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U.S. SECURITIES AND EXCHANGE COMMISSION


Washington, DC 20549





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FORM 10-QSB





(Mark One)


| ̈ |  | QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ---------------------------------------------------------------------------------




| |  | For the quarterly period ended
                                        .
| |  | ------------------------------------------------------------------------




|x |  | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------




| |  | For the transition period from 1/1/02 to 3/31/02.
| |  | -------------------------------------------------




Commission file number 0-24151





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NORTHWEST BANCORPORATION, INC.


(Exact name of small business issuer as specified in its charter)





Washington

91-1574174(State or other jurisdiction of incorporation or
organisation)

(I.R.S. Employer Identification No.)





421 West Riverside, Spokane, WA 99201-0403


(Address of principal executive offices)





(509) 456-8888


(Issuers telephone number, including area code)





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Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  x  No  ̈





The Registrant has a single class of common stock, of which
there are 1,719,585 shares issued and outstanding as of March 31, 2002.





Transitional Small Business Disclosure
Format:  Yes  x  No  ̈





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TABLE OF CONTENTS





PART I

FINANCIAL INFORMATIONItem 1.

Financial StatementsConsolidated Statements of ConditionMarch 31, 2002 and December 31, 2001

1Consolidated Statements of IncomeThree Months year-to-date Ended ended March 31, 2002 and 2001

2Consolidated Statements of Cash Flowyear-to-date ended March 31, 2002 and 2001

3Consolidated Statements of Stockholders Equity as of March 31, 2002 and 2001

4Notes to Consolidated Financial Statements

6Item 2.

Managements Discussion and Analysis or Plan of Operation

9PART II

OTHER INFORMATIONItem 6.

Exhibits and Reports on Form 8-K

9Signatures

9






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PART I     FINANCIAL INFORMATION





Item 1.Financial Statements





NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF CONDITION


March 31, 2002 and December 31, 2001


($ in thousands)





March 31 2002

December 31 2001Unaudited

AuditedA S S E T SCash and due from banks

$
6,859

$
8,710Federal funds sold


6,624


6,620Securities held-to-maturity (Note 2)


225


225Securities available-for-sale (Note 2)


38,785


40,938Federal Home Loan Bank stock, at cost


565


557Loans, net of allowance for loan losses of $1,798 in 2002 and $1,649 in 2001 (Notes 3 & 4)


130,211


128,601Loans held for sale


895


933Accrued interest receivable


1,061


1,097Premises and equipment, net (Note 7)


3,520


3,277Foreclosed real estate


1,041


317Other assets


1,574


1,593TOTAL ASSETS


191,360


192,868L I A B I L I T I E SNoninterest bearing demand deposits

$
32,075

$
32,998Money Market accounts


33,471


35,198NOW accounts


11,858


13,730Savings accounts


4,283


4,296Time Certificates of Deposit, $100,000 and over


22,458


23,337Time Certificates of Deposit, under $100,000


41,119


42,618TOTAL DEPOSITS


145,264


152,177Securities sold under agreement to repurchase


22,662


22,409Borrowed funds, Federal Home Loan Bank (Note 5)


6,268


1,804Accrued interest payable and other liabilities


1,156


899TOTAL LIABILITIES


30,086


25,112TOTAL DEPOSITS AND LIABILITIES


175,350


177,289Stockholders EquityCommon stock, no par, 5,000,000 shares authorized; issued and outstanding 1,719,585 on March 31, 2002 and 1,720,530 on December 31,
2001 (Note 6)


13,487


13,495Retained earnings


1,995


1,667Accumulated other comprehensive income, net of tax of $272 for 2002 and $215 for 2001


528


417TOTAL STOCKHOLDERS EQUITY


16,010


15,579TOTAL LIABILITIES AND STOCKHOLDERS EQUITY

$
191,360

$
192,868





The accompanying notes are an integral part of these condensed financial statements.




