Amendment No. 3 to Form 10-Q

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

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

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

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

This amendment No. 3 to Part I. Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations to our quarterly report on Form 10-Q for the quarter ended March 31, 2005 (“Form 10-Q”) is being filed to add a Regulatory Matters section to report the entering into certain supervisory agreements with AmericanWest Bank’s regulators. Other parts of the report, including our financial statements, remain unchanged.

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,” may be deemed forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA), including statements about the business strategy, financial condition, results of operations, future financial targets and earnings outlook of the Corporation. 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 Corporation’s market, loan delinquency rates, changes in portfolio composition, the AmericanWest Bank’s (AWB or the Bank) ability to attract quality commercial business, interest rate movements and the impact on margins such movement may cause, changes in the demographic make-up of the Corporation’s market, fluctuation in demand for the Corporation’s products and services, the Corporation’s ability to attract and retain qualified people, regulatory changes, competition with other banks and financial institutions, and other factors. For a discussion of factors that could cause actual results to differ, please see the Corporation’s prior report on Form 10-K as filed with the Securities and Exchange Commission. 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 Corporation 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 Corporation under PSLRA’s safe harbor provisions.

The following discussion contains a review of the results of operations and financial condition for the first quarter in 2005 and 2004. 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, 2004, which contains additional information.

AmericanWest Bancorporation (AWBC or Corporation) is a bank holding company registered under the Bank Holding Company Act of 1956, as amended. The Corporation conducts business through its wholly-owned subsidiary, AmericanWest Bank (AWB) a state-chartered, FDIC-insured commercial bank organized under the laws of the State of Washington. The Corporation’s main office is located in Spokane, Washington.

AmericanWest Capital Trust I (Trust), a subsidiary of AWBC, was formed in September 2002 for the exclusive purpose of issuing trust preferred securities and common securities and using the $10.3 million in proceeds from the issuance to acquire junior subordinated debentures issued by AWBC. Upon the adoption of amended FIN 46, the investment in the Trust is no longer consolidated on the Condensed Consolidated Financial Statements.

AWB provides a full range of banking services to small and medium-sized businesses, agricultural businesses, professionals, and consumers through 42 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, 3) interest on investments and 4) interest on interest bearing deposits with other banks. AWB’s lending activities consist of term and operating loans to businesses and agricultural businesses, 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.

The table below summarizes the Corporation’s financial performance for the three months ending March 31, 2005 and 2004:

The Corporation reported net income of approximately $3.1 million or $0.30 per fully diluted share for the three months ended March 31, 2005 compared to approximately $3.5 million and $0.34 for the same period in 2004. The decrease in net income is due mainly to the increase of interest expense and the increase in the provision for income taxes. The increase in the provision for income taxes is due mainly to historical tax credits which were recognized in 2004 which did not occur in 2005. Return on average assets for the three months ending March 31, 2005 and 2004 was 1.21% and 1.42%, respectively.

Net interest income was approximately $13.7 million for the three months ended March 31, 2005, a decrease from approximately $14.1 million for the like period in 2004. The decrease in net interest income was largely due to increases in the costs of deposits and borrowing costs offset by a slight increase in interest and fees on loans. The cost of deposits to the Company for the quarter ended March 31, 2005 was 1.79% compared to 1.65% for the quarter ended March 31, 2004. There was a decrease in net interest margin to 5.87% for the period ended March 31, 2005 compared to 6.20% for the like period last year. This decrease was due to increasing deposit costs, decreasing loan yields and decreasing investment yields. These were partially offset by decreasing borrowings costs.

The following table sets forth the Corporation’s net interest margin for the year to date ending March 31, 2005 and 2004:

The above table includes nonaccrual loans in the average loan balances. Tax exempt securities income has been presented using a tax equivalent basis and an assumed tax rate of 34%.

Provision for loan losses increased to approximately $1.1 million in the first quarter, compared to approximately $1.0 million in the first quarter of 2004. The increase was due to management’s continual assessment of specific loan characteristics in the portfolio. In general, AWBC regularly evaluates the level of provision and the allowance for loan losses for adequacy by considering changes in the nature of the loan portfolio, overall portfolio, 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 Corporation’s market, which includes Eastern Washington and Northern Idaho and includes this information in the analysis of its Provision for Loan Losses. In addition, management includes general economic conditions for its analysis. The provision for loan losses is an estimate and the use of different estimates or assumptions could produce different provision for loan loss. In addition, the allowance for loan losses and the provision for loan losses are subject to regulatory supervision, examination and change.

