EXHIBIT 3.3
                                                                     -----------
                                     BYLAWS

                                       OF

                          FIRST MUTUAL BANCSHARES, INC.


                                    ARTICLE I

                                  SHAREHOLDERS

                  SECTION 1. PLACE OF MEETINGS. All annual and special meetings
of shareholders shall be held at the principal office of the First Mutual
Bancshares, Inc. (the "Corporation") or at such other place within or without
the State of Washington as the Board of Directors may determine and as
designated in the notice of such meeting. Whenever specifically permitted by the
Chairman of the meeting, shareholders may participate in shareholders' meetings
by means of conference telephone or similar communications equipment by which
all persons participating in the meeting may hear each other during the meeting.
Participation by such means shall constitute presence in person at such meeting.

                  SECTION 2. ANNUAL MEETING. A meeting of the shareholders of
the Corporation for the election of Directors and for the transaction of any
other business of the Corporation shall be held annually on the fourth Thursday
in each April, unless that date is a legal holiday, in which case the meeting
shall be held on the first business day thereafter, or at such other date and
time prior to May 15 as the Board of Directors may determine.

                  SECTION 3. SPECIAL MEETINGS. Special meetings of the
shareholders for any purpose or purposes may be called at any time by the
President, or a majority of the Board of Directors, and shall be called by the
President or the Secretary upon the written request of the holders of not less
than one-fourth of all the outstanding capital stock of the Corporation entitled
to vote at the meeting. Such written request shall state the purpose or purposes
of the meeting and shall be delivered at the principal office of the Corporation
addressed to the President or the Secretary. Except as otherwise determined by
the Board of Directors, such written request must be received by the President
or Secretary more than 60 days in advance of the date of the special meeting.

                  SECTION 4. CONDUCT OF MEETINGS. Annual and special meetings
shall be conducted in accordance with such rules as may be established by the
Board of Directors or these Bylaws. The Board of Directors shall designate, when
present, the President to preside at such meetings. Without limitation, the
Board of Directors, through the rules adopted, and the Chairman of the meeting
in the conduct thereof, may restrict or limit the debate of issues and the
question period to allow the efficient conduct of the meeting and the
accomplishment of the essential business to come before the meeting.

                  SECTION 5. NOTICE OF MEETING. Written notice stating the
place, day and hour of the meeting and the purpose or purposes for which the
meeting is called shall be delivered by the Secretary or the officer performing
his or her duties, not less than 10 days nor more than 60 days

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before the meeting to each shareholder of record entitled to vote at such
meeting. If mailed, such notice shall be deemed to be delivered when deposited
in the U.S. mail, addressed to the shareholder at his or her address as it
appears on the stock transfer books or records of the Corporation as of the
record date prescribed in Section 6 of this Article I, with postage thereon
prepaid. If a shareholder be present at a meeting, or in writing waive notice
thereof before or after the meeting, notice of the meeting to such shareholder
shall be unnecessary. When any shareholders' meeting, either annual or special,
is adjourned for 30 days or more, notice of the adjourned meeting shall be given
as in the case of an original meeting. It shall not be necessary to give any
notice of the time and place of any meeting adjourned for less than 30 days or
of the business to be transacted thereat, other than an announcement at the
meeting at which such adjournment is taken.

                  SECTION 6. FIXING OF RECORD DATE. For the purpose of
determining shareholders entitled to notice of or to vote at any meeting of
shareholders, or any adjournment thereof, or shareholders entitled to receive
payment of any dividend, or in order to make a determination of shareholders for
any other proper purpose, the Board of Directors shall fix in advance a date as
the record date for any such determination of shareholders. Such date in any
case shall be not more than 60 days, and in the case of a meeting of
shareholders, not less than 10 days prior to the date on which the particular
action, requiring such determination of shareholders, is to be taken. When a
determination of shareholders entitled to vote at any meeting of shareholders
has been made as provided in this Section, such determination shall apply to any
adjournment thereof.

                  SECTION 7. QUORUM. A majority of the outstanding shares of the
Corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of shareholders. If less than a quorum is
represented at a meeting, a majority of the shares so represented may adjourn
the meeting from time to time without further notice. At such adjourned meeting
at which a quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as originally
notified. The shareholders present at a lawful meeting may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
shareholders to leave less than a quorum.