1




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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF INCOME


Three Months year-to-date ended March 31, 2002 and 2001


($ in thousands, except number of shares and per share information)





Three Months Ended

Year-to-date03/31/02

03/31/01

2002

2001Unaudited

Unaudited

Unaudited

UnauditedInterest IncomeInterest and fees on loans

$
2,501

$
2,811

$
2,501

$
2,811Interest on securities


598


687


598


687Interest on federal funds sold


12


62


12


62TOTAL INTEREST INCOME


3,111


3,560


3,111


3,560Interest ExpenseInterest on deposits


811


1,446


811


1,446Interest on securities sold under agreement to repurchase


58


190


58


190Interest on borrowed funds


69


28


70


28TOTAL INTEREST EXPENSE


938


1,664


938


1,664NET INTEREST INCOME


2,173


1,896


2,173


1,896Provision for loan losses


270


135


270


135NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES


1,903


1,761


1,903


1,761Noninterest IncomeFees and service charges


226


232


226


232Net gain from sale of loans


107


184


107


184Other noninterest income


99


63


99


63TOTAL NONINTEREST INCOME


432


479


432


479Noninterest ExpenseSalaries and employee benefits


1,084


1,047


1,084


1,047Occupancy/FF&E expense


190


177


190


177Depreciation and amortization expense


120


115


120


115Other operating expense


444


439


444


439TOTAL NONINTEREST EXPENSE


1,838


1,778


1,838


1,778INCOME BEFORE TAXES


497


462


497


462Federal income tax expense


169


157


169


157NET INCOME

$
328

$
305

$
328

$
305





Quarter Ended 03/31/02

Quarter Ended 03/31/01

Year-to-date 03/31/02

Year-to-date 03/31/01Unaudited

Unaudited

Unaudited

UnauditedWeighted average shares outstanding (Note 6)


1,719,659


1,742,244


1,719,659


1,742,244Basic earnings per share

$
0.19

$
0.18

$
0.19

$
0.18Weighted average shares outstanding (Note 6)


1,719,659


1,742,244


1,719,659


1,742,244Effect of dilutive securities


851


1,643


851


1,643Weighted average shares outstanding, adjusted for dilutive securities


1,720,510


1,743,887


1,720,510


1,743,887Earnings per share assuming full dilution

$
0.19

$
0.17

$
0.19

$
0.17





The accompanying notes are an integral part of these condensed financial statements.




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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF CASH FLOW


Year-to-date ended March 31, 2002 and 2001


($ in thousands)





Year-to-date2002


2001Unaudited


UnauditedNet income

$
328


$
305Adjustments to reconcile net income to cash provided by operating activities:Provision for loan losses


270



135Depreciation and amortization


120



115(Increase)/decrease in assets and liabilities:Accrued interest receivable


36



135Other assets


185



(151
)Accrued interest payable & other liabilities


266



192NET CASH PROVIDED BY OPERATING ACTIVITIES


1,205



731Cash flows from investing activities:Net (increase)/decrease in federal funds sold


(4
)


(4,087
)Net (increase)/decrease in investment securities


2,312



(5,558
)Net (increase)/decrease in loans


(1,880
)


206Net (increase)/decrease in loans held for sale


38



(491
)Purchase of premises and equipment net of gain or loss on asset disposal


(600
)


(20
)Foreclosed real estate activity (net)


(724
)


66NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES


(858
)


(9,884
)Cash flows from financing activities:Net increase/(decrease) in deposits


(6,906
)


6,119Net increase/(decrease) in securities sold under agreement to repurchase


253



985Net proceeds/(payments) from borrowed funds


4,464



(20
)Cash received from stock sales (net)


(9
)


25NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES


(2,198
)


7,109Net increase/(decrease) in cash and cash equivalents


(1,851
)


(2,044
)Cash and cash equivalents, beginning of year


8,710



8.644CASH AND CASH EQUIVALENTS, END OF QUARTER

$
6,859


$
6,600





The accompanying notes are an integral part of these condensed financial statements.




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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY





CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


In Actual Dollars


As of March 31, 2001





Total

Common Stock

Retained Earnings


Accumulated Comprehensive Income


Comprehensive IncomeBalance, December 31, 1999 (audited)

$
11,145,919

$
10,312,307

$
1,535,355


$
(701,743
)Net income 2000


799,185





799,185






$
799,185Unrealized gains (losses) on available for sale securities


892,662









892,662



892,662Comprehensive income
















1,691,847Proceeds from issuance of capital stock


1,498,026


1,498,026Transfers


0


1,026,025


(1,026,025
)Balance December 31, 2000 (audited)


14,335,792


12,836,358


1,308,515



190,919Net income, 2001, year-to-date


305,047





305,047







305,047Unrealized gains (losses) on available for sale securities


83,664









83,664



83,664Comprehensive income















$
439,301Proceeds from issuance of capital stock


25,000


25,000Balance, end-of-quarter, March 31, 2001 (unaudited)

$
14,749,503

$
12,861,358

$
1,613,562


$
274,583Disclosure of 2001 reclassification amount:Unrealized holding gains during period

$
83,664Less reclassification adjustment for losses reported in net income


0Net unrealized gains on securities

$
83,664








The accompanying notes are an integral part of
these condensed financial statements.




