**Exhibit3.2**

**BYLAWSOF**

**SKAGITSTATE BANCORP, INC.**

January 17, 2006

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**TABLEOF CONTENTS**
| ARTICLE 1 Meetings of Shareholders             | 1                                          |
|------------------------------------------------|--------------------------------------------|
|                                           |                                       |
| Section 1.1.                                   | Shareholder Meetings                       | 1 |
| Section 1.2.                                   | Annual Meeting                             | 1 |
| Section 1.3.                                   | Special Meetings                           | 1 |
| Section 1.4.                                   | Notice                                     | 1 |
| Section 1.5.                                   | Quorum                                     | 1 |
| Section 1.6.                                   | Adjournment                                | 2 |
| Section 1.7.                                   | Chairperson of Meeting                     | 2 |
| Section 1.8.                                   | Secretary of Meeting                       | 2 |
| Section 1.9.                                   | Conduct of Meetings                        | 2 |
| Section 1.10.                                  | Consent to Action                          | 2 |
| Section 1.11.                                  | Voting                                     | 2 |
| Section 1.12.                                  | Proxies                                    | 2 |
| Section 1.13.                                  | Shareholder Advisor                        | 2 |
| Section 1.14.                                  | Recording of Proceedings                   | 2 |
| Section 1.15.                                  | Record Date                                | 2 |
| Section 1.16.                                  | List of Shareholders                       | 3 |
|                                           |                                       |   |
| ARTICLE 2 Directors                            | 3                                          |
|                                           |                                       |
| Section 2.1.                                   | Authority and Size of Board                | 3 |
| Section 2.2.                                   | Qualification of Directors                 | 3 |
| Section 2.3.                                   | Vacancies                                  | 3 |
| Section 2.4.                                   | Annual Meetings                            | 3 |
| Section 2.5.                                   | Place of Meetings                          | 3 |
| Section 2.6.                                   | Regular Meetings                           | 4 |
| Section 2.7.                                   | Special Meetings                           | 4 |
| Section 2.8.                                   | Notices                                    | 4 |
| Section 2.9.                                   | Quorum                                     | 4 |
| Section 2.10.                                  | Attendance by Conference Telecommunication | 4 |
| Section 2.11.                                  | Consent to Action                          | 4 |
| Section 2.12.                                  | Compensation                               | 4 |
| Section 2.13.                                  | Manifestation of Dissent                   | 5 |
|                                           |                                       |   |
| ARTICLE 3 Committees of the Board of Directors | 5                                          |
|                                           |                                       |
| ARTICLE 4 Officers and Employees               | 6                                          |
|                                           |                                       |
| Section 4.1.                                   | Officers                                   | 6 |
| Section 4.2.                                   | Election                                   | 6 |
| Section 4.3.                                   | Removal and Vacancy                        | 6 |
| Section 4.4.                                   | Compensation                               | 6 |
| Section 4.5.                                   | Exercise of Rights as Stockholders         | 6 |
| Section 4.6.                                   | Duties of Chairperson of the Board         | 7 |
| Section 4.7.                                   | Duties of the Chief Executive Officer(s)   | 7 |
| Section 4.8.                                   | Duties of the President                    | 7 |
| Section 4.9.                                   | Duties of Executive Vice President         | 7 |

 

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| Section 4.10.                                | Duties of Vice President            | 7      |
|----------------------------------------------|-------------------------------------|--------|
| Section 4.11.                                | Duties of Secretary                 | 7      |
| Section 4.12.                                | Duties of Treasurer                 | 8      |
| Section 4.13.                                | Other Officers                      | 8      |
| Section 4.14.                                | Clerks and Agents                   | 8      |
|                                         |                                |   |
| ARTICLE 5 Security Bonds                     | 8                                   |
|                                         |                                |
| Section 5.1.                                 | Extent of Coverage                  | 8      |
|                                         |                                |   |
| ARTICLE 6 Shares and Certificates for Shares | 8                                   |
|                                         |                                |
| Section 6.1.                                 | Consideration                       | 8      |
| Section 6.2.                                 | Stock Certificates                  | 8      |
| Section 6.3.                                 | Lost Certificates                   | 9      |
| Section 6.4.                                 | Transfer of Shares                  | 9      |
| Section 6.5.                                 | Holder of Record                    | 9      |
| Section 6.6.                                 | Issuance of Shares                  | 9      |
| Section 6.7.                                 | Subscriptions                       | 9      |
| Section 6.8.                                 | Payment of Subscriptions            | 9      |
| Section 6.9.                                 | Default in Payment of Subscriptions | 10     |
|                                         |                                |   |
| ARTICLE 7 Seal                               | 10                                  |
|                                         |                                |
| Section 7.1.                                 | Corporate Seal                      | 10     |
|                                         |                                |   |
| ARTICLE 8 Miscellaneous Provisions           | 10                                  |
|                                         |                                |
| ARTICLE 9 Bylaws                             | 10                                  |
|                                         |                                |
| Section 9.1.                                 | Inspection                          | 10     |
| Section 9.2.                                 | Amendments                          | 10     |

 

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**BYLAWSOF**

**SKAGITSTATE BANCORP, INC.**

# **ARTICLE 1**

# **Meetingsof Shareholders**

## SECTION  1.1.                    Shareholder Meetings.  Shareholder meetings shall be held at theprincipal office of the corporation, or at such other location within anycounty in which the corporation has a branch or office, as shall be determinedby the Board of Directors and stated in the Notice of Meeting.

## SECTION  1.2.                    Annual Meeting.  The regular annual meeting of theshareholders for the election of directors and for the transaction of suchother business as may properly be brought before the meeting shall be held onsuch day and at such time following the close of the corporation’s fiscal yearas shall be determined each year by the Board of Directors, but not later thanMay 15 of each year.  If such annualmeeting is omitted by oversight or otherwise during such period, a subsequentannual meeting may nonetheless be held, and any business transacted orelections held at such meeting shall be as valid as if the annual meeting hadbeen held during the period provided above.

## SECTION  1.3.                    Special Meetings.  Special meetings of the shareholders may becalled at any time by the Chairperson, the Chief Executive Officer(s), or amajority of the Board of Directors. Shareholders may hold a meeting at any time and place without notice orcall, upon appropriate waivers signed by all shareholders who are entitled tovote at a shareholders’ meeting.

## SECTION  1.4.                    Notice.  Written notice stating the place, day, andhour of the meeting, and in case of a special meeting the purpose or purposesfor which the meeting is called, shall be delivered not less than ten (10) daysnor more than sixty (60) days before the date of the meeting, either personallyor by mail to each shareholder of record entitled to vote at such meeting.  If mailed, such notice shall be deemed to bedelivered when deposited in the United States mail, postage prepaid, addressedto the shareholder at the shareholder’s address as it appears on the stocktransfer books of the corporation.  Eachshareholder shall be responsible for providing the Secretary with theshareholder’s current mailing address to which notices of meetings and allother corporate notices may be sent.  Ashareholder may waive any notice required for any meeting by executing awritten waiver of notice either before or after said meeting and such waivershall be equivalent to the giving of such notice.  The attendance of a shareholder at ashareholders’ meeting, in person or by proxy, shall constitute a waiver ofnotice of the meeting.

## SECTION  1.5.                    Quorum.  A majority of the shares entitled to vote,represented in person or by proxy, shall constitute a quorum at a meeting ofshareholders.  When a quorum is presentat any meeting, the affirmative vote of the majority of the shares representedat

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## the meeting and entitled to vote on the subject matter shall be the actof the shareholders, unless otherwise provided by law.

## SECTION  1.6.                    Adjournment.  A majority of the shares represented at ameeting, even if less than a quorum, may adjourn the meeting from time to timewithout further notice.  At suchadjourned meeting at which a quorum shall be present or represented, anybusiness may be transacted which might have been transacted at the meeting asoriginally stated in the notice of meeting. The shareholders present at a duly organized meeting may continue totransact business until adjournment, notwithstanding the withdrawal of enoughshareholders to leave less than a quorum.

## SECTION  1.7.                    Chairperson of Meeting.  The Chairperson, or in the Chairperson’sabsence, the Chief Executive Officer(s), shall preside at all meetings of theshareholders unless the Board of Directors shall otherwise determine.  The Board of Directors may appoint anyshareholder to act as chairperson of the meeting.

## SECTION  1.8.                    Secretary of Meeting.  The Secretary shall act as a secretary at allmeetings of the shareholders, and in the Secretary’s absence, the presidingofficer may appoint any person to act as secretary.

## SECTION  1.9.                    Conduct of Meetings.  Shareholder meetings shall be conducted in anorderly and fair manner, but the presiding officer shall not be bound by anytechnical rules of parliamentary procedure.

## SECTION  1.10.              Consent to Action.  Any action which may be taken at a meeting ofthe shareholders, may be taken without a meeting if a consent in writing,setting forth the actions so taken shall be signed by all of theshareholders.  Such consent shall havethe same force and effect as a unanimous vote at a duly convened meeting.

## SECTION  1.11.              Voting.  Each outstanding share shall be entitled toone vote on each matter submitted to a vote at a meeting of shareholders.

## SECTION  1.12.              Proxies.  At all meetings of shareholders, ashareholder may vote by proxy executed in writing by the shareholder or by theshareholder’s duly authorized attorney-in-fact. Such proxy shall be filed with the Secretary of the corporation beforeor at the time of the meeting.  No proxyshall be valid after eleven (11) months from the date of its execution, unlessotherwise provided in the proxy.

## SECTION  1.13.              Shareholder Advisor.  A shareholder or holder of a valid proxy maybe accompanied at any shareholders’ meeting by one personal advisor, but nosuch advisor may address the meeting without the consent of the presidingofficer.

## SECTION  1.14.              Recording of Proceedings.  The proceedings of a shareholders’ meeting maynot be mechanically or electronically recorded other than by the Secretary oracting secretary without the express approval of all individuals in attendanceat the meeting.

## SECTION  1.15.              Record Date.  For the purpose of determining shareholdersentitled to notice of or to vote at any meeting of shareholders or anyadjournment thereof, or entitled to receive payment of any dividend, or inorder to make a determination of shareholders for

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## any other proper purpose, the Board of Directors may fix in advance adate as the record date for any such determination of shareholders.  Such date in any case shall not be more thanseventy (70) days and, in case of a meeting of shareholders, not less than ten(10) days prior to the date on which the particular action requiring suchdetermination of shareholders is to be taken. If no record date is fixed by the Board of Directors, the date on whichnotice of the meeting is mailed or the date on which the resolution of theBoard declaring such dividend is adopted, as the case may be, shall be therecord date for such determination of shareholders.  When a determination of shareholders entitledto vote at any meeting of shareholders has been made as provided in thissection, such determination shall apply to any adjournment thereof.

## SECTION  1.16.              List of Shareholders.  The Secretary of the corporation shall make acomplete record of the shareholders entitled to vote at a meeting ofshareholders, or any adjournment thereof, arranged in alphabetical order, withthe address of and the number of shares held by each as shown on thecorporation’s stock transfer books on the record date.  Such record shall be kept on file at theregistered office of the corporation for a period of ten (10) days prior to themeeting of shareholders.  Such recordshall be produced and kept open at the time and place of the shareholders’meeting and shall be subject to the inspection of any shareholder during themeeting for any proper purpose.

# **ARTICLE 2**

# **Directors**

## SECTION  2.1.                    Authority and Size of Board.  All corporate powers shall be exercised by,or under authority of, and the business and affairs of the corporation shall bemanaged under the direction of the Board of Directors (hereinafter sometimesreferred to as the “Board”).  The numberof directors may be increased or decreased from time to time within the limitsstated in the Articles of Incorporation. The exact number of directors within such minimum and maximum limitsshall be fixed and determined by resolution of the Board of Directors.

## SECTION  2.2.                    Qualification of Directors.  Any person of lawful age who will not attainthe age of 72 before the meeting of shareholders at which elected (or had notattained that age by the date of the last annual meeting of shareholders, ifappointed) may become a director of this corporation.

## SECTION  2.3.                    Vacancies.  Any vacancy occurring in the Board ofDirectors, unless caused by the vote of the shareholders, may be filled by theaffirmative vote of a majority of the remaining directors though less than aquorum of the Board of Directors.  Adirector elected to fill a vacancy shall be elected for the unexpired term ofthe director’s predecessor in office.

## SECTION  2.4.                    Annual Meetings.  Immediately after the annual meeting ofshareholders, the directors shall meet to elect officers and transact any otherbusiness.

## SECTION  2.5.                    Place of Meetings.  Meetings of the Board of Directors, regularor special, may be held within or without this state.

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## SECTION  2.6.                    Regular Meetings.  Regular meetings, at least quarterly, of theBoard of Directors shall be held without notice at such time and at such placeas the Board may by vote from time to time designate.

## SECTION  2.7.                    Special Meetings.  Special meetings of the Board of Directorsmay be called by the Chairperson, the Chief Executive Officer(s), or by anythree (3) directors.

## SECTION  2.8.                    Notices.  Notices of special meetings of the Board ofDirectors stating the date, time, place, and in general terms the purpose orpurposes thereof shall be delivered to each director, by mailing written noticeat least five (5) days before the meeting or by telephoning, telegraphing orpersonally advising each director at least three (3) days before the meeting.  A special meeting shall be held not more thantwenty (20) days after the delivery of said notice.  If mailed, such notice shall be deemed to bedelivered when deposited in the United States mail, postage prepaid, addressedto the director at the address provided to the Secretary.  An entry of the service of notice, given inthe manner above provided, shall be made in the minutes of the proceedings ofthe Board of Directors, and such entry, if read and approved at the subsequentmeeting of the Board, shall be conclusive on the question of service.  Attendance of a director at a special meetingshall constitute a waiver of notice of such meeting, except where a directorattends a meeting for the express purpose of objecting to the transaction ofany business because the meeting was not lawfully called or convened.  A director may waive any notice required forany meeting by executing a written waiver of notice either before or after saidmeeting, and such waiver shall be equivalent to the giving of such notice.

## SECTION  2.9.                    Quorum.  A majority of the directors shall constitutea quorum for the transaction of business. Unless otherwise provided in these Bylaws, the act of the majority ofthe directors present at a meeting at which a quorum is present shall be the actof the Board of Directors.  A majority ofthose present at the time and place of any regular or special meeting, althoughless than a quorum, may adjourn from time to time, without further notice,until a quorum shall attend.  When aquorum shall attend, any business may be transacted which might have beentransacted at the meeting had the same been held on the date stated in thenotice of meeting.

## SECTION  2.10.              Attendance by ConferenceTelecommunication.  Members of theBoard of Directors may participate in a meeting of such Board by means of aconference telephone or similar communications equipment, by means of which allpersons participating in the meeting can hear each other at the same time, andparticipation by such means shall constitute presence in person at a meeting.

## SECTION  2.11.              Consent to Action.  Any action which may be taken at a meeting ofthe Board of Directors, or at a meeting of any committee of the Board, may betaken without a meeting if a consent in writing, setting forth the action sotaken shall be signed by all of the directors or all the members of thecommittee.  Such consent shall have thesame force and effect as a unanimous vote at a duly convened meeting.

## SECTION  2.12.              Compensation.  The directors shall receive such reasonablecompensation for their attendance at meetings of the Board and for theirservices as members of any committee appointed by the Board as may beprescribed by the Board of Directors, and

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## may be reimbursed by the corporation for ordinary and reasonableexpenses incurred in the performance of their duties.

## SECTION  2.13.              Manifestation of Dissent.  A director of the corporation who is presentat a meeting of the Board at which action on any corporate matter is takenshall be presumed to have assented to the action taken unless such director’sdissent shall be entered in the minutes of the meeting or unless such directorshall file a written dissent to such action with the person acting as thesecretary of the meeting before the adjournment thereof or shall forward suchdissent by registered or certified mail to the Secretary of the corporationimmediately after the adjournment of the meeting.  Such right to dissent shall not apply to adirector who voted in favor of such action.

# **ARTICLE 3**

# **Committeesof the Board of Directors**

## SECTION  3.1.                    Executive Committee.  By resolution adopted by a majority of theentire Board of Directors, the Board may designate from among its members anExecutive Committee of not less than three (3) nor more than five (5) members,and may designate one (1) of such members as chairperson.  Any member of the Board may serve as analternate member of the Executive Committee in the absence of a regular memberor members.  The Executive Committeeshall have and may exercise all of the authority of the Board of Directorsduring the intervals between meetings of the Board, except that the ExecutiveCommittee shall not have the authority to: (1) authorize or approve a distribution, except according to a generalformula or method prescribed by the Board of Directors; (2) approve or proposeto shareholders action required by applicable law to be approved byshareholders; (3) fill vacancies on the Board of Directors or any committeethereof; (4) amend the Articles of Incorporation of the corporation; (5) amend,adopt or repeal the Bylaws of the corporation; (6) approve a plan of merger,consolidation, or exchange of shares not requiring shareholder approval; or (7)authorize or approve the issuance or sale or contract for sale of shares, ordetermine the designation and relative rights, preferences, and limitations ofa class or series of shares, except as authorized by the Board of Directorswithin limits specifically prescribed by the Board.

## SECTION  3.2.                    Audit Committee.  By resolution adopted by a majority of theentire Board of Directors, the Board may appoint from among its members anAudit Committee of two (2) or more directors, none of whom shall be activeofficers of the corporation, and may designate one (1) of such members aschairperson of the Committee.  The Boardmay also designate one or more directors as alternates to serve as a member ormembers of the Committee in the absence of a regular member or members.  The Committee shall establish and maintaincontinuing communications between the Board and the corporation’s independentauditors, internal auditors, and members of financial management with respectto the audit of the corporation’s accounts and financial affairs and the auditof the corporation’s controlled subsidiaries. The Committee shall have such other powers and perform such other dutiesas may from time to time be prescribed by the Board of Directors.

## SECTION  3.3.                    OtherCommittees.  By resolution adopted bya majority of the entire Board of Directors, the Board may designate from amongits members such other committees as it may deem necessary, each of which shallconsist of not less than two (2) directors and have such powers and duties asmay from time to time be prescribed by the Board.

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## SECTION  3.4.                    Rules of Procedure.  The majority of the members of any committeemay fix its rules of procedure.  Allactions by any committee shall be reported in written minutes available at anyreasonable time to any Board member. Such actions shall be subject to revision, alteration and approval bythe Board of Directors; provided, that no rights or acts of third parties whohave relied in good faith on the authority granted herein shall be affected bysuch revision or alteration.

# **ARTICLE 4**

# **Officersand Employees**

## SECTION  4.1.                    Officers.  The Board of Directors may elect from its ownnumber a Chairperson of the Board (Chairperson).  It may also elect a Chief ExecutiveOfficer(s), a President, an Executive Vice President, and a Secretary, and aTreasurer and may elect one or more Vice Presidents and such additionalofficers as in the opinion of the Board the business of the corporationrequires.  The Board may also elect orappoint, or in its discretion delegate to the Chief Executive Officer(s) theauthority to appoint, from time to time such other or additional officers asare desirable for the conduct of the business of the corporation.

## SECTION  4.2.                    Election.  None of the officers, except the Chairperson,need be a director.  The officers shallbe elected annually by the Board of Directors at the meeting of the Boardfollowing the annual meeting of shareholders, and they shall hold office at thepleasure of the Board of Directors.

