##### Table of Contents

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



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

For the quarterly period ended March 31, 2007 or



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

For the transition period from  to

Commission File Number 000-18561



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AMERICANWEST BANCORPORATION

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Washington                                                     |  | 91-1259511                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

41 West Riverside, Suite 400

Spokane, Washington 99201-0813

(Address of principal executive offices,
including zip code)

(509) 467-6993

(Registrants telephone number, including area code)

Not Applicable

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No ̈

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

Large Accelerated filer ̈Accelerated filer  x    Non-accelerated filer ̈

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

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



|             |  |                             
|------------ |  | ----------------------------
|Class        |  | Number of Shares Outstanding
|Common Stock |  | 17,184,588 at May 1, 2007   



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##### Table of Contents

INDEX TO QUARTERLY REPORT ON FORM 10-Q

March 31, 2007

Table of Contents



|        |  |                       |  |                                                                                          |  |     
|------- |  | --------------------- |  | ---------------------------------------------------------------------------------------- |  | ----
|        |  |                       |  |                                                                                          |  | Page
|Part I  |  | Financial Information |  |                                                                                         
|        |  |                       | 
|        |  | Item 1.               |  | Financial Statements                                                                     |  |     
|        |  |                       | 
|        |  |                       |  | Consolidated Statement of Condition as of March 31, 2007 and December 31, 2006           |  | 3   
|        |  |                       | 
|        |  |                       |  | Consolidated Statements of Income for the Three Months Ended March 31, 2007 and 2006     |  | 4   
|        |  |                       | 
|        |  |                       |  | Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2007 and 2006 |  | 5   
|        |  |                       | 
|        |  |                       |  | Notes to Consolidated Financial Statements                                               |  | 6   
|        |  |                       | 
|        |  | Item 2.               |  | Managements Discussion and Analysis of Financial Condition and Results of Operations    |  | 13  
|        |  |                       | 
|        |  | Item 3.               |  | Quantitative and Qualitative Disclosures About Market Risk                               |  | 22  
|        |  |                       | 
|        |  | Item 4.               |  | Controls and Procedures                                                                  |  | 22  
|        |  |                      
|Part II |  | Other Information     |  |                                                                                         
|        |  |                       | 
|        |  | Item 1.               |  | Legal Proceedings                                                                        |  | 23  
|        |  |                       | 
|        |  | Item 1A.              |  | Risk Factors                                                                             |  | 23  
|        |  |                       | 
|        |  | Item 2.               |  | Unregistered Sales of Equity Securities and Use of Proceeds                              |  | 23  
|        |  |                       | 
|        |  | Item 3.               |  | Defaults Upon Senior Securities                                                          |  | 23  
|        |  |                       | 
|        |  | Item 4.               |  | Submission of Matters to a Vote of Security Holders                                      |  | 24  
|        |  |                       | 
|        |  | Item 5.               |  | Other Information                                                                        |  | 24  
|        |  |                       | 
|        |  | Item 6.               |  | Exhibits                                                                                 |  | 24  
|        |  |                      
|        |  | Signatures            |  | 26                                                                                      



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##### Table of Contents

Part I. Financial Information

Item 1. Financial Statements

CONSOLIDATED STATEMENT OF CONDITION

(unaudited)

($ in thousands)



|                                                                                                                                                                                      |  |               |           |                  |   |          
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | ---------------- | - | ---------
|                                                                                                                                                                                      |  | March 31,2007 |           | December 31,2006
|ASSETS                                                                                                                                                                                |  |               |           |                  |   |          
|Cash and due from banks                                                                                                                                                               |  | $             | 64,973    |                  | $ | 45,866   
|Overnight interest bearing deposits with other banks                                                                                                                                  |  |               | 481       |                  |   | 9,863    
|                                                                                                                                                                                      |  |               |           |                  |   |          
|Cash and cash equivalents                                                                                                                                                             |  |               | 65,454    |                  |   | 55,729   
|                                                                                                                                                                                      |  |              
|Securities, available-for-sale at fair value                                                                                                                                          |  |               | 40,156    |                  |   | 39,518   
|                                                                                                                                                                                      |  |              
|Loans, net of allowance for loan losses of $14,657 and $15,136, respectively                                                                                                          |  |               | 1,231,731 |                  |   | 1,204,519
|                                                                                                                                                                                      |  |              
|Loans, held for sale                                                                                                                                                                  |  |               | 6,904     |                  |   | 2,913    
|Accrued interest receivable                                                                                                                                                           |  |               | 8,275     |                  |   | 8,311    
|FHLB stock                                                                                                                                                                            |  |               | 6,319     |                  |   | 6,319    
|Premises and equipment, net                                                                                                                                                           |  |               | 30,985    |                  |   | 30,484   
|Foreclosed real estate and other foreclosed assets                                                                                                                                    |  |               | 1,013     |                  |   | 644      
|Bank owned life insurance                                                                                                                                                             |  |               | 19,894    |                  |   | 19,716   
|Goodwill                                                                                                                                                                              |  |               | 33,073    |                  |   | 33,073   
|Intangible assets                                                                                                                                                                     |  |               | 7,215     |                  |   | 7,506    
|Other assets                                                                                                                                                                          |  |               | 7,627     |                  |   | 7,796    
|                                                                                                                                                                                      |  |               |           |                  |   |          
|TOTAL ASSETS                                                                                                                                                                          |  | $             | 1,458,646 |                  | $ | 1,416,528
|                                                                                                                                                                                      |  |               |           |                  |   |          
|LIABILITIES                                                                                                                                                                           |  |               |           |                  |   |          
|Non-interest bearing demand deposits                                                                                                                                                  |  | $             | 217,967   |                  | $ | 236,375  
|Interest bearing deposits:                                                                                                                                                            |  |               |           |                  |   |          
|NOW, savings account and money market accounts                                                                                                                                        |  |               | 503,126   |                  |   | 476,852  
|Time, $100,000 and over                                                                                                                                                               |  |               | 251,088   |                  |   | 217,508  
|Other time                                                                                                                                                                            |  |               | 194,967   |                  |   | 193,204  
|                                                                                                                                                                                      |  |               |           |                  |   |          
|TOTAL DEPOSITS                                                                                                                                                                        |  |               | 1,167,148 |                  |   | 1,123,939
|                                                                                                                                                                                      |  |              
|Federal Home Loan Bank advances                                                                                                                                                       |  |               | 73,543    |                  |   | 105,759  
|Other borrowings and capital lease obligations                                                                                                                                        |  |               | 8,247     |                  |   | 307      
|Junior subordinated debt                                                                                                                                                              |  |               | 41,239    |                  |   | 20,620   
|Accrued interest payable                                                                                                                                                              |  |               | 4,442     |                  |   | 4,270    
|Other liabilities                                                                                                                                                                     |  |               | 9,296     |                  |   | 9,596    
|                                                                                                                                                                                      |  |               |           |                  |   |          
|TOTAL LIABILITIES                                                                                                                                                                     |  |               | 1,303,915 |                  |   | 1,264,491
|STOCKHOLDERS EQUITY                                                                                                                                                                  |  |               |           |                  |   |          
|Common stock, no par, shares authorized 50 million; 11,520,331 issued and 11,424,831 outstanding at March 31, 2007; 11,467,648 issued and
11,388,315 outstanding at December 31, 2006 |  |               | 128,261   |                  |   | 127,396  
|Retained earnings                                                                                                                                                                     |  |               | 26,419    |                  |   | 24,576   
|Accumulated other comprehensive income, net of tax                                                                                                                                    |  |               | 51        |                  |   | 65       
|                                                                                                                                                                                      |  |               |           |                  |   |          
|TOTAL STOCKHOLDERS EQUITY                                                                                                                                                            |  |               | 154,731   |                  |   | 152,037  
|                                                                                                                                                                                      |  |               |           |                  |   |          
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                            |  | $             | 1,458,646 |                  | $ | 1,416,528
|                                                                                                                                                                                      |  |               |           |                  |   |          

The accompanying notes are an integral part of these statements.



