---

---



UNITED STATES 
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

FORM 10-Q

(mark one) 
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 
For the quarterly period endedMarch 31, 2004

OR

[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 
For the transition period from _________ to _________

Commission File Number0-24024

Venture Financial Group, Inc.
(Exact name of registrant as specified in its charter)

Washington
	
	91 -1277503(State or other jurisdiction
	
	(IRS Employer Identification Number)of incorporation or organization)


721 College Street. SE, P.O. Box 3800, Lacey, WA 98509(Address of principal executive offices)

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter periods that the
registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:
[X]    Yes     [_]     No

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

[_]    Yes     [X]     No

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

Title of Class
	
	Outstanding at April 14, 2004Common Stock
	
	4,305,480


---

Venture Financial Group, Inc.

Table of Contents

PART I - FINANCIAL INFORMATION
	
	PageItem 1
	
	Financial StatementsCondensed Consolidated Balance Sheets
	
	3Condensed Consolidated Statements of Income and Comprehensive Income
	
	4Condensed Consolidated Statement of Stockholders' Equity
	
	5Condensed Consolidated Statements of Cash Flows
	
	6Notes to Condensed Consolidated Financial Statements
	
	7Item 2
	
	Management's Discussion and Analysis of Financial Condition andResults of Operations
	
	10Item 3
	
	Quantitative and Qualitative Disclosures about Market Risk
	
	16Item 4
	
	Controls and Procedures
	
	17PART II - OTHER INFORMATIONItem 1
	
	Legal Proceedings
	
	18Item 2(e)
	
	Changes in Securities and Use of Proceeds
	
	18Item 6
	
	Exhibits and Reports on Form 8-K
	
	19SIGNATURES
	
	
	
	20


---

VENTURE FINANCIAL GROUP, INC. and SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Dollars in thousands, except per share data)

March 31
	
	December 312004
	
	2003(Unaudited)AssetsCash and due from banks
	
	$ 19,930
	
	$ 19,048Interest bearing deposits in banks
	
	311
	
	213Federal funds sold
	
	1,550
	
	5,530Securities available for sale
	
	79,931
	
	84,878Securities held to maturity
	
	504
	
	505FHLB Stock
	
	1,166
	
	1,156Trust preferred securities
	
	589
	
	- -Loans held for sale
	
	2,569
	
	4,138Loans
	
	371,110
	
	363,493Allowance for credit losses
	
	7,506
	
	7,589Net loans
	
	363,604
	
	355,904Premises and equipment
	
	11,801
	
	12,112Foreclosed real estate
	
	1,488
	
	1,996Accrued interest receivable
	
	1,847
	
	1,824Cash surrender value of life insurance
	
	13,255
	
	13,113Intangible assets
	
	11,570
	
	11,597Other assets
	
	1,629
	
	1,886Total assets
	
	$511,744
	
	$513,900LiabilitiesDeposits:Demand
	
	$ 77,953
	
	$ 81,344Savings and interest bearing demand
	
	186,108
	
	182,545Time deposits
	
	114,308
	
	118,334Total deposits
	
	378,369
	
	382,223Short term borrowing
	
	34,847
	
	34,394Long term debt
	
	42,000
	
	42,000Trust preferred securities
	
	589
	
	- -Accrued interest payable
	
	378
	
	174Other liabilities
	
	5,606
	
	6,436Total liabilities
	
	461,789
	
	465,227Stockholders' EquityCommon stock, (no par value); 10,000,000 shares authorized,
	
	24,467
	
	25,289shares issued: March 2004 - 4,299,160; December 2003 - 4,316,163Retained earnings
	
	24,859
	
	23,254Accumulated other comprehensive income, net of tax
	
	629
	
	130Total stockholders' equity
	
	49,955
	
	48,673Total liabilities and stockholders' equity
	
	$511,744
	
	$513,900


See notes to condensed consolidated financial statements

3

---

VENTURE FINANCIAL GROUP, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Income and Comprehensive Income (Unaudited)
(Dollars in thousands, except per share data)

Three months endedMarch 312004
	
	2003Interest incomeLoans
	
	$6,651
	
	$7,883Federal funds sold and deposits in banks
	
	3
	
	2Investments
	
	907
	
	351Total interest income
	
	7,561
	
	8,236Interest ExpenseDeposits
	
	1,002
	
	1,260Other
	
	495
	
	358Total interest expense
	
	1,497
	
	1,618Provision for credit losses
	
	132
	
	577Net interest income after provisionFor credit losses
	
	5,932
	
	6,041Non-interest incomeService charges on deposit accounts
	
	889
	
	920Mortgage loans sold
	
	338
	
	858Other operating income
	
	569
	
	788Total non-interest income
	
	1,796
	
	2,566Non-interest expenseSalaries and employee benefits
	
	2,884
	
	3,240Occupancy and equipment
	
	855
	
	803Other expense
	
	1,187
	
	1,937Total non-interest expense
	
	4,926
	
	5,980Operating income before income taxes
	
	2,802
	
	2,627Income taxes
	
	894
	
	845Net income
	
	$1,908
	
	$1,782Other comprehensive income, net of tax:Unrealized holding gains (losses) on securitiesarising during the period
	
	499
	
	(33)Comprehensive Income
	
	$2,407
	
	$1,749Earnings per Share DataBasic earnings per share
	
	$ .44
	
	$.41Diluted earnings per share
	
	$ .42
	
	$.39Dividends declared per share
	
	$ .07
	
	$.05Weighted average number of common shares
	
	4,307,607
	
	4,381,610Weighted average number of common shares,Including dilutive stock options
	
	4,497,595
	
	4,562,704Return on average assets
	
	1.50%
	
	1.52%


See notes to condensed consolidated financial statements

4

---

VENTURE FINANCIAL GROUP, INC. and SUBSIDIARIES
Condensed Consolidated Statements of Stockholders' Equity (Unaudited)
(Dollars in thousands)

