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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 March 31, 2009

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 check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by a check mark whether the registrant
is large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule
12b-2 of the Act. (Check one):

Large Accelerated filer   ̈        Accelerated filer   ̈        Non-accelerated filer   ̈        Smaller reporting company  x

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 |  | 17,213,288 at May 11, 2009  









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AMERICANWEST BANCORPORATION



INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 31, 2009

Table of Contents



|        |  |                       |  |                                                                                          |  |     
|------- |  | --------------------- |  | ---------------------------------------------------------------------------------------- |  | ----
|        |  |                       |  |                                                                                          |  | Page
|Part I  |  | Financial Information |  |                                                                                         
|        |  |                       | 
|        |  | Item 1.               |  | Financial Statements                                                                     |  |     
|        |  |                       | 
|        |  |                       |  | Consolidated Statements of Condition as of March 31, 2009 and December 31, 2008          |  | 3   
|        |  |                       | 
|        |  |                       |  | Consolidated Statements of Operations for the Three Months Ended March 31, 2009 and 2008 |  | 4   
|        |  |                       | 
|        |  |                       |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2009 and 2008 |  | 5   
|        |  |                       | 
|        |  |                       |  | Notes to Consolidated Financial Statements                                               |  | 6   
|        |  |                       | 
|        |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 16  
|        |  |                       | 
|        |  | Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk                               |  | 28  
|        |  |                       | 
|        |  | Item 4.               |  | Controls and Procedures                                                                  |  | 29  
|        |  |                      
|Part II |  | Other Information     |  |                                                                                         
|        |  |                       | 
|        |  | Item 1.               |  | Legal Proceedings                                                                        |  | 30  
|        |  |                       | 
|        |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                              |  | 30  
|        |  |                       | 
|        |  | Item 3.               |  | Defaults Upon Senior Securities                                                          |  | 30  
|        |  |                       | 
|        |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                      |  | 30  
|        |  |                       | 
|        |  | Item 5.               |  | Other Information                                                                        |  | 30  
|        |  |                       | 
|        |  | Item 6.               |  | Exhibits                                                                                 |  | 30  
|        |  |                      
|        |  | Signatures            |  | 31                                                                                      



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AMERICANWEST BANCORPORATION



CONSOLIDATED STATEMENTS OF CONDITION

(unaudited)

(in thousands)



|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                                     |  | March 31,2009 |           |   | December 31,2008 |  
|ASSETS                                                                                                                                                               |  |               |           |   |                  |   |           |  
|Cash and due from banks                                                                                                                                              |  | $             | 55,129    |   |                  | $ | 40,927    |  
|Overnight interest bearing deposits with other banks                                                                                                                 |  |               | 14,430    |   |                  |   | 26,058    |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                                                            |  |               | 69,559    |   |                  |   | 66,985    |  
|Securities, available-for-sale at fair value                                                                                                                         |  |               | 60,360    |   |                  |   | 65,270    |  
|Loans, net of allowance for loan losses of $40,675 and $44,722, respectively                                                                                         |  |               | 1,519,507 |   |                  |   | 1,577,106 |  
|Loans, held for sale                                                                                                                                                 |  |               | 16,986    |   |                  |   | 12,265    |  
|Accrued interest receivable                                                                                                                                          |  |               | 7,620     |   |                  |   | 8,193     |  
|FHLB stock                                                                                                                                                           |  |               | 10,267    |   |                  |   | 8,286     |  
|Premises and equipment, net                                                                                                                                          |  |               | 39,921    |   |                  |   | 41,385    |  
|Foreclosed real estate and other foreclosed assets                                                                                                                   |  |               | 22,552    |   |                  |   | 15,781    |  
|Bank owned life insurance                                                                                                                                            |  |               | 30,443    |   |                  |   | 30,193    |  
|Goodwill                                                                                                                                                             |  |               | 18,852    |   |                  |   | 18,852    |  
|Intangible assets                                                                                                                                                    |  |               | 12,751    |   |                  |   | 13,467    |  
|Other assets                                                                                                                                                         |  |               | 17,279    |   |                  |   | 16,840    |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|TOTAL ASSETS                                                                                                                                                         |  | $             | 1,826,097 |   |                  | $ | 1,874,623 |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|LIABILITIES                                                                                                                                                          |  |               |           |   |                  |   |           |  
|Non-interest bearing demand deposits                                                                                                                                 |  | $             | 288,248   |   |                  | $ | 321,552   |  
|Interest bearing deposits:                                                                                                                                           |  |               |           |   |                  |   |           |  
|NOW, savings account and money market accounts                                                                                                                       |  |               | 574,229   |   |                  |   | 559,666   |  
|Time, $100,000 and over                                                                                                                                              |  |               | 281,999   |   |                  |   | 342,022   |  
|Other time                                                                                                                                                           |  |               | 393,545   |   |                  |   | 350,293   |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|TOTAL DEPOSITS                                                                                                                                                       |  |               | 1,538,021 |   |                  |   | 1,573,533 |  
|Federal Home Loan Bank advances                                                                                                                                      |  |               | 140,680   |   |                  |   | 139,668   |  
|Other borrowings and capital lease obligations                                                                                                                       |  |               | 3,130     |   |                  |   | 3,294     |  
|Junior subordinated debt                                                                                                                                             |  |               | 41,239    |   |                  |   | 41,239    |  
|Accrued interest payable                                                                                                                                             |  |               | 7,806     |   |                  |   | 7,677     |  
|Other liabilities                                                                                                                                                    |  |               | 19,836    |   |                  |   | 19,424    |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|TOTAL LIABILITIES                                                                                                                                                    |  |               | 1,750,712 |   |                  |   | 1,784,835 |  
|STOCKHOLDERS EQUITY                                                                                                                                                 |  |               |           |   |                  |   |           |  
|Preferred stock, no par, shares authorized 5 million                                                                                                                 |  |               |          |   |                  |   |          |  
|Common stock, no par, shares authorized 50 million; 17,251 issued and 17,213 oustanding at March 31, 2009; 17,259 issued and 17,213
outstanding at December 31, 2008 |  |               | 253,399   |   |                  |   | 253,450   |  
|Accumulated deficit                                                                                                                                                  |  |               | (178,299  | ) |                  |   | (163,764  | )
|Accumulated other comprehensive income, net of tax                                                                                                                   |  |               | 285       |   |                  |   | 102       |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                           |  |               | 75,385    |   |                  |   | 89,788    |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                           |  | $             | 1,826,097 |   |                  | $ | 1,874,623 |  
|                                                                                                                                                                     |  |               |           |   |                  |   |           |  

The accompanying notes are an integral part of these statements.



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AMERICANWEST BANCORPORATION



CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(in thousands, except per share
amounts)



|                                                           |  |                              |         |   |      |   |         |  
|---------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                           |  | Three Months Ended March 31, |        
|                                                           |  | 2009                         |         |   | 2008 |  
|Interest Income                                            |  |                              |         |   |      |   |         |  
|Interest and fees on loans                                 |  | $                            | 22,464  |   |      | $ | 32,784  |  
|Interest on securities                                     |  |                              | 752     |   |      |   | 827     |  
|Other interest income                                      |  |                              | 35      |   |      |   | 59      |  
|                                                           |  |                              |         |   |      |   |         |  
|Total Interest Income                                      |  |                              | 23,251  |   |      |   | 33,670  |  
|                                                           |  |                              |         |   |      |   |         |  
|Interest Expense                                           |  |                              |         |   |      |   |         |  
|Interest on deposits                                       |  |                              | 7,557   |   |      |   | 9,052   |  
|Interest on borrowings                                     |  |                              | 1,757   |   |      |   | 3,331   |  
|                                                           |  |                              |         |   |      |   |         |  
|Total Interest Expense                                     |  |                              | 9,314   |   |      |   | 12,383  |  
|                                                           |  |                              |         |   |      |   |         |  
|Net Interest Income                                        |  |                              | 13,937  |   |      |   | 21,287  |  
|Loan loss provision                                        |  |                              | 13,680  |   |      |   | 12,800  |  
|                                                           |  |                              |         |   |      |   |         |  
|Net Interest Income After Loan Loss Provision              |  |                              | 257     |   |      |   | 8,487   |  
|                                                           |  |                              |         |   |      |   |         |  
|Non-interest Income                                        |  |                              |         |   |      |   |         |  
|Fees and service charges on deposits                       |  |                              | 2,208   |   |      |   | 2,553   |  
|Fees on mortgage loan sales, net                           |  |                              | 1,924   |   |      |   | 862     |  
|Other                                                      |  |                              | 1,668   |   |      |   | 805     |  
|                                                           |  |                              |         |   |      |   |         |  
|Total Non-interest Income                                  |  |                              | 5,800   |   |      |   | 4,220   |  
|                                                           |  |                              |         |   |      |   |         |  
|Non-interest Expense                                       |  |                              |         |   |      |   |         |  
|Salaries and employee benefits                             |  |                              | 8,893   |   |      |   | 10,786  |  
|FDIC assessment                                            |  |                              | 3,475   |   |      |   | 52      |  
|Equipment expense                                          |  |                              | 1,992   |   |      |   | 1,845   |  
|Occupancy expense, net                                     |  |                              | 1,954   |   |      |   | 1,855   |  
|Amortization of intangible assets                          |  |                              | 716     |   |      |   | 885     |  
|Foreclosed real estate and other foreclosed assets expense |  |                              | 287     |   |      |   | 63      |  
|Impairment of premises and securities                      |  |                              | 59      |   |      |   |        |  
|State business and occupation tax                          |  |                              | 20      |   |      |   | 288     |  
|Impairment of goodwill                                     |  |                              |        |   |      |   | 27,000  |  
|Other                                                      |  |                              | 3,196   |   |      |   | 3,009   |  
|                                                           |  |                              |         |   |      |   |         |  
|Total Non-interest Expense                                 |  |                              | 20,592  |   |      |   | 45,783  |  
|                                                           |  |                              |         |   |      |   |         |  
|Loss Before Income Tax Benefit                             |  |                              | (14,535 | ) |      |   | (33,076 | )
|Income Tax Benefit                                         |  |                              |        |   |      |   | (1,519  | )
|                                                           |  |                              |         |   |      |   |         |  
|Net Loss                                                   |  | $                            | (14,535 | ) |      | $ | (31,557 | )
|                                                           |  |                              |         |   |      |   |         |  
|Basic loss per common share                                |  | $                            | (0.84   | ) |      | $ | (1.83   | )
|Diluted loss per common share                              |  | $                            | (0.84   | ) |      | $ | (1.83   | )
|Basic weighted average shares outstanding                  |  |                              | 17,213  |   |      |   | 17,206  |  
|Diluted weighted average shares outstanding                |  |                              | 17,213  |   |      |   | 17,206  |  

The accompanying notes are an integral part of these statements.



