  |   |        
|Total assets                            |  | $ | 229,972
|                                        |  |   |        
|Liabilities assumed:                    |  |   |        
|Deposits                                |  |   | 175,914
|FHLB advances and other borrowings      |  |   | 10,566 
|Junior subordinated debt                |  |   | 3,093  
|Other liabilities                       |  |   | 845    
|                                        |  |   |        
|Total liabilities                       |  | $ | 190,418
|                                        |  |   |        
|Net assets acquired                     |  | $ | 39,554 
|                                        |  |   |        

The initial core deposit intangible of $5,794,000 is being amortized on a straight-line basis over 8 years.
Non-compete agreements of $303,000 are being amortized on a straight-line basis over 1-2 years. Goodwill of $21,023,000 is not amortized but will be reviewed for potential impairment on an annual basis, or more frequently if events or circumstances
indicate a potential impairment. An insignificant amount of the goodwill recorded was deductible for tax purposes.

NOTE 5. Junior Subordinated Debt

As of September 30, 2007, the Company had four wholly-owned trusts (Trusts) that were formed to issue trust preferred securities and related
common securities of the Trusts. The Trusts are summarized as follows:



|                                 |            |                |                   |   |        |  |          |               |  |      |                |  |               |  |               
|-------------------------------- | ---------- | -------------- | ----------------- | - | ------ |  | -------- | ------------- |  | ---- | -------------- |  | ------------- |  | --------------
|($ in thousands) Trust Name      |            |                |                   |   |        |  |          |               |  |      |                |  |               | 
|                                 | Issue Date |                | OutstandingAmount |   | Rate   |  |          | EffectiveRate |  |      | Next Call Date |  | Maturity Date
|AmericanWest Statutory Trust I   |            | September 2002 |                   | $ | 10,310 |  | Floating | (1)           |  | 8.60 | %              |  | December 2007 |  | September 2032
|Columbia Trust Statutory Trust I |            | June 2003      |                   | $ | 3,093  |  | Floating | (2)           |  | 8.30 | %              |  | June 2008     |  | June 2033     
|AmericanWest Capital Trust II    |            | March 2006     |                   | $ | 7,217  |  | 6.76     | %(3)          |  | 6.76 | %              |  | March 2011    |  | March 2036    
|AmericanWest Capital Trust III   |            | March 2007     |                   | $ | 20,619 |  | 6.53     | %(4)          |  | 6.53 | %              |  | March 2012    |  | June 2037     



|(1) | Rate based on LIBOR plus 3.40%, adjusted quarterly.
|--- | ---------------------------------------------------



|(2) | Rate based on LIBOR plus 3.10%, adjusted quarterly.
|--- | ---------------------------------------------------



|(3) | Rate fixed for 5 years from issuance, then adjusted quarterly thereafter based on LIBOR plus 1.50%.
|--- | ---------------------------------------------------------------------------------------------------



|(4) | Rate fixed for 5 years from issuance, then adjusted quarterly thereafter based on LIBOR plus 1.63%.
|--- | ---------------------------------------------------------------------------------------------------

All of the common securities of the Trusts are owned by the Company. The Company has fully and unconditionally guaranteed the capital securities along with all obligations of the Trusts under the trust agreements.
Interest income from the trust preferred securities is the source of revenues for these Trusts. In accordance with Financial Accounting Standards Board Interpretation No. 46R, Consolidation of Variable Interest Entities, the Trusts are
not consolidated in the Companys financial statements.

As of September 30, 2007, all of the junior subordinated debt, less the common stock of
the Trusts, qualified as Tier I capital, under the guidance issued by the Board of Governors of the Federal Reserve System (FRB). Effective April 11, 2005, the FRB adopted a rule that permits the inclusion of junior subordinated debt in Tier I
capital, but with stricter quantitative limits. Under the FRB rule, after a five-year transition period ending March 31, 2009, the aggregate amount of junior subordinated debt and certain other restricted core capital elements is



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limited to 25% of Tier I capital elements, net of goodwill and other intangibles. The amount of junior subordinated debt and certain other elements in excess
of the limit could be included in Tier II capital, subject to restrictions. All of the currently issued junior subordinated debt is expected to qualify as Tier I capital under the new limitations as of March 31, 2009. There can be no assurance
that the FRB will not further limit the amount of junior subordinated debt permitted to be included in Tier I capital for regulatory capital purposes.

NOTE 6. Comprehensive Income

Total comprehensive income, which includes net income and unrealized gains and losses on the Companys
available-for-sale securities, net of tax, amounted to approximately $12.0 million and $5.5 million for the nine months ended September 30, 2007 and 2006, respectively.

NOTE 7. Cash Dividends

During the nine months ended September 30, 2007, the Company declared and paid cash
dividends of $0.11 per share.

NOTE 8. Earnings Per Share

The following is a reconciliation of the numerators and denominators for basic and diluted per share computations for net income for the three and nine months ended September 30, 2007 and 2006:



|                                                                 |  |                                 |            |                                |   |            |  |      |            |  |   |           
|---------------------------------------------------------------- |  | ------------------------------- | ---------- | ------------------------------ | - | ---------- |  | ---- | ---------- |  | - | ----------
|                                                                 |  | Three Months EndedSeptember 30, |            | Nine Months EndedSeptember 30,
|($ in thousands, except per share)                               |  | 2007                            |            | 2006                           |   | 2007       |  | 2006
|Numerator:                                                       |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Net income                                                       |  | $                               | 5,349      |                                | $ | 962        |  | $    | 12,075     |  | $ | 5,379     
|Denominator:                                                     |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Weighted average number of common shares outstanding             |  |                                 | 17,197,656 |                                |   | 11,373,559 |  |      | 15,283,810 |  |   | 11,114,884
|Incremental shares assumed for stock-based compensation          |  |                                 | 70,351     |                                |   | 156,987    |  |      | 103,633    |  |   | 180,286   
|                                                                 |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Total                                                            |  |                                 | 17,268,007 |                                |   | 11,530,546 |  |      | 15,387,443 |  |   | 11,295,170
|                                                                 |  |                                 |            |                                |   |            |  |      |            |  |   |           
|Basic Earnings per common share                                  |  | $                               | 0.31       |                                | $ | 0.08       |  | $    | 0.79       |  | $ | 0.48      
|Diluted Earnings per common share                                |  | $                               | 0.31       |                                | $ | 0.08       |  | $    | 0.78       |  | $ | 0.48      
|Anti-dilutive options not included in diluted earnings per share |  |                                 | 213,421    |                                |   | 38,593     |  |      | 134,086    |  |   | 10,821    

NOTE 9. Stock-Based Compensation

The AmericanWest Bancorporation 2006 Equity Incentive Plan (Plan) provides for the issuance of incentive stock options, nonqualified stock options, restricted stock awards and unrestricted stock awards to key
employees, officers and directors. The maximum aggregate number of authorized shares issued under the Plan is 314,666. The Board of Directors Compensation Committee administers the Plan. The maximum term of an incentive stock option granted
under the Plan is ten years and the Plan will terminate on March 17, 2016.

Stock Options

Compensation cost recorded related to stock options accounted for under Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment, is
summarized in the table below including the impact on net income and diluted earnings per share for the three and nine months ended September 30, 2007 and 2006.



|                               |  |                                 |     |                                |   |      |  |      |      |  |   |     
|------------------------------ |  | ------------------------------- | --- | ------------------------------ | - | ---- |  | ---- | ---- |  | - | ----
|                               |  | Three months endedSeptember 30, |     | Nine months endedSeptember 30,
|($ In thousands)               |  | 2007                            |     | 2006                           |   | 2007 |  | 2006
|Stock option compensation cost |  | $                               | 101 |                                | $ | 74   |  | $    | 419  |  | $ | 514 
|Impact on Net Income           |  | $                               | 70  |                                | $ | 61   |  | $    | 287  |  | $ | 373 
|Impact on diluted EPS          |  | $                               |    |                                | $ | 0.01 |  | $    | 0.02 |  | $ | 0.03



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The following table summarizes the stock option activity for the nine months ended September 30, 2007.



|                                  |  |         |   |  |                              |      
|--------------------------------- |  | ------- | - |  | ---------------------------- | -----
|                                  |  | Options |   |  | Weightedaverageexerciseprice
|Outstanding at December 31, 2006  |  | 444,049 |   |  | $                            | 16.51
|Granted                           |  | 62,000  |   |  |                              | 22.79
|Exercised                         |  | (52,737 | ) |  |                              | 8.55 
|Forfeited                         |  | (22,210 | ) |  |                              | 22.44
|                                  |  |         |   |  |                              |      
|Outstanding at September 30, 2007 |  | 431,102 |   |  | $                            | 18.08
|                                  |  |         |   |  |                              |      
|Exercisable at September 30, 2007 |  | 305,102 |   |  | $                            | 16.98

