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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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Form 10-QSB



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(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 4/1/04 to 6/30/04.



Commission file number 000-24151



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NORTHWEST BANCORPORATION, INC.

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



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Washington                                                     |  | 91-1574174                          
|(State or other jurisdiction of incorporation or organization) |  | (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 ̈



APPLICABLE ONLY TO CORPORATE ISSUERS



The Registrant has a single class of common stock, of which there are
1,998,108 shares issued and outstanding as of June 30, 2004.



Transitional Small Business Disclosure Format:    Yes  x    No ̈



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##### Table of Contents

Table of Contents



|               |  |         |  |                                                                                                             |  |     
|-------------- |  | ------- |  | ----------------------------------------------------------------------------------------------------------- |  | ----
|               |  |         |  |                                                                                                             |  | Page
|               |  |         | 
|Part I         |  |         |  | Financial Information                                                                                       |  | 3   
|               |  |         | 
|               |  | Item 1. |  | Financial Statements                                                                                        |  | 3   
|               |  |         | 
|               |  |         |  | Consolidated Statements of Condition  June 30, 2004 and December 31, 2003                                  |  | 3   
|               |  |         | 
|               |  |         |  | Consolidated Statements of Income  Three-months and six-months, year-to-date, ended June 30, 2004 and 2003 |  | 4   
|               |  |         | 
|               |  |         |  | Consolidated Statements of Cash Flow  Six-months, year-to-date ended June 30, 2004 and 2003                |  | 5   
|               |  |         | 
|               |  |         |  | Consolidated Statements of Stockholders Equity as of June 30, 2004 and 2003                                |  | 6   
|               |  |         | 
|.              |  |         |  | Notes to Consolidated Financial Statements                                                                  |  | 8   
|               |  |         | 
|               |  | Item 2. |  | Managements Discussion and Analysis or Plan of Operation                                                   |  | 11  
|               |  |         | 
|               |  | Item 3. |  | Controls and Procedures                                                                                     |  | 11  
|               |  |         | 
|Part II        |  |         |  | Other Information                                                                                           |  | 11  
|               |  |         | 
|               |  | Item 2. |  | Changes in Securities                                                                                       |  | 11  
|               |  |         | 
|               |  | Item 4. |  | Submission of Matters to a Vote of Security Holders                                                         |  | 11  
|               |  |         | 
|               |  | Item 6. |  | Exhibits and Reports on Form 8-K                                                                            |  | 12  
|               |  |        
|Signatures     |  |         |  | 13                                                                                                         
|               | 
|Certifications |  |        



2



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##### Table of Contents

Part I Financial Information



Item 1. Financial Statements



NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CONDITION

June 30, 2004 and December 31, 2003

($ in
thousands)



