SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(mark one)

Registrant's telephone number: (360) 459-1100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by sections 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.

[X]Yes        [_] NO

Indicate the number of shares outstanding in each of the issuer's classes of common stock, as of the latest practicable date.

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PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements

FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)

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FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)

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FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
Nine months Ended September 30, 2001 and 2002

(Dollars in thousands)

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FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

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The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. 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, adjustments considered necessary for a fair presentation (consisting of normally recurring accruals) have been included. The interim condensed consolidated financial statements should be read in conjunction with the December 31, 2001 consolidated financial statements, including notes thereto, included in the Company's 2001 Annual Report to Shareholders. Operating results for the nine months ended September 30, 2002 are not necessarily indicative of the results anticipated for the year ending December 31, 2002.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the report amounts of assets and liabilities and disclosure of contingent assets and liabilities 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.

Basic and diluted earnings per share are calculated by dividing net income by the weighted average number of common shares outstanding during the periods presented. Diluted earnings per share assumes that all dilutive stock options outstanding are issued such that their dilutive effect is maximized.

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FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Notes to Condensed Consolidated Financial Statements
(Unaudited)

The Financial Accounting Standards Board issued Financial Accounting Standards No. 141, Business Combinations, and 142, Goodwill and Other Intangible Assets, in 2001, with an effective date of January 1, 2002. SFAS No. 141 requires that all business combinations entered into after September 30, 2001 be accounted for under the purchase method. SFAS No. 142 addresses how goodwill and other intangible assets should be accounted for after they have been initially recorded in the financial statements. Goodwill arising from business combinations prior to the effective date of this standard will no longer be amortized, starting in 2002, but will be subject to annual tests for impairment. In accordance with the provisions of SFAS No. 142, at June 30, 2002, the Company completed its transitional assessment of goodwill impairment and has determined that no adjustment for goodwill impairment is required. Other identifiable intangible assets, and certain unidentifiable intangible assets arising from certain acqu isitions, will continue to be amortized using the same lives and methods. The Company has $4,159,000 of goodwill on which amortization has ceased effective January 1, 2002 which resulted in a reduction of amortization expense of $155,000 in the nine months ended September 30, 2002. The remaining intangible assets of $1,959,000 will continue to be amortized.

In September 2001, the FASB also issued SFAS No. 143, Accounting for Asset Retirement Obligations. This statement addresses financial accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated annual retirement costs. This statement is effective for all fiscal years beginning after September 15, 2002. The Company does not anticipate that the adoption of SFAS No. 143 will have a material effect on its financial position or results of operations. In August 2001 the FASB issued SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, which became effective January 1, 2002. The statement addresses financial accounting and reporting for the impairment or disposal of long-lived assets. Adoption of this standard has not had an impact on the Company's financial statements.

Statement of Financial Accounting Standard (SFAS) No. 147, Acquisitions of Certain Financial Institutions - an amendment of FASB Statements no. 72 and 144 and FASB Interpretation No. 9. The provisions of this Statement that relate to the application of the purchase method of accounting, apply to all acquisitions of financial institutions, except transactions between two or more mutual enterprises. This Statement removes acquisitions of financial institutions from the scope of both Statement 72 and Interpretation 9 and require that those transactions be accounted for in accordance with FASB Statements No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. In addition, this Statement amends FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer-relationship intangible assets of financial institutions such as depositor- and borrower-relationship intangible assets and credit cardholder intangible assets. This statement is effective for acquisitions for which the date of the transaction is on or after October 1, 2002. The Company does not expect the Statement will result in a material impact on its financial position or results of operations.

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General
The Company's consolidated total assets at September 30, 2002 of $394,370,000 represents an 8.2% increase over December 31, 2001 assets of $364,623,000. The growth in assets is reflected in increases of $13,838,000 in net portfolio loans, $3,038,000 in loans held for sale, $7,453 in securities available for sale and $3,000 in federal funds sold.

Loans
The composition of the loan portfolio at September 30, 2002 and December 31, 2001 follows (dollars in thousands):

The total of non-performing loans (non-accrual and loans over 90 days past due still accruing interest) and other non-performing assets has increased since December 31, 2001, as shown in the following table of non-performing assets (dollars in thousands):

Non-accrual loans increased $841,000 during the first nine months of 2002. There are no accruing loans past due 90 days or more as of September 30, 2002, a reduction of $284,000 since prior year-end. Loans in this category must be well secured and in the process of collection for the accrual of interest to continue. These loans are monitored and may be reclassified as non-accrual as conditions warrant. Foreclosed real estate has increased by $402,000 from prior year end. The percentage of non-performing loans to total loans increased to 0.88% from 0.73% at December 31, 2001.

Allowance for Credit Losses
The allowance for credit losses reflects management's current estimate of the amount required to absorb losses on existing loans. Determination of the appropriate level of the allowance is based on an analysis of various factors including: historical loss experience based on volumes and types of loans; volumes and trends in delinquencies and non-accrual loans; trends in portfolio volume; results of internal and independent external credit reviews; and economic conditions. All loans in the portfolio are assigned a grade indicating credit quality by the originating loan officer at the time of loan origination. These grades are reviewed at regular intervals and, if performance concerns arise on an individual loan, the grade is lowered to the appropriate level. Management reviews the composite changes in loan grades within the portfolio in its assessment of the adequacy of the allowance. If a loan becomes impaired, the Company's loss exposure on that loan is measured based on expected cash flows or coll ateral values, and if necessary, a portion of the allowance for credit losses is allocated to that loan. After reviewing the composition of the loan portfolio at September 30, 2002, the levels of classified loans, losses experienced during the period, and the changes in the economy, management has determined the allowance for credit losses to be adequate to cover the loss exposure in the loan portfolio at that date. The analysis of the adequacy of the allowance is subject to quarterly review by the Board of Directors.

The allowance for credit losses increased $540,000 in the first nine months of 2002. The ratio of allowance for credit losses to total loans increased during the first nine months of 2002 to 1.53% from 1.42% at December 31, 2001. The dollar value change in the allowance consisted of $1,608,000 of provision less $1,068,000 in net charge-offs of loans. Charge-offs were concentrated in the Company's small-loan portfolio. Management increased the allowance for credit losses during the nine months ended September 30, 2002 in recognition of the increase in non-performing loans as shown in the table above, the increase in loans internally classified in the Bank's loan classification system, and the continued softness of the economy in the Bank's primary market area. The allowance at September 30, 2002 is slightly higher than the mid-point of loss exposure identified in the Bank's loan loss adequacy analysis model.

Investment Portfolio
Investment securities increased $7,452,000, or 40.0% during the first three quarters of 2002 to a total of $26,062,000. Additional securities were purchased during the third quarter as a source of collateral for a new sweep product and repurchase program introduced by the Company during the third quarter. This program requires that all funds swept into overnight repurchases be fully collateralized by qualified securities. No sales were made and reductions to the balance were the result of callable securities being called and principal payments received on asset-backed investments.

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Deposits and Borrowings
Total deposits increased $8,357,000, or 2.7% in the nine months ended September 30, 2002 to $322,087,000. The mix of deposits shifted toward transaction accounts during the first three quarters, with increases shown in savings and interest-bearing deposits as well as non-interest bearing deposits. Time deposits decreased slightly. Short-term borrowings have also been used as a funding source due to their relatively low cost as compared to time deposits. Federal funds purchased and short-term borrowings increased during the first three quarters by $3,362,000 to $10,417,000 due to their favorable cost and flexibility in managing funding.  Long term debt increased $13,403,000 from the trust preferred issuance and decreased $550,000 on the final principal payment on a 5 year note.

Liquidity
Liquidity management involves the ability to meet cash flow requirements of customers who may be either depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to meet their credit needs. Liquidity is generated from both internal and external sources. Internal sources are those assets that can be converted to cash with little or no risk of loss. These include overnight investments in interest bearing deposits in banks and federal funds sold and investment securities, particularly those of shorter maturity, and are the principal source of asset liquidity. At September 30, 2002, cash, deposits in banks, federal funds sold and securities available for sale totaled $51,940,000. External sources refer to the ability to attract new liabilities and capital. They include increasing savings and demand deposits, federal funds purchased, borrowings and the issuance of capital and debt securities. At September 30, 2002, borrowing lines of credit totaled $47, 437,000. These credit facilities are being used regularly as a source of funds. At September 30, 2002, $3,500,000 was borrowed against these lines of credit in the form of federal funds purchased and term advances.

Management believes the Company's liquidity position at September 30, 2002, was adequate to meet its short term funding requirements.

Capital
Consolidated capital of FCFG increased $3,685,000 during the first nine months of 2002. The increase comes primarily from net income, which increased capital by $4,639,000. Capital also increased $707,000 from the exercising of stock options and $25,000 for the elimination of the debt related to the KSOP plan. Stock repurchases in the amount of $950,000, cash dividends paid of $659,000 and an after-tax decrease in the valuation of the securities portfolio of $77,000 were reductions to the capital total.

There are regulatory constraints placed upon capital adequacy, and it is necessary to maintain an appropriate ratio between capital and assets. Regulations require banks and holding companies to maintain a minimum leverage ratio (primary capital to total assets ratio). For the most highly rated holding companies this ratio must be at least 3%, and for others it must be 4 to 5%. At September 30, 2002, the Company's leverage ratio was 9.42%, compared to 8.91% at year-end 2001. In addition, banks and holding companies are required to meet minimum risk-based capital guidelines under which risk percentages are assigned to various categories of assets and off-balance-sheet items to calculate a risk-adjusted capital ratio. Tier I capital generally consists of common stockholders' equity, less goodwill, while total capital includes the allowance for possible credit losses, subject to 1.25% limitation of risk-adjusted assets. The rules require Tier I capital of 4% of risk-adjusted assets and total capital of 8%. At September 30, 2002, the Tier I capital ratio was 9.67%, and total capital was 10.91%. At December 31, 2001 the Tier I capital ratio was 9.34% and the total capital ratio was 10.52%.

Issuance of Trust Preferred Securities

On July 11, 2002, the Company completed an offering of trust preferred securities and received net proceeds of approximately $12,600,000. A significant portion of the trust preferred proceeds were used in October 2002 to fund the acquisition of Harbor Bank, N.A., which closed October 1, 2002. The remaining balance was added to the capital of First Community Bank. Trust preferred securities consist of the issuance of subordinated debt securities to a wholly owned subsidiary business trust, which then issues preferred stock to investors. The interest payments on the debt securities are approximately equal to the dividend payments on the preferred stock of the trust. The Company will be able to recognize a deduction of the interest cost for income tax purposes, while the net proceeds will qualify as Tier 1 capital, up to 25% of conventional Tier 1 capital.

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General
Net income for the nine months ended September 30, 2002 was $4,639,000, compared to $3,331,000 for the same period in 2001. This represents a 39% increase over the prior year. Net income for the three months ended September 30, 2002 was $1,649,000, compared to $1,268,000 for the three months ended September 30, 2001. This represents a 30% increase in net income for the period.

Net interest income increased $1,817,000, an increase of 12% for the nine months ended September 30, 2002 over the same period for 2001. Net interest income increased $307,000, or 6%, for the three months ended September 30, 2002. The increase in the Company's net interest income is primarily the result of the reduction in interest rates, and corresponding reduction in cost of funds. The Company's small-loan product also had an impact on the growth in net interest income. This product's contribution to net interest income grew to $3,561,000 in the first nine months of 2002 from $2,711,000 in the first nine months of 2001, an $850,000 increase.