Three Months Ended March 31, 2003 and 2004Common
Stock
	
	Retained 
Earnings
	
	Accumulated 
Other Comprehensive Income (Loss)
	
	TotalBalance, December 31, 2002
	
	$28,430
	
	$15,246
	
	$533
	
	$44,209Net income
	
	- -
	
	1,782
	
	- -
	
	1,782Stock options exercised
	
	778
	
	- -
	
	- -
	
	778Stock repurchased
	
	(1,175)
	
	- -
	
	- -
	
	(1,175)Cash dividend ($0.05 per share)
	
	- -
	
	(220)
	
	- -
	
	(220)Other comprehensive loss
	
	- -
	
	- -
	
	(33)
	
	(33)Balance, March 31, 2003
	
	$28,033
	
	$16,808
	
	$500
	
	$45,341Balance, December 31, 2003
	
	$25,289
	
	$23,254
	
	$130
	
	$48,673Net income
	
	- -
	
	1,908
	
	- -
	
	1,908Stock options exercised
	
	341
	
	- -
	
	- -
	
	341Stock repurchased
	
	(1,163)
	
	- -
	
	- -
	
	(1,163)Cash dividend ($0.07 per share)
	
	- -
	
	(303)
	
	- -
	
	(303)Other comprehensive income
	
	- -
	
	- -
	
	499
	
	499Balance, March 31, 2004
	
	$24,467
	
	$24,859
	
	$629
	
	$49,955


See notes to condensed consolidated financial statements

5

---

VENTURE FINANCIAL GROUP, INC. and SUBSIDIARIESCondensed Consolidated Statements of Cash Flows (Unaudited)
(Dollars in thousands)

Three months ended March 312004
	
	2003Cash Flows from Operating ActivitiesNet Income
	
	$ 1,908
	
	$ 1,782Adjustments to reconcile net income to net cash providedby operating activities:Provision for credit losses
	
	132
	
	577Depreciation and amortization
	
	411
	
	353Income from mortgage loans sold
	
	(338)
	
	(858)Other - net
	
	(109)
	
	891Originations of loans held for sale
	
	(9,791)
	
	(37,351)Proceeds from sales of loans held for sale
	
	11,698
	
	34,621Net cash provided by operating activities
	
	3,911
	
	15Cash Flows from Investing ActivitiesNet (increase) decrease in interest bearing deposits in banks
	
	(98)
	
	10Net (increase) decrease in federal funds sold
	
	3,980
	
	(500)Proceeds from maturities and prepayments of available-for-sale securities
	
	5,696
	
	1,108Purchase of FHLB stock
	
	- -
	
	(215)Net (increase) decrease in loans
	
	(8,159)
	
	3,154Proceeds from sale of other real estate
	
	244
	
	333Additions to premises and equipment
	
	(166)
	
	(349)Net cash provided by investing activities
	
	1,497
	
	3,541Cash Flows from Financing ActivitiesNet (decrease) in deposits
	
	(3,854)
	
	(11,392)Net increase in short-term borrowings
	
	453
	
	1,060Sale of common stock
	
	341
	
	778Repurchase of common stock
	
	(1,163)
	
	(1,175)Repayment of long-term borrowings
	
	- -
	
	(1,000)Payment of cash dividends
	
	(303)
	
	(220)Net cash used by financing activities
	
	(4,526)
	
	(11,949)Net change in cash and due from banks
	
	882
	
	(8,393)Cash and Due from Banks:Beginning of period
	
	19,048
	
	30,965End of period
	
	$19,930
	
	$22,572Supplemental Disclosures of Cash Flow Information:Cash payments for:Interest
	
	$1,286
	
	$1,641Taxes
	
	400
	
	- -Supplemental Disclosures of Non-Cash Investing and Financing Activities:Fair value adjustment of securities available for sale, net
	
	499
	
	(33)Foreclosed real estate acquired in settlement of loans
	
	(276)
	
	- -Trust preferred securities
	
	589
	
	- -


See notes to condensed consolidated financial statements

6

---

VENTURE FINANCIAL GROUP, INC. and SUBSIDIARIESNotes to Condensed Consolidated Financial Statements 
(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information
and with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial
statements.  In the opinion of management, adjustments considered necessary for a fair presentation (consisting of normally recurring accruals) have been included.  The interim condensed consolidated financial statements should be read in
conjunction with the December 31, 2003 consolidated financial statements, including notes thereto, included in the Company's 2003 Annual Report to Shareholders.  Operating results for the three months ended March 31, 2004 are not necessarily
indicative of the results anticipated for the year ending December 31, 2004.

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.  Actual results could differ from those estimates.

Stock Based Compensation

In December 2002, the Financial Accounting Standards Board issued FASB Statement No. 148,Accounting for Stock-Based Compensation - Transition and Disclosure.This Statement amends FASB Statement No. 123,Accounting for Stock-Based Compensation,and APB Opinion No. 28,Interim Financial Reporting,to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  This
statement does not require any change from the method currently used by the Company to account for stock-based compensation, but does require more prominent disclosure in the annual and interim financial statements about the method of accounting for
such compensation and the effect of the method used on reported results. This statement was effective for fiscal years ending after December 15, 2002. The Company has adopted the disclosure provisions of SFAS No. 148 in the accompanying financial
statements, and accordingly, the required disclosures are set forth below.

The Company accounts for stock-based awards to employees and directors using the intrinsic value method, in accordance with APB No. 25,Accounting for Stock Issued to
Employees. Accordingly, no compensation expense has been recognized in the condensed consolidated financial statements for employee and director stock arrangements where the grant price is equal to market
price. However, the required pro forma disclosures of the effects of all options granted on or after January 1, 1995have been provided in accordance with SFAS No.
123,

Accounting for Stock-Based Compensation.

