SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549

                                 FORM 10-Q

 [X]     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934


         For the Quarterly period ended                June 30, 2004
                                                       -------------

 [ ]     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

         For the transition period from                 to
                                        ---------------    ---------------

                        Commission File Number: 0-26993

                        EVERTRUST FINANCIAL GROUP, INC.
------------------------------------------------------------------------------
           (Exact name of registrant as specified in its charter)


         Washington                                         91-1613658
---------------------------------                  ---------------------------
(State or other jurisdiction                              (I.R.S. Employer
of incorporation or organization)                           I.D. Number)


           2707 Colby Avenue, Suite 600, Everett, Washington 98201
           -------------------------------------------------------
           (Address of principal executive offices and zip code)


                             (425) 258-3645
           -------------------------------------------------------
            (Registrant's telephone number, including area code)

                                     NA
           -------------------------------------------------------
          (Former name, former address and former fiscal year, if
                         changed since last report)


Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

(1) Yes   X   No
        -----    -----

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).
YES   X    NO
     -----    -----

                      APPLICABLE ONLY TO CORPORATE ISSUERS

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:                                      As of August 6, 2004
---------------------------                          ---------------------
Common stock, no par value                                 6,930,848
<PAGE>


                        EVERTRUST FINANCIAL GROUP, INC.
                              Table of Contents

                                                                    Page

PART I - FINANCIAL INFORMATION

ITEM 1 - Financial Statements. The Consolidated Financial
         Statements of EverTrust Financial Group, Inc. filed as
         a part of the report are as follows:

            Consolidated Statements of Financial Condition as
             of June 30, 2004 and March 31, 2004                      1
            Consolidated Statements of Operations for the three
             months ended June 30, 2004 and 2003                      2
            Consolidated Statements of Comprehensive Income for
             the three months ended June 30, 2004 and 2003            3
            Consolidated Statements of Changes in Equity for the
             twelve months ended March 31, 2004 and three months
             ended June 30, 2004                                      4
            Consolidated Statements of Cash Flows for the three
             months ended June 30, 2004 and 2003                      5
            Notes to Consolidated Financial Statements                6

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

            General                                                   11
            Selected Financial Ratios                                 12
            Comparison of Financial Condition at June 30, and
             March 31, 2004                                           13
            Comparison of Operating Results for the three months
             ended June 30, 2004 and 2003                             15
            Liquidity and Capital Resources                           17
            Capital Requirements                                      18

ITEM 3 - Quantitative and Qualitative Disclosures About Market
         Risk and Asset and Liability Management and Market Risk      18

ITEM 4 - Controls and Procedures                                      19

PART II - OTHER INFORMATION

         Item 1.  Legal Proceedings                                   19
         Item 2.  Changes in Securities, Use of Proceeds and
                   Issuer Purchases of Equity Securities              19
         Item 3.  Defaults upon Senior Securities                     20
         Item 4.  Submission of Matters to a Vote of Stockholders     20
         Item 5.  Other Information                                   20
         Item 6.  Exhibits and Reports on Form 8-K                    20

SIGNATURES                                                            21

                                       i

<PAGE>



Part 1 - Financial Information
------------------------------
Item 1 - Financial Statements

                          EverTrust Financial Group, Inc.
                  Consolidated Statements of Financial Condition
                         June 30, 2004 and March 31, 2004
              (Dollar amounts in thousands, except per share amounts)

                                                     June 30,   March 31,
                                                        2004        2004
                                                      --------   --------
ASSETS                                                   (Unaudited)

Cash and cash equivalents, including interest
 bearing deposits of $555 and $1,000                  $ 19,123   $ 14,995
Securities available for sale, amortized cost of
 $67,619 and $66,914                                    66,889     67,567
Securities held to maturity, fair value of $2,305
 and $2,419                                              2,229      2,311
Federal Home Loan Bank stock, at cost                    6,716      6,650
Loans receivable, net of allowances of $9,148 and
 $9,046                                                658,780    661,756
Loans held for sale, fair value of $650 and $907           643        886
Accrued interest receivable                              3,337      3,301
Premises and equipment, net                              6,874      7,206
Other real estate owned                                     --        375
Prepaid expenses and other assets                        4,429      5,025

                                                      --------   --------
     Total Assets                                     $769,020   $770,072
                                                      ========   ========

LIABILITIES AND EQUITY
----------------------

LIABILITIES:
  Deposit accounts                                    $553,852   $546,388
  Federal Home Loan Bank advances and other
   borrowings                                          120,117    128,531
  Accounts payable and other liabilities                 3,876      4,574

                                                      --------   --------
     Total Liabilities                                 677,845    679,493

COMMITMENTS AND CONTINGENCIES

EQUITY:
  Common stock - no par value, 73,500,000 shares
   authorized, 6,892,660 shares and 6,890,160
   shares outstanding at June 30, 2004 and
   March 31, 2004, respectively                         23,845     23,819
  Retained earnings                                     68,017     66,738
  Shares held in trust for stock-related
   compensation plans                                     (205)      (409)
  Accumulated other comprehensive (loss) income           (482)       431

                                                      --------   --------
     Total Equity                                       91,175     90,579
                                                      --------   --------

Total Liabilities and Equity                          $769,020   $770,072
                                                      ========   ========

                                      1

<PAGE>


                         EverTrust Financial Group, Inc.
                      Consolidated Statements of Operations
                 For the Three Months Ended June 30, 2004 and 2003
             (Dollar amounts in thousands, except per share amounts)

                                            Three Months Ended June 30,
                                            --------------------------
                                               2004            2003
                                            ----------      ----------
                                                    (Unaudited)
INTEREST INCOME:
  Loans receivable                          $   10,261      $   10,505
  Investment securities:
    Taxable interest income                        521             442
    Tax-exempt interest income                      19              43
    Dividend income                                 66              86
                                            ----------      ----------
      Total investment security income             606             571
                                            ----------      ----------
      Total interest income                     10,867          11,076
INTEREST EXPENSE:
  Deposit accounts                               2,639           3,097
  Federal Home Loan Bank advances and
   other borrowings                              1,178           1,284
                                            ----------      ----------
      Total interest expense                     3,817           4,381
                                            ----------      ----------
      Net interest income                        7,050           6,695
PROVISION FOR LOAN LOSSES                          100             175
                                            ----------      ----------
      Net interest income after provision
       for loan losses                           6,950           6,520
NONINTEREST INCOME:
  Loan service fees                                753             695
  Gain on sale of securities                        --               2
  Gain on sale of loans                            337             301
  Other, net                                       780             646
                                            ----------      ----------
      Total noninterest income                   1,870           1,644
                                            ----------      ----------
NONINTEREST EXPENSES:
  Salaries and employee benefits                 3,002           3,152
  Occupancy and equipment                          742             710
  Information processing costs                     369             376
  KeyCorp merger costs                             323              --
  Other, net                                     1,231             967
                                            ----------      ----------
      Total noninterest expenses                 5,667           5,205
                                            ----------      ----------
      Earnings before federal income taxes       3,153           2,959
FEDERAL INCOME TAXES                             1,116             994
                                            ----------      ----------
NET INCOME                                  $    2,037      $    1,965
                                            ==========      ==========

Net income per common share - basic         $     0.30      $     0.28
                                            ==========      ==========
Net income per common share - diluted       $     0.28      $     0.26
                                            ==========      ==========

Weighted average shares outstanding - basic  6,782,740       6,990,670
Weighted average shares outstanding -
 diluted                                     7,258,185       7,498,660

Dividends paid per share                    $    0.110      $    0.080

                                       2

<PAGE>



                       EverTrust Financial Group, Inc.
          Consolidated Statements of Comprehensive Income (In thousands)
                For the Three Months Ended June 30, 2004 and 2003
                                 (Unaudited)