## SECTION  4.3.                    Removal and Vacancy.  Any officer, agent, or employee of thecorporation may be removed by the Board of Directors at any time with orwithout cause.  Such removal, however,shall be without prejudice to the contract rights, if any, of the persons soremoved.  Election or appointment of anofficer or agent or employee shall not of itself create contract rights.  If any corporate office becomes vacant byreason of death, resignation, removal or otherwise, the Board of Directors orthe executive officer possessing delegated authority to appoint such anofficer, shall have power to fill such vacancies.  In case of the absence or disability of anyofficer, the Board of Directors, or the. Chief Executive Officer(s), may delegate the powers or duties of anysuch officer to another officer for the time being.

## SECTION  4.4.                    Compensation.  The Board of Directors shall establish thetypes and amounts of compensation for the Chief Executive Officer(s).  Compensation for all other officers,employees, or agents of the corporation shall be established by or at thedirection of the Chief Executive Officer(s).

## SECTION  4.5.                    Exercise ofRights as Stockholders.  Unlessotherwise ordered by the Board of Directors, the Chief Executive Officer(s), orthe Chief Executive Officer’s designee acting by written designation, shallhave full power and authority on behalf of the corporation to attend and tovote at any meeting of shareholders of any corporation in which thiscorporation may hold stock, other than in a fiduciary capacity, and mayexercise on behalf of this corporation any and all of the rights and powersincident to the ownership of such stock at any such meeting, and shall havepower and authority to execute and deliver proxies and consents on behalf ofthis corporation in connection

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## with the exercise by this corporation of the rights and powers incidentto the ownership of such stock.  TheBoard of Directors, from time to time, may confer like powers upon any otherperson or persons.

## SECTION  4.6.                    Duties of Chairperson of theBoard.  The Chairperson of the Boardshall preside over all stockholders and directors meetings and shall performsuch other duties as may from time to time be assigned by the Board ofDirectors; provided, however, that the Chairperson of the Board shall not, byreason of such office, be considered an executive officer of the corporation orbe assigned executive responsibilities or participate in the operationalmanagement of the corporation.

## SECTION  4.7.                    Duties of the Chief ExecutiveOfficer(s).  The Chief ExecutiveOfficer(s) shall have general management of the business of the corporation.  The Chief Executive Officer(s) shall see thatall orders and resolutions of the Board of Directors and the ExecutiveCommittee are carried into effect, and shall have general supervision over theproperty, business, and affairs of the corporation and its severalofficers.  The Chief Executive Officer(s)shall have the power and shall perform the duties as are regularly andcustomarily performed by the chief executive officer of a corporation and maydelegate such duties as appropriate to a Vice President or other officers ofthe corporation.  The Chief ExecutiveOfficer(s) may appoint officers, agents or employees other than those appointed‘by the Board of Directors, and shall perform such other duties as may beprescribed from time to time by the Board of Directors or by the Bylaws.

## SECTION  4.8.                    Duties of the President.  The President, who also may be the ChiefExecutive Officer of the corporation, shall have such authority and shallexercise such other duties as shall, from time to time, be delegated to him bythe Board of Directors or, as appropriate, the Chief Executive Officer(s).

## SECTION  4.9.                    Duties of Executive VicePresident.  The Executive VicePresident, who also may be the Chief Executive Officer of the corporation,shall have such powers and perform such duties as may be assigned by the Boardof Directors or, as appropriate, the Chief Executive Officer(s).

## SECTION  4.10.              Duties of Vice President.  A Vice President designated by the Board ofDirectors shall perform all the duties of the President and/or the ExecutiveVice President in case of absence or disability of the President and/or theExecutive Vice President.  The VicePresidents shall have such other powers and shall perform such other duties asmay be assigned to them by the Chief Executive Officer(s).