                  SECTION 8. PROXIES. At all meetings of shareholders, a
shareholder may vote by proxy executed in writing by the shareholder or by his
or her duly authorized attorney in fact; or authorizing another person or
persons to act for the shareholder as proxy by transmitting or authorizing the
transmission of a recorded telephone call, voice mail, or other electronic
transmission to the Corporation or the person who will be the holder of the
proxy or to a proxy solicitation firm, proxy support service organization, or
like agent duly authorized by the person who will be the holder of the proxy to
receive the transmission, provided that the transmission must either set forth
or be submitted with information, including any security or validation controls
used, from which it can reasonably be determined that the transmission was
authorized by the shareholder. If it is determined that the transmission is
valid, the inspectors of election or, if there are no inspectors, any officer or
agent of the Corporation making that determination on behalf of the Corporation
shall specify the information upon which they relied. The Corporation shall
require the holders of proxies received by transmission to provide to the
Corporation copies of the transmission and the Corporation shall retain copies
of the transmission for at least 60 days. Proxies solicited on behalf of the
management shall be voted as directed by the shareholder

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or, in the absence of such direction, as determined by a majority of the Board
of Directors. No proxy shall be valid after 11 months from the date of its
execution.

                  In order to be valid, any proxy form not supplied by the
Corporation must contain all the identifying information found on the
Corporation's form of proxy and must be presented to the Secretary before the
beginning of the meeting. A presented proxy or other written direction which
revokes a proxy previously delivered to the Corporation must so state. Votes may
only be cast by proxy delivered prior to the meeting, or by full completion of a
written ballot supplied by the Corporation during the meeting. A vote properly
cast at the meeting will revoke any previous proxy cast on the issue in
question.

                  SECTION 9. VOTING LISTS. At least 10 days before each meeting
of the shareholders, the officer or agent having charge of the stock transfer
books for shares of the Corporation shall prepare an alphabetical list of all
its shareholders on the record date who are entitled to vote at the meeting or
any adjournment thereof, arranged by voting group, and within each voting group
by class or series of shares, with the address of and the number of shares held
by each, which record for a period of 10 days prior to the meeting shall be kept
on file at the principal office of the Corporation or at a place identified in
the meeting notice. Such record shall be produced and kept open at the time and
place of the meeting and shall be subject to the inspection of any shareholder,
shareholder's agent or shareholder's attorney at any time during the meeting or
any adjournment thereof. Failure to comply with the requirements of this Section
8 of Article II shall not affect the validity of any action taken at the
meeting.

                  SECTION 10. VOTING OF SHARES IN THE NAME OF TWO OR MORE
PERSONS. When ownership of stock stands in the name of two or more persons, in
the absence of written directions to the Corporation to the contrary, at any
meeting of the shareholders of the Corporation, any one or more of such
shareholders may cast, in person or by proxy, all votes to which such ownership
is entitled. In the event an attempt is made to cast conflicting votes, in
person or by proxy, by the several persons in whose name shares of stock stand,
the vote or votes to which these persons are entitled shall be cast as directed
by a majority of those holding such stock and present in person or by proxy at
such meeting, but no votes shall be cast for such stock if a majority cannot
agree.

                  SECTION 11. VOTING OF SHARES BY CERTAIN HOLDERS. Shares
standing in the name of another Corporation may be voted by any officer, agent
or proxy as the Bylaws of such Corporation may prescribe, or, in the absence of
such provision, as the Board of Directors of such Corporation may determine.
Shares held by an administrator, executor, guardian or conservator may be voted
by him, either in person or by proxy, without a transfer of such shares into his
or her name. Shares standing in the name of a receiver may be voted by such
receiver, and shares held by or under the control of a receiver may be voted by
such receiver without the transfer thereof into his or her name, if authority to
do so is contained in an appropriate order of the court or other public
authority by which such receiver was appointed.

                  A shareholder whose shares are pledged shall be entitled to
vote such shares until the shares have been  transferred  into the name of the
pledgee and thereafter the pledgee shall be entitled to vote the shares so
transferred.

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                  SECTION 12. VOTING. Every shareholder entitled to vote at any
meeting shall be entitled to one vote for each share of stock held by him.
Unless otherwise provided in the Articles of Incorporation, by Statute, or by
these Bylaws, a majority of those votes cast by shareholders at a lawful meeting
shall be sufficient to pass on a transaction or matter.

                  SECTION 13. SHAREHOLDER PROPOSALS. All shareholders shall be
entitled to consider all matters upon which they are entitled to vote.
Accordingly, proposals from shareholders shall not be considered at an annual
meeting unless they are submitted to the Secretary of the Corporation in writing
not later than the first day of December preceding the annual meeting at which
the matter is proposed for consideration, or such earlier date as the Board
determines is the date 120 calendar days in advance of the date one year later
than the date of mailing the previous year's proxy statement. No proposals from
the floor of an annual meeting shall be entertained. The Corporation shall give
notice of any shareholder proposal timely received and which is for a proper
corporate purpose in its notice of the annual meeting. No proposal shall be
considered at a special meeting unless it is included in the notice thereof. For
business to be properly brought before a meeting by a shareholder, the
shareholder proposal shall provide the following information as to each matter
the shareholder proposes to bring before the meeting: (i) a brief description of
the business desired to be brought before the meeting and the reasons for
conducting such business at the meeting; (ii) the name and address, as they
appear on the Corporation's books, of the shareholder proposing such business
and the number of shares that are beneficially owned by such shareholder; (iii)
any substantial interest of the shareholder in such business; and (iv) any other
information required pursuant to the rules and regulations promulgated under the
Securities Exchange Act of 1934 relating to shareholder proposals.


