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Table of Contents
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
FORM 10-Q
 
(Mark One)
x
 
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
  
 
For the quarterly period ended September 30, 2002
 
OR
 
¨
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
  
 
For the transition period from                      to                     
 
Commission file number 000-18561
 
 
AMERICANWEST BANCORPORATION
(Exact Name of Registrant as Specified in Its Charter)
 
Washington
  
91-1259511
(State or Other Jurisdiction of
  
(I.R.S. Employer
Incorporation or Organization)
  
Identification No.)
 
9506 North Newport Highway, Spokane, WA 99218-1200
(Address of Principal Executive Offices)
 
(509) 467-6949
(Registrant’s Telephone Number, Including Area Code)
 
 
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  ¨
 
The issuer has one class of capital stock, that being common stock. On November 12, 2002, there were 8,062,768 shares of such stock outstanding.
 

Table of Contents
 
AMERICANWEST BANCORPORATION
 
INDEX TO QUARTERLY REPORT ON FORM 10-Q
 
September 30, 2002
 
Table of Contents
 
             
Page
Part I
  
Financial Information
     
   
Item 1.
   
Financial Statements
     
           
3
           
4
           
5
           
6-12
   
Item 2.
      
13-20
   
Item 3.
      
20
   
Item 4.
      
20
           
21
Part II
  
Other Information
     
   
Item 6.
      
21
  
21
  
22-23

2

Table of Contents
 
AMERICANWEST BANCORPORAION
 
Part I    Financial Information
 
AmericanWest Bancorporation and Subsidiaries
Condensed Consolidated Statements of Condition
 
    
September 30,
   
December 31,
    
2002
   
2001
    
($ In thousands)
ASSETS
              
Cash and due from banks
   
$
46,828
   
$
24,421
Overnight interest bearing deposits with other banks
   
 
4,101
   
 
535
    
  
Cash and cash equivalents
   
 
50,929
   
 
24,956
Securities
   
 
40,464
   
 
15,550
Loans, net of allowance for loan losses of $9,005 in 2002 and $6,624 in 2001
   
 
743,452
   
 
580,899
Accrued interest receivable
   
 
7,782
   
 
5,368
Premises and equipment, net
   
 
18,608
   
 
13,488
Foreclosed real estate and other foreclosed assets
   
 
8,364
   
 
1,616
Life insurance and salary continuation assets
   
 
11,728
   
 
10,519
Goodwill
   
 
12,049
   
 
3,872
Intangible assets
   
 
3,246
   
 
1,098
Other assets
   
 
2,421
   
 
1,975
    
  
TOTAL ASSETS
   
$
899,043
   
$
659,341
    
  
LIABILITIES
              
Noninterest bearing—demand deposits
   
$
135,440
   
$
98,280
Interest bearing:
              
NOW and savings accounts
   
 
294,930
   
 
207,397
Time, $100,000 and over
   
 
163,630
   
 
81,508
Other time
   
 
165,428
   
 
145,052
    
  
TOTAL DEPOSITS
   
 
759,428
   
 
532,237
Short-term borrowings
   
 
42,226
   
 
52,974
Capital lease obligations
   
 
597
   
 
627
Long Term Debt
   
 
2,662
       
Trust Preferred Securities
   
 
10,000
       
Accrued interest payable
   
 
1,266
   
 
1,439
Other Liabilities
   
 
4,891
   
 
3,858
    
  
TOTAL LIABILITIES
   
 
821,070
   
 
591,135
STOCKHOLDERS’ EQUITY
              
Common stock, no par, shares authorized 15,000,000; issued and outstanding 8,062,768 in 2002 and 7,905,366 in 2001
   
 
64,136
   
 
61,540
Retained earnings
   
 
13,616
   
 
6,584
Accumulated other comprehensive income, net of tax
   
 
221
   
 
82
    
  
TOTAL STOCKHOLDERS’ EQUITY
   
 
77,973
   
 
68,206
    
  
TOTAL LIABILITIES and STOCKHOLDERS’ EQUITY
   
$
899,043
   
$
659,341
    
  
 
The accompanying notes are an integral part of these financial statements.

3

Table of Contents
 
AMERICANWEST BANCORPORATION
 
AmericanWest Bancorporation and Subsidiaries
Condensed Consolidated Statements of Income
 
    
Three Months Ended
September 30,
   
Year to Date
September 30,
    
2002
   
2001
   
2002
   
2001
    
($ In thousands, except per share)
INTEREST INCOME
                            
Interest and fees on loans and leases
   
$
15,460
   
$
13,215
   
$
41,299
   
$
38,356
Interest on securities
   
 
504
   
 
368
   
 
991
   
 
1,826
Other interest income
          
 
33
          
 
93
    
  
  
  
TOTAL INTEREST INCOME
   
 
15,964
   
 
13,616
   
 
42,290
   
 
40,275
    
  
  
  
INTEREST EXPENSE
                            
Interest on deposits
   
 
3,627
   
 
4,026
   
 
10,012
   
 
13,720
Interest on borrowings
   
 
372
   
 
529
   
 
936
   
 
1,558
    
  
  
  
TOTAL INTEREST EXPENSE
   
 
3,999
   
 
4,555
   
 
10,948
   
 
15,278
    
  
  
  
NET INTEREST INCOME
   
 
11,965
   
 
9,061
   
 
31,342
   
 
24,997
Provision for loan losses
   
 
1,738
   
 
1,109
   
 
3,820
   
 
2,237
    
  
  
  
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES
   
 
10,227
   
 
7,952
   
 
27,522
   
 
22,760
    
  
  
  
NONINTEREST INCOME
                            
Fees and service charges
   
 
975
   
 
729
   
 
2,661
   
 
1,970
Insurance commissions
   
 
6
   
 
17
   
 
28
   
 
334
Securities gains
   
 
44
   
 
66
   
 
44
   
 
180
Other
   
 
449
   
 
258
   
 
1,067
   
 
1,163
    
  
  