Interest income for the nine months ended September 30, 2002 decreased $1,540,000, or 7%, from the same period of the prior year. Increased volume of earning assets provided an additional $2,541,000 of interest income, which was more than offset by the $4,081,000 reduction in interest income due to the reduced earnings rate of these assets. Average earning assets for the first nine months of 2002 were $20,879,000, or 7% higher than in the same period of 2001. The average rate earned on assets decreased 119 basis points from 10.13% in the first nine months of 2001 to 8.84% for the same period of 2002. The percentage of average loans to total average earning assets increased over the prior year and represents 92.6% of total average earning assets, up from 90.5% in 2001. Interest income for the three months ended September 30, 2002 was $641,000 lower than the same period in the previous year.

Total interest expense for the nine months ended September 30, 2002 decreased $3,357,000, or 41%, from the comparable period of the prior year. This reduction is in spite of the volume of interest bearing liabilities increasing by 7%. The decrease in the interest rates paid on deposits and borrowings, which declined 193 basis points, from 4.28% in the first nine months of 2001 to 2.35% in the first nine months of 2002, produced a reduction in interest expense of $3,680,000. Of this amount, $323,000 was offset by an increase in the volume of these liabilities, which rose from an average of $255,036,000 in 2001 to $273,590,000 in 2002. Total interest expense for the three months ended September 30, 2002 was $948,000 lower than the third quarter of 2001.

Net interest margin, defined as net interest income as a percentage of average earning assets, increased by 34 basis points to 6.84% from 6.50% in the first nine months of 2002 compared to the same period in 2001.

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The yield and cost of funds for earning assets and interest bearing liabilities were as follows as of and for the nine months ended September 30 (dollars in thousands):

An analysis of the change in net interest income is as follows for the nine months ended September 30 (dollars in thousands):

The change in interest due to both rate and volume has been allocated to volume and rate changes in proportion to the relationship of the absolute dollar amounts of the change in each.

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Non-interest income increased by $1,296,000, or 30%, from the first nine months of 2001. Service charges, primarily due to the implementation of a new overdraft product in the third quarter of 2001, increased $591,000, or 36%, over the first nine months of 2001. Origination fees on mortgage loans sold continued their strong performance, increasing by $317,000, or 23% over the same period in 2001. Non-interest income for the three months ended September 30, 2002 increased $439,000, or 27% over the prior year.

Non-interest expenses for the first nine months of 2002 increased by $458,000, or 3%, over the first nine months of 2001. Compensation expense increased $86,000, or 1%. Occupancy expenses increased $23,000, or 1%. The other expenses increase of $349,000 included an additional $171,000 in expenses related to the operation of the small-loan program, including increased business and occupation taxes and correspondent bank fees, as well as $113,000 in expenses related to the implementation of a new overdraft product in the third quarter of 2001. Non-interest expenses for the third quarter of 2002 increased $3,000 over the third quarter of 2001. The ratio of non-interest expense to average assets decreased to 4.85% for the nine months ended September 30, 2002 from 4.98% in 2001. The ratio of net overhead (non-interest expense minus non-interest income) divided by average total assets decreased to 2.84% for the nine months ended September 30, 2002 from 3.33% for the same period in 2001.

Business Segment Reporting

The Company is managed along two major lines of business; Community Banking, its core business, and the small-loan division, which was entered into in the fourth quarter of 2000. Community Banking consists of all lending, deposit and administrative operations conducted through its 19 offices in Washington State. The small-loan division provides small, short-term consumer loans to customers in Alabama and Arkansas.

Prior to 2001, the Company was managed as a whole, not by discrete operating segments. When the Company began offering small loans, its operating results were segregated in the General Ledger system to better manage financial performance. The financial performance of the business lines is measured by the Company's profitability reporting process, which utilizes various management accounting techniques to more accurately reflect each business line's financial results. Revenues and expenses are primarily assigned directly to business lines.