The following table summarizes the weighted average assumptions for options issued during the three and nine
months ended September 30, 2007 and 2006.



|                        |  |                                 |   |  |                                |   |  |           |   |  |           |  
|----------------------- |  | ------------------------------- | - |  | ------------------------------ | - |  | --------- | - |  | --------- | -
|                        |  | Three months endedSeptember 30, |   |  | Nine months endedSeptember 30, |  
|                        |  | 2007                            |   |  | 2006                           |   |  | 2007      |   |  | 2006      |  
|Expected volatility     |  | 29.2                            | % |  | 32.9                           | % |  | 30.3      | % |  | 27.5      | %
|Expected dividends      |  | 0.7                             | % |  | 0.5                            | % |  | 0.5       | % |  | 0.4       | %
|Expected term           |  | 5.0 years                       |   |  | 7.5 years                      |   |  | 6.1 years |   |  | 5.5 years |  
|Risk free interest rate |  | 5.0                             | % |  | 5.0                            | % |  | 4.6       | % |  | 4.9       | %

The expected volatility is based on historical volatility, the expected dividends are based on historical cash
dividends, the expected term is based on the short-cut method and the risk free interest rate is based on US Treasury Constant Maturity yields for periods similar to the expected life of the option. The weighted average fair value of options issued
during the three and nine months ended September 30, 2007 was $6.04 and $8.50, respectively. The weighed average fair value of options issued during the three and nine months ended September 30, 2006 was $10.15 and $8.77, respectively.
Total unrecognized compensation cost at September 30, 2007 is $426,000 which will be recognized through 2012. The amortization of stock-based compensation reflects estimated forfeitures adjusted for actual forfeiture experience. Estimated
forfeitures will be continually evaluated in subsequent periods and may change based on new facts and circumstances.

The weighted average remaining term
for outstanding and exercisable stock options at September 30, 2007 was 6.4 years and 5.9 years, respectively. The aggregate intrinsic value at September 30, 2007 for stock options outstanding and exercisable was $1.0 million and $986,000,
respectively. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market price of the Companys common stock as of the reporting date. The intrinsic value of stock options exercised
during the three and nine months ended September 30, 2007 was $72,000 and $688,000, respectively.

Restricted Common Stock Awards

The Company has granted performance based restricted common stock awards and non-performance based restricted stock awards (collectively, common stock awards) to
certain executives and employees. The common stock awards vest between September 2008 and September 2012 and are expensed as compensation over the vesting period.

The purpose of these awards is to promote the long term interests of the Company and its shareholders by providing a financial incentive as a means for retaining certain key executives and employees. For the three months ended
September 30, 2007 and 2006, the compensation expense related to these awards was approximately $109,000 and $79,000, respectively. For the nine months ended September 30, 2007 and 2006, the compensation expense related to these awards was
approximately $474,000 and $181,000, respectively. The compensation expense for the nine months ended September 30, 2007, includes $141,000 related to the



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AMERICANWEST BANCORPORATION



immediate vesting of 7,500 restricted common stock awards for an executive terminated without cause. The following table summarizes restricted common stock
activity for the nine months ended September 30, 2007.



|                                  |  |                       |   |  |                                     |      
|--------------------------------- |  | --------------------- | - |  | ----------------------------------- | -----
|                                  |  | RestrictedCommonStock |   |  | Weightedaverage grantdatefair value
|Unvested as of December 31, 2006  |  | 79,333                |   |  | $                                   | 21.59
|Granted                           |  | 42,705                |   |  |                                     | 21.83
|Forfeited                         |  | (21,500               | ) |  |                                     | 22.29
|Vested                            |  | (12,117               | ) |  |                                     | 21.29
|                                  |  |                       |   |  |                                     |      
|Unvested as of September 30, 2007 |  | 88,421                |   |  | $                                   | 21.58
|                                  |  |                       |   |  |                                     |      

NOTE 10. Subsequent Events

On October 22, 2007, the Company declared a cash dividend of $0.04 per common share. The dividend is payable on November 27, 2007 to shareholders of record on November 13, 2007.

NOTE 11. Recent Accounting Pronouncements

In February 2007, the
Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 159, The Fair Value Option for Financial Assets and Financial Liabilities Including an Amendment of FASB Statement No. 115.
The new guidance allows an institution, at its option, and on an item by item basis, to begin valuing selected assets and liabilities at fair market value. The rule is required to be adopted for years beginning after November 15, 2007. Upon
adoption of this guidance, the initial valuation adjustment would be made to beginning retained earnings. The Company will adopt this guidance on January 1, 2008 and management is assessing the impact of the implementation of this guidance.

On July 13, 2006, FASB Interpretation Number (FIN) 48, Accounting for Uncertainty in Income Taxes-An Interpretation of FASB Statement
No. 109, was issued. FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the tax law may be uncertain. FIN 48 prescribes a comprehensive model for the financial statement recognition, measurement,
presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken in income tax returns. The Company adopted FIN 48 on January 1, 2007. The implementation of FIN 48 did not have a material impact on
the Company.



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

Forward-Looking
Statements

Certain matters discussed or incorporated by reference in this Quarterly Report on Form 10-Q including, but not limited to, matters
described in Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, have forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA).
Such forward-looking statements may include statements or forecasts about the Companys financial condition and results of operations, expectations for future financial performance and assumptions for those forecasts and expectations. Actual
results might differ significantly from the Companys forecasts and expectations due to several factors. Some of these factors include, but are not limited to, impact of the current national and regional economy (including real estate values)
on loan demand and borrower financial capacity in the Companys market, changes in loan portfolio composition, the Companys ability to increase market share, the Companys ability to attract quality customers, the Companys
ability to expand its markets through new financial centers and acquisitions, interest rate movements and the impact on net interest margins such movement may cause, changes in the demographic make-up of the Companys market, the Companys
products and services, the Companys ability to attract and retain qualified employees, regulatory changes, competition with other banks and financial institutions. Other factors are included in the Annual Report on Form 10-K for the year ended
December 31, 2006, filed with the US Securities and Exchange Commission (SEC) and is available on the SECs website at www.sec.gov. Words such as targets, expects, anticipates, believes,
other similar expressions or future or conditional verbs such as will, may, should, would, and could are intended to identify such forward-looking statements. Readers should not place undue
reliance on the forward-looking statements, which reflect managements view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances. This
statement is included for the express purpose of protecting the Company under PSLRAs safe harbor provisions.

The following discussion
contains a review of the results of operations and financial condition for the three and nine months ended September 30, 2007 and 2006. 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 the Companys Form 10-K for the year ended December 31, 2006, which contains additional information.

AmericanWest Bancorporation

AmericanWest Bancorporation (Company) is a Washington corporation registered as a bank
holding company under the Bank Holding Company Act of 1956. The Company is headquartered in Spokane, Washington. The Companys wholly-owned subsidiary is AmericanWest Bank (Bank), a Washington state chartered bank that operates in Washington,
Northern Idaho and Utah. Additionally, the Bank has two loan production offices in the Salt Lake City, Utah, area and one loan production office in Washington. All Utah locations are operating as Far West Bank, a division of AmericanWest Bank.
Unless otherwise indicated, reference to the Company shall include its wholly-owned subsidiary. The Companys unconsolidated information will be referred to as the Parent Companys. The Bank provides a full range of banking services to
small and medium-sized businesses, agricultural businesses, professionals and consumers through 62 financial centers and three loan production offices located in Washington, Northern Idaho and Utah.

AmericanWest Statutory Trust I, Columbia Trust Statutory Trust I, AmericanWest Capital Trust II and AmericanWest Capital Trust III (collectively Trusts) are wholly-owned
subsidiaries of the Company that were formed for the exclusive purpose of issuing capital securities and using the proceeds from the issuance to acquire junior subordinated debt issued by the Company. Due to the prior adoption of Financial
Interpretation Number 46R, Consolidation of Variable Interest Entities, the investments in these Trusts are not consolidated on the Consolidated Financial Statements.

On April 1, 2007, AmericanWest Bancorporation merged with Far West Bancorporation (FWBC) and FWBCs principal operating subsidiary, Far West Bank (FWB), was merged with and into AmericanWest Bank. The
financial information included in this Form 10-Q reflects the merger with Far West Bancorporation effective April 1, 2007.