At March 31, 2004, the Company has two stock-based employee and director compensation plans. The following illustrates the effect on net income and earnings per share if the Company had applied the fair value
recognition provisions of SFAS No. 123,Accounting for Stock-Based Compensation,to stock-based compensation awards for the effects of all options granted on or after
January 1, 1995 for the periods ended March 31:

2004
	
	2003Net income, as reported
	
	$1,908
	
	$1,782Less total stock-based compensation expense determinedunder fair value method for all qualifying awards
	
	49
	
	4Pro forma net income
	
	$1,859
	
	$1,778


7

---

Earnings per Share

Basic:As reported
      $.44
      $.41Pro forma
      .43
      .41Diluted:As reported
      .42
      .39Pro forma
      .41
      .39


2. Basic and Diluted Earnings per Share

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

> Three Months EndedMarch 312004
> 	
> 	2003Basic EPS computationNumerator - Net Income
> 	
> 	$ 1,908
> 	
> 	$ 1,782Denominator - Weighted Averagecommon shares outstanding
> 	
> 	4,307,607
> 	
> 	4,381,610Basic EPS
> 	
> 	$ .44
> 	
> 	$ .41Three Months EndedMarch 312004
> 	
> 	2003Diluted EPS computationNumerator - Net Income
> 	
> 	$ 1,908
> 	
> 	$ 1,782Denominator - Weighted averagecommon shares outstanding
> 	
> 	4,307,607
> 	
> 	4,381,610Effect of dilutive stock options
> 	
> 	189,988
> 	
> 	181,094Weighted average common sharesand common stock equivalents
> 	
> 	4,497,595
> 	
> 	4,562,704Diluted EPS
> 	
> 	$ .42
> 	
> 	$ .39

8

---

3. Recent Accounting Pronouncements

In January 2003, FASB issued Interpretation No. 46,Consolidation of Variable Interest Entities(VIE), as amended and interpreted with
an implementation date of March 31, 2004. Interpretation No. 46 defines a VIE as a corporation, partnership, trust, or other legal structure used for the business purpose that either does not have equity investors with voting rights or has equity
investors that do not provide sufficient financial resources for the entity to support its activities. This interpretation will require a VIE to be consolidated or deconsolidated by a company generally based on the risk of loss of return.  The
Company has two VIEs in the form of Trusts set up to issue Trust Preferred Securities and accordingly, the implementation of the Interpretation requires the deconsolidation of the Trusts. The application of Interpretation No. 46 has been implemented
and can easily be identified on the condensed consolidated balance sheet as both investment and debt. Immaterial amounts ($7,000) have also been included in interest income and interest expense.  The implementation did not have a significant impact
on the Company's financial position or results of operations.

4. Issuance of Trust Preferred Securities

On April 10, 2003, the Company completed an offering of trust preferred securities and received net proceeds of approximately $5,910,000. The proceeds are being used for general Company purposes, including utilization
in the stock repurchase program and potentially to provide additional capital to Venture Bank. Trust preferred securities consist of the issuance of subordinated debt securities to a wholly owned subsidiary business trust, which then issues
preferred stock to investors.  Due to implementation of a recent accounting pronouncement the wholly owned subsidiary trust is deconsolidated for the three months ended March 31, 2004. The interest payments on the debt securities are approximately
equal to the dividend payments on the preferred stock of the trust. The Company will be able to recognize a deduction of the interest cost for income tax purposes, while the net proceeds, up to one-third of total capital adjusted for accumulated
other comprehensive income, will qualify as Tier 1 capital.

9

---

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

The following discussion contains a review of the Company's and its subsidiaries operating results and financial condition for the first three months of and period ended March 31, 2004. When warranted, comparisons are
made to the same period in 2003, and to the previous year ended December 31, 2003. The discussion should be read in conjunction with the financial statements (unaudited) and related notes contained elsewhere in this report.  The reader is assumed to
have access to the Company's Form 10-K for the year ended December 31, 2003, which contains additional statistics and explanations.  All dollars in tables, except per share data, are expressed in thousands.

Forward-Looking Information

In addition to historical information, statements appearing in this report which are not historical in nature, including the discussions of the adequacy of the Company's capital resources and allowance for credit
losses, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 ("PLSRA"). Any statements that expressly or implicitly predict future results, performance, or events should be considered
forward-looking. Forward-looking statements are subject to the risks and uncertainties that may cause actual future results to differ materially.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak
only as of the date of this Quarterly Report. The Company does not undertake any obligation to publicly release any revisions to forward-looking statements contained in this Quarterly Report, with respect to events or circumstances after the date of
this Report, or to reflect the occurrence of unanticipated events.

Such risks and uncertainties with respect to the Company include, among others, those related to the general economic environment, particularly in the region in which the Company operates, competitive products and
pricing, that may lead to pricing pressures on rates the Bank charges on loans and pays on deposits, loss of customers of greatest value to the Bank, litigation or other losses, fiscal and monetary policies of the federal government, changes in
government regulations affecting financial institutions and small loan practices, including regulatory fees and capital requirements, changes in prevailing interest rates that could lead to decreased net interest margin, acquisitions and the
integration of acquired businesses, credit risk management and asset/liability management, the financial and securities markets, changes in technology or required investments in technology, and the availability of and costs associated with sources
of liquidity.

Financial Condition

General

The Company's consolidated assets at March 31, 2004 totaling $511,744,000 represents a .4% decrease from December 31, 2003 assets totaling $513,900,000. The minimal decrease is represented by a $3,980,000 decrease in
federal funds sold, a $4,358,000 decrease in securities available for sale and a $1,569,000 decrease in loans held for sale. These decreases were largely offset by a $7,617,000 increase in gross loans. Other assets were largely unchanged.

