AmericanWest Bancorporation Announces 2008 First Quarter Financial Results and Suspension of Cash Dividend.

SPOKANE, Wash. -- AmericanWest Bancorporation (NASDAQ: AWBC) ("Company") today announced its first quarter 2008 financial results, which included the following:

* Goodwill impairment charge of $27 million, or $1.57 per diluted share

* Net interest margin (tax-equivalent) of 4.62%

* Provision for loan losses of $12.8 million, or 2.89% of average loans (annualized)

* Net charge-offs of $11.0 million, or 2.48% of average loans (annualized)

* Allowance for credit losses to total loan ratio increase of 11 basis points to 1.62%

* Increase in the level of non-performing assets to 2.30% of total assets

For the quarter ended March 31, 2008, the Company recognized a net loss of $31.6 million, or $1.83 per diluted share, as compared with net income of $2.2 million, or $0.19 per diluted share for the same period in 2007. Included in the first quarter 2008 results was a non-cash goodwill impairment charge of $27 million, or $1.57 per diluted share. Excluding the impact of this charge, the first quarter net loss totaled $4.6 million, or $0.26 per diluted share. On April 1, 2007, the Company acquired Far West Bancorporation and the financial results have been consolidated since that date.

The first quarter 2008 goodwill impairment charge of $27 million represented approximately 21% of the total goodwill balance, the majority of which was recorded in connection with the acquisitions of Far West Bancorporation in April 2007 and Columbia Trust Bancorp in March 2006. The impairment, determined in the course of preparation of the financial statements for the first quarter, was principally due to the reduction in the Company's market capitalization since December 31, 2007 and declining bank merger and acquisition valuations for recent transactions. Since goodwill is excluded from regulatory capital, the charge (which was not deductible for income tax purposes) did not have any adverse impact on the regulatory capital ratios of the Company or its principal operating subsidiary, AmericanWest Bank ("Bank"). Both the Company and the Bank continued to exceed the federal regulatory standards for "well capitalized" status as of March 31, 2008.

"We are continuing to focus on reducing the unacceptably high level of non-performing loans," remarked Robert M. Daugherty, President and Chief Executive Officer. "Unfortunately, the continued deterioration of some real estate market conditions and valuations has resulted in loss severity estimates for some loans that are higher than those expected at year-end 2007. This was reflected in the first quarter's provision and charge-off levels."

Net Interest Margin:

The tax-equivalent net interest margin for the first quarter of 2008 was 4.62%, a decrease of 35 basis points from the prior quarter and a decrease of 7 basis points from the same period in 2007. The decrease from the prior quarter is due to a decline in the yield on earning assets of 59 basis points, offset by a 39 basis point reduction in the cost of interest bearing liabilities.

The average yield on loans for the first quarter of 2008 was 7.41%, a decrease of 62 basis points from the fourth quarter of 2007 and a decrease of 61 basis points from the same period in 2007. The decrease in the average yield on loans from the prior quarter was principally attributable to the re-pricing of approximately $791.5 million, or 45%, of the Company's loan portfolio, which is indexed on a variable basis. The average prime rate for the first quarter of 2008 was 6.24%, down 128 basis points from the previous quarter.

The average cost of interest bearing deposits for the first quarter of 2008 was 3.01%, a decrease of 42 basis points from the fourth quarter of 2007 and a decrease of 79 basis points from the same period in 2007. The cost of borrowed funds, including FHLB advances and subordinated debt, was 4.81% for the first quarter of 2008, representing a decrease of 70 basis points from the prior quarter and 127 basis points from the same period in 2007. The decreases in the average cost of interest bearing deposits from the prior quarter and comparable prior year period was principally due to the reduction in the paid rates on transaction accounts implemented during first quarter of 2008 and the fourth quarter of 2007 in response to lower short-term market interest rates, while the similar reduction in the average costs of borrowed funds was the result of lower short-term market rates such as LIBOR.

Loan Growth and Asset Quality:

Total loans decreased by $12.0 million during the first quarter of 2008 from year-end 2007, reflecting a decrease in agricultural loans of $17.4 million mainly related to seasonal pay-downs and a reduction in the level of new residential construction and development loan production as compared with previous quarters.

Total non-performing assets, net of government guarantees on loans, were 2.30% of total assets at March 31, 2008, as compared to 1.90% of total assets at December 31, 2007 and 0.47% of total assets at March 31, 2007. Total foreclosed assets at March 31, 2008 totaled $1.6 million and consisted of six properties, as compared to $1.2 million and four properties at December 31, 2007. Non-performing loans, net of government guaranteed amounts, represented 2.67% of total loans at March 31, 2008, up 46 basis points from December 31, 2007.

At March 31, 2008, the Company had approximately $25.0 million of loans which were not classified as non-performing but were internally identified as potential problem loans due to management's concerns about the borrower's financial condition. This represented approximately 1.43% of total outstanding loans, substantially unchanged from the percentage determined at December 31, 2007.