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AMERICANWEST BANCORPORATION



Results of Operations

Overview

The Company reported net income of $5.3 million or $0.31 per diluted share for the three months ended
September 30, 2007 compared to $1.0 million or $0.08 per diluted share the same period in 2006. The return on average assets for the three months ended September 30, 2007 was 1.03%, as compared to 0.28% for the same period of the prior
year. The return on average equity for the three months ended September 30, 2007 was 7.40%, as compared to 2.55% for the same period of the prior year. The third quarter 2006 financial results were adversely impacted by a special provision for
credit losses of $2.4 million, or $0.13 per share on an after-tax basis, which was recognized in connection with the charge-off of a single loan. Excluding the impact of this item, the increase in diluted earnings per share for the third quarter
2007 over the same period in 2006 was $0.10, or 48%. This increase is principally attributable to the positive impact of the merger with Far West Bancorporation (completed on April 1, 2007), balance sheet growth and expense control initiatives
implemented during the first quarter of 2007.

The Company reported net income of $12.1 million or $0.78 per fully diluted share for the nine months ended
September 30, 2007 compared to $5.4 million or $0.48 per fully diluted share for the same period in 2006. The return on average assets for the nine months ended September 30, 2007 was 0.89%, as compared to 0.56% for the same period of the
prior year. The return on average equity for the nine months ended September 30, 2007 was 6.68%, as compared to 5.12% for the same period of the prior year.

The tables below summarize the Companys financial performance for the three and nine months ending September 30, 2007 and 2006:



|                                                    |  |                                 |        |      |                                 |          |  |       |      |  |      |        |          |   |        |  |       |  
|--------------------------------------------------- |  | ------------------------------- | ------ | ---- | ------------------------------- | -------- |  | ----- | ---- |  | ---- | ------ | -------- | - | ------ |  | ----- | -
|                                                    |  | Three Months EndedSeptember 30, |        |      | Nine Months Ended September 30, |         
|($ in thousands except per share data)              |  | 2007                            |        | 2006 |                                 | % Change |  |       | 2007 |  | 2006 |        | % Change |  
|Interest Income                                     |  | $                               | 37,351 |      | $                               | 24,985   |  | 49.5  | %    |  | $    | 97,967 |          | $ | 68,372 |  | 43.3  | %
|Interest Expense                                    |  |                                 | 13,861 |      |                                 | 9,274    |  | 49.5  | %    |  |      | 36,742 |          |   | 23,925 |  | 53.6  | %
|                                                    |  |                                 |        |      |                                 |          |  |       |      |  |      |        |          |   |        |  |       |  
|Net Interest Income                                 |  |                                 | 23,490 |      |                                 | 15,711   |  | 49.5  | %    |  |      | 61,225 |          |   | 44,447 |  | 37.7  | %
|Provision for Loan Loss                             |  |                                 | 1,250  |      |                                 | 3,681    |  | -66.0 | %    |  |      | 3,000  |          |   | 5,167  |  | -41.9 | %
|                                                    |  |                                 |        |      |                                 |          |  |       |      |  |      |        |          |   |        |  |       |  
|Net interest income after provision for loan losses |  |                                 | 22,240 |      |                                 | 12,030   |  | 84.9  | %    |  |      | 58,225 |          |   | 39,280 |  | 48.2  | %
|                                                    |  |                                 |        |      |                                 |          |  |       |      |  |      |        |          |   |        |  |       |  
|Non-interest Income                                 |  |                                 | 4,450  |      |                                 | 2,764    |  | 61.0  | %    |  |      | 11,542 |          |   | 6,710  |  | 72.0  | %
|Non-interest Expense                                |  |                                 | 18,776 |      |                                 | 13,245   |  | 41.8  | %    |  |      | 51,507 |          |   | 37,597 |  | 37.0  | %
|                                                    |  |                                 |        |      |                                 |          |  |       |      |  |      |        |          |   |        |  |       |  
|Income before provision for income taxes            |  |                                 | 7,914  |      |                                 | 1,549    |  | 410.9 | %    |  |      | 18,260 |          |   | 8,393  |  | 117.6 | %
|Provision for income taxes                          |  |                                 | 2,565  |      |                                 | 587      |  | 337.0 | %    |  |      | 6,185  |          |   | 3,014  |  | 105.2 | %
|                                                    |  |                                 |        |      |                                 |          |  |       |      |  |      |        |          |   |        |  |       |  
|Net Income                                          |  | $                               | 5,349  |      | $                               | 962      |  | 456.0 | %    |  | $    | 12,075 |          | $ | 5,379  |  | 124.5 | %
|                                                    |  |                                 |        |      |                                 |          |  |       |      |  |      |        |          |   |        |  |       |  
|Basic earnings per common share                     |  | $                               | 0.31   |      | $                               | 0.08     |  | 287.5 | %    |  | $    | 0.79   |          | $ | 0.48   |  | 64.6  | %
|Diluted earnings per common share                   |  | $                               | 0.31   |      | $                               | 0.08     |  | 287.5 | %    |  | $    | 0.78   |          | $ | 0.48   |  | 62.5  | %



|                                                        |  |                                 |   |  |                                 |   |  |       |   |  |       |  
|------------------------------------------------------- |  | ------------------------------- | - |  | ------------------------------- | - |  | ----- | - |  | ----- | -
|                                                        |  | Three Months EndedSeptember 30, |   |  | Nine Months Ended September 30, |  
|                                                        |  | 2007                            |   |  | 2006                            |   |  | 2007  |   |  | 2006  |  
|Selected Financial Ratios, annualized:                  |  |                                 |   |  |                                 |   |  |       |   |  |       |  
|Return on average assets                                |  | 1.03                            | % |  | 0.28                            | % |  | 0.89  | % |  | 0.56  | %
|Return on average equity                                |  | 7.40                            | % |  | 2.55                            | % |  | 6.68  | % |  | 5.12  | %
|Return on tangible average equity                       |  | 15.26                           | % |  | 3.51                            | % |  | 12.42 | % |  | 6.60  | %
|Efficiency ratio                                        |  | 63.40                           | % |  | 70.10                           | % |  | 67.46 | % |  | 72.15 | %
|Non-interest income to average assets                   |  | 0.86                            | % |  | 0.80                            | % |  | 0.85  | % |  | 0.70  | %
|Non-interest expenses to average assets                 |  | 3.63                            | % |  | 3.85                            | % |  | 3.79  | % |  | 3.92  | %
|Net interest margin (1)                                 |  | 5.22                            | % |  | 5.03                            | % |  | 5.13  | % |  | 5.07  | %
|Ending shareholders equity to assets                   |  | 13.83                           | % |  | 10.96                           | % |  | 13.83 | % |  | 10.96 | %
|Ending tangible shareholders equity to tangible assets |  | 7.28                            | % |  | 8.22                            | % |  | 7.28  | % |  | 8.22  | %



|(1) | Presented on a tax equivalent basis for tax exempt securities. Average loans include loans held for sale and non-accrual loans.
|--- | -------------------------------------------------------------------------------------------------------------------------------



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AMERICANWEST BANCORPORATION



Net Interest Income

Three Months Ended September 30, 2007 and 2006

Net interest income for the third quarter of 2007 was $23.5 million, an increase of
$7.8 million from the third quarter of 2006. Interest income for the third quarter of 2007 was $37.4 million, an increase of $12.4 million over the same period of the prior year. The increase in interest income is related mainly to the average
earning assets increase of $551.2 million and an increased average yield on earning assets of 29 basis points. The increase in the average earning assets is principally due to acquired loans from FWB of $350.6 million and organic loan growth of
$154.0 million or 17% on an annualized basis. Interest expense for the third quarter of 2007 was $13.9 million, an increase of $4.6 million over the similar period of the prior year. The increase in interest expense is related to an increase in the
average cost of interest bearing liabilities of 18 basis points and the average interest bearing liabilities increase of $416.8 million from the similar period of 2006. The increase in the average interest bearing liabilities is principally due to
the acquired interest bearing deposits from FWB of $241.9 million, organic interest bearing deposit growth of $105.3 million or 16% on an annualized basis.

The tax equivalent net interest margin for the third quarter of 2007 was 5.22%, an increase of 19 basis points from the same period in 2006. The average yield on loans for the third quarter of 2007 was 8.45%, an increase of 29 basis points
from the same period in 2006. The increase in the average yield on loans is principally due to the FWB portfolio acquired, partially offset by an adjustment in the accounting for deferred loan fees and origination costs on loans with original terms
less than twelve months implemented during the first quarter of 2007 and a decrease in index rates for certain variable rate loans tied to Prime on September 19, 2007.