|                                                                                                                                                 |  |              |         |   |                  |   |        
|------------------------------------------------------------------------------------------------------------------------------------------------ |  | ------------ | ------- | - | ---------------- | - | -------
|                                                                                                                                                 |  | June 30 2004 |         |   | December 31 2003
|Assets                                                                                                                                           |  |              |         |   |                  |   |        
|Cash and due from banks                                                                                                                          |  | $            | 9,292   |   |                  | $ | 7,466  
|Federal funds sold/FHLB interest bearing balances                                                                                                |  |              | 11,831  |   |                  |   | 10,118 
|Securities held-to-maturity (Note 2)                                                                                                             |  |              | 2,368   |   |                  |   | 1,717  
|Securities available-for-sale (Note 2)                                                                                                           |  |              | 44,223  |   |                  |   | 32,492 
|Federal Home Loan Bank stock, at cost                                                                                                            |  |              | 638     |   |                  |   | 625    
|                                                                                                                                                 |  |             
|Loans, net of allowance for loan losses of $2,169 in 2004 and $2,224 in 2003 (Notes 3 & 4)                                                       |  |              | 144,718 |   |                  |   | 148,259
|Loans held for sale                                                                                                                              |  |              | 1,516   |   |                  |   | 446    
|Accrued interest receivable                                                                                                                      |  |              | 840     |   |                  |   | 825    
|Premises and equipment, net                                                                                                                      |  |              | 3,785   |   |                  |   | 3,700  
|Foreclosed real estate                                                                                                                           |  |              | 1,236   |   |                  |   | 1,832  
|Other assets                                                                                                                                     |  |              | 3,064   |   |                  |   | 2,882  
|                                                                                                                                                 |  |              |         |   |                  |   |        
|TOTAL ASSETS                                                                                                                                     |  | $            | 223,511 |   |                  | $ | 210,362
|                                                                                                                                                 |  |              |         |   |                  |   |        
|Liabilities                                                                                                                                      |  |              |         |   |                  |   |        
|                                                                                                                                                 |  |             
|Noninterest bearing demand deposits                                                                                                              |  | $            | 41,943  |   |                  | $ | 34,552 
|Money Market accounts                                                                                                                            |  |              | 54,796  |   |                  |   | 47,260 
|NOW accounts                                                                                                                                     |  |              | 13,501  |   |                  |   | 13,427 
|Savings accounts                                                                                                                                 |  |              | 7,447   |   |                  |   | 5,988  
|Time Certificates of Deposit, $100,000 and over                                                                                                  |  |              | 19,412  |   |                  |   | 20,933 
|Time Certificates of Deposit, under $100,000                                                                                                     |  |              | 42,836  |   |                  |   | 43,871 
|                                                                                                                                                 |  |              |         |   |                  |   |        
|TOTAL DEPOSITS                                                                                                                                   |  |              | 179,935 |   |                  |   | 166,031
|                                                                                                                                                 |  |             
|Securities sold under agreement to repurchase                                                                                                    |  |              | 16,182  |   |                  |   | 17,206 
|Borrowed funds (Note 5)                                                                                                                          |  |              | 7,410   |   |                  |   | 7,604  
|Borrowed funds, other (Note 5)                                                                                                                   |  |              | 251     |   |                  |   | 258    
|Accrued interest payable and other liabilities                                                                                                   |  |              | 989     |   |                  |   | 759    
|                                                                                                                                                 |  |              |         |   |                  |   |        
|TOTAL OTHER LIABILITIES                                                                                                                          |  |              | 24,832  |   |                  |   | 25,827 
|                                                                                                                                                 |  |              |         |   |                  |   |        
|TOTAL DEPOSITS & LIABILITIES                                                                                                                     |  |              | 204,767 |   |                  |   | 191,858
|                                                                                                                                                 |  |              |         |   |                  |   |        
|Stockholders Equity                                                                                                                             |  |              |         |   |                  |   |        
|                                                                                                                                                 |  |             
|Common stock, no par, 5,000,000 shares authorized; issued and outstanding 1,998,108 on June 30, 2004 and 1,993,711 on December 31, 2003 (Note
6) |  |              | 16,894  |   |                  |   | 15,332 
|Retained earnings                                                                                                                                |  |              | 1,942   |   |                  |   | 2,833  
|Accumulated other comprehensive income, net of tax of $-31,416 for 2004 and $174,760 for 2003                                                    |  |              | (92     | ) |                  |   | 339    
|                                                                                                                                                 |  |              |         |   |                  |   |        
|TOTAL STOCKHOLDERS EQUITY                                                                                                                       |  |              | 18,744  |   |                  |   | 18,504 
|                                                                                                                                                 |  |              |         |   |                  |   |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                       |  | $            | 223,511 |   |                  | $ | 210,362
|                                                                                                                                                 |  |              |         |   |                  |   |        



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



3



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##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF INCOME