Loans and loans held for sale

Loans increased $7,617,000 or 2.1% as of March 31, 2004 compared to December 31, 2003. This increase can be attributed to an improved economy and increased demand for commercial loans.  Loans held for sale decreased
$1,569,000 to $2,569,000 as of March 31, 2004. This reduction was expected and is attributed to the rising interest rates which have impacted the mortgage refinance market.

The composition of the loan portfolio was as follows (dollars in thousands):

> March 31
> 	
> 	December 312004
> 	
> 	2003Commercial
> 	
> 	$55,347
> 	
> 	$52,515Real EstateCommercial
> 	
> 	216,344
> 	
> 	211,541Mortgage
> 	
> 	9,110
> 	
> 	9,545Construction
> 	
> 	81,069
> 	
> 	79,788Consumer
> 	
> 	6,707
> 	
> 	6,946Small Loans
> 	
> 	2,533
> 	
> 	3,158Total Loans
> 	
> 	$371,110
> 	
> 	$363,493

10

---

The total non-performing loans, defined as those loans on non-accrual and accruing loans over 90-days past due, decreased since December 31, 2003 by $234,000 as shown in the following table of non-performing assets
(dollars in thousands):

March 31
	
	December 312004
	
	2003Non-accrual loans
	
	$ 1,970
	
	$ 2,204Accruing loans past due 90 days or more
	
	2
	
	2Foreclosed real estate
	
	1,488
	
	1,996Other assets
	
	3
	
	3$ 3,463
	
	$ 4,205


The percentage of non-performing loans to total loans decreased to .53% on March 31, 2004 from .60% on December 31, 2003. Non-accrual loans decreased $234,000 during the first three months of 2004, while foreclosed
real estate and other assets decreased $508,000 during the same period. The reduction in non-accrual loans and foreclosed real estate continues to be attributed to the Company's special credits team and the increased attention paid to the Company's
non-performing assets.

Allowance for Credit Losses

The allowance for credit losses reflects management's current estimate of the amount required to absorb losses on existing loans and commitments to extend credit. Determination of the appropriate level of the allowance
is based on an analysis of various factors including historical loss experience based on volumes and types of loans; volumes and trends in delinquencies and non-accrual loans; trends in portfolio volume; results of internal credit reviews; and
economic conditions.  All commercial and real estate loans in the portfolio are assigned a grade indicating credit quality by the originating loan officer at the time of loan origination. These grades are reviewed at regular intervals and, if
performance concerns arise on an individual loan, the grade is lowered to the appropriate level. Management reviews the composite changes in loan grades within the portfolio in its assessment of the adequacy of the allowance. If a loan becomes
impaired, the Company's loss exposure on that loan is measured based on expected cash flows or collateral values, and if necessary, a portion of the allowance for credit losses is allocated to that loan. After reviewing the composition of the loan
portfolio at March 31, 2004, the levels of classified loans, losses experienced during the period, and the changes in the economy, management has determined the allowance for credit losses to be adequate to cover the loss exposure in the loan
portfolio at that date.  An analysis of the adequacy of the allowance is subject to quarterly review by the Board of Directors. Various regulatory agencies, as an integral part of their examination process, periodically review the Bank's allowance
for loan losses. Such agencies may require the Bank to recognize changes to the allowance based on their judgments of information available at the time of their examination.

The allowance for credit losses decreased $83,000 for the first three months of 2004, with the ratio of the allowance for credit losses to loans at 2.01%	 on March 31, 2004, compared to 2.06%	 on December 31, 2003.
During the first three months, an additional $132,000 was reserved for potential losses, and net charge-offs were $215,000, or .06% of the loan portfolio. Gross charge-offs consisted primarily of one foreclosed real estate property write down in the
amount of $491,000. The Company had fully reserved for this charge-off. The charge-off was partially offset by a $267,000 recovery on one loan previously charged off in 1999. The allowance for credit losses to nonperforming loans was 380.63% on
March 31, 2004, compared to 344.02% on December 31, 2003. Management believes the allowance is at an appropriate level.  Due to the $267,000 recovery and improvement in the quality of the loan portfolio, Management anticipates additional provisions
for the general loan portfolio during 2004 will be significantly reduced compared to 2003. Management will continue to provide a reserve for its small loan portfolio.

Investment Portfolio

Investment securities decreased $4,358,000, or 5.13% during the first three months of 2004 to a total of $79,931,000. The decrease in securities available for sale is primarily attributed to principal reductions on
mortgage backed securities and agency securities called. Securities are typically purchased from time to time as either collateral for various operational purposes or for additional income in times of excess liquidity.

Deposits and Borrowings

Total deposits decreased $3,854,000, or 1.01% in the three months ended March 31, 2004 to $378,369,000. Savings and interest-bearing deposit accounts and non-interest bearing demand experienced a nominal increase while
time deposits decreased $4,026,000 or 3.40%	. Short term and long term borrowings experienced minimum fluctuations.

11

---

Liquidity

Liquidity management involves the ability to meet cash flow requirements of customers who may be either depositors wanting to withdraw funds or borrowers needing assurance that sufficient funds will be available to
meet their credit needs. Liquidity is generated from both internal and external sources. Internal sources are those assets that can be converted to cash with little or no risk of loss. These include overnight investments in interest bearing deposits
in banks and federal funds sold and investment securities, particularly those of shorter maturity, and are the principal source of asset liquidity. At March 31, 2004, cash, deposits in banks, federal funds sold and securities available for sale
totaled $101,722,000. External sources refer to the ability to access new borrowings and capital. These include increasing savings and demand deposits, federal funds purchased, borrowings, and the issuance of capital and debt securities. At March
31, 2004, borrowing lines of credit totaled $48,553,000. These credit facilities are being used regularly as a source of funds. At March 31, 2004, $10,000,000 was borrowed against these lines of credit in the form of long term
advances.