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AMERICANWEST BANCORPORATION



CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)



|                                                                                                                        |  |                              |          |   |      |   |          |  
|----------------------------------------------------------------------------------------------------------------------- |  | ---------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                                                        |  | Three Months Ended March 31, |         
|                                                                                                                        |  | 2009                         |          |   | 2008 |  
|CASH FLOWS USED IN OPERATING ACTIVITIES                                                                                 |  |                              |          |   |      |   |          |  
|Net Loss                                                                                                                |  | $                            | (14,535  | ) |      | $ | (31,557  | )
|Adjustments to reconcile net loss to net cash provided by operating activities:                                         |  |                              |          |   |      |   |          |  
|Provisions for loan losses, unfunded commitments and foreclosed real estate and other foreclosed assets                 |  |                              | 13,806   |   |      |   | 12,698   |  
|Depreciation and amortization                                                                                           |  |                              | 1,840    |   |      |   | 1,954    |  
|Compensatory stock options and restricted stock expense, net of forfeitures                                             |  |                              | (51      | ) |      |   | 111      |  
|Impairment of goodwill                                                                                                  |  |                              |         |   |      |   | 27,000   |  
|Loss/(Gain) on sale of other premises and equipment, investments and foreclosed real estate and other foreclosed assets |  |                              | 66       |   |      |   | (4       | )
|Loss on impairment of premises and securities                                                                           |  |                              | 59       |   |      |   |         |  
|Stock dividends received                                                                                                |  |                              | (26      | ) |      |   | (22      | )
|Originations of loans held for sale                                                                                     |  |                              | (111,700 | ) |      |   | (47,698  | )
|Proceeds from loans sold                                                                                                |  |                              | 106,979  |   |      |   | 37,656   |  
|Changes in assets and liabilities:                                                                                      |  |                              |          |   |      |   |          |  
|Accrued interest receivable                                                                                             |  |                              | 573      |   |      |   | 1,244    |  
|Bank owned life insurance                                                                                               |  |                              | (250     | ) |      |   | (277     | )
|Other assets                                                                                                            |  |                              | (537     | ) |      |   | (2,009   | )
|Accrued interest payable                                                                                                |  |                              | 129      |   |      |   | 347      |  
|Other liabilities                                                                                                       |  |                              | 412      |   |      |   | (535     | )
|                                                                                                                        |  |                              |          |   |      |   |          |  
|NET CASH USED IN OPERATING ACTIVITIES                                                                                   |  |                              | (3,235   | ) |      |   | (1,092   | )
|                                                                                                                        |  |                              |          |   |      |   |          |  
|CASH FLOWS PROVIDED BY /(USED IN) INVESTING ACTIVITIES                                                                  |  |                              |          |   |      |   |          |  
|Securities available-for-sale:                                                                                          |  |                              |          |   |      |   |          |  
|Maturities, calls, sales and principal payments                                                                         |  |                              | 5,217    |   |      |   | 8,099    |  
|Purchases                                                                                                               |  |                              |         |   |      |   | (18,192  | )
|Purchases of Federal Home Loan Bank stock                                                                               |  |                              | (1,981   | ) |      |   | (2,346   | )
|Net decrease/(increase) in loans                                                                                        |  |                              | 32,353   |   |      |   | (1,086   | )
|Purchases of premises and equipment                                                                                     |  |                              | (196     | ) |      |   | (2,706   | )
|Proceeds from sale of premises and equipment                                                                            |  |                              | 477      |   |      |   | 549      |  
|Proceeds from sale of foreclosed real estate and other foreclosed assets                                                |  |                              | 4,603    |   |      |   | 1,094    |  
|                                                                                                                        |  |                              |          |   |      |   |          |  
|NET CASH PROVIDED BY/(USED IN) INVESTING ACTIVITIES                                                                     |  |                              | 40,473   |   |      |   | (14,588  | )
|                                                                                                                        |  |                              |          |   |      |   |          |  
|CASH FLOWS (USED IN)/PROVIDED BY FINANCING ACTIVITIES                                                                   |  |                              |          |   |      |   |          |  
|Net (decrease)/increase in deposits                                                                                     |  |                              | (35,512  | ) |      |   | 52,578   |  
|Proceeds from Federal Home Loan Bank advances                                                                           |  |                              |         |   |      |   | 270,000  |  
|Repayments of Federal Home Loan Bank advances and other borrowing activity                                              |  |                              | 848      |   |      |   | (302,635 | )
|Proceeds from issuances of common stock under equity incentive plans                                                    |  |                              |         |   |      |   | 58       |  
|Payment of cash dividend                                                                                                |  |                              |         |   |      |   | (688     | )
|                                                                                                                        |  |                              |          |   |      |   |          |  
|NET CASH (USED IN)/PROVIDED BY FINANCING ACTIVITIES                                                                     |  |                              | (34,664  | ) |      |   | 19,313   |  
|                                                                                                                        |  |                              |          |   |      |   |          |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                                 |  |                              | 2,574    |   |      |   | 3,633    |  
|Cash and cash equivalents, beginning of year                                                                            |  |                              | 66,985   |   |      |   | 47,089   |  
|                                                                                                                        |  |                              |          |   |      |   |          |  
|Cash and cash equivalents, end of period                                                                                |  | $                            | 69,559   |   |      | $ | 50,722   |  
|                                                                                                                        |  |                              |          |   |      |   |          |  
|Supplemental Disclosures:                                                                                               |  |                              |          |   |      |   |          |  
|Cash paid during the period for:                                                                                        |  |                              |          |   |      |   |          |  
|Interest                                                                                                                |  | $                            | 9,185    |   |      | $ | 12,036   |  
|Income taxes                                                                                                            |  | $                            |         |   |      | $ |         |  
|Non-cash Investing and Financing Activities:                                                                            |  |                              |          |   |      |   |          |  
|Foreclosed real estate acquired in settlement of loans                                                                  |  | $                            | 11,566   |   |      | $ | 1,509    |  

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, 2008. 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 presentation of
the results for the interim periods presented. The results of operations for the three months ended March 31, 2009 and 2008 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 in 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. Amortized cost and fair values at March 31, 2009 and
December 31, 2008 were as follows:



|                                                                 |  |                |        |                   |   |               |  |           |        |  |   |       
|---------------------------------------------------------------- |  | -------------- | ------ | ----------------- | - | ------------- |  | --------- | ------ |  | - | ------
|                                                                 |  | March 31, 2009 |        | December 31, 2008
|($ in thousands)                                                 |  | AmortizedCost  |        | FairValue         |   | AmortizedCost |  | FairValue
|Mortgage-backed securities                                       |  | $              | 33,646 |                   | $ | 34,222        |  | $         | 36,311 |  | $ | 36,606
|Obligations of states, municipalities and political subdivisions |  |                | 21,421 |                   |   | 21,138        |  |           | 21,845 |  |   | 21,451
|Obligations of Federal Government Agencies                       |  |                | 3,517  |                   |   | 3,659         |  |           | 5,597  |  |   | 5,814 
|Other securities                                                 |  |                | 1,393  |                   |   | 1,341         |  |           | 1,415  |  |   | 1,399 
|                                                                 |  |                |        |                   |   |               |  |           |        |  |   |       
|Total                                                            |  | $              | 59,977 |                   | $ | 60,360        |  | $         | 65,168 |  | $ | 65,270
|                                                                 |  |                |        |                   |   |               |  |           |        |  |   |       



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AMERICANWEST BANCORPORATION



NOTE 3. Loans and Allowance for Loan Losses

Aggregate loan balances by category as of March 31, 2009 and December 31, 2008 were as follows:



|                                              |  |                |           |   |            |     |   |                   |   |           |            |  |     |  
|--------------------------------------------- |  | -------------- | --------- | - | ---------- | --- | - | ----------------- | - | --------- | ---------- |  | --- | -
|($ in thousands)                              |  | March 31, 2009 |           |   | % of Total |     |   | December 31, 2008 |   |           | % of Total | 
|Commercial real estate                        |  | $              | 634,718   |   |            | 40  | % |                   | $ | 630,540   |            |  | 39  | %
|Construction, land development and other land |  |                | 342,564   |   |            | 22  | % |                   |   | 388,381   |            |  | 24  | %
|Commercial and industrial                     |  |                | 203,401   |   |            | 13  | % |                   |   | 215,776   |            |  | 13  | %
|Residential real estate                       |  |                | 202,312   |   |            | 13  | % |                   |   | 200,047   |            |  | 12  | %
|Agricultural                                  |  |                | 150,479   |   |            | 10  | % |                   |   | 160,944   |            |  | 10  | %
|Installment and other                         |  |                | 28,922    |   |            | 2   | % |                   |   | 28,777    |            |  | 2   | %
|                                              |  |                |           |   |            |     |   |                   |   |           |            |  |     |  
|Total loans                                   |  |                | 1,562,396 |   |            | 100 | % |                   |   | 1,624,465 |            |  | 100 | %
|                                              |  |                |           |   |            |     |   |                   |   |           |            |  |     |  
|Allowance for loan losses                     |  |                | (40,675   | ) |            |     |   |                   |   | (44,722   | )          |  |     |  
|Deferred loan fees, net of deferred costs     |  |                | (2,214    | ) |            |     |   |                   |   | (2,637    | )          |  |     |  
|                                              |  |                |           |   |            |     |   |                   |   |           |            |  |     |  
|Net loans                                     |  | $              | 1,519,507 |   |            |     |   |                   | $ | 1,577,106 |            |  |     |  
|                                              |  |                |           |   |            |     |   |                   |   |           |            |  |     |  

The allowance for loan losses and reserve for unfunded commitments are maintained at levels considered adequate by
management to provide for probable loan losses as of the Consolidated Statements of Condition reporting dates. The allowance for loan losses 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 months ended March 31, 2009 and 2008 were as follows:



|                                  |  |                              |         |   |      |   |         |  
|--------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                  |  | Three Months Ended March 31, |        
|($ in thousands)                  |  | 2009                         |         |   | 2008 |  
|Allowance for loan losses:        |  |                              |         |   |      |   |         |  
|Balance, beginning of period      |  | $                            | 44,722  |   |      | $ | 25,258  |  
|Loan loss provision               |  |                              | 13,680  |   |      |   | 12,800  |  
|Loans charged-off                 |  |                              | (17,943 | ) |      |   | (11,088 | )
|Recoveries                        |  |                              | 216     |   |      |   | 119     |  
|                                  |  |                              |         |   |      |   |         |  
|Balance, end of period            |  | $                            | 40,675  |   |      | $ | 27,089  |  
|                                  |  |                              |         |   |      |   |         |  
|                                  | 
|                                  |  | Three Months Ended March 31, |        
|($ in thousands)                  |  | 2009                         |         |   | 2008 |  
|Reserve for Unfunded Commitments: |  |                              |         |   |      |   |         |  
|Balance, beginning of period      |  | $                            | 660     |   |      | $ | 1,374   |  
|Unfunded commitments benefit      |  |                              |        |   |      |   | (102    | )
|                                  |  |                              |         |   |      |   |         |  
|Balance, end of period            |  | $                            | 660     |   |      | $ | 1,272   |  
|                                  |  |                              |         |   |      |   |         |  

The provision for unfunded commitments is included in other non-interest expense within the Consolidated
Statements of Operations and among other liabilities within the Consolidated Statements of Condition.



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Impaired loan information as of March 31, 2009 and December 31, 2008 was as follows:



|                                                            |  |               |        |                  |   |       
|----------------------------------------------------------- |  | ------------- | ------ | ---------------- | - | ------
|($ in thousands)                                            |  | March 31,2009 |        | December 31,2008
|Impaired loans without a specific allowance for loan losses |  | $             | 92,686 |                  | $ | 88,110
|Impaired loans with a specific allowance for loan losses    |  |               | 31,134 |                  |   |      

Effective March 31, 2009, all non-performing relationships are included as impaired loans in
managements analysis, whereas, in prior periods only relationships greater than $500,000 were included. The Companys practice of recognizing charge-offs for the specific impairment on loans resulted in charge-offs of $17.9 million during
the three months ended March 31, 2009 related to the impaired loans in the table above. There was no interest recognized during the three months ended March 31, 2009 on the above impaired loans.

NOTE 4. Goodwill

At March 31, 2009, the Company had $18.9
million of goodwill and $12.8 million of core deposit intangible assets which were recorded in connection with various business combinations. While generally accepted accounting principles require that core deposit intangible assets be amortized to
expense over their estimated useful lives, goodwill is not amortized but periodically tested for impairment.

During the quarter ended March 31, 2008,
the Company evaluated goodwill for potential impairment based on the occurrence of a triggering event. Goodwill carried within the Companys only reporting unit was determined to be impaired by $27.0 million. During the quarter ended
September 30, 2008, in connection with its annual impairment review of goodwill, management engaged an independent valuation firm to assist with the impairment valuation of the remaining carrying value of goodwill. As a result, goodwill was
determined to be impaired by an additional $82.0 million. The Companys remaining goodwill of $18.9 million will be evaluated for future possible impairment at the Companys annual assessment date or if there are indicators of a potential
impairment pursuant to the Companys accounting policy.

