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SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

	[X]		Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
			For the quarterly period ended June 30, 2003
	[  ]		Transition Report Under Section 13 or 15(d) of the Exchange Act
			For the transition period from__________________to__________________

Commission File No. 000-32915

EVERGREENBANCORP, INC.

301 Eastlake Avenue East
Seattle, Washington 98109-5407
(Address of Principal Executive Offices) (Zip Code)

(206) 628-4250
(Registrant’s Telephone Number, Including Area Code)

     Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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  [  ]

Indicate by check mark whether the registrant is an accelerated filer as defined in Rule 12b-2 of the Act.

YES  [  ]        NO  [X]

     Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, no par value, outstanding as of August 12, 2003: 1,077,199 shares
No Preferred Stock were issued or outstanding.

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PART I
FINANCIAL INFORMATION

PART II
OTHER INFORMATION

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PART I – FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

EVERGREENBANCORP, INC.
UNAUDITED CONSOLIDATED BALANCE SHEETS
June 30, 2003 and December 31, 2002
(in thousands, except per share data)

See accompanying notes to unaudited consolidated financial statements.

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EVERGREENBANCORP, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
Three-month and six month periods ended June 30, 2003 and 2002
(in thousands, except per share data)

     See accompanying notes to unaudited consolidated financial statements.

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EVERGREENBANCORP, INC
UNAUDITED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
Six months ended June 30, 2003, and 2002 (in thousands, except share and per share data):

     See accompanying notes to unaudited consolidated financial statements.

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EVERGREENBANCORP, INC
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended June 30, 2003, and 2002
(in thousands, except share and per share data):

     See accompanying notes to unaudited consolidated financial statements

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EVERGREENBANCORP, INC.

Note 1: Basis of presentation and accounting policies

The accompanying unaudited condensed consolidated financial statements include the accounts of EvergreenBancorp, Inc. (“Bancorp”) and its wholly owned subsidiaries (collectively referred to as the “Company”). As of June 30, 2003, Bancorp’s subsidiaries were EvergreenBank (the “Bank”) and EvergreenBancorp Capital Trust I (the “Trust”). The financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six month period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For additional information, refer to the financial statements and footnotes for the year ended December 31, 2002, filed by Bancorp with the United States Securities and Exchange Commission.

Organization: Bancorp was formed February 9, 2001 and is a Washington corporation chartered as a bank holding company. Bancorp owns all of the issued and outstanding shares of the Bank and all of the common securities issued by the Trust.

The Bank is a Washington state chartered financial institution that engages in general commercial and consumer banking operations. The Bank offers a broad spectrum of personal and business banking services, including commercial, consumer and real estate lending. The Bank’s offices are centered in the Puget Sound region in the Seattle, Lynnwood and Bellevue communities. Deposits in the Bank are insured by the Federal Deposit Insurance Corporation.

The Trust is a Delaware business trust organized pursuant to a Declaration of Trust dated as of May 20, 2002. An Amended and Restated Declaration of Trust was executed May 23, 2002.

Holding company information: The Bank became a wholly owned subsidiary of Bancorp on June 20, 2001 in accordance with the Plan and Agreement of Reorganization and Merger dated February 14, 2001 (the “Plan”), and provided that each share of the Bank’s common stock be exchanged for an equal number of shares of the common stock of Bancorp. The Plan also provided that the reorganization be treated similarly to a “pooling of interest” for accounting and financial reporting purposes. Accordingly, the capital accounts of the Bank as of June 20, 2001 were carried forward, without change, as the capital accounts of Bancorp.

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Principles of consolidation: The accompanying condensed consolidated financial statements include the combined accounts of Bancorp, the Bank, and the Trust for all periods reported. All significant intercompany balances and transactions have been eliminated.

Critical accounting policies and use of estimates:

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, including contingent amounts, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Management has identified certain policies as being particularly sensitive in terms of judgments and the extent to which estimates are used. These policies relate to the determination of the allowance for loan losses on loans, and the fair value of financial instruments and are described in greater detail in subsequent sections of Management’s Discussion and Analysis and in the consolidated financial statements and footnotes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2002. Management believes that the judgments, estimates and assumptions used in the preparation of the financial statements are appropriate given the factual circumstances at the time. However, given the sensitivity of the financial statements to these critical accounting policies, estimates and assumptions could result in material differences in the results of operations or financial condition.

