Published: Wednesday, June 4, 2008
Delays doom merger of local banks
EVERETT -- The merger of two locally-based banks has been called off after a bumpy regulatory process.
Whidbey Island Bank's holding company on Tuesday announced that it had ended its plan to merge with Everett-based Frontier Financial Corp. Washington Banking Co. called off the agreement, saying that Frontier had failed to gain regulatory approval in a timely manner. The deal initially had been expected to close at the end of the first quarter, but Frontier had until June 30 to finish.
"The continued uncertainty created from waiting for the potential merger was not benefiting our customers, communities, employees or shareholders," said Michal Cann, Washington Banking's chief executive and president, in a press statement. "Washington Banking remains a strong financial institution with solid credit quality, strong loan growth and increasing profits."
Washington Banking, which is based in Oak Harbor, reported a 3 percent earnings increase to $2.3 million, or 25 cents per diluted share, in the first quarter of 2008 in comparison with the previous year. Founded in 1961, Whidbey Island Bank operates 19 full-service branches in five Washington counties.
Frontier Financial agreed to buy Washington Banking last September. The holding company for Frontier Bank said regulators are taking a different approach than they did just last November, when Frontier Financial finished its acquisition of Oregon's Bank of Salem.
"The regulators have put a much higher priority on consumer compliance," said John Dickson, president and chief executive of Frontier.
Dickson said he's frustrated and disappointed by the regulatory delays and believed the merger would have been a positive step for both Frontier and Washington Banking. With the June 30 deadline looming, regulators wouldn't give Frontier indication of when it might get the approval it was seeking.
Frontier's first-quarter profit declined 11 percent to $15.1 million, or 33 cents per share, compared with the first quarter of 2007. The company reported that it had $4.06 billion in assets at the end of March. The chilly housing market spurred Frontier to set aside $9 million in the first quarter to cover bad loans.
Between the housing market and the regulatory pitfalls, Dickson believes that Frontier will focus on internal growth rather than looking at additional acquisitions. "We're going to be focused more on taking care of our customers and growing that way," he said.
Washington Banking still is mulling its options, said Rick Shields, chief financial officer.
"It's probably going to take a month or so to decide which way we will go," Shields said. But he reiterated that the bank's position is solid.
Both Washington Banking and Frontier can claim a $5 million termination fee against the other party.
Whidbey Island Bank's holding company on Tuesday announced that it had ended its plan to merge with Everett-based Frontier Financial Corp. Washington Banking Co. called off the agreement, saying that Frontier had failed to gain regulatory approval in a timely manner. The deal initially had been expected to close at the end of the first quarter, but Frontier had until June 30 to finish.
"The continued uncertainty created from waiting for the potential merger was not benefiting our customers, communities, employees or shareholders," said Michal Cann, Washington Banking's chief executive and president, in a press statement. "Washington Banking remains a strong financial institution with solid credit quality, strong loan growth and increasing profits."
Washington Banking, which is based in Oak Harbor, reported a 3 percent earnings increase to $2.3 million, or 25 cents per diluted share, in the first quarter of 2008 in comparison with the previous year. Founded in 1961, Whidbey Island Bank operates 19 full-service branches in five Washington counties.
Frontier Financial agreed to buy Washington Banking last September. The holding company for Frontier Bank said regulators are taking a different approach than they did just last November, when Frontier Financial finished its acquisition of Oregon's Bank of Salem.
"The regulators have put a much higher priority on consumer compliance," said John Dickson, president and chief executive of Frontier.
Dickson said he's frustrated and disappointed by the regulatory delays and believed the merger would have been a positive step for both Frontier and Washington Banking. With the June 30 deadline looming, regulators wouldn't give Frontier indication of when it might get the approval it was seeking.
Frontier's first-quarter profit declined 11 percent to $15.1 million, or 33 cents per share, compared with the first quarter of 2007. The company reported that it had $4.06 billion in assets at the end of March. The chilly housing market spurred Frontier to set aside $9 million in the first quarter to cover bad loans.
Between the housing market and the regulatory pitfalls, Dickson believes that Frontier will focus on internal growth rather than looking at additional acquisitions. "We're going to be focused more on taking care of our customers and growing that way," he said.
Washington Banking still is mulling its options, said Rick Shields, chief financial officer.
"It's probably going to take a month or so to decide which way we will go," Shields said. But he reiterated that the bank's position is solid.
Both Washington Banking and Frontier can claim a $5 million termination fee against the other party.
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