Americanwest Bancorp's Upside

For the time being, Americanwest Bancorp (AWBC) will be our final look at some lesser-known banking stocks which are falling into the pond at the end of the year. AWBC has a market capitalization of $228M, and it is the only small-cap bank stock I have found that looks liquid enough to trade and also worthy of further study.

AWBC offers retail banking and mortgage loan activity through 44 branches in Eastern Washington and Northern Idaho. The company was founded in 1974. As the long-term chart indicates, AWBC has enjoyed sustained growth greatly exceeding the S&P’s, but with less volatility (beta .85). The company is in the process of buying another small regional bank, Utah based Far West Bancorp., for $150M. This merger will accelerate AWBC’s planned expansion into Utah by adding a well-known brand with 16 branches and a strong customer base.

Americanwest makes no apologies for the fact that their third quarter and year-to-date earnings are down sharply, and they express strong confidence in the future, reiterating their intention to continue with their aggressive expansion plan. At its recent low of 19.98, AWBC was trading at a 25% discount to the all-time high price of 26.75 recorded last March.

The company’s website indicates that AWBC paid annual 10% stock dividends and steadily increasing cash dividends until 2004. Since then, there has been a fixed .03 quarterly cash dividend and no stock dividends have been issued. The shares yield only 0.58%. Normally I would not consider a stock with such a small dividend unless it were increasing rapidly. AWBC is plowing as much money as they can into expansion.

But it caught my attention that on-balance volume has risen sharply this fall, even while the stock has been plummeting to new 52-week lows. AWBC is definitely under accumulation and a solid support level may have been reached.

AWBC 1-yr. chart

AWBC Investment