  
TOTAL NONINTEREST INCOME
   
 
1,474
   
 
1,070
   
 
3,800
   
 
3,647
    
  
  
  
NONINTEREST EXPENSE
                            
Salaries and employee benefits
   
 
4,296
   
 
3,134
   
 
11,721
   
 
9,686
Occupancy expense, net
   
 
516
   
 
436
   
 
1,460
   
 
1,399
Equipment expense
   
 
467
   
 
419
   
 
1,402
   
 
1,211
Intangible assets amortization
   
 
52
   
 
81
   
 
109
   
 
249
Other operating expense
   
 
1,935
   
 
1,475
   
 
4,847
   
 
4,183
    
  
  
  
TOTAL NONINTEREST EXPENSE
   
 
7,266
   
 
5,545
   
 
19,539
   
 
16,728
    
  
  
  
INCOME BEFORE INCOME TAX EXPENSE
   
 
4,435
   
 
3,477
   
 
11,783
   
 
9,679
INCOME TAX EXPENSE
   
 
1,404
   
 
1,180
   
 
3,795
   
 
3,248
    
  
  
  
NET INCOME
   
$
3,031
   
$
2,297
   
$
7,988
   
$
6,431
    
  
  
  
Basic earnings per common share
   
$
0.38
   
$
0.31
   
$
1.01
   
$
0.85
Diluted earnings per common share
   
$
0.37
   
$
0.31
   
$
0.99
   
$
0.85
Basic weighted average shares outstanding
   
 
8,003,493
   
 
7,394,407
   
 
7,917,126
   
 
7,524,709
Diluted weighted average shares outstanding
   
 
8,214,042
   
 
7,459,925
   
 
8,089,244
   
 
7,585,197
 
The accompanying notes are an integral part of these financial statements

4

Table of Contents
AMERICANWEST BANCORPORATION
 
AmericanWest Bancorporation and AmericanWest Bank
Condensed Consolidated Statements of Cash Flows
Year-To-Date September 30, 2002 and 2001
($in thousands)
 
    
2002
     
2001
  
Cash flows from operating activities:
                  
Net income
   
$
7,988
 
   
$
6,431
 
Provision for loan losses
   
 
3,820
 
   
 
2,237
 
Depreciation and amortization
   
 
1,095
 
   
 
880
 
Stock issued for employee incentive program
   
 
223
 
         
(Increase)/decrease in assets and liabilities:
                  
Gain on sales of fixed assets
   
 
(12
)
         
Accrued interest receivable
   
 
(775
)
   
 
(1,352
)
Life insurance and salary continuation assets
   
 
(483
)
   
 
(80
)
Other assets
   
 
(426
)
   
 
1,495
 
Accrued interest payable
   
 
(408
)
   
 
(34
)
Other liabilities
   
 
468
 
   
 
200
 
    
  
Net cash provided by operating activities
   
 
11,490
 
   
 
9,777
 
    
  
Cash flows from investing activities:
                  
Securities:
                  
Maturities
   
 
5,924
 
   
 
17,864
 
Sales
   
 
1,537
 
   
 
25,902
 
Purchases
   
 
(5,797
)
   
 
(14,735
)
Net increase in loans
   
 
(78,556
)
   
 
(69,753
)
Sales of pemises and equipment
   
 
40
 
   
 
10
 
Purchases of premises and equipment
   
 
(3,544
)
   
 
(1,345
)
Net Cash to Acquire Latah Bancorporation
   
 
(8,601
)
         
Foreclosed real estate activity
   
 
330
 
   
 
(404
)
    
  
Net cash change in investing activities
   
 
(88,667
)
   
 
(42,461
)
    
  
Cash flows from financing activities:
                  
Net change in deposits
   
 
114,440
 
   
 
23,106
 
Short-term borrowings activity
   
 
(18,507
)
   
 
17,300
 
Principal payments on capital lease obligations
   
 
(30
)
   
 
(29
)
Proceeds from trust preferred securities
   
 
10,000
 
         
Cash payments for stock repurchases
   
 
(3,015
)
   
 
(4,605
)
Cash received from stock sales
   
 
262
 
   
 
414
 
    
  
Net cash provided by financing activities
   
 
103,150
 
   
 
36,186
 
    
  
Net change in cash and cash equivalents
   
 
25,973
 
   
 
3,502
 
Cash and cash equivalents, beginning of year
   
 
24,956
 
   
 
29,827
 
    
  
Cash and cash equivalents, end of quarter
   
$
50,929
 
   
$
33,329
 
    
  
 
The accompanying notes are an integral part of these financial statements.

5

Table of Contents
 
AMERICANWEST BANCORPORATION
 
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
NOTE 1.   Basis of Presentation
The consolidated financial statements include AmericanWest Bancorporation and it’s wholly owned subsidiaries (AWBC), AmericanWest Bank and Bank of Latah, after eliminating all significant intercompany balances and transactions.
 
The interim unaudited condensed 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 instructions to Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments consisting only of normal recurring accruals necessary for a fair presentation of the financial condition, the results of operations, and cash flows for the interim periods included herein have been made. The consolidated statement of condition of AWBC as of December 31, 2001 has been derived from the audited consolidated statement of condition of AWBC as of that date. The results of operations for the nine months ended September 30, 2002, are not necessarily indicative of results to be anticipated for the year ending December 31, 2002. For additional information, refer to the consolidated financial statements and footnotes thereto included in AWBC’s annual report on Form 10-K for the year ended December 31, 2001.
 
NOTE 2.    Acquisition and Intangible Assets
On July 31, 2002, the Corporation completed its acquisition of 100% of the voting equity interest in Latah Bancorporation and its wholly-owned subsidiary, Bank of Latah. The results of Latah Bancorporation’s operations have been included in the consolidated financial statements since that date. Bank of Latah is a commercial bank providing a wide array of banking products and services to its customers in the Palouse region of eastern Washington.
 