The Companys net interest margin for the third quarter of 2007 was also adversely impacted by the cost of interest bearing deposits, which increased by 21 basis points over the same period in 2006. This increase
was driven principally by higher rates paid on money market and time deposit accounts due to heightened market competition. This was partially offset by a shift in the Companys deposit mix. Compared to the similar quarter of the prior year,
average non-interest bearing deposits increased as a percentage of total deposits from 21% to 23%.



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The following table sets forth the Companys net interest margin for the three months ended September 30,
2007 and 2006.



|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|--------------------------------------------- |  | -------------------------------- | --------- | -------- | ---- | ------ |  | ---- | -------------- |  | -------- | --------- | - | - | ------ |  | ---- | -
|                                              |  | Three months ended September 30, |          
|                                              |  | 2007                             |           |          | 2006 |       
|($ in thousands)                              |  | AverageBalance                   |           | Interest |      | %      |  |      | AverageBalance |  | Interest |           | % |  
|Assets                                        |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Loans (1)                                     |  | $                                | 1,707,745 |          | $    | 36,378 |  | 8.45 | %              |  | $        | 1,189,151 |   | $ | 24,447 |  | 8.16 | %
|Taxable securities                            |  |                                  | 46,506    |          |      | 609    |  | 5.20 | %              |  |          | 33,361    |   |   | 386    |  | 4.59 | %
|Non-taxable securities (2)                    |  |                                  | 21,196    |          |      | 311    |  | 5.82 | %              |  |          | 10,769    |   |   | 165    |  | 6.08 | %
|FHLB Stock                                    |  |                                  | 7,801     |          |      | 12     |  | 0.61 | %              |  |          | 6,319     |   |   |       |  | 0.00 | %
|Overnight deposits with other banks and other |  |                                  | 10,635    |          |      | 147    |  | 5.48 | %              |  |          | 3,106     |   |   | 44     |  | 5.62 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest earning assets                 |  |                                  | 1,793,883 |          |      | 37,457 |  | 8.28 | %              |  |          | 1,242,706 |   |   | 25,042 |  | 7.99 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Non-interest earning assets                   |  |                                  | 260,876   |          |      |        |  |      |                |  |          | 120,668   |   |   |        |  |      |  
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total assets                                  |  | $                                | 2,054,759 |          |      |        |  |      |                |  | $        | 1,363,374 |   |   |        |  |      |  
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Liabilities                                   |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Interest bearing demand deposits              |  | $                                | 143,054   |          | $    | 313    |  | 0.87 | %              |  | $        | 91,827    |   | $ | 168    |  | 0.73 | %
|Savings and MMDA deposits                     |  |                                  | 531,447   |          |      | 4,166  |  | 3.11 | %              |  |          | 352,140   |   |   | 2,700  |  | 3.04 | %
|Time deposits                                 |  |                                  | 529,283   |          |      | 6,575  |  | 4.93 | %              |  |          | 397,454   |   |   | 4,413  |  | 4.41 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest bearing deposits               |  |                                  | 1,203,784 |          |      | 11,054 |  | 3.64 | %              |  |          | 841,421   |   |   | 7,281  |  | 3.43 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Overnight borrowings                          |  |                                  | 23,455    |          |      | 328    |  | 5.55 | %              |  |          | 42,273    |   |   | 582    |  | 5.46 | %
|Junior subordinated debt                      |  |                                  | 41,239    |          |      | 774    |  | 7.45 | %              |  |          | 20,620    |   |   | 438    |  | 8.43 | %
|Other borrowings                              |  |                                  | 124,004   |          |      | 1,705  |  | 5.45 | %              |  |          | 71,343    |   |   | 973    |  | 5.41 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest bearing liabilities            |  |                                  | 1,392,482 |          |      | 13,861 |  | 3.95 | %              |  |          | 975,657   |   |   | 9,274  |  | 3.77 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Non-interest bearing demand deposits          |  |                                  | 353,587   |          |      |        |  |      |                |  |          | 227,782   |   |   |        |  |      |  
|Other non-interest bearing liabilities        |  |                                  | 21,919    |          |      |        |  |      |                |  |          | 10,222    |   |   |        |  |      |  
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total liabilities                             |  |                                  | 1,767,988 |          |      |        |  |      |                |  |          | 1,213,661 |   |   |        |  |      |  
|Stockholders Equity                          |  |                                  | 286,771   |          |      |        |  |      |                |  |          | 149,713   |   |   |        |  |      |  
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total liabilities and stockholders equity    |  | $                                | 2,054,759 |          |      |        |  |      |                |  | $        | 1,363,374 |   |   |        |  |      |  
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Net interest income and spread                |  |                                  |           |          | $    | 23,596 |  | 4.33 | %              |  |          |           |   | $ | 15,768 |  | 4.22 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Net interest margin to average earning assets |  |                                  |           |          |      |        |  | 5.22 | %              |  |          |           |   |   |        |  | 5.03 | %
|                                              |  |                                  |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  



|(1) | Includes loans held for sale and non-accrual loans.
|--- | ---------------------------------------------------



|(2) | Tax-exempt securities income has been presented using a tax equivalent basis and an assumed tax rate of 34%.
|--- | ------------------------------------------------------------------------------------------------------------



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The following table sets forth a summary of changes in the components of net interest income during the third quarter
of 2007 as compared to the third quarter of 2006 due to the changes in average interest earning assets and interest bearing liabilities and the resultant changes in interest income and interest expense:



|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|------------------------------------------------------------- | ------ | ------------------------------------------------------------ | ------ | ---- |  | - | ----- | - |  | - | ------ | -
|                                                              |        | Three months ended September 30,2007 compared to 2006        |       
|($ in thousands)                                              |        | Increase (decrease) in net interestincome due to changes in: |       
|                                                              | Volume |                                                              |        | Rate |  |   | Total |  
|Interest earning assets                                       |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Loans (1)                                                     |        | $                                                            | 10,666 |      |  | $ | 1,265 |   |  | $ | 11,931 |  
|Securities (2)                                                |        |                                                              | 294    |      |  |   | 75    |   |  |   | 369    |  
|Overnight deposits with other banks, and other and FHLB stock |        |                                                              | 42     |      |  |   | 73    |   |  |   | 115    |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total interest earning assets                                 |        | $                                                            | 11,002 |      |  | $ | 1,413 |   |  | $ | 12,415 |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Interest bearing liabilities                                  |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Interest bearing demand deposits                              |        | $                                                            | 94     |      |  | $ | 51    |   |  | $ | 145    |  
|Savings deposits                                              |        |                                                              | 1,374  |      |  |   | 92    |   |  |   | 1,466  |  
|Time deposits                                                 |        |                                                              | 1,465  |      |  |   | 697   |   |  |   | 2,162  |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total interest bearing deposits                               |        |                                                              | 2,933  |      |  |   | 840   |   |  |   | 3,773  |  
|Overnight borrowings                                          |        |                                                              | (259   | )    |  |   | 5     |   |  |   | (254   | )
|Junior subordinated debt                                      |        |                                                              | 438    |      |  |   | (102  | ) |  |   | 336    |  
|Other borrowings                                              |        |                                                              | 718    |      |  |   | 14    |   |  |   | 732    |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total interest bearing liabilities                            |        |                                                              | 3,830  |      |  |   | 757   |   |  |   | 4,587  |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total increase (decrease) in net interest income              |        | $                                                            | 7,172  |      |  | $ | 656   |   |  | $ | 7,828  |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  



|(1) | Includes loans held for sale and non-accrual loans.
|--- | ---------------------------------------------------



|(2) | Tax-exempt securities income has been presented using a tax equivalent basis and an assumed tax rate of 34%.
|--- | ------------------------------------------------------------------------------------------------------------

Nine Months Ended September 30, 2007 and 2006

Net interest
income for the nine months ended September 30, 2007 was $61.2 million, an increase of $16.8 million from the same period of the prior year. Interest income for the nine months ended September 30, 2007 was $98.0 million, an increase of
$29.6 million over the same period of the prior year. Interest expense for the nine months ended September 30, 2007 was $36.7 million, an increase of $12.8 million over the similar period of the prior year.

The tax equivalent net interest margin for the nine months ended September 30, 2007 was 5.13%, an increase of 6 basis points from the same period in 2006. The
average yield on loans for the nine months ended September 30, 2007 was 8.35%, an increase of 42 basis points from the same period in 2006. The increase in the average yield on loans was principally attributable to the acquisition of FWBs
loan portfolio of $350.6 million, which generally had higher yielding loans. Partially offsetting the increased yield from the FWB portfolio was the impact of an adjustment to the Companys deferral of loan fees effective January 1, 2007.
Prior to January 1, 2007, the Company did not defer loan fees or direct loan origination costs on loans with contractual maturities of one year or less as the amount was deemed immaterial. Based on the increased originations of large short-term
loans with increasing fee amounts, effective January 1, 2007, the Company began deferring all loan fees and loan origination costs.