## SECTION  4.11.              Duties ofSecretary.  The Secretary shall,subject to the direction of the Chief Executive Officer(s), keep the minutes ofall meetings of the shareholders and of the Board of Directors, and to theextent ordered by the Board of Directors, or the Chief Executive Officer(s),the minutes of all meetings of all committees. The Secretary shall cause notice to be given of the meetings of theshareholders, of the Board of Directors, and of any committee appointed by theBoard.  The Secretary shall have custodyof the corporate seal and general charge of the records, documents, and papersof the corporation not pertaining to the performance of the duties vested inother officers, which shall at all reasonable times be open to the examinationof any director.  Without

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## limiting the generality of the foregoing, the Secretary shall havecharge (directly or through such transfer agents or registrars as the Board ofDirectors may appoint) of the issuance, transfer, and registration of certificatesfor shares of the corporation and of the records pertaining thereto.  Said records shall be kept in such manner asto show at any time the number of shares of the corporation issued andoutstanding, the manner in which and the time when such shares were paid for,the names and addresses of the holders of record thereof, the numbers andclasses of shares held by each, and the time when each became such holder ofrecord.  The Secretary shall perform suchother duties as may be assigned by the Chief Executive Officer(s).

## SECTION  4.12.              Duties of Treasurer.  Except as otherwise set forth herein, theTreasurer shall, subject to the direction of the Chief Executive Officer(s),have general custody of all the property, funds and securities of the corporationand have general supervision of the collection and disbursement of funds of thecorporation.  The Treasurer shall providefor the keeping of proper records of all transactions of the corporation.  The Treasurer shall perform such other dutiesas may be assigned by the Chief Executive Officer(s).

## SECTION  4.13.              Other Officers.  Such other officers as shall be appointed bythe Board of Directors, or the Chief Executive Officer(s), acting pursuant todelegated authority of the Board, shall exercise such powers and perform suchduties as pertain to their several offices, or as may be conferred upon, orassigned to, them by the Chief Executive Officer(s), or their designee.

## SECTION  4.14.              Clerks and Agents.  The Chief Executive Officer(s), or any otherofficer of the corporation authorized by the Chief Executive Officer(s), mayappoint such custodians, bookkeepers and other clerks, agents, and employees asthe Chief Executive Officer(s) shall deem advisable for the prompt and orderlytransaction of the business of the corporation and shall define their duties,fix the salaries to be paid to them and dismiss them.

# **ARTICLE 5**

# **SecurityBonds**

## SECTION  5.1.                    Extent of Coverage.  Each of the officers and employees shall,when directed by the Board of Directors, furnish a fidelity bond to thecorporation in such amount and under such conditions as the Board shalldirect.  The Board may direct that ablanket bond in such sum as it shall determine shall be purchased by thecorporation to cover all officers and employees.

# **ARTICLE 6**

# **Sharesand Certificates for Shares**

## SECTION  6.1.                    Consideration.  Certificates for shares of the corporationshall be issued only when fully paid for.

## SECTION  6.2.                    StockCertificates.  The certificates shallbe in such form as designated by the Board of Directors, shall be numbered inthe order in which they shall be issued, and

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## shall be signed by either the Chief Executive Officer, the President,or the Executive Vice President, and by the Secretary or AssistantSecretary.  The signatures may be facsimilesif the certificate is countersigned by a transfer agent or registered by aregistrar other than the corporation or an employee of the corporation.  If a corporate seal is maintained, it or afacsimile thereof may be affixed to the certificate.  Each certificate shall state upon its facethat the corporation is organized under the laws of the State of Washington,the name of the person to whom it is issued, the number and class of shareswhich the certificate represents, and the par value of each share representedby the certificate or a statement that the shares are without par value.

## SECTION  6.3.                    Lost Certificates.  No new certificate shall be issued until theformer certificate for the shares represented thereby shall have beensurrendered and cancelled, except in the case of lost or destroyedcertificates, and in that case only after the receipt of a bond or othersecurity by the corporation, satisfactory to the Board of Directors,indemnifying the corporation and all persons against loss in consequence of theissuance of such new certificate.

## SECTION  6.4.                    Transfer of Shares.  Shares of the corporation may be transferredby endorsement by the signature of the owner, the owner’s agent, attorney orlegal representative, and the delivery of the certificate; but no transfershall be valid except between the parties thereto, until the same shall havebeen entered upon the books of the corporation, so as to show the names of theparties, by and to whom transferred, the numbers and designation of the sharesand the date of transfer.