Net cash flows from operations and investing activities contributed to liquidity while net cash flows from financing activities used liquidity. As indicated on the Company's Condensed Consolidated Statement of Cash
Flows, net cash from operating activities for the three months ended March 31, 2004 contributed $3,911,000 to liquidity compared to $316,000 for the three months ended March 31, 2003. The majority of the cash provided from operating activities for
the first three months of 2004 was contributed from net income and net loans held for sale in the amount of $1,907,000. Cash flow from investing activities contributed cash of $1,497,000 for the three months ended March 31, 2004 compared to
$3,240,000 for the same period in 2003. The majority of the cash provided from investing activities during the first quarter of 2004 was contributed from a decrease in federal funds sold of $3,980,000 and proceeds from maturities and prepayments of
available for sales securities in the amount of $5,696,000. The investing cash provided was offset by an increase in loans in the amount of $8,159,000. Cash flow from financing activities used cash of $4,526,000 as of March 31, 2004 compared to a
use of $11,949,000 during the same period in 2004.  The majority of the cash was used to fund withdrawn net deposits in the amount of $3,854,000 and to repurchase common stock in the amount of $1,163,000.

The stock repurchase program authorizes the Company to make scheduled purchases over time in either privately negotiated transactions or through the open market.  On December 11, 2002, the Company's board of directors
authorized the repurchase of 132,000 shares over a three month period. As of March 11, 2003 a total of 69,572 shares had been repurchased under this plan for a total of $1,174,792. On February 19, 2003, June 18, 2003 and October 15, 2003 the
Company's board of directors authorized 87,580, 37,420, and 150,000 shares, respectively, be added to the stock repurchase program. Under this program the Board authorized the purchase of a total of 275,000 of the Company's common stock or
approximately 6% of the total common shares currently outstanding. As of March 31, 2004 the Company had repurchased 228,480 shares at a cost of $4,816,000. There are 46,520 shares left for repurchase.

Management believes the Bank's liquidity position at March 31, 2004, was adequate to meet its short term funding requirements.

Capital

Consolidated capital of the Company increased $1,282,000 or 2.63%	 during the first three months of 2004. The net income for the first three months and its corresponding increase to retained earnings was the primary
component of this increase along with the exercising of stock options, which added $341,000 and an increase in themarket value of securities available for sale of
$499,000 on an after-tax basis. Capital decreases were the result of $1,163,000 in stock being repurchased and quarterly cash dividends paid to shareholders totaling $303,000.

There are regulatory constraints placed upon capital adequacy, and it is necessary to maintain an appropriate ratio between capital and assets. Regulations require banks and holding companies to maintain a minimum
"leverage" ratio (primary capital ratio) of total assets. For the most highly rated holding companies this ratio must be at least 3%, and for others it must be 4 to 5%.  At March 31, 2004, the Company's leverage ratio was 10.39%,	 compared to
10.70%	 at year-end 2003.  In addition, banks and holding companies are required to meet minimum risk-based capital guidelines under which risk percentages are assigned to various categories of assets and off-balance-sheet items to calculate a
risk-adjusted capital ratio. Tier I capital generally consists of common stockholders' equity, less goodwill, while total capital includes the allowance for possible credit losses, subject to 1.25% limitation of risk-adjusted assets. The rules
require Tier I capital of 4% of risk-adjusted assets and total capital of 8%. At March 31, 2004, the Company's Tier I capital ratio was 10.68%,	 and total capital was 12.59%	.  At December 31, 2003 the Company's Tier I capital ratio was 11.20%	 and
the total capital ratio was 13.04%	.

12

---

Issuance of Trust Preferred Securities

On April 10, 2003, the Company completed an offering of trust preferred securities and received net proceeds of approximately $5,910,000. The proceeds are being used to repurchase stock and for general Company
purposes; the proceeds may be used to provide additional capital to Venture Bank. Trust preferred securities consist of the issuance of subordinated debt securities to a wholly owned subsidiary business trust, which then issues preferred stock to
investors. Due to implementation of a recent accounting pronouncement the wholly owned subsidiary trust is deconsolidated for the three months ended March 31, 2004.  The interest payments on the debt securities are approximately equal to the
dividend payments on the preferred stock of the trust.  The Company will be able to recognize a deduction of the interest cost for income tax purposes, while the net proceeds, up to one-third of total capital adjusted for accumulated other
comprehensive income, will qualify as Tier 1 capital.

Results of Operations

General

Net income for the three months ended March 31, 2004 increased 7.10%	 to $1,908,000, compared to $1,782,000 for the same period in 2003. The increase in net income is primarily attributed to a reduction in non-interest
expense discussed below and a reduction in the provision for loan losses.

Interest income for the three months ended March 31, 2004 decreased $675,000, or 8.20%,	 from the same period in the prior year. Increased volume of earning assets provided an additional $559,000 of interest income for
the first three months, which was partially offset by a $1,234,000 reduction in interest income due to the reduced earnings rate of these assets. Average earning assets for the first three months of 2004 were $51,947,000 or 12.90%	 higher than in
the same period of 2003. The average rate earned on assets decreased to 6.67%	 in the first three months of 2004 from 8.27%	 for the same period in 2003, a decrease of 159 basis points. The average rate earned on assets in the first three months of
2003 would have been 7.24% without the operations in Alabama, resulting in a 57 basis point decrease compared to the first three months in 2004.

Total interest expense for the three months ended March 31, 2004 decreased $121,000, or 7.48%,	 from the comparable period in the prior year.  The decrease in the interest rate paid on deposits and borrowings, which
declined 23 basis points, to 1.66% in the first three months of 2004 from 1.89%	 in the first three months of 2003, resulted in a reduction to interest expense of $335,000.  This amount was offset by a $214,000 increase in the volume of these
liabilities, which rose from an average of $347,831,000 in 2003 to $359,602,000 in 2004. The increase in volumes is attributed to the increased borrowings in the third quarter 2003 utilized to partially fund the acquisition of additional available
for sale investments.