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CONSOLIDATED STATEMENTS OF INCOME

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(unaudited)

($ in thousands, except per share
amounts)



|                                                      |  |                              |            |      |   |           
|----------------------------------------------------- |  | ---------------------------- | ---------- | ---- | - | ----------
|                                                      |  | Three Months Ended March 31,
|                                                      |  | 2007                         |            | 2006
|INTEREST INCOME                                       |  |                              |            |      |   |           
|Interest and fees on loans                            |  | $                            | 24,329     |      | $ | 18,857    
|Interest on securities                                |  |                              | 462        |      |   | 458       
|Other interest income                                 |  |                              | 71         |      |   | 51        
|                                                      |  |                              |            |      |   |           
|TOTAL INTEREST INCOME                                 |  |                              | 24,862     |      |   | 19,366    
|                                                      |  |                              |            |      |   |           
|INTEREST EXPENSE                                      |  |                              |            |      |   |           
|Interest on deposits                                  |  |                              | 8,520      |      |   | 5,036     
|Interest on borrowings                                |  |                              | 1,608      |      |   | 1,107     
|                                                      |  |                              |            |      |   |           
|TOTAL INTEREST EXPENSE                                |  |                              | 10,128     |      |   | 6,143     
|                                                      |  |                              |            |      |   |           
|NET INTEREST INCOME                                   |  |                              | 14,734     |      |   | 13,223    
|Provision for credit losses                           |  |                              |           |      |   | 782       
|                                                      |  |                              |            |      |   |           
|NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES |  |                              | 14,734     |      |   | 12,441    
|                                                      |  |                              |            |      |   |           
|NON-INTEREST INCOME                                   |  |                              |            |      |   |           
|Fees and service charges on deposits                  |  |                              | 1,390      |      |   | 1,166     
|Fees on mortgage loan sales                           |  |                              | 342        |      |   | 280       
|Other                                                 |  |                              | 673        |      |   | 310       
|                                                      |  |                              |            |      |   |           
|TOTAL NON-INTEREST INCOME                             |  |                              | 2,405      |      |   | 1,756     
|                                                      |  |                              |            |      |   |           
|NON-INTEREST EXPENSE                                  |  |                              |            |      |   |           
|Salaries and employee benefits                        |  |                              | 8,418      |      |   | 6,891     
|Equipment expense                                     |  |                              | 1,261      |      |   | 887       
|Occupancy expense, net                                |  |                              | 1,227      |      |   | 924       
|State business and occupation tax                     |  |                              | 304        |      |   | 254       
|Intangible assets amortization                        |  |                              | 291        |      |   | 100       
|Foreclosed real estate and other foreclosed assets    |  |                              | 48         |      |   | 426       
|Other                                                 |  |                              | 2,218      |      |   | 2,186     
|                                                      |  |                              |            |      |   |           
|TOTAL NON-INTEREST EXPENSE                            |  |                              | 13,767     |      |   | 11,668    
|                                                      |  |                              |            |      |   |           
|INCOME BEFORE PROVISION FOR INCOME TAX                |  |                              | 3,372      |      |   | 2,529     
|PROVISION FOR INCOME TAX                              |  |                              | 1,187      |      |   | 880       
|                                                      |  |                              |            |      |   |           
|NET INCOME                                            |  | $                            | 2,185      |      | $ | 1,649     
|                                                      |  |                              |            |      |   |           
|Basic earnings per common share                       |  | $                            | 0.19       |      | $ | 0.15      
|Diluted earnings per common share                     |  | $                            | 0.19       |      | $ | 0.15      
|Basic weighted average shares outstanding             |  |                              | 11,412,991 |      |   | 10,641,585
|Diluted weighted average shares outstanding           |  |                              | 11,540,998 |      |   | 10,880,915

The accompanying notes are an integral part of these statements.



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CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2007 AND 2006

(unaudited)

($ in thousands)



|                                                                                                                 |      |                              |         |      |  |   |         |  
|---------------------------------------------------------------------------------------------------------------- | ---- | ---------------------------- | ------- | ---- |  | - | ------- | -
|                                                                                                                 |      | Three months ended March 31, |        
|                                                                                                                 | 2007 |                              |         | 2006 | 
|CASH FLOWS PROVIDED BY OPERATING ACTIVITIES                                                                      |      |                              |         |      |  |   |         |  
|Net Income                                                                                                       |      | $                            | 2,185   |      |  | $ | 1,649   |  
|Adjustments to reconcile net income to net cash provided by operating activities:                                |      |                              |         |      |  |   |         |  
|Provision for loan losses and foreclosed real estate and other foreclosed assets                                 |      |                              | 13      |      |  |   | 1,125   |  
|Depreciation and amortization                                                                                    |      |                              | 1,053   |      |  |   | 654     |  
|Stock-based compensation                                                                                         |      |                              | 445     |      |  |   | 231     |  
|Gain on sale of other premises and equipment, investments and foreclosed real estate and other foreclosed assets |      |                              | (192    | )    |  |   | (3      | )
|Loss on reclassification of premises to held for sale                                                            |      |                              |        |      |  |   | 300     |  
|Originations of loans held for sale                                                                              |      |                              | (31,611 | )    |  |   | (11,122 | )
|Proceeds from loans sold                                                                                         |      |                              | 27,620  |      |  |   | 12,767  |  
|Changes in assets and liabilities:                                                                               |      |                              |         |      |  |   |         |  
|Accrued interest receivable                                                                                      |      |                              | 36      |      |  |   | 247     |  
|Bank owned life insurance                                                                                        |      |                              | (178    | )    |  |   | (53     | )
|Other assets                                                                                                     |      |                              | 796     |      |  |   | 1,337   |  
|Accrued interest payable                                                                                         |      |                              | 172     |      |  |   | 27      |  
|Other liabilities                                                                                                |      |                              | (333    | )    |  |   | (245    | )
|                                                                                                                 |      |                              |         |      |  |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                                                        |      |                              | 6       |      |  |   | 6,914   |  
|                                                                                                                 |      |                              |         |      |  |   |         |  
|CASH FLOWS USED IN INVESTING ACTIVITIES                                                                          |      |                              |         |      |  |   |         |  
|Securities available-for-sale:                                                                                   |      |                              |         |      |  |   |         |  
|Maturities, calls, sales and principal payments                                                                  |      |                              | 1,809   |      |  |   | 2,681   |  
|Purchases                                                                                                        |      |                              | (2,453  | )    |  |   | (860    | )
|Purchase of Columbia Trust Bancorporation, net of cash acquired                                                  |      |                              |        |      |  |   | 17,858  |  
|Purchased securities of Capital Trust Subsidiaries                                                               |      |                              | (619    | )    |  |   | (217    | )
|Net increase in loans                                                                                            |      |                              | (27,963 | )    |  |   | (43,532 | )
|Purchases of premises and equipment                                                                              |      |                              | (1,283  | )    |  |   | (1,199  | )
|Proceeds from sale of premises and equipment                                                                     |      |                              | 15      |      |  |   | 5       |  
|Proceeds from sale of foreclosed real estate and other foreclosed assets                                         |      |                              | 583     |      |  |   | 545     |  
|                                                                                                                 |      |                              |         |      |  |   |         |  
|NET CASH USED IN INVESTING ACTIVITIES                                                                            |      |                              | (29,911 | )    |  |   | (24,719 | )
|                                                                                                                 |      |                              |         |      |  |   |         |  
|CASH FLOWS PROVIDED BY FINANCING ACTIVITIES                                                                      |      |                              |         |      |  |   |         |  
|Net increase in deposits                                                                                         |      |                              | 43,209  |      |  |   | 8,678   |  
|Proceeds from Federal Home Loan Bank advances                                                                    |      |                              | 40,000  |      |  |   | 10,000  |  
|Repayments of Federal Home Loan Bank advances and other borrowing activity                                       |      |                              | (64,276 | )    |  |   | (10,145 | )
|Proceeds from issuances of common stock under equity incentive plans                                             |      |                              | 420     |      |  |   | 384     |  
|Proceeds from issuance of junior subordinated debt                                                               |      |                              | 20,619  |      |  |   | 7,217   |  
|Payment of cash dividend                                                                                         |      |                              | (342    | )    |  |   |        |  
|                                                                                                                 |      |                              |         |      |  |   |         |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                                        |      |                              | 39,630  |      |  |   | 16,134  |  
|                                                                                                                 |      |                              |         |      |  |   |         |  
|NET CHANGE IN CASH AND CASH EQUIVALENTS                                                                          |      |                              | 9,725   |      |  |   | (1,671  | )
|Cash and cash equivalents, beginning of year                                                                     |      | $                            | 55,729  |      |  | $ | 51,944  |  
|                                                                                                                 |      |                              |         |      |  |   |         |  
|Cash and cash equivalents, end of period                                                                         |      | $                            | 65,454  |      |  | $ | 50,273  |  
|                                                                                                                 |      |                              |         |      |  |   |         |  
|Supplemental Disclosures:                                                                                        |      |                              |         |      |  |   |         |  
|Cash paid during the period for:                                                                                 |      |                              |         |      |  |   |         |  
|Interest                                                                                                         |      | $                            | 9,956   |      |  | $ | 6,116   |  
|Income taxes                                                                                                     |      | $                            | 14      |      |  | $ | 6       |  
|Non-cash Investing and Financing Activities:                                                                     |      |                              |         |      |  |   |         |  
|Foreclosed real estate acquired in settlement of loans                                                           |      | $                            | 784     |      |  | $ | 40      |  
|Fair value of assets acquired                                                                                    |      | $                            |        |      |  | $ | 229,972 |  
|Cash consideration paid for acquisition                                                                          |      | $                            |        |      |  | $ | (18,961 | )
|Stock-based consideration issued for acquisition                                                                 |      | $                            |        |      |  | $ | (20,593 | )
|Liabilities assumed in acquisition                                                                               |      | $                            |        |      |  | $ | 190,418 |  

The accompanying notes are an integral part of these statements.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. Basis of Presentation

The foregoing unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of
America for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, these financial statements do not include all of the
disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. These unaudited interim consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and the accompanying notes included in the annual report on Form 10-K for the year ended December 31, 2006. In the opinion of management, the unaudited interim consolidated financial statements furnished
herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. The results of operations for the three month periods ended March 31, 2007 and
March 31, 2006 are not necessarily indicative of the operating results for the full year. Certain prior year balances have been reclassified to conform to the current year presentation. These reclassifications had no effect on retained earnings
or net income as previously presented.