                                                         2004        2003
                                                        ------     ------

NET INCOME                                              $2,037     $1,965
OTHER COMPREHENSIVE INCOME (LOSS), net of income taxes:
  Gross unrealized gain (loss) on securities:
    Unrealized holding (loss) gain during the period,
     net of deferred income tax (benefit) expense
     of ($470) and $36                                    (913)        69
    Less adjustment of gains (loss) included in net
     income, net of income tax of $(-) and $(-)              -         (1)
                                                        ------     ------
    Other comprehensive income (loss)                     (913)        68
                                                        ------     ------

COMPREHENSIVE INCOME                                    $1,124     $2,033
                                                        ======     ======

                                       3

<PAGE>


<TABLE>
                                 EverTrust Financial Group, Inc.
                            Consolidated Statements of Changes in Equity
          For the Twelve Months Ended March 31, 2004 and Three Months Ended June 30, 2004
                           (Dollar amounts in thousands, Unaudited)

                                                                          Shares       Accumu-
                                                                          held in       lated
                                                                         trust for      other
                                                                          stock-       compre-
                            Common Stock                                  related      ensive
                       ---------------------   Debt related  Retained   compensation   income
                         Shares     Amount       to ESOP     Earnings      plans       (loss)      Total
                       ---------  -----------  -----------  -----------  ----------  ----------  ----------

                   <c>         <c>          <c>          <c>          <c>         <c>         <c>
BALANCE, April 1,
 2003                  7,252,168      $30,613     $(396)      $62,542     $(1,301)     $ 237      $91,695
                       =========      =======     =====       =======     =======      =====      =======
Common stock
 repurchased            (465,186)      (9,258)                                                     (9,258)
Common stock options
 exercised               103,178          977                                                         977
Tax benefit from
 stock options
 exercised                              1,034                                                       1,034
Repayment of ESOP debt                              396                                               396
ESOP activity - Change
 in value of shares
 committed to be
 released                                 453                                                         453
Amortization of
 compensation related
 to Management
 Recognition Plan
 (MRP)                                                                        892                     892
Net income                                                      7,046                               7,046
Dividends paid                                                 (2,850)                             (2,850)
Other comprehensive
 income (loss), net
 of  income taxes                                                                        194          194
                       ---------      -------     -----       -------     -------      -----      -------
BALANCE, March 31,
 2004                  6,890,160      $23,819     $   -       $66,738     $  (409)     $ 431      $90,579
                       =========      =======     =====       =======     =======      =====      =======

Common stock options
 exercised                 2,500           26                                                          26
Amortization of
 compensation related
 to Management
 Recognition Plan
 (MRP)                                                                        204                     204
Net income                                                      2,037                               2,037
Dividends paid                                                   (758)                               (758)
Other comprehensive
 income (loss), net
 of income taxes                                                                        (913)        (913)
                       ---------      -------     -----       -------     -------      -----      -------
BALANCE, June 30,
 2004                  6,892,660      $23,845     $   -       $68,017     $  (205)     $(482)     $91,175
                       =========      =======     =====       =======     =======      =====      =======

</TABLE>
                                                   4

</PAGE>


               EverTrust Financial Group, Inc. and Subsidiaries
              Consolidated Statements of Cash Flows (In thousands)
               For the Three Months Ended June 30, 2004 and 2003
                                 (Unaudited)

                                                      2004         2003
                                                   ---------    ---------
OPERATING ACTIVITIES:
  Net income                                       $   2,037    $   1,965
  Adjustments to reconcile net income to net
   cash provided (used) by operating activities:
    Depreciation and amortization of premises
     and equipment                                       367          407
    Dividends on Federal Home Loan Bank stock and
     accretion of investment security discounts          (74)        (253)
    Amortization of investment security premiums         160           80
    Provision for losses on loans                        100          175
    Amortization of deferred loan fees and costs        (616)        (659)
    Loan fees deferred                                   505          509
    Proceeds from sale of loans                        5,115       14,343
    Loans originated for sale                         (4,872)     (11,053)
    Amortization of compensation related to MRP          204          216
    Changes in operating assets and liabilities:
      Accrued interest receivable                        (36)          51
      Prepaid expenses and other assets                1,066        2,355
      Accounts payable and other liabilities            (698)      (1,211)
                                                   ---------    ---------

  Net cash provided by operating activities            3,258        6,925

INVESTING ACTIVITIES:
  Proceeds from maturities of securities available
   for sale                                            4,911        3,298
  Proceeds from maturities of securities held to
   maturity                                               82          197
  Proceeds from sale of securities available for sale    673        1,613
  Purchases of securities available for sale          (6,441)     (16,070)
  Loan principal payments                            162,539      109,242
  Loans originated or acquired                      (159,552)     (95,922)
  Proceeds from sales of reaquired assets and OREO       375           --
  Investment in limited partnership                       --         (112)
  Net additions to premises and equipment                (35)        (104)
                                                   ---------    ---------

  Net cash used by investing activities                2,552        2,142
                                                   ---------    ---------

FINANCING ACTIVITIES:
  Net increase in deposit accounts                     7,464       11,441
  Proceeds from stock options exercised                   26           85
  Dividends paid on common stock                        (758)        (581)
  Proceeds from Federal Home Loan Bank advances      163,900        9,400
  Repayments of Federal Home Loan Bank advances     (172,313)     (14,063)
                                                   ---------    ---------

  Net cash provided (used) by financing activities    (1,681)       6,282
                                                   ---------    ---------

NET INCREASE IN CASH AND CASH EQUIVALENTS              4,128       15,349

CASH AND CASH EQUIVALENTS:
  Beginning of period                                 14,995       37,259
                                                   ---------    ---------

  End of period                                    $  19,123    $  52,608
                                                   =========    =========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
     Interest on deposits                          $   2,647    $   3,103
     Federal income taxes                          $      60    $     100
     Interest on borrowings                        $   1,233    $   1,317

                                      5

<PAGE>



                      EverTrust Financial Group, Inc.
                 Notes to Consolidated Financial Statements
                    Three Months Ended June 30, 2004
                                  (Unaudited)

Note 1 - Basis of Presentation
------------------------------

The unaudited consolidated financial statements of EverTrust Financial Group,
Inc. (EverTrust or the Company) and its subsidiaries reflect all adjustments
which are, in the opinion of management, necessary to present fairly the
statements of financial position and results of operations for the interim
periods presented. All such adjustments are of a normal recurring nature. The
consolidated financial statements include EverTrust's wholly owned
subsidiaries, EverTrust Bank (EverTrust Bank or the Bank) and Mutual
Bancshares Capital Inc. (MB Cap). All significant intercompany accounts and
transactions have been eliminated in consolidation.

The balance sheet data as of March 31, 2004 was derived from audited financial
statements, but does not include all disclosures which have been omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC) pertaining to the presentation of interim financial
statements. The results of operations for the three months ended June 30, 2004
are not necessarily indicative of the results which may be expected for the
entire year. It is suggested that these consolidated financial statements and
notes are read in conjunction with the consolidated financial statements and
notes included in EverTrust's Annual Report on Form 10-K for the year ended
March 31, 2004, which was filed with the SEC on June 8, 2004.

Note 2 - Recent Events
----------------------

On June 25, 2004, the Company announced that it had entered into a definitive
agreement that provides for the acquisition of EverTrust by KeyCorp. The
transaction, subject to approval by EverTrust shareholders and the appropriate
regulators, is expected to close in the quarter ended December 31, 2004.

