CORRECTING and REPLACING -- Washington Banking Profits Rise 3 Percent to $2.3 Million and Diluted EPS to $0.25 in First Quarter of 2008 With Solid Asset Quality


OAK HARBOR, Wash., April 24, 2008 (PRIME NEWSWIRE) -- In a release issued today under the same headline, note the entire release should be disregarded. The corrected release follows:

Washington Banking Company (Nasdaq:WBCO), the holding company for Whidbey Island Bank, today reported that solid credit quality, strong loan growth and improved efficiency contributed to first quarter 2008 profits rising 3% over first quarter a year ago. In the 2008 first quarter, Washington Banking earned $2.3 million, or $0.25 per diluted share, compared to $2.3 million, or $0.24 per diluted share, in the first quarter a year ago. In the fourth quarter of 2007 Washington Banking earned $1.9 million or $0.19 per diluted share.

"Our consistent credit culture, which is reinforced by a compensation policy that rewards long-term credit quality, has allowed us to avoid most of the turmoil in the market, thus far," said Michal Cann, President and CEO. "We are targeting commercial and industrial lending and gaining market share in this important business segment."

"While shareholders have approved our merger into Frontier Financial (Nasdaq:FTBK), the merger remains subject to regulatory approval. We are moving ahead as an independent bank until the merger is completed," Cann added.

FIRST QUARTER 2008 FINANCIAL HIGHLIGHTS

First quarter 2008 highlights, compared to the like period last year, include:



 -- Loans receivable increased 11% to $815 million.
 -- Commercial and industrial loans increased 19%.
 -- Nonperforming assets as a percentage of total assets improved to
    0.37%.
 -- The allowance for loan losses held steady at a strong 1.40% of
    total loans.
 -- Net interest margin decreased 28 basis points to 4.69%.
 -- Efficiency ratio improved 331 basis points to 59.98%.

At March 31, 2008, total assets increased 9% to $893 million from $816 million a year ago. Total loans grew 11% to $815 million from $732 million at March 31, 2007.

At the end of March 2008, Washington Banking had reduced its exposure to construction loans, which accounted for 18% of its loan portfolio, down from 20% a year earlier. Commercial loans accounted for 13% of total loans, compared to 12% at the end of the first quarter last year. Commercial real estate loans were 38% of total loans, compared to 34% a year earlier. Single-family home mortgages accounted for 7% of the loan portfolio at the end of March, compared to 7% last March. Consumer loans represented 24% of total loans.

"Nonperforming loans and nonperforming assets have both improved since year-end," said Rick Shields, Executive Vice President and CFO. "As we said last quarter, our lending focus is on the regional business community, and we are working hard to maintain our strong asset quality." Nonperforming assets improved to $3.3 million at March 31, 2008, compared to $4.3 million at December 31, 2007 and $3.6 million at the end of the first quarter a year ago. Nonperforming assets were 0.37% of total assets at the end of this year's first quarter, compared to 0.49% at year-end 2007 and 0.44% a year ago. The allowance for loan losses was $11.4 million, or 831% of nonperforming loans and 1.40% of total loans as of March 31, 2008.

"Deposits grew 3% over the past year, reflecting the continuing strong competition in the Pacific Northwest banking market. As a result, we are utilizing borrowed funds to help supplement our funding needs," Shields noted.

The rapid cuts in interest rates at the Federal Reserve negatively impacted net interest margin in the first quarter of 2008. First quarter net interest margin was only 2 basis points below that of the fourth quarter, and it was down 28 basis points from the first quarter a year ago. On a fully tax-equivalent basis, the net interest margin was 4.69% in the first quarter, compared to 4.71% in the preceding quarter and 4.97% in the first quarter of 2007.

"About one third of our loan portfolio is tied to the prime rate, so the recent interest rate cuts have certainly impacted that portion of our portfolio. About another one third adjusts more slowly, and that, combined with the one third of our loan portfolio that is fixed-rate, should mitigate declines of our net interest margin," Shields added.

In the first quarter, the yield on earning assets was 7.61%, down from 7.92% at the end of December and 8.07% for the first quarter of 2007. The cost of interest-bearing liabilities was 3.39% in the quarter, 3.77% in the immediate prior quarter and 3.68% in the first quarter a year ago.

In the first quarter of 2008, interest income increased 6% while interest expense increased 5% compared to the first quarter of 2007. Consequently, net interest income increased 6% to $9.5 million from $9.0 million in the first quarter of 2007. First quarter noninterest income was $1.8 million, basically unchanged from the fourth quarter of 2007 as well as the first quarter a year ago.

Noninterest expense declined 12% to $6.9 million in the first quarter of 2008 compared to $7.9 million in the immediate prior quarter and 1% from $6.9 million in the first quarter of 2007. "Because of our pending merger, we are keeping a tight lid on compensation and benefits costs, which contributed to overall lower noninterest expenses in the first quarter," said Cann. Washington Banking's efficiency ratio improved to 59.98% in the 2008 first quarter compared to 68.61% in the preceding quarter and 63.29% in the first quarter a year ago.

On March 27, 2008 shareholders approved the merger of Washington Banking into Frontier Financial. The closing of the merger is subject to the approval of the Federal Deposit Insurance Corporation (FDIC), final board approval and other closing conditions. Frontier has not received FDIC approval and no assurances can be given as to when or whether the FDIC will approve the application. At this time the closing cannot be assured and the closing date of the transaction cannot be determined.

ABOUT WASHINGTON BANKING COMPANY

Washington Banking Company is a bank holding company based in Oak Harbor, Washington, that operates Whidbey Island Bank, a state-chartered full-service commercial bank. Founded in 1961, Whidbey Island Bank provides various deposit, loan and investment services to meet customers' financial needs. Whidbey Island Bank operates 19 full-service branches located in five counties in Northwestern Washington.

This news release may contain forward-looking statements that are subject to risks and uncertainties. These forward-looking statements describe management's expectations regarding future events and developments. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date hereof. The words "anticipate," "expect," "will," "believe," and words of similar meaning are intended, in part, to help identify forward-looking statements. Future events are difficult to predict, and the expectations described above are subject to risk and uncertainty that may cause actual results to differ materially. In addition to discussions about risks and uncertainties set forth from time to time in Frontier Financial Corporation and Washington Banking Company's respective filings with the Securities and Exchange Commission, factors that may cause actual results to differ materially from those contemplated in these forward-looking statements include, among others: (1) local and national general and economic condition; (2) changes in interest rates and their impact on net interest margin; (3) competition among financial institutions; (4) legislation or regulatory requirements; (5) the ability to realize the efficiencies expected from investment in personnel and infrastructure; and (6) successful completion of the merger, the closing of which remains subject to customary closing conditions. Neither Frontier Financial Corporation nor Washington Banking Company undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made. Any such statements are made in reliance on the safe harbor protections provided under the Securities Exchange Act of 1934, as amended.



 CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)
 -------------------------------------------------
 ($ in thousands, except per share data)

                        Quarter     Quarter            Quarter
                         Ended       Ended    Three     Ended    One
                        March 31,   Dec. 31,  Month    March 31, Year
                          2008        2007    Change     2007   Change
 ---------------------------------------------------------------------
 Interest Income
  Loans               $   15,360  $   15,812    -3%  $   14,428     6%
  Taxable Investment
   Securities                110         135   -19%         133   -17%
  Tax Exempt
   Securities                 51          59   -14%          71   -28%
  Other                        5          21   -76%          32   -84%
  ---------------------------------------------------------------------
   Total Interest
    Income                15,526      16,028   -3%       14,664     6%

 Interest Expense
  Deposits                 5,295       6,017   -12%       5,323    -1%
  Other Borrowings           304          62   393%          34   783%
  Junior Subordinated
   Debentures                405         471   -14%         338    20%
 ---------------------------------------------------------------------
   Total Interest
    Expense                6,004       6,550    -8%       5,695     5%

 Net Interest Income       9,522       9,478     0%       8,969     6%
 
  Provision for Loan
   Losses                  1,025         800    28%         550    86%
 ----------------------------------------------------------------------
   Net Interest 
    Income after 
    Provision for 
    Loan Losses            8,497       8,678    -2%       8,419     1%

 Noninterest Income
  Service Charges and
   Fees                      726                -6%         816   -11%
  Income from the 
   Sale of Loans              90               -17%         155   -42%
  Other Income               979          96%               833    18%
 ---------------------------------------------------------------------
   Total Noninterest
    Income                 1,795       1,808    -1%       1,804    -1%

 Noninterest Expense
  Compensation and
   Employee Benefits       3,990       4,373    -9%       4,411   -10%
  Occupancy and
   Equipment                 949         938     1%         956    -1%
  Office Supplies and
   Printing                  119         103    15%         130    -8%
  Data Processing            161         170    -5%         141    14%
  Merger Related
   Expense                    81         513   -84%          -    100%
  Consulting and
   Professional Fees         215         294   -27%         171    26%
  Other                    1,364       1,460    -7%       1,115    22%
 ---------------------------------------------------------------------
   Total Noninterest
    Expense                6,879       7,851   -12%       6,924    -1%

 Income Before Income
  Taxes                    3,413       2,636    29%       3,299     3%
 Provision for Income
  Taxes                    1,076         785    37%       1,032     4%
 ---------------------------------------------------------------------
 Net Income           $    2,337  $    1,851    26%  $    2,267     3%
 =====================================================================
 Earnings per Common
  Share
 ---------------------------------------------------------------------
   Net Income per
    Share, Basic (1)  $     0.25  $     0.19    25%  $     0.24     4%
 =====================================================================

 --------------------------------------------------------------------- 
   Net Income per
    Share, Diluted 
    (1)               $     0.25  $     0.19    26%  $     0.24     4%
 =====================================================================

 Average Number of
  Common Shares
  Outstanding          9,432,000   9,365,000          9,389,000   
 Fully Diluted 
  Average Common and
  Equivalent Shares
  Outstanding          9,514,000   9,500,000          9,558,000  

 (1) Earnings information excluding the merger related expense 
     represent non-GAAP (Generally Accepted Accounting Principles) 
     financial measures. Management has presented these non-GAAP 
     financial measures in this earnings release because it believes 
     that they provide more useful and comparative information to 
     assess trends in the Company's core operations reflected in the
     current quarter and year-to-date results. Where applicable, the 
     Company has also presented comparable earnings information using
     GAAP financial measures.

 CONSOLIDATED BALANCE SHEETS (unaudited)    
 ---------------------------------------   
 ($ in thousands except per share data)    
                                              Three              One
                         March 31,  Dec. 31,  Month  March 31,   Year
                           2008       2007    Change   2007     Change
 ---------------------------------------------------------------------
 Assets
 Cash and Due from Banks $ 21,377  $ 18,795     14%  $ 21,516     -1%
 Interest-Bearing
  Deposits with Banks         404       257     57%       783    -48%
 Fed Funds Sold             2,415        --    100%     4,640    -48%
 ---------------------------------------------------------------------
  Total Cash and Cash
   Equivalents             24,196    19,052     27%    26,939    -10%

 Investment Securities
  Available for Sale       12,494    13,832    -10%    16,748    -25%

 FHLB Stock                 1,984     1,984      0%     1,984      0%

 Loans Held for Sale          453     2,347    -81%     4,717    -90%

 Loans Receivable         814,993   805,862      1%   731,895     11%
  Less: Allowance for
  Loan Losses             (11,404)  (11,126)     3%   (10,212)    12%
 ---------------------------------------------------------------------
 Loans, Net               803,589   794,736      1%   721,683     11%

 Premises and Equipment,
  Net                      24,906    25,138     -1%    23,235      7%
 Bank Owned Life
  Insurance                16,618    16,517      1%    11,017     51%
 Other Real Estate Owned    1,890     1,440     31%        --    100%
 Other Assets               6,879     7,243     -5%     9,566    -28%
 ---------------------------------------------------------------------
 Total Assets            $893,009  $882,289      1%  $815,889      9%
 =====================================================================

 Liabilities and
  Shareholders' Equity
 Deposits:
  Noninterest-Bearing
   Demand                $ 98,003  $101,539     -3%  $101,222     -3%
  NOW Accounts            140,568   140,145      0%   155,997    -10%
  Money Market            130,044   133,265     -2%   109,918     18%
  Savings                  42,682    41,888      2%    49,282    -13%
  Time Deposits           334,449   341,517     -2%   309,954      8%
 ---------------------------------------------------------------------
   Total Deposits         745,746   758,354     -2%   726,373      3%

 FHLB Overnight
  Borrowings               11,500    20,500    -44%        --    100%
 Other Borrowed Funds      30,000        --    100%        --    100%
 Junior Subordinated
  Debentures               25,774    25,774      0%    15,007     72%
 Other Liabilities          4,277     4,091      5%     5,728    -25%
 ---------------------------------------------------------------------
  Total Liabilities       817,297   808,719      1%   747,108      9%
 
 Shareholders' Equity:
 Common Stock (no par
  value)
  Authorized 13,679,757
  Shares: Issued and
  Outstanding 9,476,360
  at 3/31/08 9,453,767
  at 12/31/07 and
  9,445,867 at 3/31/07     33,077    32,812      1%    33,952     -3%
 Retained Earnings         42,421    40,652      4%    34,852     22%
 Other Comprehensive
  Income (Loss)               214       106    101%       (23)   561%
 ---------------------------------------------------------------------
   Total Shareholders'
    Equity                 75,712    73,570      3%    68,781     10%
 ---------------------------------------------------------------------
 Total Liabilities and
  Shareholders' Equity   $893,009  $882,289      1%  $815,889      9%
 =====================================================================

 ---------------------------------------------------------------------
 ASSET QUALITY (unaudited)                              
 -------------------------       
 ($ in thousands, except per share 
  data)                               Quarter     Quarter    Quarter 
                                      Ended        Ended      Ended
                                     March 31,    Dec. 31,   March 31,
                                       2008        2007        2007
 ---------------------------------------------------------------------
  Allowance for Loan
   Losses Activity:

 Balance at Beginning of Period      $ 11,126    $ 10,755    $ 10,048
  Indirect Loans:
   Charge-offs                           (363)       (423)       (135)
   Recoveries                             171         144          54
 ---------------------------------------------------------------------
   Indirect Net Charge-offs              (192)       (279)        (81)

  Other Loans:
   Charge-offs                           (659)       (288)       (458)
   Recoveries                             104         138         153
 ---------------------------------------------------------------------
   Other Net Charge-offs                 (555)       (150)       (305)

    Total Net Charge-offs                (747)       (429)       (386)
 Provision for Loan Losses              1,025         800         550
 ---------------------------------------------------------------------
 Balance at End of Period            $ 11,404    $ 11,126    $ 10,212
 =====================================================================

  Net Charge-offs to Average Loans:

 Indirect Loans Net Charge-offs, to
  Avg Indirect Loans, Annualized (1)     0.67%       0.99%       0.31%
 Other Loans Net Charge-offs, to Avg
  Other Loans, Annualized (1)            0.32%       0.09%       0.20%
 Net Charge-offs to Average Total
  Loans (1)                              0.37%       0.21%       0.21%


                                     March 31,    Dec. 31,   March 31,
                                        2008        2007       2007
 ---------------------------------------------------------------------
 Nonperforming Assets
 --------------------
    Nonperforming Loans (2)          $  1,373    $  2,839    $  3,609
    Other Real Estate Owned             1,890       1,440          --
 ---------------------------------------------------------------------
     Total Nonperforming Assets      $  3,263    $  4,279    $  3,609
 =====================================================================
 Nonperforming Loans to Loans (1)        0.17%       0.35%       0.49%
 Nonperforming Assets to Assets          0.37%       0.49%       0.44%
 Allowance for Loan Losses to
  Nonperforming Loans                  830.59%     395.41%     282.95%
 Allowance for Loan Losses to
  Nonperforming Assets                 349.49%     262.34%     282.95%
 Allowance for Loan Losses to Loans      1.40%       1.38%       1.40%

 Loan Composition
 ----------------
  Commercial                          105,641    $102,284    $ 88,781
  Real Estate Mortgages
   One-to-Four Family Residential      55,128      56,636      54,045
   Commercial                         311,188     296,902     250,399
  Real Estate Construction
   One-to-Four Family Residential     102,742     101,912      96,627
   Commercial                          41,335      44,735      47,849
  Consumer
   Indirect                           112,351     114,271     109,466
   Direct                              84,053      86,716      82,510
 Deferred Fees                          2,555       2,406       2,218
 ---------------------------------------------------------------------
 Total Loans                         $814,993    $805,862    $731,895
 =====================================================================

 (1) Excludes Loans Held for Sale.

 (2) Nonperforming loans includes nonaccrual loans plus accruing 
     loans 90 or more days past due.

 FINANCIAL STATISTICS (unaudited)                
 --------------------------------
 ($ in thousands, except per share data)      

                                     Quarter     Quarter      Quarter 
                                      Ended       Ended        Ended
                                     March 31,   Dec. 31,    March 31,
                                       2008        2007        2007
 ---------------------------------------------------------------------
 Revenues (1) (2)                   $  11,470   $  11,443   $  10,939
 ---------

 Averages
 --------
  Total Assets                      $ 880,282   $ 867,357   $ 797,778
  Loans and Loans Held for Sale       811,128     791,546     723,735
  Interest-Earning Assets             826,659     810,783     745,467
  Deposits                            742,678     759,676     707,395
  Shareholders' Equity              $  74,264   $  72,439   $  67,164

 Financial Ratios
 ----------------
  Return on Average Assets,
   Annualized                           1.06%       0.85%       1.15%
  Return on Average Equity,
   Annualized                          12.62%      10.14%      13.69%
  Average Equity to Average Assets      8.44%       8.35%       8.42%
  Efficiency Ratio (2)                 59.98%      68.61%      63.29%
  Yield on Earning Assets (2)           7.61%       7.92%       8.07%
  Cost of Interest Bearing
   Liabilities                          3.39%       3.77%       3.68%
  Net Interest Spread                   4.22%       4.15%       4.39%
  Net Interest Margin (2)               4.69%       4.71%       4.97%

                                     March 31,   Dec. 31,    March 31,
                                       2008        2007        2007
 ---------------------------------------------------------------------
 Period End
 Book Value Per Share               $   7.99    $    7.78   $    7.28
 ---------------------------------------------------------------------

 (1) Revenues is the fully tax-equivalent net interest income before 
     provision for loan losses plus noninterest income.

 (2) Fully tax-equivalent is a non-GAAP performance measurement that 
     management believes provides investors with a more accurate 
     picture of the net interest margin, revenues and efficiency 
     ratio for comparative purposes. The calculation involves 
     grossing up interest income on tax-exempt loans and investments 
     by an amount that makes it comparable to taxable income.


            

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