                                   ARTICLE II

                               BOARD OF DIRECTORS

                  SECTION 1. GENERAL POWERS. All corporate powers shall be
exercised by or under the authority of, and the business and affairs of the
Corporation shall be managed under the direction of, its Board of Directors.

                  SECTION 2. NUMBER, TERM AND ELECTION. The Board of Directors
shall consist of not less than nine members nor more than 11 members, as shall
from time to time be determined by resolution of the Board of Directors. The
Board of Directors shall be divided into three classes as nearly equal in term
as possible. The members of each class shall be elected by the shareholders for
a term of three years and until their successors are elected and have qualified.
One class shall be elected by ballot annually. The shareholders of the
Corporation shall not be entitled to cumulative voting at any election of
Directors. In any election of Directors the candidates elected are those
receiving the largest numbers of votes cast by the shares entitled to vote in
the election, up to the number of Directors to be elected by such shares.

                  SECTION 3. PLACE OF MEETINGS; PARTICIPATION. All meetings of
the Board shall be held at the principal office of the Corporation in Bellevue,
Washington, or such other place

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within or without the State of Washington as may be approved by a majority of
the Board of Directors. Whenever permitted by the Chairman of the meeting,
members of the Board of Directors may participate in board meetings or committee
meetings by means of conference telephone or similar communications equipment by
which all persons participating in the meeting can hear each other.

                  SECTION 4. REGULAR MEETINGS. Regular meetings of the Board of
Directors shall be held at 3:00 p.m. on the fourth Thursday of each month,
except for the months of May and August, unless that date is a legal holiday, in
which case the meeting shall be held on the first business day thereafter at the
same hour. The President, with the approval of the majority of the Board, and
upon notice as provided in Section 6 of this Article, may change the date of any
regular meeting to any other day, or hour of the day, within the month provided
for such meeting, and may change the place thereof if such approval is given as
provided in Section 3 of this Article.

                  SECTION 5. SPECIAL MEETINGS. A special meeting of the Board of
Directors may be called at any time by the President when in his or her opinion
it is necessary or expedient, or by the Secretary on the written request of
three members of the Board.

                  SECTION 6. NOTICE OF MEETING. Notice of a special, or change
of regular, meeting of the Board shall be given by the Secretary by mail,
electronic form or telephone of the time, place and purpose of the meeting, to
each Director at his or her last known address in time to enable the Director,
after receipt thereof, to conveniently reach the place of meeting at the
appointed time; provided that notice of any meeting at other than the
Corporation's principal office shall not be less than 48 hours prior to the
meeting. Attendance by a Director at a meeting shall constitute a waiver of
notice thereof, except where a Director attends a meeting for the express
purpose of objecting to the transaction of any business because the meeting is
not lawfully called or convened.

                  SECTION 7. QUORUM. A quorum at any regular or special meeting
of the Board shall consist of a majority of the whole Board of Directors then
serving, but not less than five members thereof; but less than a quorum shall
have power to adjourn any meeting of the Board, from time to time, until the
next regular meeting hereof.

                  SECTION 8. ORGANIZATION. Unless the Board of Directors shall
by resolution otherwise provide, the Chairman shall act as chairman at all
meetings of the Board of Directors, or in the Chairman's absence the Vice
Chairman, and such other officer or Director as may be designated by the Board
shall act as secretary at all such meetings.

                  SECTION 9. MANNER OF ACTING. The act of the majority of the
Directors present at a meeting at which a quorum is present shall be the act of
the Board of Directors, unless a greater number is prescribed by these Bylaws or
the Articles of Incorporation.

                  SECTION 10. PRESUMPTION OF ASSENT. A Director who is present
at a meeting of the Board of Directors where action is taken shall be presumed
to have assented to the action taken unless such Director's dissent shall be
entered in the minutes of the meeting or unless such

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Director shall file his or her written dissent to such action with the person
acting as secretary of the meeting before the adjournment thereof or shall
forward such dissent by registered mail to the Secretary of the Corporation
immediately after adjournment of the meeting. Such right to dissent shall not
apply to a Director who voted in favor of such action.

                  SECTION 11. ACTION WITHOUT A MEETING. Any action required or
permitted to be taken by the Board of Directors at a meeting may be taken
without a meeting if a consent in writing, setting forth the action so taken,
shall be signed by all of the Directors. Such consent shall have the same effect
as a unanimous vote.

