AmericanWest Bancorporation Announces 2007 Second Quarter Financial Results.

SPOKANE, Wash. -- AmericanWest Bancorporation (NASDAQ:AWBC) today announced its second quarter 2007 financial results, which included the following highlights:

* 37% increase in diluted earnings per share over the first quarter of 2007 and 8% over the same period in 2006

* Return on average assets of 0.92%, an improvement of 29 basis points over the first quarter of 2007 and 10 basis points over the same period in 2006

* Net interest margin (tax-equivalent) of 5.37%, an increase of 68 basis points over the prior quarter

* Organic loan growth of $51 million, representing annualized growth of 16%

* Period-end non-performing assets of $23.9 million, or 1.19% of total assets

* Net charge-offs (annualized) of 46 basis points of average loans for the second quarter and 33 basis points for the six months ended June 30, 2007

Net income for the quarter ended June 30, 2007 was $4.5 million, or $0.26 per diluted share, as compared with $2.8 million, or $0.24 per diluted share, for the second quarter of 2006. The financial results for the second quarter of 2007 reflect AmericanWest Bancorporation's acquisition of Far West Bancorporation and its wholly-owned operating subsidiary Far West Bank, which was completed effective April 1, 2007.

"Our improved financial performance for the second quarter reflects the expected impact of the Far West Bank merger and our previously announced expense reduction initiatives," remarked Robert M. Daugherty, President and Chief Executive Officer. "We are well positioned to achieve continued improvement in operating performance for the remainder of 2007."

Net Interest Margin:

The tax-equivalent net interest margin for the second quarter of 2007 was 5.37%, an increase of 68 basis points from the prior quarter and of 30 basis points from the same period in 2006.

The average yield on loans for the second quarter of 2007 was 8.49%, an increase of 47 basis points over the first quarter of 2007 and 48 basis points from the same period in 2006. The increase in the average yield on loans is principally due to the Far West Bank portfolio acquired, which was partially offset by a change in the accounting for deferred loan fees and origination costs implemented during the first quarter of 2007.

The Company's net interest margin was also positively impacted by a reduction in the average cost of deposits of 35 basis points from the prior quarter. This was principally the result of the favorable deposit mix change related mainly to the Far West Bank deposits acquired. Non-interest bearing demand deposits represented 23% of total average deposits for the second quarter of 2007, up from 19% for the first quarter. The average cost of interest bearing deposits for the second quarter of 2007 was 3.53%, down 27 basis points from the prior quarter and up 37 basis points from the same quarter in 2006. The increase from the similar quarter of the prior year is attributed to higher rates paid on money market and time deposit accounts due to heightened market competition.

Loan Growth and Asset Quality:

Organic loan growth, which excludes the impact of loans acquired through mergers, was 16% on an annualized basis for the second quarter of 2007. Approximately $30 million, or 58%, of the second quarter organic loan growth was generated by the Company's loan production offices located in South Jordan and Salt Lake City, Utah. Growth in the agricultural portfolio contributed approximately $18 million.

Total non-performing assets, net of government guarantees on loans, were 1.19% of total assets at June 30, 2007, as compared to 0.47% of total assets at March 31, 2007 and 1.05% of total assets at June 30, 2006. The increase over the prior quarter was principally due to placement of loans totaling $10.5 million related to a wood products manufacturing company on non-accrual status and the Far West Bank acquisition, which contributed $4.6 million to the non-performing loan total. Based on current collateral valuations and the establishment of specific reserves, management does not expect to record any additional provision for credit losses in connection with the workout of the wood products manufacturing loans. Total foreclosed assets at June 30, 2007 had a carrying value of $213,000 and were comprised of two properties, both of which are expected to be sold without any significant loss by the end of 2007. During the second quarter of 2007, the Company recognized a gain of $55,000 on the sale of a foreclosed property.

The Company recognized a provision for credit losses of $1.8 million, or 0.43% of average loans on an annualized basis, for the quarter ended June 30, 2007 as compared to $704,000, or 0.24% of average loans, for the quarter ended June 30, 2006. For the quarter ended June 30, 2007, annualized net charge-offs as a percentage of average loans were 0.46% as compared to 0.26% in the same quarter of the prior year. Included in net charge-offs for the second quarter of 2007 was $1.5 million related to the wood products manufacturing loan relationship described above. For the six month period ended June 30, 2007, the annualized provision for loan losses and net charge-offs represented 0.25% and 0.33% of total loans, respectively.

The allowance for credit losses, which is comprised of the allowance for loan losses and reserve for unfunded commitments, was $23.2 million, or 1.41% of total loans, at June 30, 2007 as compared to $15.6 million, or 1.25% of total loans, at March 31, 2007. The increase in the allowance for credit losses was principally due to the addition of approximately $7.8 million acquired in connection with the Far West Bank merger, which represented 2.22% of the acquired loans. The allowance for credit losses represented 98% of total non-performing loans (net of government guarantees) as of June 30, 2007.