The aggregate purchase price was approximately $17.5 million, including $13.5 million in cash and 330,093 shares of the Corporation’s common stock valued at $4 million. The value of the shares of common stock issued was determined based on the closing market price of the Corporation’s shares on March 28, 2002, the date of the definitive agreement and notification to the public of the transaction. The Corporation issued $9.3 million in subordinated debt to fund a portion of the transaction and has assumed approximately $2.7 million in long-term debt previously held by Latah. The $9.3 million in subordinated debt was subsequently repaid with the proceeds from the issuance of trust preferred securities (Note 6)
 
The addition of Bank of Latah to the Corporation’s operations adds value to the Corporation in several ways. First, Bank of Latah is a well-managed and profitable bank with good asset quality. Second, Bank of Latah’s business locations mesh well with those of the Corporation, increasing our presence in the important Palouse agricultural market of eastern Washington and adding four locations in northern Idaho. With the addition of our new offices in Lewiston and Hayden, Idaho, this will bring the number of our Idaho locations to seven by year end. Third, Bank of Latah’s operating philosophy and information systems are substantially similar to those of the Corporation, making for an easy integration. Finally, this acquisition adds new profitable leverage to the Corporation’s capital, providing for greater future returns on equity.
 

6

Table of Contents
 
AMERICANWEST BANCORPORATION
 
The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of acquisition.
 
At July 31, 2002 ($000s)
 
Cash and cash equivalents
   
$
4,907
Securities
   
 
26,362
Loans, net
   
 
94,665
Premises and equipment, net
   
 
2,591
Other Assets
   
 
2,714
Core Deposit Intangible
   
 
2,256
Goodwill
   
 
8,177
    
Total assets acquired
   
$
141,672
    
Deposits
   
$
112,751
Short-term borrowings
   
 
7,759
Other liabilities
   
 
949
Long Term Debt
   
 
2,663
    
Total liabilities assumed
   
$
124,122
    
    
Net assets acquired
   
$
17,550
    
 
Core deposits are a dependable, long-term source of funds for the Corporation. The core deposit intangible asset will be amortized over the estimated life of the depositor relationships of 15 years under the straight-line method. Goodwill resulting from the acquisition totaled $8,177,000 and will be periodically evaluated for impairment. None of the goodwill is expected to be deductible for tax purposes.
 
The results for the three and nine months ended September 30, 2002, include the effect of adopting Statement of Financial Accounting Standards (SFAS) No. 142 Goodwill and Other Intangible Assets. SFAS 142 provides that goodwill is no longer amortized and the value of an identifiable intangible asset must be amortized over its useful life, unless the asset is determined to have an indefinite useful life. Goodwill must be tested for impairment as of the beginning of the fiscal year in which SFAS 142 is adopted and at least annually thereafter. In January 2002, the Corporation performed an impairment test of goodwill resulting in no impairment. As a result, goodwill of $3,872,000 at December 31, 2001 ceased to be amortized. AWBC will continue to periodically evaluate goodwill for impairment.

7

Table of Contents
 
AMERICANWEST BANCORPORATION
 
Had the Corporation been accounting for its goodwill under SFAS 142 for all periods presented, the Corporation’s net income and earnings per share would have been as follows:
 
    
Three Months Ended
   
Nine Months Ended
    
September 30
   
September 30
    
2002
   
2001
   
2002
   
2001
Reported Net Income
   
$
3,031
   
$
2,297
   
$
7,988
   
$
6,431
Add Back Goodwill Amortization net of tax
   
 
—  
   
 
56
   
 
—  
   
 
169
    
  
  
  
Total
   
$
3,031
   
$
2,353
   
$
7,988
   
$
6,600
    
  
  
  
Basic Earnings per Share
                            
Reported Net Income
   
$
0.38
   
$
0.31
   
$
1.01
   
$
0.85
Goodwill Amortization
   
 
—  
   
 
0.01
   
 
—  
   
 
0.02
    
  
  
  
Adjusted Earnings per Share
   
$
0.38
   
$
0.32
   
$
1.01
   
$
0.87
    
  
  
  
Diluted Earnings per Share
                            
Reported Net Income
   
$
0.37
   
$
0.31
   
$
0.99
   
$
0.85
Goodwill Amortization
   
 
—  
   
 
0.01
   
 
—  
   
 
0.02
    
  
  
  
Adjusted Earnings per Share
   
$
0.37
   
$
0.32
   
$
0.99
   
$
0.87
    
  
  
  
 
The changes in the carrying amount of goodwill for the nine months ended September 30, 2002 are as follows ($000s):
 
        
Balance at January 1, 2002
   
$
3,872
Goodwill acquired during the year
   
 
8,177
    
Balance at September 30, 2002
   
$
12,049
    

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Table of Contents
 
AMERICANWEST BANCORPORATION
 
Intangible asset balances as of September 30, 2002 were as follows:
 
    
September 30, 2002
    
Gross Carrying Amount
   
Accumulated Amortization
     
Net
   
Weighted Average Useful Life
    
($000)
Core Deposit Intangibles
                            
Wells Fargo Branches Purchased
   
$
2,100
   
$
(1,123
)
   
$
977
   
15 Years
Bank of America Branches Purchased
   
$
256
   
$
(3
)
   
$
253
   
15 Years
Purchase of Bank of Latah
   
$
2,000
   
$
(22
)
   
$
1,978
   
15 Years
Purchased Escrow Servicing
   
$
102
   
$
(64
)
   
$
38
   
8 Years
    
  
  
    
Total
   
$
4,458
   
$
(1,212
)
   
$
3,246
     
    
  
  
    
 
The Corporation has no identifiable intangible assets with indefinite useful lives.
 