Note 3 - Stock Repurchases
--------------------------

In January 2003, the Company announced an eighth repurchase plan of up to
735,000 shares, or 10%, of the Company's outstanding common stock. As a result
of the merger discussions during the three months ended June 30, 2004, the
Company did not repurchase any additional shares during the quarter, leaving a
balance of 140,965 shares under the current plan. Unless the merger with
KeyCorp is not completed, the Company will not repurchase any more shares.

Note 4 - Earnings per share
---------------------------

Earnings per share (EPS) is computed using the weighted average number of
common and diluted shares outstanding during the period. Basic EPS is computed
by dividing income available to common stockholders by the weighted average
number of common shares outstanding for the period. Diluted EPS reflects the
potential dilution that occurs if securities or other contracts to issue
common stock were exercised or converted into common stock. The only
reconciling items after the calculation of basic EPS are the inclusion of
stock options and restricted stock awards, which increase the shares
outstanding in diluted EPS by 475,445 and 507,990 for the three months ended
June 30, 2004 and 2003, respectively.

The Company applies Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations in accounting for
it's stock options. Accordingly, no compensation cost has been recognized for
the Company's option plan since the exercise price of all options has been
equal to the fair value of the Company's stock at the grant date. Had
compensation costs for the Company's compensation plan been determined
consistent with Statement of Financial Accounting Standards (SFAS) No. 123,
"Accounting for Stock-Based Compensation," the Company's net income
attributable to common stock would have been reduced by $73,000 and $75,000
for the three months ended June 30, 2004 and June 30, 2003, respectively.  Net
income per share for basic and diluted would have decreased by $.01 for the
three months ended June 30, 2004 and 2003, respectively.

                                      6

<PAGE>



Had compensation cost for the options been determined based on the fair value
at the option grant dates, the Company's net income and earnings per share
would have been reduced to the pro forma amounts indicated below (in
thousands):

                                             For the Three Months Ended
                                           June 30, 2004     June 30, 2003
                                           -------------     -------------
Net income as reported                         $2,037           $1,965
Stock based employee compensation expense         (73)             (75)
                                               ------           ------
Pro forma net income                           $1,964           $1,890

Basic earnings per share:
  As reported                                    0.30             0.28
  Pro forma                                      0.29             0.27

Diluted earnings per share:
  As reported                                    0.28             0.26
  Pro forma                                      0.27             0.25

Note 5 - Lines of Business
--------------------------

Beginning April 1, 2003, the Company began managing the activities of
EverTrust Bank under the following lines of business: Business and private
banking (including EverTrust Asset Management (ETAM)), the real estate lending
group, and the retail banking division.

The operating results of the Company and MB Cap have been included in "Other"
for both periods. Their results are not significant when taken on an
individual basis.

Financial highlights by lines of business are as follows (in thousands):



<PAGE>
<TABLE>

                                                    Three Months Ended June 30, 2004
                             -----------------------------------------------------------------------------
                               The Bank's     The Bank's
                                business      real estate    The Bank's
                              and private       lending       retail
                             banking group       group       division     Other    Eliminations     Total
                             -------------    -----------    ---------   -------   ------------    -------

                            <c>              <c>          <c>         <c>         <c>           <c>
Condensed income statement:

Net interest income after
  provision for loan losses     $   662        $  4,025      $  2,188    $    75     $      -     $  6,950
Other income                        466             725           692      2,637       (2,650)       1,870
Other expense                     1,032             962         2,681      1,005          (13)       5,667
                                -------        --------      --------    -------     --------     --------

Income before income taxes           96           3,788           199      1,707       (2,637)       3,153
Income taxes                         35           1,346            65       (330)          --        1,116
                                -------        --------      --------    -------     --------     --------

Net income                      $    61        $  2,442      $    134    $ 2,037     $ (2,637)    $  2,037
                                =======        ========      ========    =======     ========     ========

Total assets                    $50,164        $546,605      $156,682    $94,599     $(79,030)    $769,020
                                =======        ========      ========    =======     ========     ========

</TABLE>

                                         7

<PAGE>


<TABLE>
                                                    Three Months Ended June 30, 2003
                             -----------------------------------------------------------------------------
                               The Bank's     The Bank's
                                business      real estate    The Bank's
                              and private       lending       retail
                             banking group       group       division     Other    Eliminations     Total
                             -------------    -----------    ---------   -------   ------------    -------

                            <c>              <c>          <c>         <c>         <c>           <c>
Condensed income statement:

Net interest income after
 provision for loan losses       $   677        $  3,946      $  1,835   $    62    $     --      $  6,520
Other income                         401             480           776     2,371      (2,384)        1,644
Other expense                      1,072             942         2,528       676         (13)        5,205
                                 -------        --------      --------   -------    --------      --------

Income before income taxes             6           3,484            83     1,757      (2,371)        2,959
Income taxes                           2           1,172            28      (208)         --           994
                                 -------        --------      --------   -------    --------      --------

Net income                       $     4        $  2,312      $     55   $ 1,965    $ (2,371)     $  1,965
                                 =======        ========      ========   =======    ========      ========

Total assets                     $62,169        $449,353      $194,436   $97,240    $(89,742)     $713,483
                                 =======        ========      ========   =======    ========      ========

</TABLE>


Note 6 -  Additional Information Regarding Investment Securities
----------------------------------------------------------------

The following table sets forth the composition of the Company's investment
portfolio at the dates indicated (in thousands):

                                   June 30, 2004           March 31, 2004
                                ---------------------   ---------------------
                                Amortized      Fair     Amortized      Fair
                                   Cost        Value       Cost        Value
                                ---------    --------   ---------     -------
Available for sale:
Investment securities:
  U.S. Government Agency
   obligations                    $28,412     $28,172     $27,525     $27,769
  Corporate obligations                --          --          --          --
  Municipal obligations             2,180       2,176       1,931       1,947
  Equity securities                   581         594          15          28
  Certificates of deposit              --          --          --          --
  Mortgage-backed securities       36,446      35,947      37,443      37,823
                                  -------     -------     -------     -------
     Total available for sale     $67,619     $66,889     $66,914     $67,567
                                  =======     =======     =======     =======

Held to maturity:
Investment securities:
  U.S. Government Agency
   obligations                    $ 1,001     $ 1,036     $ 1,001     $ 1,057
  Municipal obligations               955         976       1,015       1,044
  Certificates of deposit             273         293         295         318
                                  -------     -------     -------     -------
  Mortgage-backed securities      $ 2,229     $ 2,305     $ 2,311     $ 2,419
                                  =======     =======     =======     =======
     Total available for sale     $69,848     $69,194     $69,225     $69,986
                                  =======     =======     =======     =======

U.S. Government Agency obligations increased $887,000 at cost from $28.5
million at March 31, 2004 to $29.4 million at June 30, 2004. Mortgage-backed
securities decreased $403,000 at cost from $37.1 million at March 31, 2004 to
$36.7

                                      8

<PAGE>



million at June 30, 2004. The Company will continue to look to invest excess
cash over the next several months in high quality investments and loans.

At June 30, 2004  equity securities were comprised of, at cost, $581,000
($594,000 fair value) in money market mutual funds. During the three months
ended December 31, 2003, the Company sold all of it's remaining common stock
held in publically traded companies and recorded a pre-tax loss of $95,000.
The Company has no plans at this time to reinvest in common stock of other
companies.

