##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549





Form 10-K


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934    
|          
|           |  | For the fiscal year ended December 31, 2005                                                 
|          
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934
|          
|           |  | (No Fee Required)                                                                           

Commission file
number 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


(Address of Principal Executive Offices) (ZIP Code)


Registrants telephone number, including area code:


(206) 628-4250


Securities registered pursuant to Section 12(b) of the
Act:


None


Securities registered pursuant to Section 12(g) of the
Act:


Common Stock, no par value per share


o þ


o þ


þ o


S-K 10-K 10-K. þ




o o þ


12b-2 o þ






DOCUMENTS INCORPORATED BY REFERENCE












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##### 










EVERGREENBANCORP, INC.


FORM 10-K


ANNUAL REPORT


TABLE OF CONTENTS


|             |  |                                                                                                               |    |      |    | 
|------------ |  | ------------------------------------------------------------------------------------------------------------- | -- | ---- | -- | 
|             |  |                                                                                                               |    | Page |   
|             |  |                                                                                                               |    |      |   
|             |  | PART I                                                                                                        |    |      | 3  | 
|Item 1.      |  | Business                                                                                                      |    |      | 3  | 
|Item 1A.     |  | Risk Factors                                                                                                  |    |      | 10 | 
|Item 1B.     |  | Unresolved Staff Comments                                                                                     |    |      | 11 | 
|Item 2.      |  | Properties                                                                                                    |    |      | 11 | 
|Item 3.      |  | Legal Proceedings                                                                                             |    |      | 12 | 
|Item 4.      |  | Submission of Matters to a Vote of Security
    Holders                                                       |    |      | 12 | 
|            
|             |  | PART II                                                                                                       |    |      | 12 | 
|Item 5.      |  | Market for Registrants Common
Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities |    |      | 12 | 
|Item 6.      |  | Selected Consolidated Financial Data                                                                          |    |      | 14 | 
|Item 7.      |  | Managements
Discussion and Analysis of Financial Condition and Results of Operations                         |    |      | 14 | 
|Item 7A.     |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                |    |      | 33 | 
|Item 8.      |  | Financial Statements and Supplementary
    Data                                                               |    |      | 33 | 
|Item 9.      |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                          |    |      | 60 | 
|Item 9A.     |  | Controls and Procedures                                                                                       |    |      | 60 | 
|Item 9B.     |  | Other Information                                                                                             |    |      | 60 | 
|            
|             |  | PART III                                                                                                      |    |      | 60 | 
|Item 10.     |  | Directors and Executive Officers of the
    Registrant                                                        |    |      | 60 | 
|Item 11.     |  | Executive Compensation                                                                                        |    |      | 60 | 
|Item 12.     |  | Security Ownership of Certain Beneficial Owners and
Management and Related Shareholder Matters                |    |      | 61 | 
|Item 13.     |  | Certain Relationships and Related
    Transactions                                                            |    |      | 61 | 
|Item 14.     |  | Principal Accounting Fees and Services                                                                        |    |      | 61 | 
|            
|             |  | PART IV                                                                                                       |    |      | 61 | 
|Item 15.     |  | Exhibits and Financial Statement
    Schedules                                                                |    |      | 61 | 
|SIGNATURES   |  |                                                                                                               | 63 |     
|EXHIBIT 21  
|EXHIBIT 23  
|EXHIBIT 31.1
|EXHIBIT 31.2
|EXHIBIT 32.1
|EXHIBIT 32.2



2



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PART I


Forward-Looking Information Statement









|        |         
|------- | --------
|Item 1. | Business

EvergreenBancorp, Inc.








3



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10-K


EvergreenBank






| |       
| | ------
| | Market

25-mile


24-hour




| |            
| | -----------
| | Competition





4



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| |          
| | ---------
| | Employees



EvergreenBancorp Capital Trust I






SUPERVISION AND REGULATION


General




Federal Bank Holding Company Regulation


General.


Holding Company Bank Ownership.


5



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Holding Company Control of Nonbanks.


Transactions with Affiliates.


Tying Arrangements.


Support of Subsidiary Banks.


State Law Restrictions.


Federal and State Regulation of EvergreenBank


General.


Community Reinvestment.


Insider Credit Transactions.


6



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Regulation of Management.


Safety and Soundness Standards.


Interstate Banking and Branching




loan-to




Deposit Insurance






7



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Dividends




Capital Adequacy


Regulatory Capital Guidelines.


Tier 1 and Tier 2 Capital.


Risk-Based Capital Ratios.


Leverage Ratio.


Prompt Corrective Action.


Corporate Governance and Accounting Legislation


Sarbanes-Oxley Act of 2002.




8



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Anti-Terrorism Legislation


USA PATRIOT Act of 2001.


Financial Services Modernization


Gramm-Leach-Bliley Act of 1999.






Effects of Government Monetary Policy




9



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|         |             
|-------- | ------------
|Item 1A. | Risk Factors



Fluctuating interest rates can adversely affect our
profitability




Our allowance for loan losses may not be adequate to cover
actual loan losses, which could adversely affect our earnings




Our loan portfolio contains a high percentage of commercial
and commercial real estate loans in relation to our total loans
and total assets




10



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An economic downturn in the market area we serve may cause us
to have lower earnings and could increase our credit risk
associated with our loan portfolio




Competition in our market area may limit our future
success




There are restrictions on changes in control of the Company
that could decrease our shareholders chance to realize a
premium on their shares









|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties







11



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|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings








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






PART II







|        |                                                                                                                      
|------- | ---------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Stockholder Matters, and Issuer Purchases of Equity
    Securities





|               |  |          |       |  |      |  |       |     |  |  |          |  |  |      |       |  |     |  |       |  |  |  |       | 
|-------------- |  | -------- | ----- |  | ---- |  | ----- | --- |  |  | -------- |  |  | ---- | ----- |  | --- |  | ----- |  |  |  | ----- | 
|               |  | 2005     |       |  | 2004 | 
|               |  |          |       |  |      | 
|               |  | Cash     |       |  |      |  | Cash  |     |  | 
|               |  | Dividend |       |  | High |  |       | Low |  |  | Dividend |  |  | High |       |  | Low | 
|               |  |          |       |  |      |  |       |     |  |  |          |  |  |      |       |  |     | 
|First Quarter  |  |          | 0.056 |  |      |  | 13.09 |     |  |  | 12.11    |  |  |      | 0.048 |  |     |  | 11.06 |  |  |  | 10.83 | 
|Second Quarter |  |          | 0.056 |  |      |  | 14.07 |     |  |  | 11.80    |  |  |      | 0.048 |  |     |  | 10.83 |  |  |  | 10.42 | 
|Third Quarter  |  |          | 0.056 |  |      |  | 14.68 |     |  |  | 13.07    |  |  |      | 0.048 |  |     |  | 11.06 |  |  |  | 10.45 | 
|Fourth Quarter |  |          | 0.060 |  |      |  | 16.93 |     |  |  | 13.49    |  |  |      | 0.048 |  |     |  | 13.50 |  |  |  | 10.97 | 





962-4284.




12



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Equity Compensation Plan Information




|                                                       |  |                     |         |  |                      |                  |                         |                          |  |  |        | 
|------------------------------------------------------ |  | ------------------- | ------- |  | -------------------- | ---------------- | ----------------------- | ------------------------ |  |  | ------ | 
|                                                       |  |                     |         |  |                      | Number of Shares |                        
|                                                       |  | Number of Shares    |         |  |                      |                  | Remaining Available for |                         
|                                                       |  | to be Issued        |         |  | Weighted-Average     |                  |                         | Future Issuance Under    | 
|                                                       |  | upon Exercise of    |         |  | Exercise Price of    |                  |                         | Equity Compensation      | 
|                                                       |  | Outstanding Options |         |  | Outstanding Options, |                  |                         | Plans (Excluding Shares  | 
|                                                       |  | Warrants and Rights |         |  | Warrants and Rights  |                  |                         | Reflected in Column (a)) | 
|Plan Category                                          |  | (a)                 |         |  | (b)                  |                  |                         | (c)                      | 
|                                                       |  |                     |         |  |                      |                  |                         |                          | 
|Equity compensation plans approved by shareholders(1)  |  |                     | 228,250 |  |                      | $                | 9.32                    |                          |  |  | 68,675 | 
|Equity compensation plans not approved by shareholders |  |                     | N/A     |  |                      |                  | N/A                     |                          |  |  | N/A    | 
|                                                       |  |                     |         |  |                      |                  |                         |                          | 
|Total                                                  |  |                     | 228,250 |  |                      | $                | 9.32                    |                          |  |  | 68,675 | 
|                                                       |  |                     |         |  |                      |                  |                         |                          | 






|    |                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------
|(1) | Amounts have been adjusted to reflect all applicable stock
    splits and dividends paid on the Companys common stock.

13



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|        |                                     
|------- | ------------------------------------
|Item 6. | Selected Consolidated Financial Data

|                                                            |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|----------------------------------------------------------- |  | ----------------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- | - |  | - | ------- | -
|                                                            |  | 2005                                            |         |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                                            |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |        
|                                                            |  | (In thousands, except per share and ratio data) |        
|INCOME STATEMENT DATA                                       |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Net interest income                                         |  | $                                               | 10,263  |   |      | $ | 9,102   |      |  | $ | 8,200   |   |  | $    | 8,337   |   |  | $ | 7,714   |  
|Provision for loan losses                                   |  |                                                 | 423     |   |      |   | 321     |      |  |   | 233     |   |  |      | 330     |   |  |   | 479     |  
|Noninterest income                                          |  |                                                 | 1,693   |   |      |   | 1,709   |      |  |   | 1,755   |   |  |      | 1,537   |   |  |   | 1,807   |  
|Noninterest expense                                         |  |                                                 | 10,150  |   |      |   | 8,602   |      |  |   | 8,196   |   |  |      | 7,521   |   |  |   | 7,213   |  
|Net income                                                  |  |                                                 | 966     |   |      |   | 1,282   |      |  |   | 1,036   |   |  |      | 1,343   |   |  |   | 1,240   |  
|                                                            |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |        
|PER SHARE DATA(1)                                           |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Earnings per common share                                   |  | $                                               | 0.48    |   |      | $ | 0.64    |      |  | $ | 0.52    |   |  | $    | 0.68    |   |  | $ | 0.62    |  
|Diluted earnings per common share                           |  |                                                 | 0.47    |   |      |   | 0.63    |      |  |   | 0.52    |   |  |      | 0.68    |   |  |   | 0.62    |  
|Dividends declared per common share                         |  |                                                 | 0.228   |   |      |   | 0.192   |      |  |   | 0.185   |   |  |      | 0.086   |   |  |   | 0.080   |  
|                                                            |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |        
|BALANCE SHEET DATA                                          |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Total loans                                                 |  | $                                               | 189,188 |   |      | $ | 159,656 |      |  | $ | 138,468 |   |  | $    | 121,509 |   |  | $ | 122,219 |  
|Allowance for loan losses                                   |  |                                                 | 2,056   |   |      |   | 1,887   |      |  |   | 1,636   |   |  |      | 1,690   |   |  |   | 1,498   |  
|Real estate owned                                           |  |                                                 |        |   |      |   |        |      |  |   | 2,659   |   |  |      |        |   |  |   |        |  
|Total assets                                                |  |                                                 | 249,192 |   |      |   | 209,630 |      |  |   | 194,556 |   |  |      | 169,926 |   |  |   | 156,365 |  
|Total deposits                                              |  |                                                 | 199,890 |   |      |   | 173,801 |      |  |   | 152,683 |   |  |      | 132,174 |   |  |   | 130,344 |  
|Total long-term debt                                        |  |                                                 | 28,849  |   |      |   | 16,067  |      |  |   | 20,381  |   |  |      | 16,783  |   |  |   | 4,005   |  
|Stockholders equity                                        |  |                                                 | 17,736  |   |      |   | 17,485  |      |  |   | 16,583  |   |  |      | 15,960  |   |  |   | 14,738  |  
|                                                            |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |        
|SELECTED FINANCIAL RATIOS                                   |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |         |   |  |   |         |  
|Return on average assets                                    |  |                                                 | 0.45    | % |      |   | 0.66    | %    |  |   | 0.60    | % |  |      | 0.82    | % |  |   | 0.83    | %
|Return on average equity                                    |  |                                                 | 5.51    |   |      |   | 7.58    |      |  |   | 6.42    |   |  |      | 8.84    |   |  |   | 8.50    |  
|Dividend payout ratio                                       |  |                                                 | 47.31   |   |      |   | 29.80   |      |  |   | 35.33   |   |  |      | 12.51   |   |  |   | 13.39   |  
|Average equity to average assets                            |  |                                                 | 8.16    |   |      |   | 8.71    |      |  |   | 9.29    |   |  |      | 9.31    |   |  |   | 9.70    |  
|Net interest margin (tax equivalent)                        |  |                                                 | 5.15    |   |      |   | 5.02    |      |  |   | 5.02    |   |  |      | 5.48    |   |  |   | 5.52    |  
|Allowance for loan losses to total loans at the end of year |  |                                                 | 1.09    |   |      |   | 1.18    |      |  |   | 1.18    |   |  |      | 1.39    |   |  |   | 1.23    |  
|Nonperforming loans to total loans at the end of year(2)    |  |                                                 | 0.61    |   |      |   | 0.14    |      |  |   | 0.46    |   |  |      | 0.66    |   |  |   | 0.95    |  
|Net loans charged off to average total loans                |  |                                                 | 0.16    |   |      |   | 0.05    |      |  |   | 0.24    |   |  |      | 0.11    |   |  |   | 0.26    |  
|                                                            |  |                                                 |         |   |      |   |         |      |  |   |         |   |  |      |        






|    |                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------
|(1) | All per share amounts have been adjusted to reflect all
    applicable stock splits and dividends paid on the Companys
    common stock.
|   
|(2) | Nonperforming loans include nonaccrual loans, and other loans
    90 days or more past due.                                              






|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

General




14



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Forward-Looking Statements






Critical Accounting Policies


10-K.


15



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Allowance for Loan Losses.










Temporary Decline in Fair Value of Securities.


Overview








16



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Results of Operations 2005 Compared to 2004










Results of Operations 2004 Compared to 2003




17



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Net Interest Income




2005 Compared to 2004








2004 Compared to 2003








18



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Analysis of Average Balances, Net Interest Income, and Net
Interest Margin