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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARYCONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITYIn Actual DollarsAs of March 31, 2002Total


Common Stock


Retained Earnings


Accumulated Comprehensive Income

Comprehensive IncomeBalance, December 31, 2000 (audited)

$
14,335,792


$
12,836,358


$
1,308,515


$
190,919Net income 2001


1,188,815







1,188,815





$
1,188,815Unrealized gains (losses) on available for sale securities


225,639











225,639


225,639Comprehensive income

















1,414,454Proceeds from issuance of capital stock


52,360



52,360Repurchase of capital stock


(221,532
)


(221,532
)Fractional shares, issued in cash


(2,369
)






(2,369
)Transfers


0



828,000



(828,000
)Balance December 31, 2001 (audited)


15,578,705



13,495,186



1,666,961



416,558Net income, 2002, year-to-date


328,241







328,241






328,241Unrealized gains (losses) on available for sale securities


111,060











111,060


111,060Comprehensive income
















$
439,301Repurchase of capital stock


(8,600
)


(8,600
)Balance, end-of-quarter, March 31, 2002 (unaudited)

$
16,009,407


$
13,486,587


$
1,995,202


$
527,618Disclosure of 2002 reclassification amount:Unrealized holding gains during period

$
111,060Less reclassification adjustment for losses reported in net income


0Net unrealized gains on securities

$
111,060





The accompanying notes are an integral part of these condensed financial statements.




5




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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS





NOTE 1.    Management Statement





In the opinion of the Company, the accompanying audited and unaudited Consolidated Financial Statements present fairly the financial position of the
Company as of March 31, 2002 and December 31, 2001, as well as the results of operations and changes in financial position for the three-month, year-to-date periods ended March 31, 2002 and 2001. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed statements be read in conjunction with the
Independent Auditors Report and Financial Statements contained in the Companys most recent Annual Report on Form 10-KSB as of December 31, 2001.





Certain reclassifications of March 31, 2001 balances have been made to conform to the March 31, 2002 presentation; there was no impact on net income or stockholders equity. Shares outstanding and calculation of
earnings per share have been restated for the three-month, year-to-date period ending March 31, 2001 to reflect the effect of a five-percent stock dividend effective for shareholders of record as of May 15, 2001.








NOTE 2.    Securities





Most of the securities are classified as available-for-sale and are stated at fair value, and unrealized holding gains and losses, net of related deferred taxes, are reported as a
separate component of stockholders equity. Gains or losses on available-for-sale securities sales are reported as part of non-interest income based on the net proceeds and the adjusted carrying amount of the securities sold, using the specific
identification method. There are no realized gains or losses included in the results of the three-month periods ending March 31, 2002 or 2001. Carrying amount and fair values at March 31, 2002 and December 31, 2001 were as follows (in thousands):





March 31, 2002

December 31, 2001Amortized Cost

Fair Value

Amortized Cost

Fair ValueUnaudited

Unaudited

Audited

AuditedSecurities available-for-sale:US Treasury securities

$
5,501

$
5,637

$
5,527

$
5,661Obligations of federal government agencies


24,194


24,617


26,290


26,681Mortgage backed securities


7,074


7,320


7,769


7,876Corporate Bonds


1,217


1,211


721


720TOTAL

$
37,986

$
38,785

$
40,307

$
40,938Securities held-to-maturity:Obligations of states, municipalities and political subdivisions

$
225

$
238

$
225

$
228




6




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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







NOTE 3.    Loans





Loan detail by category as of March 31, 2002 and December 31, 2001 is as follows (in thousands):





March 31


December 312002


2001Unaudited


AuditedCommercial loans

$
103,380


$
105,457Real estate loans


20,553



16,943Installment loans


4,362



4,446Consumer and other loans


4,006



3,726TOTAL LOANS


132,301



130,572Allowance for loan losses


(1,798
)