NOTE 5. Junior Subordinated Debt

As of March 31, 2009, 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 CallDate |            | Maturity Date
|AmericanWest Statutory Trust I   |  | September 2002 |  | $                 | 10,310 |      | Floating | (1)  |               | 4.63 | % |               | June 2009  |               | September 2032
|Columbia Trust Statutory Trust I |  | June 2003      |  |                   | 3,093  |      | Floating | (2)  |               | 4.33 | % |               | June 2009  |               | 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     
|                                 |  |                |  |                   |        |      |          |      |               |      |   |               |            |               |               
|                                 |  |                |  | $                 | 41,239 |      |          |      |               |      |   |               |            |               |               
|                                 |  |                |  |                   |        |      |          |      |               |      |   |               |            |               |               



|(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 Trusts issued their preferred securities to investors, and used the proceeds to purchase junior subordinated debt of the Company. The Company
has fully and unconditionally guaranteed the trust preferred securities along with all obligations of the Trusts under the trust agreements. Interest income from the junior subordinated debt 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.



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During the third quarter of 2008, in accordance with the provisions of the related indentures, the Company notified
the trustees of the Trusts that the payment of interest on the junior subordinated debt will be deferred until further notice. The Company has the right to defer payment of interest for up to 20 consecutive quarters, although it will continue to
accrue the cost and recognize the expense of the interest at the normal rate on a compounded basis until such time as the deferred arrearage has been paid current. As of March 31, 2009, interest totaling $2.1 million was deferred and in
arrears.

As of March 31, 2009, $25.0 million of the $40.0 million junior subordinated debt (excluding 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), with the balance qualifying as Tier 2 capital. 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 originally set to end on March 31, 2009 but extended by two years in light of continued stress in financial
markets, the aggregate amount of junior subordinated debt and certain other restricted core capital elements is limited to 25% of Tier I capital elements, net of goodwill. The amount of junior subordinated debt and certain other elements in excess
of the limit could be included in Tier 2 capital, subject to restrictions. Of the currently issued junior subordinated debt, $19.0 million is expected to qualify as Tier I capital under the new limitations as of March 31, 2011. 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 (Loss) Income

Total comprehensive loss, which includes the net loss and unrealized gains and losses on the
Companys available-for-sale securities, net of tax, was $14.4 million for the three months ended March 31, 2009. Total comprehensive loss for the three months ended March 31, 2008 was $31.2 million.

NOTE 7. Cash Dividends

Pursuant to the provisions of a Cease and
Desist Order issued by the Federal Deposit Insurance Corporation (FDIC) and Washington Department of Financial Institutions (DFI) effective May 11, 2009, the Bank is prohibited from paying any cash dividends without prior regulatory approval. A
comparable restriction was contained in a Supervisory Directive issued by the DFI in August 2008. In addition, the Company was notified by the Federal Reserve System (FRB) in August 2008 that it could not make any dividend payments without prior
approval from the FRB. As a result, no cash dividend payments were declared or paid by the Company during the three months ended March 31, 2009.

NOTE 8. (Loss) Earnings Per Share

The following is a reconciliation of the numerators and denominators for basic and diluted loss per share
computations for the three months ended March 31, 2009 and 2008:



|                                                                              |  |                              |         |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -
|                                                                              |  | Three Months Ended March 31, |        
|(in thousands, except per share)                                              |  | 2009                         |         |   | 2008 |  
|Numerator:                                                                    |  |                              |         |   |      |   |         |  
|Net loss                                                                      |  | $                            | (14,535 | ) |      | $ | (31,557 | )
|Denominator:                                                                  |  |                              |         |   |      |   |         |  
|Weighted average number of common shares outstanding                          |  |                              | 17,213  |   |      |   | 17,206  |  
|Basic loss per common share                                                   |  | $                            | (0.84   | ) |      | $ | (1.83   | )
|Diluted loss per common share                                                 |  | $                            | (0.84   | ) |      | $ | (1.83   | )
|Anti-dilutive stock options and awards not included in diluted loss per share |  |                              | 315     |   |      |   | 484     |  



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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 Plan was amended during 2008 to increase the number of authorized shares for issuance under all awards by 250,000 shares (plus any shares under the Companys 2001 Stock Option Plan as to which options or
other benefits granted and outstanding as of March 17, 2006 may lapse, expire, terminate or be canceled). The number of shares subject to stock options and restricted stock awards issued under the Plan as of March 31, 2009 was 646,097. 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 expense 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 loss and diluted loss per share for the three months ended
March 31, 2009 and 2008:



|                               |  |                              |   |      |   |   
|------------------------------ |  | ---------------------------- | - | ---- | - | --
|                               |  | Three months ended March 31,
|($ in thousands)               |  | 2009                         |   | 2008
|Stock option compensation cost |  | $                            | 5 |      | $ | 55
|Impact on net loss             |  | $                            | 2 |      | $ | 39

The following table summarizes the stock option activity for the three months ended March 31, 2009:



|                                 |  |         |   |  |                              |      
|-------------------------------- |  | ------- | - |  | ---------------------------- | -----
|                                 |  | Options |   |  | Weightedaverageexerciseprice
|Outstanding at December 31, 2008 |  | 320,701 |   |  | $                            | 13.38
|Granted                          |  |        |   |  |                              |     
|Exercised                        |  |        |   |  |                              |     
|Forfeited                        |  | (43,364 | ) |  |                              | 5.69 
|                                 |  |         |   |  |                              |      
|Outstanding at March 31, 2009    |  | 277,337 |   |  | $                            | 14.58
|                                 |  |         |   |  |                              |      
|Exercisable at March 31, 2009    |  | 178,247 |   |  | $                            | 18.24

There were no options issued during the three months ended March 31, 2009. The following table summarizes the
weighted average assumptions for options issued for the three months ended March 31, 2008:



|                        |  |                    |     |  |               |  
|----------------------- |  | ------------------ | --- |  | ------------- | -
|                        |  | Three months ended |    
|                        |  | March 31,2009      |     |  | March 31,2008 |  
|Expected volatility     |  | N/A                | (1) |  | 33.6          | %
|Expected dividends      |  | N/A                | (1) |  | 2.5           | %
|Expected term           |  | N/A                | (1) |  | 5.0 years     |  
|Risk free interest rate |  | N/A                | (1) |  | 2.8           | %



|(1) | No options were issued during the first three months of 2009.
|--- | -------------------------------------------------------------



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The weighted average fair value of options issued during the three months ended March 31, 2008 was $2.86. Total
unrecognized compensation cost at March 31, 2009 was $113 thousand, which will be recognized through 2013. 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 March 31, 2009 was 6.1 years and 4.7 years, 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. Since none of the stock options outstanding and exercisable at March 31, 2009 had an exercise price lower than the market value of the Companys common stock, these options had no
aggregate intrinsic value as of that date. No stock options were exercised during the three months ended March 31, 2009. The intrinsic value of stock options exercised during the three months ended March 31, 2008 was $62 thousand.

Restricted Common Stock Awards

The Company has
granted performance-based restricted common stock awards to certain executives and employees. Outstanding performance-based awards vest between January 2010 and September 2012 and are expensed as compensation over the period earned. Certain
agreements require that the Company or the individual meet performance criteria and, for every year that the goal is not achieved, the award recipients forfeit 20% of their performance-based restricted common stock award. Awards are also forfeited
if an employees employment with the Company or the Bank is terminated prior to vesting other than pursuant to a change in control.

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 March 31, 2009 and 2008,
compensation expense, pre-tax, related to these grants was approximately $9 thousand and $56 thousand, respectively. In addition, the compensation expense for the three months ended March 31, 2009, was offset by the reversal of $65 thousand
related to the termination of an executives employment and the forfeiture of 5,000 shares of restricted common stock.

The following table summarizes
both unvested performance restricted and unvested restricted common stock activity for the three months ended March 31, 2009:



|                                 |  |                       |   |  |                                     |      
|-------------------------------- |  | --------------------- | - |  | ----------------------------------- | -----
|                                 |  | RestrictedCommonStock |   |  | Weightedaverage grantdate fairvalue
|Unvested as of December 31, 2008 |  | 45,390                |   |  | $                                   | 21.46
|Granted                          |  |                      |   |  |                                     |     
|Forfeited                        |  | (7,340                | ) |  |                                     | 22.40
|Vested                           |  |                      |   |  |                                     |     
|                                 |  |                       |   |  |                                     |      
|Unvested as of March 31, 2009    |  | 38,050                |   |  | $                                   | 21.28
|                                 |  |                       |   |  |                                     |      

NOTE 10. Fair Value Measurement

The Company has adopted Statement of Financial Accounting Standard (SFAS) No. 157, Fair Value Measurements which provides enhanced guidance for measuring assets and liabilities using fair value and applies
to situations where other standards require or permit assets or liabilities to be measured at fair value. SFAS No. 157 also requires expanded disclosure of items that are measured at fair value, the information used to measure fair value and
the effect of fair value measurements on earnings.

Valuation techniques are based upon observable and unobservable inputs. Observable inputs reflect
market data obtained from independent sources, while unobservable inputs reflect our market assumptions. These two types of inputs create a fair value hierarchy. Level 1 includes quoted prices for identical instruments in active markets. Level 2
includes quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable. Level 3 includes instruments whose
significant value input assumptions are unobservable.



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The following table summarizes the Companys financial instruments that were measured at fair value on a
recurring basis at March 31, 2009:



|                              |  |            |        |                               |   |         |  |         |        |  |   |    
|----------------------------- |  | ---------- | ------ | ----------------------------- | - | ------- |  | ------- | ------ |  | - | ---
|                              |  |            |        | Fair Value Measurements Using
|($ in thousands)              |  | Fair Value |        | Level 1                       |   | Level 2 |  | Level 3
|Recurring                     |  |            |        |                               |   |         |  |         |        |  |   |    
|Securities available-for-sale |  | $          | 60,360 |                               | $ | 26,138  |  | $       | 34,222 |  | $ |   
|Derivative loan commitments   |  | $          | 140    |                               | $ |        |  | $       |       |  | $ | 140

During the three months ended March 31, 2009, the Company recorded a loss of $49 thousand related to the
derivative loan commitments shown in the above table. Additionally, certain assets are measured at fair value on a non-recurring basis. These adjustments to fair value generally result from the application of lower-of-cost-or-market accounting or
write-downs of individual assets due to impairment. The following table summarizes the Companys financial instruments that were measured at fair value on a non-recurring basis at March 31, 2009, and the total amount charged to operations
resulting from fair value adjustments for the three months ended March 31, 2009:



|                                                   |  |            |         |                               |   |                                            |  |   |   |  |   |         |  |   |       
|-------------------------------------------------- |  | ---------- | ------- | ----------------------------- | - | ------------------------------------------ |  | - | - |  | - | ------- |  | - | ------
|($ in thousands)                                   |  | Fair Value |         | Fair Value Measurements Using |   | Three months endedMarch 31, 2009Total Loss
|                                                   |  | Level 1    |         | Level 2                       |   | Level 3                                    | 
|Non-Recurring                                      |  |            |         |                               |   |                                            |  |   |   |  |   |         |  |   |       
|Impaired loans                                     |  | $          | 122,442 |                               | $ |                                           |  | $ |  |  | $ | 122,442 |  | $ | 17,943
|Foreclosed real estate and other foreclosed assets |  | $          | 22,552  |                               | $ |                                           |  | $ |  |  | $ | 22,552  |  | $ | 126   

Impaired loans included in the table above are collateral dependent and fair value for each was determined based
on the estimated fair value of the underlying collateral, less costs to sell. If the Bank determines that the value of an impaired loan is less than the recorded investment in the loan, the carrying value is adjusted through a charge-off. These
charge-offs are recorded through the allowance for loan losses. The loss column above represents charge-offs recognized during the three months ended March 31, 2009 related to the impaired loans.