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

NOTE 2. Securities

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



|                                                                 |               |                |           |                   |               |        |           |   |        |  |   |       
|---------------------------------------------------------------- | ------------- | -------------- | --------- | ----------------- | ------------- | ------ | --------- | - | ------ |  | - | ------
|($ in thousands)                                                 |               | March 31, 2007 |           | December 31, 2006
|                                                                 | AmortizedCost |                | FairValue |                   | AmortizedCost |        | FairValue
|Obligations of Federal Government Agencies                       |               | $              | 9,744     |                   | $             | 9,693  |           | $ | 11,927 |  | $ | 11,857
|Obligations of states, municipalities and political subdivisions |               |                | 10,267    |                   |               | 10,280 |           |   | 9,016  |  |   | 9,062 
|Mortgage-backed securities                                       |               |                | 14,163    |                   |               | 14,224 |           |   | 14,680 |  |   | 14,739
|Corporate securities                                             |               |                | 1,499     |                   |               | 1,485  |           |   | 1,498  |  |   | 1,481 
|Other securities                                                 |               |                | 4,406     |                   |               | 4,474  |           |   | 2,297  |  |   | 2,379 
|                                                                 |               |                |           |                   |               |        |           |   |        |  |   |       
|Total                                                            |               | $              | 40,079    |                   | $             | 40,156 |           | $ | 39,418 |  | $ | 39,518
|                                                                 |               |                |           |                   |               |        |           |   |        |  |   |       



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NOTE 3. Loans and Allowance for Loan Losses

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



|                                          |  |                |           |   |                   |   |           |  
|----------------------------------------- |  | -------------- | --------- | - | ----------------- | - | --------- | -
|($ in thousands)                          |  | March 31, 2007 |           |   | December 31, 2006 |  
|Commercial real estate                    |  | $              | 676,442   |   |                   | $ | 651,386   |  
|Commercial and industrial                 |  |                | 298,888   |   |                   |   | 283,889   |  
|Agricultural                              |  |                | 120,445   |   |                   |   | 141,646   |  
|Residential mortgage                      |  |                | 79,002    |   |                   |   | 74,222    |  
|Residential construction                  |  |                | 51,472    |   |                   |   | 47,235    |  
|Installment and other                     |  |                | 21,913    |   |                   |   | 22,508    |  
|                                          |  |                |           |   |                   |   |           |  
|Total Loans                               |  | $              | 1,248,162 |   |                   | $ | 1,220,886 |  
|                                          |  |                |           |   |                   |   |           |  
|Allowance for loan losses                 |  |                | (14,657   | ) |                   |   | (15,136   | )
|Deferred loan fees, net of deferred costs |  |                | (1,774    | ) |                   |   | (1,231    | )
|                                          |  |                |           |   |                   |   |           |  
|Net Loans                                 |  | $              | 1,231,731 |   |                   | $ | 1,204,519 |  
|                                          |  |                |           |   |                   |   |           |  

The allowance for loan loss and reserve for unfunded commitments are maintained at levels considered adequate by
management to provide for possible loan losses as of the consolidated statement of condition reporting dates. The allowance and reserve for unfunded commitments are based on managements assessment of various factors affecting the loan
portfolio, including problem loans, business conditions and loss experience, and an overall evaluation of the quality of the underlying collateral. Changes in the allowance for loan losses and the reserve for unfunded commitments during the three
months ended March 31, 2007 and 2006 were as follows:



|                                    |  |                    |        |   |           |   |        |  
|----------------------------------- |  | ------------------ | ------ | - | --------- | - | ------ | -
|                                    |  | Three Months Ended |       
|                                    |  | 3/31/2007          |        |   | 3/31/2006 |  
|Allowance for Loan Losses:          |  |                    |        |   |           |   |        |  
|Balance, beginning of period        |  | $                  | 15,136 |   |           | $ | 13,895 |  
|Provision for loan losses           |  |                    | (33    | ) |           |   | 666    |  
|Allowance related to acquired loans |  |                    |       |   |           |   | 2,068  |  
|Loans charged-off                   |  |                    | (546   | ) |           |   | (2,727 | )
|Recoveries                          |  |                    | 100    |   |           |   | 113    |  
|                                    |  |                    |        |   |           |   |        |  
|Balance, end of period              |  | $                  | 14,657 |   |           | $ | 14,015 |  
|                                    |  |                    |        |   |           |   |        |  
|Reserve for Unfunded Commitments:   |  |                    |        |   |           |   |        |  
|Balance, beginning of period        |  | $                  | 881    |   |           | $ | 466    |  
|Provision for unfunded commitments  |  |                    | 33     |   |           |   | 116    |  
|                                    |  |                    |        |   |           |   |        |  
|Balance, end of period              |  | $                  | 914    |   |           | $ | 582    |  
|                                    |  |                    |        |   |           |   |        |  

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

NOTE 4. Business Combination

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



7



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



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

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

NOTE 5. Junior Subordinated Debt

As of March 31, 2007, the Company had four wholly owned trusts (Trusts) that were formed to issue trust preferred securities and related common securities of the Trusts. The Trusts are summarized as follows:



|                                 |  |                |  |                   |        |      |          |     |               |      |   |           |                |               |               
|-------------------------------- |  | -------------- |  | ----------------- | ------ | ---- | -------- | --- | ------------- | ---- | - | --------- | -------------- | ------------- | --------------
|($ in thousands)                
|Trust Name                       |  | Issue Date     |  | OutstandingAmount |        | Rate |          |     | EffectiveRate |      |   | Call Date |                | Maturity Date
|AmericanWest Statutory Trust I   |  | September 2002 |  | $                 | 10,310 |      | Floating | (1) |               | 8.75 | % |           | September 2007 |               | September 2032
|Columbia Trust Statutory Trust I |  | June 2003      |  | $                 | 3,093  |      | Floating | (2) |               | 8.45 | % |           | June 2008      |               | June 2033     
|AmericanWest Capital Trust II    |  | March 2006     |  | $                 | 7,217  |      | 6.76%    | (3) |               | 6.76 | % |           | March 2011     |               | March 2036    
|AmericanWest Capital Trust III   |  | March 2007     |  | $                 | 20,619 |      | 6.53%    | (4) |               | 6.53 | % |           | March 2012     |               | June 2037     

---

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

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

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

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

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

As of March 31, 2007, $1,330,000 of the junior subordinated debt, less the common stock
of the Trusts, did not qualify as Tier I capital, under the guidance issued by the Board of Governors of the Federal Reserve System (FRB). Effective April 11, 2005, the FRB adopted a rule that permits the inclusion of junior subordinated debt
in Tier I capital, but with stricter quantitative limits. Under the FRB rule, after a five-year transition period ending March 31, 2009, the aggregate amount of junior subordinated debt and certain other restricted core capital elements is
limited to 25% of Tier I capital elements, net of goodwill. The amount of junior subordinated debt and



8



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##### Table of Contents

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

NOTE 6. Comprehensive Income

Total
comprehensive income, which includes net income and unrealized gains and losses on the Companys available-for-sale securities, net of tax, amounted to approximately $2,171,000 and $1,605,000 for the three months ended March 31, 2007 and
2006, respectively.

NOTE 7. Cash Dividends

During the
three months ended March 31, 2007, the Company declared and paid a cash dividend of $0.03 per share.