Three months and six months, year-to-date, ended June 30, 2004 and 2003

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



|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|--------------------------------------------------------------------- |  | --------------------- | --------- | ------------------------ | - | --------- |  | ---- | --------- |  | - | ---------
|                                                                      |  | Quarter ended June 30 |           | Six-months, year-to-date
|                                                                      |  | 2004                  |           | 2003                     |   | 2004      |  | 2003
|Interest Income                                                       |  |                       |           |                          |   |           |  |      |           |  |   |          
|                                                                      |  |                       |           |                         
|Interest and fees on loans                                            |  | $                     | 2,394     |                          | $ | 2,470     |  | $    | 4,748     |  | $ | 4,824    
|Interest on securities                                                |  |                       | 407       |                          |   | 446       |  |      | 775       |  |   | 1,024    
|Interest on federal funds sold                                        |  |                       | 30        |                          |   | 32        |  |      | 48        |  |   | 56       
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|TOTAL INTEREST INCOME                                                 |  |                       | 2,831     |                          |   | 2,948     |  |      | 5,571     |  |   | 5,904    
|                                                                      |  |                       |           |                         
|Interest Expense                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|                                                                      |  |                       |           |                         
|Interest on deposits                                                  |  |                       | 584       |                          |   | 694       |  |      | 1,182     |  |   | 1,424    
|Interest on securities sold under agreement to repurchase             |  |                       | 23        |                          |   | 22        |  |      | 43        |  |   | 52       
|Interest on borrowed funds                                            |  |                       | 85        |                          |   | 78        |  |      | 171       |  |   | 155      
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|TOTAL INTEREST EXPENSE                                                |  |                       | 692       |                          |   | 794       |  |      | 1,396     |  |   | 1,631    
|                                                                      |  |                       |           |                         
|NET INTEREST INCOME                                                   |  |                       | 2,139     |                          |   | 2,154     |  |      | 4,175     |  |   | 4,273    
|Provision for loan losses                                             |  |                       | 40        |                          |   | 188       |  |      | 120       |  |   | 413      
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES                   |  |                       | 2,099     |                          |   | 1,966     |  |      | 4,055     |  |   | 3,860    
|                                                                      |  |                       |           |                         
|Noninterest Income                                                    |  |                       |           |                          |   |           |  |      |           |  |   |          
|                                                                      |  |                       |           |                         
|Fees and service charges                                              |  |                       | 258       |                          |   | 271       |  |      | 500       |  |   | 515      
|Net gain from sale of loans                                           |  |                       | 158       |                          |   | 239       |  |      | 226       |  |   | 399      
|Gain on sale of securities                                            |  |                       | 0         |                          |   | 0         |  |      | 37        |  |   | 32       
|Other noninterest income                                              |  |                       | 104       |                          |   | 115       |  |      | 205       |  |   | 242      
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|TOTAL NONINTEREST INCOME                                              |  |                       | 520       |                          |   | 625       |  |      | 968       |  |   | 1,188    
|                                                                      |  |                       |           |                         
|Noninterest Expense                                                   |  |                       |           |                          |   |           |  |      |           |  |   |          
|                                                                      |  |                       |           |                         
|Salaries and employee benefits                                        |  |                       | 1,138     |                          |   | 1,198     |  |      | 2,242     |  |   | 2,348    
|Occupancy/FF&E expense                                                |  |                       | 186       |                          |   | 185       |  |      | 381       |  |   | 369      
|Depreciation and amortization expense                                 |  |                       | 109       |                          |   | 118       |  |      | 223       |  |   | 238      
|Other operating expense                                               |  |                       | 520       |                          |   | 466       |  |      | 894       |  |   | 925      
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|TOTAL NONINTEREST EXPENSE                                             |  |                       | 1,953     |                          |   | 1,967     |  |      | 3,740     |  |   | 3,880    
|                                                                      |  |                       |           |                         
|INCOME BEFORE TAXES                                                   |  |                       | 666       |                          |   | 624       |  |      | 1,283     |  |   | 1,168    
|Income tax expense                                                    |  |                       | 230       |                          |   | 221       |  |      | 440       |  |   | 391      
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|NET INCOME                                                            |  | $                     | 436       |                          | $ | 403       |  | $    | 843       |  | $ | 777      
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|                                                                      |  |                      
|                                                                      |  | Quarter ended June 30 |           | Six-months, year-to-date
|                                                                      |  | 2004                  |           | 2003                     |   | 2004      |  | 2003
|Weighted average shares outstanding (Note 6)                          |  |                       | 1,996,479 |                          |   | 1,995,511 |  |      | 1,994,978 |  |   | 1,994,544
|Basic earnings per share                                              |  | $                     | 0.22      |                          | $ | 0.20      |  | $    | 0.42      |  | $ | 0.39     
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          
|Weighted average shares outstanding (Note 6)                          |  |                       | 1,996,479 |                          |   | 1,995,511 |  |      | 1,994,978 |  |   | 1,994,544
|Effect of dilutive securities                                         |  |                       | 34,724    |                          |   | 15,073    |  |      | 31,466    |  |   | 11,138   
|                                                                      |  |                       |           |                         
|Weighted average shares outstanding, adjusted for dilutive securities |  |                       | 2,031,203 |                          |   | 2,010,584 |  |      | 2,026,444 |  |   | 2,005,682
|Earnings per share assuming full dilution                             |  | $                     | 0.21      |                          | $ | 0.20      |  | $    | 0.42      |  | $ | 0.39     
|                                                                      |  |                       |           |                          |   |           |  |      |           |  |   |          



