AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

     This AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (“Amendment No. 2”) is entered into as of the 31^st day of December, 2006 (the “Effective Date”), and amends that certain EMPLOYMENT AGREEMENT dated as of January 25, 2005, as amended December 15^th, 2005 (as amended, the “Employment Agreement”) by and between AmericanWest Bancorporation, a Washington corporation (“AWBC”), its wholly owned subsidiary AmericanWest Bank, a Washington state-chartered bank (the “Bank” and, together with AWBC, “Employer”) and R. Blair Reynolds (“Executive”).

     SECTION 1. Subdivision (a) of Section 11 of the Employment Agreement is hereby amended to read, in its entirety, as follows:

     (a) Death; Disability; Resignation without Good Reason; Termination for Cause.

     If Executive’s employment is terminated as a result of death, Disability, resignation without Good Reason or termination for Cause pursuant to subparagraphs (a), (b), (c) or (f), respectively, of Section 10, Executive shall receive as of the Date of Termination:

        (1)      his base salary through the Date of Termination;
 
        (2)      any incentive compensation earned for anyperformance period completed on or before the Date of Termination but not yet paid; and

        (3)      reimbursement of expenses described in Section 6(d) incurred as of the Date of Termination but not yet reimbursed.

     SEC. 2. Subdivision (b) of Section 11 of the Employment Agreement is hereby amended to read, in its entirety, as follows:

    (b)      Change of Control.
 
         (1) If, within two (2) years following the effective dateof a Change of Control (as defined in Section 16), Executive terminates his employment for Good Reason pursuant to Section 10(d) or Employer terminates Executive without Cause pursuant to Section 10(e), Executive shall receive:

                   (i) An amount equal to Executive’s then-current annual base salary for two (2) years;

1

                    (ii) An amount equal to Executive’s bonus paid during the twelve (12) months immediately preceding any such termination;

                   (iii) Any incentive compensation earned for any performance period completed on or before the Date of Termination but not yet paid;

                   (iv) Reimbursement of expenses described in Section 6(d) incurred as of the Date of Termination but not yet reimbursed; and

                   (v) Immediate acceleration of vesting of all Discretionary Performance Shares and/or Stock Options granted to Executive and not lapsed.

              (2) The payment to which Executive is entitled pursuant to subparagraphs (i), (ii) and (iii) of Section 11(b)(1) shall be paid in equal monthly installment payments over the Restricted Period, as defined in Section 13(a), with no percent value or other discount.

              (3) Executive shall not be required to mitigate the amount of any payment or benefit contemplated by this Section 11(b) (whether by seeking new employment or otherwise), and no such payment or benefit shall be reduced by earnings that Executive may receive from any other source.

     SEC. 3. Subdivision (c) of Section 11 of the Employment Agreement is hereby amended to read, in its entirety, as follows: