##### Table of Contents

---

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



---



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 1/1/04 to 3/31/04.



Commission file number 000-24151



---



NORTHWEST BANCORPORATION, INC.

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



---



|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|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)



---



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
1,993,711 shares issued and outstanding as of March 31, 2004.



Transitional Small Business Disclosure Format:    Yes  x    No ̈



---



---

##### Table of Contents

Table of Contents



|           |  |                                                                                                 |  |     
|---------- |  | ----------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                 |  | Page
|Part I     |  | Financial Information                                                                           |  |     
|           |  |                                                                                                
|Item 1.    |  | Financial Statements                                                                            |  | 3   
|           |  |                                                                                                
|           |  | Consolidated Statements of Condition  March 31, 2004 and December 31, 2003                     |  | 3   
|           |  |                                                                                                
|           |  | Consolidated Statements of Income  Three-months, year-to-date, ended March 31, 2004 and 2003   |  | 4   
|           |  |                                                                                                
|           |  | Consolidated Statements of Cash Flow  Three-months, year-to-date ended March 31, 2004 and 2003 |  | 6   
|           |  |                                                                                                
|           |  | Consolidated Statements of Stockholders Equity as of March 31, 2004 and 2003                   |  | 7   
|           |  |                                                                                                
|           |  | Notes to Consolidated Financial Statements                                                      |  | 9   
|           |  |                                                                                                
|Item 2.    |  | Managements Discussion and Analysis or Plan of Operation                                       |  | 12  
|           |  |                                                                                                
|Item 3.    |  | Controls and Procedures                                                                         |  | 12  
|           |  |                                                                                                
|Part II    |  | Other Information                                                                               |  |     
|           |  |                                                                                                
|Item 6.    |  | Exhibits and Reports on Form 8-K                                                                |  | 12  
|           | 
|Signatures |  | 13                                                                                             



2



---

##### Table of Contents

Part I Financial Information



Item 1. Financial Statements



NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CONDITION



March 31, 2004
and December 31, 2003



($ in thousands)