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



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##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOW

Six months, year-to-date, ended June 30, 2004 and 2003

($ in thousands)



|                                                                              |  |                          |         |   |      |   |        |  
|----------------------------------------------------------------------------- |  | ------------------------ | ------- | - | ---- | - | ------ | -
|                                                                              |  | Six months, year-to-date |        
|                                                                              |  | 2004                     |         |   | 2003 |  
|Net income                                                                    |  | $                        | 843     |   |      | $ | 777    |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                          |         |   |      |   |        |  
|Provision for loan losses                                                     |  |                          | 120     |   |      |   | 413    |  
|Depreciation and amortization                                                 |  |                          | 223     |   |      |   | 238    |  
|(Increase)/decrease in assets and liabilities:                                |  |                          |         |   |      |   |        |  
|Accrued interest receivable                                                   |  |                          | (15     | ) |      |   | 108    |  
|Net (increase)/decrease in loans held for sale                                |  |                          | (1,070  | ) |      |   | (1,868 | )
|Other assets                                                                  |  |                          | 41      |   |      |   | (597   | )
|Accrued interest payable & other liabilities                                  |  |                          | 230     |   |      |   | (1     | )
|                                                                              |  |                          |         |   |      |   |        |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                     |  |                          | 372     |   |      |   | (930   | )
|                                                                              |  |                         
|Cash flows from investing activities:                                         |  |                          |         |   |      |   |        |  
|Net (increase)/decrease in federal funds sold/FHLB interest bearing balances  |  |                          | (1,713  | ) |      |   | (8,664 | )
|Net (increase)/decrease in investment securities                              |  |                          | (13,049 | ) |      |   | 15,908 |  
|Net (increase)/decrease in loans                                              |  |                          | 3,421   |   |      |   | (6,776 | )
|Purchase of premises and equipment net of gain or loss on asset disposal      |  |                          | (308    | ) |      |   | (33    | )
|Foreclosed real estate activity (net)                                         |  |                          | 596     |   |      |   | (365   | )
|                                                                              |  |                          |         |   |      |   |        |  
|NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES                              |  |                          | (11,053 | ) |      |   | 70     |  
|                                                                              |  |                         
|Cash flows from financing activities:                                         |  |                          |         |   |      |   |        |  
|Net increase/(decrease) in deposits                                           |  |                          | 13,904  |   |      |   | 3,216  |  
|Net increase/(decrease) in securities sold under agreement to repurchase      |  |                          | (1,024  | ) |      |   | (2,036 | )
|Net proceeds/(payments) from borrowed funds                                   |  |                          | (201    | ) |      |   | (790   | )
|Cash received from stock sales (net of stock repurchases)                     |  |                          | 60      |   |      |   | 30     |  
|Cash dividend paid/purchase partial shares created by stock dividend          |  |                          | (232    | ) |      |   | (184   | )
|                                                                              |  |                          |         |   |      |   |        |  
|NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES                              |  |                          | 12,507  |   |      |   | 236    |  
|                                                                              |  |                         
|Net increase/(decrease) in cash and cash equivalents                          |  |                          | 1,826   |   |      |   | (624   | )
|Cash and due from banks, beginning of year                                    |  | $                        | 7,466   |   |      |   | 10,233 |  
|                                                                              |  |                          |         |   |      |   |        |  
|CASH AND DUE FROM BANKS, END OF QUARTER                                       |  | $                        | 9,292   |   |      | $ | 9,609  |  



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



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##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

