**EXHIBIT      3.1**

**CERTIFICATE      OF**

**AMENDED      AND RESTATED**

**ARTICLES      OF INCORPORATION**

 

**OF**

 

**FIRST      MUTUAL BANCSHARES, INC.**

 

 

Pursuant      to the provisions of RCW 23B.I0.070 of the Washington Business      Corporation Act, **First Mutual Bancshares, Inc.,**a Washington      corporation (the "Company") hereby      certifies that it has amended and restated its articles of      incorporation:

 

| **FIRST:** | The                name of the Company is: |
|------------|--------------------------------------------|

 

**First      Mutual Bancshares, Inc.**

 

**SECOND:**            The      Amended and Restated Articles of Incorporation, a~ recommended to the      shareholders by the board of directors is hereby adopted by the Company and      supersede the Articles of Incorporation of the Company and contain amendments      to      the Articles of Incorporation as follows:

 

The      Articles of Incorporation are amended to read in their entirety as      set forth in the Amended and Restated Articles of Incorporation, attached hereto      as Exhibit A.

 

The      amendments do not provide for an exchange, reclassification or      cancellation of any issued shares.

 

**THIRD:**               The      foregoing amendments to the Articles of Incorporation were duly approved and      adopted on the 27th day of January, 2005 by the board of directors and were      dilly approved and adopted on the 28th day of April, 2005 by the shareholders      of      the Company in accordance with the provisions ofRCW 23B.l 0.030 and RCW 23B.l      0.040.

 

| **FOURTH:** | The                Restated Articles oflncorporation are attached                hereto. |
|-------------|------------------------------------------------------------------------------------------|

 

| DATED                this 26th day of May,                2005. |
|-----------------------------------------------------------------|

 

 

|         |                                               |                                 |
|--------------|----------------------------------------------------|--------------------------------------|
|         | **FIRST                MUTUAL BANCSHARES, INC.**   |
|    |                                          |                            |
|         | By:                                      | /s/ John              R. Valaas |
|         | John                R. Valaas, President & CEO |
|         |                                               |

 

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**Exhibit      A**

 

**AMENDED      AND RESTATED**

**ARTICLES      OF INCORPORATION**

 

**OF**

 

**FIRST      MUTUAL BANCSHARES, INC.**

 

**ARTICLE      I.**The name of the corporation shall      be First Mutual Bancshares, Inc. (the "Corporation").

 

**ARTICLE      II.**The principal office of the      Corporation shall be located in the City of Bellevue, County of King, State      of      Washington.

 

**ARTICLE      III.**The nature of the business and      the objects and purposes to be transacted, promoted or carried on by the      Corporation are to engage in any lawful business for which a corporation may      be      incorporated under Title 23B, RCW as now in existence or as such laws may      hereafter be amended.

 

**ARTICLE      IV.**The total number of shares of      all classes of capital stock which the Corporation has authority to issue is      40,000,000, of which 30,000,000 shall be common stock, par value $1.00 per      share, and 10,000,000 shall be serial preferred stock, par value $1.00 per      share. The consideration for the issuance of the shares shall be paid in full      before their issuance and shall not be less than the stated value per share.      Upon payment of such consideration such shares shall be deemed to be fully      paid      and nonassessable. Upon authorization by the board of directors, the Corporation      may issue its own shares in exchange for or in conversion of its outstanding      shares or distribute its own shares, pro rata to its shareholders or the      shareholders of one or more classes or series, to effectuate stock dividends      or      splits, and any such transaction shall not require consideration. Nothing      contained herein shall entitle the holders of any class or series of capital      stock to vote as a separate class or series. A description of the different      classes and series of the Corporation's capital stock is as follows:

 

Common      Stock.  Except as provided      herein, the holders Qf the common stock shall exclusively possess all voting      power. Each holder of shares of common stock shall be entitled to one vote      for      each share held by such holder, and there shall be no right to cumulate votes      for the election of directors or for any other purpose.

 

Whenever      there shall have been paid, or declared and set aside for      payment, to the holders of the outstanding shares of any class of stock having      preference over the common stock as to the payment of dividends, the full amount      of dividends and of sinking fund or retirement fund or other retirement      payments, if any, to which such holders are respectively entitled in preference      to the common stock, then dividends may be paid on the common stock and on      any      class or series of stock entitled to participate therewith as to dividends,      out      of any assets legally available for the payment of dividends; but only when      and      as declared by the board of directors.