Net interest income decreased $554,000, a decrease of 8.37%	 for the three months ended March 31, 2004 over the same period for 2003.  The Company's small loan product impacted net interest income for the period. This
product's contribution to net interest income decreased to $361,000 in the first three months of 2004 from $1,156,000 during the same period in 2003, a $795,000 or 69% decrease. The decrease in the product's contribution to net interest income can
be attributed to a modification in the Company's Advance America agreement related specifically to loan originations in Alabama. Effective July 11, 2003 the Company discontinued the origination of small loans in Alabama; Advance America paid the
Company a fee equal to the loan fees that would have been received under its original agreement through October 31, 2003.

Net interest margin, defined as net interest income as a percentage of average earning assets, decreased by 121 basis points to 5.35% from 6.64% in the first three months of 2004 compared to the same period in 2003.
Net interest margin in the first three months of 2003 would have been 5.84%	 without the Alabama operations, resulting in a decrease of 49 basis points compared to the first three months of 2004.

13

---

The yield and cost of funds for earning assets and interest bearing liabilities were as follows as of and for the three months ended March 31 (dollars in thousands):

2004
	
	2003Average 
Balance
	
	Interest
	
	
	
	Average  Balance
	
	Interest
	
	Average  RatesIncome
	
	Average
	
	
	Income(Expense)
	
	Rates
	
	
	(Expense)Earning Assets:Loans (Interest and fees) 1
	
	$370,501
	
	$6,651
	
	7.22%
	
	$370,528
	
	$7,883
	
	8.63%Federal funds sold
	
	1,207
	
	3
	
	1.00%
	
	650
	
	2
	
	1.25%Investment securities2
	
	84,312
	
	907
	
	4.29%
	
	32,895
	
	351
	
	4.33%Total earning assetsand interest income
	
	$456,020
	
	$7,561
	
	6.68%
	
	$404,073
	
	$8,236
	
	8.27%Interest bearing liabilities:Deposits:Savings, NOW, andMoney Market Deposits
	
	$180,252
	
	$(364)
	
	0.81%
	
	$157,611
	
	$(381)
	
	.98%Time deposits
	
	116,464
	
	(638)
	
	2.20%
	
	142,638
	
	(879)
	
	2.50%Total interest bearing deposits
	
	296,716
	
	(1,002)
	
	1.36%
	
	300,249
	
	(1,260)
	
	1.70%Other borrowings
	
	62,886
	
	(495)
	
	3.11%
	
	47,582
	
	(358)
	
	3.05%Total interest bearing liabilitiesand interest expense
	
	$359,602
	
	$(1,497)
	
	1.66%
	
	$347,831
	
	$(1,618)
	
	1.89%Net interest income
	
	
	
	$6,064
	
	
	
	
	
	$6,618Net interest margin as a percentof average earning assets:
	
	
	
	
	
	5.35%
	
	
	
	
	
	6.64%


An analysis of the change in net interest income is as follows for the three months ended March 31 (dollars in thousands):

2004 compared to 2003Increase (decrease) due toVolume
	
	Rate
	
	NetInterest earned on:Loans3
	
	$ (1)
	
	$ (1,231)
	
	$ (1,232)Federal funds sold and deposits in banks
	
	3
	
	(2)
	
	1Investment securities
	
	557
	
	(1)
	
	556Total interest income
	
	559
	
	(1,234)
	
	(675)Interest paid on:Savings, NOW and MMA
	
	235
	
	(252)
	
	(17)Time deposits
	
	(145)
	
	(96)
	
	(241)Other borrowings
	
	124
	
	13
	
	137Total Interest expense
	
	214
	
	(335)
	
	(121)Net interest income
	
	$ 345
	
	$ (899)
	
	$ (554)


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



2The yield on investment securities is calculated using historical cost basis.



14

---

Non-interest income for the three months ended March 31, 2004 was $770,000, or 30.01%	 less than the same period for 2003. This reduction can be primarily attributed to a $520,000 or 60.61%	 reduction in mortgage loans
sold. This decrease was anticipated and is attributed primarily to the increased interest rate negatively impacting activity in the mortgage refinance market.

Non-interest expense for the three months ended March 31, 2004 decreased by $1,054,000 or 17.63% over the same period in 2003. Salaries and employee benefits for the quarter ended March 31, 2004 decreased $356,000 or
10.99%	 compared to the same quarter in 2003.  This expense reduction is primarily attributed to the expected decrease in mortgage commissions associated with reduced mortgage loans originated as previously discussed and a fewer number of employees.
 Other expenses for the quarter ended March 31, 2004 decreased $750,000 or 38.72%	 compared to the same period in 2003.  The other expense decrease can be primarily attributed to an enhanced focus on expense control in 2004 and additional increased
expenses in the first quarter 2003 associated with branding including the Company's name change to Venture Financial Group.

Business Segment Reporting

The Company is managed along two major lines of business; community banking, its core business, and the small loan division, which began operations in the fourth quarter of 2000.  Community banking consists of all
lending, deposit and administrative operations conducted through 20 offices in Washington. The small loan division provides small, short-term consumer loans to customers in Arkansas and prior to July 2003 in Alabama. Effective July 11, 2003 the
Company discontinued originating small loans in Alabama.  The Company continued to receive income comparable to the amount the Company would have received if it had continued to originate these loans in the State of Alabama. This income only
continued through October 31, 2003 and accordingly in not included in the March 31, 2004 income numbers.