|                                                                                                                                        |  |              |         |                 |   |        
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | --------------- | - | -------
|                                                                                                                                        |  | March 312004 |         | December 312003
|Assets                                                                                                                                  |  |              |         |                 |   |        
|                                                                                                                                        |  |             
|Cash and due from banks                                                                                                                 |  | $            | 7,067   |                 | $ | 7,466  
|Federal funds sold/FHLB interest bearing balances                                                                                       |  |              | 12,735  |                 |   | 10,118 
|Securities held-to-maturity (Note 2)                                                                                                    |  |              | 2,119   |                 |   | 1,717  
|Securities available-for-sale (Note 2)                                                                                                  |  |              | 32,442  |                 |   | 32,491 
|Federal Home Loan Bank stock, at cost                                                                                                   |  |              | 632     |                 |   | 625    
|Loans, net of allowance for loan losses of $2,175 in 2004 and $2,172 in 2003 (Notes 3 & 4)                                              |  |              | 144,050 |                 |   | 148,259
|Loans held for sale                                                                                                                     |  |              | 1,665   |                 |   | 446    
|Accrued interest receivable                                                                                                             |  |              | 745     |                 |   | 824    
|Premises and equipment, net                                                                                                             |  |              | 3,709   |                 |   | 3,700  
|Foreclosed real estate                                                                                                                  |  |              | 1,806   |                 |   | 1,832  
|Other assets                                                                                                                            |  |              | 2,997   |                 |   | 2,884  
|                                                                                                                                        |  |              |         |                 |   |        
|TOTAL ASSETS                                                                                                                            |  | $            | 209,967 |                 | $ | 210,362
|                                                                                                                                        |  |              |         |                 |   |        
|Liabilities                                                                                                                             |  |              |         |                 |   |        
|                                                                                                                                        |  |             
|Noninterest bearing demand deposits                                                                                                     |  | $            | 35,783  |                 | $ | 34,381 
|Money Market accounts                                                                                                                   |  |              | 46,679  |                 |   | 47,431 
|NOW accounts                                                                                                                            |  |              | 12,538  |                 |   | 13,427 
|Savings accounts                                                                                                                        |  |              | 6,283   |                 |   | 5,988  
|Time Certificates of Deposit, $100,000 and over                                                                                         |  |              | 19,991  |                 |   | 20,743 
|Time Certificates of Deposit, under $100,000                                                                                            |  |              | 44,004  |                 |   | 44,061 
|                                                                                                                                        |  |              |         |                 |   |        
|TOTAL DEPOSITS                                                                                                                          |  |              | 165,278 |                 |   | 166,031
|                                                                                                                                        |  |             
|Securities sold under agreement to repurchase                                                                                           |  |              | 16,976  |                 |   | 17,206 
|Borrowed funds, FHLB (Note 5)                                                                                                           |  |              | 7,508   |                 |   | 7,605  
|Borrowed funds, other (Note 5)                                                                                                          |  |              | 254     |                 |   | 258    
|Accrued interest payable and other liabilities                                                                                          |  |              | 1,063   |                 |   | 759    
|                                                                                                                                        |  |              |         |                 |   |        
|TOTAL OTHER LIABILITIES                                                                                                                 |  |              | 25,801  |                 |   | 25,828 
|                                                                                                                                        |  |              |         |                 |   |        
|TOTAL DEPOSITS & LIABILITIES                                                                                                            |  |              | 191,079 |                 |   | 191,859
|                                                                                                                                        |  |              |         |                 |   |        
|Stockholders Equity                                                                                                                    |  |              |         |                 |   |        
|                                                                                                                                        |  |             
|Common stock, no par, 5,000,000 shares authorized; issued and outstanding 1,993,711 on March 31, 2004 and on December 31, 2003 (Note
6) |  |              | 15,332  |                 |   | 15,332 
|Retained earnings                                                                                                                       |  |              | 3,240   |                 |   | 2,832  
|Accumulated other comprehensive income, net of tax of $163 for 2004 and $175 for 2003                                                   |  |              | 316     |                 |   | 339    
|                                                                                                                                        |  |              |         |                 |   |        
|TOTAL STOCKHOLDERS EQUITY                                                                                                              |  |              | 18,888  |                 |   | 18,503 
|                                                                                                                                        |  |              |         |                 |   |        
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                                                                                              |  | $            | 209,967 |                 | $ | 210,362
|                                                                                                                                        |  |              |         |                 |   |        



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



3



---

##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF INCOME



Three months,
year-to-date, ended March 31, 2004 and 2003



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



|                                                          |  |                       |       |      |   |      
|--------------------------------------------------------- |  | --------------------- | ----- | ---- | - | -----
|                                                          |  | Quarter endedMarch 31
|                                                          |  | 2004                  |       | 2003
|Interest Income                                           |  |                       |       |      |   |      
|Interest and fees on loans                                |  | $                     | 2,354 |      | $ | 2,354
|Interest on securities                                    |  |                       | 368   |      |   | 578  
|Interest on federal funds sold                            |  |                       | 18    |      |   | 24   
|                                                          |  |                       |       |      |   |      
|TOTAL INTEREST INCOME                                     |  |                       | 2,740 |      |   | 2,956
|                                                          |  |                      
|Interest Expense                                          |  |                       |       |      |   |      
|                                                          |  |                      
|Interest on deposits                                      |  |                       | 598   |      |   | 730  
|Interest on securities sold under agreement to repurchase |  |                       | 20    |      |   | 30   
|Interest on borrowed funds                                |  |                       | 86    |      |   | 78   
|                                                          |  |                       |       |      |   |      
|TOTAL INTEREST EXPENSE                                    |  |                       | 704   |      |   | 838  
|                                                          |  |                      
|NET INTEREST INCOME                                       |  |                       | 2,036 |      |   | 2,118
|Provision for loan losses                                 |  |                       | 80    |      |   | 225  
|                                                          |  |                       |       |      |   |      
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES       |  |                       | 1,956 |      |   | 1,893
|                                                          |  |                      
|Noninterest Income                                        |  |                       |       |      |   |      
|                                                          |  |                      
|Fees and service charges                                  |  |                       | 242   |      |   | 244  
|Net gain from sale of loans                               |  |                       | 68    |      |   | 161  
|Gain on sale of securities                                |  |                       | 37    |      |   | 32   
|Other noninterest income                                  |  |                       | 101   |      |   | 127  
|                                                          |  |                       |       |      |   |      
|TOTAL NONINTEREST INCOME                                  |  |                       | 448   |      |   | 564  
|                                                          |  |                      
|Noninterest Expense                                       |  |                       |       |      |   |      
|                                                          |  |                      
|Salaries and employee benefits                            |  |                       | 1,104 |      |   | 1,150
|Occupancy/FF&E expense                                    |  |                       | 195   |      |   | 185  
|Depreciation and amortization expense                     |  |                       | 114   |      |   | 120  
|Other operating expense                                   |  |                       | 374   |      |   | 458  
|                                                          |  |                       |       |      |   |      
|TOTAL NONINTEREST EXPENSE                                 |  |                       | 1,787 |      |   | 1,913
|INCOME BEFORE TAXES                                       |  |                       | 617   |      |   | 544  
|Income tax expense                                        |  |                       | 210   |      |   | 170  
|                                                          |  |                       |       |      |   |      
|NET INCOME                                                |  | $                     | 407   |      | $ | 374  
|                                                          |  |                       |       |      |   |      



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



4



---

##### Table of Contents

|                                                                      |  |                        |           |      |   |          
|--------------------------------------------------------------------- |  | ---------------------- | --------- | ---- | - | ---------
|                                                                      |  | Quarter ended March 31
|                                                                      |  | 2004                   |           | 2003
|Weighted average shares outstanding (Note 6)                          |  |                        | 1,993,711 |      |   | 1,993,566
|Basic earnings per share                                              |  | $                      | 0.20      |      | $ | 0.19     
|                                                                      |  |                        |           |      |   |          
|Weighted average shares outstanding (Note 6)                          |  |                        | 1,993,711 |      |   | 1,993,566
|Effect of dilutive securities                                         |  |                        | 30,416    |      |   | 3,984    
|Weighted average shares outstanding, adjusted for dilutive securities |  |                        | 2,024,127 |      |   | 1,997,550
|Earnings per share assuming full dilution                             |  | $                      | 0.20      |      | $ | 0.19     
|                                                                      |  |                        |           |      |   |          



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



5



---

##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF CASH FLOW



Three months,
year-to-date, ended March 31, 2004 and 2003



($ in thousands)