The organizational structure of the Company and its business line financial results are not necessarily comparable across companies. As such, the Company's business line performance may not be directly comparable with similar information from other financial institutions.

Selected comparative financial information for the small loan division, which are included in the overall financial results, as of and for the nine months ended September 30, 2002 are as follows (dollars in thousands):
 

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Rate Sensitivity

The Company's assets and liabilities are managed to maximize long-term shareholder returns by optimizing net interest income within the constraints of maintaining high credit quality, conservative interest rate risk disciplines and prudent levels of liquidity. The Asset/Liability Committee meets regularly to monitor the composition of the balance sheet, to assess current and projected interest rate trends, and to formulate strategies consistent with established objectives for liquidity, interest rate risk and capital adequacy.

Interest rate sensitivity is closely related to liquidity, as each is directly affected by the maturity of assets and liabilities. The Company's net interest margin is affected by changes in the level of market interest rates. Management's objectives are to monitor and control interest rate risk and ensure predictable and consistent growth in net interest income.

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Management considers any asset or liability that matures, or is subject to re-pricing within one year to be interest sensitive, although continual monitoring is performed for other time intervals as well. The difference between interest sensitive assets and liabilities for a defined period of time is known as the interest sensitivity "gap", and may be either positive or negative. If positive, more assets re-price before liabilities. If negative, the reverse is true. Gap analysis provides a general measure of interest rate risk but does not address complexities such as prepayment risk, interest rate floors and ceilings imposed on financial instruments, interest rate dynamics and customers' response to interest rate changes. Currently the Banks' interest sensitivity gap is negative within one year. Assuming that general market interest rate changes affected the re-pricing of assets and liabilities in equal magnitudes, this indicates that the effects of rising interest rates on the Company would be a d ecrease in the net interest margin, whereas falling interest rates would cause a corresponding increase in the margin.

The Company's market risk is impacted by changes in interest rates. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not arise in the normal course of the Company's business.

The Company has market risk in the form of interest rate risk on its financial assets. In an effort to understand the relative impact of this risk on the Company's current financial situation, a process known as a rate shock is applied to the current financial assets.

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Rate shock is a process wherein the characteristics of the financial assets of the Company are reviewed in the event they are subjected to an instantaneous and complete adjustment in the market rate of interest. These results are modeled to determine the effects on interest rate margin for the succeeding twelve months from the re-pricing of variable rate assets and liabilities where applicable. The level of impact on the various assets and liabilities are also estimated for their sensitivity to pricing changes of such a market interest rate change. According to this model and its assumptions, the change in net interest income over a 12 month period in the event market interest rates were to immediately rise or fall by 100 basis points is estimated to be $105,000.

(a)    Evaluation of Disclosure Controls and Procedures.

Management of the Company, including the Chief Executive Officer and the Chief Financial Officer, have conducted an evaluation of the Company's disclosure controls and procedures in accordance with rule 13a-14 under the Securities Exchange Act of 1934 as of a date (the "evaluation date") within 90 days prior to the filing date of this report. Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the evaluation date, the Company's disclosure controls and procedures were effective in ensuring that all material information relating to the Company required to be filed in this quarterly report has been made known to them in a timely manner.

(b)    Changes in Internal Controls

Since the evaluation date, there have been no changes to the Company's internal controls or in other factors that could significantly affect those controls.

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Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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I, Ken F. Parsons, Sr. certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Community Financial Group, Inc. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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I, James F. Arneson certify that:

1. I have reviewed this quarterly report on Form 10-Q of First Community Financial Group, Inc. (the "registrant");

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function):

6. The registrant's other certifying officers and I have indicated in this report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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This certification is given by the undersigned Chief Executive Officer and Chief Financial Officer of First Community Financial Group, Inc. (the "Registrant") pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. Each of the undersigned hereby certifies, with respect to the Registrant's quarterly report of Form 10-Q for the period ended June 30, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), that:

(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Registrant.

November 14, 2002

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