The
Companys net interest margin for the nine months ended September 30, 2007 was also adversely impacted by the cost of interest bearing deposits, which increased 48 basis points over the same period in 2006, and the cost of borrowings,
which increased 42 basis points, over the similar period of the prior year. The cost of interest bearing deposits increased mainly due to heightened market competition.



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The following table sets forth the Companys net interest margin for the nine months ended September 30,
2007 and 2006.



|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|--------------------------------------------- |  | ------------------------------- | --------- | -------- | ---- | ------ |  | ---- | -------------- |  | -------- | --------- | - | - | ------ |  | ---- | -
|                                              |  | Nine months ended September 30, |          
|                                              |  | 2007                            |           |          | 2006 |       
|($ in thousands)                              |  | AverageBalance                  |           | Interest |      | %      |  |      | AverageBalance |  | Interest |           | % |  
|Assets                                        |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Loans (1)                                     |  | $                               | 1,528,993 |          | $    | 95,532 |  | 8.35 | %              |  | $        | 1,126,255 |   | $ | 66,839 |  | 7.93 | %
|Taxable securities                            |  |                                 | 41,609    |          |      | 1,603  |  | 5.15 | %              |  |          | 30,977    |   |   | 1,115  |  | 4.81 | %
|Non-taxable securities (2)                    |  |                                 | 17,144    |          |      | 782    |  | 6.10 | %              |  |          | 9,865     |   |   | 447    |  | 6.06 | %
|FHLB Stock                                    |  |                                 | 7,220     |          |      | 30     |  | 0.56 | %              |  |          | 6,055     |   |   |       |  | 0.00 | %
|Overnight deposits with other banks and other |  |                                 | 6,760     |          |      | 285    |  | 5.64 | %              |  |          | 3,005     |   |   | 123    |  | 5.47 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest earning assets                 |  |                                 | 1,601,726 |          |      | 98,232 |  | 8.20 | %              |  |          | 1,176,157 |   |   | 68,524 |  | 7.79 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Non-interest earning assets                   |  |                                 | 215,714   |          |      |        |  |      |                |  |          | 107,694   |   |   |        |  |      |  
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total assets                                  |  | $                               | 1,817,440 |          |      |        |  |      |                |  | $        | 1,283,851 |   |   |        |  |      |  
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Liabilities                                   |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Interest bearing demand deposits              |  | $                               | 126,273   |          | $    | 759    |  | 0.80 | %              |  | $        | 88,291    |   | $ | 482    |  | 0.73 | %
|Savings and MMDA deposits                     |  |                                 | 480,336   |          |      | 11,233 |  | 3.13 | %              |  |          | 342,342   |   |   | 7,175  |  | 2.80 | %
|Time deposits                                 |  |                                 | 487,059   |          |      | 17,816 |  | 4.89 | %              |  |          | 368,025   |   |   | 11,211 |  | 4.07 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest bearing deposits               |  |                                 | 1,093,668 |          |      | 29,808 |  | 3.64 | %              |  |          | 798,658   |   |   | 18,868 |  | 3.16 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Overnight borrowings                          |  |                                 | 34,743    |          |      | 1,458  |  | 5.61 | %              |  |          | 43,544    |   |   | 1,668  |  | 5.12 | %
|Junior subordinated debt                      |  |                                 | 35,197    |          |      | 2,002  |  | 7.60 | %              |  |          | 17,584    |   |   | 1,111  |  | 8.45 | %
|Other borrowings                              |  |                                 | 85,325    |          |      | 3,474  |  | 5.44 | %              |  |          | 60,745    |   |   | 2,278  |  | 5.01 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest bearing liabilities            |  |                                 | 1,248,933 |          |      | 36,742 |  | 3.93 | %              |  |          | 920,531   |   |   | 23,925 |  | 3.47 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Non-interest bearing demand deposits          |  |                                 | 308,341   |          |      |        |  |      |                |  |          | 213,184   |   |   |        |  |      |  
|Other non-interest bearing liabilities        |  |                                 | 18,522    |          |      |        |  |      |                |  |          | 9,548     |   |   |        |  |      |  
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total liabilities                             |  |                                 | 1,575,796 |          |      |        |  |      |                |  |          | 1,143,263 |   |   |        |  |      |  
|Stockholders Equity                          |  |                                 | 241,644   |          |      |        |  |      |                |  |          | 140,588   |   |   |        |  |      |  
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total liabilities and stockholders equity    |  | $                               | 1,817,440 |          |      |        |  |      |                |  | $        | 1,283,851 |   |   |        |  |      |  
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Net interest income and spread                |  |                                 |           |          | $    | 61,490 |  | 4.27 | %              |  |          |           |   | $ | 44,599 |  | 4.32 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Net interest margin to average earning assets |  |                                 |           |          |      |        |  | 5.13 | %              |  |          |           |   |   |        |  | 5.07 | %
|                                              |  |                                 |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  



|(1) | Includes loans held for sale and non-accrual loans.
|--- | ---------------------------------------------------



|(2) | Tax-exempt securities income has been presented using a tax equivalent basis and an assumed tax rate of 34%.
|--- | ------------------------------------------------------------------------------------------------------------



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The following table sets forth a summary of changes in the components of net interest income during the nine months
ended September 30, 2007 as compared to the similar period of 2006 due to the changes in average interest earning assets and interest bearing liabilities and the resultant changes in interest income and interest expense:



|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|------------------------------------------------------------- | ------ | ------------------------------------------------------------ | ------ | ---- |  | - | ----- | - |  | - | ------ | -
|                                                              |        | Nine months ended September 30,2007 compared to 2006         |       
|($ in thousands)                                              |        | Increase (decrease) in net interestincome due to changes in: |       
|                                                              | Volume |                                                              |        | Rate |  |   | Total |  
|Interest earning assets                                       |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Loans (1)                                                     |        | $                                                            | 23,887 |      |  | $ | 4,806 |   |  | $ | 28,693 |  
|Securities (2)                                                |        |                                                              | 685    |      |  |   | 138   |   |  |   | 823    |  
|Overnight deposits with other banks, and other and FHLB stock |        |                                                              | 67     |      |  |   | 125   |   |  |   | 192    |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total interest earning assets                                 |        | $                                                            | 24,639 |      |  | $ | 5,069 |   |  | $ | 29,708 |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Interest bearing liabilities                                  |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Interest bearing demand deposits                              |        | $                                                            | 208    |      |  | $ | 69    |   |  | $ | 277    |  
|Savings deposits                                              |        |                                                              | 2,890  |      |  |   | 1,168 |   |  |   | 4,058  |  
|Time deposits                                                 |        |                                                              | 3,624  |      |  |   | 2,981 |   |  |   | 6,605  |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total interest bearing deposits                               |        |                                                              | 6,722  |      |  |   | 4,218 |   |  |   | 10,940 |  
|Overnight borrowings                                          |        |                                                              | (337   | )    |  |   | 127   |   |  |   | (210   | )
|Junior subordinated debt                                      |        |                                                              | 1,113  |      |  |   | (222  | ) |  |   | 891    |  
|Other borrowings                                              |        |                                                              | 921    |      |  |   | 275   |   |  |   | 1,196  |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total interest bearing liabilities                            |        |                                                              | 8,419  |      |  |   | 4,398 |   |  |   | 12,817 |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  
|Total increase in net interest income                         |        | $                                                            | 16,220 |      |  | $ | 671   |   |  | $ | 16,891 |  
|                                                              |        |                                                              |        |      |  |   |       |   |  |   |        |  



|(1) | Includes loans held for sale and non-accrual loans.
|--- | ---------------------------------------------------



|(2) | Tax-exempt securities income has been presented using a tax equivalent basis and an assumed tax rate of 34%.
|--- | ------------------------------------------------------------------------------------------------------------

The following table summarizes the repricing in the loan portfolio as of September 30, 2007 and December 31, 2006. The adjustable and variable rate loans are
tied to Prime or another market index. Adjustable rate loans do not reprice immediately with market changes while variable rate loans adjust within three months or immediately with market changes.



|                 |  |                   |   |  |                  |  
|---------------- |  | ----------------- | - |  | ---------------- | -
|                 |  | September 30,2007 |   |  | December 31,2006 |  
|Adjustable Rates |  | 26                | % |  | 36               | %
|Variable Rates   |  | 47                | % |  | 35               | %
|Fixed Rates      |  | 27                | % |  | 29               | %

The change in the mix of the loan portfolio repricing is principally due to the portfolio acquired from FWB.

