UPDATE 1-AmericanWest posts huge Q3 loss, sees Q4 charge

* Q3 loss $5.63/shr vs profit of $0.31/shr last year

* Q3 loss $0.87/shr before items, vs estimate of $0.33/shr

* Q3 bad loan provision $27.7 mln vs $1.2 mln last year

* Q3 net charge-offs $22.8 mln vs $2 mln last year

Oct 31 (Reuters) - AmericanWest Bancorp (AWBC.O) posted a huge loss for the third quarter, hurt by a surge in net charge-offs and bad loan provision, and said it sees a pre-tax charge of about $670,000 to cover severance costs, a majority of which will be recognized in the fourth quarter.

The company also said it will defer payment of dividends on four trust preferred securities until further notice. This action will retain about $700,000 of additional liquidity and capital at the subsidiary bank level each quarter, it said.

AmericanWest reported a quarterly net loss of $96.9 million, compared with a profit of $5.3 million a year ago. The latest third-quarter loss included a non-cash goodwill impairment charge of $82 million, or $4.76 a share.

The company said it has started the process of closing down some financial centers, and will consolidate its retail banking, commercial banking and private banking delivery channels into a single channel focused on community banking.

The parent of AmericanWest Bank continues to evaluate options to improve capital levels by raising new capital and selling assets including financial centers with related loans and deposits, it said in a statement.

"The continued turmoil in the capital markets has made the process of raising new capital a challenge," Chief Executive Patrick Rusnak said, adding, "we believe that reducing our asset base through financial center sales is much less dilutive to our current shareholders."

The company named Patrick Rusnak as permanent president and chief executive officer during the quarter.

Rusnak has served as the interim CEO of the company since July, when former CEO Robert Daugherty resigned. He joined AmericanWest in 2006 as the chief operating officer.

AmericanWest said it will participate in the FDIC's program to insure all non-interest bearing deposits without passing any related costs to customers.

Shares of the company closed at $1.30 Thursday on Nasdaq.

For the press release, please click [ID:nBw315170a] . For the alerts, please click [ID:nWNAB5900]. (Reporting by Adheesha Sarkar in Bangalore; Editing by Jarshad Kakkrakandy)