Amortization expense for the net carrying amount of intangible assets at September 30, 2002 is estimated to be as follows ($000s):
 
        
Remainder of 2002
   
$
66
2003
   
$
264
2004
   
$
264
2005
   
$
264
2006
   
$
264
2007
   
$
264
After 2007
   
$
264

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Table of Contents
 
AMERICANWEST BANCORPORATION
 
NOTE 3.    Securities
The securities are classified as available-for-sale and are stated at fair value, and unrealized holding gains and losses, net of related deferred taxes, are reported as a separate component of stockholders’ equity. Gains or losses on available-for-sale securities sales are reported as part of noninterest income based on the net proceeds and the adjusted carrying amount of the securities sold, using the specific identification method. Carrying amount and fair values at September 30, 2002 and December 31, 2001 were as follows:
 
    
September 30, 2002
   
December 31, 2001
    
Amortized
   
Fair
   
Amortized
   
Fair
    
Cost
   
Value
   
Cost
   
Value
    
($ in thousands)
U.S. Treasury securities
   
$
501
   
$
556
   
$
1,001
   
$
1,043
Obligations of federal government agencies
   
$
8,575
   
$
8,656
   
 
4,531
   
 
4,564
Mortgage backed securities
   
$
6,071
   
$
6,089
   
 
2,688
   
 
2,730
Obligations of states, municipalities and political subdivisions
                            
Other securities
   
$
15,261
   
$
15,424
   
 
5,951
   
 
5,916
    
  
  
  
Total
   
$
39,581
   
$
40,464
   
$
15,426
   
$
15,550
    
  
  
  
 
NOTE 4.    Loans
Loan detail by category as of September 30, 2002 and December 31, 2001 were as follows:
 
      
September 30, 2002
       
December 31, 2001
  
      
($ in thousands)
  
Commercial and industrial
     
$
474,906
 
     
$
411,197
 
Agricultural
     
 
91,457
 
     
 
88,121
 
Real estate mortgage
     
 
39,453
 
     
 
40,084
 
Real estate construction
     
 
21,730
 
     
 
17,201
 
Installment
     
 
21,263
 
     
 
26,311
 
Bank cards and other
     
 
8,718
 
     
 
5,062
 
      
    
Total loans
     
 
657,527
 
     
 
587,976
 
Allowance for loan losses
     
 
(8,011
)
     
 
(6,624
)
Deferred loan fees, net of deferred costs
     
 
(257
)
     
 
(453
)
      
    
Net loans
     
$
649,259
 
     
$
580,899
 
      
    

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Table of Contents
 
AMERICANWEST BANCORPORATION
 
NOTE 5.    Allowance for Loan Losses
The allowance for loan loss is maintained at levels considered adequate by management to provide for possible loan losses. The allowance is 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 during the three and nine months ended September 30, 2002 and 2001 were as follows:
 
    
Three Months Ended
     
Year to Date
  
    
September 30,
     
September 30,
  
    
2002
     
2001
     
2002
     
2001
  
    
($ in thousands)
  
Balance, beginning of period
   
$
7,022
 
   
$
5,511
 
   
$
6,624
 
   
$
4,948
 
Balances Acquired
   
$
878
 
            
$
878
 
         
Provision for loan losses
   
 
1,738
 
   
$
1,109
 
   
 
3,820
 
   
 
2,237
 
Loan charge-offs
   
 
(728
)
   
$
(221
)
   
 
(2,666
)
   
 
(828
)
Loan recoveries
   
 
95
 
   
$
16
 
   
 
349
 
   
 
58
 
    
  
  
  
Balance, end of period
   
$
9,005
 
   
$
6,415
 
   
$
9,005
 
   
$
6,415
 
    
  
  
  
 
NOTE 6.    Issuance of Trust Preferred Securities
During the third quarter of 2002 the Holding Company formed a subsidiary whose sole purpose was to issue $10.0 million in Trust Preferred Securities through a pool sponsored by FTN Financial Capital Markets Under the terms of the transaction the Trust Preferred Securities will have a maturity of 30 years and are redeemable after five years with certain exceptions. The floating-rate securities have a 5.22% interest rate, which will reset quarterly at the three-month LIBOR rate plus 3.40%. The Trust Preferred Securities will be recorded as a liability on the Statement of Financial Condition, but are expected to qualify as Tier 1 capital for regulatory capital purposes. The proceeds from the offering were used to retire debt associated with the purchase of Latah Bancorporation, Inc.
 
NOTE 7.    New Accounting Pronouncements
Statement of Financial Accounting Standard (SFAS) No. 146, Accounting for Costs Associated with Exit or Disposal Activities, addresses financial accounting and reporting for the treatment of costs associated with exit or disposal activities. This Statement improves financial reporting by requiring that a liability for a cost associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. This Statement replaces EITF Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity. The provisions of this Statement are to be applied prospectively to exit or disposal activities initiated after December 31, 2002. The Corporation does not expect the Statement will result in a material impact on its financial position or results of operations.

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Table of Contents
 
AMERICANWEST BANCORPORATION
 
Statement of Financial Accounting Standard (SFAS) No. 147, Acquisitions of Certain Financial Institutions—an amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9. The provisions of this Statement that relate to the application of the purchase method of accounting apply to all acquisitions of financial institutions, except transactions between two or more mutual enterprises. This Statement removes acquisitions of financial institutions from the scope of both Statement 72 and Interpretation 9 and requires that those transactions be accounted for in accordance with FASB Statements No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. In addition, this Statement amends FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer-relationship intangible assets of financial institutions such as depositor- and borrower-relationship intangible assets and credit cardholder intangible assets. This Statement is effective for acquisitions for which the date of acquisition is on or after October 1, 2002. The Corporation does not expect the Statement will result in a material impact on its financial position or results of operations.

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AMERICANWEST BANCORPORATION
 
Item 2:    Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
The following discussion contains a review of the results of operations and financial condition for third quarter and the year-to-date results in 2002 and 2001. 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 AWBC’s Form 10-K for the year ended December 31, 2001, which contains additional information.
 