|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |     |  
|------------------------------------------------------------------------------ | ------------------------ | ------------------------ | ------- | -------------- | -------- | - | ------ | ---------------- |  | ------- | ------- | ---- | - | -------- | ------- | ------ | ---- | - | ------ | ------ |  |  | ---- | ---- | - |  | ----- | ----- | - |  | ----- | --- | -
|                                                                               |                          | Years Ended December 31, |        
|                                                                               |                          |                          |        
|                                                                               |                          |                          |         | 2005 Over 2004 |         
|                                                                               |                          |                          |         |                |         
|                                                                               |                          | 2005                     |         |                | 2004     |   |        | Change in income | 
|                                                                               |                          |                          |         |                |          |   |        | due to           | 
|                                                                               |                          | Average                  |         |                |          |   | Yield/ |                  |  | Average |         |      |   |          | Yield/  |        |      |   |       
|                                                                               |                          | Balance                  |         |                | Interest |   |        | Rate             |  |         | Balance |      |   | Interest |         |        | Rate |   |        | Volume |  |  | Rate |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|                                                                               |                          | (In thousands)           |        
|ASSETS                                                                        
|Loans:                                                                         |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|                                                                               | Commercial and financial |                          | $       | 56,551         |          |   | $      | 4,688            |  |         |         | 8.29 | % |          | $       | 62,706 |      |   | $      | 4,504  |  |  |      | 7.18 | % |  | $     | (469  | ) |  | $     | 653 |  
|                                                                               | Real estate              |                          |         | 89,433         |          |   |        | 6,303            |  |         |         | 7.05 |   |          |         | 66,352 |      |   |        | 4,456  |  |  |      | 6.72 |   |  |       | 1,617 |   |  |       | 230 |  
|                                                                               | Consumer and other       |                          |         | 14,238         |          |   |        | 1,380            |  |         |         | 9.69 |   |          |         | 13,170 |      |   |        | 1,283  |  |  |      | 9.74 |   |  |       | 104   |   |  |       | (7  | )
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total loans                                                                    |                          |                          | 160,222 |                |          |   | 12,371 |                  |  |         | 7.72    |      |   |          | 142,228 |        |      |   | 10,243 |        |  |  | 7.20 |      |   |  | 1,252 |       |   |  | 876   |    
|Federal funds sold                                                             |                          |                          | 5,350   |                |          |   | 164    |                  |  |         | 3.06    |      |   |          | 3,564   |        |      |   | 44     |        |  |  | 1.24 |      |   |  | 31    |       |   |  | 89    |    
|Interest-bearing deposits in financial institutions                            |                          |                          | 849     |                |          |   | 15     |                  |  |         | 1.77    |      |   |          | 962     |        |      |   | 4      |        |  |  | 0.42 |      |   |  | (1    | )     |   |  | 12    |    
|Investment securities                                                          |                          |                          | 34,816  |                |          |   | 1,245  |                  |  |         | 3.58    |      |   |          | 35,575  |        |      |   | 1,129  |        |  |  | 3.18 |      |   |  | (24   | )     |   |  | 140   |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total earning assets                                                           |                          |                          | 201,237 |                |          |   | 13,795 |                  |  |         | 6.86    |      |   |          | 182,329 |        |      |   | 11,420 |        |  |  | 6.26 |      |   |  | 1,258 |       |   |  | 1,117 |    
|Cash and due from banks                                                        |                          |                          | 8,756   |                |          |   |        |                  |  |         |         |      |   |          | 7,500   |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|Premises and equipment                                                         |                          |                          | 2,942   |                |          |   |        |                  |  |         |         |      |   |          | 3,402   |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|Other real estate owned                                                        |                          |                          |        |                |          |   |        |                  |  |         |         |      |   |          | 330     |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|Accrued interest and other assets                                              |                          |                          | 3,901   |                |          |   |        |                  |  |         |         |      |   |          | 2,220   |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|Allowance for loan losses                                                      |                          |                          | (1,937  | )              |          |   |        |                  |  |         |         |      |   |          | (1,677  | )      |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total assets                                                                   |                          | $                        | 214,899 |                |          |   |        |                  |  |         |         |      |   | $        | 194,104 |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|                                                                              
|LIABILITIES                                                                   
|Interest-bearing deposits:                                                     |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|                                                                               | Demand deposits          |                          |         | 12,529         |          |   |        | 21               |  |         |         | 0.17 |   |          |         | 11,133 |      |   |        | 12     |  |  |      | 0.11 |   |  |       | 2     |   |  |       | 7   |  
|                                                                               | Savings deposits         |                          |         | 55,299         |          |   |        | 777              |  |         |         | 1.40 |   |          |         | 49,384 |      |   |        | 469    |  |  |      | 0.95 |   |  |       | 62    |   |  |       | 246 |  
|                                                                               | Time deposits            |                          |         | 58,342         |          |   |        | 1,723            |  |         |         | 2.95 |   |          |         | 48,953 |      |   |        | 972    |  |  |      | 1.99 |   |  |       | 212   |   |  |       | 539 |  
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total interest-bearing deposits                                                |                          |                          | 126,170 |                |          |   | 2,521  |                  |  |         | 2.00    |      |   |          | 109,470 |        |      |   | 1,453  |        |  |  | 1.33 |      |   |  | 276   |       |   |  | 792   |    
|Federal funds purchased                                                        |                          |                          | 323     |                |          |   | 15     |                  |  |         | 4.65    |      |   |          | 1,715   |        |      |   | 14     |        |  |  | 0.82 |      |   |  | (19   | )     |   |  | 20    |    
|Federal Home Loan Bank advances                                                |                          |                          | 12,351  |                |          |   | 568    |                  |  |         | 4.60    |      |   |          | 12,663  |        |      |   | 541    |        |  |  | 4.27 |      |   |  | (14   | )     |   |  | 41    |    
|Junior subordinated debt                                                       |                          |                          | 5,000   |                |          |   | 345    |                  |  |         | 6.90    |      |   |          | 5,000   |        |      |   | 253    |        |  |  | 5.06 |      |   |  |      |       |   |  | 92    |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total interest-bearing liabilities                                             |                          |                          | 143,844 |                |          |   | 3,449  |                  |  |         | 2.40    |      |   |          | 128,848 |        |      |   | 2,261  |        |  |  | 1.75 |      |   |  | 243   |       |   |  | 945   |    
|Noninterest-bearing deposits                                                   |                          |                          | 51,576  |                |          |   |        |                  |  |         |         |      |   |          | 46,323  |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|Accrued interest and other liabilities                                         |                          |                          | 1,937   |                |          |   |        |                  |  |         |         |      |   |          | 2,024   |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total liabilities                                                              |                          |                          | 197,357 |                |          |   |        |                  |  |         |         |      |   | $        | 177,195 |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|Stockholders equity                                                           |                          |                          | 17,542  |                |          |   |        |                  |  |         |         |      |   |          | 16,909  |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total liabilities and stockholders equity                                     |                          | $                        | 214,899 |                |          |   |        |                  |  |         |         |      |   | $        | 194,104 |        |      |   |        |        |  |  |      |      |   |  |       |       |   |  |       |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Interest revenue as a percentage of average earning assets                     |                          |                          |         |                |          |   |        |                  |  |         | 6.86    | %    |   |          |         |        |      |   |        |        |  |  | 6.26 | %    |   |  |       |       |   |  |       |    
|Interest expense as a percentage of average earning assets                     |                          |                          |         |                |          |   |        |                  |  |         | 1.71    | %    |   |          |         |        |      |   |        |        |  |  | 1.24 | %    |   |  |       |       |   |  |       |    
|Net interest income on a taxable- equivalent basis and net
    interest margin |                          |                          |         |                |          | $ | 10,346 |                  |  |         | 5.15    | %    |   |          |         |        |      | $ | 9,159  |        |  |  | 5.02 | %    |   |  |       |       |   |  |       |    
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     



19



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##### Table of Contents



Analysis of Average Balances, Net Interest Income, and Net
Interest Margin


|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |      |  
|------------------------------------------------------------------------------ | ------------------------ | ------------------------ | ------- | -------------- | -------- | - | ------ | ---------------- |  | ------- | ------- | ---- | - | -------- | ------- | ------ | ---- | - | ------ | ------ |  |  | ---- | ---- | - |  | ----- | --- | - |  | ---- | ---- | -
|                                                                               |                          | Years Ended December 31, |        
|                                                                               |                          |                          |        
|                                                                               |                          |                          |         | 2004 Over 2003 |         
|                                                                               |                          |                          |         |                |         
|                                                                               |                          | 2004                     |         |                | 2003     |   |        | Change in income | 
|                                                                               |                          |                          |         |                |          |   |        | due to           | 
|                                                                               |                          | Average                  |         |                |          |   | Yield/ |                  |  | Average |         |      |   |          | Yield/  |        |      |   |       
|                                                                               |                          | Balance                  |         |                | Interest |   |        | Rate             |  |         | Balance |      |   | Interest |         |        | Rate |   |        | Volume |  |  | Rate |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|                                                                               |                          | (In thousands)           |        
|ASSETS                                                                        
|Loans:                                                                         |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|                                                                               | Commercial and financial |                          | $       | 62,706         |          |   | $      | 4,504            |  |         |         | 7.18 | % |          | $       | 53,822 |      |   | $      | 3,839  |  |  |      | 7.13 | % |  | $     | 648 |   |  | $    | 17   |  
|                                                                               | Real estate              |                          |         | 66,352         |          |   |        | 4,456            |  |         |         | 6.72 |   |          |         | 52,809 |      |   |        | 4,037  |  |  |      | 7.64 |   |  |       | 810 |   |  |      | (391 | )
|                                                                               | Consumer and other       |                          |         | 13,170         |          |   |        | 1,283            |  |         |         | 9.74 |   |          |         | 14,129 |      |   |        | 1,410  |  |  |      | 9.98 |   |  |       | (92 | ) |  |      | (35  | )
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total loans                                                                    |                          |                          | 142,228 |                |          |   | 10,243 |                  |  |         | 7.20    |      |   |          | 120,760 |        |      |   | 9,286  |        |  |  | 7.69 |      |   |  | 1,366 |     |   |  | (409 | )   
|Federal funds sold                                                             |                          |                          | 3,564   |                |          |   | 44     |                  |  |         | 1.24    |      |   |          | 8,425   |        |      |   | 90     |        |  |  | 1.07 |      |   |  | (63   | )   |   |  | 17   |     
|Interest-bearing deposits in financial institutions                            |                          |                          | 962     |                |          |   | 4      |                  |  |         | 0.42    |      |   |          | 1,328   |        |      |   | 12     |        |  |  | 0.90 |      |   |  | (3    | )   |   |  | (5   | )   
|Investment securities                                                          |                          |                          | 35,575  |                |          |   | 1,129  |                  |  |         | 3.18    |      |   |          | 33,828  |        |      |   | 1,078  |        |  |  | 3.19 |      |   |  | 59    |     |   |  | (8   | )   
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total earning assets                                                           |                          |                          | 182,329 |                |          |   | 11,420 |                  |  |         | 6.26    |      |   |          | 164,341 |        |      |   | 10,466 |        |  |  | 6.37 |      |   |  | 1,359 |     |   |  | (405 | )   
|Cash and due from banks                                                        |                          |                          | 7,500   |                |          |   |        |                  |  |         |         |      |   |          | 6,953   |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|Premises and equipment                                                         |                          |                          | 3,402   |                |          |   |        |                  |  |         |         |      |   |          | 2,377   |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|Other real estate owned                                                        |                          |                          | 330     |                |          |   |        |                  |  |         |         |      |   |          | 144     |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|Accrued interest and other assets                                              |                          |                          | 2,220   |                |          |   |        |                  |  |         |         |      |   |          | 1,641   |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|Allowance for loan losses                                                      |                          |                          | (1,677  | )              |          |   |        |                  |  |         |         |      |   |          | (1,657  | )      |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total assets                                                                   |                          | $                        | 194,104 |                |          |   |        |                  |  |         |         |      |   | $        | 173,799 |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|                                                                              
|LIABILITIES                                                                   
|Interest-bearing deposits:                                                     |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|                                                                               | Demand deposits          |                          |         | 11,133         |          |   |        | 12               |  |         |         | 0.11 |   |          |         | 10,208 |      |   |        | 20     |  |  |      | 0.19 |   |  |       | 2   |   |  |      | (10  | )
|                                                                               | Savings deposits         |                          |         | 49,384         |          |   |        | 469              |  |         |         | 0.95 |   |          |         | 48,677 |      |   |        | 513    |  |  |      | 1.05 |   |  |       | 7   |   |  |      | (51  | )
|                                                                               | Time deposits            |                          |         | 48,953         |          |   |        | 972              |  |         |         | 1.99 |   |          |         | 36,868 |      |   |        | 829    |  |  |      | 2.25 |   |  |       | 224 |   |  |      | (82  | )
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total interest-bearing deposits                                                |                          |                          | 109,470 |                |          |   | 1,453  |                  |  |         | 1.33    |      |   |          | 95,753  |        |      |   | 1,362  |        |  |  | 1.42 |      |   |  | 234   |     |   |  | (143 | )   
|Federal funds purchased                                                        |                          |                          | 1,715   |                |          |   | 14     |                  |  |         | 0.82    |      |   |          | 3,054   |        |      |   | 20     |        |  |  | 0.65 |      |   |  | (14   | )   |   |  | 8    |     
|Federal Home Loan Bank advances                                                |                          |                          | 12,663  |                |          |   | 541    |                  |  |         | 4.27    |      |   |          | 14,313  |        |      |   | 586    |        |  |  | 4.09 |      |   |  | (71   | )   |   |  | 26   |     
|Junior subordinated debt                                                       |                          |                          | 5,000   |                |          |   | 253    |                  |  |         | 5.06    |      |   |          | 5,000   |        |      |   | 240    |        |  |  | 4.80 |      |   |  |      |     |   |  | 13   |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total interest-bearing liabilities                                             |                          |                          | 128,848 |                |          |   | 2,261  |                  |  |         | 1.75    |      |   |          | 118,120 |        |      |   | 2,208  |        |  |  | 1.87 |      |   |  | 149   |     |   |  | (96  | )   
|Noninterest-bearing deposits                                                   |                          |                          | 46,323  |                |          |   |        |                  |  |         |         |      |   |          | 37,940  |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|Accrued interest and other liabilities                                         |                          |                          | 2,024   |                |          |   |        |                  |  |         |         |      |   |          | 1,593   |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total liabilities                                                              |                          |                          | 177,195 |                |          |   |        |                  |  |         |         |      |   |          | 157,653 |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|Stockholders equity                                                           |                          |                          | 16,909  |                |          |   |        |                  |  |         |         |      |   |          | 16,146  |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Total liabilities and stockholders equity                                     |                          | $                        | 194,104 |                |          |   |        |                  |  |         |         |      |   | $        | 173,799 |        |      |   |        |        |  |  |      |      |   |  |       |     |   |  |      |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Interest revenue as a percentage of average earning assets                     |                          |                          |         |                |          |   |        |                  |  |         | 6.26    | %    |   |          |         |        |      |   |        |        |  |  | 6.37 | %    |   |  |       |     |   |  |      |     
|Interest expense as a percentage of average earning assets                     |                          |                          |         |                |          |   |        |                  |  |         | 1.24    | %    |   |          |         |        |      |   |        |        |  |  | 1.34 | %    |   |  |       |     |   |  |      |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     
|Net interest income on a taxable- equivalent basis and net
    interest margin |                          |                          |         |                |          | $ | 9,159  |                  |  |         | 5.02    | %    |   |          |         |        |      | $ | 8,258  |        |  |  | 5.02 | %    |   |  |       |     |   |  |      |     
|                                                                               |                          |                          |         |                |          |   |        |                  |  |         |         |      |   |          |         |        |      |   |        |        |  |  |      |     



20



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##### Table of Contents



Provision and Allowance for Loan Losses














Noninterest Income








Noninterest Expense




21



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##### Table of Contents







Review of Financial Condition




Analysis of Securities




|                                                                       |  |                |        |  |          |   |        |          |  |   |        | 
|---------------------------------------------------------------------- |  | -------------- | ------ |  | -------- | - | ------ | -------- |  | - | ------ | 
|                                                                       |  | 2005           |        |  | 2004     |   |        | 2003     | 
|                                                                       |  | Carrying       |        |  | Carrying |   |        | Carrying | 
|                                                                       |  | Value          |        |  | Value    |   |        | Value    | 
|                                                                       |  |                |        |  |          |   |        |          | 
|                                                                       |  | (In thousands) |       
|U.S. agencies                                                          |  | $              | 7,394  |  |          | $ | 8,004  |          |  | $ | 8,481  | 
|State and political subdivisions                                       |  |                | 4,454  |  |          |   | 3,555  |          |  |   | 3,567  | 
|AMF Adjustable Rate Mortgage Fund                                      |  |                | 14,823 |  |          |   | 14,832 |          |  |   | 16,586 | 
|Mortgage-backed securities and collateralized mortgage
    obligations |  |                | 5,461  |  |          |   | 7,367  |          |  |   | 9,812  | 
|Federal Home Loan Bank stock                                           |  |                | 1,418  |  |          |   | 1,412  |          |  |   | 1,372  | 
|                                                                       |  |                |        |  |          |   |        |          | 
|Total                                                                  |  | $              | 33,550 |  |          | $ | 35,170 |          |  | $ | 39,818 | 
|                                                                       |  |                |        |  |          |   |        |          | 







22



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|                                                                       |  |                                |        |              |          |   |               |           |  |       |           |           |          |         |       |   |  |   |        |  
|---------------------------------------------------------------------- |  | ------------------------------ | ------ | ------------ | -------- | - | ------------- | --------- |  | ----- | --------- | --------- | -------- | ------- | ----- | - |  | - | ------ | -
|                                                                       |  |                                |        | After 1 Year |          |   | After 5 Years |           |  |       |           | Total and |         
|                                                                       |  |                                |        | But Within   |          |   | But Within    |           |  | After |           |           | Weighted |        
|                                                                       |  | Within 1 Year/                 |        |              | 5 Years/ |   |               | 10 Years/ |  |       | 10 Years/ |           |          | Average |      
|                                                                       |  | Yield                          |        |              | Yield    |   |               | Yield     |  |       | Yield     |           |          | Yield   |      
|                                                                       |  |                                |        |              |          |   |               |           |  |       |           |           |          |         |      
|                                                                       |  | (In thousands, carrying value) |       
|U.S. agencies                                                          |  | $                              | 987    |              |          | $ | 6,407         |           |  |       |          |           |          |         |      |   |  | $ | 7,394  |  
|                                                                       |  |                                | 3.05   | %            |          |   | 3.22          | %         |  |       |           |           |          |         |       |   |  |   | 3.20   | %
|State and political subdivisions                                       |  |                                | 311    |              |          |   | 2,991         |           |  |       | 1,152     |           |          |         |      |   |  |   | 4,454  |  
|                                                                       |  |                                | 3.17   | %            |          |   | 4.11          | %         |  |       | 5.17      | %         |          |         |       |   |  |   | 4.32   | %
|AMF Adjustable Rate Mortgage Fund*                                     |  |                                | 14,823 |              |          |   |              |           |  |       |          |           |          |         |      |   |  |   | 14,823 |  
|                                                                       |  |                                | 4.05   | %            |          |   |               |           |  |       |           |           |          |         |       |   |  |   | 4.05   | %
|Mortgage-backed securities and collateralized mortgage
    obligations |  |                                |       |              |          |   |              |           |  |       | 270       |           |          |         | 5,191 |   |  |   | 5,461  |  
|                                                                       |  |                                |       |              |          |   |              |           |  |       | 3.54      | %         |          |         | 4.05  | % |  |   | 4.02   | %
|Federal Home Loan Bank stock*                                          |  |                                | 1,418  |              |          |   |              |           |  |       |          |           |          |         |      |   |  |   | 1,418  |  
|                                                                       |  |                                |        |              |          |   |               |           |  |       |           |           |          |         |      
|Total                                                                  |  | $                              | 17,539 |              |          | $ | 9,398         |           |  | $     | 1,422     |           |          | $       | 5,191 |   |  | $ | 33,550 |  
|                                                                       |  |                                |        |              |          |   |               |           |  |       |           |           |          |         |      






|  |                                      
|- | -------------------------------------
|* | Securities without a stated maturity.