Provision for Credit Losses

During the three and nine
months ended September 30, 2007, the Company recognized a provision for credit losses of $1.3 million and $3.0 million, respectively. This represents 0.29% and 0.26% of average gross loans on an annualized basis for the three and nine months
ended September 30, 2007, respectively. The provision for credit losses for the third quarter of 2006 was $3.7 million, or 1.23% of average loans on an annualized basis. For the nine months ended September 30, 2006 the provision was $5.2
million, or 0.61% of average gross loans on an annualized basis. The annualized net charge-offs were 0.47% and 0.91% of average gross loans for the three months ended September 30, 2007 and 2006, respectively. For the nine months ended
September 30, 2007 and



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2006, annualized net charge-offs were 0.38% and 0.73%, respectively. Included in net charge-offs for the third quarter was a partial charge-off of $1.6
million related to a single relationship involving a wood products manufacturing loan relationship. This same relationship had a partial charge-off in the second quarter of $1.5 million. The net charge-offs for the nine months ended
September 30, 2006 included $4.8 million related to one relationship. Of this amount, $2.4 million was recognized in the three months ended September 30, 2006.

The provision is determined based on a model which considers, among other things, specific loan risk characteristics in the portfolio and internal loan risk rating classifications. Management regularly evaluates the
level of the allowance for credit losses for adequacy by considering changes in the nature of the loan portfolio, portfolio composition, overall portfolio quality, industry concentrations, delinquency trends, current economic factors and the
estimated impact of current economic conditions that may affect a borrowers ability to pay. Management continually monitors the economic conditions of the markets in which it currently operates, which include mainly Eastern and Central
Washington, Northern Idaho and Utah. This information is used in the analysis of its provision for credit losses. Management also considers general economic conditions in the analysis. The provision for credit losses is a significant estimate and
the use of different assumptions could produce different results.

Non-interest Income

Non-interest income for the three months ended September 30, 2007 was $4.5 million as compared to $2.8 million for the same period of 2006, an increase of $1.7 million or 61%. This increase consists of the
following components:



| |  |  | Fees and service charges on deposits increased $1.1 million, or 76%. Of this change, approximately $972,000 or 87% was related to an increase in fees and service
charges related to FWB deposits. There was an additional increase of $162,000 related to fees on analyzed accounts which was a new product introduced in mid-2006.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fees on mortgage loan sales increased $488,000 or 108% due to increases in staffing in the residential mortgage teams and FWB operations.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other non-interest income increased $77,000, or 9%. The change is related to overall increased activity and the following items:
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | Bankcard revenues increased $118,000 related to a portfolio acquired through FWB.
| | - |  | ---------------------------------------------------------------------------------



| |  |  | Bank owned life insurance increased $98,000 due mainly to FWB acquired policies.
| | - |  | --------------------------------------------------------------------------------



| |  |  | Foreclosed real estate gains increased $77,000 primarily related to a gain on a property with no carrying value.
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | These items were offset by a decline in asset sale income of $358,000 related mainly to a gain of $462,000 on the sale of a government guaranteed loan in the three
months ended September 30, 2006.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-interest income for the nine months ended September 30, 2007 was $11.5 million, an
increase of $4.8 million or 72% over the same period of 2006. The following items contributed to this change:



| |  |  | Fees and service charges on deposits increased $2.5 million, or 61%. The fees and service charges in the Utah market contributed $1.9 million to this increase which
is due to the acquisition of FWB. Additionally, service charges on analyzed accounts increased by $361,000.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fees on mortgage loan sales increased $1.1 million, or 101%, related mainly to increases in staffing in the residential mortgage teams and FWB operations.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other non-interest income increased $1.2 million, or 79%. The following items contributed to this change:
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Bank-owned life insurance revenue increased $378,000 related partially to acquired policies from FWB.
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | Bankcard fee income increased $314,000 related principally to an acquired credit card portfolio from FWB.
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | Merchant fee income increased $215,000 related to operations at FWB and enhanced product offerings launched in 2006.
| | - |  | --------------------------------------------------------------------------------------------------------------------



| |  |  | Foreclosed asset sale income increased $200,000, related mainly to the sale of a foreclosed property in the first quarter of 2007 which resulted in a gain of
$166,000 and gains recorded in the third quarter as discussed above.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | Loan servicing fees increased $124,000 related to the acquired mortgage servicing portfolio from FWB. This portfolio was sold prior to June 30, 2007 without a
gain or loss recorded.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Asset sale income decreased $132,000. During 2006, there was a gain recorded on the sale of a government guaranteed loan that resulted in income of $462,000 and a
gain on a sale of mortgage servicing rights of $237,000. That was offset by a write-down of $473,000 for the reclassification of certain buildings to held for sale and impairment taken on another building. During 2007, the sale of an occupied
financial center which is being relocated resulted in a gain of $319,000 which was partially offset by the write-down of a vacant building of $219,000.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-interest Expense

Non-interest expense for the three months ended September 30, 2007 was approximately $18.8
million, an increase of $5.5 million, or 42%, over the similar period of 2006. The increase from the prior year is related mainly to higher salaries and employee benefits expense of $3.3 million. This increase was caused primarily by the increase in
the number of full-time equivalent positions to 692 at September 30, 2007 as compared to 491 at September 30, 2006. This is principally attributable to the FWB acquisition and the opening of three financial centers and two loan production
offices since the same period of the prior year and the related increases in salaries, incentives, taxes and insurance. Offsetting these costs is an increase in the deferred direct loan origination costs of $661,000.

Non-interest expense for the nine months ended September 30, 2007 was approximately $51.5 million, an increase of $13.9 million or 37% over the similar period of
2006 related mainly to higher salaries and employee benefits of $8.8 million. This increase was principally related to the higher number of full-time equivalent employees attributable to the Far West Bancorporation acquisition on April 1, 2007,
the Columbia Trust Bancorp acquisition on March 16, 2006 and the opening of three new financial centers and two loan production offices. During the first quarter of 2007, there were severance benefits of $364,000 paid to employees terminated in
connection with the Companys expense reduction initiative.

Total occupancy and equipment expense increased by $1.1 million and $3.0 million over the
three and nine months ended September 30, 2006, respectively. The increase is principally attributed to costs associated with 18 acquired facilities from Far West Bancorporation and new, remodeled or relocated existing financial centers.
Additionally, vendor service contracts have increased with the increased number of employees and account growth. Amortization of intangible assets increased $769,000 over the similar quarter of the prior year related to the amortization of the core
deposit intangible asset recorded related to the FWB acquisition. The core deposit intangible is being amortized on an accelerated basis and approximately $2.4 million is expected to be expensed during 2007. Offsetting this expense is the accounting
accretion and amortization of FWB loans and deposits acquired which resulted in an increase of approximately $150,000 in net interest income for the nine months ended September 30, 2007.

Provision for Income Tax

The effective tax rates for the nine months
ended September 30, 2007 and 2006 were 33.9% and 35.9%, respectively. The decrease in the effective tax rate is a result of recaptured tax credits during 2006 which are continuing in 2007 with less of an impact and adjustments related to the
Companys 2006 federal tax return which was filed during the third quarter of 2007. These adjustments were mainly the result of unanticipated tax credits received on an investment. These declines in the tax rate are slightly offset by higher
state taxes in Utah for 2007.

Non-performing Assets

Non-performing assets include loans that are 90 or more days past due or on non-accrual status and real estate and other loan collateral acquired through foreclosure and repossession. Loans 90 days or more past due may remain on an accrual
basis if adequately collateralized and in the process of collection. For non-accrual loans, income may be recognized on a cash basis if the borrower demonstrates an ability to continue payments of principal and interest in accordance with the loan
agreement. Interest previously accrued but not collected is reversed and charged against income at the time a loan is placed on non-accrual status.