NOTE 8. Earnings Per Share

The following is a reconciliation of the numerators and denominators for basic and diluted per share computations for net income for the three months ended March 31,
2007 and 2006:



|                                                        |  |                             |            |      |   |           
|------------------------------------------------------- |  | --------------------------- | ---------- | ---- | - | ----------
|                                                        |  | Three Months EndedMarch 31,
|($ in thousands, except per share)                      |  | 2007                        |            | 2006
|Numerator:                                              |  |                             |            |      |   |           
|Net income                                              |  | $                           | 2,185      |      | $ | 1,649     
|Denominator:                                            |  |                             |            |      |   |           
|Weighted average number of common shares outstanding    |  |                             | 11,412,991 |      |   | 10,641,585
|Incremental shares assumed for stock-based compensation |  |                             | 128,007    |      |   | 239,330   
|                                                        |  |                             |            |      |   |           
|Total                                                   |  |                             | 11,540,998 |      |   | 10,880,915
|                                                        |  |                             |            |      |   |           
|Basic Earnings per common share                         |  | $                           | 0.19       |      | $ | 0.15      
|Diluted Earnings per common share                       |  | $                           | 0.19       |      | $ | 0.15      

NOTE 9. Stock-Based Compensation

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

Stock Options

Compensation cost recorded related to stock options accounted for under Statement of Financial Accounting Standards (SFAS) No. 123(R), Share-Based Payment,
was approximately $203,000 and $189,000 for the three months ended March 31, 2007 and 2006, respectively. Net income was reduced by approximately $136,000 or $0.01 per diluted share for the three months ended March 31, 2007 related to
stock options. For the three months ended March 31, 2006, compensation cost related to stock options reduced net income by approximately $155,000 or $0.01 per diluted share.



9



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##### Table of Contents

The following table summarizes the stock option activity for the three months ended March 31, 2007.



|                                 |  |         |   |  |                                 |      
|-------------------------------- |  | ------- | - |  | ------------------------------- | -----
|                                 |  | Options |   |  | Weighted average exercise price
|Outstanding at December 31, 2006 |  | 444,049 |   |  | $                               | 16.51
|Granted                          |  | 46,050  |   |  |                                 | 23.27
|Exercised                        |  | (36,015 | ) |  |                                 | 9.41 
|Forfeited                        |  | (4,610  | ) |  |                                 | 22.37
|                                 |  |         |   |  |                                 |      
|Outstanding at March 31, 2007    |  | 449,474 |   |  | $                               | 17.72
|                                 |  |         |   |  |                                 |      
|Exercisable at March 31, 2007    |  | 282,424 |   |  | $                               | 16.24

The following table summarizes the weighted average assumptions for options issued during the three months ended
March 31, 2007 and 2006.



|                        |      |                              |   |      |           |  
|----------------------- | ---- | ---------------------------- | - | ---- | --------- | -
|                        |      | Three months ended March 31, |  
|                        | 2007 |                              |   | 2006 |          
|Expected volatility     |      | 31.4                         | % |      | 22.8      | %
|Expected dividends      |      | 0.5                          | % |      | 0.0       | %
|Expected term           |      | 6.4 years                    |   |      | 7.5 years |  
|Risk free interest rate |      | 4.7                          | % |      | 4.6       | %

The expected volatility is based on historical volatility, the expected dividends are based on historical cash
dividends, the expected term is based on the short-cut method and the risk free interest rate is based on US Treasury Constant Maturity yields for periods similar to the expected life of the option. The weighted average fair value of options issued
during the three months ended March 31, 2007 and 2006 was $9.13 and $9.90, respectively. Total unrecognized compensation cost at March 31, 2007 is $319,000 which will be recognized through 2011. 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, 2007 was 6.7 years and 5.9 years, respectively. The aggregate
intrinsic value at March 31, 2007 was $1,719,000 for stock options outstanding and $1,496,000 for stock options exercisable. The intrinsic value for stock options is calculated based on the exercise price of the underlying awards and the market
price of the Companys common stock as of the reporting date. The intrinsic value of stock options exercised during the three months ended March 31, 2007 was $473,000.

Restricted Common Stock Awards

The Company has granted performance-based restricted common stock awards and
non-performance based restricted stock awards (collectively restricted common stock awards) to certain executives and employees. The restricted common stock awards vest between September 2007 and March 2012 and are expensed as compensation over the
vesting period.

The purpose of these awards was 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, 2007 and 2006, the compensation expense related to these grants was approximately $241,000 and $64,000, respectively. The compensation expense
for the three months ended March 31, 2007, includes $141,000 related to the immediate vesting of 7,500 restricted common stock awards for an executive terminated without cause.



10



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##### Table of Contents

The following table summarizes unvested restricted common stock activity for the three months ended March 31, 2007.



|                                 |  |                         |   |  |                                        |      
|-------------------------------- |  | ----------------------- | - |  | -------------------------------------- | -----
|                                 |  | Restricted Common Stock |   |  | Weighted average grant date fair value
|Unvested as of December 31, 2006 |  | 79,333                  |   |  | $                                      | 21.59
|Granted                          |  | 25,700                  |   |  |                                        | 23.63
|Forfeited                        |  | (7,500                  | ) |  |                                        | 21.29
|Vested                           |  | (2,033                  | ) |  |                                        | 21.61
|                                 |  |                         |   |  |                                        |      
|Unvested as of March 31, 2007    |  | 95,500                  |   |  | $                                      | 22.16
|                                 |  |                         |   |  |                                        |      

NOTE 10. Subsequent Events

On April 1, 2007, the Company completed the acquisition of Far West Bancorporation and its wholly owned subsidiary, Far West Bank, based in Provo, Utah. The acquisition will be accounted for under the purchase
method of accounting. The Company issued approximately 5.74 million shares of common stock and paid approximately $30 million in cash in exchange for the outstanding shares of Far West Bancorporation. As of March 31, 2007, the recorded
values of Far West Bancorporations assets and liabilities were as follows:



|                                        |  |               |        
|--------------------------------------- |  | ------------- | -------
|($ in thousands)                        |  | March 31,2007
|ASSETS                                  |  |               |        
|Cash and cash equivalents               |  | $             | 31,490 
|Securities, available-for-sale          |  |               | 30,445 
|Loans, net of allowance for loan losses |  |               | 347,988
|Premises and equipment, net             |  |               | 7,438  
|Other assets                            |  |               | 21,455 
|                                        |  |               |        
|TOTAL ASSETS                            |  | $             | 438,816
|                                        |  |               |        
|LIABILITIES                             |  |               |        
|Deposits                                |  | $             | 383,550
|Other liabilities                       |  |               | 4,404  
|                                        |  |               |        
|TOTAL LIABILITIES                       |  | $             | 387,954
|                                        |  |               |        

Under the purchase method of accounting, the Company will record Far West Bancorporations assets and
liabilities at their fair values at the acquisition date, and record an intangible asset (goodwill) for the excess of the fair value of the purchase price paid over the fair value of the assets and liabilities acquired. Additionally, the results of
operations on and after April 1, 2007 will be reported on a combined basis.

On April 30, 2007, the Company declared a cash dividend of $0.04 per
common share. The dividend is payable on May 29, 2007 to shareholders of record on May 14, 2007.

NOTE 11. Recent Accounting Pronouncements

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

On July 13, 2006, FASB
Interpretation Number (FIN) 48, Accounting for Uncertainty in Income TaxesAn Interpretation of FASB Statement No. 109, was issued. FIN 48 clarifies the accounting and reporting for income taxes where interpretation of the tax law
may be uncertain. FIN 48 prescribes a comprehensive model for the



11



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##### Table of Contents

financial statement recognition, measurement, presentation and disclosure of income tax uncertainties with respect to positions taken or expected to be taken
in income tax returns. The Company adopted FIN 48 on January 1, 2007. The implementation of FIN 48 did not have an impact on the Company.



12



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##### Table of Contents

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

Forward-Looking Statements

Certain matters discussed or incorporated by reference in this Quarterly Report on
Form 10-Q including, but not limited to, matters described in Item 2, Managements Discussion and Analysis of Financial Condition and Results of Operations, are forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (PSLRA). Such forward looking statements include statements about the financial condition, results of operations, future financial targets and earnings outlook of the Company. The forward-looking statements
are subject to risks and uncertainties that could cause actual results to differ materially from those projected. Those factors include, but are not limited to, impact of the current national and regional economy on small business loan demand in the
Companys market, loan delinquency rates, changes in portfolio composition, the Companys ability to increase market share, the Companys ability to attract quality commercial business, the Companys ability to expand its markets
through new branches and acquisitions, interest rate movements and the impact on net interest margins such movement may cause, changes in the demographic make-up of the Companys market, the Companys products and services, the
Companys ability to attract and retain qualified people, regulatory changes, competition with other banks and financial institutions, and other factors. 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 hereto. 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, 2007 and 2006. This information should be read in conjunction with the financial statements and related notes
appearing in this report. The reader is assumed to have access to the Companys Form 10-K for the year ended December 31, 2006, which contains additional information.