Temporary Decline in the Fair Value of Securities


Loans








| |               
| | --------------
| | Types of Loans

|                   |                        |                |         |        |      |   |         |        |  |   |         |        |  |      |         |        |  |   |         |        | 
|------------------ | ---------------------- | -------------- | ------- | ------ | ---- | - | ------- | ------ |  | - | ------- | ------ |  | ---- | ------- | ------ |  | - | ------- | ------ | 
|                   |                        | 2005           |         |        | 2004 |   |         | 2003   |  |   | 2002    |        |  | 2001 |        
|                   |                        |                |         |        |      |   |         |        |  |   |         |        |  |      |        
|                   |                        | (In thousands) |        
|Commercial         |                        | $              | 61,921  |        |      | $ | 55,563  |        |  | $ | 53,770  |        |  | $    | 47,603  |        |  | $ | 53,791  |       
|Real estate:       |                        |                |         |        |      |   |         |        |  |   |         |        |  |      |         |        |  |   |         |       
|                   | Commercial             |                |         | 76,902 |      |   |         | 67,165 |  |   |         | 48,963 |  |      |         | 42,497 |  |   |         | 28,349 | 
|                   | Construction           |                |         | 6,953  |      |   |         | 11,538 |  |   |         | 10,911 |  |      |         | 5,574  |  |   |         | 7,002  | 
|                   | Residential 1-4 family |                |         | 28,195 | *    |   |         | 11,508 |  |   |         | 11,971 |  |      |         | 10,821 |  |   |         | 13,942 | 
|Consumer and other |                        |                | 15,217  |        |      |   | 13,882  |        |  |   | 12,853  |        |  |      | 15,014  |        |  |   | 19,135  |       
|                   |                        |                |         |        |      |   |         |        |  |   |         |        |  |      |        
|Total              |                        | $              | 189,188 |        |      | $ | 159,656 |        |  | $ | 138,468 |        |  | $    | 121,509 |        |  | $ | 122,219 |       
|                   |                        |                |         |        |      |   |         |        |  |   |         |        |  |      |        






|  |                                                                                                                      
|- | ---------------------------------------------------------------------------------------------------------------------
|* | Residential 1-4 family includes $13,882,000 of loans purchased
    from a mortgage broker in the fourth quarter 2005.

23



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##### Table of Contents



Origination of Loans




Commercial Loans


Commercial Real Estate Loans


loan-to one-to 25-year


one-to loan-to


loan-to


Construction Loans loan-to loan-to loan-to


24



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##### Table of Contents





One-to one-to one-to


loan-to one-to loan-to due-on




Consumer Loans


Collections


Nonaccrual Loans


25



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##### Table of Contents





|                   |                        |        |        |                |           |   |        |         |  |   |        |        |  |   |         |        | 
|------------------ | ---------------------- | ------ | ------ | -------------- | --------- | - | ------ | ------- |  | - | ------ | ------ |  | - | ------- | ------ | 
|                   |                        | Within |        |                |           |   | After  |         |  |  
|                   |                        | 1 Year |        |                | 1-5 Years |   |        | 5 Years |  |   | Total  |       
|                   |                        |        |        |                |           |   |        |         |  |   |        |       
|                   |                        |        |        | (In thousands) |           |   |       
|Commercial         |                        | $      | 42,957 |                |           | $ | 15,430 |         |  | $ | 3,534  |        |  | $ | 61,921  |       
|Real estate:       |                        |        |        |                |           |   |        |         |  |   |        |        |  |   |         |       
|                   | Commercial             |        |        | 25,647         |           |   |        | 39,942  |  |   |        | 11,313 |  |   |         | 76,902 | 
|                   | Construction           |        |        | 5,403          |           |   |        | 1,550   |  |   |        |       |  |   |         | 6,953  | 
|                   | Residential 1-4 family |        |        | 10,725         |           |   |        | 5,830   |  |   |        | 11,640 |  |   |         | 28,195 | 
|Consumer and other |                        |        | 10,392 |                |           |   | 4,566  |         |  |   | 259    |        |  |   | 15,217  |       
|                   |                        |        |        |                |           |   |        |         |  |   |        |       
|Total              |                        | $      | 95,124 |                |           | $ | 67,318 |         |  | $ | 26,746 |        |  | $ | 189,188 |       
|                   |                        |        |        |                |           |   |        |         |  |   |        |       



|               |  |                |        |       |         |   |        | 
|-------------- |  | -------------- | ------ | ----- | ------- | - | ------ | 
|               |  |                |        | After |        
|               |  | 1-5 Years      |        |       | 5 Years |  
|               |  |                |        |       |         |  
|               |  | (In thousands) |       
|Fixed rates    |  | $              | 23,893 |       |         | $ | 21,736 | 
|Variable rates |  |                | 16,098 |       |         |   | 58,976 | 
|               |  |                |        |       |         |  
|Total          |  | $              | 39,991 |       |         | $ | 80,712 | 
|               |  |                |        |       |         |  



| |                                            
| | -------------------------------------------
| | Allocation of the Allowance for Loan Losses



|                    |                        |                |       |         |          |  |     |           |         |   |          |     |  |           |     |    |          |   |         |           |  |  |          |         |  |           |       |     |          |  |     |    |  |   |       |     |  |  |     |    | 
|------------------- | ---------------------- | -------------- | ----- | ------- | -------- |  | --- | --------- | ------- | - | -------- | --- |  | --------- | --- | -- | -------- | - | ------- | --------- |  |  | -------- | ------- |  | --------- | ----- | --- | -------- |  | --- | -- |  | - | ----- | --- |  |  | --- | -- | 
|                    |                        |                |       | % of    |          |  |     |           | % of    |   |          |     |  | % of      |     |    |          |   | % of    |           |  |  |          | % of    | 
|                    |                        |                |       | Loans   |          |  |     |           | Loans   |   |          |     |  | Loans     |     |    |          |   | Loans   |           |  |  |          | Loans   | 
|                    |                        |                |       | in Each |          |  |     |           | in Each |   |          |     |  | in Each   |     |    |          |   | in Each |           |  |  |          | in Each | 
|                    |                        | 2005           |       |         | Category |  |     | 2004      |         |   | Category |     |  | 2003      |     |    | Category |   |         | 2002      |  |  | Category |         |  | 2001      |       |     | Category | 
|                    |                        | Allocated      |       |         | to Total |  |     | Allocated |         |   | to Total |     |  | Allocated |     |    | to Total |   |         | Allocated |  |  | to Total |         |  | Allocated |       |     | to Total | 
|                    |                        | Amount         |       |         | Loans    |  |     | Amount    |         |   | Loans    |     |  | Amount    |     |    | Loans    |   |         | Amount    |  |  | Loans    |         |  | Amount    |       |     | Loans    | 
|                    |                        |                |       |         |          |  |     |           |         |   |          |     |  |           |     |    |          |   |         |           |  |  |          |         |  |           |       |     |          | 
|                    |                        | (In thousands) |      
|Commercial          |                        | $              | 987   |         |          |  | 33  |           |         | $ | 1,000    |     |  |           | 35  |    |          | $ | 885     |           |  |  | 39       |         |  | $         | 1,024 |     |          |  | 39  |    |  | $ | 908   |     |  |  | 44  |   
|Real estate:        |                        |                |       |         |          |  |     |           |         |   |          |     |  |           |     |    |          |   |         |           |  |  |          |         |  |           |       |     |          |  |     |    |  |   |       |     |  |  |     |   
|                    | Commercial             |                |       | 651     |          |  |     | 40        |         |   |          | 568 |  |           |     | 42 |          |   |         | 436       |  |  |          | 35      |  |           |       | 423 |          |  |     | 35 |  |   |       | 261 |  |  |     | 23 | 
|                    | Construction           |                |       | 72      |          |  |     | 4         |         |   |          | 117 |  |           |     | 7  |          |   |         | 110       |  |  |          | 8       |  |           |       | 59  |          |  |     | 5  |  |   |       | 65  |  |  |     | 6  | 
|                    | Residential 1-4 family |                |       | 106     |          |  |     | 15        |         |   |          | 11  |  |           |     | 7  |          |   |         | 9         |  |  |          | 9       |  |           |       | 28  |          |  |     | 9  |  |   |       | 12  |  |  |     | 11 | 
|Consumer and other  |                        |                | 240   |         |          |  | 8   |           |         |   | 191      |     |  |           | 9   |    |          |   | 196     |           |  |  | 9        |         |  |           | 156   |     |          |  | 12  |    |  |   | 252   |     |  |  | 16  |   
|                    |                        |                |       |         |          |  |     |           |         |   |          |     |  |           |     |    |          |   |         |           |  |  |          |         |  |           |       |     |          | 
|Total               |                        | $              | 2,056 |         |          |  | 100 |           |         | $ | 1,887    |     |  |           | 100 |    |          | $ | 1,636   |           |  |  | 100      |         |  | $         | 1,690 |     |          |  | 100 |    |  | $ | 1,498 |     |  |  | 100 |   
|                    |                        |                |       |         |          |  |     |           |         |   |          |     |  |           |     |    |          |   |         |           |  |  |          |         |  |           |       |     |          | 
|% of loan portfolio |                        |                | 1.09  | %       |          |  |     |           |         |   | 1.18     | %   |  |           |     |    |          |   | 1.18    | %         |  |  |          |         |  |           | 1.39  | %   |          |  |     |    |  |   | 1.23  | %   |  |  |     |   
|                    |                        |                |       |         |          |  |     |           |         |   |          |     |  |           |     |    |          |   |         |           |  |  |          |         |  |           |       |     |          | 



26



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##### Table of Contents





| |                                          
| | -----------------------------------------
| | Analysis of the Allowance for Loan Losses



|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |       |    |  |   |       |   | 
|----------------------------------------------------- | ---------------------- | -------------- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | --- |  | ---- | ----- | -- |  | - | ----- | - | 
|                                                      |                        | 2005           |       |   | 2004 |   |       | 2003 |  |   | 2002  |     |  | 2001 |      
|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |      
|                                                      |                        | (In thousands) |      
|Beginning balance                                     |                        | $              | 1,887 |   |      | $ | 1,636 |      |  | $ | 1,690 |     |  | $    | 1,498 |    |  | $ | 1,323 |  
|Charge-offs:                                          |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |       |    |  |   |       |  
|Commercial                                            |                        |                | 252   |   |      |   | 24    |      |  |   | 81    |     |  |      | 108   |    |  |   | 185   |  
|Real estate:                                          |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |       |    |  |   |       |  
|                                                      | Commercial             |                |       | 1 |      |   |       |     |  |   |       |    |  |      |       | 20 |  |   |       |  | 
|                                                      | Construction           |                |       |  |      |   |       |     |  |   |       |    |  |      |       |   |  |   |       |  | 
|                                                      | Residential 1-4 family |                |       |  |      |   |       |     |  |   |       | 184 |  |      |       |   |  |   |       |  | 
|Consumer and other                                    |                        |                | 41    |   |      |   | 146   |      |  |   | 67    |     |  |      | 63    |    |  |   | 176   |  
|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |      
|Total charge-offs                                     |                        |                | 294   |   |      |   | 170   |      |  |   | 332   |     |  |      | 191   |    |  |   | 361   |  
|Recoveries:                                           |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |       |    |  |   |       |  
|Commercial                                            |                        |                | 26    |   |      |   | 87    |      |  |   | 17    |     |  |      | 22    |    |  |   | 57    |  
|Real estate:                                          |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |       |    |  |   |       |  
|                                                      | Commercial             |                |       |  |      |   |       |     |  |   |       | 20  |  |      |       |   |  |   |       |  | 
|                                                      | Construction           |                |       |  |      |   |       |     |  |   |       |    |  |      |       | 1  |  |   |       |  | 
|                                                      | Residential 1-4 family |                |       |  |      |   |       |     |  |   |       | 8   |  |      |       |   |  |   |       |  | 
|Consumer and other                                    |                        |                | 14    |   |      |   | 13    |      |  |   |      |     |  |      | 30    |    |  |   |      |  
|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |      
|Total recoveries                                      |                        |                | 40    |   |      |   | 100   |      |  |   | 45    |     |  |      | 53    |    |  |   | 57    |  
|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |      
|Net charge-offs/(recoveries)                          |                        |                | 254   |   |      |   | 70    |      |  |   | 287   |     |  |      | 138   |    |  |   | 304   |  
|Provision                                             |                        |                | 423   |   |      |   | 321   |      |  |   | 233   |     |  |      | 330   |    |  |   | 479   |  
|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |      
|Ending balance                                        |                        | $              | 2,056 |   |      | $ | 1,887 |      |  | $ | 1,636 |     |  | $    | 1,690 |    |  | $ | 1,498 |  
|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |      
|Ratio of net charge-offs to average loans outstanding |                        |                | 0.16  | % |      |   | 0.05  | %    |  |   | 0.24  | %   |  |      | 0.11  | %  |  |   | 0.26  | %
|                                                      |                        |                |       |   |      |   |       |      |  |   |       |     |  |      |      



27



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##### Table of Contents





| |                               
| | ------------------------------
| | Nonperforming Loans and Assets



|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |       |  
|----------------------------------------------------- |  | -------------- | ----- | - | ---- | - | ---- | ---- |  | - | ----- | - |  | ---- | ---- | - |  | - | ----- | -
|                                                      |  | 2005           |       |   | 2004 |   |      | 2003 |  |   | 2002  |   |  | 2001 |     
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     
|                                                      |  | (In thousands) |      
|Nonaccruing loans:                                    |  |                |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |       |  
|Commercial                                            |  | $              | 37    |   |      | $ | 182  |      |  | $ | 112   |   |  | $    | 309  |   |  | $ | 463   |  
|Real Estate                                           |  |                | 661   |   |      |   |     |      |  |   |      |   |  |      | 462  |   |  |   | 90    |  
|Consumer                                              |  |                | 37    |   |      |   | 31   |      |  |   |      |   |  |      | 1    |   |  |   |      |  
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     
|Total(1)                                              |  |                | 735   |   |      |   | 213  |      |  |   | 112   |   |  |      | 772  |   |  |   | 553   |  
|Accruing loans delinquent 90 days or more:            |  |                |       |   |      |   |      |      |  |   |       |   |  |      |      |   |  |   |       |  
|Commercial                                            |  |                | 401   |   |      |   | 5    |      |  |   | 464   |   |  |      | 15   |   |  |   | 444   |  
|Real Estate                                           |  |                |      |   |      |   |     |      |  |   |      |   |  |      |     |   |  |   | 111   |  
|Consumer                                              |  |                | 13    |   |      |   |     |      |  |   | 67    |   |  |      | 12   |   |  |   | 47    |  
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     
|Total                                                 |  |                | 414   |   |      |   | 5    |      |  |   | 531   |   |  |      | 27   |   |  |   | 602   |  
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     
|Total non-performing loans                            |  |                | 1,149 |   |      |   | 218  |      |  |   | 643   |   |  |      | 799  |   |  |   | 1,155 |  
|Other real estate owned                               |  |                |      |   |      |   |     |      |  |   | 2,659 |   |  |      |     |   |  |   |      |  
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     
|Total non-performing assets                           |  | $              | 1,149 |   |      | $ | 218  |      |  | $ | 3,302 |   |  | $    | 799  |   |  | $ | 1,155 |  
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     
|Total non-performing loans as a percentage of loans   |  |                | 0.61  | % |      |   | 0.14 | %    |  |   | 0.46  | % |  |      | 0.66 | % |  |   | 0.95  | %
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     
|Total non-performing assets as a percentage of assets |  |                | 0.46  | % |      |   | 0.10 | %    |  |   | 1.70  | % |  |      | 0.47 | % |  |   | 0.74  | %
|                                                      |  |                |       |   |      |   |      |      |  |   |       |   |  |      |     






|    |                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | If interest on these nonaccruing loans had been recognized, such
    income would have been $29,000, $9,000, $9,000, $68,000, and
    $22,000 for 2005, 2004, 2003, 2002, and 2001.











28



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##### Table of Contents



Deposits




|                           |                                        |                |         |        |      |  |      |        |  |   |         |        |  |        |      |      |      |   |         |        |  |  |      |      | 
|-------------------------- | -------------------------------------- | -------------- | ------- | ------ | ---- |  | ---- | ------ |  | - | ------- | ------ |  | ------ | ---- | ---- | ---- | - | ------- | ------ |  |  | ---- | ---- | 
|                           |                                        | 2005           |         |        | 2004 |  |      | 2003   | 
|                           |                                        |                |         |        |      |  |      |        | 
|                           |                                        | Amount         |         |        | Rate |  |      | Amount |  |   | Rate    |        |  | Amount |      |      | Rate |  
|                           |                                        |                |         |        |      |  |      |        |  |   |         |        |  |        |      |      |      |  
|                           |                                        | (In thousands) |        
|DEPOSITS                   |                                        |                |         |        |      |  |      |        |  |   |         |        |  |        |      |      |      |   |         |        |  |  |      |     
|Noninterest bearing demand |                                        | $              | 51,576  |        |      |  | 0.00 | %      |  | $ | 46,323  |        |  |        | 0.00 | %    |      | $ | 37,940  |        |  |  | 0.00 | %   
|Interest bearing demand    |                                        |                | 12,529  |        |      |  | 0.17 |        |  |   | 11,133  |        |  |        | 0.11 |      |      |   | 10,208  |        |  |  | 0.19 |     
|Savings deposits           |                                        |                | 55,299  |        |      |  | 1.40 |        |  |   | 49,384  |        |  |        | 0.95 |      |      |   | 48,677  |        |  |  | 1.05 |     
|Time deposits:             |                                        |                |         |        |      |  |      |        |  |   |         |        |  |        |      |      |      |   |         |        |  |  |      |     
|                           | Certificate of deposit, under $100,000 |                |         | 23,861 |      |  |      | 2.79   |  |   |         | 22,369 |  |        |      | 2.08 |      |   |         | 19,839 |  |  |      | 2.53 | 
|                           | Certificate of deposit, over $100,000  |                |         | 17,970 |      |  |      | 2.74   |  |   |         | 13,184 |  |        |      | 2.14 |      |   |         | 14,640 |  |  |      | 2.03 | 
|                           | Public Funds                           |                |         | 16,511 |      |  |      | 3.41   |  |   |         | 13,400 |  |        |      | 1.66 |      |   |         | 2,389  |  |  |      | 1.28 | 
|                           |                                        |                |         |        |      |  |      |        |  |   |         |        |  |        |      |      |      |  
|Total time deposits        |                                        |                | 58,342  |        |      |  | 2.95 | %      |  |   | 48,953  |        |  |        | 1.99 | %    |      |   | 36,868  |        |  |  | 2.25 | %   
|                           |                                        |                |         |        |      |  |      |        |  |   |         |        |  |        |      |      |      |  
|Total                      |                                        | $              | 177,746 |        |      |  |      |        |  | $ | 155,793 |        |  |        |      |      |      | $ | 133,693 |        |  |  |      |     
|                           |                                        |                |         |        |      |  |      |        |  |   |         |        |  |        |      |      |      |  



|                                |  |                |        | 
|------------------------------- |  | -------------- | ------ | 
|                                |  | Amount         |       
|                                |  |                |       
|                                |  | (In thousands) |       
|3 months or less                |  | $              | 26,170 | 
|Over 3 months through 6 months  |  |                | 4,115  | 
|Over 6 months through 12 months |  |                | 6,052  | 
|Over 12 months                  |  |                | 3,267  | 
|                                |  |                |       
|Total                           |  | $              | 39,604 | 
|                                |  |                |       

Borrowings




|                                               |  |                   |       |   |                   |   |       |                   |  |   |       |  
|---------------------------------------------- |  | ----------------- | ----- | - | ----------------- | - | ----- | ----------------- |  | - | ----- | -
|Federal Funds Purchased                        |  | December 31, 2005 |       |   | December 31, 2004 |   |       | December 31, 2003 | 
|                                               |  |                   |       |   |                   |   |       |                   | 
|                                               |  | (In thousands)    |      
|Balance at end of year                         |  | $                 |      |   |                   | $ |      |                   |  | $ | 3,097 |  
|Weighted average interest rate at end of year  |  |                   |      |   |                   |   |      |                   |  |   | 0.50  | %
|Maximum amount outstanding(1)                  |  |                   | 3,020 |   |                   |   | 3,212 |                   |  |   | 4,666 |  
|Average amount outstanding                     |  |                   | 323   |   |                   |   | 1,715 |                   |  |   | 3,054 |  
|Weighted average interest rate during the year |  |                   | 4.65  | % |                   |   | 0.82  | %                 |  |   | 0.65  | %






|    |                                                                       
|--- | ----------------------------------------------------------------------
|(1) | Based on average amount outstanding at month end during each
    year.

29



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##### Table of Contents



|                                               |  |                   |        |   |                   |   |        |                   |  |   |        |  
|---------------------------------------------- |  | ----------------- | ------ | - | ----------------- | - | ------ | ----------------- |  | - | ------ | -
|FHLB Advances                                  |  | December 31, 2005 |        |   | December 31, 2004 |   |        | December 31, 2003 | 
|                                               |  |                   |        |   |                   |   |        |                   | 
|                                               |  | (In thousands)    |       
|Balance at end of year                         |  | $                 | 23,849 |   |                   | $ | 11,067 |                   |  | $ | 15,381 |  
|Weighted average interest rate at end of year  |  |                   | 4.73   | % |                   |   | 4.50   | %                 |  |   | 3.81   | %
|Maximum amount outstanding(1)                  |  |                   | 23,849 |   |                   |   | 17,537 |                   |  |   | 19,339 |  
|Average amount outstanding                     |  |                   | 12,351 |   |                   |   | 12,663 |                   |  |   | 14,313 |  
|Weighted average interest rate during the year |  |                   | 4.60   | % |                   |   | 4.27   | %                 |  |   | 4.09   | %






|    |                                                                        
|--- | -----------------------------------------------------------------------
|(1) | Based on average amount outstanding for the month during each
    year.

Junior Subordinated Debt (Trust Preferred Securities)








Contractual Obligations and Commitments




30



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##### Table of Contents









|                                |  |                |        |  |           |   |        |           |       |   |         |  |  |       |        |  |  |   |        | 
|------------------------------- |  | -------------- | ------ |  | --------- | - | ------ | --------- | ----- | - | ------- |  |  | ----- | ------ |  |  | - | ------ | 
|                                |  | Within         |        |  |           |   |        |           | After |   |         | 
|                                |  | 1 Year         |        |  | 1-3 Years |   |        | 3-5 Years |       |   | 5 Years |  |  | Total |       
|                                |  |                |        |  |           |   |        |           |       |   |         |  |  |       |       
|                                |  | (In thousands) |       
|Federal Home Loan Bank advances |  | $              | 5,580  |  |           | $ | 7,269  |           |       | $ | 5,000   |  |  | $     | 6,000  |  |  | $ | 23,849 | 
|Junior subordinated debt        |  |                |       |  |           |   |       |           |       |   |        |  |  |       | 5,000  |  |  |   | 5,000  | 
|Time deposits                   |  |                | 60,089 |  |           |   | 6,715  |           |       |   | 75      |  |  |       |       |  |  |   | 66,879 | 
|Operating leases                |  |                | 647    |  |           |   | 857    |           |       |   | 702     |  |  |       | 1,113  |  |  |   | 3,319  | 
|                                |  |                |        |  |           |   |        |           |       |   |         |  |  |       |       
|Total                           |  | $              | 66,316 |  |           | $ | 14,841 |           |       | $ | 5,777   |  |  | $     | 12,113 |  |  | $ | 99,047 | 
|                                |  |                |        |  |           |   |        |           |       |   |         |  |  |       |       



Asset/ Liability Management






Liquidity












31



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##### Table of Contents







Interest Rate Risk








Net Interest Income Analysis


|                      |  |        |      |   |         |  |       |  
|--------------------- |  | ------ | ---- | - | ------- |  | ----- | -
|December 31, 2005     | 
|                      |  | Dollar |      |   | Percent | 
|Immediate Rate Change |  | Change |      |   | Change  | 
|                      |  |        |      |   |         | 
|+200bp                |  | $      | 252  |   |         |  | 2.31  | %
|+100bp                |  |        | 94   |   |         |  | 0.86  |  
|+50bp                 |  |        | 47   |   |         |  | 0.43  |  
|-50bp                 |  |        | (122 | ) |         |  | (1.11 | )
|-100bp                |  |        | (243 | ) |         |  | (2.22 | )
|-200bp                |  |        | (750 | ) |         |  | (6.87 | )

|                      |  |        |        |   |         |  |        |  
|--------------------- |  | ------ | ------ | - | ------- |  | ------ | -
|December 31, 2004     | 
|                      |  | Dollar |        |   | Percent | 
|Immediate Rate Change |  | Change |        |   | Change  | 
|                      |  |        |        |   |         | 
|+200bp                |  | $      | 653    |   |         |  | 6.45   | %
|+100bp                |  |        | 309    |   |         |  | 3.05   |  
|+50bp                 |  |        | 155    |   |         |  | 1.53   |  
|-50bp                 |  |        | (167   | ) |         |  | (1.65  | )
|-100bp                |  |        | (334   | ) |         |  | (3.30  | )
|-200bp                |  |        | (1,172 | ) |         |  | (11.58 | )







32



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##### Table of Contents



Capital Resources















|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Quantitative and Qualitative Disclosures About Market
    Risk








|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data



|                                                    |  |      |    | 
|--------------------------------------------------- |  | ---- | -- | 
|                                                    |  | Page |   
|                                                    |  |      |   
|Report of Independent Auditors                      |  |      | 34 | 
|Consolidated Balance Sheets                         |  |      | 35 | 
|Consolidated Statements of Income                   |  |      | 36 | 
|Consolidated Statements of
    Stockholders Equity |  |      | 37 | 
|Consolidated Statements of Comprehensive
    Income |  |      | 38 | 
|Consolidated Statements of Cash Flows               |  |      | 39 | 
|Notes to Consolidated Financial
    Statements      |  |      | 40 | 

33



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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM














| |                             
| | ----------------------------
| | -s- Crowe Chizek and Company
|
| | CROWE CHIZEK AND COMPANY LLC





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EVERGREENBANCORP, INC.


CONSOLIDATED BALANCE SHEETS


|                                                                                                                                               |                                 |                       |         |         |         |   |         |         |         | 
|---------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------- | --------------------- | ------- | ------- | ------- | - | ------- | ------- | ------- | 
|                                                                                                                                               |                                 | December 31,          |        
|                                                                                                                                               |                                 |                       |        
|                                                                                                                                               |                                 | 2005                  |         |         | 2004    |  
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                               |                                 | (In thousands, except |        
|                                                                                                                                               |                                 | share and per         |        
|                                                                                                                                               |                                 | share data)           |        
|Assets                                                                                                                                         |                                 |                       |         |         |         |   |         |        
|Cash and due from banks                                                                                                                        |                                 | $                     | 12,379  |         |         | $ | 9,407   |        
|Federal funds sold                                                                                                                             |                                 |                       | 2,112   |         |         |   | 2,736   |        
|Interest-bearing deposits in financial institutions                                                                                            |                                 |                       | 2,811   |         |         |   | 2       |        
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                               | Total cash and cash equivalents |                       |         | 17,302  |         |   |         | 12,145  |        
|Securities available-for-sale                                                                                                                  |                                 |                       | 33,550  |         |         |   | 35,170  |        
|Loans                                                                                                                                          |                                 |                       | 189,188 |         |         |   | 159,656 |        
|Allowance for loan losses                                                                                                                      |                                 |                       | (2,056  | )       |         |   | (1,887  | )      
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                               | Net loans                       |                       |         | 187,132 |         |   |         | 157,769 |        
|Premises and equipment                                                                                                                         |                                 |                       | 3,179   |         |         |   | 2,576   |        
|Cash surrender value of bank owned life insurance                                                                                              |                                 |                       | 5,090   |         |         |   |        |        
|Accrued interest and other assets                                                                                                              |                                 |                       | 2,939   |         |         |   | 1,970   |        
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                               | Total assets                    |                       | $       | 249,192 |         |   | $       | 209,630 |        
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                              
|Liabilities                                                                                                                                    |                                 |                       |         |         |         |   |         |        
|Deposits                                                                                                                                       |                                 |                       |         |         |         |   |         |        
|                                                                                                                                               | Noninterest-bearing             |                       | $       | 64,635  |         |   | $       | 54,193  |        
|                                                                                                                                               | Interest-bearing                |                       |         | 135,255 |         |   |         | 119,608 |        
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                               |                                 | Total deposits        |         |         | 199,890 |   |         |         | 173,801 | 
|Federal Home Loan Bank advances                                                                                                                |                                 |                       | 23,849  |         |         |   | 11,067  |        
|Junior subordinated debt                                                                                                                       |                                 |                       | 5,000   |         |         |   | 5,000   |        
|Accrued expenses and other liabilities                                                                                                         |                                 |                       | 2,717   |         |         |   | 2,277   |        
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                               | Total liabilities               |                       |         | 231,456 |         |   |         | 192,145 |        
|Stockholders equity                                                                                                                           |                                 |                       |         |         |         |   |         |        
|Preferred stock; no par value; 100,000 shares authorized;
    none issued                                                                      |                                 |                       |        |         |         |   |        |        
|Common stock and surplus; no par value; 15,000,000 shares
    authorized; 2,000,467 shares issued at 2005;
    1,992,428 shares issued at 2004 |                                 |                       | 16,005  |         |         |   | 15,927  |        
|Retained earnings                                                                                                                              |                                 |                       | 2,187   |         |         |   | 1,678   |        
|Accumulated other comprehensive loss                                                                                                           |                                 |                       | (456    | )       |         |   | (120    | )      
|                                                                                                                                               |                                 |                       |         |         |         |  
|                                                                                                                                               | Total stockholders equity      |                       |         | 17,736  |         |   |         | 17,485  |        
|                                                                                                                                               |                                 |                       |         |         |         |  
|Total liabilities and stockholders equity                                                                                                     |                                 | $                     | 249,192 |         |         | $ | 209,630 |        
|                                                                                                                                               |                                 |                       |         |         |         |  



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EVERGREENBANCORP, INC.


CONSOLIDATED STATEMENTS OF INCOME


|                                                    |                                                |                           |        |        |        |   |       |        |        |   |       |       |        | 
|--------------------------------------------------- | ---------------------------------------------- | ------------------------- | ------ | ------ | ------ | - | ----- | ------ | ------ | - | ----- | ----- | ------ | 
|                                                    |                                                | Years Ended December 31,  |       
|                                                    |                                                |                           |       
|                                                    |                                                | 2005                      |        |        | 2004   |   |       | 2003   |       
|                                                    |                                                |                           |        |        |        |   |       |        |       
|                                                    |                                                | (In thousands, except     |       
|                                                    |                                                | per share data)           |       
|Interest income                                     |                                                |                           |        |        |        |   |       |        |        |   |       |      
|                                                    | Loans, including fees                          |                           | $      | 12,371 |        |   | $     | 10,243 |        |   | $     | 9,286 |       
|                                                    | Taxable securities                             |                           |        | 1,036  |        |   |       | 976    |        |   |       | 955   |       
|                                                    | Tax exempt securities                          |                           |        | 126    |        |   |       | 94     |        |   |       | 77    |       
|                                                    | Federal funds sold and other                   |                           |        | 179    |        |   |       | 50     |        |   |       | 90    |       
|                                                    |                                                |                           |        |        |        |   |       |        |       
|                                                    |                                                | Total interest income     |        |        | 13,712 |   |       |        | 11,363 |   |       |       | 10,408 | 
|Interest expense                                    |                                                |                           |        |        |        |   |       |        |        |   |       |      
|                                                    | Deposits                                       |                           |        | 2,521  |        |   |       | 1,453  |        |   |       | 1,362 |       
|                                                    | Federal funds purchased                        |                           |        | 15     |        |   |       | 14     |        |   |       | 20    |       
|                                                    | Federal Home Loan Bank advances                |                           |        | 568    |        |   |       | 541    |        |   |       | 586   |       
|                                                    | Junior subordinated debt                       |                           |        | 345    |        |   |       | 253    |        |   |       | 240   |       
|                                                    |                                                |                           |        |        |        |   |       |        |       
|                                                    |                                                | Total interest expense    |        |        | 3,449  |   |       |        | 2,261  |   |       |       | 2,208  | 
|                                                    |                                                |                           |        |        |        |   |       |        |       
|Net interest income                                 |                                                |                           | 10,263 |        |        |   | 9,102 |        |        |   | 8,200 |      
|Provision for loan losses                           |                                                |                           | 423    |        |        |   | 321   |        |        |   | 233   |      
|                                                    |                                                |                           |        |        |        |   |       |        |       
|Net interest income after provision for loan losses |                                                |                           | 9,840  |        |        |   | 8,781 |        |        |   | 7,967 |      
|Noninterest income                                  |                                                |                           |        |        |        |   |       |        |        |   |       |      
|                                                    | Service charges on deposit accounts            |                           |        | 1,177  |        |   |       | 1,305  |        |   |       | 1,176 |       
|                                                    | Merchant credit card processing                |                           |        | 151    |        |   |       | 145    |        |   |       | 166   |       
|                                                    | Gain from sales of loans                       |                           |        |       |        |   |       |       |        |   |       | 10    |       
|                                                    | Gain on sales of securities available-for-sale |                           |        |       |        |   |       | 15     |        |   |       | 56    |       
|                                                    | Other commissions and fees                     |                           |        | 128    |        |   |       | 136    |        |   |       | 180   |       
|                                                    | Net earnings on bank owned life insurance      |                           |        | 90     |        |   |       |       |        |   |       |      |       
|                                                    | Other noninterest income                       |                           |        | 147    |        |   |       | 108    |        |   |       | 167   |       
|                                                    |                                                |                           |        |        |        |   |       |        |       
|                                                    |                                                | Total noninterest income  |        |        | 1,693  |   |       |        | 1,709  |   |       |       | 1,755  | 
|Noninterest expense                                 |                                                |                           |        |        |        |   |       |        |        |   |       |      
|                                                    | Salaries and employee benefits                 |                           |        | 4,898  |        |   |       | 4,259  |        |   |       | 4,036 |       
|                                                    | Occupancy and equipment                        |                           |        | 1,697  |        |   |       | 1,391  |        |   |       | 1,318 |       
|                                                    | Data processing                                |                           |        | 744    |        |   |       | 727    |        |   |       | 728   |       
|                                                    | Professional fees                              |                           |        | 391    |        |   |       | 241    |        |   |       | 150   |       
|                                                    | Marketing                                      |                           |        | 473    |        |   |       | 393    |        |   |       | 362   |       
|                                                    | State revenue and sales tax expense            |                           |        | 306    |        |   |       | 257    |        |   |       | 49    |       
|                                                    | Loss on other real estate owned                |                           |        |       |        |   |       | 132    |        |   |       |      |       
|                                                    | Other noninterest expense                      |                           |        | 1,641  |        |   |       | 1,202  |        |   |       | 1,553 |       
|                                                    |                                                |                           |        |        |        |   |       |        |       
|                                                    |                                                | Total noninterest expense |        |        | 10,150 |   |       |        | 8,602  |   |       |       | 8,196  | 
|                                                    |                                                |                           |        |        |        |   |       |        |       
|Income before income taxes                          |                                                |                           | 1,383  |        |        |   | 1,888 |        |        |   | 1,526 |      
|Income tax expense                                  |                                                |                           | 417    |        |        |   | 606   |        |        |   | 490   |      
|                                                    |                                                |                           |        |        |        |   |       |        |       
|Net income                                          |                                                | $                         | 966    |        |        | $ | 1,282 |        |        | $ | 1,036 |      
|                                                    |                                                |                           |        |        |        |   |       |        |       
|Basic earnings per share                            |                                                | $                         | 0.48   |        |        | $ | 0.64  |        |        | $ | 0.52  |      
|                                                    |                                                |                           |        |        |        |   |       |        |       
|Diluted earnings per share                          |                                                | $                         | 0.47   |        |        | $ | 0.63  |        |        | $ | 0.52  |      
|                                                    |                                                |                           |        |        |        |   |       |        |       



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EVERGREENBANCORP, INC.


CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY


Years Ended December 31, 2005, 2004, and 2003


|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |      |   |  |   |        |       |       | 
|------------------------------------------------------------------------------------------------------------------ | ---------- | ------------------------------------- | --------- | ------ | ------- | - | ------ | ----------- | ----- | ------------- | ------ | ----- | ----- | ------------- | ---- | - |  | - | ------ | ----- | ----- | 
|                                                                                                                   |            |                                       |           |        |         |   |        | Accumulated |       |               |       
|                                                                                                                   |            |                                       |           | Common |         |   |        |             | Other |               |        |      
|                                                                                                                   |            | Common                                |           |        | Stock   |   |        |             |       | Comprehensive |        |       | Total |              
|                                                                                                                   |            | Stock                                 |           |        | and     |   |        | Retained    |       |               | Income |       |       | Stockholders |     
|                                                                                                                   |            | Shares                                |           |        | Surplus |   |        | Earnings    |       |               | (Loss) |       |       | Equity        |     
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     
|                                                                                                                   |            | (In thousands, except per share data) |          
|Balance at January 1, 2003                                                                                         |            |                                       | 1,075,461 |        |         | $ | 13,597 |             |       | $             | 2,266  |       |       | $             | 97   |   |  | $ | 15,960 |      
|Comprehensive income                                                                                               |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |      |   |  |   |        |      
|                                                                                                                   | Net income |                                       |           |       |         |   |        |            |       |               |        | 1,036 |       |               |      |  |  |   |        | 1,036 |      
|Change in net unrealized gain (loss) on securities available for
    sale, net of reclassification and tax effects |            |                                       |          |        |         |   |       |             |       |               |       |       |       |               | (146 | ) |  |   | (146   | )    
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     
|                                                                                                                   |            | Total comprehensive income            |           |        |         |   |        |             |       |               |        |       |       |               |      |   |  |   |        |       | 890   | 
|Cash dividends ($.185 per share)                                                                                   |            |                                       |          |        |         |   |       |             |       |               | (366   | )     |       |               |     |   |  |   | (366   | )    
|Stock dividend (10%)                                                                                               |            |                                       | 107,944   |        |         |   | 2,158  |             |       |               | (2,158 | )     |       |               |     |   |  |   |       |      
|Exercise of stock options                                                                                          |            |                                       | 6,961     |        |         |   | 88     |             |       |               |       |       |       |               |     |   |  |   | 88     |      
|Tax benefit from stock related compensation                                                                        |            |                                       |          |        |         |   | 11     |             |       |               |       |       |       |               |     |   |  |   | 11     |      
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     
|Balance at December 31, 2003                                                                                       |            |                                       | 1,190,366 |        |         |   | 15,854 |             |       |               | 778    |       |       |               | (49  | ) |  |   | 16,583 |      
|Comprehensive income                                                                                               |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |      |   |  |   |        |      
|                                                                                                                   | Net income |                                       |           |       |         |   |        |            |       |               |        | 1,282 |       |               |      |  |  |   |        | 1,282 |      
|Change in net unrealized gain (loss) on securities available for
    sale, net of reclassification and tax effects |            |                                       |          |        |         |   |       |             |       |               |       |       |       |               | (71  | ) |  |   | (71    | )    
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     
|                                                                                                                   |            | Total comprehensive income            |           |        |         |   |        |             |       |               |        |       |       |               |      |   |  |   |        |       | 1,211 | 
|Cash dividends ($.192 per share)                                                                                   |            |                                       |          |        |         |   |       |             |       |               | (382   | )     |       |               |     |   |  |   | (382   | )    
|Stock split (five-for-four)                                                                                        |            |                                       | 298,645   |        |         |   |       |             |       |               |       |       |       |               |     |   |  |   |       |      
|Repurchase of fractional shares                                                                                    |            |                                       | (296      | )      |         |   | (7     | )           |       |               |       |       |       |               |     |   |  |   | (7     | )    
|Exercise of stock options                                                                                          |            |                                       | 5,606     |        |         |   | 69     |             |       |               |       |       |       |               |     |   |  |   | 69     |      
|Tax benefit from stock related compensation                                                                        |            |                                       |          |        |         |   | 11     |             |       |               |       |       |       |               |     |   |  |   | 11     |      
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     
|Balance at December 31, 2004                                                                                       |            |                                       | 1,494,321 |        |         |   | 15,927 |             |       |               | 1,678  |       |       |               | (120 | ) |  |   | 17,485 |      
|Comprehensive income                                                                                               |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |      |   |  |   |        |      
|                                                                                                                   | Net income |                                       |           |       |         |   |        |            |       |               |        | 966   |       |               |      |  |  |   |        | 966   |      
|Change in net unrealized gain (loss) on securities available for
    sale, net of reclassification and tax effects |            |                                       |          |        |         |   |       |             |       |               |       |       |       |               | (336 | ) |  |   | (336   | )    
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     
|                                                                                                                   |            | Total comprehensive income            |           |        |         |   |        |             |       |               |        |       |       |               |      |   |  |   |        |       | 630   | 
|Cash dividends ($.228 per share)                                                                                   |            |                                       |          |        |         |   |       |             |       |               | (457   | )     |       |               |     |   |  |   | (457   | )    
|Stock split (four-for-three)                                                                                       |            |                                       | 500,165   |        |         |   |       |             |       |               |       |       |       |               |     |   |  |   |       |      
|Repurchase of fractional shares                                                                                    |            |                                       | (471      | )      |         |   | (7     | )           |       |               |       |       |       |               |     |   |  |   | (7     | )    
|Exercise of stock options                                                                                          |            |                                       | 6,452     |        |         |   | 71     |             |       |               |       |       |       |               |     |   |  |   | 71     |      
|Tax benefit from stock related compensation                                                                        |            |                                       |          |        |         |   | 14     |             |       |               |       |       |       |               |     |   |  |   | 14     |      
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     
|Balance at December 31, 2005                                                                                       |            |                                       | 2,000,467 |        |         | $ | 16,005 |             |       | $             | 2,187  |       |       | $             | (456 | ) |  | $ | 17,736 |      
|                                                                                                                   |            |                                       |           |        |         |   |        |             |       |               |        |       |       |               |     



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EVERGREENBANCORP, INC.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


|                                                                  |  |                          |      |   |      |   |       |      |  |   |       |  
|----------------------------------------------------------------- |  | ------------------------ | ---- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                                                  |  | Years Ended December 31, |     
|                                                                  |  |                          |     
|                                                                  |  | 2005                     |      |   | 2004 |   |       | 2003 | 
|                                                                  |  |                          |      |   |      |   |       |      | 
|                                                                  |  | (In thousands)           |     
|Net income                                                        |  | $                        | 966  |   |      | $ | 1,282 |      |  | $ | 1,036 |  
|Other comprehensive income:                                       |  |                          |      |   |      |   |       |      |  |   |       |  
|Change in unrealized gain (loss) on securities available for sale |  |                          | (509 | ) |      |   | (91   | )    |  |   | (166  | )
|Reclassification adjustment for gains included in net income      |  |                          |     |   |      |   | (15   | )    |  |   | (56   | )
|                                                                  |  |                          |      |   |      |   |       |      | 
|Net unrealized gains (losses)                                     |  |                          | (509 | ) |      |   | (106  | )    |  |   | (222  | )
|Tax effect                                                        |  |                          | 173  |   |      |   | 35    |      |  |   | 76    |  
|                                                                  |  |                          |      |   |      |   |       |      | 
|Total other comprehensive income (loss)                           |  |                          | (336 | ) |      |   | (71   | )    |  |   | (146  | )
|                                                                  |  |                          |      |   |      |   |       |      | 
|Total comprehensive income                                        |  | $                        | 630  |   |      | $ | 1,211 |      |  | $ | 890   |  
|                                                                  |  |                          |      |   |      |   |       |      | 



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EVERGREENBANCORP, INC.


CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                                                            |                                                      |                          |         |      |      |   |         |      |   |   |         |       |  
|------------------------------------------------------------------------------------------- | ---------------------------------------------------- | ------------------------ | ------- | ---- | ---- | - | ------- | ---- | - | - | ------- | ----- | -
|                                                                                            |                                                      | Years Ended December 31, |        
|                                                                                            |                                                      |                          |        
|                                                                                            |                                                      | 2005                     |         |      | 2004 |   |         | 2003 |  
|                                                                                            |                                                      |                          |         |      |      |   |         |      |  
|                                                                                            |                                                      | (In thousands)           |        
|Cash flows from operating activities                                                        |                                                      |                          |         |      |      |   |         |      |   |   |         |      
|Net income                                                                                  |                                                      | $                        | 966     |      |      | $ | 1,282   |      |   | $ | 1,036   |      
|Adjustments to reconcile net income to net cash provided by
    operating activities:       |                                                      |                          |         |      |      |   |         |      |   |   |         |      
|                                                                                            | Depreciation                                         |                          |         | 801  |      |   |         | 663  |   |   |         | 597   |  
|                                                                                            | Provision for loan losses                            |                          |         | 423  |      |   |         | 321  |   |   |         | 233   |  
|                                                                                            | Gain from sales of securities                        |                          |         |     |      |   |         | (15  | ) |   |         | (56   | )
|                                                                                            | Gain on sales of loans                               |                          |         |     |      |   |         |     |   |   |         | (10   | )
|                                                                                            | Write-down of other real estate owned                |                          |         |     |      |   |         | 132  |   |   |         |      |  
|                                                                                            | Amortization of premiums and discounts on securities |                          |         | 64   |      |   |         | 79   |   |   |         | 159   |  
|                                                                                            | Federal Home Loan Bank stock dividends               |                          |         | (6   | )    |   |         | (40  | ) |   |         | (74   | )
|                                                                                            | Dividends reinvested                                 |                          |         | (190 | )    |   |         | (349 | ) |   |         | (290  | )
|                                                                                            | Net earnings on bank owned life insurance            |                          |         | (90  | )    |   |         |     |   |   |         |      |  
|                                                                                            | Other changes, net                                   |                          |         | (342 | )    |   |         | 694  |   |   |         | (291  | )
|                                                                                            |                                                      |                          |         |      |      |   |         |      |  
|Net cash provided by operating activities                                                   |                                                      |                          | 1,626   |      |      |   | 2,767   |      |   |   | 1,304   |      
|Cash flows from investing activities                                                        |                                                      |                          |         |      |      |   |         |      |   |   |         |      
|Proceeds from sales, maturities and principal payments on
    securities available for sale |                                                      |                          | 2,368   |      |      |   | 6,390   |      |   |   | 9,524   |      
|Purchases of securities available for sale                                                  |                                                      |                          | (1,125  | )    |      |   | (1,523  | )    |   |   | (32,767 | )    
|Purchases of loans                                                                          |                                                      |                          | (13,882 | )    |      |   |        |      |   |   |        |      
|Net loan originations                                                                       |                                                      |                          | (15,904 | )    |      |   | (21,258 | )    |   |   | (20,199 | )    
|Purchase of bank owned life insurance                                                       |                                                      |                          | (5,000  | )    |      |   |        |      |   |   |        |      
|Proceeds from sales of loans                                                                |                                                      |                          |        |      |      |   |        |      |   |   | 304     |      
|Proceeds from sale of other real estate owned                                               |                                                      |                          |        |      |      |   | 2,527   |      |   |   |        |      
|Purchases of premises and equipment                                                         |                                                      |                          | (1,404  | )    |      |   | (770    | )    |   |   | (892    | )    
|Proceeds from prepayments of securities available-for-sale                                  |                                                      |                          |        |      |      |   |        |      |   |   | 7,158   |      
|                                                                                            |                                                      |                          |         |      |      |   |         |      |  
|Net cash used in investing activities                                                       |                                                      |                          | (34,947 | )    |      |   | (14,634 | )    |   |   | (36,872 | )    
|Cash flows from financing activities                                                        |                                                      |                          |         |      |      |   |         |      |   |   |         |      
|Net increase in deposits                                                                    |                                                      |                          | 26,089  |      |      |   | 21,118  |      |   |   | 20,509  |      
|Net decrease (increase) in federal funds purchased                                          |                                                      |                          |        |      |      |   | (3,097  | )    |   |   | (256    | )    
|Proceeds from Federal Home Loan Bank advances                                               |                                                      |                          | 16,900  |      |      |   |        |      |   |   | 5,460   |      
|Repayments of Federal Home Loan Bank advances                                               |                                                      |                          | (4,118  | )    |      |   | (4,314  | )    |   |   | (1,862  | )    
|Repurchase of common stock                                                                  |                                                      |                          | (7      | )    |      |   | (7      | )    |   |   |        |      
|Proceeds from exercise of stock options                                                     |                                                      |                          | 71      |      |      |   | 69      |      |   |   | 88      |      
|Dividends paid                                                                              |                                                      |                          | (457    | )    |      |   | (382    | )    |   |   | (366    | )    
|                                                                                            |                                                      |                          |         |      |      |   |         |      |  
|Net cash provided by financing activities                                                   |                                                      |                          | 38,478  |      |      |   | 13,387  |      |   |   | 23,573  |      
|                                                                                            |                                                      |                          |         |      |      |   |         |      |  
|Net increase (decrease) in cash and cash equivalents                                        |                                                      |                          | 5,157   |      |      |   | 1,520   |      |   |   | (11,995 | )    
|Cash and cash equivalents at beginning of year                                              |                                                      |                          | 12,145  |      |      |   | 10,625  |      |   |   | 22,620  |      
|                                                                                            |                                                      |                          |         |      |      |   |         |      |  
|Cash and cash equivalents at end of year                                                    |                                                      | $                        | 17,302  |      |      | $ | 12,145  |      |   | $ | 10,625  |      
|                                                                                            |                                                      |                          |         |      |      |   |         |      |  
|Supplemental disclosures of cash flow information                                           |                                                      |                          |         |      |      |   |         |      |   |   |         |      
|Interest paid                                                                               |                                                      | $                        | 3,292   |      |      | $ | 2,203   |      |   | $ | 2,221   |      
|Income taxes paid                                                                           |                                                      |                          | 810     |      |      |   | 326     |      |   |   | 760     |      
|Supplemental disclosures of noncash investing activities                                    |                                                      |                          |         |      |      |   |         |      |   |   |         |      
|                                                                                            | Transfer of loan to other real estate owned          |                          |         |     |      |   |         |     |   |   |         | 2,659 |  



39



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##### Table of Contents






EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




|        |                                           
|------- | ------------------------------------------
|Note 1: | Summary of Significant Accounting Policies

Organization.




Operating Segments.


Holding Company Information. ,


Principles of Consolidation and Use of Estimates.




Cash and Cash Equivalents.


Securities.




40



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Loans.






Allowance for Loan Losses.






Other Real Estate Owned.


Premises and Equipment.


41



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##### Table of Contents



EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Foreclosed Assets.


Income Taxes.


Comprehensive Income.


Postretirement Health Care Benefits.


Fair Values of Financial Instruments.


Loan Commitments and Related Financial Instruments.


Loss Contingencies.


42



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##### Table of Contents



EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Stock-Based Compensation. Accounting for
Stock-Based Compensation.


|                                                                                      |  |                           |      |  |      |   |       |      |  |   |       | 
|------------------------------------------------------------------------------------- |  | ------------------------- | ---- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                                                                      |  | 2005                      |      |  | 2004 |   |       | 2003 | 
|                                                                                      |  |                           |      |  |      |   |       |      | 
|                                                                                      |  | (In thousands, except per |     
|                                                                                      |  | share data)               |     
|Net income as reported                                                                |  | $                         | 966  |  |      | $ | 1,282 |      |  | $ | 1,036 | 
|Deduct: Stock-based compensation expense determined under fair
    value based method |  |                           | 64   |  |      |   | 52    |      |  |   | 49    | 
|                                                                                      |  |                           |      |  |      |   |       |      | 
|Pro forma net income                                                                  |  | $                         | 902  |  |      | $ | 1,230 |      |  | $ | 987   | 
|                                                                                      |  |                           |      |  |      |   |       |      | 
|Basic earnings per share as reported                                                  |  | $                         | 0.48 |  |      | $ | 0.64  |      |  | $ | 0.52  | 
|Pro forma basic earnings per share                                                    |  |                           | 0.45 |  |      |   | 0.62  |      |  |   | 0.50  | 
|Diluted earnings per share as reported                                                |  |                           | 0.47 |  |      |   | 0.63  |      |  |   | 0.52  | 
|Pro forma diluted earnings per share                                                  |  |                           | 0.44 |  |      |   | 0.61  |      |  |   | 0.49  | 



|                                |  |      |             |  |      |  |             |      |  |  |             | 
|------------------------------- |  | ---- | ----------- |  | ---- |  | ----------- | ---- |  |  | ----------- | 
|                                |  | 2005 |             |  | 2004 |  |             | 2003 | 
|                                |  |      |             |  |      |  |             |      | 
|Risk-free interest rate         |  |      | 3.94%       |  |      |  | 3.65%       |      |  |  | 3.00%       | 
|Expected option life            |  |      | 7.50  years |  |      |  | 7.50  years |      |  |  | 7.50  years | 
|Expected stock price volatility |  |      | 22%         |  |      |  | 13%         |      |  |  | 12%         | 
|Dividend yield                  |  |      | 1.7%        |  |      |  | 1.8%        |      |  |  | 1.1%        | 

Earnings Per Share.


Newly issued accounting pronouncements.




43



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Dividend Restriction.