Noninterest income for the three months ended March 31, 2005 was approximately $1.6 million. This represented an increase from approximately $1.5 million for the like period in 2004. This increase was due mainly to increases in the value of life insurance and salary continuation assets, which was slightly offset by a decrease in the gains on sales of foreclosed real estate and other foreclosed assets as compared with the prior year.

Noninterest expense decreased to approximately $9.5 million for the three months ended March 31, 2005 from approximately $10.0 million in the comparable quarter of 2004. This decrease is due mainly to the change in foreclosed real estate and other foreclosed assets expense for the quarter ended March 31, 2005 from the quarter ended March 31, 2004. The decrease in the foreclosed real estate and other foreclosed assets was mainly due to charge offs of approximately $0.7 million in the first quarter of 2004 which did not occur in 2005. This decrease was partially offset by the increasing occupancy expense for the quarter ended March 31, 2005 as compared to the quarter ended March 31, 2004. This increase in occupancy expense was due mainly to escalation clauses in

existing lease agreements and a leased building in downtown Spokane for the corporate headquarters which was placed into service in December of 2004.

Income tax expense has increased as a percentage of income before income taxes for the three month period ended March 31, 2005 to 33.3% compared to 24.3% in 2004. There were two buildings placed into service during the first quarter of 2004 in which AWBC had purchased historical rehabilitation tax credits. The Corporation recognized these tax credits during the three months ended March 31, 2004 causing the effective tax rate to decrease during that period.

Nonperforming assets include loans that are 90 or more days past due or in nonaccrual status and real estate and other loan collateral acquired through foreclosure. Total nonperforming assets were approximately $33.3 million or 3.26% of total assets at March 31, 2005. This compares to approximately $28.5 million or 2.71% of assets at December 31, 2004. The majority of nonperforming assets are comprised of several loans and properties discussed below.

The Company has acquired title to an ice skating complex in Spokane that it is currently carrying in foreclosed real estate and other foreclosed assets. It is carried at $1.3 million and is being operated as an ice skating rink. The asset is being carried at estimated market value and is being marketed as both an operating facility and as an alternative use facility. The Company has this complex under contract for sale and expects the sale to close in the second quarter of 2005 at its current carrying value.

The Company has classified $6.2 million in loans to a real estate developer as nonaccrual due to delinquency and the apparent inability to repay the debt without liquidation of the collateral. The Company has evaluated collateral coverage and has determined adequate coverage. The Company expects to sell the note to a private investor during the second quarter of 2005 for the full amount owed to the company including interest.

The Company has classified $5.3 million in loans to a wine grape vineyard and winery as nonaccrual due to continuing operating losses and inadequate cash flow to service debt. The entity continues to operate. The Company has evaluated collateral coverage and has provided for an impairment on the loan. The borrower is marketing the real estate and seeking alternative financing.

The Company has classified $2.2 million in loans to a row crop farmer as nonaccrual due to continued operating losses and inadequate cash flow to service debt. The entity continues to operate. The Company has evaluated collateral coverage and has provided for an impairment on the loan. The borrower is currently marketing the real estate.

The Company has $3.0 million in loans to an auto dealer as nonaccrual due to a maturity of the loans and cessation of operations by the owner. The Company has evaluated collateral coverage and has provided for an impairment on the loan. The Company intends to obtain title to the property through foreclosure and market the property to achieve repayment.

A $4.8 million loan on a mixed use office/retail building in Spokane has been classified as nonaccrual due to slow lease up and lack of ability to support debt service from current leases. The Company has evaluated collateral coverage and has provided for an impairment on the loan. The Company is evaluating options for remediation at this time.

The Company’s consolidated assets at March 31, 2005 and December 31, 2004 were approximately $1.0 billion. Cash and cash equivalents decreased to approximately $23.2 million at March 31, 2005 from $29.2 million at December 31, 2004.

Total stockholders’ equity was approximately $109.0 million at March 31, 2005, up from approximately $105.1 million at December 31, 2004. The increase in stockholders’ equity was mostly due to net income and the exercise of stock options by employees and directors.

The Corporation’s investment portfolio decreased from approximately $33.9 million at December 31, 2004 to approximately $33.3 million at March 31, 2005. This decrease was due mainly to decreases in the market value of investments, principle payments received and a called investment, which was offset by the purchase of an investment. All securities are classified as available-for–sale and recorded at the market value. Management believes that this classification provides greater flexibility to respond to interest rate changes and liquidity needs.

The major classifications of loans at March 31, 2005 and December 31, 2004 can be found in the Notes to Condensed Consolidated Financial Statements.