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The following table summarizes the non-performing assets at September 30, 2007, December 31, 2006 and
September 30, 2006.



|                                                        |  |                   |        |   |                  |   |        |                   |  |   |        |  
|------------------------------------------------------- |  | ----------------- | ------ | - | ---------------- | - | ------ | ----------------- |  | - | ------ | -
|($ in thousands)                                        |  | September 30,2007 |        |   | December 31,2006 |   |        | September 30,2006 | 
|                                                        |  |                   |        |   |                  |   |        |                   |  |   |        |  
|Accruing loans over 90 days past due                    |  | $                 | 0      |   |                  | $ | 0      |                   |  | $ | 549    |  
|Non-accrual loans                                       |  |                   | 19,846 |   |                  |   | 11,500 |                   |  |   | 9,255  |  
|                                                        |  |                   |        |   |                  |   |        |                   |  |   |        |  
|Total non-performing loans                              |  | $                 | 19,846 |   |                  | $ | 11,500 |                   |  | $ | 9,804  |  
|Foreclosed real estate and other foreclosed assets      |  |                   | 298    |   |                  |   | 644    |                   |  |   | 573    |  
|                                                        |  |                   |        |   |                  |   |        |                   |  |   |        |  
|Total non-performing assets                             |  | $                 | 20,144 |   |                  | $ | 12,144 |                   |  | $ | 10,377 |  
|                                                        |  |                   |        |   |                  |   |        |                   |  |   |        |  
|Non-performing loans to total gross loans (1)           |  |                   | 1.15   | % |                  |   | 0.94   | %                 |  |   | 0.83   | %
|Non-performing assets to total assets (1)               |  |                   | 0.97   | % |                  |   | 0.86   | %                 |  |   | 0.76   | %
|Allowance for loan loss to total gross loans            |  |                   | 1.22   | % |                  |   | 1.24   | %                 |  |   | 1.25   | %
|Allowance for credit losses to total gross loans        |  |                   | 1.30   | % |                  |   | 1.31   | %                 |  |   | 1.31   | %
|Allowance for credit losses to non-performing loans (1) |  |                   | 113.00 | % |                  |   | 139.28 | %                 |  |   | 157.86 | %



|(1) | Amounts and ratios shown net of government guarantees on non-performing loans of $1.1 million, $4.0 million and $1.8 million, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

Total non-performing assets were $20.1 million or 0.97% of total assets at September 30, 2007 as compared to $12.1 million or 0.86% of total assets at
December 31, 2006. The increase in non-performing assets from year-end was principally due to the placement on non-accrual status of loans totaling $10.5 million related to a single-relationship wood product manufacturing company and the FWB
acquisition which contributed $4.6 million to the non-performing loans total. These increases were partially offset by the pay-off of a large non-performing loan relationship totaling $6.2 million and a pay-down of $1.3 million and partial
charge-off of $1.6 million related to the wood products manufacturing company loans during the third quarter.

At September 30, 2007 and
December 31, 2006, the Company had approximately $27.2 million or 1.6% of total loans and $19.3 million or 1.6% of total loans, respectively, of loans that were not classified as non-performing but for which known information about the
borrowers financial condition caused management to have concern about the ability of the borrowers to comply with the repayment terms of the loans if the weaknesses were uncorrected.

Investment Portfolio

The Companys investment portfolio
increased from $39.5 million at December 31, 2006 to $70.7 million at September 30, 2007. The increase in the investment portfolio is mainly related to acquired investments from the FWB merger of $30.2 million. All securities are
classified as available-forsale and recorded at fair value. Management believes that this classification provides greater flexibility to respond to interest rate changes and liquidity needs.

Loan Portfolio

Total gross loans increased $504.7 million during the
nine months ended September 30, 2007, including the acquired FWB portfolio of $350.6 million. Organic loan growth, which excludes acquired loans, was $154.0 million, or 17% on an annualized basis for the nine months ended September 30,
2007. Approximately $43.3 million of the third quarter organic loan growth was generated by the Banks loan production offices in South Jordan and Salt Lake City, Utah. The percentage of commercial real estate loans declined slightly to 48% of
the total portfolio at September 30, 2007 compared to 53% at December 31, 2006. The commercial real estate loans include commercial construction loans. At September 30, 2007, the Banks largest 20 credit relationships consisted
of loans and loan commitments ranging from $7.6 million to $25.0 million, with an aggregate total credit exposure of $296.2 million and outstanding balances of $205.1 million.

A substantial majority of the Banks loans are extended to real estate developers and building contractors, small and medium-sized businesses, agricultural businesses, professionals and consumers in the
Banks principal market area and are secured by residential and commercial real estate, crops, business inventory and



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receivables. Real estate values in the Banks principal markets remained relatively stable. Prices for agricultural commodities are relatively stable.
Significant, long-term deterioration in any of these underlying factors could affect the collectability of a material portion of the Banks loans outstanding. Each of these factors is also considered in the analysis of assessing the adequacy of
the allowance for credit losses.

The major classifications of loans at September 30, 2007 and December 31, 2006 can be found in Note 3 to the
Consolidated Financial Statements.

Allowance for Loan Losses and Reserve for Unfunded Commitments

At September 30, 2007, the Banks allowance for loan losses was $21.0 million or 1.22% of total gross loans. This compares to $15.1 million or 1.24% at
December 31, 2006. At September 30, 2007 the Banks reserve for unfunded commitments was $1.4 million as compared to $881,000 at December 31, 2006. The allowance for loan losses and the reserve for unfunded commitments are
increased by charges to income through the provision for credit losses and the allowance related to acquired loans, and decreased by charge-offs, net of recoveries. Loans are charged to the allowance when management believes the collection of
principal is unlikely.

In assessing the adequacy of the allowance for loan losses and reserve for unfunded commitments, management objectively analyzes
recent historical loan loss experience and projects future allowance requirements. The analysis of credits provides an inherent loss rate by risk ratings. Each category of risk rating is assigned a projected loss value based upon general historic
valuations and current management expectations for future losses. Additionally, management utilizes an analysis of impaired loans to determine required specific reserves. Management also compares allowance requirements with current non-performing
loan conditions and historical loss statistics. Finally, management utilizes judgment based on individual loan evaluations, delay in receipt of customer financial information, related credit facilities, volatility of economic and customer specific
conditions or concentrations, and delinquency rates in assessing the allowance for loan losses.

Management believes that the allowance for loan losses and
reserve for unfunded commitments are adequate at September 30, 2007. Management uses currently available information to recognize losses on loans and foreclosed real estate and other foreclosed assets; however, future additions to the
allowances may be necessary based on changes in economic conditions and borrower or loan characteristics.

Deposits, Borrowings and Other Liabilities

To attract and retain deposits, the Bank offers a wide variety of account types and maturities, both interest bearing and non-interest bearing. Some
account types have additional products bundled with them, such as free checks and free or discounted access to other bank services. Interest rates on accounts are determined by management based on the Banks funding needs and market conditions
and can change as frequently as daily.

Total deposits grew $473.3 million for the first nine months of 2007, ending the period at $1.6 billion, including
acquired deposits of FWB of $383.4 million. Non-interest bearing deposits were 23% of total deposits as of September 30, 2007 as compared to 21% at December 31, 2006. This is a result of 37% of the acquired FWB deposits being in the
non-interest bearing category offset by the organic decrease in non-interest bearing deposits.

Federal Home Loan Bank of Seattle (FHLB) advances and other
borrowings increased approximately $25.1 million during the nine months ended September 30, 2007. The increase in FHLB advances and other borrowings is mainly a result of the organic loan growth (excluding acquired loans) exceeding deposit
growth. The Company issued $20.6 million of junior subordinated debt on March 22, 2007 to provide a portion of the cash consideration for the merger with Far West Bancorporation. The junior subordinated debt will bear a fixed rate of interest
at 6.53% for the first five years and thereafter will bear interest at a rate equal to the three month LIBOR plus 1.63%.

Other liabilities have increased
$10.2 million as compared to the balance of $9.6 million at December 31, 2006. The increase is related mainly to purchases of investments which had not yet settled of $4.2 million, acquired salary continuation agreements from FWB of $3.0
million and increased accrued incentives by $1.8 million.

Liquidity and Capital Resources

Management believes that the Companys cash flow will be sufficient to support its existing operations for the foreseeable future. Cash flows from operations
generally contribute significantly to liquidity, as do proceeds from



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issuances of junior subordinated debt and increasing customer deposits. In the nine months ended September 30, 2007, the Company had $23.9 million in
cash provided by operating activities principally due to the net income for the first nine months and balance sheet changes of assets and liabilities, excluding the FWB acquired balances. This compared to $9.0 million provided by operating
activities in the nine months ended September 30, 2006. Additionally, the Company generated $134.5 million and $39.9 million in net cash from financing activities for the nine months ended September 30, 2007 and 2006, respectively.

The Banks primary source of funds is deposits. In addition, the Bank has the ability to borrow from various sources, including the FHLB and
correspondent banks that provide Fed Funds lines. At September 30, 2007, the Bank had $208.2 million of available credit from these sources as compared to $244.2 million at December 31, 2006.

The Parent Company received a dividend of $10.0 million from the Bank during the first quarter of 2007, to provide a portion of the funding for the acquisition of FWBC,
which was completed on April 1, 2007. Additionally, the Parent Company issued junior subordinated debt, net of purchased securities of the Trust of $619,000 (refer to Note 5 under Item 1 of this Report). The Parent Company declared $0.11
per share of dividends on its common stock during the nine months ended September 30, 2007. On October 22, 2007, the Parent Company declared a dividend of $0.04 per common share. There were no repurchases of common stock during the nine
months ended September 30, 2007 or 2006, other than 1,532 shares tendered on payment for the exercise of stock options during the first quarter of 2007.