                  SECTION 12. VACANCIES. Any vacancy occurring in the Board of
Directors, whether resulting from the resignation or inability to serve of an
existing Director or from an increase in the number of Directors, may be filled
by the affirmative vote of a majority of the remaining Directors although less
than a quorum of the Board of Directors. A Director elected to fill a vacancy
resulting from the resignation or inability to serve (including by reason of
death) of an existing Director shall serve for the remainder of the term of the
resigning, deceased or incapacitated Director. The existence of a vacancy on the
Board of Directors shall not impair the authority of the remaining Directors to
act in any manner authorized by law.

                  SECTION 13. REMOVAL OF DIRECTORS. A Director may be removed
from office for the causes and in the manner provided by law.

                  SECTION 14. QUALIFICATIONS. A person shall not be a Director
of this Corporation if that individual: (1) is not a resident of the State of
Washington; (2) has been adjudicated a bankrupt or has taken the benefit of any
insolvency law or has made a general assignment for the benefit of creditors;
(3) has suffered a judgment for a sum of money which has remained unsatisfied of
record or unsecured on appeal for a period of more than three months; (4) is a
director, officer, clerk or other employee of any unaffiliated bank or insured
depository institution. No person shall be eligible for election as a Director
of this Corporation who is 75 years of age or more.

                  SECTION 15. AGE LIMITATIONS. A Director shall retire from the
Board of Directors upon attaining age 75.

                  SECTION 16. COMPENSATION OF DIRECTORS. The Board of Directors
shall fix the compensation for Directors by affirmative vote of a majority of
all the Directors. A Director receiving compensation from the Corporation for
service as an officer shall not receive any additional compensation from the
Corporation for service as a Director.

                  SECTION 17. CHAIRMAN OF THE BOARD. The Board of Directors may
elect a Chairman and Vice Chairman of the Board. The Chairman of the Board of
Directors shall preside at meetings of the Board of Directors. In the Chairman's
absence, the Vice Chairman shall preside at meetings of the Board of Directors.
In the absence of both the Chairman and the Vice Chairman, the President shall
preside at meetings of the Board of Directors.

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                  SECTION 18. EMERGENCY IN THE EVENT OF DISASTER. In the event
there shall occur and be declared by appropriate governmental authority a state
of disaster which shall be of such severity as to prevent the conduct and
management of the affairs and business of the Corporation by its Board and
officers as otherwise provided in these Bylaws, any three available Directors
shall constitute a Special Committee for the full conduct and management of the
affairs and business of the Corporation and any two shall constitute a quorum of
such committee. If, in any emergency, any authorized place of business of this
Corporation shall be unable to function because of this emergency, the business
ordinarily conducted at such location may be relocated elsewhere, in addition to
or in lieu of the locations theretofore authorized.

                  SECTION 19. TRANSACTIONS WITH INTERESTED PERSONS. Insofar as
not prohibited by applicable law or rules, including the rules of the Nasdaq
Stock Market, Inc. applicable to the Corporation, no contract or other
transaction between the Corporation and one or more of its Directors or any
other corporation, partnership, association or other organization in which one
or more of its Directors or officers are directors, officers or similar
officials, or have a financial interest, shall be either void or voidable solely
because of such relationship or interest, or solely because such Director or
Directors are present at or participate in the meeting of the Board of Directors
or a committee thereof which authorizes, approves or ratifies such contract or
transaction or solely because his, her or their votes are counted for such
purpose, if the contract or transaction is fair and reasonable to the
Corporation and if either:

                                    A. The material facts as to such
relationship or interest and as to the contract or transaction are disclosed or
are known to the Board of Directors or appropriate committee which, in good
faith, authorizes, approves or ratifies such contract or transaction by the
affirmative vote or consent of a majority of the disinterested Directors even
though the disinterested Directors are less than a quorum; or

                                    B. The material facts as to such
relationship or interest and as to such contract or transaction are disclosed or
are known to the shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote or written consent of
the shareholders; or

                                    C. The contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or ratified by the
Board of Directors or a committee thereof or by the shareholders. Interested
Directors may be counted in determining the presence of a quorum at a meeting of
the Board of Directors that authorizes the contract or transaction.

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                                   ARTICLE III
                                   COMMITTEES

                  SECTION 1. STANDING AND OTHER COMMITTEES. Standing or
temporary committees and subcommittees may be elected from its own number by the
Board of Directors from time to time by resolution of the Board of Directors.
The Board of Directors may from time to time vest such committees with such
powers as it may see fit, subject to such conditions as may be prescribed by the
Board. All committees so elected shall keep regular minutes of the transactions
of their meetings and shall cause them to be recorded in books kept for that
purpose. The designation of any such committee and the delegation of authority
thereto shall not relieve the Board of Directors or any member thereof of any
responsibility imposed by law.

