Evergreenbancorp (EVGGQ) 10-Q 2002 Q1 Quarterly report

SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-Q

	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
	For the quarterly period ended March 31, 2002
	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.
(Exact Name of Registrant as Specified in Its Charter)

WASHINGTON	91-2097262
(State or Other Jurisdiction of Incorporation or Organization	(I.R.S. Employer Identification Number

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 Exchange Act 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       No 

         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 March 31, 2002: 934,817 shares
No Preferred stock were issued or outstanding.

TABLE OF CONTENTS

	PART I — FINANCIAL INFORMATION
	Item 1. Financial Statements.
Consolidated statements of condition
Consolidated statements of income
Consolidated Statements of Stockholders’ Equity
Consolidated statements of cash flows
	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II — OTHER INFORMATION
	ITEM 1. LEGAL PROCEEDINGS
	ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
	ITEM 3. DEFAULTS UPON SENIOR SECURITIES
	ITEM 5. OTHER INFORMATION
	ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
EXHIBIT INDEX
EXHIBIT 10.1
EXHIBIT 10.2

PART I
FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements.

The following financial statements are presented for the registrant, EvergreenBancorp, Inc.

Balance Sheets — March 31, 2002 and December 31, 2001.

Statements of Income — For the three-month periods ended March 31, 2002 and 2001.

Statements of Changes in stockholders’ Equity — For the three-month periods ended March 31, 2002 and 2001.

Statements of Cash Flows — For the three-month periods ended March 31, 2002 and 2001.

Notes to consolidated financial statements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

PART II
OTHER INFORMATION

Item 1. Legal Proceedings.

Item 2. Changes in Securities and Use of Proceeds.

Item 3. Defaults Upon Senior Securities.

Item 4. Submission of Matters to a Vote of Security Holders.

Item 5. Other Information.

Item 6. Exhibits and Reports on Form 8-K.

(a)	Exhibits
(b)	Reports on Form 8-K

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PART I — CONSOLIDATED FINANCIAL INFORMATION

Item 1. Financial Statements

EvergreenBancorp, Inc. and Subsidiary

Consolidated Statements of Condition

March 31, 2002 and December 31, 2001
(in thousands)
(Unaudited)

			March 31,			December 31,
			2002			2001
ASSETS
Cash and cash equivalents:
	Cash and due from banks		$	7,553		$	9,319
	Interest-bearing deposits in financial institutions			1,895			1,547
Federal funds sold				21,100			6,300
		Cash and cash equivalents		30,548			17,166
Investment securities:
	Available for sale			15,265			15,214
		Total investment securities		15,265			15,214
Loans				121,876			122,219
	Less allowance for loan losses			(1,613	)		(1,498	)
	Net loans			120,263			120,721
Premises and equipment				1,888			1,925
Accrued income and other assets				1,440			1,339
TOTAL ASSETS			$	169,404		$	156,365
LIABILITIES
Deposits:
	Noninterest bearing		$	33,848		$	38,233
	Interest bearing			106,753			92,111
		Total Deposits		140,601			130,344
Federal funds purchased and securities sold under agreements to repurchase				7,951			5,597
Federal Home Loan Bank advances				4,355			4,005
Accrued expenses and other liabilities				1,650			1,681
TOTAL LIABILITIES			$	154,557		$	141,627
STOCKHOLDERS’ EQUITY
Preferred stock: No par value; 100,000 shares authorized;
		issued and outstanding — none		0			0
Common stock and surplus: No par value;
		15,000,000 shares authorized; 934,817 shares issued and outstanding		11,485			11,485
Retained earnings				3,331			3,198
Accumulated other comprehensive income(loss)				31			55
TOTAL STOCKHOLDERS’ EQUITY				14,847			14,738
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY			$	169,404		$	156,365

See accompanying notes to consolidated financial statements.