|                                                                              |  |                           |        |   |      |   |         |  
|----------------------------------------------------------------------------- |  | ------------------------- | ------ | - | ---- | - | ------- | -
|                                                                              |  | Three months,year-to-date |       
|                                                                              |  | 2004                      |        |   | 2003 |  
|Net income                                                                    |  | $                         | 407    |   |      | $ | 374     |  
|Adjustments to reconcile net income to cash provided by operating activities: |  |                           |        |   |      |   |         |  
|Provision for loan losses                                                     |  |                           | 80     |   |      |   | 225     |  
|Depreciation and amortization                                                 |  |                           | 114    |   |      |   | 120     |  
|(Increase)/decrease in assets and liabilities:                                |  |                           |        |   |      |   |         |  
|Accrued interest receivable                                                   |  |                           | 79     |   |      |   | 31      |  
|Net increase in loans held for sale                                           |  |                           | (1,219 | ) |      |   | (2,231  | )
|Other assets                                                                  |  |                           | (101   | ) |      |   | 98      |  
|Accrued interest payable & other liabilities                                  |  |                           | 304    |   |      |   | 83      |  
|                                                                              |  |                           |        |   |      |   |         |  
|NET CASH PROVIDED BY OPERATING ACTIVITIES                                     |  |                           | (335   | ) |      |   | (1,300  | )
|                                                                              |  |                          
|Cash flows from investing activities:                                         |  |                           |        |   |      |   |         |  
|Net increase in federal funds sold/FHLB interest bearing balances             |  |                           | (2,617 | ) |      |   | (13,748 | )
|Net (increase)/decrease in investment securities                              |  |                           | (394   | ) |      |   | 9,815   |  
|Net (increase)/decrease in loans                                              |  |                           | 4,129  |   |      |   | (383    | )
|Purchase of premises and equipment net of gain or loss on asset disposal      |  |                           | (123   | ) |      |   | (16     | )
|Foreclosed real estate activity (net)                                         |  |                           | 26     |   |      |   | (841    | )
|                                                                              |  |                           |        |   |      |   |         |  
|NET CASH PROVIDED/(USED) BY INVESTING ACTIVITIES                              |  |                           | 1,020  |   |      |   | (5,173  | )
|                                                                              |  |                          
|Cash flows from financing activities:                                         |  |                           |        |   |      |   |         |  
|Net increase/(decrease) in deposits                                           |  |                           | (753   | ) |      |   | 5,272   |  
|Net increase/(decrease) in securities sold under agreement to repurchase      |  |                           | (230   | ) |      |   | 397     |  
|Net repayment of borrowed funds                                               |  |                           | (101   | ) |      |   | (695    | )
|Cash received from stock sales (net of stock repurchases)                     |  |                           |       |   |      |   | (1      | )
|                                                                              |  |                           |        |   |      |   |         |  
|NET CASH PROVIDED/(USED) BY FINANCING ACTIVITIES                              |  |                           | (1,084 | ) |      |   | 4,973   |  
|                                                                              |  |                          
|Net decrease in cash and cash equivalents                                     |  |                           | (399   | ) |      |   | (1,500  | )
|Cash and due from banks, beginning of year                                    |  |                           | 7,466  |   |      |   | 10,233  |  
|                                                                              |  |                           |        |   |      |   |         |  
|CASH AND DUE FROM BANKS, END OF QUARTER                                       |  | $                         | 7,067  |   |      | $ | 8,733   |  



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



6



---

##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY



In Actual Dollars



As of March 31, 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 gains 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                           |  |       | 407,140    |   |             |   |            |                  |  |   | 407,140                        |   |  |                     |          |   |  |   | 407,140   |  
|Unrealized losses on available for sale securities       |  |       | (23,181    | ) |             |   |            |                  |  |   |                                |   |  |                     | (23,181  | ) |  |   | (23,181   | )
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Comprehensive income                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  | $ | 383,959   |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Balance, end-of-quarter, March 31, 2004                  |  | $     | 18,887,723 |   |             | $ | 15,332,345 |                  |  | $ | 3,239,456                      |   |  | $                   | 315,922  |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Disclosure of 2004 reclassification amount:              |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |            
|Unrealized holding gain on available for sale securities |  | $     | 1,633      |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Reclassification adjustment for gains realized in income |  |       | (36,756    | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Net unrealized loss                                      |  |       | (35,123    | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Tax effect                                               |  |       | (11,942    | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|Net of tax amount                                        |  | $     | (23,181    | ) |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  
|                                                         |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |          |   |  |   |           |  