                  SECTION 2. AUDIT COMMITTEE. At the meeting of the Board
following the annual meeting of shareholders each year, an Audit Committee of
not less than three Directors, none of whom shall be officers or salaried
employees of the Corporation and all of whom shall be "independent" within the
meaning of the rules of the Nasdaq Stock Market, Inc., shall be elected. The
Board of Directors shall adopt and review, at least annually, an Audit Committee
Charter. It shall be the duty of the Audit Committee to guide and review the
financial reporting processes of the Corporation, including the audits of the
Corporation's financial statements, and shall be responsible for the oversight
of the quality and integrity of the accounting, auditing and reporting practices
of the Corporation. The Audit Committee may employ such assistance and advisors
as it deems necessary or appropriate, and shall appoint and provide for
compensation and oversight of an independent certified public accounting firm to
perform such examinations on behalf of the Committee. The Corporation shall
compensate any such advisors and auditor as directed by the Audit Committee. A
report of the result of each such examination shall be presented to the Board of
Directors at its regular meeting which shall be held within 30 days after
completion of such examinations. The Audit Committee shall make such other
examinations as the Board of Directors may require.

                  SECTION 3. NOMINATIONS COMMITTEE. At the meeting of the Board
following the annual meeting of shareholders each year, a Nominations Committee
of not less than three Directors, none of whom shall be officers or salaried
employees of the Corporation and all of whom shall be "independent" within the
meaning of the rules of the Nasdaq Stock Market, Inc., shall be elected. The
Board of Directors shall adopt and review, at least annually, a Nominations
Committee Charter. The Nominations Committee shall recommend to the full Board
of Directors the candidates for the slate of nominees for election as Directors
at the annual meeting and, as appropriate, candidates to fill vacancies on the
Board of Directors. The work of the Nominations Committee shall be conducted,
pursuant to the Charter, at one or more meetings within the fourth calendar
quarter of each year, and at such other meetings as it finds advisable. The
Committee shall consider for nomination as Directors individuals recommended by
shareholders if such nominations are received by the Committee in writing on or
prior to October 15 of the year preceding the annual meeting at which
consideration of said nominee is desired. No nominations from the floor of any
annual shareholders meeting shall be entertained, and any vote for a nominee not
reviewed by the Nominations Committee shall be void and not counted.

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                  SECTION 4. COMPENSATION COMMITTEE. At the meeting of the Board
following the annual meeting of shareholders each year, a Compensation Committee
of not less than three Directors, none of whom shall be officers or salaried
employees of the Corporation and all of whom shall be "independent" within the
meaning of the rules of the Nasdaq Stock Market, Inc., shall be elected. The
Compensation Committee shall fix and determine the salary and other compensation
and benefits of the executive officers of the Corporation

                  SECTION 5. QUORUM. A majority of the members of a committee
then serving shall be necessary at all meetings to constitute a quorum for the
transaction of business.

                  SECTION 6. VACANCIES. In case of death, resignation or
incapacity of any member of a committee, that member's place shall be filled for
the remainder of the term as soon as practicable in the manner prescribed for
original selection.


                                   ARTICLE IV

                             OFFICERS AND EMPLOYEES

                  SECTION 1. OFFICER DESIGNATIONS. The Board of Directors shall
elect from their number a Chairman of the Board and a Vice Chairman of the
Board. In addition, the Directors shall elect from their number, or otherwise, a
President and such other officers as the Board believes to be appropriate.

                  SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board,
or in the Chairman's absence, the Vice Chairman of the Board shall preside at
all meetings of the Board of Directors and shall have all powers and perform the
duties incidental to the office or those assigned to the Chairman from time to
time by the Board of Directors.

                  SECTION 3. PRESIDENT. The President shall be the Chief
Executive Officer of the Corporation and shall, subject to the direction of the
Board, have such authority and such duties as shall be determined from time to
time by the Board of Directors. The President shall also preside over meetings
of the Board in the absence of the Chairman of the Board and the Vice Chairman
of the Board.

                  SECTION 4. VICE PRESIDENTS. The Executive Vice Presidents,
Senior Vice Presidents, other Vice Presidents and Assistant Vice Presidents as
may be designated at any time or from time to time shall perform such duties and
exercise such authority as may be designated by the Board of Directors, the
Chairman of the Board, the President or another officer of the Corporation
assigned to supervise the activities of such officers.

                  In the absence or disability of the Chairman of the Board, the
Vice Chairman of the Board, and the President, the Executive Vice Presidents,
Senior Vice Presidents and other Vice Presidents shall perform the duties of
those officers in the order of their priority of status.

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                  SECTION 5. SECRETARY. The Secretary shall attend meetings of
the Board and the meetings of such committees of the Board as may be requested
and keep the minutes of such meetings. The Secretary shall give such notices to
the Directors as may be required by law or by these Bylaws and shall have the
custody of the corporate seal and the contracts, papers and documents belonging
to the Corporation. The Secretary shall have such powers as usually appertain to
the office of Secretary and perform such other duties as may from time to time
be assigned by the Board of Directors, the Chairman of the Board or the
President. The Assistant Secretary or Assistant Secretaries, in the order
designated by the Board, shall perform all of the duties of Secretary during the
absence or disability of the Secretary and at other times may perform such other
duties as are directed by the Board of Directors, the Chairman of the Board, the
President or the Secretary.

