AmericanWest takes hit
AmericanWest Bank on Thursday reported a $31.6 million first-quarter loss and suspended its dividend, triggering a 28 percent plunge in the price of its stock.
The loss per share at the Spokane-based institution was $1.83, compared with a profit of 19 cents per share based on net income of $2.2 million for the first quarter of 2007.
The bulk of the quarterly loss – $27 million – was a writedown of capital booked when AmericanWest acquired two other banks in 2007 and 2006. The operating loss was $4.6 million, or 26 cents per share.
The bank also charged off $11 million in loans, and made a $12.8 million provision for additional losses.
A squeeze on interest margins and severe deterioration in some Utah real estate markets were blamed for most of the difficulties by bank officers speaking to analysts.
Chief Credit Officer Rich Shamberger said prices on homes and condominiums had fallen 30 percent in some markets, with much of the decline occurring in a matter of a few months. The inventory of unsold homes in the once-hot St. George market exceeds two years in sales, he said.
Many loans in those markets were inherited from Far West Bancorporation, which AmericanWest purchased last April.
President Robert Daugherty, whose banking experience in Utah goes back to the early 1990s, said real estate values there tend to swing sharply but have always recovered. Employment numbers remain strong, he noted.
AmericanWest itself cut 35 jobs during the quarter and closed one of three branches in Walla Walla. The bank employs 725.
Daugherty said suspending the 4-cent quarterly dividend will preserve $3 million in capital per year. Although AmericanWest remains adequately capitalized, shareholders will vote next week on a measure that will allow officers to issue up to 5 million shares of preferred stock.
Daugherty said he did not know when or how much preferred stock might be sold, saying an issue is one of several tools the bank may use to increase capital. Officers want to avoid dilution of common stock if possible, he said.
They also want to be sure the new funds will support growth when markets turn around, he said.
“When you raise capital, you kind of like to only do it once,” Daugherty said. “We’re going to be well-positioned.”
Meanwhile, AmericanWest shares tumbled $2.08 to $5.24 on more than three times average volume. The 28 percent fall was the biggest on Nasdaq in Thursday trading. A year ago, the stock was trading at $21.