Bank of the Northwest Announces Mailing of Proxy Materials For Proposed Merger with Pacific Northwest Bancorp.

Business Editors

PORTLAND, Ore.--(BUSINESS WIRE)--Sept. 25, 2002

Bank of the Northwest (Nasdaq:BKNW) announced that it commenced the mailing of proxy statement/prospectuses and proxies to its shareholders today in connection with the Special Meeting of Shareholders of Bank of the Northwest to be held on October 29, 2002.

The Special Meeting has been called to request shareholder approval of the Agreement and Plan of Merger among Bank of the Northwest, Pacific Northwest Bancorp, and Pacific Northwest Bank. The Special Meeting will be held on Tuesday, October 29, 2002 at 4:00 p.m., local time, at The Hilton Hotel, 921 S.W. Sixth Avenue, Portland, Oregon. Bank of the Northwest shareholders of record as of the close of business on September 19, 2002 will be entitled to vote at the meeting.

Additionally, the exchange agent, Mellon Investors, will mail election forms to shareholders under separate cover next week. The election forms, which will be due no later than October 25, 2002, will allow shareholders to indicate their preferences for receiving cash or shares of Pacific Northwest Bancorp common stock in the merger, within the limits explained in the materials accompanying the forms.

Investors and security holders are urged to read the proxy statement/prospectus for the Special Meeting carefully. The proxy statement/prospectus contains important information about Pacific Northwest Bancorp, Bank of the Northwest, the proposed merger, and related matters. Bank of the Northwest, its directors, executive officers, and certain employees will be soliciting proxies from Bank of the Northwest shareholders in favor of approval of the merger agreement. Descriptions of the interests, direct or indirect, that Bank of the Northwest's directors and executive officers have in the merger are included in the proxy statement/prospectus.

Free copies of the Registration Statement on Form S-4 filed by Pacific Northwest Bancorp with the SEC, which contains the proxy statement/prospectus, are publicly available through the Web site maintained by the SEC at http://www.sec.gov. Free copies of the proxy statement/prospectus are also available from Bank of the Northwest by calling 503/417-8800 or writing Bank of the Northwest, 600 Pioneer Tower, 888 S.W. Fifth Avenue, Portland, OR 97204.