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

Selected comparative financial information for community banking and the small loan division, which are included in the overall financial results, as of and for the three months ended March 31, are as follows (dollars
in thousands):

Three months ended March 31, 2004
	
	
	
	Community
	
	
	
	SmallBanking
	
	
	
	Loans
	
	
	
	TotalNet Interest income after provision for credit losses
	
	$
	
	5,817
	
	$
	
	361
	
	$
	
	6,178Non-interest income
	
	
	
	1,799
	
	
	
	14
	
	
	
	1,813Non-interest expense
	
	
	
	4,905
	
	
	
	23
	
	
	
	4,928Income taxes
	
	
	
	864
	
	
	
	120
	
	
	
	984Net Income
	
	$
	
	1,847
	
	$
	
	233
	
	$
	
	2,080Total assets
	
	$
	
	501,197
	
	$
	
	9,444
	
	$
	
	510,641Total Loans
	
	$
	
	371,357
	
	$
	
	2,322
	
	$
	
	373,679Three months ended March 31, 2003
	
	
	
	Community
	
	
	
	SmallBanking
	
	
	
	Loans
	
	
	
	TotalNet Interest income after provision for credit losses
	
	$
	
	5,090
	
	$
	
	1,156
	
	$
	
	6,256Non-Interest income
	
	
	
	2,244
	
	
	
	16
	
	
	
	2,260Non-Interest expense
	
	
	
	5,442
	
	
	
	163
	
	
	
	5,605Income taxes
	
	
	
	641
	
	
	
	343
	
	
	
	984Net Income
	
	$
	
	1,251
	
	$
	
	665
	
	$
	
	1,916Total assets
	
	$
	
	449,779
	
	$
	
	14,834
	
	$
	
	464,613Total Loans
	
	$
	
	362,357
	
	$
	
	6,964
	
	$
	
	369,321


15

---

Regulatory Developments

Three legislative and regulatory developments impacted or may impact the operations and earnings generated by the small loan division.

In 2003 the Alabama legislature enacted the Deferred Presentment Services Act.  The Act creates a regulatory framework within which licensed, non-bank lenders may now make small loans in Alabama.  Due to changes in
Alabama law, the Bank and Advance America terminated the original Marketing and Servicing Agreement effective July 11, 2003. The terms of the termination agreement include Advance America continuing to remit to the Bank a portion of the fees earned
for the period July 11, 2003 through October 31, 2003, the termination date of the original agreement. The fee structure was established to keep the Bank financially whole as if the Bank had continued in the small loan program in Alabama through the
original agreement termination date.

The Washington State legislature in 2003 passed amendments to the Check Cashers and Sellers Act, the law that authorizes small loans in Washington. Among other changes, the amendments increase the maximum small loan
amount from $500 to $700 (with lower fees allowed on any amounts over $500), allows borrowers to rescind a loan within one business day, and requires lenders to offer payment plans to certain repeat borrowers.  While the amendments may cause an
increase in certain administrative expenses, we do not anticipate that they will have a material impact on our small loan operations.

The Federal Deposit Insurance Corporation (FDIC) in 2003 issued Guidelines for state chartered, nonmember banks that participate in small loan programs with third party contractors.  The Guidelines cover safety and
soundness considerations, including loan concentrations, capital adequacy, allowance for loan and lease losses, and loan classification guidelines. Compliance considerations, such as Community Reinvestment Act performance, Truth in Lending, and
consumer privacy are also covered. The Guidelines allow examiners wide discretion to review and, where necessary, criticize a bank's loan program based upon these considerations. Where serious deficiencies exist, the FDIC may order a bank to
discontinue its small loan program.  The Guidelines will certainly increase the regulatory scrutiny of the Bank's small loan program. While we do not believe that grounds exist for the FDIC to order the Bank to curtail or discontinue its small loan
program, it is likely that the increased regulatory scrutiny will add to the Bank's compliance burdens and costs.  It may also cause the Bank to evaluate the extent of its continued participation in the small loan business.

The Company continues to take steps to forestall any negative effect that may occur from these developments, including the discussions regarding providing small loan programs with Advance America and other small loan
providers in other states and the introduction of replacement programs. While the Company believes it will be able to minimize any long-term negative impact on its earnings from these developments, there can be no assurance that its efforts will be
wholly successful.

Item 3Quantitative and Qualitative Disclosure About Market Risk

The Company's results of operation are dependent upon its ability to manage interest rate risk. Management considers interest rate risk to be a risk that could have a material effect on the Company's financial
condition and results of operations. The Company does not currently use derivatives to manage market and interest rate risk. A number of measures are used to monitor and manage interest rate risk, including income simulations and interest
sensitivity (gap) analyses.  An income simulation model is the primary tool used to assess the direction and magnitude of changes in net interest income resulting from changes in interest rates. Key assumptions in the model include repayment speeds
on certain assets, cash flows and maturities of other investment securities, loan and deposit volumes and pricing.  These assumptions are inherently uncertain and, as a result, the model cannot precisely estimate net interest income or precisely
predict the impact of higher or lower interest rates on net interest income.

Actual results will differ from simulated results due to timing, magnitude and frequency of interest rate changes and changes in market conditions and management strategies, among other factors. At March 31, 2004,
based on the measures used to monitor and manage interest rate risk, there has not been a material change in the Company's interest rate risk since December 31, 2003. For additional information, refer to the Company's annual report on Form 10-K for
the year ended December 31, 2003.