This discussion may contain certain forward-looking statements, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those stated. Readers are cautioned not to place undue reliance on these forward-looking statements.
 
AmericanWest Bancorporation
AmericanWest Bancorporation, Inc (the “Corporation”) is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Corporation conducts business through two wholly-owned subsidiaries, AmericanWest Bank, (AWB) a state-chartered, FDIC-insured commercial bank organized under the laws of the State of Washington, and Bank of Latah (Latah), a state-chartered, FDIC-insured commercial bank organized under the laws of the State of Idaho. The Corporation’s main office is located in Spokane, Washington.
 
AmericanWest Bank
AWB provides a full range of banking services to small and medium sized businesses, professionals, and consumers through 32 banking offices located in eastern Washington and northern Idaho.
 
The principal sources of the AWB’s revenue are 1) interest and fees on loans, 2) fees for deposit accounts and related services, and 3) interest on investments (principally government securities and 4) interest bearing deposits with other banks. AWB’s lending activities consist of term and operating loans to businesses and farmers, real estate construction and development loans, vehicle and equipment loans for both businesses and consumers, and real estate mortgage loans. AWB also offers a full line of deposit account products and related services.
 
Latah Bancorporation and Bank of Latah
 
The Corporation acquired 100% of Latah Bancorporation and its sole subsidiary, Bank of Latah on July 31, 2002. Latah Bancorporation is a bank holding company registered under the Bank Holding Company Act of 1956, as amended and will be dissolved prior to year end 2002. Bank of Latah provides a full range of banking services to small and medium sized businesses, professionals, and consumers through 8 banking offices located in the Palouse region of eastern Washington and in northern Idaho.
 
The principal sources of the Latah’s revenue are 1) interest and fees on loans, 2) fees for deposit accounts and related services, and 3) interest on investments (principally government securities and 4) interest bearing deposits with other banks. Latah’s lending activities consist of term and operating loans to businesses and farmers, real estate construction and development loans, vehicle and equipment loans for both businesses and consumers, and real estate mortgage loans. Latah also offers a full line of deposit account products and related services.

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AMERICANWEST BANCORPORATION
 
The Corporation intends to merge Bank of Latah into AmericanWest Bank in early 2003.
 
Performance Overview
The table below summarizes the Corporation’s financial performance for the three and nine month periods ending September 30, 2002 and 2001:
 
AMERICANWEST BANCORPORATION AND SUBSIDIARIES
PERFORMANCE SUMMARY
 
    
Three Months Ended September 30,
     
Year-To-Date September 30,
  
              
%
Change
               
%
Change
  
    
2002
   
2001
      
2002
   
2001
   
    
($ in thousands, except per share)
  
Interest income
   
$
15,964
   
$
13,616
   
17.2
%
   
$
42,290
   
$
40,275
   
5.0
%
Interest expense
   
 
3,999
   
 
4,555
   
-12.2
%
   
 
10,948
   
 
15,278
   
-28.3
%
    
  
  
  
  
  
Net interest income
   
 
11,965
   
 
9,061
   
32.0
%
   
 
31,342
   
 
24,997
   
25.4
%
Provision for loan losses
   
 
1,738
   
 
1,109
   
56.7
%
   
 
3,820
   
 
2,237
   
70.8
%
    
  
  
  
  
  
Net interest income after provision for loan losses
   
 
10,227
   
 
7,952
   
28.6
%
   
 
27,522
   
 
22,760
   
20.9
%
Noninterest income
   
 
1,474
   
 
1,070
   
37.8
%
   
 
3,800
   
 
3,647
   
4.2
%
Noninterest expense
   
 
7,266
   
 
5,545
   
31.0
%
   
 
19,539
   
 
16,728
   
16.8
%
    
  
  
  
  
  
Income before income taxes
   
 
4,435
   
 
3,477
   
27.6
%
   
 
11,783
   
 
9,679
   
21.7
%
Income taxes
   
 
1,404
   
 
1,180
   
19.0
%
   
 
3,795
   
 
3,248
   
16.8
%
    
  
  
  
  
  
Net income
   
$
3,031
   
$
2,297
   
32.0
%
   
$
7,988
   
$
6,431
   
24.2
%
    
  
  
  
  
  
Basic earnings per common share
   
$
0.38
   
$
0.31
   
22.3
%
   
$
1.01
   
$
0.85
   
18.1
%
Diluted earnings per common share
   
$
0.37
   
$
0.31
   
19.8
%
   
$
0.99
   
$
0.85
   
16.5
%
 
Net Income
The Corporation reported net income of $3,031,000 or $0.37 per fully diluted share for the second quarter of 2002 compared to $2,297,000 and $0.31 for the same period in 2001. For the first nine months of 2002, net income was $7,988,000 or $.99 per fully diluted share versus $6,431,000 and $0.85 in 2001. The Corporation’s return on average assets was 1.47 % for the nine months ended September 30, 2002 and 1.46% for the same period in 2001. All of the Corporation’s net income for these periods was derived from the operating results of the banks.
 
Net Interest Income
Net interest income for the nine months ended September 30, 2002 was $31,342,000, an increase of $6,345,000 or 25% over the same period in 2001. This was the principal factor in the increase of the Corporation’s net income for the same period.
 
Growth in net interest income was due to two factors. First, loans increased by 28% to $743,452,000 in 2002 over $580,899,000 in 2001. Second, the Corporation’s net interest margin increased to 6.11% in 2002 versus 5.83% in 2001.

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AMERICANWEST BANCORPATION
 
This favorable change in net interest margin has been due to a faster decline in the Corporation’s interest expense than the related decline in the yield on loans and other earning assets. The maturities of the Corporation’s time deposits are generally shorter than that of its loans, causing these liabilities to re-price more quickly in a period of falling rates. In addition, the Corporation has continually adjusted the rates on other interest bearing deposits downward as market rates have declined. Finally, the Corporation has carefully managed the rates and terms on new loans to slow the decline in earning asset yields.
 