The foreclosed real estate and other foreclosed assets in the table above have been adjusted to estimated fair value, less estimated costs to sell. At the time of
foreclosure, foreclosed assets are recorded at the lower of the carrying amount of the loan or estimated fair value less costs to sell. Any write-downs based on the assets fair value at the date of acquisition are charged to the allowance for
loan losses. After foreclosure, management periodically obtains updated valuations of the foreclosed assets and, if additional impairments are deemed necessary, the impairment is recorded in foreclosed real estate and other foreclosed assets expense
on the Consolidated Statements of Operations. The loss column above represents impairments charged to the Consolidated Statements of Operations during the three months ended March 31, 2009.

NOTE 11. Derivatives

The Company may use derivatives to hedge the
risk of changes in the fair values of interest rate lock commitments, residential mortgage loans held for sale, and mortgage servicing rights. None of the Companys derivatives are designated as hedging instruments under SFAS No. 133
Accounting for Derivative Instruments and Hedging Activities. Rather, they are accounted for as free-standing derivatives, or economic hedges, with changes in the fair value of the derivatives reported in income. The Company primarily
utilizes forward interest rate contracts in its derivative risk management strategy.

The Bank enters into forward delivery contracts to sell residential
mortgage loans or mortgage-backed securities to broker/dealers at specific prices and dates in order to hedge the interest rate risk in its portfolio of mortgage loans held for sale and its residential mortgage loan commitments. Credit risk
associated with forward contracts is limited to the replacement cost of those forward contracts in a gain position. There were no counterparty default losses on forward contracts in the three months ended March 31, 2009. Market risk with
respect to forward contracts arises principally from changes in the value of contractual positions due to changes in interest rates. The Bank limits its exposure to market risk by monitoring differences between commitments to customers and



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forward contracts with broker/dealers. In the event the Company has forward delivery contract commitments in excess of available mortgage loans, the Company
completes the transaction by either paying or receiving a fee to or from the broker/dealer equal to the increase or decrease in the market value of the forward contract. At March 31, 2009, the Bank had commitments to originate mortgage loans
held for sale totaling $15.3 million and forward sales commitments of $35.8 million.

The following table summarizes the types of derivatives, separately
by assets and liabilities, their location on the Consolidated Statements of Condition, and the fair values of such derivatives as of March 31, 2009 and December 31, 2008:

(in thousands)



|                            |  |                           |  |                       |  |               |     |                  |   |   
|--------------------------- |  | ------------------------- |  | --------------------- |  | ------------- | --- | ---------------- | - | --
|Underlying Risk Exposure    |  | Description               |  | Balance SheetLocation |  | March 31,2009 |     | December 31,2008
|Asset Derivatives           |  |                           |  |                       |  |               |     |                  |   |   
|Interest rate contracts     |  | Rate lock commitments     |  | Other assets          |  | $             |    |                  | $ |  
|Interest rate contracts     |  | Forward sales commitments |  | Other assets          |  | $             |    |                  | $ |  
|                            |  |                           |  |                       |  |               |     |                  |   |   
|Total asset derivatives     |  |                           |  |                       |  | $             |    |                  | $ |  
|                            |  |                           |  |                       |  |               |     |                  |   |   
|Liability Derivatives       |  |                           |  |                       |  |               |     |                  |   |   
|Interest rate contracts     |  | Rate lock commitments     |  | Other liabilities     |  | $             |    |                  | $ |  
|Interest rate contracts     |  | Forward sales commitments |  | Other liabilities     |  | $             | 140 |                  | $ | 91
|                            |  |                           |  |                       |  |               |     |                  |   |   
|Total liability derivatives |  |                           |  |                       |  | $             | 140 |                  | $ | 91
|                            |  |                           |  |                       |  |               |     |                  |   |   

The following table summarizes the types of derivatives, their location on the Consolidated Statements of
Operations, and the gains (losses) recording during the three months ended March 31, 2009 and 2008:

(in thousands)



|                         |  |                           |  |                                  |  |               |     |   |               |   |  
|------------------------ |  | ------------------------- |  | -------------------------------- |  | ------------- | --- | - | ------------- | - | -
|Underlying Risk Exposure |  | Description               |  | Income Statement Location        |  | March 31,2009 |     |   | March 31,2008
|Interest rate contracts  |  | Rate lock commitments     |  | Fees on mortgage loan sales, net |  | $             |    |   |               | $ | 
|Interest rate contracts  |  | Forward sales commitments |  | Fees on mortgage loan sales, net |  | $             | (49 | ) |               | $ | 
|                         |  |                           |  |                                  |  |               |     |   |               |   |  
|Total                    |  |                           |  |                                  |  | $             | (49 | ) |               | $ | 
|                         |  |                           |  |                                  |  |               |     |   |               |   |  

NOTE 12. Recent Accounting Pronouncements

In December 2007, FASB issued SFAS No. 141 (revised), Business Combinations. SFAS No. 141R establishes principles and requirements for how an acquirer recognizes and measures in its
financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquired entity and the goodwill acquired. Furthermore, acquisition-related and other costs will now be expensed rather than treated
as cost components of the acquisition. SFAS No. 141R also establishes disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. This statement applies prospectively to business
combinations for which the acquisition date is on or after January 1, 2009. The adoption of SFAS No. 141R will increase the costs charged to operations for acquisitions consummated on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interest in Consolidated Financial Statements, an amendment to ARD No 51. SFAS
No. 160 establishes accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. The standard also requires additional disclosures that clearly identify and distinguish between
the interest of the parents owners and the interest of the noncontrolling owners of the subsidiary. This statement is effective on January 1, 2009 for the Company, to be applied prospectively. The adoption of this standard did not have a
material impact on the Companys consolidated financial statements.



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In March 2008, FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities
 an amendment of FASB Statement No. 133. SFAS No. 161 expands the disclosure requirements in SFAS No. 133 about an entitys derivative instruments and hedging activities. This includes enhanced disclosures
regarding how and why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities and its related
interpretations, and how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. Provisions of this statement are to be applied prospectively, and comparative disclosures for
earlier periods are encouraged. The Company adopted the provisions of SFAS No. 161 for the year ended December 31, 2008, and the impact was not material to the consolidated financial statements.

In May 2008, FASB issued SFAS No. 162, The Hierarchy of Generally Accepted Accounting Principles. Under SFAS No. 162, the U.S. GAAP hierarchy will now
reside in the accounting literature established by the FASB. SFAS No. 162 identifies the sources of accounting principles and the framework for selecting the principles used in the preparation of financial statements in conformity with U.S.
GAAP for nongovernmental entities. This statement is effective 60 days after the U.S. Securities and Exchange Commission approves the Public Company Accounting Oversight Boards amendments to AU Section 411, The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles. The Company does not expect the adoption of SFAS No. 162 will have a material impact on its consolidated financial statements.

In June 2008, FASB issued FSP EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. FSP EITF
03-6-1 concludes that nonvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents are participating securities and shall be included in the computation of EPS pursuant to the two-class method. This
statement is effective for fiscal years beginning after December 15, 2008, to be applied retrospectively. The adoption of this guidance did not have a material impact on the Companys consolidated financial statements.

In October 2008, FASB issued FSP No.157-3, Determining the Fair Value of a Financial Asset When the Market for That Asset Is Not Active. FSP No.157-3 clarifies
the application of SFAS No. 157 in a market that is not active and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for that financial asset is not active. The FSP does not
change existing generally accepted accounting principles. This FSP was effective immediately upon issuance, including prior periods for which financial statements had not been issued. The adoption of this standard did not have a material impact on
the Companys consolidated financial statements.

In January 2009, FASB issued FSP EITF 99-20-1, Amendments to the Impairment Guidance of EITF
Issue No.99-20. FSP EITF 99-20-1 addresses certain practice issues in EITF No.99-20, Recognition of Interest Income and Impairment on Purchased Beneficial Interests and Beneficial Interests That Continue to Be Held by a Transferor in
Securitized Financial Assets, by making its other-than-temporary impairment assessment guidance consistent with SFAS No.115, Accounting for Certain Investments in Debt and Equity Securities. FSP EITF 99-20-1 removes the reference to the
consideration of a market participants estimates of cash flows in EITF 99-20, and instead requires an assessment of whether it is probable, based on current information and events, that the holder of the security will be unable to collect all
amounts due according to the contractual terms. If it is probable that there has been an adverse change in estimated cash flows, an other-than-temporary impairment is deemed to exist, and a corresponding loss shall be recognized in earnings equal to
the entire difference between the investments carrying value and its fair value at the balance sheet date of the reporting period for which the assessment is made. This FSP became effective for interim and annual reporting periods ending after
December 15, 2008, and is applied prospectively. The adoption of this standard did not have a material impact on the Companys consolidated financial statements.

On April 9, 2009, FASB issued FSP FAS No. 157-4, Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are
Not Orderly. FSP FAS No. 157-4 provides guidance to help an entity determine whether the market for an asset is not active and when a price for a transaction is not distressed. In this two-step model, an entity must first determine whether
there are factors present that indicate that the market for the asset is not active at the measurement date. Second, an entity must evaluate whether a quoted price is representative of a transaction that is not orderly. If



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determined that a quoted price is distressed (not orderly), and thereby not representative of fair value under SFAS No. 157, the entity must make
adjustments to the quoted price or utilize an alternative valuation technique (e.g. income approach or multiple valuation techniques) to determine fair value. Additionally, an entity must incorporate appropriate risk premium adjustments, reflective
of an orderly transaction under current market conditions, due to uncertainty in cash flows. This FSP is effective for interim reporting periods ending after June 15, 2009. The Company is currently evaluating the impact of the adoption of FSP
FAS No. 157-4.

On April 9, 2009, FASB issued FSP FAS No. 115-2 and FAS No. 124-2, Recognition and Presentation of
Other-Than-Temporary Impairments(OTTI), that changes the OTTI model for debt securities. Under previous guidance, an entity is required to assess whether it has the intent and ability to hold a security to recovery in determining whether an
impairment of that security is other-than-temporary. If the security was deemed other-than-temporarily impaired, the investment was written-down to fair value through earnings. Under the new guidance, OTTI is triggered if an entity has the intent to
sell the security, if it is more likely than not that it will be required to sell the security before recovery, or if the entity does not expect to recover the entire amortized cost basis of the security. If the entity intends to sell the security
or if it is more likely than not that it will be required to sell the security before recovering its cost basis, the entire impairment loss would be recognized in earnings as an OTTI. If the entity does not intend to sell the security and it is not
likely that the entity will be required to sell the security before recovering its cost basis, only the portion of the impairment loss representing credit losses would be recognized in earnings as an OTTI. The remaining impairment loss would be
recognized as a charge to other comprehensive income (OCI). The FSP also results in a new category within OCI for the portion of the OTTI that is unrelated to credit losses for securities held to maturity. The impairment recognized in OCI would be
amortized over the remaining life of the debt security prospectively based on the amount and timing of future estimated cash flows, unless there is an indication of additional credit losses. The amortization of the OTTI amount recorded in OCI will
increase the carrying value of the investment, and would not affect earnings. Upon adoption of the FSP, the noncredit portion of previously recognized OTTI shall be reclassified to accumulated OCI by a cumulative-effect adjustment to the opening
balance of retained earnings. This FSP is effective for interim reporting periods ending after June 15, 2009. The Company is currently evaluating the impact of the adoption of FSP FAS No. 115-2 and FAS No. 124-2.

On April 9, 2009, FASB issued FSP FAS No. 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP requires SFAS
No. 107, Disclosures about Fair Value of Financial Instruments, disclosures in the notes of an entitys interim financial statements for all financial instruments, whether or not recognized in the statement of financial position.
This FSP is effective for interim reporting periods ending after June 15, 2009. The Company does not expect the adoption of FSP No. 107-1 and APB 28-1 will have a material impact on its consolidated financial statements.