Stock compensation:

Employee compensation expense under stock options is reported using the intrinsic value method. No stock-based compensation cost is reflected in net income, as all options granted had an exercise price equal to or greater than the market price of the underlying common stock at date of grant. The following table illustrates the effect on net income and earnings per share if expense was measured using the fair value recognition provisions of FASB Statement No. 123, Accounting for Stock-Based Compensation.

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Reclassifications: Certain items in prior periods’ financial statements have been reclassified to conform with the current period’s presentation. These reclassifications did not change previously reported stockholders’ equity or net income.

Note 2: Stock dividend

On July 8, 2002, the Company effected a 15% stock dividend. All references to number of shares issued, outstanding (basic and diluted), and earnings per share, for all periods presented have been restated as if the stock dividend had actually occurred on January 1, 2002.

Note 3: Stock options

During the second quarter of 2003, no stock options were granted and there were 574 options exercised. The total stock options outstanding were 106,176 at June 30, 2003 with exercise prices ranging between $12.54 and $16.30 and expiration dates between October 22, 2003 and March 25, 2013. All options are granted at market value as of date of grant.

Note 4: Investments

Investment securities available for sale include $12,357,000 in mortgage backed securities at June 30, 2003. This investment by the Bank in mortgage backed securities qualifies as collateral for advances from the Federal Home Loan Bank of Seattle. Investment securities available for sale also include the AMF Adjustable Rate Mortgage Fund with a fair value of $12,509,000 at June 30, 2003.

Note 5: Junior subordinated debt (trust preferred securities)

On May 23, 2002, Bancorp purchased 155 Floating Rate Common Securities (liquidation amount $1,000 per common security) (the “Common Security”) issued by the Trust. Also on May 23, 2002, the Trust issued 5,000 Floating Rate Capital Securities (liquidation amount $1,000 per capital security) (the “Capital Securities”). The capital securities were sold in a private placement pursuant to exemption from registration under of the Securities Act of 1933. The proceeds of the issuance of the common and capital securities, net of issuing expenses, were used by the Trust to purchase $5,155,000 in principal amount of Floating Rate Junior Subordinated Deferrable Interest Debentures (the “Debentures”) issued by Bancorp. Bancorp invested $4,800,000 of the proceeds in the Bank. Distributions on the common and capital securities issued by the Trust are payable quarterly at a variable interest rate, reset quarterly, equal to the three-month London interbank offered rate (LIBOR) plus 3.5 percent. The Company recognizes the distributions payable on the capital securities and the debentures as interest expense for financial reporting purposes. The debentures mature in 2032 and are redeemable at Bancorp’s option beginning in 2007. Issuing expenses are being amortized over the thirty year period. The capital securities are guaranteed on a subordinated basis by Bancorp with respect to distributions and amounts payable upon liquidation, redemption, or repayment. The capital securities qualify as Tier 1 capital for regulatory purposes.

Note 6: Earnings per share

Basic earnings per share of common stock is computed on the basis of the weighted average number of common stock shares outstanding adjusted for the 15 percent stock dividend of 2002. Diluted earnings per share of common stock is computed on the basis of the weighted average number of common shares outstanding plus the effect of the assumed conversion of outstanding stock options adjusted for the 15 percent stock dividend of 2002.

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A reconciliation of the numerator and denominator used in the calculation of basic and diluted earnings per share of common stock follows.

(in thousands, except share and per share data):

(in thousands, except share and per share data):

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Note 7: Commitments and contingencies

In the normal course of business, there are various commitments and contingent liabilities (such as guarantees, commitments to extend credit, letters of credit, and lines of credit) that are not presented in the financial statements. Such off-balance-sheet items are recognized in the financial statements when they are funded or related fees are received. The Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance-sheet instruments. The off-balance-sheet items do not represent unusual elements of credit risk in excess of the amounts recognized in the balance sheets.

The distribution of commitments to extend credit approximates the distribution of loans outstanding. Commercial and standby letters of credit and similar arrangements are granted primarily to commercial borrowers.

The Company is not aware of any claims or lawsuits that would have a materially adverse effect on the financial position of the Company.

The Company’s significant commitments at June 30 were as follows (in thousands):

Note 8: Newly Issued But Not Yet Effective Accounting Standards

The Financial Accounting Standards Board (FASB) recently issued two new accounting standards, Statement 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities, and Statement 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equities, both of which generally become effective in the quarter beginning July 1, 2003.

Because the Company is not involved in derivative instruments or hedging activities, Statement 149 will not materially affect the Company’s operating results or financial condition.