AmericanWest Bancorporation

AmericanWest Bancorporation (Company) is a Washington corporation registered as a bank
holding company under the Bank Holding Company Act of 1956. The Company is headquartered in Spokane, Washington. The Companys wholly-owned subsidiary is AmericanWest Bank (Bank), a Washington state chartered bank that operates in Eastern and
Central Washington and Northern Idaho. Additionally, the Bank has two loan production offices in the Salt Lake City, Utah, area and two loan production offices in Washington. Unless otherwise indicated, reference to the Company shall include its
wholly-owned subsidiary. The Companys unconsolidated information will be referred to as the Parent Company.

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

On April 1, 2007, AmericanWest Bancorporation merged with Far West Bancorporation and Far West
Bancorporations principal operating subsidiary, Far West Bank, was merged with and into AmericanWest Bank. All operations in Utah will function under the Far West Bank brand as a division of AmericanWest Bank. Since the completion of the
merger, the Bank provides a full range of banking services to small and medium-sized businesses, agricultural businesses, professionals and consumers through 62 financial centers and four loan production offices located in Eastern and Central
Washington, Northern Idaho and Utah. The financial information included in this Form 10-Q does not reflect the merger with Far West Bancorporation.



13



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##### Table of Contents

Results of Operations

Overview

The Company reported net income of $2.2 million or $0.19 per fully diluted share for the three months ended
March 31, 2007 compared to $1.6 million or $0.15 per fully diluted share for the same period in 2006. The return on average assets for the three months ended March 31, 2007 was 0.63%, as compared to 0.59% for the same period of the prior
year. The return on average equity for the three months ended March 31, 2007 was 5.75%, as compared to 5.32% for the same period of the prior year.

The tables below summarize the Companys financial performance for the three months ending March 31, 2007 and 2006:



|                                                    |  |                             |        |      |   |          |  |        |  
|--------------------------------------------------- |  | --------------------------- | ------ | ---- | - | -------- |  | ------ | -
|                                                    |  | Three Months EndedMarch 31, |       
|($ in thousands except per share data)              |  | 2007                        |        | 2006 |   | % Change | 
|Interest Income                                     |  | $                           | 24,862 |      | $ | 19,366   |  | 28.4   | %
|Interest Expense                                    |  |                             | 10,128 |      |   | 6,143    |  | 64.9   | %
|                                                    |  |                             |        |      |   |          |  |        |  
|Net Interest Income                                 |  |                             | 14,734 |      |   | 13,223   |  | 11.4   | %
|Provision for Loan Loss                             |  |                             |       |      |   | 782      |  | -100.0 | %
|                                                    |  |                             |        |      |   |          |  |        |  
|Net interest income after provision for loan losses |  |                             | 14,734 |      |   | 12,441   |  | 18.4   | %
|                                                    |  |                             |        |      |   |          |  |        |  
|Non-interest Income                                 |  |                             | 2,405  |      |   | 1,756    |  | 37.0   | %
|Non-interest Expense                                |  |                             | 13,767 |      |   | 11,668   |  | 18.0   | %
|                                                    |  |                             |        |      |   |          |  |        |  
|Income before provision for income taxes            |  |                             | 3,372  |      |   | 2,529    |  | 33.3   | %
|Provision for income taxes                          |  |                             | 1,187  |      |   | 880      |  | 34.9   | %
|                                                    |  |                             |        |      |   |          |  |        |  
|Net Income                                          |  | $                           | 2,185  |      | $ | 1,649    |  | 32.5   | %
|                                                    |  |                             |        |      |   |          |  |        |  
|Basic earnings per common share                     |  | $                           | 0.19   |      | $ | 0.15     |  | 26.7   | %
|Diluted earnings per common share                   |  | $                           | 0.19   |      | $ | 0.15     |  | 26.7   | %



|                                                        |  |                   |   |  |           |  
|------------------------------------------------------- |  | ----------------- | - |  | --------- | -
|                                                        |  | Three MonthsEnded |  
|Selected Financial Ratios:                              |  | 3/31/2007         |   |  | 3/31/2006 |  
|Return on average assets                                |  | 0.63              | % |  | 0.59      | %
|Return on average equity                                |  | 5.75              | % |  | 5.32      | %
|Efficiency ratio                                        |  | 78.63             | % |  | 77.23     | %
|Non-interest income to average assets                   |  | 0.70              | % |  | 0.63      | %
|Non-interest expenses to average assets                 |  | 3.98              | % |  | 4.18      | %
|Net interest margin (1)                                 |  | 4.69              | % |  | 5.15      | %
|Ending shareholders equity to assets                   |  | 10.61             | % |  | 10.79     | %
|Ending tangible shareholders equity to tangible assets |  | 8.07              | % |  | 7.94      | %

---

|(1) | Presented on a tax equivalent basis for tax exempt securities.
|--- | --------------------------------------------------------------

Net
Interest Income

Net interest income for the first quarter of 2007 was $14.7 million, an increase of $1.5 million from first quarter of 2006. Interest
income for the first quarter of 2007 was $24.9 million, an increase of $5.5 million over the same period of the prior year. The increase in interest income is related mainly to the average earning assets increase of $233.9 million and an increased
yield on earning assets of 37 basis points. The increase in the average earning assets is principally due to acquired loans from Columbia Trust Bancorp of $145.5 million. Interest expense for the first quarter of 2007 was $10.1 million, an increase
of $4.0 million over the similar period of the prior year. The increase in interest expense is related to an increase in the cost of interest bearing liabilities of 96 basis points and the average interest bearing liabilities increase of $208.0
million from the similar period of 2006. The increase in the average interest bearing liabilities is principally due to the acquired interest-bearing deposits from Columbia Trust Bancorp of $133.4 million.



14



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##### Table of Contents

The tax equivalent net interest margin for the first quarter of 2007 was 4.69%, a decrease of 46 basis points from the
same period in 2006. Prior to January 1, 2007, the Company did not defer loan fees on loans with contractual maturities of one year or less as the amount was deemed immaterial. Effective January 1, 2007, based on the increased originations
of short-term loans, the Company began deferring all loans fees. This change resulted in the deferral of approximately $800,000 of loan fee income on new loan originations during the first quarter of 2007 which, under the prior method, would have
been recognized as interest income during the first quarter of 2007. The impact of this change represented approximately 25 of the 46 basis points of margin compression from the similar quarter of the prior year.

The average yield on loans for the first quarter of 2007 was 8.02%, an increase of 40 basis points from the same period in 2006. During the first quarter of 2006, the
average yield on loans was reduced by approximately 15 basis points due to the reversal of interest for a large loan placed on non-accrual status. The remaining increase from the prior year is due mainly to higher market interest rates, offset by
the change in the accounting for deferred loan fees and origination costs in 2007. The following table summarizes the repricing in the loan portfolio as of March 31, 2007 and December 31, 2006. The adjustable and variable rate loans are
tied to Prime or another market index. Adjustable rate loans do not reprice immediately with market changes.



|                 |  |               |   |  |                  |  
|---------------- |  | ------------- | - |  | ---------------- | -
|                 |  | March 31,2007 |   |  | December 31,2006 |  
|Adjustable Rates |  | 36            | % |  | 36               | %
|Variable Rates   |  | 36            | % |  | 35               | %
|Fixed Rates      |  | 28            | % |  | 29               | %

The Companys net interest margin for the first quarter of 2007 was also adversely impacted by the cost of
interest bearing deposits, which increased by 97 basis points over the same period in 2006. The increases were driven principally by a shift in the Companys deposit mix, with a reduction in non-interest bearing deposits having to be replaced
with higher cost money market and certificate of deposit accounts, and by continued increases in offered rates due to competitive pricing pressures.