Current conditions appear to indicate that market rates will not fall significantly through the remainder of 2002. Sluggish economic activity and negligible inflationary pressure also indicate that rates will not increase materially until well into 2003. When rates rise, the Corporation may see its net interest income decline as deposits re-price upward more quickly than loans. This may be offset somewhat by the Corporation’s efforts to emphasize variable rate lending and less rate-sensitive deposit types.
 
The following table sets forth the Corporation’s net interest margin for the nine months ending September 30, 2002 and 2001:
 
AmericanWest Bancorporation and Subsidiaries
Net Interest Margin
Year-To-Date September 30, 2002 and 2001
($ in thousands)
 
    
2002*
     
2001
  
    
Average
   
Interest
   
%
     
Average
   
Interest
   
%
  
Loans
   
$
709,618
   
$
40,323
   
7.60
%
   
$
529,233
   
$
35,305
   
8.92
%
* Loan fees
          
 
5,137
   
0.97
%
          
 
3,051
   
0.77
%
Investments
   
 
55,217
   
 
1,954
   
4.73
%
   
 
43,826
   
 
1,919
   
5.85
%
    
  
         
  
      
Total earning assets
   
 
764,835
   
 
47,414
   
8.29
%
   
 
573,059
   
 
40,275
   
9.40
%
    
  
         
  
      
Other assets
   
 
66,522
                 
 
51,683
              
    
  
         
  
      
Total assets
   
$
831,357
   
$
47,414
          
$
624,742
   
$
40,275
       
    
  
         
  
      
Interest-bearing deposits
   
$
567,014
   
$
11,365
   
2.68
%
   
$
421,318
   
$
13,720
   
4.35
%
Borrowings
   
 
49,661
   
 
1,091
   
2.94
%
   
 
42,376
   
$
1,558
   
4.92
%
    
  
  
  
  
  
Total interest-bearing liabilities
   
 
616,675
   
 
12,456
   
2.70
%
   
 
463,694
   
 
15,278
   
4.41
%
    
  
  
  
  
  
Noninterest bearing deposits
   
 
120,397
                 
 
89,701
              
Other liabilities
   
 
15,739
                 
 
5,314
              
    
  
         
  
      
Total liabilities
   
 
752,811
   
 
12,456
   
2.21
%
   
 
558,709
   
 
15,278
   
3.66
%
    
  
         
  
      
Equity
   
 
77,774
                 
 
66,033
              
    
  
         
  
      
Total liabilities and capital
   
$
830,585
   
$
12,456
          
$
624,742
   
$
15,278
       
    
  
         
  
      
Net interest income/spread
          
$
34,958
   
5.59
%
          
$
24,997
   
4.99
%
Net interest margin to average earning assets
                 
6.11
%
                 
5.83
%
*
 
Amounts include year-to-date average balances, income and expense for Bank of Latah.

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AMERICANWEST BANCORPATION
 
Provision for Loan Losses
Provision for loan losses reduces net interest income. The Corporation provided $3,820,000 in the first nine months of 2002, compared to $2,237,000 in 2001. This increased provision is the result of growth in the Corporation’s loans and the recognition of increased risk in the Corporation’s loan portfolio in light of increases in non-performing assets and declining economic activity.
 
Management believes the allowance for possible loan losses is adequate to absorb any losses in the current portfolio. This statement is based on management’s continuing evaluation of the inherent risks in outstanding loans, current levels of nonperforming assets and economic factors.
 
Noninterest Income and Expense
Noninterest income for the nine months ended September 30, 2002 was $3,800,000, an increase of 4% from 2001. 2001 amounts include revenue from a former insurance agency subsidiary and one-time gains from the sale of that subsidiary and the sale of an investment in an ATM transaction processor. Fees and service charges increased in 2002 to $2,661,000 over $1,970,000 in 2001. This is primarily due to improved assessment and collection of overdraft and NSF fees and general growth in business volume.
 
Noninterest expense increased to $19,539,000 at September 30 2002 compared to $16,728,000 in 2001. Most of this increase was attributable to higher employee incentive expense and costs incurred to upgrade the Corporation’s information systems.
 
Nonperforming Assets
Nonperforming assets include loans that are 90 or more days past due or in non-accrual status and real estate and other loan collateral acquired through foreclosure. Total nonperforming assets were $21,207,000 or 2.42% of total assets at September 30, 2002. This compares to $18,146,000 or 2.83% of assets in 2001. The majority of nonperforming assets involve nine borrowers totaling $17.6 million. The Corporation has acquired clear title to one ice skating complex in Spokane and has received a substantial cash settlement from the borrowers. The Corporation is in the process of liquidating its equipment and real property and anticipates no loss on the remaining $1.6 million balance. The Corporation continues to operate another ice skating complex in Spokane pending its sale as an operating business. Management believes such a sale will recover substantially all of the $3.1 million balance of this loan.
 
Management believes it remains well secured on a $4 million retail/office complex in Spokane. This loan is subject to litigation with trial now scheduled for May of 2003. Management believes the Corporation will prevail in this matter.
 
The Corporation has acquired two former apple orchards in the Yakima area and is working to recast these properties for development as residential or commercial sites. It is Management’s belief that these efforts will allow the Corporation to fully recover the $2 million book value of these assets.

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AMERICANWEST BANCORPATION
 
An additional apple orchard and warehouse complex was acquired through foreclosure during the quarter. The warehouse is currently leased to another party and is for sale. The orchard land is being marketed separately as development property. Management anticipates no further loss on this $2.1 million asset.
 
The Corporation is in foreclosure on a $2.5 million retail/office complex in the Tri Cities area. An offer to purchase is pending the Corporation’s acquisition of title. The potential purchasers are financially strong and no loss is anticipated in this transaction.
 
The Corporation is in negotiations with the borrower on a $1.3 million loan secured by commercial real estate and nursery stock in the Yakima area to allow the borrower to refinance properties and repay the obligation. Management believes this process will lead to full recovery on this loan.
 