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

Forward-Looking Statements

Certain matters discussed 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, include 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. The Company makes forward-looking statements about potential problem loans, cash flows, strategic initiatives, capital initiatives and the adequacy of the allowance for loan losses. 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 ability of the Company to comply with Cease and Desist Order, the Companys ability to raise regulatory capital and the dilutive effect of capital raising, the
Companys access to liquidity sources, the Companys ability to increase market share, the Companys ability to attract quality customers, 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 and competition with other banks and financial institutions.
Other factors are included in Part II, Section 1A of this Quarterly Report on Form 10-Q and in the Annual Report on Form 10-K for the year ended December 31, 2008, filed with the US Securities and Exchange Commission (SEC) 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 months ended
March 31, 2009 and 2008. 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, 2008, which contains additional information.

AmericanWest Bancorporation

AmericanWest Bancorporation, which was formed in 1983, is a Washington corporation registered as a bank holding company under the Bank Holding Company Act of 1956, and is
headquartered in Spokane, Washington. The Companys wholly-owned subsidiary is AmericanWest Bank (Bank), a Washington state chartered bank that operates in Eastern and Central Washington, Northern Idaho and in Utah doing business as Far West
Bank. Unless otherwise indicated, reference to the Company shall include the Bank and its Far West Bank division. The Companys unconsolidated information will be referred to as that of the Parent Company. The Bank provides a full
range of banking services to small and medium-sized businesses, agricultural businesses, professionals and consumers through 58 financial centers located in Washington, Northern Idaho and Utah.

The Company also has four wholly-owned statutory trust subsidiaries which were formed for the sole purpose of issuing trust preferred securities. These include
AmericanWest Statutory Trust I, Columbia Trust Statutory Trust I, AmericanWest Capital Trust II and AmericanWest Capital Trust III (collectively Trusts). Due to the adoption of Financial Interpretation Number 46R, Consolidation of Variable
Interest Entities, the investments in these Trusts are not consolidated within the consolidated financial statements.

The Companys stock trades
on the NASDAQ Global Select market under the symbol AWBC. The discussion in this Quarterly Report of the Company and its financial statements reflects the Companys acquisitions of Far West Bancorporation (FWBC) and its subsidiary on
April 1, 2007 and Columbia Trust Bancorp and its subsidiaries on March 15, 2006. Both acquisitions were accounted for by the purchase method of accounting and the results of the Companys operations prior to the respective
acquisitions do not reflect the activities of Far West Bancorporation or Columbia Trust Bancorp.



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As a result of an interim examination, effective August 8, 2008, the Bank is subject to a Supervisory Directive
of the Washington State Department of Financial Institutions, Division of Banks (DFI). The directive requires the Bank to provide periodic liquidity and credit quality reports; update the DFI of the status of liquidity planning and the previously
announced capital raising initiatives; notify the DFI of significant changes in management and financial condition; retain a permanent Chief Executive Officer, and seek prior written consent of the DFI before paying dividends. As of the date of this
quarterly report, management believes it is in compliance with the Supervisory Directive.

On May 8, 2009, the Bank entered into a Stipulation and
Consent to the Issuance of an Order to Cease and Desist (Stipulation) with the FDIC and DFI that was issued in connection with a routine regulatory examination of the Bank completed during December 2008 (Examination). Pursuant to the Stipulation,
the FDIC and the DFI issued an Order to Cease and Desist (Order) on May 11, 2009. Neither the Bank nor the Company admitted any wrongdoing and no monetary penalties were imposed in connection with the Order. Copies of the Stipulation and the
Order are included as Exhibits 10.1 and 10.2 of this Form 10-Q.

The Order reaffirms certain restrictions that were included in the Supervisory Directive,
including restrictions on the payment of dividends and appointment of directors or senior executive officers without prior approval. Other material provisions of the Order require the Bank to:



| |  |  | Increase Tier 1 leverage ratio to 10.0% by September 8, 2009 and thereafter maintain such a level until such time as the Order is rescinded;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Charge-off all assets classified as loss and 50% of loans classified as doubtful as of the most recent report of examination by
June 10, 2009 ($4.8 million of related loss assets were previously recognized as losses/charge-offs in 2008 and $5.3 million of doubtful assets were reserved at 50% of the outstanding balance as of December 31,
2008; accordingly, no additional expense is expected in connection with this requirement);
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Reduce the level of assets classified as substandard or doubtful noted in the most recent report of examination to 75% of capital by
September 8, 2009;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Develop a written asset disposition plan for all adversely classified assets of $1 million or more, and take other specified actions to strengthen the credit
administration and collection processes by July 10, 2009;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Develop policies for maintenance of an adequate level of liquidity and certify that pricing of deposits is in compliance with Section 337.6 of the FDIC Rules
and Regulations;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Obtain an independent study of the Banks credit and lending functions to determine if additional personnel are necessary and develop and implement enhanced
policies and procedures for the monitoring and reporting of certain types of loans by July 10, 2009; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Formulate and implement written profit improvement and multi-year strategic plans by August 9, 2009.
| | - |  | ----------------------------------------------------------------------------------------------------

Although management has undertaken actions to comply with all aspects of the Order, there is no assurance that full compliance will be achieved within the timeframes
specified. As a result, the Bank could become subject to further restrictions and/or penalties.

Results of Operations

Overview

The Company reported a net loss of $14.5 million or $0.84
per share for the three months ended March 31, 2009, compared to a net loss (excluding a $27.0 million goodwill impairment charge) of $4.6 million or $0.26 per share for the same period in 2008 and a net loss of $31.6 million, or $1.83, per
share inclusive of the goodwill impairment charge.



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The negative return on average assets annualized, for the three months ended March 31, 2009, was 3.18% as
compared to 5.98% for the three months ended March 31, 2008. The negative return on average assets annualized, excluding the goodwill impairment charge, for the three months ended March 31, 2008 was 0.86%.

The Company recognized a provision for loan losses of $13.7 million, or 3.44% of average loans on an annualized basis, for the three months ended March 31, 2009, as
compared to $12.8 million, or 2.89% of average loans annualized, for the three months ended March 31, 2008. For the quarter ended March 31, 2009, net charge-offs were $17.7 million, or 4.45% of average gross loans annualized, as compared
to $11.0 million, or 2.48%, for the first quarter of 2008.

The table below summarizes the Companys financial performance for the three months ended
March 31, 2009 and 2008:



|                                              |  |                              |         |   |      |   |         |          |  |     |  
|--------------------------------------------- |  | ---------------------------- | ------- | - | ---- | - | ------- | -------- |  | --- | -
|                                              |  | Three Months Ended March 31, |        
|($ in thousands except per share data)        |  | 2009                         |         |   | 2008 |   |         | % Change | 
|Interest Income                               |  | $                            | 23,251  |   |      | $ | 33,670  |          |  | -31 | %
|Interest Expense                              |  |                              | 9,314   |   |      |   | 12,383  |          |  | -25 | %
|                                              |  |                              |         |   |      |   |         |          |  |     |  
|Net Interest Income                           |  |                              | 13,937  |   |      |   | 21,287  |          |  | -35 | %
|Loan Loss Provision                           |  |                              | 13,680  |   |      |   | 12,800  |          |  | 7   | %
|                                              |  |                              |         |   |      |   |         |          |  |     |  
|Net interest income after loan loss provision |  |                              | 257     |   |      |   | 8,487   |          |  | -97 | %
|                                              |  |                              |         |   |      |   |         |          |  |     |  
|Non-interest Income                           |  |                              | 5,800   |   |      |   | 4,220   |          |  | 37  | %
|Non-interest Expense                          |  |                              | 20,592  |   |      |   | 45,783  |          |  | -55 | %
|                                              |  |                              |         |   |      |   |         |          |  |     |  
|Loss before income tax benefit                |  |                              | (14,535 | ) |      |   | (33,076 | )        |  | 56  | %
|Income tax benefit                            |  |                              | 0       |   |      |   | (1,519  | )        |  | 100 | %
|                                              |  |                              |         |   |      |   |         |          |  |     |  
|Net Loss                                      |  | $                            | (14,535 | ) |      | $ | (31,557 | )        |  | 54  | %
|                                              |  |                              |         |   |      |   |         |          |  |     |  
|Basic loss per common share                   |  | $                            | (0.84   | ) |      | $ | (1.83   | )        |  | 54  | %
|Diluted loss per common share                 |  | $                            | (0.84   | ) |      | $ | (1.83   | )        |  | 54  | %

The selected financial ratios presented below in the non-GAAP column exclude the goodwill impairment charge of
$27.0 million taken during the three months ended March 31, 2008. These calculations do not conform to generally accepted accounting principles (GAAP) measures; however, management believes these ratios are preferable as they represent a more
meaningful comparison to the three months ended March 31, 2009.



|                                        |  |                              |   |  |                  |   |  |          |  
|--------------------------------------- |  | ---------------------------- | - |  | ---------------- | - |  | -------- | -
|                                        |  | Three Months Ended March 31, |  
|                                        |  | 2009                         |   |  | 2008Non-GAAP (1) |   |  | 2008GAAP |  
|Selected Financial Ratios, annualized:  |  |                              |   |  |                  |   |  |          |  
|Return on average assets                |  | -3.18                        | % |  | -0.86            | % |  | -5.98    | %
|Return on average equity                |  | -66.70                       | % |  | -6.44            | % |  | -44.58   | %
|Return on tangible average equity       |  | -104.51                      | % |  | -13.03           | % |  | -90.25   | %
|Efficiency ratio                        |  | 100.70                       | % |  | 70.17            | % |  | 70.17    | %
|Non-interest income to average assets   |  | 1.27                         | % |  | 0.80             | % |  | 0.80     | %
|Non-interest expenses to average assets |  | 4.50                         | % |  | 3.56             | % |  | 8.68     | %
|Net interest margin (2)                 |  | 3.34                         | % |  | 4.62             | % |  | 4.62     | %



|(1) | Excludes goodwill impariment charge, when applicable.
|--- | -----------------------------------------------------



|(2) | 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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Net Interest Income

Three Months Ended March 31, 2009 and 2008

Net interest income for the first quarter of 2009 was $13.9 million, a decrease of $7.4
million from the first quarter of 2008. Interest income for the first quarter of 2009 was $23.3 million, a decrease of $10.4 million from the same period of the prior year. The decrease in interest income is related mainly to the decline in the
yield on earning assets of 175 basis points as well as a decline in average earning assets of $154 million. The Companys cost of funds inclusive of non-interest bearing demand deposits was 2.17% in the first quarter of 2009, as compared to
2.74% in the same period of 2008. Interest expense for the first quarter of 2009 was $9.3 million, a decrease of $3.1 million from the similar period of the prior year. The decrease in interest expense from the first quarter of 2008 is a result of a
decrease in the cost of funds of 74 basis points and a decrease in average interest bearing liabilities of $42 million.

The tax equivalent net interest
margin for the first quarter of 2009 was 3.34%, a decrease of 128 basis points from the same period in 2008. This decrease was driven by the decline in yield on earning assets, offset in part by a reduction in the cost of funds. The average yield on
loans for the first quarter of 2009 was 5.64%, a decrease of 177 basis points from the same period in 2008, which drove the reduction in yield on interest earning assets down to 5.55%. The decrease in the average yield on loans is in part related to
a decline in index rates for certain variable rate loans tied to Prime. The average prime rate (the base index for approximately 35% of the Companys loan portfolio) for the first quarter of 2009 was 3.25% as compared to 6.24% for the same
period of the prior year. In addition, the impact of non-accrual loans on the net interest margin for the three months ended March 31, 2009 was approximately 61 basis points.

The reduction in the Companys cost of funds, inclusive of non-interest bearing demand deposits, to 2.17% in the first quarter of 2009 as compared to the same period in the prior year was a result of a reduction
in the cost of interest bearing liabilities of 74 basis points offset in part by a reduction in average non-interest bearing demand deposits of $32 million or 9.8%.