                  SECTION 6. TREASURER. The Treasurer shall be the Corporation's
Chief Financial Officer and shall have control of the money, securities and
other property of the Corporation and shall keep regular books of account. The
Treasurer shall disburse the funds of the Corporation in payment of the just
demands against the Corporation or as may be ordered by the Board of Directors,
taking proper vouchers for such disbursements, and shall render to the Board of
Directors from time to time as may be required in an account of all the
Treasurer's transactions and of the financial condition of the Corporation. The
Treasurer shall perform all other duties incidental to the office or that are
properly required of the Treasurer by the Board of Directors. The Assistant
Treasurer or Assistant Treasurers, as may be designated by the Board of
Directors, shall perform all of the duties of the Treasurer in the absence or
disability of the Treasurer and at other times may perform such other duties as
are directed by the Board of Directors, the Chairman of the Board, the President
or the Treasurer.

                  SECTION 7. OTHER OFFICERS. Additional officers elected by the
Board of Directors shall exercise such powers and perform such duties as shall
be required by law or determined from time to time by the Board of Directors,
the Chairman of the Board or the President.

                  SECTION 8. DELEGATION. The Board of Directors may from time to
time delegate the powers or duties of any officer to any other officer or any
Director or other person whom it may select.

                  SECTION 9. CONTRACTS. The Board of Directors may authorize any
officer or officers, agent or agents, to enter into any contract or execute and
deliver any instrument in the name of and on behalf of the Corporation, and that
authority may be general or confined to specific instances.

                  SECTION 10. TERM AND REMOVAL. The officers of the Corporation
shall hold office until their successors are chosen and qualify. Any officer
elected by the Board of Directors may be removed at any time, with or without
cause, by the affirmative vote of a majority of the whole Board of Directors,
but such removal shall be without prejudice to the contract rights, if any, of
the person so removed, unless such removal is effected following written notice
of objection to such officer by an appropriate regulatory authority.

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                  SECTION 11. VACANCIES. Vacancies in any office arising from
any cause may be filled by the Board of Directors at any regular or special
meeting of the Board.

                  SECTION 12. UNAUTHORIZED COMPENSATION. If an officer or
employee of this Corporation receives any compensation with respect to any loan
made by this Corporation which that individual is not authorized by the Board to
retain, the officer or employee shall immediately pay the same over to the
Corporation.

                  SECTION 13. RESTRICTIONS ON OFFICERS. An officer of this
Corporation shall not:

                                    A. Personally or as agent or partner of
another, directly or indirectly, use any of the funds or deposits held by this
Corporation, except to make such current and necessary payments as are
authorized by the Board; or

                                    B. Receive, directly or indirectly, and
retain any commission on or benefit from any loan made by this Corporation or
pay or emolument for services rendered to any borrower by the Corporation in
connection with such loan, except as authorized by the Board.

                  SECTION 14. FIDELITY BONDS. The Board of Directors by
resolution may require any and all of the officers and employees of the
Corporation to give bonds to the Corporation, with sufficient surety or
sureties, conditioned for the faithful performance of the duties of their
respective offices and to comply with such other conditions as may from time to
time be required by the Board of Directors. Such security may be accepted from
any company authorized to furnish fidelity bonds and doing business under the
laws of the State of Washington, and premiums therefor may be paid as a
necessary expense of the Corporation.


                                    ARTICLE V

          INDEMNIFICATION OF OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS

                  SECTION 1.  DEFINITIONS.  As used in this Article:

                                    A. "Action" means any actual or threatened
claim, suit or proceeding, whether civil, criminal, administrative or
investigative.

                                    B. "Another Enterprise" means a corporation
(other than the Corporation), partnership, joint venture, trust, association,
committee, employee benefit plan or other group or entity.

                                    C. "Corporation" means First Mutual
Bancshares, Inc. and any predecessor to it and any constituent corporation
(including any constituent of a constituent) absorbed by the Corporation in a
consolidation or merger.

                                    D. "Director or Officer" means each person
who is serving or who has served as a Director of the Corporation or an officer
of the Corporation elected by the Board of

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Directors or, at the request of the Corporation, as a director, officer,
partner, trustee, employee or agent of Another Enterprise.

                                    E. "Indemnitee" means each person who was,
is or is threatened to be made a party to or is involved (including without
limitation, as a witness) in an Action because the person is or was a Director
or Officer of the Corporation.

                                    F. "Loss" means loss, liability, expenses
(including attorneys' fees), judgments, fines, ERISA excise taxes or penalties
and amounts to be paid in settlement, actually and reasonably incurred or
suffered by Indemnitee in connection with an Action.