Reclassifications.




|        |                                        
|------- | ---------------------------------------
|Note 2: | Restrictions on Cash and Due from Banks





|        |           
|------- | ----------
|Note 3: | Securities



|                                                                       |                                     |       |        |        |            |   |       |            |  |   |      |      |  
|---------------------------------------------------------------------- | ----------------------------------- | ----- | ------ | ------ | ---------- | - | ----- | ---------- |  | - | ---- | ---- | -
|                                                                       |                                     |       |        | Gross  |            |   | Gross |           
|                                                                       |                                     | Fair  |        |        | Unrealized |   |       | Unrealized | 
|                                                                       |                                     | Value |        |        | Gains      |   |       | Losses     | 
|                                                                       |                                     |       |        |        |            |   |       |            | 
|December 31, 2005                                                      |                                     |       |        |        |            |   |       |            |  |   |      |     
|U.S. agencies                                                          |                                     | $     | 7,394  |        |            | $ |      |            |  | $ | (116 | )   
|States and political subdivisions                                      |                                     |       | 4,454  |        |            |   | 2     |            |  |   | (52  | )   
|Mortgage-backed securities and collateralized mortgage
    obligations |                                     |       | 5,461  |        |            |   | 2     |            |  |   | (144 | )   
|AMF Adjustable Rate Mortgage Fund                                      |                                     |       | 14,823 |        |            |   |      |            |  |   | (383 | )   
|Federal Home Loan Bank stock                                           |                                     |       | 1,418  |        |            |   |      |            |  |   |     |     
|                                                                       |                                     |       |        |        |            |   |       |            | 
|                                                                       | Total securities available-for-sale |       | $      | 33,550 |            |   | $     | 4          |  |   | $    | (695 | )
|                                                                       |                                     |       |        |        |            |   |       |            | 
|December 31, 2004                                                      |                                     |       |        |        |            |   |       |            |  |   |      |     
|U.S. agencies                                                          |                                     | $     | 8,004  |        |            | $ | 21    |            |  | $ | (37  | )   
|States and political subdivisions                                      |                                     |       | 3,555  |        |            |   | 38    |            |  |   | (4   | )   
|Mortgage-backed securities and collateralized mortgage
    obligations |                                     |       | 7,367  |        |            |   | 21    |            |  |   | (36  | )   
|AMF Adjustable Rate Mortgage Fund                                      |                                     |       | 14,832 |        |            |   |      |            |  |   | (185 | )   
|Federal Home Loan Bank stock                                           |                                     |       | 1,412  |        |            |   |      |            |  |   |     |     
|                                                                       |                                     |       |        |        |            |   |       |            | 
|                                                                       | Total securities available-for-sale |       | $      | 35,170 |            |   | $     | 80         |  |   | $    | (262 | )
|                                                                       |                                     |       |        |        |            |   |       |            | 

44



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                                       |       |            |        |        | 
|---------------------------------------------------------------------- | ----- | ---------- | ------ | ------ | 
|                                                                       |       | Fair Value |       
|                                                                       |       |            |       
|Due in one year or less                                                |       | $          | 1,298  |       
|Due after one year through five years                                  |       |            | 9,398  |       
|Due after five years through ten years                                 |       |            | 1,152  |       
|                                                                       |       |            |       
|                                                                       | Total |            |        | 11,848 | 
|AMF Adjustable Rate Mortgage Fund                                      |       |            | 14,823 |       
|Mortgage-backed securities and collateralized mortgage
    obligations |       |            | 5,461  |       
|Federal Home Loan Bank stock                                           |       |            | 1,418  |       
|                                                                       |       |            |       
|                                                                       | Total |            | $      | 33,550 | 
|                                                                       |       |            |       



|             |  |      |   |      |  |   |       |   |  |   |       | 
|------------ |  | ---- | - | ---- |  | - | ----- | - |  | - | ----- | 
|             |  | 2005 |   | 2004 |  |   | 2003  |  
|             |  |      |   |      |  |   |       |  
|Proceeds     |  | $    |  |      |  | $ | 2,525 |   |  | $ | 5,433 | 
|Gross gains  |  |      |  |      |  |   | 25    |   |  |   | 56    | 
|Gross losses |  |      |  |      |  |   | (10   | ) |  |   |      | 





|                                  |  |                     |       |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |   |        |  |  |   |      |  
|--------------------------------- |  | ------------------- | ----- |  | ----------------- | - | --- | ----- |  | - | ---------- |  |  | ----- | ---- | - | ---------- | - | ------ |  |  | - | ---- | -
|                                  |  | Less than 12 Months |       |  | 12 Months or More |   |     | Total | 
|                                  |  |                     |       |  |                   |   |     |       | 
|                                  |  | Fair                |       |  | Unrealized        |   |     | Fair  |  |   | Unrealized |  |  | Fair  |      |   | Unrealized |  
|                                  |  | Value               |       |  | Loss              |   |     | Value |  |   | Loss       |  |  | Value |      |   | Loss       |  
|                                  |  |                     |       |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |  
|Description of Securities         |  |                     |       |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |   |        |  |  |   |      |  
|US agencies                       |  | $                   | 496   |  |                   | $ | (4  | )     |  | $ | 6,898      |  |  | $     | (112 | ) |            | $ | 7,394  |  |  | $ | (116 | )
|State and political subdivisions  |  |                     | 3,278 |  |                   |   | (41 | )     |  |   | 694        |  |  |       | (11  | ) |            |   | 3,972  |  |  |   | (52  | )
|Mortgage-backed securities        |  |                     | 436   |  |                   |   | (3  | )     |  |   | 4,755      |  |  |       | (141 | ) |            |   | 5,191  |  |  |   | (144 | )
|AMF Adjustable Rate Mortgage Fund |  |                     | 188   |  |                   |   | (2  | )     |  |   | 14,635     |  |  |       | (381 | ) |            |   | 14,823 |  |  |   | (383 | )
|                                  |  |                     |       |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |  
|Total temporarily impaired        |  | $                   | 4,398 |  |                   | $ | (50 | )     |  | $ | 26,982     |  |  | $     | (645 | ) |            | $ | 31,380 |  |  | $ | (695 | )
|                                  |  |                     |       |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |  



45



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|                                  |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |   |        |  |  |   |      |  
|--------------------------------- |  | ------------------- | ------ |  | ----------------- | - | --- | ----- |  | - | ---------- |  |  | ----- | ---- | - | ---------- | - | ------ |  |  | - | ---- | -
|                                  |  | Less than 12 Months |        |  | 12 Months or More |   |     | Total | 
|                                  |  |                     |        |  |                   |   |     |       | 
|                                  |  | Fair                |        |  | Unrealized        |   |     | Fair  |  |   | Unrealized |  |  | Fair  |      |   | Unrealized |  
|                                  |  | Value               |        |  | Loss              |   |     | Value |  |   | Loss       |  |  | Value |      |   | Loss       |  
|                                  |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |  
|Description of Securities         |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |   |        |  |  |   |      |  
|U.S. agencies                     |  | $                   | 3,495  |  |                   | $ | (25 | )     |  | $ | 988        |  |  | $     | (12  | ) |            | $ | 4,483  |  |  | $ | (37  | )
|State and political subdivisions  |  |                     | 891    |  |                   |   | (4  | )     |  |   |           |  |  |       |     |   |            |   | 891    |  |  |   | (4   | )
|Mortgage-backed securities        |  |                     | 6,210  |  |                   |   | (36 | )     |  |   | 31         |  |  |       |     |   |            |   | 6,241  |  |  |   | (36  | )
|AMF Adjustable Rate Mortgage Fund |  |                     | 283    |  |                   |   | (1  | )     |  |   | 14,549     |  |  |       | (184 | ) |            |   | 14,832 |  |  |   | (185 | )
|                                  |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |  
|Total temporarily impaired        |  | $                   | 10,879 |  |                   | $ | (66 | )     |  | $ | 15,568     |  |  | $     | (196 | ) |            | $ | 26,447 |  |  | $ | (262 | )
|                                  |  |                     |        |  |                   |   |     |       |  |   |            |  |  |       |      |   |            |  





|        |      
|------- | -----
|Note 4: | Loans





|                           |       |      |         |         |      |   |        |         | 
|-------------------------- | ----- | ---- | ------- | ------- | ---- | - | ------ | ------- | 
|                           |       | 2005 |         |         | 2004 |  
|                           |       |      |         |         |      |  
|Commercial                 |       | $    | 61,921  |         |      | $ | 55,563 |        
|Real estate mortgage       |       |      | 105,097 |         |      |   | 78,673 |        
|Real estate construction   |       |      | 6,953   |         |      |   | 11,538 |        
|Consumer                   |       |      | 14,939  |         |      |   | 13,685 |        
|Other including overdrafts |       |      | 278     |         |      |   | 197    |        
|                           |       |      |         |         |      |  
|                           | Total |      | $       | 189,188 |      |   | $      | 159,656 | 
|                           |       |      |         |         |      |  

46



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                             |       |       |        |        |          |   |        |         |  |   |        |         | 
|------------------------------------------------------------ | ----- | ----- | ------ | ------ | -------- | - | ------ | ------- |  | - | ------ | ------- | 
|                                                             |       | Fixed |        |        | Variable |   |        |        
|                                                             |       | Rate  |        |        | Rate     |   |        | Total   | 
|                                                             |       |       |        |        |          |   |        |         | 
|Due in one year or less                                      |       | $     | 11,100 |        |          | $ | 83,471 |         |  | $ | 94,571 |        
|Due after one year through five years                        |       |       | 23,893 |        |          |   | 43,243 |         |  |   | 67,136 |        
|Due after five years                                         |       |       | 21,776 |        |          |   | 4,970  |         |  |   | 26,746 |        
|                                                             |       |       |        |        |          |   |        |         | 
|                                                             | Total |       | $      | 56,769 |          |   | $      | 131,684 |  |   | $      | 188,453 | 
|                                                             |       |       |        |        |          |   |        |         | 
|Loans on which the accrual of interest has been discontinued |       |       |        |        |          |   |        |         |  |   | 735    |        
|                                                             |       |       |        |        |          |   |        |         | 
|                                                             | Total |       |        |        |          |   |        |         |  |   | $      | 189,188 | 
|                                                             |       |       |        |        |          |   |        |         | 









|                  |  |   |        |  
|----------------- |  | - | ------ | -
|Beginning balance |  | $ | 1,048  |  
|Repayments        |  |   | (2,784 | )
|Additions         |  |   | 1,808  |  
|                  |  |   |       
|Ending balance    |  | $ | 72     |  
|                  |  |   |       



|        |                          
|------- | -------------------------
|Note 5: | Allowance for Loan Losses



|                                     |  |      |       |   |      |   |       |      |  |   |       |  
|------------------------------------ |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                     |  | 2005 |       |   | 2004 |   |       | 2003 | 
|                                     |  |      |       |   |      |   |       |      | 
|Balance at January 1                 |  | $    | 1,887 |   |      | $ | 1,636 |      |  | $ | 1,690 |  
|Recoveries credited to the allowance |  |      | 40    |   |      |   | 100   |      |  |   | 45    |  
|Provision for loan losses            |  |      | 423   |   |      |   | 321   |      |  |   | 233   |  
|Loans charged off                    |  |      | (294  | ) |      |   | (170  | )    |  |   | (332  | )
|                                     |  |      |       |   |      |   |       |      | 
|Balance at December 31               |  | $    | 2,056 |   |      | $ | 1,887 |      |  | $ | 1,636 |  
|                                     |  |      |       |   |      |   |       |      | 



|                                                                        |       |      |     |     |      |   |     |     | 
|----------------------------------------------------------------------- | ----- | ---- | --- | --- | ---- | - | --- | --- | 
|                                                                        |       | 2005 |     |     | 2004 |  
|                                                                        |       |      |     |     |      |  
|Impaired loans for which no allowance for loan losses was
    allocated |       | $    | 516 |     |      | $ | 65  |    
|Impaired loans with an allocation of the allowance for loan
    losses  |       |      | 219 |     |      |   | 483 |    
|                                                                        |       |      |     |     |      |  
|                                                                        | Total |      | $   | 735 |      |   | $   | 548 | 
|                                                                        |       |      |     |     |      |  
|Amount of the allowance for loan losses allocated                       |       | $    | 37  |     |      | $ | 298 |    
|                                                                        |       |      |     |     |      |  

47



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                             |  |      |     |  |      |   |     | 
|-------------------------------------------- |  | ---- | --- |  | ---- | - | --- | 
|                                             |  | 2005 |     |  | 2004 |  
|                                             |  |      |     |  |      |  
|Average of impaired loans during the year    |  | $    | 648 |  |      | $ | 155 | 
|Interest income recognized during impairment |  |      | 93  |  |      |   | 2   | 
|Cash-basis interest income recognized        |  |      | 93  |  |      |   |    | 



|                                                                                           |  |      |     |  |      |   |     | 
|------------------------------------------------------------------------------------------ |  | ---- | --- |  | ---- | - | --- | 
|                                                                                           |  | 2005 |     |  | 2004 |  
|                                                                                           |  |      |     |  |      |  
|Loans past due 90 days or more and still accruing                                          |  | $    | 414 |  |      | $ | 5   | 
|Loans accounted for on a nonaccrual basis                                                  |  |      | 735 |  |      |   | 213 | 
|If interest on these nonaccrual loans had been recognized, such
    income would have been |  |      | 29  |  |      |   | 9   | 





|        |                       
|------- | ----------------------
|Note 6: | Premises and Equipment



|                                          |       |      |        |       |      |   |        |       | 
|----------------------------------------- | ----- | ---- | ------ | ----- | ---- | - | ------ | ----- | 
|                                          |       | 2005 |        |       | 2004 |  
|                                          |       |      |        |       |      |  
|Equipment and furniture                   |       | $    | 4,623  |       |      | $ | 3,948  |      
|Leasehold improvements                    |       |      | 2,959  |       |      |   | 2,267  |      
|Accumulated depreciation and amortization |       |      | (4,403 | )     |      |   | (3,639 | )    
|                                          |       |      |        |       |      |  
|                                          | Total |      | $      | 3,179 |      |   | $      | 2,576 | 
|                                          |       |      |        |       |      |  





|        |         
|------- | --------
|Note 7: | Deposits





|     |       |   |        |        | 
|---- | ----- | - | ------ | ------ | 
|2006 |       | $ | 60,089 |       
|2007 |       |   | 4,953  |       
|2008 |       |   | 1,762  |       
|2009 |       |   | 75     |       
|     |       |   |       
|     | Total |   | $      | 66,879 | 
|     |       |   |       



|        |                                        
|------- | ---------------------------------------
|Note 8: | Borrowings and Junior Subordinated Debt



48



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |      |              |  |      |        |   |          |              |        |  |        |      |      |   |   |       |        | 
|-------------------------- | ---- | ------------ |  | ---- | ------ | - | -------- | ------------ | ------ |  | ------ | ---- | ---- | - | - | ----- | ------ | 
|                           |      | December 31, | 
|                           |      |              | 
|                           |      | 2005         |  |      | 2004   |  
|                           |      |              |  |      |        |  
|                           |      | Weighted     |  |      |        |   | Weighted |              |        | 
|                           |      | Average Rate |  |      | Amount |   |          | Average Rate |        |  | Amount |     
|                           |      |              |  |      |        |   |          |              |        |  |        |     
|Advances from the FHLB due |      |              |  |      |        |   |          |              |        |  |        |      |      |   |   |      
|                           | 2006 |              |  | 4.74 | %      |   | $        | 5,580        |        |  |        | 4.78 | %    |   | $ | 3,654 |       
|                           | 2007 |              |  | 4.64 |        |   |          | 5,084        |        |  |        | 4.84 |      |   |   | 2,880 |       
|                           | 2008 |              |  | 4.10 |        |   |          | 2,185        |        |  |        | 4.17 |      |   |   | 2,347 |       
|                           | 2009 |              |  | 4.77 |        |   |          | 3,000        |        |  |        | 3.37 |      |   |   | 1,186 |       
|                           | 2010 |              |  | 4.91 |        |   |          | 2,000        |        |  |        | 4.57 |      |   |   | 1,000 |       
|                           | 2011 |              |  | 4.96 |        |   |          | 2,000        |        |  |        |     |      |   |   |      |       
|                           | 2012 |              |  | 4.98 |        |   |          | 2,000        |        |  |        |     |      |   |   |      |       
|                           | 2013 |              |  | 4.92 |        |   |          | 1,000        |        |  |        |     |      |   |   |      |       
|                           | 2014 |              |  | 4.95 |        |   |          | 1,000        |        |  |        |     |      |   |   |      |       
|                           |      |              |  |      |        |   |          |              |        |  |        |     
|                           |      | Total        |  |      | 4.73   | % |          | $            | 23,849 |  |        |      | 4.50 | % |   | $     | 11,067 | 
|                           |      |              |  |      |        |   |          |              |        |  |        |     







49



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|        |                     
|------- | --------------------
|Note 9: | Stockholders Equity



,






|         |             
|-------- | ------------
|Note 10: | Income Taxes



|                  |       |      |      |     |      |   |      |      |  |   |     |     | 
|----------------- | ----- | ---- | ---- | --- | ---- | - | ---- | ---- |  | - | --- | --- | 
|                  |       | 2005 |      |     | 2004 |   |      | 2003 | 
|                  |       |      |      |     |      |   |      |      | 
|Currently payable |       | $    | 595  |     |      | $ | 816  |      |  | $ | 572 |    
|Deferred          |       |      | (178 | )   |      |   | (210 | )    |  |   | (82 | )  
|                  |       |      |      |     |      |   |      |      | 
|                  | Total |      | $    | 417 |      |   | $    | 606  |  |   | $   | 490 | 
|                  |       |      |      |     |      |   |      |      | 



|                                                            |       |      |     |     |      |   |     |      |  |   |     |     | 
|----------------------------------------------------------- | ----- | ---- | --- | --- | ---- | - | --- | ---- |  | - | --- | --- | 
|                                                            |       | 2005 |     |     | 2004 |   |     | 2003 | 
|                                                            |       |      |     |     |      |   |     |      | 
|Federal income tax at statutory rates                       |       | $    | 470 |     |      | $ | 642 |      |  | $ | 519 |    
|Decrease in taxes resulting from tax-exempt interest income |       |      | (39 | )   |      |   | (30 | )    |  |   | (31 | )  
|Bank owned life insurance                                   |       |      | (31 | )   |      |   |    |      |  |   |    |    
|Nondeductible expenses and other                            |       |      | 17  |     |      |   | (6  | )    |  |   | 2   |    
|                                                            |       |      |     |     |      |   |     |      | 
|                                                            | Total |      | $   | 417 |      |   | $   | 606  |  |   | $   | 490 | 
|                                                            |       |      |     |     |      |   |     |      | 