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The following table sets forth the Companys net interest margin for the three months ended March 31, 2009
and 2008:



|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|--------------------------------------------- |  | ---------------------------- | --------- | -------- | ---- | ------ |  | ---- | -------------- |  | -------- | --------- | - | - | ------ |  | ---- | -
|                                              |  | Three months ended March 31, |          
|                                              |  | 2009                         |           |          | 2008 |       
|($ in thousands)                              |  | AverageBalance               |           | Interest |      | %      |  |      | AverageBalance |  | Interest |           | % |  
|Assets                                        |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Loans (1)                                     |  | $                            | 1,614,190 |          | $    | 22,464 |  | 5.64 | %              |  | $        | 1,778,977 |   | $ | 32,784 |  | 7.41 | %
|Taxable securities                            |  |                              | 45,589    |          |      | 560    |  | 4.98 | %              |  |          | 51,844    |   |   | 647    |  | 5.02 | %
|Non-taxable securities (2)                    |  |                              | 19,106    |          |      | 292    |  | 6.20 | %              |  |          | 17,918    |   |   | 273    |  | 6.13 | %
|FHLB Stock                                    |  |                              | 9,586     |          |      |       |  | 0.00 | %              |  |          | 9,689     |   |   | 20     |  | 0.83 | %
|Overnight deposits with other banks and other |  |                              | 18,200    |          |      | 35     |  | 0.78 | %              |  |          | 2,688     |   |   | 39     |  | 5.84 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest earning assets                 |  |                              | 1,706,671 |          |      | 23,351 |  | 5.55 | %              |  |          | 1,861,116 |   |   | 33,763 |  | 7.30 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Non-interest earning assets                   |  |                              | 147,616   |          |      |        |  |      |                |  |          | 260,208   |   |   |        |  |      |  
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total assets                                  |  | $                            | 1,854,287 |          |      |        |  |      |                |  | $        | 2,121,324 |   |   |        |  |      |  
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Liabilities                                   |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Interest bearing demand deposits              |  | $                            | 131,007   |          | $    | 132    |  | 0.41 | %              |  | $        | 138,319   |   | $ | 189    |  | 0.55 | %
|Savings and MMDA deposits                     |  |                              | 426,313   |          |      | 1,768  |  | 1.68 | %              |  |          | 546,262   |   |   | 2,953  |  | 2.17 | %
|Time deposits                                 |  |                              | 664,369   |          |      | 5,657  |  | 3.45 | %              |  |          | 523,962   |   |   | 5,910  |  | 4.54 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest bearing deposits               |  |                              | 1,221,689 |          |      | 7,557  |  | 2.51 | %              |  |          | 1,208,543 |   |   | 9,052  |  | 3.01 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Overnight borrowings                          |  |                              | 94,242    |          |      | 214    |  | 0.92 | %              |  |          | 85,425    |   |   | 822    |  | 3.87 | %
|Junior subordinated debt                      |  |                              | 41,239    |          |      | 641    |  | 6.30 | %              |  |          | 41,239    |   |   | 736    |  | 7.18 | %
|Other borrowings                              |  |                              | 87,721    |          |      | 902    |  | 4.17 | %              |  |          | 151,672   |   |   | 1,773  |  | 4.70 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total interest bearing liabilities            |  |                              | 1,444,891 |          |      | 9,314  |  | 2.61 | %              |  |          | 1,486,879 |   |   | 12,383 |  | 3.35 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Non-interest bearing demand deposits          |  |                              | 295,854   |          |      |        |  |      |                |  |          | 327,931   |   |   |        |  |      |  
|Other non-interest bearing liabilities        |  |                              | 25,168    |          |      |        |  |      |                |  |          | 21,821    |   |   |        |  |      |  
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total liabilities                             |  |                              | 1,765,913 |          |      |        |  |      |                |  |          | 1,836,631 |   |   |        |  |      |  
|Stockholders Equity                          |  |                              | 88,374    |          |      |        |  |      |                |  |          | 284,693   |   |   |        |  |      |  
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Total liabilities and stockholders equity    |  | $                            | 1,854,287 |          |      |        |  |      |                |  | $        | 2,121,324 |   |   |        |  |      |  
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Net interest income and spread                |  |                              |           |          | $    | 14,037 |  | 2.94 | %              |  |          |           |   | $ | 21,380 |  | 3.95 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  
|Net interest margin to average earning assets |  |                              |           |          |      |        |  | 3.34 | %              |  |          |           |   |   |        |  | 4.62 | %
|                                              |  |                              |           |          |      |        |  |      |                |  |          |           |   |   |        |  |      |  



|(1) | Includes loans held for sale and non-accrual loans in average loans. Interest income includes loan fee income.
|--- | --------------------------------------------------------------------------------------------------------------



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



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AMERICANWEST BANCORPORATION



The following table sets forth a summary of changes in the components of net interest income during the first quarter
of 2009, as compared to the first quarter of 2008, 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 March 31, 2009compared to 2008 |       
|($ in thousands)                                              |        | Decrease in net interest income dueto changes in: |       
|                                                              | Volume |                                                   |        | Rate |  |   | Total  |  
|Interest earning assets                                       |        |                                                   |        |      |  |   |        |   |  |   |         |  
|Loans (1)                                                     |        | $                                                 | (3,003 | )    |  | $ | (7,317 | ) |  | $ | (10,320 | )
|Securities (2)                                                |        |                                                   | (66    | )    |  |   | (2     | ) |  |   | (68     | )
|Overnight deposits with other banks, and other and FHLB stock |        |                                                   | 72     |      |  |   | (96    | ) |  |   | (24     | )
|                                                              |        |                                                   |        |      |  |   |        |   |  |   |         |  
|Total interest earning assets                                 |        | $                                                 | (2,997 | )    |  | $ | (7,415 | ) |  | $ | (10,412 | )
|                                                              |        |                                                   |        |      |  |   |        |   |  |   |         |  
|Interest bearing liabilities                                  |        |                                                   |        |      |  |   |        |   |  |   |         |  
|Interest bearing demand deposits                              |        | $                                                 | (989   | )    |  | $ | 932    |   |  | $ | (57     | )
|Savings and MMDA deposits                                     |        |                                                   | (640   | )    |  |   | (545   | ) |  |   | (1,185  | )
|Time deposits                                                 |        |                                                   | 1,567  |      |  |   | (1,820 | ) |  |   | (253    | )
|                                                              |        |                                                   |        |      |  |   |        |   |  |   |         |  
|Total interest bearing deposits                               |        |                                                   | (62    | )    |  |   | (1,433 | ) |  |   | (1,495  | )
|Overnight borrowings                                          |        |                                                   | 84     |      |  |   | (692   | ) |  |   | (608    | )
|Junior subordinated debt                                      |        |                                                   |       |      |  |   | (95    | ) |  |   | (95     | )
|Other borrowings                                              |        |                                                   | (739   | )    |  |   | (132   | ) |  |   | (871    | )
|                                                              |        |                                                   |        |      |  |   |        |   |  |   |         |  
|Total interest bearing liabilities                            |        |                                                   | (717   | )    |  |   | (2,352 | ) |  |   | (3,069  | )
|                                                              |        |                                                   |        |      |  |   |        |   |  |   |         |  
|Total decrease in net interest income                         |        | $                                                 | (2,280 | )    |  | $ | (5,063 | ) |  | $ | (7,343  | )
|                                                              |        |                                                   |        |      |  |   |        |   |  |   |         |  



|(1) | Includes loans held for sale and non-accrual loans in average loans. Interest income includes loan fee income.
|--- | --------------------------------------------------------------------------------------------------------------



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

Loan Loss Provision

During the three months ended March 31,
2009, the Company recognized a provision for loan losses of $13.7 million, or 3.44%, of average gross loans on an annualized basis. For the three months ended March 31, 2008, the Company recognized a provision for loan losses of $12.8 million,
or 2.89%, of average gross loans on an annualized basis. For the three months ended March 31, 2009 and 2008, the annualized net charge-offs were 4.45% and 2.48% of average gross loans, respectively.

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 adequacy of the level of the allowance for credit losses 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. Management also considers general economic conditions in the analysis. In its evaluation of impaired loans, management considers collateral values if the loan is
collateral dependent and the discounted cash flows if the loan is not collateral dependent. Substantially all of the Companys impaired loans are collateral dependent and it is the Companys practice to charge-off the difference between
the carrying value and the market value of all impaired loans. The loan loss provision is a significant estimate and the use of different assumptions could produce different results.



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Non-interest Income

Three Months Ended March 31, 2009 and 2008

Non-interest income for the three months ended March 31, 2009 was $5.8 million, as
compared to $4.2 million for the same period of 2008, an increase of $1.6 million, or 37%. This increase consists of the following components:



| |  |  | Fees and service charges on deposits decreased $345 thousand, or 14%, largely due to lower transaction volumes, a reduction in overdraft fee income which decreased
$327 thousand and debit card fee income which decreased $65 thousand.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Fees on mortgage loan sales increased $1.1 million, or 123%, largely due to the Federal Reserve Banks aggressive monetary policy in an effort to drive down
mortgage rates. This, combined with additional internal efforts to market these services to the Banks customers, resulted in strong growth in mortgage related fee revenue.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other non-interest income increased $863 thousand, or 107%, due mainly to a one-time excise tax refund from the state of Washington of $977 thousand net of the
certain professional fees paid in the process of amending prior years excise tax returns.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Non-interest Expense

Three Months Ended March 31, 2009 and 2008

Non-interest
expense for the three months ended March 31, 2009 totaled $20.6 million, as compared to $18.8 million (excluding a goodwill impairment charge of $27 million) for the same quarter of the prior year. The change consists of the following
components:



| |  |  | Salaries and benefits were down $1.9 million, or 17.6%, in the first quarter of 2009 as compared to the first quarter of 2008, as a result of cost saving
initiatives that included a reduction in total staff of approximately 129 full-time equivalents.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | FDIC assessments were $3.48 million in the first quarter of 2009 as compared to $52 thousand in the first quarter of 2008. The increase was a result of increased
assessments rates and an accrual for a special assessment equal to 10 basis points of total deposits
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Equipment and occupancy increased $246 thousand, or 6.6%, related to costs associated with improvements made to existing facilities and higher rent expense.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Other non-interest expense increased $187 thousand or 6.2% largely due to an increase in professional fees associated with capital raising efforts and loan
collection activities.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Income Tax (Benefit) Provision

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

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. For non-accrual loans, interest previously accrued but not collected is reversed and charged against income at the time a loan is placed on non-accrual status. Any payments
received for a loan that is on non-accrual status are applied to principal. Interest income is not recognized until the loan is returned to accrual status, when all the principal and interest amounts contractually due are brought current and future
payments are reasonably assured.