The Corporation is working with a Yakima area borrower on a $1.0 million loan secured by residential building lots to facilitate the sale of the lots. Management believes the loan is well secured and the lots are readily marketable. No loss is anticipated.
 
Financial Condition
The Corporation’s consolidated assets at September 30, 2002 were $899,043,000, an increase of 239,702,000 or 36% over December 31, 2001. Approximately $142 million of this growth is attributable to the acquisition of Bank of Latah. Other asset growth took the form of increased loans outstanding, funded by increased deposits and short-term borrowings. Total stockholders equity was $77,937,000 at the same date, up from $68,206,000 at year-end 2001. Increases in shareholders equity came from net income, which was partially offset by buy-backs of common stock.
 
Investment Portfolio
The Corporation’s investment portfolio grew from $15,550,000 at December 31 2001 to $40,464,000 in 2002. The acquisition of Bank of Latah contributed $26 million of this growth. Two corporate securities were sold during the third quarter and the proceeds reinvested in US Government securities. These transactions were executed to reduce the regulatory risk weighting of the portfolio and resulted in a small gain on sale. The major classifications of investments as of September 30, 2002 and December 31, 2001 can be found in the Notes to Condensed Consolidated Financial Statements. All securities are classified at available-for–sale. Management believes that this classification provides greater flexibility to respond to interest rate changes and liquidity needs.
 
Loan Portfolio
The major classifications of loans at September 30, 2002 and December 31, 2001 can be found in the Notes to Condensed Consolidated Financial Statements.
 
Total loans were $752,457,000 as September 30, 2002 compared to $587,523,000 at December 31, 2001. Approximately $95 million of this increase came from the acquisition of Bank of Latah. Other growth was centered in commercial and industrial loans and real estate construction loans, which increased by 15% and 26%, respectively. Smaller increases were also realized in credit card and agricultural loans. These increases were partially off set by small decreases in installment and mortgage loans. Management continues to pursue loan growth, both in total and as a percentage of assets, as a source of increased net interest income
 

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AMERICANWEST BANCORPATION
 
Allowance for Loan Losses
At September 30, 2002, the Corporation’s Allowance for Loan Losses was $9,005,000 or 1.20% of total loans. This compares to $6,624,000 or 1.12% at December 31, 2001. Activity in the Allowance is summarized in Note 4 in the Notes to Condensed Consolidated Financial Statements
 
The Allowance for Loan Losses is increased by charges to income (provision for loan losses) and decreased by charge offs (net of recoveries). Loans are charged to the allowance when management believes the collection of principal is unlikely. The allowance is an amount management believes is adequate to absorb losses inherent in existing loans and commitments to extend credit. This judgment is based on growth and composition of the portfolio, periodic risk evaluation of existing loans and loan commitments, past loan loss experience, economic factors, and the status of specific problem loans.
 
The majority of the Corporation’s loans are to small and medium sized businesses and farmers in eastern Washington and northern Idaho and are secured by residential and commercial real estate, crops and business inventory and receivables. Real estate values in this area remain stable. Prices for agricultural commodities, with the exception of apples, also remain at normal levels. However, significant, long term changes in either of these underlying factors could affect the collectibility of a material portion of the Corporation’s loans outstanding.
 
While management uses available information to evaluate and recognize loan losses, further reductions in the carrying amounts of loans may be necessary based on changes in local, national and/or global economic conditions. In addition, state and federal regulatory agencies, as part of their normal examination process periodically review the estimated losses on loans. Such agencies may require the Corporation to recognize additional estimated losses based on their judgment about information available to them at the time of their examination, even if such estimated losses do not ultimately occur.
 
Deposits
The Corporation’s primary source of funds is customer deposits. To attract and retain deposits, the Corporation offers a wide variety of account types and maturities, both interest bearing and non interest bearing. Many accounts types have additional services bundled with them, such as insurance, travel discounts, free checks and free or discounted access to other bank services. Interest rates on accounts are determined by management based on the Corporation’s funding needs and market conditions and can change as frequently as daily.

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AMERICANWEST BANCORPORATION
 
At September 30, 2002, total deposits were $759,428,000, an increase of $227 million over December 31, 2001. Of this growth, $112 million is attributable to the acquisition of Bank of Latah
 
In recent years, competition from non-bank investment alternatives has increased competition for retail deposits. The current low interest rate environment also makes it more difficult to attract consumer deposits, particularly the longer maturities the Corporation desires to protect its net interest margin. In light of these factors and to further diversify its funding sources, the Corporation has expanded its use of time deposits from public entities and from small depository institutions. These funds have also proven to be less costly than retail time deposits. At September 30, 2002, these accounts totaled $104,400,000 or 14% of total deposits.
 
Issuance of Trust Preferred Securities
During the third quarter of 2002 the Holding Company formed a subsidiary whose sole purpose was to issue $10.0 million in Trust Preferred Securities through a pool sponsored by FTN Financial Capital Markets. Under the terms of the transaction the Trust Preferred Securities will have a maturity of 30 years and are redeemable after five years with certain exceptions. The floating-rate securities have a 5.22 % interest rate, which will reset quarterly at the three-month LIBOR rate plus 3.40%. The Trust Preferred Securities will be recorded as a liability on the Statement of Financial Condition, but are expected to qualify as Tier I capital for regulatory capital purposes. The proceeds from the offering were used to retire debt associated with the purchase of Latah Bancorporation, Inc.
 
Liquidity and Capital Resources
In addition to the strategy noted for deposits above, the Corporation uses short-term borrowings, principally in the form of advances from the Federal Home Loan Bank of Seattle, as a source of funding. With maturities ranging from overnight to 12 years, these advances are used to provide a ready source of liquidity for the banks operations and are a tool the Corporation uses to manage its interest rate risk.
 