                  SECTION 2. RIGHT TO INDEMNIFICATION. The Corporation shall
indemnify and hold harmless each Indemnitee (and may indemnify and hold harmless
any other officer or any employee or agent of the Corporation) against all Loss
except for Losses arising out of: (a) the Indemnitee's acts or omissions finally
adjudged to be intentional misconduct or a knowing violation of law or acts or
omissions where the Indemnitee was not acting in good faith and in a manner the
Indemnitee reasonably believed to be in or not opposed to the best interests of
the Corporation; or (b) proceedings subject to RCW 23B.08.510(4). Except as
provided in Section 4 of this Article V, the Corporation shall not indemnify an
Indemnitee in connection with an Action (or part thereof) initiated by the
Indemnitee unless such Action (or part thereof) was authorized or was reasonably
believed to have been authorized by the Board of Directors of the Corporation.
If, after the effective date of this Article, the Washington Business
Corporation Act is amended to authorize further indemnification of directors or
officers, then Directors of this Corporation and Officers elected by the Board
of Directors of this Corporation shall be indemnified to the fullest extent
permitted by the Washington Business Corporation Act, as so amended.

                  SECTION 3. BURDEN OF PROOF AND PROCEDURE FOR PAYMENT.

                                    A. The Indemnitee shall be presumed to be
entitled to indemnification under this Article upon submission of a written
claim (including a claim for expenses incurred in defending any Action in
advance of its final disposition, where the undertaking in B. below has been
tendered to the Corporation), and thereafter the Corporation shall have the
burden of proof to overcome the presumption that the Indemnitee is so entitled.

                                    B. The right to indemnification conferred in
this Article shall include the right to be paid by the Corporation all expenses
(including attorneys' fees) incurred in defending any Action in advance of its
final disposition; provided, however, that the payment of such expenses in
advance of the final disposition of an Action shall be made upon delivery to the
Corporation of an undertaking, by or on behalf of such Director or Officer, to
repay all amounts so advanced if it shall ultimately be determined that such
Director or Officer is not entitled to be indemnified under this Article or
otherwise.

                  SECTION 4. RIGHT OF INDEMNITEE TO BRING SUIT. If a claim under
this Article is not paid in full by the Corporation within 60 days after a
written claim has been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover

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<PAGE>

the unpaid amount of the claim and, to the extent successful in whole or in
part, the Indemnitee shall be entitled to be paid also the expense of
prosecuting such claim. Neither the failure of the Corporation (including its
Board of Directors, its shareholders or independent legal counsel) to have made
a determination prior to the commencement of such Action that indemnification of
or reimbursement or advancement of expenses to the claimant is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors, its shareholders or independent legal counsel) that the
Indemnitee is not entitled to indemnification or to the reimbursement or
advancement of expenses, shall be a defense to the action or create a
presumption that the Indemnitee is not so entitled.

                  SECTION 5. NONEXCLUSIVITY OF RIGHTS. The right to
indemnification and the payment of expenses incurred in defending an Action in
advance of its final disposition conferred in this Article shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the Articles of Incorporation, Bylaws,
agreement, vote of shareholders or disinterested Directors or otherwise.

                  SECTION 6. INSURANCE, CONTRACTS AND FUNDING. The Corporation
may maintain insurance, at its expense, to protect itself and any Director,
Officer, employee or agent of the Corporation or Another Enterprise against any
expense, liability or loss, whether or not the Corporation would have the power
to indemnify such person against such expense, liability or loss under the
Washington Business Corporation Act. The Corporation may, without further
corporate action, enter into contracts with any Director or Officer of the
Corporation in furtherance of the provisions of this Article and may create a
trust fund, grant a security interest or use other means (including, without
limitation, a letter of credit) to ensure the payment of such amounts as may be
necessary to effect indemnification as provided in this Article.

                  SECTION 7. INDEMNIFICATION OF EMPLOYEES AND AGENTS OF THE
CORPORATION. The Corporation may, by action of its Board of Directors from time
to time, provide indemnification and pay expenses in advance of the final
disposition of an Action to employees and agents of the Corporation with the
same scope and effect as the provisions of this Article with respect to the
indemnification and advancement of expenses of Directors and Officers of the
Corporation or pursuant to rights granted pursuant to, or provided by, the
Washington Business Corporation Act or otherwise.

                  SECTION 8. CONTRACT RIGHT. Rights of indemnification under
this Article shall continue as to an Indemnitee who has ceased to be a Director
or Officer and shall inure to the benefit of his or her heirs, executors and
administrators. The right to indemnification conferred in this Article shall be
a contract right upon which each Director or Officer shall be presumed to have
relied in determining to serve or to continue to serve as such. Any amendment to
or repeal of this Article shall not adversely affect any right or protection of
a Director or Officer of the Corporation for or with respect to any acts or
omissions of such Director or Officer occurring prior to such amendment or
repeal.