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The following table summarizes the non-performing assets at March 31, 2009, December 31, 2008 and
March 31, 2008:



|                                                        |  |              |         |   |                  |   |         |              |  |   |        |  
|------------------------------------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | ------------ |  | - | ------ | -
|                                                        |  | March 312009 |         |   | December 31,2008 |   |         | March 312008 | 
|($ in thousands)                                        |  |              |         |   |                  |   |         |              | 
|Non-accrual loans (1)                                   |  | $            | 122,442 |   |                  | $ | 91,744  |              |  | $ | 43,269 |  
|Accruing loans over 90 days past due (1)                |  |              | 285     |   |                  |   |        |              |  |   | 3,578  |  
|                                                        |  |              |         |   |                  |   |         |              |  |   |        |  
|Total non-performing loans                              |  |              | 122,727 |   |                  |   | 91,744  |              |  |   | 46,847 |  
|Foreclosed real estate and other foreclosed assets      |  |              | 22,552  |   |                  |   | 15,781  |              |  |   | 1,645  |  
|                                                        |  |              |         |   |                  |   |         |              |  |   |        |  
|Total non-performing assets                             |  | $            | 145,279 |   |                  | $ | 107,525 |              |  | $ | 48,492 |  
|                                                        |  |              |         |   |                  |   |         |              |  |   |        |  
|Non-performing loans to total gross loans (1)           |  |              | 7.86    | % |                  |   | 5.65    | %            |  |   | 2.67   | %
|Non-performing assets to total assets (1)               |  |              | 7.96    | % |                  |   | 5.74    | %            |  |   | 2.30   | %
|Allowance for loan loss to total gross loans            |  |              | 2.60    | % |                  |   | 2.75    | %            |  |   | 1.54   | %
|Allowance for credit losses to total gross loans        |  |              | 2.65    | % |                  |   | 2.79    | %            |  |   | 1.62   | %
|Allowance for credit losses to non-performing loans (1) |  |              | 33.68   | % |                  |   | 49.47   | %            |  |   | 60.54  | %



|(1) | Amounts and ratios are shown net of government guarantees on non-performing loans of $1.4 million, $1.6 million, and $1.2 million, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------

Total non-performing assets were $145.3 million, or 7.96%, of total assets at March 31, 2009 as compared to $107.5 million, or 5.74%, of total assets at
December 31, 2008. Total non-performing loans as of March 31, 2009 were $122.7 million, or 7.86%, of total gross loans and consisted of the following categories:



|                                              |  |               |         |                     |     |  
|--------------------------------------------- |  | ------------- | ------- | ------------------- | --- | -
|($ in thousands)                              |  | March 31,2009 |         | % of Non-performing |    
|Construction, land development and other land |  | $             | 99,128  |                     | 81  | %
|Commercial real estate                        |  |               | 14,932  |                     | 12  | %
|Commercial and industrial                     |  |               | 4,503   |                     | 3   | %
|Residential real estate                       |  |               | 3,524   |                     | 3   | %
|Agricultural                                  |  |               | 629     |                     | 1   | %
|Installment and other                         |  |               | 11      |                     | 0   | %
|                                              |  |               |         |                     |     |  
|Total non-performing loans                    |  | $             | 122,727 |                     | 100 | %
|                                              |  |               |         |                     |     |  

The following is a summary of the activity of the non-performing loans during the three months ended
March 31, 2009:



|                                                                   |  |      |         |   |      |   |         |  
|------------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | -
|($ in thousands)                                                   |  | 2009 |         |   | 2008 |  
|Beginning Balance                                                  |  | $    | 91,744  |   |      | $ | 38,335  |  
|Additions and other                                                |  |      | 65,063  |   |      |   | 24,342  |  
|Charge-offs                                                        |  |      | (16,296 | ) |      |   | (10,674 | )
|Paydowns and sales                                                 |  |      | (6,218  | ) |      |   | (4,517  | )
|Reclassified to foreclosed real estate and other foreclosed assets |  |      | (11,566 | ) |      |   | (639    | )
|                                                                   |  |      |         |   |      |   |         |  
|Ending Balance                                                     |  | $    | 122,727 |   |      | $ | 46,847  |  
|                                                                   |  |      |         |   |      |   |         |  

At March 31, 2009 and December 31, 2008, the Company had approximately $74.8 million, or 4.79% of total
loans, and $102.9 million, or 6.33% of total loans, respectively, that were not classified as non-performing that management considered to be potential problem loans. A loan is considered a potential problem loan if it has a well-defined weakness,
based on known information about the borrowers financial condition that causes management to have concerns about the borrowers ability to comply with the repayment terms of the loan if the weakness is not corrected. Potential problem
loans are classified as substandard, or risk grade 7 on the Companys internal 9 grade risk rating scale, but are not included in non-performing loans. A substandard loan is



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placed on non-accrual status and included in non-performing loans when management determines, based on current information and events, that it is probable
the borrower will be unable to repay both principal and interest in accordance with the original terms of the loan agreement. These classifications are subject to managements judgment and management believes the classifications are appropriate
at March 31, 2009. The decrease in potential problem loans from December 31, 2008 is primarily the result of deterioration to non-accrual status in the residential construction loan portfolio.

As of March 31, 2009, other real estate owned (OREO) and foreclosed property totaled $22.6 million as compared to $15.8 million at December 31, 2008 and $1.6
million at March 31, 2008. Other real estate owned at March 31, 2009 was comprised of 36 individual properties, the largest of which was a condominium complex in South Jordan, Utah with a carrying value of $6.0 million. Of the remaining
properties, only 5 residential developments had carrying values in excess of $1.0 million. The remaining 30 properties had an average carrying value of $510 thousand and consisted principally of completed single family residences. The weighted
average holding period for properties held as of March 31, 2009 was approximately 4 months.

The Company pursues an active liquidation strategy
designed to condense holding periods and carrying costs associated with OREO. Marketing strategies commence during the foreclosure process, prior to ownership of the foreclosed asset. During the first quarter of 2009 the Company liquidated 11
properties as compared to 3 properties in the first quarter of 2008 and 30 properties for the full year 2008.

The following table sets forth the major
components of the changes in OREO and foreclosed property during the first quarter of 2009 and 2008:



|                      |  |                                      |        |   |        |     |   |        |   |        |        |  |    |  
|--------------------- |  | ------------------------------------ | ------ | - | ------ | --- | - | ------ | - | ------ | ------ |  | -- | -
|                      |  | For the three months ended March 31, |       
|                      |  | 2009                                 |        |   | 2008   |    
|($ in thousands)      |  | Amount                               |        |   | Number |     |   | Amount |   |        | Number | 
|Beginnng balance      |  | $                                    | 15,781 |   |        | 22  |   |        | $ | 1,230  |        |  | 4  |  
|Additions to OREO     |  |                                      | 11,566 |   |        | 25  |   |        |   | 1,509  |        |  | 5  |  
|Valuation adjustments |  |                                      | (126   | ) |        |    |   |        |   |       |        |  |   |  
|Disposition of OREO   |  |                                      | (4,669 | ) |        | (11 | ) |        |   | (1,094 | )      |  | (3 | )
|                      |  |                                      |        |   |        |     |   |        |   |        |        |  |    |  
|Ending balance        |  | $                                    | 22,552 |   |        | 36  |   |        | $ | 1,645  |        |  | 6  |  
|                      |  |                                      |        |   |        |     |   |        |   |        |        |  |    |  

Investment Portfolio

The Companys investment portfolio decreased from $65.3 million at December 31, 2008 to $60.4 million at March 31, 2009 as a result of sales, maturities and pay-downs. No securities were purchased during the first quarter of
2009. All securities are classified as available-forsale and recorded at fair value. Management believes that this classification provides greater flexibility to respond to unexpected interest rate changes and liquidity needs. The Company did
not hold any preferred securities issued by Fannie Mae or Freddie Mac as of March 31, 2009 or December 31, 2008.

Loan Portfolio

Total loans decreased $62.1 million during the three months ended March 31, 2009. The decrease includes a $45.8 million decrease in construction,
land development and other land loans and a $12.4 million decrease in commercial and industrial loans. At March 31, 2009, the Banks largest 20 credit relationships consisted of loans and loan commitments ranging from $7.4 million to $26.6
million, with an aggregate total credit exposure of $220.3 million and outstanding balances of $189.3 million. Of this total $114.9 million is related to commercial construction or land acquisition and development related loans and $55.1
million of these loans were classified as non-performing.

The Banks portfolio consists of loans extended to real estate developers and building
contractors, small and medium-sized businesses, agricultural businesses, professionals and consumers in the Banks principal market areas, and such loans are principally secured by residential and commercial real estate, crops, business
inventory and receivables. Management has assessed, and will continue to assess on an on-going basis, the effect of the economy within the Banks principal market areas on the credit risk in the loan portfolio, and the effect of overall



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economic conditions on the entire balance sheet. Management is aware of recent downturns in the residential real estate economy which have adversely affected
the credit quality of the loan portfolio. Additionally, management recognizes certain geographical concentrations in the market areas serviced and continues to closely monitor the Banks credit quality and focus on identifying potential problem
credits and any loss exposure in a timely manner. Industry concentration and related limits will continue to be subject to ongoing assessments.

The major
classifications of loans at March 31, 2009 and December 31, 2008 can be found in Note 3 to the Consolidated Financial Statements. The following table summarizes additional information related to the construction, land development and other
land category at March 31, 2009 and December 31, 2008:



|                                                    |  |               |         |                 |    |   |                  |   |                 |  |    |  
|--------------------------------------------------- |  | ------------- | ------- | --------------- | -- | - | ---------------- | - | --------------- |  | -- | -
|($ in thousands)                                    |  | March 31,2009 |         | % of TotalLoans |    |   | December 31,2008 |   | % of TotalLoans | 
|Residential land development                        |  | $             | 148,581 |                 | 10 | % |                  | $ | 173,065         |  | 11 | %
|Investor commercial construction                    |  |               | 84,922  |                 | 5  | % |                  |   | 87,241          |  | 5  | %
|Builder spec                                        |  |               | 28,613  |                 | 2  | % |                  |   | 38,895          |  | 2  | %
|Owner occupied commercial construction              |  |               | 40,672  |                 | 3  | % |                  |   | 42,922          |  | 3  | %
|Residential consumer                                |  |               | 22,087  |                 | 1  | % |                  |   | 31,223          |  | 2  | %
|Raw land                                            |  |               | 9,328   |                 | 1  | % |                  |   | 10,074          |  | 1  | %
|Builder custom                                      |  |               | 157     |                 | 0  | % |                  |   | 576             |  | 0  | %
|Other                                               |  |               | 8,204   |                 | 1  | % |                  |   | 4,385           |  | 0  | %
|                                                    |  |               |         |                 |    |   |                  |   |                 |  |    |  
|Total construction, land development and other land |  | $             | 342,564 |                 | 23 | % |                  | $ | 388,381         |  | 24 | %
|                                                    |  |               |         |                 |    |   |                  |   |                 |  |    |  

The following table summarizes the outstanding unfunded commitments as of March 31, 2009:



|                                              |  |               |        
|--------------------------------------------- |  | ------------- | -------
|($ in thousands)                              |  | March 31,2009
|Commercial and industrial                     |  | $             | 90,040 
|Commercial real estate                        |  |               | 43,221 
|Residential real estate                       |  |               | 46,009 
|Agricultural                                  |  |               | 59,965 
|Construction, land development and other land |  |               | 20,134 
|Installment and other                         |  |               | 9,298  
|                                              |  |               |        
|Total                                         |  | $             | 268,667
|                                              |  |               |        

The following table summarizes the loan portfolio repricing as of March 31, 2009. The adjustable and variable
rate loans are tied to Prime or another market index. Adjustable rate loans do not re-price immediately with market changes while variable rate loans adjust within three months or immediately with market index rate changes:



|                 |  |               |  
|---------------- |  | ------------- | -
|                 |  | March 31,2009 |  
|Adjustable Rates |  | 34            | %
|Variable Rates   |  | 42            | %
|Fixed Rates      |  | 24            | %

Allowance for Loan Losses and Reserve for Unfunded Commitments

At March 31, 2009, the Banks allowance for loan losses was $40.7 million, or 2.60%, of total loans. This compares to $44.7 million, or 2.75%, at
December 31, 2008. At March 31, 2009 and December 31, 2008 the Banks reserve for unfunded commitments was $660 thousand. The allowance for loan losses is increased by charges to income through the provision for loan losses, and
decreased by charge-offs, net of recoveries. The reserve for unfunded commitments is increased or decreased through charges through income included in other non-interest expense. Loans are charged to the allowance when management believes the
collection of principal is unlikely.



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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 March 31, 2009. Management uses currently available information to recognize losses on loans and foreclosed real estate and other foreclosed assets; however,
depending on economic conditions in the markets the Company serves, and other conditions, there can be no assurance that significant additional loan loss provisions may not be necessary to supplement the allowance. In addition, the Banks
regulators, as an integral part of their examination process, review the Banks loans and allowance for loan losses.