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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                       |                                                        |      |       |       |      |  |       |      |  
|---------------------- | ------------------------------------------------------ | ---- | ----- | ----- | ---- |  | ----- | ---- | -
|                       |                                                        | 2005 |       |       | 2004 | 
|                       |                                                        |      |       |       |      | 
|Deferred tax asset     |                                                        |      |       |       |      |  |       |     
|                       | Provision for loan losses                              |      | $     | 607   |      |  | $     | 559  |  
|                       | Postretirement health care benefits                    |      |       | 472   |      |  |       | 414  |  
|                       | Unamortized loan fees, net of loan costs               |      |       | 265   |      |  |       | 236  |  
|                       | Accrued vacation pay                                   |      |       | 108   |      |  |       | 89   |  
|                       | Unrealized losses on securities available-for-sale net |      |       | 235   |      |  |       | 62   |  
|                       |                                                        |      |       |       |      | 
|                       |                                                        |      | 1,687 |       |      |  | 1,360 |     
|                       |                                                        |      |       |       |      | 
|Deferred tax liability |                                                        |      |       |       |      |  |       |     
|                       | Federal Home Loan Bank stock dividends                 |      | $     | (262  | )    |  | $     | (258 | )
|                       | Depreciation                                           |      |       | (121  | )    |  |       | (144 | )
|                       | Other                                                  |      |       | (10   | )    |  |       | (15  | )
|                       |                                                        |      |       |       |      | 
|                       |                                                        |      | (393  | )     |      |  | (417  | )   
|                       |                                                        |      |       |       |      | 
|                       | Net deferred income tax asset                          |      | $     | 1,294 |      |  | $     | 943  |  
|                       |                                                        |      |       |       |      | 



|         |                  
|-------- | -----------------
|Note 11: | Stock Option Plan







|                                         |  |        |         |           |       |   |       |        |           |  |         |   |  |           |       |  |       |  |         |   |  |   |      | 
|---------------------------------------- |  | ------ | ------- | --------- | ----- | - | ----- | ------ | --------- |  | ------- | - |  | --------- | ----- |  | ----- |  | ------- | - |  | - | ---- | 
|                                         |  | 2005   |         |           | 2004  |   |       | 2003   |          
|                                         |  |        |         |           |       |   |       |        |          
|                                         |  |        |         | Weighted- |       |   |       |        | Weighted- |  |         |   |  | Weighted- |      
|                                         |  |        |         | Average   |       |   |       |        | Average   |  |         |   |  | Average   |      
|                                         |  |        |         | Exercise  |       |   |       |        | Exercise  |  |         |   |  | Exercise  |      
|                                         |  | Shares |         |           | Price |   |       | Shares |           |  | Price   |   |  | Shares    |       |  | Price | 
|                                         |  |        |         |           |       |   |       |        |           |  |         |   |  |           |       |  |       | 
|Outstanding at the beginning of the year |  |        | 191,440 |           |       | $ | 8.15  |        |           |  | 176,771 |   |  | $         | 7.62  |  |       |  | 143,507 |   |  | $ | 7.28 | 
|Granted                                  |  |        | 45,334  |           |       |   | 13.72 |        |           |  | 31,667  |   |  |           | 10.65 |  |       |  | 55,917  |   |  |   | 8.90 | 
|Exercised                                |  |        | (8,524  | )         |       |   | 6.29  |        |           |  | (8,899  | ) |  |           | 7.76  |  |       |  | (12,711 | ) |  |   | 6.89 | 
|Forfeited                                |  |        |        |           |       |   |      |        |           |  | (8,099  | ) |  |           | 8.28  |  |       |  | (9,942  | ) |  |   | 8.30 | 
|                                         |  |        |         |           |       |   |       |        |           |  |         |   |  |           |       |  |       | 
|Outstanding at the end of the year       |  |        | 228,250 |           |       | $ | 9.32  |        |           |  | 191,440 |   |  | $         | 8.15  |  |       |  | 176,771 |   |  | $ | 7.62 | 
|                                         |  |        |         |           |       |   |       |        |           |  |         |   |  |           |       |  |       | 

51



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |  |         |      |             |        |           |             |                  |  |  |            |         |  |                |         |  |  |   |       | 
|-------------------------- |  | ------- | ---- | ----------- | ------ | --------- | ----------- | ---------------- |  |  | ---------- | ------- |  | -------------- | ------- |  |  | - | ----- | 
|                           |  |         |      | Outstanding |        |           | Exercisable |                 
|                           |  |         |      |             |        |           |             |                 
|                           |  |         |      |             |        | Weighted- |             |                  | 
|                           |  |         |      |             |        | Average   |             |                  |  |  | Weighted-  |        
|                           |  | Year of |      |             |        |           | Remaining   |                  |  |  |            | Average | 
|Exercise Price             |  | Grant   |      |             | Number |           |             | Contractual Life |  |  | Number     |         |  | Exercise Price |        
|                           |  |         |      |             |        |           |             |                  |  |  |            |         |  |                |        
|$13.72                     |  |         | 2005 |             |        |           | 45,326      |                  |  |  | 7.72 years |         |  |                |        |  |  | $ | 13.72 | 
|10.65                      |  |         | 2004 |             |        |           | 31,107      |                  |  |  | 8.12 years |         |  |                | 6,125   |  |  |   | 10.65 | 
|8.90                       |  |         | 2003 |             |        |           | 40,941      |                  |  |  | 6.23 years |         |  |                | 15,802  |  |  |   | 8.90  | 
|8.02                       |  |         | 2002 |             |        |           | 33,530      |                  |  |  | 6.30 years |         |  |                | 19,636  |  |  |   | 8.02  | 
|7.01                       |  |         | 2001 |             |        |           | 42,664      |                  |  |  | 5.28 years |         |  |                | 34,143  |  |  |   | 7.01  | 
|6.84                       |  |         | 2000 |             |        |           | 34,682      |                  |  |  | 4.81 years |         |  |                | 34,682  |  |  |   | 6.84  | 
|                           |  |         |      |             |        |           |             |                  |  |  |            |         |  |                |        
|Outstanding at end of year |  |         |      |             |        |           | 228,250     |                  |  |  | 6.40 years |         |  |                | 110,388 |  |  | $ | 9.30  | 
|                           |  |         |      |             |        |           |             |                  |  |  |            |         |  |                |        



|         |                                   
|-------- | ----------------------------------
|Note 12: | Earnings Per Share of Common Stock





|                                           |                                                                                                  |      |      |           |      |   |      |           |  |   |      |           | 
|------------------------------------------ | ------------------------------------------------------------------------------------------------ | ---- | ---- | --------- | ---- | - | ---- | --------- |  | - | ---- | --------- | 
|                                           |                                                                                                  | 2005 |      |           | 2004 |   |      | 2003      | 
|                                           |                                                                                                  |      |      |           |      |   |      |           | 
|Income (numerator):                        |                                                                                                  |      |      |           |      |   |      |           |  |   |      |          
|                                           | Net Income                                                                                       |      | $    | 966       |      |   | $    | 1,282     |  |   | $    | 1,036     | 
|                                           |                                                                                                  |      |      |           |      |   |      |           | 
|Shares (denominator):                      |                                                                                                  |      |      |           |      |   |      |           |  |   |      |          
|                                           | Weighted average number of common stock shares
    outstanding  basic                           |      |      | 1,997,429 |      |   |      | 1,988,979 |  |   |      | 1,976,588 | 
|                                           | Dilutive effect of outstanding employee and director stock
    options                           |      |      | 45,276    |      |   |      | 34,502    |  |   |      | 21,529    | 
|                                           |                                                                                                  |      |      |           |      |   |      |           | 
|                                           | Weighted average number of common stock shares outstanding and
    assumed conversions  diluted |      |      | 2,042,705 |      |   |      | 2,023,481 |  |   |      | 1,998,117 | 
|                                           |                                                                                                  |      |      |           |      |   |      |           | 
|Basic earnings per share of common stock   |                                                                                                  | $    | 0.48 |           |      | $ | 0.64 |           |  | $ | 0.52 |          
|                                           |                                                                                                  |      |      |           |      |   |      |           | 
|Diluted earnings per share of common stock |                                                                                                  | $    | 0.47 |           |      | $ | 0.63 |           |  | $ | 0.52 |          
|                                           |                                                                                                  |      |      |           |      |   |      |           | 



|         |                    
|-------- | -------------------
|Note 13: | Retirement Benefits



52



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




Employers Accounting for Postretirement Benefits Other
Than Pensions




|                                      |  |      |     |   |      |   |     |      |  |   |     |  
|------------------------------------- |  | ---- | --- | - | ---- | - | --- | ---- |  | - | --- | -
|                                      |  | 2005 |     |   | 2004 |   |     | 2003 | 
|                                      |  |      |     |   |      |   |     |      | 
|Service cost                          |  | $    | 126 |   |      | $ | 90  |      |  | $ | 68  |  
|Interest cost                         |  |      | 95  |   |      |   | 87  |      |  |   | 73  |  
|Amortization of transition obligation |  |      |    |   |      |   | 41  |      |  |   | 41  |  
|Amortization of prior service cost    |  |      | (5  | ) |      |   |    |      |  |   |    |  
|Recognized actuarial (gain) loss      |  |      | 20  |   |      |   |    |      |  |   | (4  | )
|                                      |  |      |     |   |      |   |     |      | 
|Net periodic benefit cost             |  | $    | 236 |   |      | $ | 218 |      |  | $ | 178 |  
|                                      |  |      |     |   |      |   |     |      | 



|                                        |  |      |       |   |      |   |       |      |  |   |       |  
|--------------------------------------- |  | ---- | ----- | - | ---- | - | ----- | ---- |  | - | ----- | -
|                                        |  | 2005 |       |   | 2004 |   |       | 2003 | 
|                                        |  |      |       |   |      |   |       |      | 
|Benefit obligation at beginning of year |  | $    | 1,605 |   |      | $ | 1,337 |      |  | $ | 1,204 |  
|Service cost                            |  |      | 125   |   |      |   | 90    |      |  |   | 68    |  
|Interest cost                           |  |      | 95    |   |      |   | 87    |      |  |   | 73    |  
|Plan participants contributions        |  |      | 3     |   |      |   |      |      |  |   |      |  
|Amendments                              |  |      | (396  | ) |      |   |      |      |  |   |      |  
|Actuarial loss                          |  |      | 533   |   |      |   | 128   |      |  |   | 24    |  
|Benefits paid                           |  |      | (37   | ) |      |   | (37   | )    |  |   | (32   | )
|                                        |  |      |       |   |      |   |       |      | 
|Benefit obligation at end of year       |  | $    | 1,928 |   |      | $ | 1,605 |      |  | $ | 1,337 |  
|                                        |  |      |       |   |      |   |       |      | 



|                                               |  |      |     |   |      |   |     |      |  |   |     |  
|---------------------------------------------- |  | ---- | --- | - | ---- | - | --- | ---- |  | - | --- | -
|                                               |  | 2005 |     |   | 2004 |   |     | 2003 | 
|                                               |  |      |     |   |      |   |     |      | 
|Fair value of plan assets at beginning of year |  | $    |    |   |      | $ |    |      |  | $ |    |  
|Employer contribution                          |  |      | 37  |   |      |   | 37  |      |  |   | 32  |  
|Benefits paid                                  |  |      | (37 | ) |      |   | (37 | )    |  |   | (32 | )
|                                               |  |      |     |   |      |   |     |      | 
|Fair value of plan assets at end of year       |  | $    |    |   |      | $ |    |      |  | $ |    |  
|                                               |  |      |     |   |      |   |     |      | 

53



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                   |  |      |        |   |      |   |        |      |  |   |        |  
|---------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                   |  | 2005 |        |   | 2004 |   |        | 2003 | 
|                                   |  |      |        |   |      |   |        |      | 
|Funded status                      |  | $    | (1,928 | ) |      | $ | (1,605 | )    |  | $ | (1,337 | )
|Unrecognized transition obligation |  |      |       |   |      |   | 326    |      |  |   | 367    |  
|Unrecognized prior service cost    |  |      | (66    | ) |      |   |       |      |  |   |       |  
|Unrecognized actuarial (gain) loss |  |      | 577    |   |      |   | 60     |      |  |   | (69    | )
|                                   |  |      |        |   |      |   |        |      | 
|Accrued benefit cost               |  | $    | (1,417 | ) |      | $ | (1,219 | )    |  | $ | (1,039 | )
|                                   |  |      |        |   |      |   |        |      | 







|                                                        |  |               |     |  |               |   |      |  
|------------------------------------------------------- |  | ------------- | --- |  | ------------- | - | ---- | -
|                                                        |  | 1-Percentage- |     |  | 1-Percentage- |  
|                                                        |  | Point         |     |  | Point         |  
|                                                        |  | Increase      |     |  | Decrease      |  
|                                                        |  |               |     |  |               |  
|Effect on total of service and interest cost components |  | $             | 55  |  |               | $ | (42  | )
|                                                        |  |               |     |  |               |  
|Effect on benefit obligation                            |  | $             | 404 |  |               | $ | (317 | )
|                                                        |  |               |     |  |               |  



|          |  |   |     | 
|--------- |  | - | --- | 
|2006      |  | $ | 44  | 
|2007      |  |   | 47  | 
|2008      |  |   | 52  | 
|2009      |  |   | 58  | 
|2010      |  |   | 65  | 
|2011-2016 |  |   | 560 | 



|         |       
|-------- | ------
|Note 14: | Leases

month-to


54



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|           |       |   |       |       | 
|---------- | ----- | - | ----- | ----- | 
|2006       |       | $ | 647   |      
|2007       |       |   | 469   |      
|2008       |       |   | 388   |      
|2009       |       |   | 356   |      
|2010       |       |   | 346   |      
|Thereafter |       |   | 1,113 |      
|           |       |   |      
|           | Total |   | $     | 3,319 | 
|           |       |   |      



|         |                                
|-------- | -------------------------------
|Note 15: | Agreements with Related Parties











|         |                              
|-------- | -----------------------------
|Note 16: | Commitments and Contingencies







55



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                   |  |       |       |  |          |   |        |       |  |   |          |  |  |   |        | 
|-------------------------------------------------- |  | ----- | ----- |  | -------- | - | ------ | ----- |  | - | -------- |  |  | - | ------ | 
|                                                   |  | 2005  |       |  | 2004     |  
|                                                   |  |       |       |  |          |  
|                                                   |  | Fixed |       |  | Variable |   |        | Fixed |  |   | Variable | 
|                                                   |  |       |       |  |          |   |        |       |  |   |          | 
|Lines of credit                                    |  | $     | 6,696 |  |          | $ | 40,250 |       |  | $ | 6,369    |  |  | $ | 38,287 | 
|Commitments to extend credit                       |  |       |      |  |          |   | 5,340  |       |  |   |         |  |  |   | 1,935  | 
|Standby letters of credit and similar arrangements |  |       |      |  |          |   | 145    |       |  |   |         |  |  |   | 95     | 



|         |                                     
|-------- | ------------------------------------
|Note 17: | Fair Values of Financial Instruments



|                      |                                      |       |   |         |       |  |   |         |  |  |       |         |  |  |   |         | 
|--------------------- | ------------------------------------ | ----- | - | ------- | ----- |  | - | ------- |  |  | ----- | ------- |  |  | - | ------- | 
|                      |                                      | 2005  |   |         | 2004  | 
|                      |                                      |       |   |         |       | 
|                      |                                      | Book  |   |         | Fair  |  |   | Book    |  |  | Fair  |        
|                      |                                      | Value |   |         | Value |  |   | Value   |  |  | Value |        
|                      |                                      |       |   |         |       |  |   |         |  |  |       |        
|Financial assets      |                                      |       |   |         |       |  |   |         |  |  |       |         |  |  |   |        
|                      | Cash and cash equivalents            |       | $ | 17,302  |       |  | $ | 17,302  |  |  | $     | 12,145  |  |  | $ | 12,145  | 
|                      | Securities available-for-sale        |       |   | 33,550  |       |  |   | 33,550  |  |  |       | 35,170  |  |  |   | 35,170  | 
|                      | Net loans                            |       |   | 187,132 |       |  |   | 185,596 |  |  |       | 157,769 |  |  |   | 157,491 | 
|                      | Accrued interest receivable          |       |   | 931     |       |  |   | 931     |  |  |       | 684     |  |  |   | 684     | 
|Financial liabilities |                                      |       |   |         |       |  |   |         |  |  |       |         |  |  |   |        
|                      | Deposits                             |       | $ | 199,890 |       |  | $ | 199,820 |  |  | $     | 173,801 |  |  | $ | 173,639 | 
|                      | Advances from Federal Home Loan Bank |       |   | 23,849  |       |  |   | 23,702  |  |  |       | 11,067  |  |  |   | 11,194  | 
|                      | Junior subordinated debt             |       |   | 5,000   |       |  |   | 5,000   |  |  |       | 5,000   |  |  |   | 5,000   | 
|                      | Accrued interest payable             |       |   | 347     |       |  |   | 347     |  |  |       | 190     |  |  |   | 190     | 







|         |                                
|-------- | -------------------------------
|Note 18: | Regulatory Capital Requirements