In Actual Dollars

As of June 30, 2004



|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|-------------------------------------------------------- |  | ----- | ---------- | - | ----------- | - | ---------- | ---------------- |  | - | ------------------------------ | - |  | ------------------- | -------- | - |  | - | --------- | -
|                                                         |  | Total |            |   | CommonStock |   |            | RetainedEarnings |  |   | AccumulatedComprehensiveIncome |   |  | ComprehensiveIncome |         
|Balance, December 31, 2002                               |  | $     | 17,380,826 |   |             | $ | 14,325,289 |                  |  | $ | 2,271,912                      |   |  | $                   | 783,625  |   |  |   |           |  
|Net income 2003                                          |  |       | 1,746,275  |   |             |   |            |                  |  |   | 1,746,275                      |   |  |                     |          |   |  | $ | 1,746,275 |  
|Unrealized losses on available for sale securities       |  |       | (444,522   | ) |             |   |            |                  |  |   |                                |   |  |                     | (444,522 | ) |  |   | (444,522  | )
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Comprehensive income                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   | 1,301,753 |  
|Proceeds from issuance of common stock                   |  |       | 31,147     |   |             |   | 31,147     |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Repurchase of common stock                               |  |       | (26,776    | ) |             |   | (26,776    | )                |  |   |                                |   |  |                     |          |   |  |   |           |  
|Fractional shares, issued in cash                        |  |       | (183,186   | ) |             |   |            |                  |  |   | (183,186                       | ) |  |                     |          |   |  |   |           |  
|Transfers                                                |  |       |           |   |             |   | 1,002,685  |                  |  |   | (1,002,685                     | ) |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Balance December 31, 2003                                |  |       | 18,503,764 |   |             |   | 15,332,345 |                  |  |   | 2,832,316                      |   |  |                     | 339,103  |   |  |   |           |  
|Net income, 2004, year-to-date                           |  |       | 843,279    |   |             |   |            |                  |  |   | 843,279                        |   |  |                     |          |   |  |   | 843,279   |  
|Unrealized losses on available for sale securities       |  |       | (431,400   | ) |             |   |            |                  |  |   |                                |   |  |                     | (431,400 | ) |  |   | (431,400  | )
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Comprehensive income                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  | $ | 411,879   |  
|Proceeds from issuance of common stock                   |  |       | 60,383     |   |             |   | 60,383     |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Repurchase of common stock                               |  |       |           |   |             |   |           |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Cash dividend paid                                       |  |       | (231,755   | ) |             |   |            |                  |  |   | (231,755                       | ) |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Transfers                                                |  |       |           |   |             |   | 1,501,714  |                  |  |   | (1,501,714                     | ) |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Balance, end-of-quarter, June 30, 2004                   |  | $     | 18,744,271 |   |             | $ | 16,894,442 |                  |  | $ | 1,942,126                      |   |  | $                   | (92,297  | ) |  |   |           |  
|Disclosure of 2004 reclassification amount:              |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Unrealized holding loss on available for sale securities |  | $     | (616,869   | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Reclassification adjustment for gains realized in income |  | $     | (36,767    | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Net unrealized loss                                      |  | $     | (653,636   | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Tax effect                                               |  |       | (222,236   | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Net of tax amount                                        |  | $     | (431,400   | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  



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



6



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##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

In Actual Dollars

As of June 30, 2003



|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|-------------------------------------------------------------------- |  | ----- | ---------- | - | ------------ | - | ---------- | ----------------- |  | - | -------------------------------- | - |  | -------------------- | -------- | - |  | - | --------- | -
|                                                                     |  | Total |            |   | Common Stock |   |            | Retained Earnings |  |   | Accumulated Comprehensive Income |   |  | Comprehensive Income |         
|Balance, December 31, 2001                                           |  | $     | 15,578,705 |   |              | $ | 13,495,186 |                   |  | $ | 1,666,961                        |   |  | $                    | 416,558  |   |  |   |           |  
|Net income 2002                                                      |  |       | 1,418,702  |   |              |   |            |                   |  |   | 1,418,702                        |   |  |                      |          |   |  | $ | 1,418,702 |  
|Unrealized gains on available for sale securities                    |  |       | 367,067    |   |              |   |            |                   |  |   |                                  |   |  |                      | 367,067  |   |  |   | 367,067   |  
|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Comprehensive income                                                 |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   | 1,785,769 |  
|Proceeds from issuance of common stock                               |  |       | 27,802     |   |              |   | 27,802     |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Repurchase of common stock                                           |  |       | (9,161     | ) |              |   | (9,161     | )                 |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Fractional shares, issued in cash                                    |  |       | (2,289     | ) |              |   |            |                   |  |   | (2,289                           | ) |  |                      |          |   |  |   |           |  
|Transfers                                                            |  |       |           |   |              |   | 811,462    |                   |  |   | (811,462                         | ) |  |                      |          |   |  |   |           |  
|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Balance December 31, 2002                                            |  |       | 17,380,826 |   |              |   | 14,325,289 |                   |  |   | 2,271,912                        |   |  |                      | 783,625  |   |  |   |           |  
|                                                                     |  |       |            |   |             
|Net income, 2003, year-to-date                                       |  |       | 776,777    |   |              |   |            |                   |  |   | 776,777                          |   |  |                      |          |   |  |   | 776,777   |  
|Unrealized losses on available for sale securities                   |  |       | (125,719   | ) |              |   |            |                   |  |   |                                  |   |  |                      | (125,719 | ) |  |   | (125,719  | )
|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Comprehensive income                                                 |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  | $ | 651,058   |  
|Proceeds from issuance of common stock                               |  |       | 31,148     |   |              |   | 31,148     |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Repurchase of common stock                                           |  |       | (1,241     | ) |              |   | (1,241     | )                 |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Cash dividend paid/purchase partial shares created by stock dividend |  |       | (183,620   | ) |              |   |            |                   |  |   | (183,620                         | ) |  |                      |          |   |  |   |           |  
|Transfers                                                            |  |       |           |   |              |   | 1,002,252  |                   |  |   | (1,002,252                       | ) |  |                      |          |   |  |   |           |  
|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Balance, end-of-quarter, June 30, 2003                               |  | $     | 17,878,171 |   |              | $ | 15,357,448 |                   |  | $ | 1,862,817                        |   |  | $                    | 657,906  |   |  |   |           |  
|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Disclosure of 2003 reclassification amount:                          |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Unrealized holding loss on available for sale securities             |  | $     | (158,000   | ) |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Reclassification adjustment for gains realized in income             |  | $     | (32,483    | ) |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Net unrealized loss                                                  |  | $     | (190,483   | ) |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Tax effect                                                           |  |       | (64,764    | ) |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|Net of tax amount                                                    |  | $     | (125,719   | ) |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  
|                                                                     |  |       |            |   |              |   |            |                   |  |   |                                  |   |  |                      |          |   |  |   |           |  