The following table summarizes
the loan charge-offs by loan type for the three months ended March 31, 2009 and 2008:



|                                              |  |                                  |        |                                  |   |       
|--------------------------------------------- |  | -------------------------------- | ------ | -------------------------------- | - | ------
|($ in thousands)                              |  | Three Months EndedMarch 31, 2009 |        | Three Months EndedMarch 31, 2008
|Construction, land development and other land |  | $                                | 14,874 |                                  | $ | 10,029
|Commercial and industrial                     |  |                                  | 1,916  |                                  |   | 247   
|Commercial real estate                        |  |                                  | 426    |                                  |   | 115   
|Residential real estate                       |  |                                  | 532    |                                  |   | 33    
|Agricultural                                  |  |                                  |       |                                  |   | 508   
|Installment and other                         |  |                                  | 195    |                                  |   | 156   
|                                              |  |                                  |        |                                  |   |       
|Total                                         |  | $                                | 17,943 |                                  | $ | 11,088
|                                              |  |                                  |        |                                  |   |       

Deposits and Borrowings

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 fell $35.5 million during the three months ended March 31, 2009, ending the period at $1.54 billion. Non-interest bearing demand deposits fell $33.3
million, or 10.4%, during the first quarter of 2009 but the average balance outstanding fell just 4.3% in the first quarter of 2009 as compared to the fourth quarter of 2008. Non-interest bearing deposits were 18.7% of total deposits as of
March 31, 2009 as compared to 20.4% at December 31, 2008.

Federal Home Loan Bank of Seattle (FHLB) advances and other borrowings increased by
$1.0 million during the three months ended March 31, 2009 to $140.7 million.

Liquidity and Capital Resources

For the three months ended March 31, 2009 and 2008, the net cash flows used in operations were $3.2 million and $1.1 million, respectively. Additionally, the Company
generated $40.5 million in net cash from investing activities primarily as loan balances decreased and used $34.7 million in net cash from financing activities for the three months ended March 31, 2009. The Company used $14.6 million in
investing activities and generated $19.3 million in net cash from financing activities during the same period of the previous year.



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The Banks primary source of funds is deposits. In addition, the Bank has the ability to borrow from the FHLB
and the Federal Reserve Bank of San Francisco (FRB) Discount Window. At March 31, 2009, the Bank had $200.5 million of available credit from these sources as compared to $251.5 million at December 31, 2008. As of March 31, 2009 and
December 31, 2008, the Bank did not have any Fed Funds lines agreements with correspondent banks.

The Parent Company received no cash dividends from
the Bank during the three months ended March 31, 2009. Similarly, the Parent Company declared no cash dividends during the first quarter of 2009, compared to the first quarter of 2008 when a cash dividend of $0.04 per share was declared. The
decision to suspend Parent cash dividends was made by the Board of Directors in accordance with the Companys capital and dividend policy in March 2008. Subsequent to the decision to suspend payment of Parent cash dividends, the Company was
advised by the FRB that prior approval would be required before paying any future Parent cash dividends.

In accordance with the provisions of the related
indentures, the Company has notified the trustees of the Trusts with respect to its four trust preferred securities issuances that the payment of interest will be deferred until further notice. This action will result in approximately $700 thousand
of additional liquidity and capital being retained at the subsidiary bank level each quarter. The Company has the right to defer interest payments for up to 20 consecutive quarters, although it will continue to accrue the cost of the interest, at
the normal interest rate on a compounded basis until such time as the deferred arrearage has been paid current.

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. The Bank is currently prohibited by regulatory
order from paying any dividends to the Company without prior regulatory approval.

The Companys total stockholders equity decreased to $75.4
million at March 31, 2009 as compared to $89.8 million at December 31, 2008. This decrease is mainly related to the net loss recorded for the first three months of 2009 of $14.5 million. The Companys total stockholders equity
to total assets ratio decreased to 4.13% as of March 31, 2009 from 4.79% as of December 31, 2008. As of March 31, 2009, the Companys tangible stockholders equity to ending tangible assets ratio decreased to 2.44% and $2.54
per share as compared to 3.12% and $3.34 per share at December 31, 2008. At March 31, 2009 and December 31, 2008, the Company held cash and cash equivalent assets of $69.6 million and $67.0 million, respectively.

As of March 31, 2009, the Company and the Bank have failed to meet certain regulatory capital requirements established by the federal banking agencies. As a result
of these capital deficiencies, as of May 2009, the Bank has entered into a Stipulation and Consent to the Issuance of an Order to Cease and Desist with the FDIC and DFI (Stipulation) (for further details see Item 2, Managements Discussion
and Analysis of Financial Condition and Results of Operations). These actions by regulators could have a direct material effect on the Companys financial statements. Under the order issued pursuant to the Stipulation, the Bank must meet
specific capital guidelines that involve quantitative measures of its 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.



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AMERICANWEST BANCORPORATION



The Companys and the Banks actual capital amounts and ratios as of March 31, 2009 are presented in
the table below:



|                                                    |  |        |         |       |                        |   |        |                  |         |  |      |        |  |       |         |  |       |  
|--------------------------------------------------- |  | ------ | ------- | ----- | ---------------------- | - | ------ | ---------------- | ------- |  | ---- | ------ |  | ----- | ------- |  | ----- | -
|                                                    |  | Actual |         |       | Adequately Capitalized |   |        | Well Capitalized |        
|($ in thousands)                                    |  | Amount |         | Ratio |                        |   | Amount |                  | Ratio   |  |      | Amount |  | Ratio |        
|As of March 31, 2009:                               |  |        |         |       |                        |   |        |                  |         |  |      |        |  |       |         |  |       |  
|Total capital to risk weighted assets:              |  |        |         |       |                        |   |        |                  |         |  |      |        |  |       |         |  |       |  
|Company                                             |  | $      | 105,656 |       | 6.02                   | % |        | $                | 140,450 |  | 8.00 | %      |  |       | N/A     |  | N/A   |  
|Bank                                                |  |        | 106,067 |       | 6.05                   | % |        |                  | 140,222 |  | 8.00 | %      |  | $     | 175,278 |  | 10.00 | %
|Tier I capital to risk weighted assets:             |  |        |         |       |                        |   |        |                  |         |  |      |        |  |       |         |  |       |  
|Company                                             |  |        | 68,472  |       | 3.90                   | % |        |                  | 70,225  |  | 4.00 | %      |  |       | N/A     |  | N/A   |  
|Bank                                                |  |        | 83,918  |       | 4.79                   | % |        |                  | 70,111  |  | 4.00 | %      |  |       | 105,167 |  | 6.00  | %
|Leverage capital, Tier I capital to average assets: |  |        |         |       |                        |   |        |                  |         |  |      |        |  |       |         |  |       |  
|Company                                             |  |        | 68,472  |       | 3.76                   | % |        |                  | 72,907  |  | 4.00 | %      |  |       | N/A     |  | N/A   |  
|Bank                                                |  |        | 83,918  |       | 4.61                   | % |        |                  | 72,792  |  | 4.00 | %      |  |       | 90,990  |  | 5.00  | %

During November 2008, the Company submitted an application for approval to issue $57 million of preferred stock to
the United States Department of the Treasury (Treasury) under the Troubled Asset Relief Programs Capital Purchase Program (TARP-CPP). This application reflected the Companys commitment to secure a significant private equity investment
coincident with receipt of any capital infusion from the Treasury under TARP-CPP. On April 28, 2009, the Company submitted a letter to the FDIC, which serves as the primary regulator for AmericanWest Bank, indicating its intention to withdraw
its TARP-CPP application. The decision to withdraw the application was based upon a number of factors, including the expectation that the required private equity co-investment will not be consummated prior to the deadline for the processing of final
TARP-CPP investments.

The Company and its financial advisor, Sandler ONeill + Partners, LP, continued efforts with respect to identification of and
discussions with a variety of potential private equity investors over the past six months. A group of prospective investors have provided the Company with a non-binding proposal, which originally contemplated a matching TARP-CPP investment. This
proposal was deemed by the Companys Board of Directors to be acceptable, and the prospective investors substantially completed their on-site due diligence. The Company and its financial advisor have informed the prospective investors of the
decision to withdraw the TARP-CPP application and are continuing discussions regarding alternative approaches to securing a mutually acceptable recapitalization agreement. Although the Company has the existing authority under its Articles of
Incorporation to issue preferred shares, it is likely that shareholder approval will be required for any private equity investment in common stock in accordance with NASDAQ rules.

As previously announced during the third quarter of 2008, the Company initiated efforts to divest certain assets during the third quarter of 2008 through the marketing of selected branches, loans and deposits. The
Company has received letters of intent from more than one party at terms that are acceptable to the Board of Directors. These transactions, if approved by the regulatory authorities and consummated at a premium, would have a positive impact on the
capital ratios of the Bank as additional capital would be generated and risk assets would be reduced.



|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 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 slightly under rising interest rates. These scenarios also include the assumptions that balances and current pricing
spreads remain constant. The modeling as of March 31, 2009 considered parallel interest rate changes of an increase in rates of 100 basis points and 200 basis points.

The economic value of the Companys equity changes slightly under rising or falling rates. Both the declining and increasing interest rate risk measures remain within the Companys policy limits as of
March 31, 2009. Management also runs non-parallel 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.



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AMERICANWEST BANCORPORATION



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 March 31, 2009 and December 31, 2008 based on the rate changes evaluated at the time of the analysis.



|                                |  |                                                        |     |  |                  |    
|------------------------------- |  | ------------------------------------------------------ | --- |  | ---------------- | ---
|                                |  | Percentage Change in Net InterestIncome over 12 Months |    
|Rate Scenario                   |  | March 31,2009                                          |     |  | December 31,2008 |    
|Rates increase 200 basis points |  | 2.73                                                   | %   |  | 3.96             | %  
|Rates increase 100 basis points |  | 1.30                                                   | %   |  | 1.94             | %  
|Rates decrease 100 basis points |  | N/A                                                    | (1) |  | N/A              | (1)
|Rates decrease 200 basis points |  | N/A                                                    | (1) |  | N/A              | (1)



|(1) | Market rates in effect were less than 1.0% thus these downward rate simulation scenarios are not applicable.
|--- | ------------------------------------------------------------------------------------------------------------



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

During the three months ended
March 31, 2009, 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 the Company, 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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AMERICANWEST BANCORPORATION



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 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
three months ended March 31, 2009 or the year ended December 31, 2008.



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

Not applicable.



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

Not
applicable.



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

There is no other information to report.



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

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



|     |  |                                                                                                                                                                                                                                                                       
|---- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Amended and Restated Articles of Incorporation of AmericanWest (filed as Exhibit 3.1 to the Form 10-Q filed on August 11, 2008, and incorporated herein by this reference).                                                                                           
|     | 
|3.2  |  | Amended and Restated Bylaws of AmericanWest Bancorporation (filed as Exhibit 3.2 to the Form 8-K filed on April 21, 2009, and incorporated herein by this reference).                                                                                                 
|     | 
|10.1 |  | Order to Cease and Desist dated May 11, 2009, issued by the Federal Deposit Insurance Corporation and Washington Department of Financial Institutions.+                                                                                                               
|     | 
|10.2 |  | Stipulation to Consent to an Order to Cease and Desist dated May 8, 2009, issued by the Federal Deposit Insurance Corporation and Washington Department of Financial
Institutions.+                                                                                   
|     | 
|10.3 |  | Amendment No. 4 to Employment Agreement by and between AmericanWest Bancorporation, AmericanWest Bank and B. Nicole Sherman dated effective April 15, 2009 (filed as Exhibit 10.1 to the Form 8-K
filed on April 21, 2009, and incorporated herein by this reference).
|     | 
|31.1 |  | Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.+                                                                                                                                  
|     | 
|32.1 |  | Certification of the Chief Executive Officer and 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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AMERICANWEST BANCORPORATION



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 May 15, 2009.



AMERICANWEST BANCORPORATION\s\ Patrick J. RusnakPatrick J. RusnakChief Executive Officer\s\ Shelly L. KrasseltPrincipal Accounting OfficerVice President and Controller




31