Note 7 - Additional Information Regarding Federal Home Loan Bank Advances and
-----------------------------------------------------------------------------
Other Borrowings
----------------

The following table sets forth maturity detail on EverTrust's Federal Home
Loan Bank advances and other borrowings (in thousands):

                                      June 30, 2004     March 31, 2004
                                      -------------     --------------
     Nonamortizing:
       Due within 1 year                 $ 62,550          $ 65,750
       After 1 year through 2 years        16,950            17,900
       After 2 years through 3 years       16,550            16,350
       After 3 years through 5 years       14,350            16,600
       After 5 years through 10 years       7,650             9,650
       After 10 years                       1,500             1,700
     Amortizing:
       After 10 years                         567               581
                                         --------          --------

                                         $120,117          $128,531
                                         ========          ========

At June 30, 2004 and March 31, 2004, the Bank had $47.0 million available in
unsecured lines of credit with commercial banks. At June 30, 2004 there were
no advances on the lines of credit with commercial banks. In addition, the
Bank has a revolving line of credit with the Federal Home Loan Bank of up to
35% of total assets or the Bank's available collateral, whichever is less.

Note 8 - Recently Issued Accounting Standards
---------------------------------------------

In May 2003, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity."
The statement establishes standards for classifying and measuring certain
financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity as liabilities. SFAS 150 is
effective for instruments entered into or modified after May 31, 2003. The
adoption of SFAS No. 150 did not materially impact the Company's consolidated
results of operations, financial position, or cash flows.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. The new guidance amends SFAS No. 133 for decisions made as part of
the Derivatives Implementation Group (DIG) process that effectively required
amendments to SFAS No. 133, and decisions made in connection with other FASB
projects dealing with financial instruments and in connection with
implementation issues raised in relation to the application of the definition
of a derivative and characteristics of a derivative that contains financing
components. In addition, it clarifies when a derivative contains a financing
component that warrants special reporting in the statement of cash flows. SFAS
No. 149 is effective for contracts entered into or modified after June 30,
2004, and for hedging relationships designated after June 30, 2003. The
adoption of SFAS No. 149 did not have any impact on the Company's financial
statements.

                                      9

<PAGE>



In January 2003, the FASB issued Financial Accounting Standards Board
Interpretation (FIN) No. 46, "Consolidation of Certain Variable Interest
Entities An Interpretation of ARB No. 51," to clarify when an entity should
consolidate another entity known as a Variable Interest Entity (VIE), more
commonly referred to as a special purpose entity or SPE. A VIE is an entity in
which equity investors do not have characteristics of a controlling financial
interest or do not have sufficient equity at risk for the entity to finance
its activities without additional subordinated financial support from other
parties, and may include many types of SPEs. FIN No. 46 requires that an
entity shall consolidate a VIE if that enterprise has a variable interest that
will absorb a majority of the VIE's expected losses if they occur, receive a
majority of the VIE's expected residual returns if they occur, or both. FIN
No. 46 is effective for newly created VIEs beginning February 1, 2003, and for
existing VIEs as of the third quarter of 2003. The adoption of FIN No. 46 did
not have a material effect on the Company's financial statements.

In December 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based
Compensation Transition and Disclosure."  SFAS No. 148 amends SFAS No. 123 to
provide alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to
require prominent disclosures in both annual and interim financial statements
about the method of accounting for stock-based employee compensation and the
effect of the method used on reported results. The provisions of SFAS No. 148
are effective for financial statements for fiscal years and interim periods
ending after December 15, 2002. The disclosure provisions of SFAS No. 148 have
been adopted by the Company (see Note 1). SFAS No. 148 did not require the
Company to change to the fair value based method of accounting for stock-based
compensation.

In November 2002, the FASB issued FIN No. 45, "Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others," which requires the guarantor to recognize as a
liability the fair value of the obligation at the inception of the guarantee.
The disclosure requirements in FIN No. 45 are effective for financial
statements of interim or annual periods ending after December 15, 2002.
Management believes that the Company has no material guarantees that are
required to be disclosed in the financial statements. The recognition
provisions are to be applied on a prospective basis to guarantees issued after
December 31, 2002. The adoption of the recognition provisions of FIN No. 45
has not had a material impact on the Company's financial statements.  In
October 2002, the FASB issued SFAS No. 147, Acquisitions of Certain Financial
Institutions.  SFAS No. 147 allows financial institutions meeting certain
criteria to reclassify unidentifiable intangible asset balances to goodwill
and cease amortization. SFAS No. 147 is generally effective as of October 31,
2002. The adoption of SFAS No. 147 did not materially impact the Company's
financial statements.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities."  SFAS No. 146 requires recording costs
associated with exit or disposal activities when a liability has been
incurred. Under previous guidance, certain exit costs were accrued upon
management's commitment to an exit plan, which is generally before an actual
liability has been incurred. SFAS No. 146 is effective for exit or disposal
activities initiated after December 31, 2002. The adoption of SFAS No. 146 has
not had a material effect on the Company's financial statements.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections."  SFAS No.145 eliminates extraordinary accounting treatment for
reporting gain or loss on debt extinguishment and amends other existing
authoritative pronouncements to make various technical corrections, clarify
meanings, or describe their applicability under changed conditions. The
provisions of SFAS No. 145 related to the rescission of SFAS No. 4 are
effective for fiscal years beginning after May 15, 2002. The provisions
related to SFAS No. 13 are effective for transactions occurring after May 15,
2002. All other provisions are effective for financial statements issued on or
after May 15, 2002. The adoption of SFAS No. 145 did not materially impact the
Company's financial statements.

In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets," which supercedes SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be
Disposed Of."  SFAS No. 144 retains the fundamental provisions of SFAS No. 121
but sets forth new criteria for asset classification and broadens the scope of
qualifying discontinued operations. SFAS No. 144 is effective for fiscal years

                                      10

<PAGE>



beginning after December 15, 2001. The Company adopted SFAS No. 144 on April
1, 2002. The adoption of SFAS No. 144 did not have a material impact on the
Company's financial statements.

In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which took effect for fiscal years beginning after June 15,
2002. SFAS No. 143 establishes the initial and subsequent accounting for legal
obligations associated with the retirement of long-lived assets that result
from the acquisition, construction, development, and/or normal operation of a
long-lived asset. The Company adopted SFAS No. 143 as of April 1, 2003. The
adoption of SFAS No. 143 did not materially impact the Company's financial
statements.

In July 2001, the FASB issued SFAS No. 141, "Accounting for Business
Combinations," and SFAS No. 142, "Accounting for Goodwill and Other Intangible
Assets," which were effective for the Company on April 1, 2002.  SFAS No. 141
requires all business combinations initiated after September 30, 2001, to be
accounted for using the purchase method. Under SFAS No. 142, goodwill is no
longer subject to amortization over its estimated useful life but instead is
subject to an impairment assessment at least annually. The Company has not
engaged in any business combinations since the adoption of SFAS No. 141 and
does not currently have any goodwill. The adoption of SFAS No. 141 and SFAS
No. 142 have not had any effect on the Company's financial statements.

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

General. EverTrust, a Washington state corporation, is primarily engaged in
the business of planning, directing and coordinating the business of its
wholly owned subsidiaries, EverTrust Bank and MB Cap.

EverTrust Bank's strategy is to operate as a community-based, retail oriented
financial institution offering a wide variety of banking products, delivered
and distinguished by providing a superior level of customized service to
individuals. EverTrust Bank attracts retail deposits and generates real estate
secured loans through its 12 full service banking offices and its two loan
production offices using repeat business, targeted marketing, customer
cross-selling, referrals and its longstanding reputation in its market area as
a primary means of meeting this strategy. EverTrust Bank strives to serve a
niche base of higher balance transaction account customers by offering tiered,
interest-bearing products, versus a mass market strategy that seeks lower
balance/no interest/high fee transaction accounts. In addition to offering
multi-family and commercial real estate loans, the Bank focuses on
construction and land development loans, and to a much lesser extent,
one-to-four family real estate loans. Since single family lending has become a
commodity product, EverTrust Bank has sought to diversify its lending
activities by emphasizing real estate construction, multifamily and commercial
lending. This diversification has allowed for continued customization of its
lending products in a highly competitive environment.