15



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##### Table of Contents

The following table sets forth the Companys net interest margin for the three months ended March 31, 2007 and
2006.



|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|--------------------------------------------- | -------------- | ---------------------------- | --------- | ---- | - | ------ |  | -------------- | - | -------- | - | --------- |  | - | ------ |  | ---- | -
|($ in thousands)                              |                | Three months ended March 31, |          
|                                              | 2007           |                              |           | 2006 |  
|                                              | AverageBalance |                              | Interest  |      | % |        |  | AverageBalance |   | Interest |   | %         | 
|Assets                                        |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Loans (1)                                     |                | $                            | 1,229,508 |      | $ | 24,329 |  | 8.02           | % |          | $ | 1,003,622 |  | $ | 18,857 |  | 7.62 | %
|Taxable securities                            |                |                              | 30,267    |      |   | 369    |  | 4.94           | % |          |   | 24,903    |  |   | 373    |  | 6.07 | %
|Non-taxable securities (2)                    |                |                              | 8,974     |      |   | 142    |  | 6.42           | % |          |   | 8,290     |  |   | 129    |  | 6.31 | %
|FHLB Stock                                    |                |                              | 6,319     |      |   | 6      |  | 0.39           | % |          |   | 5,520     |  |   |       |  | 0.00 | %
|Overnight deposits with other banks and other |                |                              | 4,494     |      |   | 65     |  | 5.87           | % |          |   | 3,355     |  |   | 51     |  | 6.16 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Total interest earning assets                 |                |                              | 1,279,562 |      |   | 24,911 |  | 7.90           | % |          |   | 1,045,690 |  |   | 19,410 |  | 7.53 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Non-interest earning assets                   |                |                              | 122,507   |      |   |        |  |                |   |          |   | 86,908    |  |   |        |  |      |  
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Total assets                                  |                | $                            | 1,402,069 |      |   |        |  |                |   |          | $ | 1,132,598 |  |   |        |  |      |  
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Liabilities                                   |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Interest bearing demand deposits              |                | $                            | 88,671    |      | $ | 178    |  | 0.81           | % |          | $ | 90,299    |  | $ | 142    |  | 0.64 | %
|Savings and MMDA deposits                     |                |                              | 386,572   |      |   | 3,097  |  | 3.25           | % |          |   | 309,715   |  |   | 1,981  |  | 2.59 | %
|Time deposits                                 |                |                              | 434,822   |      |   | 5,245  |  | 4.89           | % |          |   | 321,602   |  |   | 2,913  |  | 3.67 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Total interest bearing deposits               |                |                              | 910,065   |      |   | 8,520  |  | 3.80           | % |          |   | 721,616   |  |   | 5,036  |  | 2.83 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Overnight borrowings                          |                |                              | 22,204    |      |   | 305    |  | 5.57           | % |          |   | 16,652    |  |   | 191    |  | 4.65 | %
|Junior subordinated debt                      |                |                              | 22,911    |      |   | 462    |  | 8.18           | % |          |   | 12,303    |  |   | 254    |  | 8.37 | %
|Other borrowings                              |                |                              | 62,128    |      |   | 841    |  | 5.49           | % |          |   | 58,725    |  |   | 662    |  | 4.57 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Total interest bearing liabilities            |                |                              | 1,017,308 |      |   | 10,128 |  | 4.04           | % |          |   | 809,296   |  |   | 6,143  |  | 3.08 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Non-interest bearing demand deposits          |                |                              | 218,213   |      |   |        |  |                |   |          |   | 188,838   |  |   |        |  |      |  
|Other non-interest bearing liabilities        |                |                              | 12,540    |      |   |        |  |                |   |          |   | 8,651     |  |   |        |  |      |  
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Total liabilities                             |                |                              | 1,248,061 |      |   |        |  |                |   |          |   | 1,006,785 |  |   |        |  |      |  
|Stockholders Equity                          |                |                              | 154,008   |      |   |        |  |                |   |          |   | 125,813   |  |   |        |  |      |  
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Total liabilities and stockholders equity    |                | $                            | 1,402,069 |      |   |        |  |                |   |          | $ | 1,132,598 |  |   |        |  |      |  
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Net interest income and spread                |                |                              |           |      | $ | 14,783 |  | 3.86           | % |          |   |           |  | $ | 13,267 |  | 4.45 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  
|Net interest margin to average earning assets |                |                              |           |      |   |        |  | 4.69           | % |          |   |           |  |   |        |  | 5.15 | %
|                                              |                |                              |           |      |   |        |  |                |   |          |   |           |  |   |        |  |      |  

---

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

|(2) | Tax equivalent basis with assumed rate of 34%.
|--- | ----------------------------------------------



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##### Table of Contents

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



|                                                   |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|-------------------------------------------------- | ------------------------------------------------------------- | -------------------------------------------------- | ----- | ---- |  | - | ------ | - |  | - | -----
|($ in thousands)                                   |                                                               | Three months ended March 31, 2007 compared to 2006
|                                                   | Increase (decrease) in net interest income due to changes in:
|                                                   | Volume                                                        |                                                    |       | Rate |  |   | Total 
|Interest earning assets                            |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|Loans                                              |                                                               | $                                                  | 4,242 |      |  | $ | 1,230  |   |  | $ | 5,472
|Securities                                         |                                                               |                                                    | 91    |      |  |   | (82    | ) |  |   | 9    
|Overnight deposits with other banks and FHLB stock |                                                               |                                                    | 12    |      |  |   | 8      |   |  |   | 20   
|                                                   |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|Total interest earning assets                      |                                                               | $                                                  | 4,345 |      |  | $ | 1,156  |   |  | $ | 5,501
|                                                   |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|Interest bearing liabilities                       |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|Interest bearing demand deposits                   |                                                               | $                                                  | (3    | )    |  | $ | 39     |   |  | $ | 36   
|Savings deposits                                   |                                                               |                                                    | 491   |      |  |   | 625    |   |  |   | 1,116
|Time deposits                                      |                                                               |                                                    | 1,025 |      |  |   | 1,307  |   |  |   | 2,332
|                                                   |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|Total interest bearing deposits                    |                                                               |                                                    | 1,513 |      |  |   | 1,971  |   |  |   | 3,484
|Overnight borrowings                               |                                                               |                                                    | 63    |      |  |   | 51     |   |  |   | 114  
|Other borrowings and junior subordinated debt      |                                                               |                                                    | 181   |      |  |   | 206    |   |  |   | 387  
|                                                   |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|Total interest bearing liabilities                 |                                                               |                                                    | 1,757 |      |  |   | 2,228  |   |  |   | 3,985
|                                                   |                                                               |                                                    |       |      |  |   |        |   |  |   |      
|Total increase (decrease) in net interest income   |                                                               | $                                                  | 2,588 |      |  | $ | (1,072 | ) |  | $ | 1,516
|                                                   |                                                               |                                                    |       |      |  |   |        |   |  |   |      

Provision for Credit Losses

The Company did not recognize a provision for credit losses for the three months ended March 31, 2007, principally due to the reduction in non-performing loans from loan payments (including principal reductions
and payments in full). The provision for credit losses for the first quarter of 2006 was $782,000, or 0.32% of average loans on an annualized basis. For the three months ended March 31, 2007 and 2006, the annualized net charge offs were 0.15%
and 1.06% of average gross loans, respectively. The significant decline in this ratio is due primarily to the partial charge-off of a single relationship of $2.4 million in the quarter ended March 31, 2006.

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

Non-interest Income

Non-interest income for the three months ended March 31, 2007 was approximately $2.4 million, an increase of $0.6 million or 37% over the similar
period of 2006. This increase is due principally to growth in deposit service charges of $224,000, increased bank-owned life insurance revenue of $126,000, increased mortgage banking revenue of $62,000 and a gain of $166,000 recorded in connection
with the sale of foreclosed property during the first quarter of 2007. The growth in deposit service charges is principally due to an increase in debit card interchange fees of $138,000 and growth in the number of deposit accounts from the
acquisition of Columbia Trust Bancorp, which was completed on March 15, 2006. Non-interest income of the first quarter of 2006 included a loss of $300,000 of the reclassification of three buildings as held for sale, which was partially offset
by a gain on sale of mortgage servicing rights of $237,000.



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##### Table of Contents

Non-interest Expense

Non-interest expense for the three months ended March 31, 2007 was approximately $13.8 million, an increase of $2.1 million or 18% over the similar period of 2006. The increase from the prior year is related mainly to higher salaries
and employee benefits expense of $1.5 million. The following items contributed to this change:



| |  |  | Severance benefits of $364,000 paid to employees terminated in connection with the Companys expense reduction initiative.
| | - |  | --------------------------------------------------------------------------------------------------------------------------



| |  |  | Increased full-time equivalent attributable to the Columbia Trust Bancorp acquisition, the opening of four new financial center locations and loan production
offices.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Stock options granted to non-employee board members of $96,000.
| | - |  | ---------------------------------------------------------------

These costs are partially offset by a change in deferral of certain direct loan origination costs associated with loans with a term of one year or less, which decreased the salaries and employee benefits expense by
approximately $400,000 during the first quarter of 2007.

Total occupancy and equipment expense increased by $677,000 over the first quarter of 2006. The
increase is principally attributed to costs associated with new and acquired facilities and other remodeled or relocated financial centers. Additionally, vendor service contracts have increased with the increased number of employees and volumes of
business. The foreclosed real estate and other foreclosed assets expense declined $378,000 related mainly to a write-down in the first quarter of 2006 of $340,000.