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



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Notes to Consolidated Financial Statements



NOTE 1. Management Statement



In the opinion of the Company, the accompanying audited and unaudited Consolidated Financial Statements reflect all adjustments necessary for a fair presentation of the financial position of the Company as of June 30, 2004 and December 31,
2003, as well as the results of operations and changes in financial position for the three-month and six-month, year-to-date periods ended June 30, 2004 and 2003. 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, 2003.



Certain reclassifications of June 30, 2003 balances have been made to conform to the June 30, 2004 presentation; there was no impact on net income or
stockholders equity. The number of weighted average shares outstanding, the effect of dilutive securities on earnings per share and the calculation of earnings per share have been restated for the three-month and six-month, year-to-date
periods ending June 30, 2003 to reflect the effect of a five-percent stock dividend effective for shareholders of record as of May 14, 2004.



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. Realized 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. Pre-tax, realized net gains of $36,767 are included in the financial results for the six-month, year-to-date period ending June 30, 2004; and, net gains of $32,483 are included in the
financial results for the six-month, year-to-date period ending June 30, 2003. Carrying amounts and fair values at June 30, 2004 and December 31, 2003 were as follows (in thousands):



|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       
|---------------------------------------------------------------- |  | -------------- | ------ | ----------------- | - | -------------- |  | ---------- | ------ |  | - | ------
|                                                                 |  | June 30, 2004  |        | December 31, 2003
|                                                                 |  | Amortized Cost |        | Fair Value        |   | Amortized Cost |  | Fair Value
|Securities available-for-sale:                                   |  |                |        |                   |   |                |  |            |        |  |   |       
|US Treasury securities                                           |  | $              | 7,628  |                   | $ | 7,622          |  | $          | 7,142  |  | $ | 7,212 
|Obligations of federal government agencies                       |  |                | 31,764 |                   |   | 31,546         |  |            | 19,518 |  |   | 19,761
|Mortgage backed securities                                       |  |                | 2,481  |                   |   | 2,600          |  |            | 3,290  |  |   | 3,473 
|Corporate Bonds                                                  |  |                | 2,490  |                   |   | 2,455          |  |            | 2,028  |  |   | 2,046 
|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       
|TOTAL                                                            |  | $              | 44,363 |                   | $ | 44,223         |  | $          | 31,978 |  | $ | 32,492
|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       
|Securities held-to-maturity:                                     |  |                |        |                   |   |                |  |            |        |  |   |       
|Obligations of states, municipalities and political subdivisions |  | $              | 2,368  |                   | $ | 2,377          |  | $          | 1,717  |  | $ | 1,760 
|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       