Under the new standard for certain liabilities and equity instruments, mandatorily redeemable instruments such as trust preferred securities are considered liabilities and not part of mezzanine (or temporary) equity. The Company will continue to carry these instruments as liabilities in the consolidated balance sheet.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EvergreenBancorp, Inc. (“Bancorp”) is a Washington chartered bank holding company formed in 2001 and headquartered in Seattle, Washington. Bancorp has as its primary business activity ownership of EvergreenBank (the “Bank”) and a financing entity, EvergreenBancorp Capital Trust I (“Trust”). The Bank’s principal business is personal and business banking. Services offered include commercial, real estate and consumer lending; savings, checking and certificate of deposit accounts; financial planning and investment services, and merchant credit card processing services. The Bank conducts business from three locations: the main office northeast of downtown Seattle, the Lynnwood branch office north of Seattle, and the downtown Bellevue branch office east of Seattle. A fourth branch office is expected to open in Federal Way, south of Seattle, in September of 2003.

The Bank’s results of operations primarily depend on net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowed funds. The Bank’s operating results are also affected by loan fees, service charges on deposit accounts, merchant credit card processing fees, gains from sales of loans and investments and other noninterest income. Operating expenses of the Bank include employee compensation and benefits, occupancy and equipment costs, federal deposit insurance premiums and other administrative expenses.

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The Bank’s results of operations are further affected by economic and competitive conditions, particularly changes in market interest rates. Results are also affected by monetary and fiscal policies of federal agencies, and actions of regulatory authorities.

The following discussion contains a review of the consolidated operating results and financial condition of Bancorp and its wholly-owned subsidiaries (collectively referred to as the “Company”) for the second quarter of 2003. This discussion should be read in conjunction with the unaudited consolidated financial statements and accompanying notes contained elsewhere in this report. When warranted, comparisons are made to the same period in 2002 and to the previous year ended December 31, 2002. For additional information, refer to the audited consolidated financial statements and footnotes of EvergreenBancorp, Inc. for the year ended December 31, 2002.

RESULTS OF OPERATIONS

Net Income

Three months and six months ended June 30, 2003 and 2002

For the second quarter of 2003, the Company reported net income of $223,000 compared to $335,000 for the second quarter of 2002, a reduction of 33.43 percent. The main reason for reduced profits in the second quarter were lower net interest income due to compression in the net interest margin, and increased operating expenses, offset in part by higher non-interest income. Basic and diluted earnings per common share were $0.21 for the second quarter of 2003 compared to $0.31 for the same period one year ago.

For the second quarter of 2003, return on average common equity and return on average assets was 5.95 percent and 0.55 percent respectively, compared to 8.85 percent and 0.85 percent for the same period one year ago.

For the first six months of 2003 net income was $521,000, compared with $636,000 for the first six months of 2002, a decrease of 18.08 percent. Basic and diluted earnings per common share were $0.48 for the first six months of 2003 and $0.59 for the same period of 2002. Return on average assets was 0.59 percent for 2003 and 0.80 percent for 2002. Return on average common equity was 6.31 percent for the first six months of 2003 and 8.58 percent for the same period of 2002. Additional analysis of financial components is contained in the discussion that follows. Unless otherwise stated comparisons are between the second quarter of 2003 and 2002.

Net Interest Income and Net Interest Margin

The Company’s principal source of earnings is net interest income, which is the difference between interest income on loans and investments and interest expense on deposits and borrowed funds. Several factors can contribute to changes in net interest income, such as changes in average balances or in the rates on earning assets and rates paid for interest bearing liabilities, the level of noninterest bearing deposits, the level of shareowners’ equity, and the level of nonaccrual loans.

Net interest income before provision for loan losses was $1,980,000 for the second quarter of 2003, compared to $2,064,000 for the same period in 2002, a reduction of 4.07 percent. Net interest income was $4,003,000 for the first six months of 2003, compared with $4,107,000 for the six months of 2002, a decrease of 2.53 percent. The decrease in net interest income for the second quarter was primarily due to the impact of lower interest rates and a change in the mix of assets and liabilities. Changes in mix include lower levels of loans and higher investment balances.

The net interest margin, which is the ratio of taxable-equivalent net interest income to average earning assets, was 5.12 percent for the first six months of 2003 compared to 5.52 percent for the same period one year ago. The weighted average yield on interest earning assets was 6.63 percent for the first six months of 2003, a decrease of 0.69 percent, compared to 7.32 percent in 2002. Interest expense as a percentage of average earning assets was 1.47 percent for the first six months of 2003, a decrease of 0.30 percent compared to 1.77 percent in 2002.