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



7



---

##### Table of Contents

NORTHWEST BANCORPORATION, INC. AND SUBSIDIARY



CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY



In Actual Dollars



As of March 31, 2003



|                                                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|-------------------------------------------------------------------- |  | ----- | ---------- | - | ----------- | - | ---------- | ---------------- |  | - | ------------------------------ | - |  | ------------------- | ------- | - |  | - | --------- | -
|                                                                     |  | Total |            |   | CommonStock |   |            | RetainedEarnings |  |   | AccumulatedComprehensiveIncome |   |  | ComprehensiveIncome |        
|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                                       |  |       | 373,752    |   |             |   |            |                  |  |   | 373,752                        |   |  |                     |         |   |  |   | 373,752   |  
|Unrealized gains on available for sale securities                    |  |       | (58,535    | ) |             |   |            |                  |  |   |                                |   |  |                     | (58,535 | ) |  |   | (58,535   | )
|                                                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|Comprehensive income                                                 |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  | $ | 315,217   |  
|Repurchase of common stock                                           |  |       | (1,241     | ) |             |   | (1,241     | )                |  |   |                                |   |  |                     |         |   |  |   |           |  
|Cash dividend paid/purchase partial shares created by stock dividend |  |       | (180,820   | ) |             |   |            |                  |  |   | (180,820                       | ) |  |                     |         |   |  |   |           |  
|                                                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|Balance, end-of-quarter, March 31, 2003                              |  | $     | 17,513,982 |   |             | $ | 14,324,048 |                  |  | $ | 2,464,844                      |   |  | $                   | 725,090 |   |  |   |           |  
|                                                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|Disclosure of 2003 reclassification amount:                          |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|                                                                     |  |       |            |   |            
|Unrealized holding loss on available for sale securities             |  | $     | (56,206    | ) |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|Reclassification adjustment for gains realized in income             |  |       | (32,483    | ) |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|Net unrealized loss                                                  |  |       | (88,689    | ) |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|Tax effect                                                           |  |       | (30,154    | ) |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|                                                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|Net of tax amount                                                    |  | $     | (58,535    | ) |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  
|                                                                     |  |       |            |   |             |   |            |                  |  |   |                                |   |  |                     |         |   |  |   |           |  



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



8



---

##### Table of Contents

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 March 31, 2004 and December 31,
2003, as well as the results of operations and changes in financial position for the three-month, year-to-date periods ended March 31, 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 March 31, 2003 balances have been made to conform to the March 31, 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, year-to-date period ending March
31, 2003 to reflect the effect of a five-percent stock dividend effective for shareholders of record as of May 15, 2003. A similar adjustment has been made to all periods presented to reflect the effect of a five-percent stock dividend effective for
shareholders of record as of May 14, 2004 and payable on June 15, 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. 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 $36,756 are
included in the financial results for the three-month, year-to-date period ending March 31, 2004; and, net gains of $32,483 are included in the financial results for the three-month, year-to-date period ending March 31, 2003. Carrying amounts and
fair values at March 31, 2004 and December 31, 2003 were as follows (in thousands):



|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       
|---------------------------------------------------------------- |  | -------------- | ------ | ----------------- | - | -------------- |  | ---------- | ------ |  | - | ------
|                                                                 |  | March 31, 2004 |        | December 31, 2003
|                                                                 |  | Amortized Cost |        | Fair Value        |   | Amortized Cost |  | Fair Value
|Securities available-for-sale:                                   |  |                |        |                   |   |                |  |            |        |  |   |       
|US Treasury securities                                           |  | $              | 7,136  |                   | $ | 7,159          |  | $          | 7,142  |  | $ | 7,211 
|Obligations of federal government agencies                       |  |                | 19,501 |                   |   | 19,786         |  |            | 19,518 |  |   | 19,761
|Mortgage backed securities                                       |  |                | 2,831  |                   |   | 2,993          |  |            | 3,290  |  |   | 3,473 
|Corporate Bonds                                                  |  |                | 2,495  |                   |   | 2,504          |  |            | 2,028  |  |   | 2,046 
|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       
|TOTAL                                                            |  | $              | 31,963 |                   | $ | 32,442         |  | $          | 31,978 |  | $ | 32,491
|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       
|Securities held-to-maturity:                                     |  |                |        |                   |   |                |  |            |        |  |   |       
|Obligations of states, municipalities and political subdivisions |  | $              | 2,119  |                   | $ | 2,176          |  | $          | 1,717  |  | $ | 1,760 
|                                                                 |  |                |        |                   |   |                |  |            |        |  |   |       