                  SECTION 9. SEVERABILITY. If any provision of this Article or
any application thereof shall be invalid, unenforceable or contrary to
applicable law, the remainder of this Article, or the application of such
provisions to persons or circumstances other than those as to which it is held

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<PAGE>

invalid, unenforceable or contrary to applicable law, shall not be affected
thereby and shall continue in full force and effect.

                  SECTION 10. FURTHER INDEMNIFICATION. Reference is made to the
adoption of indemnity statutes at RCW 23B.08.500-600. To the extent these
statutes, or any successor statute within the Washington Business Corporation
Act or the Federal Bank Holding Company Act, as in effect from time to time,
create rights of indemnification for officers and directors broader than
contained in the balance of the Bylaws within this Article V, such additional or
further indemnification is approved and made a part of this Bylaw.

                  SECTION 11. LIMITS ON INDEMNIFICATION. Rights of
indemnification under this Article shall be subject to the prohibited
indemnification payments provision of the FDIC Regulations, 12 CFR, Part 359.3,
as it may be amended from time to time, and the Corporation shall not make any
prohibited indemnification payment as that term is defined in such Regulation.


                                   ARTICLE VI

                   CERTIFICATES FOR SHARES AND THEIR TRANSFER

                  SECTION 1. CERTIFICATES FOR SHARES. Certificates representing
shares of capital stock of the Corporation shall be in such form as shall be
determined by the Board of Directors. Such certificates shall be signed by the
President or Vice President and attested by the Secretary or an Assistant
Secretary. The signatures of such officers upon a certificate may be facsimiles
if the certificate is manually signed on behalf of a transfer agent or
registered by a registrar, other than the company itself or one of its
employees. Each certificate for shares of capital stock shall be consecutively
numbered or otherwise identified. The name and address of the person to whom the
shares are issued, with the number of shares and date of issue, shall be entered
on the stock transfer books of the Corporation. All certificates surrendered to
the Corporation for transfer shall be canceled and no new certificate shall be
issued until the former certificate for the like number of shares shall have
been surrendered and canceled, except that in case of a lost or destroyed
certificate, a new certificate may be issued therefor upon such terms and
indemnity to the Corporation as the Board of Directors may prescribe.

                  SECTION 2. TRANSFER OF SHARES. Transfer of shares of capital
stock of the Corporation shall be made only on its stock transfer books.
Authority for such transfer shall be given only by the holder of record thereof
or by his or her legal representative, who shall furnish proper evidence of such
authority, or by his or her attorney thereunto authorized by power of attorney
duly executed and filed with the Corporation. Such transfer shall be made only
on surrender for cancellation of the certificate for such shares. The person in
whose name of shares of capital stock stand on the books of the Corporation
shall be deemed by the Corporation to be the owner thereof for all purposes.

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<PAGE>

                                   ARTICLE VII

                            FISCAL YEAR; ANNUAL AUDIT

                  The fiscal year of the Corporation shall end on the last day
of December of each year. The Corporation shall be subject to an annual audit as
of the end of its fiscal year by independent public accountants appointed by the
Audit Committee of the Board of Directors.


                                  ARTICLE VIII

                                    DIVIDENDS

                  Dividends upon the stock of the Corporation, subject to the
provisions of the Articles of Incorporation, if any, may be declared by the
Board of Directors at any regular or special meeting, pursuant to law. Dividends
may be paid in cash, in property or in stock.


                                   ARTICLE IX

                                 CORPORATE SEAL

                  This Corporation need not have a corporate seal. If the Board
of Directors adopts a corporate seal, the seal of the Corporation shall be
circular in form and consist of the name of the Corporation, the state and year
of incorporation, and the words "Corporate Seal."


                                    ARTICLE X

                                   CONFORMITY

                  Any article, section or provision of these Bylaws which shall
be in conflict with any laws or regulations relating to or governing this
Corporation or the activities thereof shall be deemed amended to conform
therewith. Whether or not specifically provided in these Bylaws, this
Corporation, its Board of Directors and its officers shall have all authority,
control, management and power granted to or provided for corporations by the
laws of the State of Washington and any other laws now or hereafter in effect.
If any provision of these Bylaws should be held invalid or in violation of any
law or regulation, it shall not affect the validity of the remainder of these
Bylaws or of the article, section or other subdivision thereof in which such
provision appears.


                                   ARTICLE XI

                                   AMENDMENTS

                  These Bylaws may be amended at any time by a majority vote of
the Board of Directors or by the shareholders.

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<PAGE>

                  The undersigned, being the Secretary of the Corporation,
hereby certifies that these Bylaws are the Bylaws of First Mutual Bancshares,
Inc. adopted by resolution of the Directors on __________________ ,_____.

                  DATED this _____ day of _____________, _____ .


                                         ______________________________________

                                         ___________________________, Secretary



























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