## SECTION  6.5.                    Holder of Record.  The person registered on the books of thecorporation as the owner of the issued shares shall be recognized by thecorporation as the person exclusively entitled to have and to exercise the rightsand privileges incident to the ownership of such shares.  Notwithstanding the preceding sentence, theBoard of Directors may adopt by resolution a procedure whereby a shareholdermay certify in writing to the corporation that all or a portion of the sharesregistered in the name of such shareholder are held for the account of aspecified person or persons.  Uponreceipt by the corporation of a certification complying with such an adoptedprocedure, the person specified in the certification shall be deemed, for thepurpose or purposes set forth in the certification, to be the holders of recordof the number of shares specified in place of the shareholder making thecertification.

## SECTION  6.6.                    Issuance of Shares.  Any shares authorized but not issued shall beissued, sold, or otherwise transferred by this corporation only uponauthorization of the Board of Directors.

## SECTION  6.7.                    Subscriptions.  A subscription for shares of this corporationshall be in writing and upon such terms as may be approved by the’ Board ofDirectors.

## SECTION  6.8.                    Payment ofSubscriptions.  A subscription forshares shall be paid in accordance with the terms set forth in the subscriptionor related subscription agreement, if any. If the subscription or subscription agreement does not require paymenton or before a stated date or at a fixed period after a stated date, thenpayment shall be made in such manner and at such times as may be determined bythe Board of Directors and expressed by it in a written call for payment; providedthat the call shall be uniform as to

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## all shares of the same class or series and that the call shall bemailed to each subscriber at the subscriber’s last address known to thecorporation at least thirty (30) days in advance of the date upon which paymentor the first installment, if installment payments are called for, is due.

## SECTION  6.9.                    Default in Payment ofSubscriptions.  If a payment requiredby a subscription, a subscription agreement, or a call of the Board ofDirectors is not paid when due, then the corporation may make written demandfor payment upon the defaulting subscriber by personal service or by mailing acopy of the demand to the subscriber at the subscriber’s last post officeaddress known to the corporation.  If thepayment is not made within twenty (20) days of the serving or mailing of thedemand for payment, the corporation may terminate the subscription, forfeit thesubscriber’s rights thereunder, retain as liquidated damages any sumspreviously paid on the subscription, and hold and dispose of the shares asthough never subject to the subscription. In lieu of forfeiture, the corporation may proceed to collect the amountdue in the same manner as any debt due the corporation.

# **ARTICLE 7**

# **Seal**

## SECTION  7.1.                    Corporate Seal.  In the exercise of its discretion the Boardof Directors may adopt and maintain a suitable seal for the corporation.

# **ARTICLE 8**

# **MiscellaneousProvisions**

## SECTION  8.1.                    Fiscal Year.  The fiscal year of the corporation shall bethe calendar year.

## SECTION  8.2.                    Records.  The Articles of Incorporation, the Bylaws, andthe proceedings of all meetings of the shareholders, the Board of Directors andstanding committees of the Board shall be recorded in appropriate minute booksprovided for that purpose.  The minutesof each meeting shall be signed by the Secretary or other person appointed toact as Secretary.

# **ARTICLE 9**

# **Bylaws**

## SECTION  9.1.                    Inspection.  A copy of the Bylaws, with all amendmentsthereto, shall at all times be kept in a convenient place at the principaloffice of the corporation, and shall be open for inspection of all shareholdersduring normal business hours.

## SECTION  9.2.                    Amendments.  The Bylaws may be amended, altered orrepealed, at any regular or special meeting of the Board of Directors, by avote of the majority of the whole Board of Directors, provided that a writtenstatement of the proposed action shall have been personally delivered or mailedto all directors at least five (5) days prior to any such meeting.

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## I HEREBY CERTIFY that the foregoing are theBylaws of Skagit State Bancorp, Inc. as in effect on this 17th day of  January, 2006.

 
|   | /s/ Donna Weaver |   |
|--------|------------------|--------|
|   | Secretary        |

 

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