Provision for Income Tax

The effective tax rates for the three months ended March 31, 2007 and 2006 were 35.2% and 34.8%,
respectively. The slight increase from the prior year is related mainly to increases in recaptured tax credits as compared to the first quarter of 2006 and increasing state income taxes related to operations in Utah.

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. Accruing loans 90 days or more past due may remain on an accrual basis if adequately collateralized and in the
process of collection. For non-accrual loans income may be recognized on a cash basis if the borrower demonstrates an ability to continue payments of principal and interest in accordance with the loan agreement. Interest previously accrued, but not
collected, is reversed and charged against income at the time a loan is placed in non-accrual status.



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##### Table of Contents

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



|                                                        |  |               |        |   |                  |   |        |               |  |   |        |  
|------------------------------------------------------- |  | ------------- | ------ | - | ---------------- | - | ------ | ------------- |  | - | ------ | -
|($ in thousands)                                        |  | March 31,2007 |        |   | December 31,2006 |   |        | March 31,2006 | 
|Accruing loans over 90 days past due                    |  | $             | 0      |   |                  | $ | 0      |               |  | $ | 27     |  
|Non-accrual loans                                       |  |               | 5,819  |   |                  |   | 11,500 |               |  |   | 15,315 |  
|                                                        |  |               |        |   |                  |   |        |               |  |   |        |  
|Total non-performing loans                              |  | $             | 5,819  |   |                  | $ | 11,500 |               |  | $ | 15,342 |  
|Foreclosed real estate and other foreclosed assets      |  |               | 1,013  |   |                  |   | 644    |               |  |   | 1,452  |  
|                                                        |  |               |        |   |                  |   |        |               |  |   |        |  
|Total non-performing assets                             |  | $             | 6,832  |   |                  | $ | 12,144 |               |  | $ | 16,794 |  
|                                                        |  |               |        |   |                  |   |        |               |  |   |        |  
|Non-performing loans to total gross loans (1)           |  |               | 0.47   | % |                  |   | 0.94   | %             |  |   | 1.33   | %
|Non-performing assets to total assets (1)               |  |               | 0.47   | % |                  |   | 0.86   | %             |  |   | 1.25   | %
|Allowance for loan loss to total gross loans            |  |               | 1.17   | % |                  |   | 1.24   | %             |  |   | 1.22   | %
|Allowance for credit losses to total gross loans        |  |               | 1.25   | % |                  |   | 1.31   | %             |  |   | 1.27   | %
|Allowance for credit losses to non-performing loans (1) |  |               | 267.59 | % |                  |   | 139.28 | %             |  |   | 95.14  | %

---

|(1) | Amounts and ratios shown net of government guarantees on non-performing loans of $2.3 million, $4.0 million and $3.3 million, respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------

Total non-performing assets were $6.8 million, or 0.47% of total assets, at March 31, 2007. This compares to $16.8 million or 1.25% of total assets at
March 31, 2006. At December 31, 2006, the non-performing assets were $12.1 million, or 0.86% of total assets. The significant reductions in non-performing loans and assets during the first quarter of 2007 was mainly due to principal
repayments of $6.3 million (including principal reductions and payments in full). Included in the balance of non-performing loans at December 31, 2006 was one aggregate lending relationship of $6.2 million, of which $2.8 million was subject to
a government guarantee. During the first quarter of 2007, the borrower repaid $4.4 million leaving a remaining balance of $1.8 million, of which $1.5 million is subject to a government guarantee. This remaining balance is expected to be repaid in
full in the second quarter of 2007.

At March 31, 2007 and December 31, 2006, the Company had approximately $15.3 million and $19.3 million,
respectively, of loans that were not classified as non-performing but for which known information about the borrowers financial condition caused management to have concern about the ability of the borrowers to comply with the repayment terms
of the loans.

Investment Portfolio

The Companys
investment portfolio increased from $39.5 million at December 31, 2006 to $40.2 million at March 31, 2007. All securities are classified as available-forsale and recorded at fair value. Management believes that this classification
provides greater flexibility to respond to interest rate changes and liquidity needs. The Companys portfolio includes two corporate bonds which have fallen below investment grade totaling $1.5 million at March 31, 2007. These investments
have relatively short maturities (both mature in 2008) and the issuers are expected to have cash flows sufficient to meet the required payments.

Loan
Portfolio

Total gross loans increased $27.3 million or 9% on an annualized basis, during the first quarter of 2007. This increase includes growth in
commercial real estate of $25.1 million and commercial and industrial loans of $15.0 million, offset by a decline of agricultural loans of $21.2 million. The reduction in agricultural related loans was due in part to seasonality of line usage and
repayments (including disengagements of marginal loan relationships which the Company elected to not renew) related to the Companys continuing efforts to improve the credit risk profile of the loan portfolio. Approximately $19.0 million of the
first quarter loan growth was generated by the Companys loan production office in South Jordan, Utah. The percentage of commercial real estate loans remained consistent at 54% of the total portfolio at March 31, 2007 compared to 53% at
December 31, 2006. At March 31, 2007, the Banks largest 20 credit relationships consisted of loans and loan commitments ranging from $9.7 million to $25.0 million, with an aggregate total credit exposure of $292.7 million and
outstanding balances of $103.5 million.



19



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##### Table of Contents

A substantial majority of the Banks loans are to small and medium-sized businesses, agricultural businesses,
professionals and consumers in the Banks principal market area and are secured by residential and commercial real estate, crops, business inventory and receivables. Real estate values in these areas remain stable. Prices for agricultural
commodities are relatively stable. Significant, long term deterioration in either of these underlying factors could affect the collectability of a material portion of the Banks loans outstanding. Each of these factors is also considered in the
analysis of assessing the adequacy of the allowance for credit losses.

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

Allowance for Loan Losses and Reserve for Unfunded Commitments

At March 31, 2007, the Companys allowance for loan losses was $14.7 million or 1.17% of total gross loans. This compares to $15.1 million or 1.24% at
December 31, 2006. At March 31, 2007 the Companys reserve for unfunded commitments was $914,000 as compared to $881,000 at December 31, 2006. The allowance for loan losses and the reserve for unfunded commitments are increased
by charges to income through the provision for credit losses and allowance related to acquired loans, and decreased by charge-offs, net of recoveries. Loans are charged to the allowance when management believes the collection of principal is
unlikely.

In assessing the adequacy of the allowance for loan losses and reserve for unfunded commitments, management objectively analyzes recent
historical loan loss experience and projects future allowance requirements. The analysis of credits provides an inherent loss rate by risk ratings. Each category of risk rating is assigned a projected loss value based upon general historic
valuations and current management expectations for future losses. Additionally, management utilizes an analysis of impaired loans to determine specific reserves. Management also compares projected future 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, 2007. Management uses currently available information to recognize losses on loans and foreclosed real estate and other foreclosed assets; however, future additions
to the allowances may be necessary based on changes in economic conditions and borrower or loan characteristics.

Deposits and Borrowings

The Companys primary source of funds is customer deposits. 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 services bundled with them, such as free checks and free or discounted access to other bank services. Interest rates on accounts are determined by
management based on the Banks funding needs and market conditions and can change as frequently as daily.

Total deposits grew $43.2 million, or an
annualized rate of 16%, for the first quarter of 2007, ending the period at $1.17 billion. Of this increase, $35.3 million related to higher cost certificate of deposits. Non-interest bearing deposits were 19% of total deposits as of March 31,
2007 as compared to 21% at December 31, 2006.

FHLB advances and other borrowings decreased approximately $24.3 million during the first quarter of
2007. The decrease in FHLB advances and other borrowings were principally funded by the increase in the certificate of deposit accounts. The Company issued $20.6 million of junior subordinated debt on March 22, 2007 to provide a portion of the
cash consideration for the merger with Far West Bancorporation. The junior subordinated debt will bear a fixed rate of interest at 6.53% for the first five years and thereafter will bear interest at a rate equal to the three month LIBOR plus 1.63%.



20



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##### Table of Contents

Liquidity and Capital Resources

Management believes that the Companys cash flow will be sufficient to support its existing operations for the foreseeable future. Cash flows from operations generally contribute significantly to liquidity, as do
proceeds from issuances of junior subordinated debt and increasing customer deposits. In the three months ended March 31, 2007, the Company had minimal cash provided by operating activities principally due to the net cash outflow related to
held for sale loans. This compared to $6.6 million provided by operating activities in the three months ended March 31, 2006. Additionally, the Company generated $39.6 million and $16.1 million in net cash from financing activities for the
three months ended March 31, 2007 and 2006, respectively.

The Banks primary source of funds is its deposits. In addition, the Bank has the
ability to borrow from various sources, including the FHLB and correspondent banks that provide Fed Funds lines. At March 31, 2007, the Bank had $275.0 million of available credit (after deducting outstanding borrowings) from these sources as
compared to $244.2 million at December 31, 2006.