16

---

Interest Rate Gap Analysis March 31, 2004

After OneWithin
	
	But Within
	
	After(dollars in thousands)
	
	One Year
	
	Five Years
	
	Five Years
	
	TotalLoans
	
	$ 165,132
	
	$155,480
	
	$51,097
	
	$371,709Securities:Available for sale
	
	3,615
	
	21,604
	
	54,712
	
	79,931Held to maturity
	
	- -
	
	504
	
	- -
	
	504Federal funds sold
	
	1,550
	
	- -
	
	- -
	
	1,550Interest bearing deposits in banks
	
	311
	
	- -
	
	- -
	
	311Total Earning Assets
	
	$ 170,608
	
	$ 177,588
	
	$105,809
	
	$454,005Deposits:Savings, NOW and money market
	
	$ 186,108
	
	$ - -
	
	$ - -
	
	$186,108Time deposits
	
	76,944
	
	37,364
	
	- -
	
	114,308Short-term borrowings
	
	34,847
	
	- -
	
	- -
	
	34,847Long-term debt
	
	- -
	
	23,000
	
	19,000
	
	42,000Total Interest Bearing Liabilities
	
	$ 297,899
	
	$ 60,364
	
	19,000
	
	$377,263Net Interest Rate Sensitivity Gap
	
	($ 127,291)
	
	$ 117,224
	
	$ 86,809
	
	$ 76,742


Item 4Controls and Procedures

(a)     Evaluation of Disclosure Controls and Procedures.

Management of the Company, including the Chief Executive Officer and the Chief Financial Officer, have conducted an evaluation of the Company's disclosure controls and procedures in accordance with Rule 13a-14 under
the Securities Exchange Act of 1934 as of March 31, 2004.  Based on that evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that, as of the
evaluation date, the Company's disclosure controls and procedures were effective in ensuring that all material information relating to the Company required to be filed in this quarterly report has been made known to them in a timely manner.

(b)     Changes in Internal Controls

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

17

---

Venture Financial Group, Inc.

PART II - OTHER INFORMATION

Item 1     Legal Proceedings

> Due to the nature of the banking business, we are in involved in legal proceedings in the ordinary course of business. At this time, we do not believe that there is pending litigation the outcome of which will have a
> material adverse affect on the financial condition, results of operations, or liquidity of the Company.

Item 2     Changes in Securities and Use of Proceeds

(e)           	Issuer Purchases of Equity Securities

Total number ofshares purchased aspart of publicly
	
	Maximum number ofTotal number of
	
	Average price paid
	
	announced plans or
	
	shares that may yetPeriod
	
	shares purchased
	
	per share
	
	programs
	
	be purchasedMonth #1January 1, 2004 throughJanuary 31, 2004
	
	13,584
	
	$22.76
	
	13,584
	
	84,017Month #2February 1, 2004 throughFebruary 29, 2004
	
	37,497
	
	$22.79
	
	37,497
	
	46,520Month #3March 1, 2004 throughMarch 31, 2004
	
	--
	
	--
	
	--
	
	46,520Total
	
	51,081
	
	$22.78
	
	51,081
	
	46,520


Date repurchase authorized
	
	Date publicly announced
	
	# of shares authorized
	
	Expiration DateFebruary 19, 2003
	
	March 5, 2003
	
	87,580
	
	August 19, 2004June 18, 2003
	
	June 24, 2003
	
	37,420
	
	December 18, 2004October 15, 2003
	
	October 17, 2003
	
	150,000
	
	April 15, 2005Total
	
	
	
	275,000


18

---

Item 6     Exhibits and Reports on Form 8-K





(a)
      ExhibitsThe following exhibits are filed herewith, and this list constitutes the exhibit index:3.1
      
      Second Amended and Restated Articles of Incorporation (incorporated by reference to Exhibit 3 to the Registrant's Current Report on Form 8-K filed November 14, 2003)3.2
      
      Bylaws (incorporated by reference to Exhibit 3(b) to the Registrant's Annual Report on Form 10-K for the fiscal year ending December 31, 2001)31.1
      
      Certification of the Chief Executive Officer pursuant to Section 312 of the Sarbanes-Oxley Act of 200331.2
      
      Certification of the Chief Financial Officer pursuant to Section 312 of the Sarbanes-Oxley Act of 200332
      
      Certification of Chief Executive Officer and Chief Financial Officer under Section 906 of Sarbanes-Oxley Act of 2002(b)
      Reports on Form 8-KFourth Quarter 2003 Earnings Release filed February 3, 2004Fourth Quarter 2003 Cash Dividend Declared filed January 22, 2004Venture Bank announces acquisition of Washington Asset Management Tacoma, LLC filed March 16, 2004




19

---

Venture Financial Group, Inc.

SIGNATURES

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

> VENTURE FINANCIAL GROUP, INC. 
> (Registrant)

Date: May 14, 2004

> By:/s/ Ken F. Parsons, Sr.      Ken F. Parsons Sr. 
>       President, Chief Executive Officer
> By:/s/ Catherine M. ReinesCatherine M. Reines
> 
>       Chief Financial Officer

20

---

Exhibit 31.1

CERTIFICATION UNDER SECTION 312 
OF SARBANES-OXLEY ACT OF 2002

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

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

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

|(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and                                                                                                    
|(c) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

|(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.                                                                                               





---

Exhibit 31.2

CERTIFICATION UNDER SECTION 312
OF SARBANES-OXLEY ACT OF 2002

I, Catherine M. Reines, certify that:

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

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

|(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;         
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the
period covered by this report based on such evaluation; and                                                                                                    
|(c) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of
an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

|(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process,
summarize and report financial information; and
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.                                                                                               

Date:May 14, 2004                                                
/s/ Catherine M. ReinesCatherine M. Reines Chief Financial Officer



---

Exhibit 32

CERTIFICATION OF 
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

This certification is furnished by the
undersigned Chief Executive Officer and Chief Financial Officer of Venture
Financial Group, Inc. (the "Registrant") pursuant to Section 906 of the
Sarbanes-Oxley Act of 2003. Each of the undersigned hereby certifies, with
respect to the Registrant's quarterly report of Form 10-Q for the period ended
March 31, 2004 as filed with the Securities and Exchange Commission on the date
hereof (the "Report"), that:

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

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

/s/ Ken F. Parsons, Sr.
Ken F. Parsons, Sr. 
Chief Executive Officer

/s/ Catherine M. Reines
Catherine M. Reines 
Chief Financial Officer

May 14, 2004



---

---