The Bank established a commercial mortgage banking group in July 2001, in an
effort to increase non-interest fee revenue through commercial mortgage
banking and servicing activities. Additional lending officers were added to
the group in fiscal 2004 to enhance this objective. In addition to brokering
loans to life insurance companies, the group arranges loan participations with
correspondent lenders in an effort to diversify credit risk, enhance loan
yields and generate servicing fee income. To a lesser extent, the Bank also
originates business loans and consumer loans through a broadened product line
with an emphasis on quality service.

In connection with the merger of the Company's former bank subsidiary,
Commercial Bank of Everett, with and into EverTrust Bank in February 2001, the
Bank established a business and private banking group primarily focused on
serving the needs of the Bank's business banking clients with a high level of
customer service. This group provides banking services directly at the
client's place of business, including lending and non-cash deposit activities,
to the greatest extent possible. As part of the Bank's internal referral
system, business and private banking clients are seamlessly referred to
appropriate staff within the Bank that specialize in multi-family, commercial
real estate and one-to-four family residential loans, as well as other banking
and investment products and services. The business and private banking group
generally targets business clients with annual revenues up to $10 million, but
will also consider relationships outside of this range.

                                      11

<PAGE>



The Bank expanded its business banking group by opening a new business and
private banking office in Seattle, Washington in May 2002 and by increasing
its business banking network throughout all of the Bank's offices in Snohomish
County, Washington. A primary objective of the group is to generate
non-interest bearing and other low-cost core deposits through its business
banking and cash management products and services.  In fiscal 2003, the Bank
re-branded its business and private banking group as the private client group.
The private client group also includes ETAM.

The Company does not presently engage in any activities outside of serving as
a shell parent company for its subsidiaries. The operating strategy of the
Company has been to enhance the performance of EverTrust Bank, and expand and
diversify the consolidated operations of the Company across a variety of
companies and/or operating units that are engaged in complementary, but
different, businesses and/or operating strategies. In connection with the
Company's initial public offering in 1999 and as a result of the additional
capital that was retained by the Company, this diversification strategy is
expected to continue as opportunities arise, although there are no specific
acquisitions or new business formations planned at this time.

In January 2003, the Company announced that it had reached a tentative
agreement to shift the day-to-day operations of MB Cap to a local venture
capital firm. As a result of the agreement, the sole activity of MB Cap will
be to hold its limited partnership investment. The limited partnership will be
managed by the former employees of MB Cap along with an additional venture
capitalist. The agreement has been approved by the limited partners and is
subject to approval by regulatory authorities.

The investment in the limited partnership investment is recorded using the
equity method, based on the percentage of ownership held in the limited
partnership. Such amounts were $1.3 million at June 30, 2004 and March 31,
2004.

Selected Financial Ratios
-------------------------

The following table sets forth certain selected financial ratios for
EverTrust.

                                        Three Months Ended June 30,
                                        --------------------------
                                            2004        2003
SELECTED FINANCIAL RATIOS                  ------      ------

Performance Ratios:
Return on average assets (1)                1.06%       1.10%
Return on average equity (2)                8.89        8.42
Equity-to-assets ratio (3)                 11.90       13.09
Interest rate spread (4)                    3.40        3.39
Net interest margin (5)                     3.73        3.83
Average interest-earning assets to
 average interest-bearing liabilities     116.38      117.62
Other operating expenses as a percent
 of average total assets                    2.94        2.92
Efficiency ratio (6)                       63.46       62.25
Non interest income as a percent of
 net revenue                               20.96       19.71

---------------
(1)  Net earnings divided by average total assets.
(2)  Net earnings divided by average equity.
(3)  Average equity divided by average total assets.
(4)  Difference between weighted average yield on interest-earning assets and
     weighted average rate on interest-bearing liabilities.
(5)  Net interest income as a percentage of average interest-bearing assets.
(6)  Total other operating expenses divided by total net interest income (on a
     tax-equivalent basis) before provision for loan losses plus total other
     operating income.

                                      12

<PAGE>



Comparison of Financial Condition at June 30, 2004 and March 31, 2004
---------------------------------------------------------------------

Total assets decreased approximately $1.1 million from $770.1 million at March
31, 2004 to $769.0 million at June 30, 2004.  Cash and cash equivalents
increased $4.1 million from $15.0 million at March 31, 2004 to $19.1 million
at June 30, 2004. The overall decrease in assets and increase in cash since
March 31, 2004 is primarily as a result of the participation of $16.4 million
in loans to other banks during the three months ended June 30, 2004. The
participated loans had previously been held the Company's loan portfolio.
Loans receivable (including loans held for sale) decreased $3.2 million from
$662.6 million at March 31, 2004  to $659.4 million, primarily as a result of
the participations.

Loan originations totaled  $164.4 million for the three months ended June 30,
2004 compared to $107.0 million for the same period in 2003.  Net loans
receivable decreased $3.0 million from $661.8 million at March 31, 2004 to
$658.8 million at June 30, 2004. Commercial and one-to-four family
construction and land development loans increased $14.9 million from March 31,
2004 to $125.6 million at June 30, 2004. These increases were more than offset
by a $9.0 million decrease in commercial real estate loans, a $3.9 million
decrease in multifamily residential loans and a $2.7 million reduction in
multifamily construction loans from March 31, 2004.

Loans held for sale at June 30, 2004 were $643,000, compared to $886,000 at
March 31, 2004.

The following table is provided to disclose additional detail on EverTrust's
loans (dollars in thousands):

                                      June 30, 2004         March 31, 2004
                                   -------------------    -------------------
                                    Amount     Percent     Amount     Percent
                                   --------    -------    --------    -------
Commercial construction            $ 55,866      8.3%    $ 45,786       6.8%
Commercial real estate              278,069     41.4      287,046      42.7
Multifamily construction             20,996      3.1       23,727       3.5
Multifamily residential             180,627     26.9      184,525      27.4
Business loans                       25,573      3.8       23,878       3.6
One-to-four family construction
 and land development                69,750     10.4       64,963       9.7
Consumer:
  Home equity and second mortgages   19,833      2.9       21,513       3.2
  Credit cards                          862      0.1          900       0.1
  Other installment loans             2,007      0.3        2,410       0.4
One to four family residential       18,781      2.8       20,353       3.0
                                   --------    -----     --------     -----
                                   $672,364    100.0%    $675,101     100.4%
                                   --------    =====     --------     =====
Less:
  Deferred loan fees and other       (4,436)               (4,299)
  Reserve for loan losses            (9,148)               (9,046)
                                   --------              --------

                                    (13,584)              (13,345)
                                   --------              --------

Loans receivable, net              $658,780              $661,756
                                   ========              ========

Loans held for sale                $    643              $    886
                                   ========              ========

At June 30, 2004, EverTrust had $611,000 in loans accounted for on a
non-accrual basis compared to approximately $4.0 million at March 31, 2004.
Two properties account for approximately $473,000 of the $611,000 total. The
Company believes that it is adequately secured on both properties. The
remaining $138,000 is comprised of five loans that may or may not be collected
on in the future.