The Parent Company cash balances as of March 31, 2007 included $30.0 million held in an escrow
account for funding the cash consideration for the merger with Far West Bancorporation. The source of these funds was a $10.0 million dividend received from the Bank and $20.0 million from the issuance of junior subordinated debt, net of purchased
securities of the Trust of $619,000 (refer to Note 6). The merger was completed on April 1, 2007 at which time the Company relinquished the funds in escrow. The Parent Company declared $0.03 per share of dividends on its common stock during the
first quarter of 2007. On April 30, 2007, the Parent Company declared a dividend of $0.04 per common share. There were no repurchases of common stock during the three months ended March 31, 2007 or 2006, other than 1,532 shares tendered on
payment for the exercise of stock options.

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

The Companys total
stockholders equity increased to $154.7 million at March 31, 2007 as compared to $152.0 million at December 31, 2006. This increase is mainly related to retained net income of $1.8 million and the expensing of stock-based
compensation. The Companys total stockholders equity to total assets ratio decreased to 10.61% as of March 31, 2007 from 10.73% as of December 31, 2006. As of March 31, 2007, the Companys ending tangible
shareholders equity to ending tangible assets ratio decreased to 8.07% as compared to 8.10% from December 31, 2006. At March 31, 2007 and December 31, 2006, the Company held cash and cash equivalent assets of $65.5 million and
$55.7 million, respectively.

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

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and ratios of total and Tier I
capital to risk-weighted assets and of Tier I capital to average assets, as those terms are defined in the regulations. Management believes, as of March 31, 2007, that the Company and the Bank meet all capital adequacy requirements to which
they are subject.

As of March 31, 2007, the most recent notification from the Federal Deposit Insurance Company categorized the Bank as well
capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as



21



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##### Table of Contents

set forth in the following tables. There are no conditions or events since the notification that management believes have changed the Banks category.
The Companys and the Banks actual capital amounts and ratios as of March 31, 2007 are presented in the table below:



|                                       |  |                                                   |   |  |         |   |  |       |  
|-------------------------------------- |  | ------------------------------------------------- | - |  | ------- | - |  | ----- | -
|Capital Ratio                          |  | Regulatory Standard for Well Capitalized Rating |   |  | Company |   |  | Bank  |  
|Tier 1 Capital to Average Total Assets |  | 5.00                                              | % |  | 11.24   | % |  | 8.92  | %
|Tier 1 Capital to Risk Weighted Assets |  | 6.00                                              | % |  | 11.27   | % |  | 8.98  | %
|Total Capital to Risk Weighted Assets  |  | 10.00                                             | % |  | 12.52   | % |  | 10.14 | %



|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. Under parallel interest rate changes of an increase or decrease in rates of 100 bps and
200 bps over the next twelve months, the Companys net interest income is expected to increase moderately under rising interest rates and to decline moderately under falling interest rates. This is because the Company has slightly more
assets repricing than liabilities during this time period. These scenarios also include the assumptions that balances and current pricing spreads remain constant. The economic value of the Companys equity is also expected to increase
with rising interest rates. Both of these interest rate risk measures remain within the Companys policy limits as of March 31, 2007. Management also runs nonparallel interest rate scenarios and a most likely rate scenario to
consider the impact of various interest rate changes in the yield curve and the respective impact on net interest income to determine if any actions should be taken.



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

During the three months ended
March 31, 2007, there were no changes in the Companys internal control over financial reporting that materially affected or are reasonably likely to materially affect internal control over financial reporting.

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



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##### Table of Contents

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 will not have a material
adverse effect on the financial position or results of operations of the Company.



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

There have been no material changes in risk factors
since December 31, 2006.



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

The
following table summarizes repurchases of common stock during the three months ended March, 31, 2007. No repurchases were made during the three months ended March 31, 2006.



|                                      |  |                                         |  |                                     |       |                                                                                        |   |                                                                                                                    |        
|------------------------------------- |  | --------------------------------------- |  | ----------------------------------- | ----- | -------------------------------------------------------------------------------------- | - | ------------------------------------------------------------------------------------------------------------------ | -------
|Period                                |  | TotalNumber ofShares (orUnits)Purchased |  | AveragePrice Paidper Share(or Unit) |       | Total Number ofShares (or Units)Purchased as Partof PubliclyAnnounced Plansor
Programs |   | Maximum Number (orApproximate DollarValue) of Shares (orUnits) that May Yet BePurchased
under thePlans or Programs
|January 1, 2007 to January 31, 2007   |  | 1,532                                   |  | $                                   | 22.29 |                                                                                        |  |                                                                                                                    | 250,000
|February 1, 2007 to February 28, 2007 |  |                                        |  |                                     |      |                                                                                        |  |                                                                                                                    | 250,000
|March 1, 2007 to March 31, 2007       |  |                                        |  |                                     |      |                                                                                        |  |                                                                                                                    | 250,000
|                                      |  |                                         |  |                                     |       |                                                                                        |   |                                                                                                                    |        
|Total                                 |  | 1,532                                   |  | $                                   | 22.29 |                                                                                        |  |                                                                                                                    | 250,000
|                                      |  |                                         |  |                                     |       |                                                                                        |   |                                                                                                                    |        

The shares purchased in the table above represent tendered shares as payment for the exercise of
stock options.

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 first quarter of 2007 or the year ended December 31, 2006.



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

Not applicable.



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##### Table of Contents

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

The Company
conducted a special meeting of shareholders on March 27, 2007. On February 1, 2007, the record date for that meeting, there were 11,411,218 shares of common stock outstanding. Holders of 8,896,632 shares (78%) were present at the
meeting in person or by proxy. Three proposals were voted upon at the meeting:

Proposal 1: Approval of the amendment to the Articles of Incorporation to
increase the number of authorized shares of common stock from 15.0 million to 50.0 million. This proposal was approved by the following vote:



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|7,839,508 |  | 859,171 |  | 197,953

Proposal 2: Approval of the amendment of the Articles of Incorporation to require majority vote of outstanding
shares for approval of future mergers. This proposal was approved by the following vote:



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|7,857,679 |  | 860,877 |  | 178,076

Proposal 3: Approval of the Agreement and Plan of Merger, dated October 18, 2006 by and between AmericanWest
Bancorporation and Far West Bancorporation. This proposal was approved by the following vote:



|          |  |         |  |        
|--------- |  | ------- |  | -------
|For       |  | Against |  | Abstain
|8,394,527 |  | 334,573 |  | 167,532



|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 & Restated Articles of Incorporation of the registrant +                                                                                                                                                                                   
|     | 
|3.2  |  | 2004 Amended and Restated By-Laws of the registrant +                                                                                                                                                                                              
|     | 
|10.1 |  | Employment Agreement, dated as of October 18, 2006, by and between AmericanWest Bank and H. Don Norton (filed as Exhibit 10.2 to the Registrants Current Report on Form 8-K filed on October
19, 2006, and incorporated herein by this reference)*
|     | 
|10.2 |  | Amended and Restated Joint Beneficiary Designation Agreement between H. Don Norton and AmericanWest Bank (as successor)*+                                                                                                                          
|     | 
|10.3 |  | Executive Long-Term Care Agreement between H. Don Norton and AmericanWest Bank (as successor)*+                                                                                                                                                    
|     | 
|10.4 |  | Director Supplemental Compensation Agreement between Ivan T. Call and AmericanWest Bank (as successor)*+                                                                                                                                           
|     | 
|10.5 |  | Director Long-Term Care Agreement between Ivan T. Call and AmericanWest Bank (as successor)*+                                                                                                                                                      
|     | 
|10.6 |  | Indenture dated as of March 22, 2007, by and between AmericanWest Bancorporation and Wilmington Trust Company, as Trustee, for the issuance of Fixed/Floating Junior Subordinated Deferrable
Interest Debentures due 2037+                         
|     | 
|10.7 |  | Executive Supplemental Compensation Agreement between H. Don Norton and AmericanWest Bank (as successor)*+                                                                                                                                         
|     | 
|10.8 |  | Life Insurance Endorsement Method Split Dollar Agreement between H. Don Norton and AmericanWest Bank (as successor)*+                                                                                                                              
|     | 
|31.1 |  | Certification of the Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+                                                                                                                                        
|     | 
|31.2 |  | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002+                                                                                                                                        



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##### Table of Contents

|     |  |                                                                                                                                                       
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------
|32.1 |  | Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+
|     | 
|32.2 |  | Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+

---

|* | Denotes executive compensation plan or arrangement
|- | --------------------------------------------------

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



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Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on
Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on May 9, 2007.



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




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