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Interest income for the three months ended June 30, 2003 was $2,533,000 compared to $2,729,000 for the three months ended June 30, 2002, a decrease of $196,000 or 7.18 percent. This decrease was due primarily to falling interest rates and a change in the mix of interest-earning assets from loans to securities. Average loans outstanding for the three months ended June 30, 2003 were $5,106,000 lower than the three months ended June 30, 2002. Interest income for the six months ended June 30, 2003 was $5,143,000 compared with $5,440,000 for the six months ended June 30, 2002, a decrease of 5.46 percent.

Interest expense for the three months ended June 30, 2003 was $553,000 compared to $665,000 for the three months ended June 30, 2002, a decrease of $112,000 or 16.84 percent. Interest expense for the six months ended June 30, 2003 was $1,140,000 compared with $1,333,000 for the same period a year ago, a decrease of $193,000 or 14.48 percent. The decrease in interest expense for the second quarter was primarily due to falling interest rates and a higher percentage mix of lower cost deposits, partially offset by higher levels of borrowings.

Noninterest Income/Expense

Noninterest income in the second quarter of 2003 was $481,000 compared to $374,000 in the same quarter of 2002, an increase of $107,000 or 28.61 percent. Noninterest income for the six months ended June 30, 2003 was $893,000 compared with $724,000 for the same period of 2002, an increase of $169,000 or 23.34 percent. The increase in the second quarter was primarily due to higher revenue from service charges on deposit accounts and gains on sale of investments.

Noninterest expense was $2,091,000 in the second quarter of 2003, compared to $1,837,000 in the same quarter of 2002, an increase of $254,000 or 13.83 percent. Noninterest expense was $4,080,000 for the six months of 2003, compared with $3,696,000 for the same period of 2002, an increase of $384,000 or 10.39 percent. The increase was primarily due to increased professional expenses including the costs associated with engaging an outside consultant specializing in bank efficiency and cost containment, and higher technology costs.

Provision and Allowance for Loan Losses

The provision for loan losses was $35,000 for the second quarter of 2003 compared to $99,000 for the same quarter of 2002. The provision for loan losses for six months ended June 30, 2003 was $38,000 compared to $188,000 for the same period of 2002. The decrease in the provision for both the second quarter and the year to date was mostly due to reduced loan levels and fewer classified credits.

At June 30, 2003, the allowance for loan losses was $1,614,000 compared to $1,690,000 at December 31, 2002. The ratio of the allowance to total loans outstanding was 1.35 percent and 1.40 percent at June 30, 2003, and December 31, 2002.

Management evaluates the adequacy of the allowance for loan losses on a monthly basis after consideration of a number of factors, including the volume and composition of the loan portfolio, potential impairment of individual loans, concentrations of credit, past loss experience, current delinquencies, information about specific borrowers, current economic conditions, loan commitments outstanding and other factors. Although management believes the allowance for loan losses was at a level adequate to absorb probable incurred losses on existing loans at June 30, 2003, there can be no assurance that such losses will not exceed estimated amounts.

While management is encouraged by recent indications of an improving national economy, local economic conditions could still adversely affect cash flows for both commercial and individual borrowers, as a result of which the Company could experience increases in problem assets, delinquencies and losses on loans.

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FINANCIAL CONDITION

Loans

At June 30, 2003, loans totaled $119,135,000, a reduction of $2,374,000 or 1.95 percent over December 31, 2002. The decrease in loan balances is attributed to reduced economic activity and loan payoffs as borrowers refinance in the low interest rate environment. At June 30, 2003, the Bank had $87,833,000 in loans secured by real estate. The collectibility of a substantial portion of the loan portfolio is susceptible to changes in economic and market conditions in the region. The Bank generally requires collateral on all real estate exposures and typically maintains loan-to-value ratios of no greater than 80 percent.

The following tables set out the composition of the types of loans, the allocation of the allowance for loan losses and the analysis of the allowance for loan losses:

Types of Loans

Allocation of the Allowance for Loan Losses

In the following table, the allowance for loan losses at June 30, 2003, and 2002 has been allocated among major loan categories based on a number of factors including quality, volume, current economic outlook and other business considerations.

The analysis of the allowance for loan losses should not be interpreted as an indication that chargeoffs will occur in these amounts or proportions, or that the allocation indicates future chargeoff trends. Furthermore, the portion allocated to each category is not the total amount available for future losses that might occur within each category.

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Analysis of Allowance for Loan Losses

The following table summarizes transactions in the allowance for loan losses and details the chargeoffs, recoveries and net loan losses by loan category for the last two years.

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