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EvergreenBancorp, Inc. and Subsidiary

Consolidated Statements of Income

Three-month periods ended March 31, 2002 and 2001
(in thousands, except per share data)
(unaudited)

			Three months ended March 31,
			2002		2001
INTEREST AND DIVIDEND INCOME:
Loans, including fees			$	2,515	$	2,716
Federal funds sold and other				49		109
Investment securities:
	Held to maturity			0		40
	Available for sale			147		122
		TOTAL INTEREST AND DIVIDEND INCOME		2,711		2,987
INTEREST EXPENSE:
Deposits				587		1,001
Federal funds purchased and securities sold under agreements to repurchase				18		94
Advances from Federal Home Loan Bank				63		31
		TOTAL INTEREST EXPENSE		668		1,126
		NET INTEREST INCOME		2,043		1,861
Provision for loan losses				89		150
		NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		1,954		1,711
NONINTEREST INCOME:
Service charges on deposit accounts				167		200
Merchant credit card processing				286		276
Gain on sale of loans and available-for-sale securities				0		19
Other noninterest income				139		298
		TOTAL NONINTEREST INCOME		592		793
NONINTEREST EXPENSE
Salaries and employee benefits				969		946
Merchant credit card processing				242		230
Occupance and equipment				297		245
Other noninterest expense				593		576
		TOTAL NONINTEREST EXPENSE		2,101		1,997
INCOME BEFORE INCOME TAX EXPENSE				445		507
INCOME TAX EXPENSE				144		169
NET INCOME			$	301	$	338
Basic earnings per share of common stock*			$	0.32	$	0.34
Weighted average number of common stock outstanding-basic*				934,817		995,193
Diluted earnings per share of common stock*			$	0.30	$	0.33
Shares outstanding and assumed conversions-diluted*				989,385		1,033,818

                   *  Retroactively adjusted for the shares issued pursuant to the 2001 three-for-two stock split.

See accompanying notes to consolidated financial statements.

3

EvergreenBancorp, Inc and Subsidiary

Consolidated Statements of Stockholders’ Equity

For the three-month periods ended March 31, 2002 and 2001
(in thousands, except shares)
(unaudited)

																Accumulated
																Other			Total
				Common Stock		Common stock		Common stock					Retained			Comprehensive			Stockholders'
				Shares		and surplus		Par Value			Surplus		Earnings			Income (loss)			Equity
Balance at January 01, 2001					663,462			$	6,634		$	5,838	$	2,124			($19	)	$	14,577
Comprehensive income
	Net income													338						338
	Other comprehensive income, net of tax:
	Change in unrealized gain(loss) on securities available for sale, net of deferred income tax of $37																72
	Reclassification adjustments included in net income, net of deferred tax of $(6)																(13	)		59
Total comprehensive income																			$	397
Change in par value of common stock from $10 to $1 par value									(5,971	)		5,971
Cash dividends paid ($.167 per share)*														(166	)					(166	)
Balance at March 31, 2001					663,462			$	663		$	11,809	$	2,296		$	40		$	14,808
Balance at January 1, 2002					934,817	$	11,485	$	0		$	0	$	3,198		$	55		$	14,738
Comprehensive income
		Net income												301						301
		Other comprehensive income, net of tax:
			Change in unrealized gain(loss) on securities available for sale, net of deferred income tax benefit of $(10)														(24	)		(24	)
		Total comprehensive income																		277
		Cash dividends paid ($.18 per share)												(168	)					(168	)
Balance at March 31, 2002					934,817	$	11,485	$	0		$	0	$	3,331		$	31		$	14,847

                   *  Retroactively adjusted for the shares issued pursuant to the 2001 three-for-two stock split.

See accompanying notes to consolidated financial statements.

4

EvergreenBancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows

Three-month periods ended March 31, 2002 and 2001
(in thousands)
(unaudited)

		2002			2001
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income		$	301		$	338
Adjustments to reconcile net income to net cash provided (used) by operating activities:
	Depreciation and amortization		113			77
	Provision for loan losses		89			150
	Net amortization of premium (accretion of discount) on investment securities		6			5
	(Gain)/loss from sale of available-for-sale securities		0			(19	)
	Federal Home Loan Bank stock dividend		(18	)		(18	)
	Other changes, net		(142	)		284
	Net Cash provided (used) by operating activities		349			817
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of held-to-maturity securities			0			30
Proceeds from sales/maturities of available-for-sale securities			30			4,019
Purchases of available-for-sale securities			(83	)
Net (increase) decrease in loans			369			(2,503	)
Purchases of premises and equipment			(76	)		(65	)
	Net Cash provided (used) by investing activities		240			1,481
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in noninterest bearing deposits			(4,385	)		(6,995	)
Net increase (decrease) in interest bearing deposits			14,642			4,448
Net increase (decrease) in federal funds purchased and securities sold under agreements to repurchase			2,354			843
Advances from Federal Home Loan Bank			350			0
Dividends paid			(168	)		(166	)
	Net cash provided (used) by financing activities		12,793			(1,870	)
Net increase (decrease) in cash and cash equivalents			13,382			428
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD			17,166			22,415
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	30,548		$	22,843
Supplemental disclosures of cash flow information
Interest Paid		$	814		$	1,152
Income Taxes Paid			0		$	262
Total change in unrealized gains (losses) on available-for-sale securities			(14	)		109

See accompanying notes to consolidated financial statements.

5

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
EVERGREENBANCORP, INC.

Quarterly period ended March 31, 2002
(UNAUDITED)

Basis of presentation:The accompanying unaudited consolidated financial statements, which include the accounts of EvergreenBancorp, Inc. and its wholly owned subsidiary, EvergreenBank, 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. Accordingly, they do not include all of the information and footnotes required for complete financial statements. In the opinion of management, adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2002 are not necessarily indicative of the results for the year ending December 31, 2002. For additional information, refer to the financial statements and footnotes for the year ended December 31, 2001, that was filed by EvergreenBancorp, Inc. with the United States Securities and Exchange Commission.

Organization:EvergreenBancorp, Inc. (“Bancorp”) was formed February 9, 2001 and is a Washington corporation chartered as a bank holding company. Bancorp holds all of the issued and outstanding shares of EvergreenBank (the “Bank”). The Bank is a Washington state chartered financial institution that engages in general commercial and consumer banking operations. Deposits in the Bank are insured by the Federal Deposit Insurance Corporation (the “FDIC”).

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.

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.

Accounting:The accounting and reporting policies of Bancorp and the Bank, collectively referred to as the “Company”, conform to accounting principles generally accepted in the United States of America. The following is a description of the more significant of these policies.

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

6

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS — CONTINUED
EVERGREENBANCORP, INC.

Quarterly period ended March 31, 2002
(UNAUDITED)

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America and with the general practices in the banking industry. The preparation of financial statements in conformity with these principles requires management to make 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. Material estimates particularly susceptible to possible changes in the near term relate to the determination of the allowance for losses on loans, the carrying values of securities, and deferred tax assets. An estimate of possible changes or range of possible changes cannot be made related to these items.

Reclassifications:Certain items in prior period’s 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.

Parent company only financial information:The following table illustrates the condensed balance sheet at March 31, 2002 and December 31, 2001, and the related condensed statements of income and cash flows for the quarterly period ended March 31, 2002 for EvergreenBancorp, Inc., without including the accounts of its subsidiary, EvergreenBank:

Condensed balance sheets (in thousands):
			MARCH 31,		DECEMBER 31,
			2002		2001
Assets:
	Due from EvergreenBank		$	83	$	83
	Investment in EvergreenBank			14,764		14,655
Total assets			$	14,847	$	14,738
Liabilities and stockholders’ equity:
	Stockholders’ equity:
		Preferred stock	$		$
		Common stock and surplus		11,485		11,485
		Retained earnings		3,331		3,198
		Accumulated other comprehensive income		31		55
Total liabilities and stockholders’ equity			$	14,847	$	14,738

Condensed statement of income(in thousands):
		THREE MONTHS
		ENDED
		MARCH 31, 2002
Income:
	Dividend from EvergreenBank	$	168
Income before equity in undistributed income of subsidiary			168
Equity in undistributed income of subsidiary			133
Net income		$	301

7

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS — CONTINUED
EVERGREENBANCORP, INC.

Quarterly period ended March 31, 2002
(UNAUDITED)

Condensed statement of cash flows(in thousands):
			THREE MONTHS
			ENDED
			MARCH 31, 2002
Cash flows from operating activities:
	Net income		$	301
	Adjustments to reconcile net income to net cash provided by operating activities:
		Equity in undistributed income of subsidiary		(133	)
Net cash provided by operating activities				168
Cash flows from financing activities:
	Dividends paid			(168	)
Net cash provided (used) by financing activities				(168	)
Net increase in cash				0
Cash on deposit with EvergreenBank at beginning of period				83
Cash on deposit with EvergreenBank at end of period			$	83

8

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion contains a review of the consolidated operating results and financial condition of EvergreenBancorp, Inc. (“Bancorp”) and its wholly-owned subsidiary EvergreenBank (the “Bank”), collectively referred to as the “Company”, for the first quarter of 2002. 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 2001 and to the previous year ended December 31, 2001. For additional information, refer to the consolidated financial statements and footnotes of EvergreenBancorp, Inc. for the year ended December 31, 2001.

RESULTS OF OPERATIONS

Net Income

The Company reported net income of $301,000 for the first quarter of 2002, compared to $338,000 for the first quarter of 2001, a reduction of 10.95 percent. Earnings per basic common share were $0.32 for the first quarter of 2002 compared to $0.34 for the first quarter of 2001. The results from first quarter of 2001 included two nonrecurring items which impacted the results: additional revenue of $143,000 from the repurchase of shares in an ATM electronic services provider, offset by expense of $50,000 associated with the formation of EvergreenBancorp, Inc. Return on average assets was 0.76 percent for the first quarter of 2002 and 0.95 percent for the first quarter of 2001. Return on average common equity was 8.18 percent for the first quarter of 2002 and 9.18 percent for the first quarter of 2001.

Net Interest Income

Net interest income was $2,043,000 for the first quarter of 2002, compared to $1,861,000 for the same quarter a year ago, an increase of 9.78 percent. The increase in the net interest income for the first quarter was primarily due to increased lending activity and an improved mix of earning assets.

Interest income for the three months ended March 31, 2002 was $2,711,000 compared to $2,987,000 for the three months ended March 31, 2001, a decrease of $276,000 or 9.24 percent. This decrease was primarily the result of falling interest rates offset by growth in loan volume. Average loans outstanding for the three months ended March 31, 2002 were $6,918,000 higher than the three months ended March 31, 2001.

9

Interest expense for the three months ended March 31, 2002 was $668,000 compared to $1,126,000 for the three months ended March 31, 2001, a decrease of $458,000 or 40.67 percent. The decrease was primarily the result of falling interest rates during 2001 and a higher percentage mix of lower cost deposits.

Noninterest Income/Expense

Noninterest income in the first quarter of 2002 was $592,000 compared to $793,000 in the same quarter of 2001, a reduction of $201,000 or 25.35 percent. Last year’s results included additional revenue of $143,000 resulting from the repurchase of our share in a company that provides ATM electronic services.

Noninterest expense was $2,101,000 in the first quarter of 2002, compared to $1,997,000 in the same quarter of 2001, an increase of $104,000 or 5.21 percent. The increase was mostly due to increased costs, including premises and equipment, associated with opening a new office in 2001.

Allowance for Loan Losses

The allowance for loan losses is maintained at a level considered adequate by management to absorb estimated losses over the life of the portfolio.

Management periodically evaluates the adequacy of the allowance based upon a number of factors, including the volume and composition of the loan portfolio, potential impairment of individual loans and concentrations of credit, estimated value of underlying collateral, past loss experience, current economic conditions, loan commitments outstanding and other factors.

The following table sets forth the changes in the Company’s allowance for loan losses at the dates indicated.

	Three months ended March 31
	2002			2001
Balance at beginning of period	$	1,498,000		$	1,323,000
Provision for possible credit losses		89,000			150,000
Charge-offs		(8,000	)		(10,000	)
Recoveries		34,000			1,000
Net Recoveries (Charge-offs)		26,000			(9,000	)
Balance at end of period	$	1,613,000		$	1,464,000

10

At March 31, 2002, the allowance for loan losses stood at $1,613,000 compared to $1,498,000 at December 31, 2001, and $1,464,000 at March 31, 2001. The ratio of the allowance to total loans outstanding was 1.32 percent, 1.23 percent and 1.27 percent, respectively at March 31, 2002, December 31, 2001, and March 31, 2001.

Non-performing Assets and Foreclosed Real Estate

Non-performing assets totaled $975,000 at March 31, 2002. This represented 0.8 percent of total loans and foreclosed real estate compared to $1,155,000 or 0.95 percent at December 31, 2001, and $661,000 or 0.58 percent at March 31, 2001.

Analysis of Non-Performing Assets	March 31,		December 31,		March 31,
(in thousands)	2002		2001		2001
Accruing Loans past due 90 days or more		488		602		288
Non-accrual loans		487		553		373
Foreclosed real estate		0		0		0
Total		975		1,155		661

Income Taxes

Accrued income taxes applicable to income for the three-month period ended March 31, 2002 were $144,000 compared to $169,000 for the same period in 2001. Pretax income for the three months ended March 31, 2002 totaling $445,000 was down $62,000 from the $507,000 for the three months ended March 31, 2001. The effective tax rates for these periods were 32.35 percent and 33.33 percent, respectively.

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FINANCIAL CONDITION

Loans and Investments

At March 31, 2002, loans totaled $121,876,000, a reduction of $343,000 or 0.28 percent over December 31, 2001 and an increase of $6,324,000 or 5.47 percent over the level reported at March 31, 2001. At March 31, 2002, the Bank had $89,581,000 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.

Types of Loans

The major classifications of loans net of unearned income in the Bank’s portfolio at March 31, 2002 and December 31, 2001 were:

(in thousands)		2002		2001
Commercial		$	52,308	$	53,791
Real estate:
	Commercial		32,645		28,349
	Construction		7,439		7,002
	Residential 1-4 family		12,381		13,942
Consumer and other			17,103		19,135
Total		$	121,876	$	122,219

At March 31, 2002, investments totaled $15,265,000, an increase of $51,000 or 0.33 percent over December 31, 2001 and an increase of $4,054,000 or 36.16 percent over the level reported at March 31, 2001. In 2001, the Company restructured the investment portfolio to bolster liquidity and reduce interest rate risk. Specifically, the Company reduced levels of intermediate term (two to five years) investment securities and increased short term (one year or less) liquidity investments.

Deposits and Borrowings

At March 31, 2002, total deposits were $140,601,000, compared to $130,344,000 at December 31, 2001 and $122,878,000 at March 31, 2001. This represents a 7.87 percent increase from December 31, 2001 and a 14.42 percent increase from March 31, 2001. Non-interest bearing deposits totaled $33,848,000 at March 31, 2002 compared to $38,233,000 at December 31, 2001 and $30,931,000 at March 31, 2001. Interest bearing deposits totaled $106,753,000, an increase of $14,806,000 or 16.10 percent over March 31, 2001 and $14,642,000 or 15.90 percent over the level reported at December 31, 2001.

At March 31, 2002, total borrowings, consisting of Federal Home Loan Bank advances were $4,355,000, compared to $4,005,000 at December 31, 2001 and $2,000,000 at March 31, 2001. This represents a 8.74 percent increase from December 31, 2001 and a 117.75 percent increase from March 31, 2001 due to liquidity needs.

Stockholders’ Equity and Capital Resources

Stockholders’ equity totaled $14,847,000 at March 31, 2002, an increase of $109,000 or .74 percent over December 31, 2001 and an increase of $39,000 or 0.26 percent over March 31, 2001. The increase in capital over last year is principally due to retained earnings substantially

12

offset by cash dividends and by the repurchase for $997,000 of common stock held by shareholders dissenting to the holding company formation in June 2001.

Cash dividends paid year-to-date at March 31, 2002 totaled $168,000 (18 cents per share) and for the year ended December 31, 2001 and the three months ended March 31, 2001 totaled $166,000 (16.7 cents per share). Book value per share was $15.88 at March 31, 2002 compared to $15.77 at December 31, 2001 and $14.88 at March 31, 2001. Book value per share is calculated by dividing total equity by total shares outstanding, giving retroactive effect to the July 2001 three-for-two stock split.

The following table displays the capital ratios at March 31, 2002 and December 31, 2001 for EvergreenBancorp and Bank. As the table illustrates, the capital ratios exceeded those required to be considered well-capitalized.

											Minimum to Be Well
											Capitalized
											Under the Prompt
						Minimum for Capital					Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
March 31, 2002
Total Capital (to risk-weighted assets)
EvergreenBancorp	$	16,428		12.42	%	$	10,579		8.00	%	$	13,224		10.00	%
EvergreenBank		16,345		12.36	%		10,579		8.00	%		13,224		10.00	%
Tier 1 Capital (to risk-weighted assets)
EvergreenBancorp		14,816		11.20	%		5,290		4.00	%		7,935		6.00	%
EvergreenBank		14,733		11.14	%		5,290		4.00	%		7,935		6.00	%

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											Minimum to Be Well
											Capitalized
											Under the Prompt
						Minimum for Capital					Corrective
	Actual					Adequacy Purposes					Action Provisions
	Amount		Ratio			Amount		Ratio			Amount		Ratio
Tier 1 Capital (to average assets)
EvergreenBancorp		14,816		9.33	%		6,349		4.00	%		7,936		5.00	%
EvergreenBank		14,733		9.28	%		6,349		4.00	%		7,936		5.00	%
December 31, 2001
Total Capital (to risk-weighted assets)
EvergreenBancorp		16,181		12.78	%		10,132		8.00	%		12,665		10.00	%
EvergreenBank		16,099		12.71	%		10,131		8.00	%		12,663		10.00	%
Tier 1 Capital (to risk-weighted assets)
EvergreenBancorp		14,683		11.59	%		5,066		4.00	%		7,599		6.00	%
EvergreenBank		14,601		11.53	%		5,065		4.00	%		7,598		6.00	%
Tier 1 Capital (to average assets)
EvergreenBancorp		14,683		9.57	%		6,135		4.00	%		7,669		5.00	%
EvergreenBank		14,601		9.68	%		6,032		4.00	%		7,540		5.00	%

Liquidity

Liquidity is defined as the ability to provide sufficient cash to fund operations and meet obligations and commitments on a timely basis. Through asset and liquidity management, the Company controls its liquidity position to ensure that sufficient funds are available to meet the needs of depositors, borrowers, and creditors.