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NOTE 3. Loans



Loan detail by category as of June 30, 2004 and December 31, 2003 is as follows (in thousands):



|                          |  |              |         |   |                  |   |         |  
|------------------------- |  | ------------ | ------- | - | ---------------- | - | ------- | -
|                          |  | June 30 2004 |         |   | December 31 2003 |  
|Commercial loans          |  | $            | 111,512 |   |                  | $ | 117,055 |  
|Real estate loans         |  |              | 24,197  |   |                  |   | 22,127  |  
|Installment loans         |  |              | 4,406   |   |                  |   | 4,625   |  
|Consumer and other loans  |  |              | 7,070   |   |                  |   | 6,983   |  
|                          |  |              |         |   |                  |   |         |  
|TOTAL LOANS               |  | $            | 147,185 |   |                  | $ | 150,790 |  
|                          |  |              |         |   |                  |   |         |  
|Allowance for loan losses |  |              | (2,169  | ) |                  |   | (2,224  | )
|Net deferred loan fees    |  |              | (298    | ) |                  |   | (307    | )
|                          |  |              |         |   |                  |   |         |  
|NET LOANS                 |  | $            | 144,718 |   |                  | $ | 148,259 |  
|                          |  |              |         |   |                  |   |         |  



NOTE
4. Allowance for Loan Losses



The allowance for loan losses is
maintained at a level considered adequate by management to provide for reasonably anticipated credit losses in the Banks loan portfolio. Future credit losses are estimated through an analysis of various factors affecting the performance of the
loan portfolio, including: individual review of problem loans, including an evaluation of the quality of underlying collateral; current business conditions and the Banks historical loan loss experience; the term, in years, that the average
loan is expected to remain on the Banks books; and other factors that management determines to be relevant at the time of the analysis. Changes in the allowance for loan losses during the three-month and six-month, year-to-date periods ended
June 30, 2004 and 2003 were as follows (in thousands):



|                             |  |                    |       |                                 |   |       |  |      |       |  |   |      
|---------------------------- |  | ------------------ | ----- | ------------------------------- | - | ----- |  | ---- | ----- |  | - | -----
|                             |  | Three months ended |       | Six months, year-to-date, ended
|                             |  | 06/30/2004         |       | 06/30/2003                      |   | 2004  |  | 2003
|Balance, beginning of period |  | $                  | 2,175 |                                 | $ | 2,172 |  | $    | 2,224 |  | $ | 2,026
|Provision for loan losses    |  |                    | 40    |                                 |   | 188   |  |      | 120   |  |   | 413  
|Loan Charge-offs             |  |                    | 48    |                                 |   | 91    |  |      | 180   |  |   | 173  
|Loan Recoveries              |  |                    | 2     |                                 |   | 22    |  |      | 5     |  |   | 25   
|                             |  |                    |       |                                 |   |       |  |      |       |  |   |      
|Balance, end of period       |  | $                  | 2,169 |                                 | $ | 2,291 |  | $    | 2,169 |  | $ | 2,291



NOTE
5. Borrowed Funds



The Companys subsidiary, Inland
Northwest Bank, has unsecured operating lines of credit with Key Bank of Washington for $9,000,000, US Bank for $1,500,000 and Zions Bank for $1,500,000. In addition, Key Bank provides the Bank with two $100,000 credit facilities to support issuance
of letters of credit and to facilitate foreign currency transactions. The Bank also has a secured line of credit with the Federal Home Loan Bank of Seattle (FHLB) for approximately $22,346,000 (10.0% of Bank assets.) The Bank did not have any
balances outstanding on its operating lines of credit on either June 30, 2004 or December 31, 2003. In addition to overnight funds, the Bank has access to long-term funding through the FHLB in the approximate amount of $11,173,000 (5.0% of Bank
assets) and has taken advances to fund Community Investment Program and other loans utilizing these funds. Long-term notes payable to the FHLB were $7,410,504 on June 30, 2004 and $7,604,573 on December 31, 2003.



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Other borrowed funds consist of a note assumed by the Company related to the foreclosure of real estate.
The note is collateralized by a first lien on foreclosed assets with a carrying value of $396,000. Monthly principal and interest payments total $3,100, with interest at 9%. The note matures on October 31, 2004.



NOTE 6. Common Stock



On April 20, 2004, the Board of Directors declared a five-percent stock
dividend payable on June 15, 2004 to shareholders of record as of May 14, 2004. Shares reported as outstanding on June 30, 2003, as well as earnings per share, the number of weighted average shares outstanding and the effect of dilutive securities
for the three-month and six-month, year-to-date periods ending June 30, 2003, have been restated to reflect the 2004 stock dividend.