                                      13

<PAGE>



The following table provides a roll-forward of EverTrust's allowance for loan
losses by quarter beginning with the quarter ended June 30, 2003 (in
thousands):

                                             Quarter ended
                       -----------------------------------------------------
                       06/30/04    03/31/04   12/31/03   09/30/03   06/30/03
                       --------    --------   --------   --------   --------

Allowance at beginning
 of period              $9,046      $8,973     $8,747     $9,086     $8,979
Provision for loan
 losses                    100         100        250         --        175
Charge-offs                 (2)        (34)       (69)      (353)       (73)
Recoveries                   4           7         45         14          5
                        ------      ------     ------     ------     ------
  Balance at end of
   period               $9,148      $9,046     $8,973     $8,747     $9,086
                        ======      ======     ======     ======     ======

The following table sets forth certain asset quality ratios for EverTrust.

                                                  Three Months
                                                  Ended June 30,
                                               ------------------
                                                 2004       2003
                                               -------     ------
Asset Quality Ratios:
Nonaccrual and 90 days or more past due
 loans as a percent of total loans, net          0.09%      0.04%
Nonperforming assets as a percent of
 total assets                                    0.08       0.03
Allowance for losses as a percent of gross
 loans receivable                                1.37       1.52
Allowance for loan losses as a percent of
 nonperforming loans                         1,487.23   3,980.83
Net charge-offs (recoveries) to average
 outstanding loans                                 --       0.01

Total deposits of EverTrust increased by approximately $7.5 million, from
$546.4 million at March 31, 2004 to $553.9 million at June 30, 2004. The
change is primarily the result of increases in time deposits of $5.8 million
and transaction accounts of $4.3 million offset in part by a decrease in money
market accounts of $3.0 million since March 31, 2004.  The increase in
deposits from March 31, 2004 to June 30, 2004 is generally attributable to an
increased emphasis in attracting business deposits and an increased customer
preference for insured deposits.

The following table sets forth the balances of deposits in the various types
of accounts offered by EverTrust at the dates indicated (dollars in
thousands):

                                  At June 30, 2004     At March 31, 2004
                                  ----------------     -----------------
                                   Amount       %       Amount        %
                                  --------   -----     --------    -----

Noninterest-bearing accounts      $ 24,163     4.4%    $ 22,662      4.1%
Savings accounts                    13,327     2.4       12,964      2.4
Checking accounts                   99,223    17.9       96,463     17.7
Money market accounts              154,900    28.0      157,850     28.9

Time deposits by original term:
  One to 11 months                  34,595     6.2       35,575      6.5
  12 to 23 months                   95,086    17.2       96,355     17.6
  24 to 35 months                   30,900     5.6       28,240      5.2
  36 to 59 months                   23,415     4.2       22,956      4.2
  60 months and beyond              78,243    14.1       73,323     13.4
                                  --------   -----     --------    -----

                                   262,239    47.3      256,449     46.9
                                  --------   -----     --------    -----

                                  $553,852   100.0%    $546,388    100.0%
                                  ========   =====     ========    =====

                                      14

<PAGE>



Federal Home Loan Bank advances and other borrowings decreased $8.4 million
from $128.5 million at March 31, 2004 to $120.1 million at June 30, 2004. The
need for borrowings since March 31, 2004 has decreased as a result of an
increase in deposit balances and cash received from loan participations.

Total equity decreased approximately $596,000 to $90.6 million at June 30,
2004 compared to $91.2 million at March 31, 2004. Earnings of $4.8 million for
the nine months ended June 30, 2004 were more than offset by stock repurchases
totaling $6.2 million and cash dividends paid of approximately $2.1 million.

Comparison of Operating Results for the Three Months Ended June 30, 2004 and
2003

General. Net income increased approximately $72,000 to $2.0 million for the
three months ended June 30, 2004 compared to the quarter ended June 30, 2003.
The increase in income is primarily attributable to an additional $226,000 of
non-interest income for the three months ended June 30, 2004 compared to the
same period last year and a $564,000 decrease in interest expense compared to
June 30, 2003. The increase in non-interest income was partially offset by
$323,000 in merger related expenses.

Net Interest Income. Net interest income increased 5.3% from $6.7 million for
the three months ended June 30, 2003 to $7.1 million for the three months
ended June 30, 2004. The change is primarily a result of the lower cost of
interest-bearing liabilities.

Interest income decreased approximately $209,000 from $11.1 million for the
three months ended June 30, 2003 to $10.9 million for the same period in 2004.
The average balance of interest-earning assets increased from $699.0 million
for the three months ended June 30, 2003 to $755.3 million for the three
months ended June 30, 2004 resulting in an increase of approximately $1.2
million in income. The yield on interest-earning assets decreased from 6.34%
for the three months ended June 30, 2003 to 5.75% for the same period in 2004
resulting in a decrease in income of approximately $1.3 million.  Increased
balances resulted from an increase in loans receivable and investment
securities. The decrease in the yield on interest-earning assets is primarily
attributable to the lower interest rate environment.

Total interest expense decreased $564,000 from $4.4 million for the three
months ended June 30, 2003 to $3.8 million for the same period in 2004. The
average balance of interest-bearing liabilities increased 9.2% or $54.8
million from $594.3 million at June 30, 2003 to $649.0 million for the three
months ended June 30, 2004 resulting in an increase of $317,000 in expense. A
decrease of  $789,000 in expense was a result of the decrease in the rates on
interest-bearing liabilities from 2.95% for the three months ended June 30,
2003 to 2.35% for the same period in 2004. The reduction is attributable to
market interest rate decreases and the generally downward interest rate
adjustments on maturing and renewed time deposits. The average balance of
borrowings comprised 19.2% of interest-bearing liabilities for the quarter
ended June 30, 2004 compared to 16.7% for the same period in 2003.

                                      15

<PAGE>


<TABLE>

The following table provides additional comparative data on the Company's average balance sheet, yield and
expense information, interest rate spread and net interest margin ratios (dollars in thousands):

                                                    Three months ended June 30,
                                  ---------------------------------------------------------------
                                               2004                              2003
                                  -----------------------------      ----------------------------
                                             Interest                          Interest
                                   Average      and      Yield/      Average      and      Yield/
                                   Balance   Dividends    Cost       Balance   Dividends    Cost
                                  --------   ---------   ------      --------  ----------  ------

                               <c>        <c>         <c>         <c>       <c>         <c>
Interest-earning assets:
  Loans receivable, net (1)       $678,080    $10,261     6.05%      $617,336   $10,505     6.81%
  Investment securities             70,150        539     3.07         44,335       398     3.59
  Federal Home Loan Bank stock       6,650         66     3.97          6,335        83     5.24
  Cash and cash equivalents            455          1     0.88         30,976        90     1.16
                                  --------    -------     ----       --------   -------     ----
    Total interest-earning assets  755,335     10,867     5.75        698,982    11,076     6.34
                                              -------     ----                  -------     ----

Noninterest-earning assets          15,401                             14,146
                                  --------                           --------

    Total average assets          $770,736                           $713,128
                                  ========                           ========

Interest-bearing liabilities:
  Savings accounts                $ 12,996    $    18     0.55%      $ 12,736   $    26     0.82%
  Checking accounts                 97,458        237     0.97         70,293       195     1.11
  Money market deposit accounts    154,639        462     1.20        132,855       491     1.48
  Time deposits                    259,257      1,922     2.97        279,343     2,385     3.42
                                  --------    -------     ----       --------   -------     ----
    Total deposits                 524,350      2,639     2.01        495,227     3,097     2.50
  Borrowings                       124,697      1,178     3.78         99,067     1,284     5.18
                                  --------    -------     ----       --------   -------     ----
    Total interest-bearing
     liabilities                   649,047      3,817     2.35        594,294     4,381     2.95
                                              -------     ----                  -------     ----

Noninterest-bearing liabilities     29,997                             25,504
                                  --------                           --------

    Total average liabilities      679,044                            619,798

Average equity                      91,692                             93,330
                                  --------                           --------

    Total liabilities and equity  $770,736                           $713,128
                                  ========                           ========

Net interest income                           $ 7,050                           $ 6,695
                                              =======                           =======
Interest rate spread                                      3.40%                             3.39%
                                                          ====                              ====
Net interest margin                                       3.73%                             3.83%
                                                          ====                              ====
Ratio of average interest-earning
 assets to average interest-bearing
 liabilities                                   116.38%                           117.62%
                                              =======                           =======

-------------
(1)  Average loans receivable includes non-performing loans.  Interest income does not include interest on
     loans 90 days or more past due.