The Parent Companys ability to service its debt, is generally dependent upon the availability of dividends from the Bank. The payment of dividends by the Bank is subject to limitations imposed by law and governmental regulations. In
determining whether the Bank or the Company will declare a dividend, the respective boards of directors consider factors including financial condition, anticipated growth, acquisition opportunities and applicable laws, regulations and regulatory
capital requirements. Another potential source of cash during the nine months ended September 30, 2007 was a line of credit of $5.0 million that the Parent Company has with an unaffiliated financial institution. The line was not used during the
first nine months of 2007. Subsequent to September 30, 2007, this borrowing facility was increased to $20.0 million.

The Companys total
stockholders equity increased to $288.2 million at September 30, 2007 as compared to $152.0 million at December 31, 2006. This increase is mainly related to stock issued in the acquisition of FWBC of $124.4 million and retained net
income of $10.4 million. The Companys total stockholders equity to total assets ratio increased to 13.83% as of September 30, 2007 from 10.73% as of December 31, 2006. As of September 30, 2007, the Companys tangible
shareholders equity to ending tangible assets ratio decreased to 7.28% as compared to 8.10% from December 31, 2006. At September 30, 2007 and December 31, 2006, the Company held cash and cash equivalent assets of $52.3 million
and $55.7 million, respectively.

The Company and the Bank are subject to various regulatory capital requirements administered by the federal banking
agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Companys financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities and certain off-balance sheet
items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier I
capital to risk-weighted assets and of Tier I capital to average assets, as those terms are defined in the regulations. Management believes, as of September 30, 2007, that the Company and the Bank meet all capital adequacy requirements to which
they are subject.

As of September 30, 2007, the most recent notification from the Federal Deposit Insurance Company categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the following tables.
There are no conditions or events since the notification that management believes have changed the Banks category.



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The Companys and the Banks actual capital amounts and ratios as of September 30, 2007 are presented
in the table below:



|                                       |  |                                               |   |  |         |   |  |       |  
|-------------------------------------- |  | --------------------------------------------- | - |  | ------- | - |  | ----- | -
|Capital Ratio                          |  | RegulatoryStandardfor WellCapitalizedRating |   |  | Company |   |  | Bank  |  
|Tier 1 Capital to Average Total Assets |  | 6.00                                          | % |  | 9.49    | % |  | 9.46  | %
|Tier 1 Capital to Risk Weighted Assets |  | 9.00                                          | % |  | 9.37    | % |  | 9.34  | %
|Total Capital to Risk Weighted Assets  |  | 10.00                                         | % |  | 10.53   | % |  | 10.50 | %



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

In
managements opinion, there have been no material changes in reported market risks faced by the Company since the end of the most recent fiscal year. Based upon modeling using parallel interest rate changes of an increase or decrease in
rates of 100 basis points and 200 basis points over the next twelve months, the Companys net interest income is expected to increase moderately under rising interest rates and to decline moderately under falling interest rates. These
scenarios also include the assumptions that balances and current pricing spreads remain constant. The economic value of the Companys equity is also expected to increase with rising interest rates. Both of these interest rate risk measures
remain within the Companys policy limits as of September 30, 2007. Management also runs nonparallel interest rate scenarios and a most likely rate scenario to consider the impact of various interest rate changes in the yield curve
and the respective impact on net interest income to determine if any actions should be taken.

The changes to net interest income over the next twelve
months given the assumptions in the model are presented in the table below as of September 30, 2007 and December 31, 2006:



|                                |  |                                                       |   |  |                  |  
|------------------------------- |  | ----------------------------------------------------- | - |  | ---------------- | -
|                                |  | Percentage Change in NetInterest Income over 12Months |  
|Rate Scenario                   |  | September 30,2007                                     |   |  | December 31,2006 |  
|Rates increase 200 basis points |  | 4.77                                                  | % |  | 4.91             | %
|Rates increase 100 basis points |  | 2.42                                                  | % |  | 2.40             | %
|Rates decrease 100 basis points |  | -2.47                                                 | % |  | -3.12            | %
|Rates decrease 200 basis points |  | -4.97                                                 | % |  | -6.18            | %



|Item 4. | Controls and Procedures.
|------- | ------------------------

During the nine months ended
September 30, 2007, there were no changes in the Companys internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control over financial reporting.

The Company carried out an evaluation, under the supervision and with the participation of the Companys management, including the principal executive officer and
the principal financial officer, of the effectiveness of the design and operation of the disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as amended (Exchange Act). Based
upon that evaluation, the Companys principal executive officer and principal financial officer concluded that the Companys disclosure controls and procedures were effective, as of the end of the period covered by this report, in ensuring
that material information relating to AmericanWest Bancorporation, including its consolidated subsidiaries, required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the SECs rules and forms.



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Part II. Other Information



|Item 1. | Legal Proceedings
|------- | -----------------

Periodically and in the ordinary course of
business, various claims and lawsuits are brought against the Company or the Bank, such as claims to enforce liens, condemnation proceedings on properties in which the Bank held a security interest, claims involving the making and servicing of real
property loans, actions relating to employee claims and other issues incident to the business of the Company and the Bank. In the opinion of management, the ultimate liability, if any, resulting from such claims or lawsuits currently pending or
threatened will not have a material adverse effect on the financial position or results of operations of the Company.



|Item 1A. | Risk Factors
|-------- | ------------

The following discussion describes material changes
from the risk factors included in the Companys annual report on Form 10-K for the fiscal year ended December 31, 2006, and should be read in conjunction with the risk factors section of the Form 10-K and all other information contained in
this Form 10-Q and other reports filed by AmericanWest Bancorporation with the U.S. Securities and Exchange Commission.

Risk factors since
December 31, 2006, have changed materially related to the Utah expansion and the Far West Bancorporation merger consummated on April 1, 2007 and the growth of loan production offices located in South Jordan and Salt Lake City, Utah.

The greater Salt Lake City area and Utah economies each have grown rapidly during the past several years, and the failure of these economies to sustain
such growth in the future could affect the Companys ability to grow.

Salt Lake City, surrounding communities and other Utah communities served
by Far West Bank each have experienced significant economic growth in recent years, which has created a demand for the Companys loan and deposit products. Failure to sustain this growth or deterioration in local economic conditions could
result in, among other things, an increase in loan delinquencies, a decrease in property values, a change in housing turnover rate or a reduction in the level of bank deposits. Particularly, a weakening of the real estate or employment market in
Utah, which with the Far West Bank merger has become one of the Companys largest markets, could result in an increase in the number of borrowers who default on their loans and a reduction in the value of the collateral securing their loans.
These events could have an adverse effect on the Companys profitability and asset quality.



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

The
Company has a stock repurchase authorization for 250,000 common shares which was approved by the Board of Directors during 2006. This authorization does not have an expiration date. No shares were repurchased under this authorization during the nine
months ended September 30, 2007 or the year ended December 31, 2006.



|Item 3. | Defaults Upon Senior Securities
|------- | -------------------------------

Not applicable.



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

There is no
information to report.



|Item 5. | Other Information
|------- | -----------------

There is no other information to report.



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|Item 6. | Exhibits -
|------- | ----------



| | a. | Exhibits. The exhibits filed as part of this report are as follows:
| | -- | -------------------------------------------------------------------



|     |  |                                                                                                                                                                                                      
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     | 
|3.1  |  | Amended & Restated Articles of Incorporation of the registrant (filed as Exhibit 3.1 to the Registrants Current Report on Form 10-Q filed on May 9, 2007, and incorporated herein
by this reference)
|     | 
|3.2  |  | 2004 Amended and Restated By-Laws of the registrant (filed as Exhibit 3.2 to the Registrants Current Report on Form 10-Q filed on May 9, 2007, and incorporated herein by this
reference)           
|     | 
|31.1 |  | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+                                                                                          
|     | 
|31.2 |  | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+                                                                                          
|     | 
|32.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+                                               
|     | 
|32.2 |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+                                               



|+ | Denotes items filed herewith
|- | ----------------------------



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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on
Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on November 8, 2007.



AMERICANWEST BANCORPORATION/s/ Robert M. DaughertyRobert M. Daugherty, President and Chief Executive
Officer/s/ Patrick J. RusnakPatrick J. Rusnak, Executive Vice President and Chief
Operating Officer Principal Financial and Accounting Officer




29