On February 18, 2003, the Board of Directors declared a ten-cent ($0.10) per share cash dividend, which was paid on April 4, 2003 to shareholders of
record as of March 21, 2003. On April 20, 2004, the Board of Directors declared a twelve-cent ($0.12) per share cash dividend which was paid on June 15, 2004 to shareholders of record as of May 14, 2004.



NOTE 7. Subsequent Events



In April 2004, Inland Northwest Bank accepted a bid for the construction of
a new branch office facility, to be located in Post Falls, Idaho. As discussed in the Companys most recent Annual Report on Form 10-KSB, as of December 31, 2003, the Bank had purchased property in Post Falls in 2003 in anticipation of
relocating its existing Post Falls branch from a retail grocery store to a stand-alone facility. Land acquisition and land-improvement costs included in the 2003 Annual Report were approximately $374,500. Total costs for construction of the 3,300
square foot branch facility, including furniture and equipment, are estimated to be $825,500, for a total investment in the branch of $1,200,000.



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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.



| | Item | 3. Controls and Procedures
| | ---- | --------------------------



The officers signing this report: are responsible for maintaining internal controls; have designed such internal controls to ensure that material
information relating to the Company and its consolidated subsidiary is made known to them by others within those entities, particularly for the period(s) for and in which this report was being prepared; have evaluated the effectiveness of the
Companys internal controls as of the end of the period covered by this report; and, believe that, as of the date of this report and for the periods presented, existing internal controls are effective and adequate based on their evaluation.
There have been no significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies
and material weaknesses.



Part II Other Information



| | Item | 2. Changes in Securities
| | ---- | ------------------------



A five-percent stock dividend was declared by the directors on April 20, 2004, payable to stockholders of record as of May 14, 2004; 94,925 shares were
issued and delivered on June 15, 2004. During the second quarter of the 2004 fiscal year, the Registrant issued 3,700 shares of common stock to non-employee directors pursuant to the Registrants compensation plan for non-employee directors;
this plan provides for the issuance of 300 shares annually to each non-employee director, with an additional 100 shares to the chairperson, provided completion of twelve months of service prior to the annual shareholder meeting. Also during the
second quarter of 2004, pursuant to the Companys Non-Qualified Stock Option Plan, employees purchased 711 shares of common stock with an average exercise price per share of $8.43 and an average market value, at the date of exercise, of $14.58.



The Registrant believes that the issuance of these shares of
common stock was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933.



| | Item | 4. Submission of Matters to a Vote of Security Holders
| | ---- | ------------------------------------------------------



The annual meeting of shareholders of the Registrant was held on Monday, May 17, 2004. In addition to the election of Directors described in the proxy
material furnished to the shareholders pursuant to Regulation 14A, the shareholders also ratified the selection of Moss Adams, LLP, 601 West Riverside Avenue, Suite 1800, Spokane, Washington 99201-0663, as independent public accountants for the
Company for the fiscal year ending December 31, 2004. 1,706,083 shares were voted in favor of the ratification with 15,198 shares being voted against or withheld, including abstentions and broker non-votes.



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| | Item | 6. Exhibits and Reports on Form 8-K
| | ---- | -----------------------------------



| | (a) | Exhibit 31.1
| | --- | ------------

Certification of Randall L. Fewel,
President and Chief Executive Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



Exhibit 31.2

Certification of Christopher
C. Jurey, Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.



Exhibit 32.1

Certification of Randall L.
Fewel, President and Chief Executive Officer, pursuant to 18 U.S.C. 1350



Exhibit 32.2

Certification of Christopher C. Jurey, Chief Financial Officer, pursuant to 18 U.S.C. 1350



| | (b) | Reports on Form 8-K
| | --- | -------------------



The Company filed the following reports on Form 8-K during the period covered by this Report:



Report filed April 14, 2004. On April 14, 2004 the Company issued a press
release announcing financial information for the first-quarter of 2004.



Report filed April 26, 2004. On April 26, 2004 the Company issued a press release announcing the declaration of a five-percent (5%) stock dividend and a twelve-cent ($0.12) per share cash dividend, as described in
Note 6. to this filing.



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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/ Randall L. FewelRandall L. Fewel, President andChief Executive Officer




Date: August 5, 2004



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: August 5, 2004



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