Total gross loans were approximately $907.5 million as of March 31, 2005 compared to approximately $927.9 million at December 31, 2004. The decrease is related to decreases in commercial real estate, agricultural and real estate construction categories. The decreases in agricultural and real estate construction are partially due to seasonality within those industries. Certain commercial real estate loans in the portfolio were sold to an investor during the first quarter of 2005 which contributed to the decrease in the commercial real estate loan category.

At March 31, 2005, the Corporation’s allowance for loan losses was approximately $16.9 million or 1.86% of total gross loans. This compares to approximately $18.5 million or 1.99% at December 31, 2004. The allowance for loan losses is increased by charges to income through the provision for loan losses and decreased by charge-offs, net of recoveries. 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, management utilizes an analysis of credits for objectively analyzing recent historical loan loss experience and projecting future allowance requirements. The analysis 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, determining the collateral coverage of loans to assess the adequacy of the allowance. Management also compares projected future allowance requirements with current nonperforming 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 allowance for loan losses.

The majority of the Company’s loans are to small and medium-sized businesses, agricultural businesses, professionals and consumers 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 also remain at normal levels. However, significant, long-term changes in either of these underlying factors could affect the collectability of a material portion of the Company’s loans outstanding. Each of these factors is also considered in the analysis of assessing the adequacy of the allowance for loan losses.

Management believes that the allowances for loan losses and other real estate owned are adequate. Management uses currently available information to recognize losses on loans and foreclosed real estate; however, future additions to the allowances may be necessary based on changes in economic conditions and borrower or loan characteristics. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the Company’s allowance for loan losses and foreclosed real estate. Such agencies may require the Company to recognize additions to the allowance based on their judgments of information available to them at the time of their examination.

The Company’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 noninterest bearing. Some account 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 Company’s funding needs and market conditions and can change as frequently as daily.

At March 31, 2005, total deposits were approximately $856.8 million, a decrease of approximately $38.0 million from $894.8 million at December 31, 2004. NOW and savings accounts, which include money market accounts, decreased approximately $27.1 million to $425.3 million at March 31, 2005 from $452.4 million at December 31, 2004 and the Corporation experienced a decrease of approximately $17.0 million in time deposits to $255.9 million at March 31, 2005 from $272.9 million December 31, 2004. Noninterest bearing deposits increased $6.1 million to $175.7 million from $169.6 million at December 31, 2004. The decreases in money market now and savings accounts were concentrated in money market account types and reflect decreases in balances from some larger depositors related to rate differentials and use of the funds for business purposes. The decrease in time deposits was related to decreases in public funds and other wholesale deposits. AWBC has put into place late in the first quarter of 2005 an incentive program for employees to grow the deposit base through the attraction of core deposit funding.

Management actively analyzes and manages the Corporation’s liquidity position. The objective of liquidity management is to ensure the availability of sufficient cash flows to meet all financial commitments and to capitalize on opportunities for profitable business expansion. Management believes that the Corporation’s cash flow will be sufficient to support its existing operations for the foreseeable future.

As indicated on the Corporation’s Condensed Consolidated Statement of Cash Flows, net cash from operating activities for the three months ended March 31, 2005 contributed approximately $6.4 million to liquidity compared to approximately $3.8 million for the three months ended March 31, 2004. This increase is due mainly to the changes in asset and liability accounts from the prior year.

In addition to the strategy noted for deposits above, the Corporation uses short-term and long-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 30 years, these advances are used to provide a ready source of liquidity for the operations and are a tool the Corporation uses to manage its interest rate risk.

At March 31, 2005, short-term and long-term borrowings stood at approximately $31.3 million and $4.3 million, respectively. These balances represented an increase of approximately $6.8 million in short-term borrowings and a decrease of approximately $1.4 million in long-term borrowings in comparison to December 31, 2004, which were $24.5 million and $5.7 million, respectively. As of March 31, 2005 and December 31, 2004, AWBC had lines of credit available of approximately $187.8 million and $198.3, respectively. The lines were available for short-term and long-term maturities up to 30 years at market interest rates.

As a federally-regulated bank holding corporation, the Corporation is required to maintain minimum levels of capital at all times at both AWBC and AWB. Bank regulatory agencies have promulgated regulations that measure the Corporation’s capital in three ways. Tier one capital, currently comprised of stockholders’ equity and trust preferred securities, 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, tier one capital is adjusted for certain other items, most prominently the allowance for loan losses and certain intangibles, to arrive at defined total regulatory capital. This amount is then measured against risk-weighted assets.

The table below lists AWB and AWBC’s capital ratios relative to regulatory requirements at March 31, 2005:

However, the Bank is subject to a minimum level of capital exceeding the requirement of a well capitalized bank. See the “Regulatory Matters” below.