At September 30, 2002, these borrowings stood at $42,226,000. Of these, $35 million is advances to AWB due in $5 million increments monthly between October 2002 and April 2003. The remaining $7.3 million represents a series of fixed and amortizing advances to Bank of Latah due between 2005 and 2014. The Corporation’s total line of credit at the FHLB is approximately $104,000,000. The Corporation also has unused, short-term credit lines totaling $29 million with two correspondent banks.
 
With the acquisition of Bank of Latah, the Corporation assumed other debt of $2.7 million. This is a loan obtained from a large commercial bank by Latah Bancorporation to enhance the capital of Bank of Latah. It is secured by the outstanding shares of Bank of Latah and must be repaid when the Corporation merges the two banks or by March 2003, which ever occurs earlier.
 
Ten million dollars in Trust Preferred Securities were issued during the quarter through a pooled trust program sponsored by FTN Financial Capital Markets. The proceeds from the offering were used to retire debt associated with the purchase of Latah Bancorporation, Inc..
 

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AMERICANWEST BANCORPORATION
 
As a federally-regulated bank holding company, the Corporation is required to maintain minimum levels of capital at all times. Bank regulatory agencies have promulgated regulations that measure the Corporation’s capital in three ways. Shareholders equity is measured against assets both on a book basis and on a risk-weighted basis according to standardized risk categories for specific types of assets. In addition, shareholders equity is adjusted for certain other items, most prominently the Allowance for Loan Losses and certain intangibles, to arrive at defined regulatory capital. This amount is then measured against risk-weighted assets.
 
The table below lists the Corporation’s capital ratios relative to regulatory requirements at September 30, 2002:
 
Capital Ratio
     
Regulatory Standard for “Well Capitalized” Rating
       
Actual Ratio
  
Shareholders Equity to Average Total Assets
     
5.00
%
     
8.06
%
Shareholders Equity to Risk Weighted Assets
     
6.00
%
     
8.98
%
Total Capital to Risk Weighted Assets
     
10.00
%
     
10.09
%
 
Item 3.     Quantitative and Qualitative Disclosures About Market Risk.
Management considers interest rate risk to be a market risk that could have a significant effect on the financial condition of AWBC. There have been no material changes in reported market risks faced by AWBC since the end of the most recent fiscal year.
 
Item 4.     Controls and Procedures.
(a)   Evaluation of Disclosure Controls and Procedures: An evaluation of the Corporation’s disclosure controls and procedures (as defined in Section 13(a)-14(c) of the Securities Exchange Act of 1934 (the “Act”)) was carried out under the supervision and with the participation of the Registrant’s Chief Executive Officer, Acting Chief Financial Officer and several other members of the Registrant’s senior management within the 90-day period preceding the filing date of this quarterly report. The Registrant’s Chief Executive Officer and Acting Chief Financial Officer concluded that the Registrant’s disclosure controls and procedures as currently in effect are effective in ensuring that the information required to be disclosed by the Registrant in the reports it files or submits under the Act is (i) accumulated and communicated to the Registrant’s management (including the Chief Executive Officer and Acting Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.
 
(b)  Changes in Internal Controls: In the quarter ended September 30, 2002, the Corporation did not make any significant changes in, nor take any corrective actions regarding, its internal controls or other factors that could significantly affect these controls.
 

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AMERICANWEST BANCORPORATION
 
Forward–Looking Statements
This quarterly report on Form 10-Q includes forward-looking statements about the future operations of the Corporation. These forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Such risks and uncertainties include, but are not limited to, the following factors: competitive pressure in the banking industry significantly increasing; changes in the interest rate environment reducing margins; general economic conditions, either nationally or regionally, are less favorable than expected, resulting in, among other things, a deterioration in credit quality and an increase in the provision for possible loan losses; changes in the regulatory environment; loan delinquency rates; changes in business conditions; volatility of rate sensitive deposits; operational risks including data processing system failures or fraud; asset/liability matching risks and liquidity risks; and changes in the securities markets. Because of these uncertainties, actual future results may be materially different from the results indicated by these forward-looking statements. In addition, the Corporation’s past results do not necessarily indicate its future results.
 
Part II    Other Information
 
Item 6.     Exhibits and Reports on Form 8-K
 
(a)   Exhibits
The following exhibits are filed as part of this report:
 
•
 
Exhibit 99.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
•
 
Exhibit 99.2 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
(b)   Reports on Form 8-K
None in third quarter 2002.
 
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on November 12, 2002
 
AMERICANWEST BANCORPORATION
/s/  Wes Colley        
Wes Colley, President and
Chief Executive Officer
 
/s/  Dan Murray       
Dan Murray, Senior Vice President and
Credit Administrator
 
 
 
/s/  Wade A. Griffith      
Wade A. Griffith, Vice President and
Acting Chief Financial Officer

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AMERICANWEST BANCORPORATION
 
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Wes Colley, certify that:
 
1.
 
I have reviewed this quarterly report on Form 10-Q of AmericanWest Bancorporation;
 
2.
 
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3.
 
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
4.
 
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
 
 
a)
 
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
 
b)
 
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
 
 
c)
 
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
 
5.
 
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
 
 
a)
 
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
 
 
b)
 
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
 
6.
 
The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
Date: November 12, 2002
 
By:
  
/s/    Wes Colley
   
Wes Colley
President and
Chief Executive Officer
 

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AMERICANWEST BANCORPORATION
 
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
 
I, Wade A. Griffith, certify that:
 
1.
 
I have reviewed this quarterly report on Form 10-Q of AmericanWest Bancorporation;
 
2.
 
Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
 
3.
 
Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
 
4.
 
The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
 
 
a)
 
designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
 
 
b)
 
evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and
 
 
c)
 
presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
 
5.
 
The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):
 
 
a)
 
all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and
 
 
b)
 
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
 
6.
 
The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
 
Date: November 12, 2002
 
By:
  
/s/    Wade A. Griffith
   
Wade Griffith
Vice President and
Acting Chief Financial
Officer

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