AmericanWest Bancorp., of Spokane, which announced last week a tentative agreement to sell and recapitalize its wholly owned subsidiary, AmericanWest Bank, says it posted a net loss of $5.9 million, or 35 cents a share, in the third quarter.

That was down sharply from a loss of $28.4 million, or $1.65, a share, in the year-earlier quarter, and it said a $3.5 million provision for loan losses in the latest quarter was its smallest such set-aside in three years. Meanwhile, it said its total balance sheet liquidity—comprised of cash, cash equivalents, and securities—on Sept. 30 was $333.4 million, up from $252.3 million a year earlier.

It said its net charge-offs last quarter were $4.4 million, and its nonperforming assets were $132.2 million, down from $8.9 million and $156.4 million, respectively, in the 2009 third quarter.

In a separate announcement last week, AmericanWest said it had agreed to sell the bank in a transaction that would provide up to $200 million to satisfy capital requirements imposed by regulators and return the bank to "well-capitalized" status.

It said SKBHC Holdings LLC, a Corona del Mar, Calif.-based private investor led by a small group of experienced bankers, and an affiliated entity had committed to acquire all of the common stock of the bank for a cash payment of $6.5 million, subject to a competitive bidding process. If SKBHC is the successful bidder, the agreement calls for it to recapitalize the bank with the previously mentioned $200 million capital infusion.

To facilitate that transaction, the holding company—but not the bank—late last week filed a Chapter 11 petition in U.S. Bankruptcy Court here. The bank has 58 branches, which are continuing to operate as before under the names of AmericanWest Bank, in Eastern Washington and North Idaho, and Far West Bank, in Utah.

"Throughout this process, the bank will continue to provide customers with the same great service they have come to expect. Customers will have full access to their accounts and the bank's other services," says Pat Rusnak, the holding company's president and CEO. "Our most recent financial results demonstrate that the bank has significant liquidity to meet its financial obligations."

Craig D. Eerkes, the holding company's chairman, says, "We have been actively engaged over the past two years in seeking additional capital, but no qualified investor has been willing to put new capital into the holding company without resolution, such as a discounted settlement, of its existing creditor claims. The court-supervised Chapter 11 process will give the holding company an effective way to handle those claims while preserving the value of the bank's franchise for the community."

The holding company has petitioned the bankruptcy court to expedite the bidding process and says it expects to complete the sale of the bank by the end of this year, It says it plans to liquidate its operation after the sale and recapitalization of the bank have been completed.