As previously disclosed in the Company’s December 31, 2004 annual report on Form 10-K/A number 2, the Company’s wholly-owned subsidiary, AmericanWest Bank (Bank), entered into a memorandum of understanding with the Federal Deposit Insurance Corporation (FDIC) relating to the Bank’s compliance controls, processes and training established by prior management. In addition, on December 15, 2004, the Bank received a directive from the Washington Department of Financial Institutions (DFI) requiring it to take various actions to improve the Bank’s asset quality and loan administration, to maintain a minimum level of capital exceeding that required of well capitalized banks under the applicable regulations (which the Bank met as of the date of the directive and continues to meet) and to revise its policies and procedures with respect to liquidity and funds management.

The Company’s Board and the new Executive Management team, who were hired from and after September, 2004, are committed to resolving the issues raised by the regulators. The Bank has devoted, and continues to devote, significant effort in that regard. The Board and Management are of the opinion that changes in policy, procedures and personnel which have occurred under the new Management were appropriate and would have occurred even in the absence of the supervisory actions.

The supervisory actions will remain in effect until modified or terminated by the FDIC and the DFI, respectively.

Neither the memorandum of understanding nor the directive imposed any fines or penalties on the Bank. However, during the quarter the Bank has paid civil money penalties of $18,000 in the aggregate for compliance factors prior to June 30, 2004, relating to certain record-keeping requirements.

These supervisory actions may adversely affect the Company’s and the Bank’s ability to obtain regulatory approval for future initiatives requiring regulatory action, such as acquisitions. However, neither this effect nor the memorandum of understanding nor the supervisory directive, including the financial impact of the Bank’s compliance with them, are expected to have a material adverse impact on the financial condition or results of operations of the Company or the Bank.

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Amendment No. 3 to report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized on August 8, 2005.

AMERICANWEST BANCORPORATION

/s/ Robert M. Daugherty

Robert M. Daugherty, President and

Chief Executive Officer


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

41 West Riverside, Suite 400, Spokane, WA		99201-0813
(Address of principal executive offices)		(Zip Code)


Class		Number of Shares Outstanding
Common Stock		10,389,541 at May 3, 2005


($ in thousands except per share data)	2005		2004		% Change
Interest Income	$	17,336	$	17,306	0.2	%
Interest Expense		3,595		3,198	12.4	%

Net Interest Income		13,741		14,108	-2.6	%

Provision for Loan Loss		1,075		1,000	7.5	%
Net interest income after provision for loan losses		12,666		13,108	-3.4	%

Noninterest Income		1,565		1,539	1.7	%
Noninterest Expense		9,526		9,972	-4.5	%
Income before provision for income taxes		4,705		4,675	0.6	%

Provision for income taxes		1,566		1,138	37.6	%

Net Income	$	3,139	$	3,537	-11.3	%

Basic earnings per common share	$	0.30	$	0.35	-14.3	%
Diluted earnings per common share	$	0.30	$	0.34	-11.8	%


	Three Months Ended March 31,
	2005						2004
($ in thousands)	Average Balance		Interest		%		Average Balance		Interest		%
Assets
Loans, gross	$	919,350	$	16,983	7.49	%	$	864,428	$	16,816	7.82	%
Taxable Investments		25,867		252	3.95	%		31,772		367	4.65	%
Nontaxable Investments		8,723		138	6.42	%		8,873		137	6.21	%
Overnight deposits with other banks		1,857		10	2.18	%		11,019		32	1.17	%

Total earning assets		955,797	$	17,383	7.38	%		916,092	$	17,352	7.62	%

Other assets		79,541						77,444

Total assets	$	1,035,338					$	993,536

Liabilities
Interest bearing deposits	$	687,516	$	3,027	1.79	%	$	706,206	$	2,901	1.65	%
Borrowings		64,095		568	3.59	%		31,994		297	3.73	%

Total interest bearing liabilities		751,611	$	3,595	1.94	%		738,200	$	3,198	1.74	%

Noninterest bearing deposits		167,729						151,106
Other liabilities		8,506						6,780

Total liabilities		927,846						896,086

Stockholders’ equity		107,492						97,450

Total liabilities and stockholders’ equity	$	1,035,338					$	993,536

Net interest income and spread					5.44	%					5.88	%
Net interest margin to average earnings assets					5.87	%					6.20	%


Capital Ratio	Regulatory Standard for “Well Capitalized” Rating		AWBC Actual Ratio		AWB Actual Ratio
Tier One Capital to Average Total Assets	5.00	%	10.27	%	10.05	%
Tier One Capital to Risk Weighted Assets	6.00	%	10.64	%	10.42	%
Total Capital to Risk Weighted Assets	10.00	%	11.90	%	11.68	%


31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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