</TABLE>


Provision for Loan Losses. For the three months ended June 30, 2004, the
provision for loan loss expense was $100,000 compared to $175,000 for the
year-earlier period.  As a percent of gross loans receivable, the allowance
for loan losses was 1.37% at June 30, 2004 compared to 1.35% at March 31, 2004
and 1.52% at June 30, 2003.  Total nonperforming assets at June 30, 2004 were
0.08% of total.  Net recoveries for the three months ended June 30, 2004 were
approximately $2,000. The total loss reserve is $9.1 million for the period
ending June 30, 2004 compared to $9.0 million at March 31, 2004.

                                      16

<PAGE>



The allowance for losses on loans is maintained at a level sufficient to cover
losses inherent in the loan portfolio but not yet apparent to management. The
risk of loss will vary with the type of loan being made, the creditworthiness
of the borrower, general economic conditions and, in the case of a secured
loan, the quality of the security for the loan.

EverTrust's management reviews the adequacy of the allowance at least
quarterly, as computed by a consistently applied formula-based methodology,
supplemented by management's assessment of current economic conditions, past
loss and collection experience, and risk characteristics of the loan
portfolio. In addition, various regulatory agencies, as an integral part of
their examination process, periodically review the Company's allowance for
loan losses. Such agencies may require the Company to provide additions to the
allowance based on judgment different from management.  Although management
uses the best information available, future adjustments to the allowance may
be necessary due to economic, operating, regulatory and other conditions
beyond EverTrust's control.

Non-interest Income.  Non-interest income increased $226,000 from $1.6 million
for the three months ended June 30, 2003 to $1.9 million for the same period
in 2004. The increase is primarily the result of an additional $264,000 in
management fees from ETAM and brokered loan fees from the Bank's commercial
mortgage banking operation.

The increase from the prior period in ETAM management fees was attributable to
additional assets under management.  Brokered loan fees may vary from quarter
to quarter depending on the level of activity.

The following table sets forth non-interest income (in thousands):

                                         Three Months Ended June 30,
                                         --------------------------
                                            2004            2003
                                           ------          ------

     Brokered loan fees                    $  376          $  231
     ETAM management fees                     328             209
     Loan modification fees                    67             165
     Gain on sale of securities                --               2
     Gain on sale of loans                    337             301
     Service fees and other, net              762             736
                                           ------          ------
       Total noninterest income            $1,870          $1,644
                                           ======          ======

Non-interest Expense.  Non-interest expense increased $462,000 from $5.2
million for the three months ended June 30, 2003 to $5.7 million for the same
period in 2004. The increase is primarily attributable to $323,000 of merger
related expenses associated with the proposed KeyCorp acquisition.

Provision for Income Taxes. Federal income taxes increased $122,000 from
$994,000 for the three months ended June 30, 2003 to $1.1 million for the
three months ended June 30, 2004. The increase is a result of increased
earnings.

Liquidity and Capital Resources

Liquidity and Capital Resources.  EverTrust's primary source of funds are
deposits and proceeds from principal and interest payments on loans and
securities, and Federal Home Loan Bank of Seattle advances and other
borrowings.  While maturities and scheduled amortization of loan and
securities are a predictable source of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions and competition.

The primary investing activity of EverTrust is the origination of commercial
real estate, multifamily and, to a much lesser extent, one-to-four family
mortgage loans. A secondary, but increasing activity of the Company is the
origination of business and private banking loans. During the three months
ended June 30, 2004, the Company originated $164.4 million in new loans. In
addition during this three month period, funds were used to pay a cash
dividend to shareholders totaling $758,000. These activities were funded by
loan repayments, participations and proceeds from the sales and maturities of
investment securities. EverTrust must maintain adequate levels of liquidity to
ensure the availability of sufficient funds to support loan growth and deposit
withdrawals, to satisfy financial commitments and to take advantage

                                      17

<PAGE>



of investment opportunities. The source of funds include deposits and
principal and interest payments from loans and investments and Federal Home
Loan Bank of Seattle advances.

The management of EverTrust believes it has adequate resources to fund all
loan commitments by deposits and, if necessary, Federal Home Loan Bank of
Seattle advances and other borrowings and the sale of mortgage loans. It can
also adjust the offering rates of deposit accounts to retain deposits in
changing interest rate environments.

Capital Requirements. EverTrust, as a financial holding company, is regulated
by the Federal Reserve Board (FRB).  The FRB's minimum risk-based capital
ratio guidelines for Tier 1 and total capital are 4% and 8%, respectively.

The actual regulatory capital ratios calculated for EverTrust along with the
minimum capital amounts and ratios for capital adequacy purposes were as
follows (dollars in thousands):


                                                      Minimum for Capital
                                    Actual             adequacy purposes
                              -------------------     -------------------
                               Amount      Ratio       Amount      Ratio
                              --------    -------     --------    -------
June 30, 2004:
  Total capital to risk-
   weighed assets             $100,304     14.1%      $56,910       8.0%
  Tier 1 capital to risk-
   weighted assets              91,597     12.9        28,402       4.0
  Tier 1 leverage capital
   to average assets            91,597     11.8        31,050       4.0

Forward-looking Statements
--------------------------

Certain matters discussed in this Form 10-Q may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward looking statements relate to, among other things,
expectations of the business environment in which the Company operates,
projections of future performance, perceived opportunities in the market, and
statements regarding the Company's mission and vision. These forward-looking
statements are based upon current management expectations, and may therefore
involve risks and uncertainties. The Company's actual results, performance, or
achievements may differ materially from this suggested, expressed, or implied
by forward looking statements due to a wide range of factors including, but
not limited to, non-bank financial services providers, regulatory changes,
interest rates, national and regional economic conditions and other risks
detailed in the Company's reports filed with the Securities and Exchange
Commission.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Asset and Liability Management and Market Risk

EverTrust's profitability depends primarily on its net interest income, which
is the difference between the income it receives on its loan and investment
portfolio and its cost of funds, which consists of interest paid on deposits
and borrowings. Net income is further affected by gains and losses on loans
held for sale, which can be affected by changes in interest rates. Net
interest income is also affected by the relative amounts of interest-earning
assets and interest-bearing liabilities. When interest-earning assets equal or
exceed interest-bearing liabilities, any positive interest rate spread will
generate net interest income. EverTrust continues to actively manage the
impact of interest rate changes on net interest income and capital by
emphasizing the origination of adjustable rate and shorter-term fixed rate
loans, selling 30 year fixed rate mortgages, and purchasing investment
securities that better match the duration of its deposits. EverTrust's
profitability is also affected by the level of non-interest income and
expenses. Non-interest income includes items such as service charges and fees
on deposit accounts, loan service fees and gains on sale of investments and
loans.

Non-interest expenses primarily include compensation and benefits, occupancy
and equipment expenses, deposit insurance premiums and information processing
expenses. EverTrust's results of operations are also significantly affected by
general economic and competitive conditions, particularly changes in market
interest rates, government legislation and regulation and monetary and fiscal
policies.

