Exhibit 99.1


                  KEY TECHNOLOGY COMPLETES NEW CREDIT FACILITY
                          AND TERMINATES EXCHANGE OFFER

WALLA WALLA, WA -- Key Technology, Inc. (NASDAQ:KTEC) announced today the
completion of an $18.0 million credit facility with Banner Bank (NASDAQ:BNR)
that will provide the Company with greater financial flexibility and long-term
financing. The new financing replaces the Company's credit facility with U.S.
Bancorp, the majority of which would have expired on November 30, 2002. The
Company is also in final negotiations with ABN AMRO Bank N.V. for an additional
credit facility of approximately $3.2 million for its European subsidiary, which
it expects to close by the end of August.

The new credit accommodation from Banner Bank consists of a term loan, a
revolving credit facility and a standby line of credit. The Company intends to
use the credit facility for general corporate purposes, including but not
limited to financing working capital needs. The new facility also provides the
Company with the ability to fund all potential redemption obligations related to
outstanding redeemable securities.

"We are pleased with the completion of this new credit facility and the support
from Banner Bank, indicating their confidence in the continued improvement of
our capital structure," commented Thomas C. Madsen, Chairman and CEO of Key
Technology.

As of the close of business on August 9, 2002, approximately 628,927, or 55.29%,
of the shares of Series B Convertible Preferred Stock had been submitted to the
Company for redemption. The redemption price for all of the shares submitted
will be paid by the Company on August 12, 2002. The Company anticipates that
future redemption claims will be paid in the normal course as they are
presented.




                                       1




The Company also announced that it will terminate, effective today, its
previously announced offer to exchange its outstanding Series B Convertible
Preferred Stock for shares of newly authorized Series D Convertible Preferred
Stock. All Series B shares which have been tendered will be promptly returned to
the shareholders.

About Key Technology
Key Technology, Inc., headquartered in Walla Walla, Washington, is a worldwide
leader in the design and manufacture of process automation systems for the food
processing and industrial markets. The Company's products integrate
electro-optical inspection and sorting, specialized conveying and product
preparation equipment, which allow processors to improve quality, increase yield
and reduce cost. Key has manufacturing facilities in Washington, Oregon and the
Netherlands, and worldwide sales and service coverage.

About Banner Bank
Banner Corporation is the parent of Banner Bank, a Washington state chartered
commercial bank. It operates a total of 39 branch offices and six loan offices
in 18 counties in Washington, Oregon and Idaho. Banner serves the Pacific
Northwest region with a full range of deposit services and business, commercial
real estate, construction, residential, agricultural and consumer loans.

About ABN AMRO
Netherlands-based ABN AMRO is one of the world's leading banks with total assets
of EUR 623 billion and a presence in more than 3,500 locations in 60 countries
and territories. ABN AMRO operates through three autonomous strategic business
units: wholesale clients; consumer and commercial clients; and private clients
and asset management.

This release contains forward-looking statements within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995.
These statements are based on management's current expectations or beliefs and
are subject to a number of factors and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. The forward-looking statements in this release address future
financial and operating results.


                                       2


The following factors, among others, could cause actual results to differ
materially from those described in the forward-looking statements: o the effect
of adverse economic conditions in markets served by the Company and the
financial capacity of customers to
      purchase capital equipment;
o the ability of new products to compete successfully in either existing or new
markets; o increased competition and its effects on our product pricing and
customer capital spending; o risks involved in expanding international
operations and sales; and o risks associated with adverse fluctuations in
foreign currency exchange rates.

For a detailed discussion of these and other cautionary statements, please refer
to the Company's filings with the Securities and Exchange Commission,
particularly Exhibit 99.1 "Forward-Looking Statement Risk and Uncertainty
Factors" to the Company's Annual Report on Form 10-K for the fiscal year ended
September 30, 2001 and the Risk Factors section of the Company's Registration
Statement on Form S-4, Post-Effective Amendment No. 3, filed August 17, 2001.

        Note: News releases and other information on Key Technology, Inc.
                can be accessed at www.keyww.com on the Internet.


        CONTACT: Key Technology, Inc.
                 Ted R. Sharp
                 Chief Financial Officer
                 (509) 529-2161





                                       3