Community banks say merger to benefit all
Frontier, Whidbey Island Bank merger set for March 2008

By Kate Nichols

The merger of two local community banks, Whidbey Island Bank with, and into, Frontier Bank will help expand Frontier’s footprint from the Canadian border to Salem, Ore. Leaders from both financial institutions say customers, employees and stockholders from both banks will benefit from the growth.
On September 26, 2007, a merger agreement was signed between Frontier Financial Corporation, holding company of Frontier Bank, and Washington Banking Company, holding company for Whidbey Island Bank.
“Frontier Bank customers will have more branches for their convenience and a broader array of products in Skagit, Whatcom and Island counties,” said John Dickson, Frontier Financial Corporation president and CEO. Frontier’s long-range goal is to “fill-in the footprint between Salem, Oregon, and the Canadian border along the I-5 corridor.”
“The merger will allow us to go to the next level with more products, service and branch locations for customers. Banking is a competitive business and this merger allows us to compete,” said Michael Cann, president and CEO of Washington Banking Company. “The shareholders will be paid well.” After the merger, Washington Banking shareholders will own 11 percent of the combined company.
The merger was a natural result of the banks’ similar direction and values explained Cann. Both banks had comparable beginnings: A group of local businessmen who got together to start locally owned, independent banks to serve the needs of their communities. Whidbey Island Bank was started in 1960 by a group of business people in Coupeville; a business group in Everett opened Frontier Bank in 1978.
Before the merger, Whidbey Island had 20 branches with 25,000 customers in Island, Skagit and Whatcom counties. Frontier has opened 48 offices in Western Washington. “There may be some consolidations,” said Dickson. “We hope to keep most employees after the merger as we are a growing firm and there is a natural attrition.”
The details of the transaction will be decided over the next couple of months to determine what the structure will look like and how specific bank branches will be affected.
This merger “benefits employees because as a growing organization there are more opportunities,” said Dickson. It also creates wealth and equity compensation for employees. At the end of the year, between the profit sharing, 401K matches and cash bonuses, employees could receive up to 20 percent of their salary.
It is a challenge to stay focused locally as Frontier grows, Dickson admitted. But they plan to meet the challenge by maintaining a community bank structure with de-centralized decision-making. Branches will continue to do their own budgets for community support and make local decisions when they want to waive a fee. Lending will remain under one roof with a quick turn around, except where regulations demand otherwise.
Frontier Bank intends to continue its policy of giving back to the community. The United Way awarded the Everett head branch its corporate award as recognition for their work in the community. Dickson expects the head branch to set the standards for the other branches. “We want that (community service) to happen within our footprint,” said Dickson. “We expect bank managers to be actively giving back to their community.”
“Frontier is the premier community bank in the state of Washington,” said Cann.
Frontier Bank is also finalizing a merger with Bank of Salem, based in Salem, Ore., during the fourth quarter of 2007. The Frontier Bank and Whidbey Island Bank merger is expected to finalize in March 2008. Following the mergers Frontier Bank’s assets will total approximately $4.6 billion. It is the largest commercial bank in Western Washington.