56



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|                                         |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |       |  
|---------------------------------------- | ------------ | ------ | - | ---------------- |  | ----------------- |  | ---------------- | - | ------------- | - | ------ |  |  |  | ---- | - |  | - | ------ |  |  |  | ----- | -
|                                         |              |        |   |                  |  |                   |  |                  |   | Minimum to Be
|                                         |              |        |   |                  |  |                   |  | Well Capitalized
|                                         |              |        |   |                  |  | Minimum for       |  | Under the Prompt
|                                         |              |        |   | Capital Adequacy |  | Corrective Action
|                                         |              | Actual |   | Purposes         |  | Provisions       
|                                         |              |        |   |                  |  |                  
|                                         |              | Amount |   | Ratio            |  | Amount            |  | Ratio            |   | Amount        |   | Ratio 
|                                         |              |        |   |                  |  |                   |  |                  |   |               |   |       
|December 31, 2005                        |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|Total capital (to risk-weighted assets)  |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                         | Consolidated |        | $ | 24,997           |  |                   |  | 12.55            | % |               | $ | 15,939 |  |  |  | 8.00 | % |  |   | N/A    |  |  |  | N/A   |  
|                                         | Bank         |        |   | 24,626           |  |                   |  | 12.39            |   |               |   | 15,898 |  |  |  | 8.00 |   |  | $ | 19,873 |  |  |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                         | Consolidated |        |   | 22,941           |  |                   |  | 11.51            |   |               |   | 7,953  |  |  |  | 4.00 |   |  |   | N/A    |  |  |  | N/A   |  
|                                         | Bank         |        |   | 22,570           |  |                   |  | 11.36            |   |               |   | 7,949  |  |  |  | 4.00 |   |  |   | 11,924 |  |  |  | 6.00  |  
|Tier 1 capital (to average assets)(1)    |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                         | Consolidated |        |   | 22,941           |  |                   |  | 10.25            |   |               |   | 8,952  |  |  |  | 4.00 |   |  |   | N/A    |  |  |  | N/A   |  
|                                         | Bank         |        |   | 22,570           |  |                   |  | 10.10            |   |               |   | 8,935  |  |  |  | 4.00 |   |  |   | 11,169 |  |  |  | 5.00  |  
|December 31, 2004                        |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|Total capital (to risk-weighted assets)  |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                         | Consolidated |        | $ | 24,305           |  |                   |  | 14.03            | % |               | $ | 13,826 |  |  |  | 8.00 | % |  |   | N/A    |  |  |  | N/A   |  
|                                         | Bank         |        |   | 23,651           |  |                   |  | 13.71            |   |               |   | 13,805 |  |  |  | 8.00 |   |  | $ | 17,256 |  |  |  | 10.00 | %
|Tier 1 capital (to risk-weighted assets) |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                         | Consolidated |        |   | 22,419           |  |                   |  | 12.94            |   |               |   | 6,913  |  |  |  | 4.00 |   |  |   | N/A    |  |  |  | N/A   |  
|                                         | Bank         |        |   | 21,764           |  |                   |  | 12.61            |   |               |   | 6,902  |  |  |  | 4.00 |   |  |   | 10,354 |  |  |  | 6.00  |  
|Tier 1 capital (to average assets)(1)    |              |        |   |                  |  |                   |  |                  |   |               |   |        |  |  |  |      |   |  |   |        |  |  |  |      
|                                         | Consolidated |        |   | 22,419           |  |                   |  | 11.07            |   |               |   | 8,083  |  |  |  | 4.00 |   |  |   | N/A    |  |  |  | N/A   |  
|                                         | Bank         |        |   | 21,764           |  |                   |  | 10.77            |   |               |   | 8,083  |  |  |  | 4.00 |   |  |   | 10,104 |  |  |  | 5.00  |  






|    |                                       
|--- | --------------------------------------
|(1) | Also referred to as the leverage ratio

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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|         |                                          
|-------- | -----------------------------------------
|Note 19: | Condensed Financial Statements of Bancorp



CONDENSED BALANCE SHEETS (in thousands):


|                                     |                                            |      |        |        |      |   |        |        | 
|------------------------------------ | ------------------------------------------ | ---- | ------ | ------ | ---- | - | ------ | ------ | 
|                                     |                                            | 2005 |        |        | 2004 |  
|                                     |                                            |      |        |        |      |  
|Assets                               |                                            |      |        |        |      |   |        |       
|Due from EvergreenBank               |                                            | $    | 285    |        |      | $ | 438    |       
|Investment in subsidiaries           |                                            |      | 22,365 |        |      |   | 21,830 |       
|Other assets                         |                                            |      | 413    |        |      |   | 284    |       
|                                     |                                            |      |        |        |      |  
|                                     | Total assets                               |      | $      | 23,063 |      |   | $      | 22,552 | 
|                                     |                                            |      |        |        |      |  
|Liabilities and stockholders equity |                                            |      |        |        |      |   |        |       
|Stockholders equity                 |                                            | $    | 17,736 |        |      | $ | 17,485 |       
|Junior subordinated debt             |                                            |      | 5,000  |        |      |   | 5,000  |       
|Other liabilities                    |                                            |      | 327    |        |      |   | 67     |       
|                                     |                                            |      |        |        |      |  
|                                     | Total liabilities and stockholders equity |      | $      | 23,063 |      |   | $      | 22,552 | 
|                                     |                                            |      |        |        |      |  

CONDENSED STATEMENTS OF INCOME (in thousands):


|                                                                                       |            |      |     |     |      |   |       |       |  |   |     |       | 
|-------------------------------------------------------------------------------------- | ---------- | ---- | --- | --- | ---- | - | ----- | ----- |  | - | --- | ----- | 
|                                                                                       |            | 2005 |     |     | 2004 |   |       | 2003  | 
|                                                                                       |            |      |     |     |      |   |       |       | 
|Dividend income from EvergreenBank                                                     |            | $    | 870 |     |      | $ | 495   |       |  | $ | 886 |      
|Interest expense                                                                       |            |      | 345 |     |      |   | 253   |       |  |   | 240 |      
|Other expense                                                                          |            |      | 453 |     |      |   | 370   |       |  |   | 3   |      
|                                                                                       |            |      |     |     |      |   |       |       | 
|Income (loss) before income taxes and equity in undistributed
    income of subsidiary |            |      | 72  |     |      |   | (128  | )     |  |   | 643 |      
|Income tax benefit                                                                     |            |      | 243 |     |      |   | 208   |       |  |   | 83  |      
|Equity in undistributed income of subsidiary                                           |            |      | 651 |     |      |   | 1,202 |       |  |   | 310 |      
|                                                                                       |            |      |     |     |      |   |       |       | 
|                                                                                       | Net income |      | $   | 966 |      |   | $     | 1,282 |  |   | $   | 1,036 | 
|                                                                                       |            |      |     |     |      |   |       |       | 

58



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EVERGREENBANCORP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


CONDENSED STATEMENTS OF CASH FLOWS (in thousands):


|                                                        |                                                                                      |                                                |      |      |      |   |      |       |        |   |      |       |      |  
|------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------------------------- | ---- | ---- | ---- | - | ---- | ----- | ------ | - | ---- | ----- | ---- | -
|                                                        |                                                                                      | 2005                                           |      |      | 2004 |   |      | 2003  |       
|                                                        |                                                                                      |                                                |      |      |      |   |      |       |       
|Cash flows from operating activities                    |                                                                                      |                                                |      |      |      |   |      |       |        |   |      |      
|                                                        | Net income                                                                           |                                                | $    | 966  |      |   | $    | 1,282 |        |   | $    | 1,036 |     
|                                                        | Adjustments to reconcile net income to net cash provided by
    operating activities |                                                |      |      |      |   |      |       |        |   |      |       |     
|                                                        |                                                                                      | Equity in undistributed income of subsidiary   |      |      | (651 | ) |      |       | (1,202 | ) |      |       | (310 | )
|                                                        |                                                                                      | Other changes, net                             |      |      | 231  |   |      |       | 146    |   |      |       | (79  | )
|                                                        |                                                                                      |                                                |      |      |      |   |      |       |       
|Net cash provided by operating activities               |                                                                                      |                                                | 546  |      |      |   | 226  |       |        |   | 647  |      
|Cash flows from investing activities                    |                                                                                      |                                                |      |      |      |   |      |       |        |   |      |      
|                                                        |                                                                                      | Capital contributed to subsidiary              |      |      |     |   |      |       |       |   |      |       |     |  
|                                                        |                                                                                      | Investment in EvergreenBancorp Capital Trust I |      |      |     |   |      |       |       |   |      |       |     |  
|                                                        |                                                                                      |                                                |      |      |      |   |      |       |       
|Cash flows used in investing activities                 |                                                                                      |                                                |     |      |      |   |     |       |        |   |     |      
|Cash flows from financing activities                    |                                                                                      |                                                |      |      |      |   |      |       |        |   |      |      
|                                                        | Payment of dividends                                                                 |                                                |      | (457 | )    |   |      | (382  | )      |   |      | (366  | )   
|                                                        | Repurchase of fractional shares                                                      |                                                |      | (7   | )    |   |      | (7    | )      |   |      |      |     
|                                                        | Proceeds from issuance of subordinated debt, net                                     |                                                |      |     |      |   |      |      |        |   |      |      |     
|                                                        | Proceeds from exercise of stock options                                              |                                                |      | 71   |      |   |      | 69    |        |   |      | 88    |     
|                                                        |                                                                                      |                                                |      |      |      |   |      |       |       
|Net cash provided by (used in) financing activities     |                                                                                      |                                                | (393 | )    |      |   | (320 | )     |        |   | (278 | )    
|                                                        |                                                                                      |                                                |      |      |      |   |      |       |       
|Net increase (decrease) in cash                         |                                                                                      |                                                | (153 | )    |      |   | (94  | )     |        |   | 369  |      
|Cash on deposit with EvergreenBank at beginning of year |                                                                                      |                                                | 438  |      |      |   | 532  |       |        |   | 163  |      
|                                                        |                                                                                      |                                                |      |      |      |   |      |       |       
|Cash on deposit with EvergreenBank at end of year       |                                                                                      | $                                              | 285  |      |      | $ | 438  |       |        | $ | 532  |      
|                                                        |                                                                                      |                                                |      |      |      |   |      |       |       



|         |                                    
|-------- | -----------------------------------
|Note 20: | Selected Quarterly Data (Unaudited)

|     |                            |                                       |   |         |  |              |   |             |  |  |   |       |  |  |   |       | 
|---- | -------------------------- | ------------------------------------- | - | ------- |  | ------------ | - | ----------- |  |  | - | ----- |  |  | - | ----- | 
|     |                            | Quarter Ended                        
|     |                            |                                      
|     |                            | March 31                              |   | June 30 |  | September 30 |   | December 31
|     |                            |                                       |   |         |  |              |   |            
|     |                            | (In thousands, except per share data)
|2005 |                            |                                       |   |         |  |              |   |             |  |  |   |       |  |  |   |      
|     | Interest income            |                                       | $ | 3,179   |  |              | $ | 3,287       |  |  | $ | 3,513 |  |  | $ | 3,733 | 
|     | Net interest income        |                                       |   | 2,461   |  |              |   | 2,498       |  |  |   | 2,608 |  |  |   | 2,696 | 
|     | Net income                 |                                       |   | 299     |  |              |   | 214         |  |  |   | 201   |  |  |   | 252   | 
|     | Basic earnings per share   |                                       |   | 0.15    |  |              |   | 0.10        |  |  |   | 0.10  |  |  |   | 0.13  | 
|     | Diluted earnings per share |                                       |   | 0.15    |  |              |   | 0.10        |  |  |   | 0.10  |  |  |   | 0.12  | 
|2004 |                            |                                       |   |         |  |              |   |             |  |  |   |       |  |  |   |      
|     | Interest income            |                                       | $ | 2,725   |  |              | $ | 2,702       |  |  | $ | 2,842 |  |  | $ | 3,094 | 
|     | Net interest income        |                                       |   | 2,193   |  |              |   | 2,158       |  |  |   | 2,287 |  |  |   | 2,464 | 
|     | Net income                 |                                       |   | 286     |  |              |   | 280         |  |  |   | 301   |  |  |   | 415   | 
|     | Basic earnings per share   |                                       |   | 0.14    |  |              |   | 0.14        |  |  |   | 0.15  |  |  |   | 0.21  | 
|     | Diluted earnings per share |                                       |   | 0.14    |  |              |   | 0.14        |  |  |   | 0.15  |  |  |   | 0.20  | 

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##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

13a-15(e)









|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant



S-K.


10-K







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation



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|         |                                                                                                   
|-------- | --------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Shareholder Matters








|         |                                               
|-------- | ----------------------------------------------
|Item 13. | Certain Relationships and Related Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules

Financial Statements




Financial Statement Schedules




Exhibits


|            |    |             |  |                                                                                                                                                                                                                                   
|----------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    | Description
|            |    |            
|            | 3  | .1          |  | Restated Articles of Incorporation of Registrant dated
    July 25, 2001 (incorporated by reference to
    Registrants Form 10-K for the year ended
    December 31, 2001)                                                       
|            | 3  | .2          |  | Bylaws of Registrant dated February 14, 2001 (incorporated
    by reference to Registrants Form 10-K for the year
    ended December 31, 2001)                                                                                   
|            | 10 | .1          |  | 2000 Stock Option Plan dated February 17, 2000 and adopted
    by Registrant effective June 20, 2001 (incorporated by
    reference to Registrants Form S-8 Filed
    August 20, 2001; Reg. No. 333-67956)                       
|            | 10 | .2          |  | Incentive Stock Option Letter Agreement (incorporated by
    reference to Registrants Form S-8 Filed
    August 20, 2001; Reg. No. 333-67956)                                                                                    
|            | 10 | .3          |  | Nonqualified Stock Option Letter Agreement (incorporated by
    reference to Registrants Form S-8 Filed
    August 20, 2001; Reg. No. 333-67956)                                                                                 
|            | 10 | .4          |  | Directors Nonqualified Stock Option Letter Agreement
    (incorporated by reference to Registrants Form S-8
    Filed August 20, 2001; Reg. No. 333-67956)                                                                       
|            | 10 | .5          |  | Form of Change of Control Severance Agreement effective
    May 24, 2005 between the Bank and each of Gerald O.
    Hatler and William G. Filer II (incorporated by
    reference to Registrants Form 8-K filed May 27,
    2005)
|            | 10 | .6          |  | PEMCO Executive Deferred Compensation Plan, effective
    August 1, 2005 (incorporated by reference to
    Registrants Form 8-K filed July 27, 2005)                                                                             
|            | 10 | .7          |  | PEMCO Directors Deferred Compensation Plan, effective
    August 1, 2005 (incorporated by reference to
    Registrants Form 8-K filed July 27, 2005)                                                                            

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|            |    |             |  |                                                                                                                                                                                                                                          
|----------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |    | Description
|            |    |            
|            | 10 | .8          |  | Form of Change of Control Severance Agreement effective
    February 2, 2006 between the Bank and each of
    Michelle P. Worden and Valerie K. Blake (incorporated
    by reference to Registrants Form 8-K filed
    February 8, 2006)
|            | 10 | .9          |  | Separation Agreement between the Bank and Susan L. Gates
    dated February 3, 2006 (incorporated by reference to
    Registrants Form 8-K filed February 8, 2006)                                                                      
|            | 10 | .10         |  | Lease between the Bank and EOP-Northwest Properties, L.L.C.
    dated January 17, 2005 (incorporated by reference to
    Registrants Form 10-Q for the quarter ended
    March 31, 2005.)                                               
|            | 14 |             |  | Code of Ethics for Senior Financial Officers (incorporated by
    reference to Registrants Form 10-K for the year ended
    December 31, 2003)                                                                                          
|            | 21 |             |  | Subsidiaries of the Registrant                                                                                                                                                                                                           
|            | 23 |             |  | Independent Auditors Consent  Crowe Chizek and
    Company LLC                                                                                                                                                                         
|            | 31 | .1          |  | Certification of Chief Executive Officer of Registrant required
    by Rule 13a-14(a)/15d-14(a), adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                   
|            | 31 | .2          |  | Certification of Chief Financial Officer of Registrant required
    by Rule 13a-14(a)/15d-14(a), adopted pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                                   
|            | 32 | .1          |  | Certification of Chief Executive Officer of Registrant required
    by 18 U.S.C. Section 1350, adopted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002                                                                     
|            | 32 | .2          |  | Certification of the Chief Financial Officer of Registrant
    required by 18 U.S.C. Section 1350, adopted pursuant
    to Section 906 of the Sarbanes-Oxley Act of 2002                                                                 

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SIGNATURES






| |                       
| | ----------------------
| | EVERGREENBANCORP, INC.



| |     |                     
| | --- | --------------------
| | By: | /s/ GERALD O. HATLER

| |                                      
| | -------------------------------------
| |                                      
| | Gerald O. Hatler                     
| | President and Chief Executive Officer



|                                               |  |                                                                                        
|---------------------------------------------- |  | ---------------------------------------------------------------------------------------
|Signature                                      |  | Title                                                                                  
|                                               |  |                                                                                        
|                                              
|/s/ GERALD O. HATLERGerald O. Hatler           |  | President, Chief Executive Officer and Director (Principal
    Executive Officer)      
|                                              
|/s/ WILLIAM G.
    FILER IIWilliam G. Filer II |  | Executive Vice President and Chief Financial Officer (Principal
    Accounting Officer)
|                                              
|/s/ RICHARD W. BALDWINRichard W. Baldwin       |  | Director                                                                               
|                                              
|/s/ C. DON FILERC. Don Filer                   |  | Director                                                                               
|                                              
|/s/ CAROLE J. GRISHAMCarole J. Grisham         |  | Director                                                                               
|                                              
|/s/ ROBERT J. GROSSMANRobert J. Grossman       |  | Director                                                                               
|                                              
|/s/ J. THOMAS HANDYJ. Thomas Handy             |  | Director                                                                               
|                                              
|/s/ STAN W. MCNAUGHTONStan W. McNaughton       |  | Director                                                                               
|                                              
|/s/ RUSSEL E. OLSONRussel E. Olson             |  | Director                                                                               

63