Deposits and Borrowed Funds:

Total deposits as of June 30, 2007 were $1.5 billion, an increase of $343 million from March 31, 2007. On an organic basis, total deposits increased by 6% over the prior year, with growth in the interest-bearing transaction and money market account category (11%) and certificates of deposit (7%) offset by a decline in demand deposits (7%). On an organic basis, total deposits declined by approximately $40 million during the second quarter of 2007. This decline was principally due to reductions in public entity certificate of deposits of $37 million, and non-interest bearing demand deposits of $11 million offset by an increase in short-term brokered certificates of deposit of $25 million.

Total FHLB borrowings at June 30, 2007 were $157 million, an increase of $84 million over March 31, 2007 and $29 million over June 30, 2006. The increased level of FHLB borrowing for both periods provided funding for loan growth in excess of deposit growth.

Non-interest Income and Expense:

Non-interest income was $4.7 million for the quarter ended June 30, 2007 as compared to $2.2 million for the same period in 2006. This increase is due principally to growth in deposit service charges of $1.1 million, or 80%, increased mortgage banking revenue of $599,000, or 148%, and an increase in bank-owned life insurance revenue of $154,000. Deposit accounts acquired in the Far West Bank merger contributed $923,000, or 37%, of the second quarter 2007 deposit service charge income. The growth of mortgage banking revenue is attributed to increased originations due to additions to the lending staff in Washington and Idaho during the first quarter of 2007 and increased production resulting from the Far West Bank merger. The increase in the bank-owned life insurance income is mainly a result of insurance policies acquired through the merger. Included in non-interest income for the second quarter of 2007 were net gains of $129,000 related to the sale of two financial center facilities, attributed to a gain of $319,000 on the sale of an occupied financial center which is being relocated to a new leased facility, partially offset by a write-down on another vacant building of $190,000. The vacant property is under a contract for sale that is expected to close during the third quarter of 2007 and no additional gain or loss is expected.

Non-interest expense was $19.0 million for the quarter ended June 30, 2007 as compared to $12.7 million for same period in 2006 and $13.8 million for the first quarter of 2007. The increase is related mainly to salaries and employee benefits expense which increased $4.0 million, or 55%, from the same period in 2006 and $3.0 million, or 36%, over the previous quarter. The majority of this increase is related to growth in full-time equivalent employees from the Far West Bank merger and staff additions related to residential mortgage lending, four new financial centers and the two Utah loan production offices opened since late 2006.

The Company recorded a core deposit intangible asset of $12.9 million in connection with Far West Bank acquisition which is being amortized on an accelerated basis. The related amortization expense recognized during the second quarter of 2007 was $793,000. Also included in non-interest expenses are costs associated with mergers that do not qualify for capitalization. Total merger-related expenses recognized during the second quarter of 2007 were $263,000, or $0.02 per diluted share on an after-tax basis, as compared to $102,000 for the first quarter of 2007 and $233,000 for the same period in 2006.

The efficiency ratio has improved significantly to 64.7% for the quarter ended June 30, 2007, as compared to 78.6% in the prior quarter and 70.0% for the same period in 2006.

Income Taxes:

The effective tax rate for the quarter ended June 30, 2007 was 34.9%, as compared to 35.2% for the first quarter of 2007 and 35.9% for the second quarter of 2006. The decrease in the effective tax rate is principally related to the recapture of certain tax credits during 2006.

Earnings Conference Call:

The second quarter earnings conference call will be held Thursday, July 26, 2007 at 10:00 a.m. PDT (1:00 p.m. EDT). Management will discuss the second quarter 2007 operating results and provide an update on recent initiatives. Shareholders, analysts and other interested parties are invited to join the call. The telephone access number is [phone] and the pass code is "AWBC."

About AmericanWest Bancorporation:

AmericanWest Bancorporation is a bank holding company whose principal subsidiary is AmericanWest Bank, which includes Far West Bank, operating as an integrated division of AmericanWest Bank. AmericanWest Bank is a community bank with 62 financial centers and three loan production offices located in Washington, Northern Idaho and Utah. For further information on the Company, please visit our web site at www.awbank.net/IR.

This press release includes forward-looking statements, and AmericanWest Bancorporation intends for such statements to be covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements describe AmericanWest Bancorporation's expectations regarding future events, including the improvements in operating performance, the successful workout of certain non-performing loans and the sale of foreclosed and other bank owned property at current carrying values. Future events are difficult to predict and are subject to risk and uncertainty which could cause actual results to differ materially and adversely. Additional information regarding risks and uncertainties is included in AmericanWest Bancorporation's periodic filings on Forms 10-K and 10-Q with the Securities and Exchange Commission. AmericanWest Bancorporation undertakes no obligation to revise or amend any forward-looking statements to reflect subsequent events or circumstances.

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