In addition to cash and cash equivalents, asset liquidity is provided by the available-for-sale securities portfolio. More than 75 percent of the investment balances within this portfolio mature within one year. Liquidity is further enhanced by deposit growth, federal funds purchased and securities sold under agreements to repurchase, borrowings, and planned maturities and sales of investments and loans.

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The consolidated statement of cash flows contained in this report provides information on the sources and uses of cash for the respective year-to-date periods ending March 31, 2002 and 2001. See Form 10K for the year ended December 31, 2001 for additional information.

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Item 3.Quantitative and Qualitative Disclosures About Market Risk

There were no material changes in information about market risk that was provided in the Company’s Form 10-K for the year ended December 31, 2001.

Forward-Looking Information Statement

Statements in this report regarding future events or performance are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”) and are made pursuant to the safe harbors of the PSLRA. Actual results could be quite different from those expressed or implied by the forward-looking statements. Any statements that expressly or implicitly predict future results, performance, or events should be considered forward-looking. Factors that could cause results to differ from forward-looking statements include, among others, risks discussed in the rest of this report as well as the following specific items: general economic conditions, including levels of employment, whether national, regional, or local, that could affect the demand for loans or lead to increased loan losses; competitive factors, including increased competition with community, regional, and national financial institutions that may lead to pricing pressures on rates the Company’s bank subsidiary charges on loans and pays on deposits, loss of customers of greatest value to the Company, or other losses; increasing or decreasing interest rate environments that could lead to decreased net interest margin; changing business conditions in the banking industry; changes in the regulatory environment or new legislation; and changes in technology or required investments in technology. Readers are cautioned not to place undue reliance on forward-looking statements, which reflect management’s analysis only as of the date of the statement. The Company does not intend to publicly revise or update forward-looking statements to reflect events or circumstances that arise after the date of this report.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

         There are no material pending legal proceedings to which EvergreenBancorp, Inc. or its subsidiary is a party other than ordinary routine litigation incidental to their respective businesses.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

         None

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Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Bancorp held its annual meeting of stockholders on April 18, 2002, at which the election of directors was held. All nine of the persons nominated were elected to serve a one, two or three year term to expire when indicated, and the votes cast are as shown:

	Term		Number of		Number of
Director Candidate	Expires		Votes For		Votes Withheld
Richard W. Baldwin		2005		754711		2055
Marceline Duncan		2004		749067		7699
C. Don Filer		2005		749356		7410
Carole J. Grisham		2004		754846		1920
J. Thomas Handy		2004		751624		5142
Gerald O. Hatler		2003		754696		2070
Robert W. Howisey		2005		751464		5302
Stan W. McNaughton		2003		753946		2820
Gladys M. Perry		2003		748617		8149

ITEM 5. OTHER INFORMATION

         None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

10.1	Agreement of Lease dated March 29, 2002 between EvergreenBank and PEMCO Mutual Insurance Company relating to lease of premises in Seattle, King County, Washington
10.2	Agreement of Lease dated March 29, 2002 between EvergreenBank and PEMCO Mutual Insurance Company relating to lease of premises in Lynnwood, Snohomish County, Washington

(b) Reports on Form 8-K

         None

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SIGNATURES

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

Dated this 14th day of May, 2002.

EVERGREENBANCORP, INC.

/s/  WILLIAM G. FILER II
William G. Filer II
Senior Vice President and Chief Financial Officer
(Authorized Officer and Principal Financial Officer)

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EXHIBIT INDEX

10.1	Agreement of Lease dated March 29, 2002 between EvergreenBank and PEMCO Mutual Insurance Company relating to lease of premises in Seattle, King County, Washington
10.2	Agreement of Lease dated March 29, 2002 between EvergreenBank and PEMCO Mutual Insurance Company relating to lease of premises in Lynnwood, Snohomish County, Washington