 

 

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In      the event of any liquidation, dissolution or winding up of the      Corporation, after there shall have been paid to or set aside for the holders      of      any class having preferences over the common stock in the event of liquidation,      dissolution or winding up, of the full preferential amounts of which they are      respectively entitled, the holders of the common stock, and of any class or      series of stock entitled to participate therewith, in whole or in part, as      to      distribution of assets, shall be entitled after payment or provision for payment      of all debts and liabilities of the Corporation to receive the remaining assets      of the Corporation available for distribution, in cash or in kind.

 

Each      share of common stock shall have the same relative rights as and be      identical in all respects with all the other shares of common stock.

 

Serial      Preferred Stock.  The board of      directors of the Corporation is authorized, subject to limitations prescribed      by      law and the provisions of this Article, to provide for the issuance of shares      of      preferred stock in one or more series, at such time or times and for such      consideration or considerations as the board of directors may determine. Each      series shall be so designated to distinguish its shares from the shares of      all      other series and classes. All shares of a series of preferred stock shall have      preferences, limitations, and relative rights identical with those of other      shares of the same series and, except to the extent otherwise provided in the      articles of amendment adopted by the board of directors creating the series      and      filed with the Washington Secretary of State in accordance with the Washington      Business Corporation Act, of those of other series of the same class. Except      as      may otherwise be provided in these Articles of Incorporation, different series      of preferred stock shall not be construed to constitute different classes of      shares for the purpose of voting by classes. The authority of the board of      directors with respect to each such series shall include, without limitation      of      the foregoing, determination of the following and adoption of the articles      of      amendment providing for the following:

 

| a. | The                distinctive serial designation and the number of shares                constituting such series; |
|----|---------------------------------------------------------------------------------------------------------------------|

 

| b. | The                dividend rates or the amount of dividends to be paid on the                shares of such series, whether dividends shall be cumulative and,                if so,                from which date or dates, the payment or dates for dividends, and                the                participation or other special rights, if any, with respect to                dividends; |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| c. | The                voting powers, full or limited, if any, of shares of such                series; |
|----|-----------------------------------------------------------------------------------------------------|

 

| d. | Whether                the shares of such series shall be redeemable and, if so,                the price or prices at which, and the terms and conditions on which,                such                shares may be redeemed; |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| e. | The                amount or amounts payable upon the shares of such series in the                event of voluntary or involuntary liquidation, dissolution or winding                up                of the Corporation; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| f. | Whether                the shares of such series shall be entitled to the benefit                of a sinking or retirement fund to be applied to the purchase or                redemption of such shares, and if so entitled, the amount of such                fund and                the manner of its application, including the price or prices at which                such                shares may be redeemed or purchased through the application of such                fund; |
|----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

          

 

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| g. | Whether                the shares of such series shall be convertible into, or                exchangeable for, shares of any other class or classes or of any                other                series of the same or any other class or classes of stock of the                Corporation, and, if so convertible or exchangeable, the conversion                price                or prices, or the rate or rates of exchange, and the adjustments                thereof,                if any, at which such conversion or exchange may be made, and any                other                terms and conditions of such conversion or                exchange; |
|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| h. | The                price or other consideration for which the shares of such                series shall be issued; and |
|----|-------------------------------------------------------------------------------------------------------------------------|

 

| i. | Whether                the shares of such series which are redeemed or converted                shall have the status of authorized but unissued shares of serial                preferred stock and whether such shares may be reissued as shares                of the                same or any other serial preferred                stock. |
|----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

Each      share of each series of serial preferred stock shall have the same      relative rights as and be identical in all respects with all other shares of      the      same series.

 

**ARTICLE      V.**Holders of the capital stock of      the Corporation shall not be entitled to preemptive rights with respect to      any      shares of the Corporation which may be issued.

 

**ARTICLE      VI.**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 stockholders. The stockholders present      at a duly organized meeting may continue to transact business until adjournment,      notwithstanding the withdrawal of enough stockholders to leave less than a      quorum.

