AmericanWest Bancorp., the Spokane-based parent of AmericanWest Bank, reported a sizable third-quarter loss, but said improved liquidity, lower net charge-offs, and its smallest loan loss provision in two years demonstrate its continuing progress on a number of fronts.

The bank holding company posted a third-quarter net loss of $28.4 million, or $1.65 a share, which compared with a net loss of $96.9 million, or $5.63 a share, in the same quarter last year. Excluding goodwill impairment charges, the net loss was $9.5 million, or 55 cents a share, compared with $14.9 million, or 87 cents a share, in the year-earlier period.

Total balance-sheet liquidity, comprised of cash, cash equivalents, and securities, jumped to $252 million as of Sept. 30, from about $134 million a year earlier.

AmericanWest had total loans of $1.37 billion at the end of the latest quarter, down 16 percent from a year earlier, but its total deposits of $1.55 billion were down just 1 percent. It said the by-design reduction in loans, together with continued stability of its core deposit base, lowered its reliance on borrowings to fund its liquidity needs over the past year.

The company said it had net charge-offs of $8.7 million, or 2.4 percent of total loans, in the latest quarter, which was down sharply from $19.8 million in the prior quarter and $22.8 million, or 5.15 percent of total loans, in the 2008 third quarter.

AmericanWest recorded a $9 million provision for loan losses in the latest quarter, which also was down markedly from the $11.8 million provision made in the prior quarter and $27.7 million in the year-earlier quarter.

The company's total nonperforming loans of about $100.1 million as of Sept. 30 were up from $81.4 million a year earlier, but down substantially from $122.2 million at the end of the second quarter. Factoring in $56.3 million worth of foreclosed real estate and other foreclosed assets, its total nonperforming assets were $156.4 million, or 8.9 percent of total assets, in the latest quarter. That dollar figure was up sharply from $88.7 million a year earlier, but down slightly from $157.5 in the second quarter of this year.

AmericanWest said it has initiated foreclosure action on substantially all real estate-secured nonperforming loans, and the company expects to obtain ownership of about $34 million worth of additional real estate collateral, and also to complete the sale of about $16 million worth of foreclosed property, by the end of the year.

CEO Patrick Rusnak says, "Over the past eight quarters, we have been aggressively addressing the deterioration in our loan portfolio caused by the economy in general, and the residential real estate market in particular, through the timely identification of problem loans, recognition of related losses, and commencement of liquidation efforts."

He says, "Our current outlook is for continued asset quality improvement during the fourth quarter of 2009 and into 2010, driven mostly by the liquidation of foreclosed real estate."

The company also noted, though, in its latest earnings report that it hasn't raised its capital levels to regulatory standards, missing a Sept. 8 deadline set by regulators and needing to raise $109 million to achieve the prescribed capital ratio.

Rusnak says AmericanWest "is continuing to explore all available options with respect to restoration of the bank's regulatory capital. We are actively engaging in discussions with prospective investors and are encouraged by recent improvements in the capital markets environment."

He adds, "The stabilization of our asset quality, solid core deposit base, and fact that we have already completed substantial organizational changes distinguish our bank from many others seeking new capital."

AmericanWest Bank, AmericanWest Bancorp.'s principal subsidiary, operates 58 branches in Washington, North Idaho, and Utah, counting those of its Far West Bank division in Utah.