9



---

##### Table of Contents

NOTE 3. Loans



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



|                          |  |              |         |                 |   |        
|------------------------- |  | ------------ | ------- | --------------- | - | -------
|                          |  | March 312004 |         | December 312003
|Commercial loans          |  | $            | 112,444 |                 | $ | 117,055
|Real estate loans         |  |              | 22,989  |                 |   | 22,127 
|Installment loans         |  |              | 4,434   |                 |   | 4,625  
|Consumer and other loans  |  |              | 6,657   |                 |   | 6,983  
|                          |  |              |         |                 |   |        
|TOTAL LOANS               |  | $            | 146,524 |                 | $ | 150,790
|                          |  |              |         |                 |   |        
|Allowance for loan losses |  |              | -2,175  |                 |   | -2,224 
|Net deferred loan fees    |  |              | -299    |                 |   | -307   
|                          |  |              |         |                 |   |        
|NET LOANS                 |  | $            | 144,050 |                 | $ | 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, year-to-date periods ended March 31, 2004
and 2003 were as follows (in thousands):



|                             |  |                                   |       |            |   |      
|---------------------------- |  | --------------------------------- | ----- | ---------- | - | -----
|                             |  | Three months, year to date, ended
|                             |  | 03/31/2004                        |       | 03/31/2003
|Balance, beginning of period |  | $                                 | 2,225 |            | $ | 2,026
|Provision for loan losses    |  |                                   | 80    |            |   | 225  
|Loan Charge-offs             |  |                                   | 132   |            |   | 82   
|Loan Recoveries              |  |                                   | 2     |            |   | 3    
|                             |  |                                   |       |            |   |      
|Balance, end of period       |  | $                                 | 2,175 |            | $ | 2,172



NOTE
5. Borrowed Funds



The Companys subsidiary, Inland
Northwest Bank, has unsecured operating lines of credit with Key Bank of Washington for $6,000,000, 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 $20,976,000 (10.0% of Bank assets.) The Bank did not have any
balances outstanding on its operating lines of credit on either March 31,



10



---

##### Table of Contents

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 $10,488,000 (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 $7,507,803 on March 31, 2004 and $7,604,573 on
December 31, 2003.



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 February 18, 2003, the Board of Directors declared a
five-percent stock dividend payable on June 15, 2003 to shareholders of record as of May 15, 2003. 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 March 31, 2003, as well as earnings per share, the number of weighted average shares outstanding and the effect of dilutive securities for the three-month, year-to-date period ending March 31, 2003, have been
restated to reflect the 2003 stock dividend. Shares reported as outstanding, earnings per share, the number of weighted average shares outstanding and the effect of dilutive securities for all periods presented have been adjusted 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 is payable 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.



At its April 20, 2004 meeting, the Board of Directors of the Company declared
cash and stock dividends as detailed in Note 6. As detailed in Note 6, shares reported as outstanding, earnings per share, the number of weighted average shares outstanding and the effect of dilutive securities for all periods presented have been
adjusted to reflect the stock dividend payable.



11



---

##### Table of Contents

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 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 February 5, 2004. On February 5, 2004 the Company issued a
press release announcing financial information for the fourth-quarter of 2003.



Report filed March 29, 2004. On March 29, 2004 the Company issued a press release announcing that SunTrust Mortgage, Inc. had awarded Inland Northwest Banks mortgage department the Portland Award.



12



---

##### Table of Contents

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 and Chief Executive Officer




Date: May 7, 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: May 7, 2004



13