 

**ARTICLE      VII.**The number of directors may be      fixed, from time to time, by the affirmative vote of at least three-fourths      of      the entire board of directors or by action of the shareholders of the      Corporation. Commencing as of the effective date of the adoption by the      shareholders of this Article VII, the directors shall be classified in respect      to the time for which they shall severally hold office, by dividing them into      three classes. The number of directors in each class shall be as nearly equal      as      possible. At a meeting of the shareholders, the initial directors of the first      class shall be elected for a term of one year, the initial directors of the      second class shall be elected for a term of two years and the initial directors      of the third class shall be elected for a term of three years. Thereafter,      at      each annual election, any vacancy in any class of directors may be filled and      successors to the class of directors whose terms shall expire that year shall      be      elected to hold office for a term of three years, so that the term of office      of      one class of directors shall expire in each year. In the event the number of      directors is increased, the additional directors may be elected by the board      of      directors to a class or classes of directors with terms expiring in three years      or less in order to maintain proportionate equality between the classes. Any      decrease in the number of directors shall be effective at the time of the next      succeeding annual meeting of shareholders unless there shall be vacancies in      the      board of directors, in which case such decrease may become effective at any      time      prior to the next succeeding annual meeting to the extent of the number of      such      vacancies. Directors need not be shareholders. Except as otherwise provided      by      statute or these Articles or the Corporation's Bylaws, the directors shall      be      elected at the annual meeting of shareholders. Each director shall hold office      until the expiration of the 

 

 

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term      for which he or she is elected and until his or her successor has      been elected and qualified, or until his or her prior resignation or removal,      as      hereinafter provided in the Bylaws.

 

**ARTICLE      VIII.**The registered office of the      Corporation shall be located at 400 108th Avenue N.E., Bellevue, Washington      98004.

 

**ARTICLE      IX.**No amendment to these articles      of incorporation shall be made, unless such is first proposed by the board      of      directors and approved by the stockholders by at least two-thirds of the total      votes eligible to be cast at a lawful meeting.

 

**ARTICLE      X.**A director of the Corporation      shall not be personally liable to the Corporation or its shareholders for      monetary damages for conduct as a director, except for:

 

| a. | Acts                or omissions involving intentional misconduct by the director                or a knowing violation of law by the                director; |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| b. | Conduct                violating RCW 23B.08.31 0;                or |
|----|---------------------------------------------------------------------|

 

| c. | Any                transaction from which the director will personally receive a                benefit in money, property, or services to which the director is                not                legally entitled. |
|----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

 

If      the Washington Business Corporation Act (RCW 23B) is hereafter amended      to authorize corporate action further eliminating or limiting the personal      liability of directors, then the liability of a director of the Corporation      shall be eliminated or limited to the fullest extent permitted by either such      title, as so amended. Any repeal or modification of the foregoing paragraph      by      the Corporation or its shareholders shall not adversely affect any right or      protection of a director of the Corporation with respect to any acts or      omissions of such director occurring prior to such repeal or      modification.

 

**ARTICLE      XI.**The Corporation shall indemnify      its directors and officers to the fullest extent permitted by the Washington      Business Corporation Act (RCW 23B) now or hereafter in force. However, such      indemnity shall not apply on account of:

 

| a. | Acts                or omissions of the director or officer [mally adjudged to be                intentional misconduct or a knowing violation of                law; |
|----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

| b. | Conduct                of the director or officer [mally adjudged to be in                violation of RCW 23B.08.31 0; or |
|----|----------------------------------------------------------------------------------------------------------------------------|

 

| c. | Any                transaction with respect to which it was finally adjudged that                such director or officer personally received a benefit in money,                property                or services to which the director was not legally entitled. The                Corporation shall advance expenses for such persons pursuant to the                terms                set forth in the Bylaws, or any separate directors resolution or                contract. |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

This      Article is not a limitation upon the indemnity provisions in the      Corporation's Bylaws.

 

 

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The      Board of Directors may take such action as is necessary to carry out      these indemnification and expense advancement provisions. It is expressly      empowered to adopt, approve, and amend from time to time, such Bylaws,      resolutions, contracts, or further indemnification and expense advancement      arrangements as may be permitted by law, implementing these provisions. Such      Bylaws, resolutions, contracts or further arrangements shall include, but not      be      limited to, implementing the manner in which determinations as to any indemnity      or advancement of expenses shall be made.

 

No      amendment or repeal of this Article shall apply to, or have any effect      on, any right to indemnification provided hereunder with respect to acts or      omissions occurring prior to such amendment or repeal.

 

| DATED                this 26th day of May,                2005. |
|-----------------------------------------------------------------|

 

|         |                                               |                                 |
|--------------|----------------------------------------------------|--------------------------------------|
|         | **FIRST                MUTUAL BANCSHARES, INC.**   |
|    |                                          |                            |
|         | By:                                      | /s/ John              R. Valaas |
|         | John                R. Valaas, President & CEO |
|         |                                               |

 

 

 

 

 

 

 

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