AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT Nicole Sherman

Exhibit 10.3c

AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT

Nicole Sherman

This AMENDMENT NO. 2 TO EMPLOYMENT AGREEMENT (“ Amendment No. 2 ”) is entered into as of the 28 ^th day of July, 2008 (the “ Effective Date ”), and amends that certain EMPLOYMENT AGREEMENT dated as of January 28, 2005 as previously amended by that certain Amendment No. 1 to Employment Agreement dated as of December 31, 2006 (collectively, the “ Employment Agreement ”) by and between AmericanWest Bank, a Washington state-chartered bank (“ Employer ”), and Nicole Sherman (“ Executive ”).

SECTION 1. A new Section 18 is hereby added to the Employment Agreement, to read as follows:

18. Separation Agreement . Receipt of any benefits on termination of employment (“Severance Benefit”) as set forth in Section 11 is conditioned on Executive having executed the Separation Agreement in substantially the form attached hereto as Exhibit A and the revocation period having expired without Executive having revoked the Separation Agreement. Receipt and continued receipt of the Severance Benefit is further conditioned on Executive not being in violation of this Agreement or the Separation Agreement.

SECTION 2. No change is intended by this Amendment No. 2 to the present compensation of Executive. Except as amended and modified by this Amendment No. 2, the Employment Agreement, as hereby amended and supplemented, shall remain in full force and effect.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above.

Exhibit A

RELEASE OF CLAIMS

This is a confidential agreement between you, Nicole Sherman, and us, AmericanWest Bancorporation and AmericanWest Bank. This Release of Claims is dated for reference purposes                      , 20__, which is the date we delivered this Release of Claims to you for your consideration. For purposes of this Release of Claims, AmericanWest Bancorporation together with each of its subsidiaries or affiliates is referred to as “AWBC.”

1. Termination of Employment Agreement Term. The term of your employment under your employment agreement, as amended, terminates on                      (the “Expiration Date”).

2. Payments. In exchange for your agreeing to the release of claims and other terms in this Release of Claims, we will pay you the benefits specified in Section 11 of the Employment Agreement between you and AWBC dated as of January 28, 2005, as amended December 31, 2006 and July 28, 2008 (the “Employment Agreement”) on the dates provided therein. Such provisions of the Employment Agreement are incorporated herein by reference. You acknowledge that we are not obligated to make these payments to you unless you comply with the provisions of Sections 12, 13 and 14 of the Employment Agreement, which is incorporated herein by reference, and otherwise comply with the material terms of the Employment Agreement and of this Release of Claims.

3. COBRA Continuation Coverage. Your normal employee participation in AWBC’s group health coverage will terminate on                      . Continuation of group health coverage thereafter will be made available to you and your dependents (to the extent you previously elected dependent coverage) pursuant to federal law (COBRA) with the first three months paid by AWBC pursuant to Section 11(d) of the Employment Agreement. Continuation of group health coverage after                      is entirely at your expense, as provided under COBRA.

4. Termination of Benefits. Except as provided in Section 3 above, your participation in all employee benefit plans and programs ended on the Expiration Date. Your rights under any pension benefit or other plans in which you may have participated will be determined in accordance with the written plan documents governing those plans.

5. Full Payment . You acknowledge having received full payment of all compensation of any kind (including wages, salary, vacation, sick leave, commissions, bonuses and incentive compensation) that you earned as a result of your employment by us, except Severance Benefit, which is payable following the Expiration Date.

6. No Further Compensation. Any and all agreements to pay you bonuses or other incentive compensation are terminated, except the Severance Benefit, which is payable following the Expiration Date. You understand and agree that you have no right to receive any further payments for bonuses or other incentive compensation except the Severance Benefit. We owe no further compensation or benefits of any kind, except as described in Section 2 above.

7. Release of Claims.

(a) You hereby release (i) AWBC and its subsidiaries, affiliates, and benefit plans, (ii) each of AWBC’s past and present shareholders, officers, directors, agents, employees, representatives, administrators, fiduciaries and attorneys, and (iii) the predecessors, successors, transferees and assigns of each of the persons and entities described in this sentence, from any and all claims of any kind, known or unknown, that arose on or before the date you signed this Release of Claims.

(b) The claims you are releasing include, without limitation, claims of wrongful termination, claims of constructive discharge, claims arising out of employment agreements, representations or policies related to your employment, claims arising under federal, state or local laws or ordinances prohibiting discrimination or harassment or requiring accommodation on the basis of age, race, color, national origin, religion, sex, disability, marital status, sexual orientation or any other status, claims of failure to accommodate a disability or religious practice, claims for violation of public policy, claims of retaliation, claims of failure to as