The Company recognized a provision for loan losses of $12.8 million, or 2.89% of average loans on an annualized basis, for the quarter ended March 31, 2008 as compared to $14.6 million, or 3.31% of average loans annualized for the fourth quarter of 2007. A loan loss benefit of $33 thousand was recognized during the first quarter of 2007. For the quarter ended March 31, 2008, net charge-offs were $11.0 million, or 2.48% of average loans annualized, as compared to 2.35% and 0.15% for the fourth quarter of 2007 and the same period in 2007, respectively. Approximately $4.5 million of the first quarter 2008 charge-offs were recognized in connection with two residential development loans which had a combined carrying value of $13.4 million as of December 31, 2007 due to recently updated collateral valuation information. An additional $3.0 million charge-off was recorded related to a construction relationship which was transferred to non-accrual status during the first quarter of 2008, with a remaining carrying value of $9.6 million.

The allowance for credit losses, which is comprised of the allowance for loan losses and reserve for unfunded commitments, was $28.4 million, or 1.62% of total loans, an increase of 11 basis points over year-end 2007 and 37 basis points over March 31, 2007. The allowance for credit losses represented 61% of total non-performing loans (net of government guarantees) as of March 31, 2008 as compared to 68% at December 31, 2007 and 268% at March 31, 2007.

Deposits and Borrowed Funds:

Total average deposits for the first quarter of 2008 were $1.54 billion, down approximately 2% from the average for the fourth quarter of 2007. The average balance of certificates of deposit increased $12 million principally due to the issuance of brokered certificates, which increased by $26 million. This growth was offset by reductions in average non-interest bearing deposits of $24 million and savings/money market deposits of $14 million. Total ending deposits at March 31, 2008 were $1.58 billion, up from $1.53 billion at December 31, 2007. The increase was related mainly to growth in the brokered certificates ($30 million) and savings/money market ($28 million) deposit categories.

Total FHLB and other borrowings at March 31, 2008 were $212 million, a decrease from $245 million at December 31, 2007, and an increase of $130 million from March 31, 2007. The decrease from year-end 2007 was principally due to the replacement of matured borrowings with brokered certificates of deposit.

Non-interest Income and Expense:

Non-interest income was $4.2 million for the quarter ended March 31, 2008 as compared to $4.6 million for the quarter ended December 31, 2007 and $2.4 million for the same period of the prior year. The decrease from the previous quarter relates principally to deposit fees and service charges, mainly overdraft and NSF fees, and government guaranteed loan sale fee income. Fees on mortgage loan sales for the first quarter of 2008 was $862 thousand, a decrease of 3% from the previous quarter and up over 150% from the same period in 2007.

Non-interest expense was $45.8 million for the quarter ended March 31, 2008. Excluding the goodwill impairment charge of $27.0 million, total non-interest expenses for the quarter would have been $18.8 million. This compares to $18.8 million for the quarter ended December 31, 2007 and $13.8 million for the same period of the prior year. Total occupancy and equipment expenses during the first quarter of 2008 were $3.7 million as compared to $3.5 million for the fourth quarter of 2007. Of this increase $142 thousand relates to increased rent expense mainly related to a new centralized administrative facility.

The efficiency ratio, excluding the goodwill impairment charge, was 70.2% for the quarter ended March 31, 2008 as compared to 64.6% for the quarter ended December 31, 2007. The increase in the ratio level from the fourth quarter of 2007 is related mainly to the decrease in net interest income, as the non-interest income and expenses remained relatively constant. The efficiency ratio for the quarter ended March 31, 2007 was 78.8%.

Income Taxes:

The effective tax benefit rate, excluding the goodwill impairment charge, for the quarter ended March 31, 2008 was 25.0%. This rate compares to a benefit of 40.7% for the quarter ended December 31, 2007 due mainly to year-end adjustments to the estimates used throughout the year for 2007. In addition, expected non-taxable permanent differences as compared to pre-tax income for the year are anticipated to have a more significant impact which causes the low rate for the first quarter. For the quarter ended March 31, 2007, the effective tax rate was 35.2% which reflected the recapture of certain tax credits in that year.

Capital:

Total shareholders' equity at March 31, 2008 was $250.8 million and total tangible shareholders' equity was $133.9 million, or $7.78 per share. The tangible equity ratio was 6.73% and the Company's and the Bank's regulatory capital ratios remained in excess of the requirements for "well capitalized" status as of March 31, 2008.

In light of the impact of increased loan loss provisions on the Company's operating results for the past two quarters and the current elevated level of non-performing assets, the board of directors has determined that the quarterly cash dividend will be suspended effective immediately. Although the Company's capital plan and dividend policy will be evaluated on a regular basis, management does not expect that a cash dividend will be reinstituted prior to 2009. The Company is currently evaluating alternatives for raising additional regulatory capital.

Earnings Conference Call:

The first quarter earnings conference call will be held Thursday, April 24, 2008 at 10:00 a.m. PDT (1:00 p.m. EDT). Management will discuss the first quarter 2008 operating results and provide an update on recent initiatives. Shareholders, analysts and other interested parties are invited to join the call. The call may be accessed via telephone at [phone] (no pass code is required) or webcast at www.awbank.net/IR.

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 64 financial centers and two 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 performance of the construction and development loan portfolio, reinstitution of cash dividend payments and expense control. 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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