(1,649
)Deferred loan fees, net of deferred costs


(292
)


(322
)NET LOANS

$
130,211


$
128,601








NOTE 4.    Allowance for Loan Losses





The allowance for loan loss is maintained at levels considered adequate by management to provide for possible loan losses.
The allowance is based on managements assessment of various factors affecting the loan portfolio, including problem loans, business conditions and loss experience, and an overall evaluation of the quality of underlying collateral. Changes in
the allowance for loan loss during the three-month, year-to-date periods ended March 31, 2002 and 2001 were as follows (in thousands):





Three Months Ended

Year-to-date03/31/02

03/31/01

2001

2000Unaudited

Unaudited

Unaudited

UnauditedBalance, beginning of period

$
1,649

$
1,625

$
1,649

$
1,625Provision for loan losses


270


135


270


135Loan Charge-offs


126


232


126


232Loan Recoveries


5


1


5


1Balance, end of period

$
1,798

$
1,529

$
1,798

$
1,529








NOTE 5.    Borrowed Funds





The Companys subsidiary, Inland Northwest Bank, has unsecured operating lines of credit with Key Bank of Washington for $3,000,000, US
Bank for $1,500,000, Zions Bank for $1,500,000 and the Federal Home Loan Bank of Seattle (FHLB) for approximately $9,567,300 (5.0% of bank assets.) There were no balances outstanding on any of the lines on March 31, 2002 or December 31 or March 31,
2001. The bank also has access to an equal (5.0%) amount of long-term funding through the FHLB (that is, an additional $9,567,300) and has taken advances to fund Community Investment Program and other loans




7




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NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY





NOTES TO CONSOLIDATED FINANCIAL STATEMENTS(Continued)







utilizing these funds. Long-term notes payable to the FHLB were $6,268,034 on March 31, 2002; $1,803,974 on
December 31, 2001; and, $1,865,835 on March 31, 2001.








NOTE 6.    Common Stock





On April 17, 2001, the Board of Directors authorized a five-percent stock dividend payable to shareholders of record as of
May 15, 2001. Earnings per share and weighted average and actual shares outstanding for the three-month period ending March 31, 2001 have been restated to reflect the stock dividend.





On March 19, 2002, the Board of Directors authorized a five-percent stock dividend payable to shareholders of record as of May 15, 2002. As payment of the dividend will occur in the
future, no adjustment to earnings per share or weighted average and actual shares outstanding has been made in this report.








NOTE 7.    Construction in Process





In the fourth-quarter, 2001,
Inland Northwest Bank entered into a contract for construction of a new branch facility, located in the Ironwood district of Coeur dAlene, Idaho, to replace its existing leased facility. The bank had previously purchased the land where the new
branch will be located; the land purchase price of $400,000 is included in the December 31, 2001 and March 31, 2002 financial statements under Premises and equipment, net. Construction costs will be approximately $690,000; and, another
$225,000 will be spent on furniture and equipment. Progress payments of approximately $575,000 are included in the March 31, 2002 financial statements under Premises and equipment, net. The new branch is expected to open June 3, 2002.








NOTE 8.    Subsequent Event





At its meeting on April 16, 2002, the Board of Directors of Inland Northwest Bank approved an amendment to the Inland Northwest Bank Non-Qualified Stock Option Plan (the
Plan), reserving and setting aside an additional 125,000 shares of the common stock of Northwest Bancorporation, Inc. for issuance pursuant to options granted under the Plan. The Board of Directors of the Company had approved the set
aside of the shares at its meeting on March 19, 2002, subject to legal review and final action by the Bank board.




8




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Item 2.Managements Discussion and Analysis or Plan of Operation





The Registrant relied upon
Alternative 2 in its registration statement filed on Form 10-SB; there is no information to provide in response to Item 6(a)(3)(i) to Model B of Form 1-A.








Part II    Other Information





Item
6.Exhibits and Reports on Form 8-K





(a)  Exhibit 10.2.61





Randall L. Fewel, Employment Agreement





(b)  Reports on Form 8-K





Not applicable








SIGNATURES





In accordance with Section 12 of the Securities Exchange Act of 1934, the Registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.








NORTHWEST BANCORPORATION, INC.By:

/s/    CHRISTOPHER C. JUREYChristopher C. Jurey Chief Financial Officer





Date:  May 14, 2002




9