                                      18

<PAGE>



EverTrust does not maintain a trading account for any class of financial
instrument nor does it purchase high-risk derivative instruments. EverTrust
Bank is authorized to engage in limited hedging activities for its saleable
loan pipeline, but had no forward sale contracts in place at June 30, 2004.
EverTrust has no commodity price risk, and only a limited amount of foreign
currency exchange rate risk as a result of holding Canadian currency in the
normal course of business.

Item 4. Controls and Procedures.

     (a) Evaluation of Disclosure Controls and Procedures: An evaluation of
the Company's disclosure controls and procedures (as defined in Section
13(a)-14(c) of the Securities Exchange Act of 1934 (the "Act")) was carried
out under the supervision and with the participation of the Company's Chief
Executive Officer, Chief Financial Officer and several other members of the
Company's senior management within the 90-day period preceding the filing date
of this quarterly report. The Company's Chief Executive Officer and Chief
Financial Officer concluded that the Company's disclosure controls and
procedures as currently in effect are effective in ensuring that the
information required to be disclosed by the Company in the reports it files or
submits under the Act is (i) accumulated and communicated to the Company's
management (including the Chief Executive Officer and Chief Financial Officer)
in a timely manner, and (ii) recorded, processed, summarized and reported
within the time periods specified in the SEC's rules and forms.

     (b)  Changes in Internal Controls: In the quarter ended June 30, 2004,
the Company did not make any significant changes in, nor take any corrective
actions regarding, its internal controls or other factors that could
significantly affect these controls.

Part II - Other Information
---------------------------

Item 1.  Legal Proceedings

     From time to time the Company or its subsidiaries are engaged in legal
proceedings in the ordinary course of business, none of which are considered
to have a material impact on the Company's financial position or results of
operations.

Item 2.  Changes in Securities, Use of Proceeds and Issuer Purchases of Equity
Securities

     As disclosed in the following table, no shares of the Company's Common
Stock were repurchased during the quarter  ended June 30, 2004.

                      Issuer Purchases of Equity Securities
          --------------------------------------------------------------------
                                                                   (d)
                                                (c)          Maximum Number
                                            Total Number     (or Approximate)
                                              of Shares       Dollar Value
                                             (or Units)       Of Shares (or
                                            Purchased as     Units) that May
                    (a)            (b)         Part of         Yet to be
                Total Number     Average      Publicly         Purchased
                 of Shares      Price Paid    Announced        Under the
                (Or Units)      per Share     Plans or         Plans or
Period           Purchased      (or Unit)     Programs         Programs
--------       -------------  ----------  ------------   -------------------
April 1, 2004 -
 April 30, 2004      --            --          --              140,965
May 1, 2004 -
 May 31, 2004        --            --          --              140,965
June 1, 2004 -
 June 30, 2004        -            --          --              140,965
                 ------        ------      ------              -------
   Total              -            --          --              140,965
                 ======        ======      ======              =======

                                       19

<PAGE>



Item 3.  Defaults Upon Senior Securities

Not applicable.

Item 4.  Submission of Matters to a Vote of Shareholders

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8-K

       (a)  Exhibits

              3.1   Articles of Incorporation of the Registrant(1)
              3.2   Bylaws of the Registrant(1)
             10.1   401(k) Employee Savings and Profit Sharing Plan and
                    Trust(1)
             10.2   Employee Severance Compensation Plan(2)
             10.3   Employee Stock Ownership Plan(1)
             10.4   2000 Stock Option Plan (3)
             10.5   2000 Management Recognition Plan (3)
             10.6   Amended Employment Agreement with Michael R. Deller (4)
             10.7   Amended Employment Agreement with Jeffrey R. Mitchell (5)
             10.8   Amended Employment Agreement with Robert L. Nall (5)
             10.9   Employment Agreement with Philip Mitterling (5)
             10.10  Amended Employment Agreement with Philip Mitterling (5)
             31.1   Certification of Chief Executive Officer Pursuant to
                    Section 302 of the Sarbanes-Oxley Act
             31.2   Certification of Chief Financial Officer Pursuant to
                    Section 302 of the Sarbanes-Oxley Act
             32     Certification of Chief Executive Officer and Chief
                    Financial Officer Pursuant to Section 906 of the
                    Sarbanes-Oxley Act
--------------
(1)  Filed as an exhibit to the Registrant's Registration Statement on Form
     S-1 (333-81125).
(2)  Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
     the year ended March 31, 2000.
(3)  Filed as an exhibit to the Registrant's annual meeting proxy statement
     dated June 19, 2000.
(4)  Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
     the year ended March 31, 2003.
(5)  Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
     the year ended March 31, 2004.

     (b)  Reports on Form 8-K

     During the quarter ended June 30, 2004, the Registrant filed three
Current Reports on Form 8-K.  A Form 8-K was filed (1) on May 5, 2004 to
report earnings for the quarter and year ending March 31, 2004; (2) on May 20,
2004 to announce the appointment of a new executive officer; and (2) on June
25, 2004 to announce the proposed  merger with KeyCorp.

                                      20

<PAGE>



                                  Signatures

Pursuant to the requirement 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.

                               EverTrust Financial Group, Inc.


August 9, 2004                  /s/Michael B. Hansen
                                -------------------------------------
                                Michael B. Hansen
                                President and Chief Executive Officer
                               (Principal Executive Officer)




August 9, 2004                  /s/Jeffrey R. Mitchell
                                -------------------------------------
                                Jeffrey R. Mitchell
                                Chief Financial Officer
                                (Principal Financial and Accounting Officer)


                                      21

<PAGE>



                              Exhibit 31.1

                        Certification Required
    by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Michael B. Hansen, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of EverTrust Financial
    Group, Inc.;

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

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

4.  The registrant's other certifying 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

5.  The registrant's other certifying officer(s) and I have disclosed, based
    on our most recent evaluation of internal control over financial
    reporting, to the registrant's auditors and the audit committee of the
    registrant's board of directors (or persons performing the equivalent
    functions):

    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: August 9, 2004                   /s/Michael B. Hansen
                                       -------------------------------
                                       Michael B. Hansen
                                       Chief Executive Officer

<PAGE>


                                 Exhibit 31.2

                           Certification Required
      by Rules 13a-14 and 15d-14 under the Securities Exchange Act of 1934

I, Jeffrey R. Mitchell, certify that:

1.  I have reviewed this quarterly report on Form 10-Q of EverTrust Financial
    Group, Inc.;

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

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

4.  The registrant's other certifying 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

5.  The registrant's other certifying officer(s) and I have disclosed, based
    on our most recent evaluation of internal control over financial
    reporting, to the registrant's auditors and the audit committee of the
    registrant's board of directors (or persons performing the equivalent
    functions):

    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: August 9, 2004                   /s/Jeffrey R. Mitchell
                                       ---------------------------------
                                       Jeffrey R. Mitchell
                                       Chief Financial Officer

<PAGE>


                                   Exhibit 32


     CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
                   OF EVERTRUST FINANCIAL GROUP, INC.
        PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2003

     The undersigned hereby certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2003 and in connection with this Quarterly Report on
Form 10-Q, that:

     (1)  the report fully complies with the requirements of Sections 13(a)
          and 15(d) of the Securities Exchange Act of 1934, as amended, and

     (2)  the information contained in the report fairly presents, in all
          material respects, the company's financial condition and results of
          operations.



/s/Michael B. Hansen                      /s/Jeffrey R. Mitchell
------------------------------            ----------------------------------
Michael B. Hansen                         Jeffrey R. Mitchell
Chief Executive Officer                   Chief Financial Officer

Dated: August 9, 2004

<PAGE>