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Whidbey Island Bank to merge with Frontier Bankposted 09/28/2007 "We are absolutely thrilled to have Washington Banking join our organization,” stated John J. Dickson, President and CEO of Frontier Financial Corporation. “Whidbey Island Bank is a high quality organization that operates with a philosophy very similar to our own. We believe this will be an outstanding combination of highly talented employees that bring with them a solid customer base, and we look forward to welcoming the Washington Banking team into the Frontier family." "The professionals on the Frontier team are amongst the finest bankers in the region, and I am confident that our organizations will both benefit from this combination,” said Michal D. Cann, President and CEO of Washington Banking Company. “As we considered all of our strategic growth options, it became obvious that choosing to partner with Frontier would provide the greatest benefits and opportunities for our shareholders, employees, customers, and the communities we serve." Based on the closing price of Frontier’s shares of $23.90 on September 26, 2007, the terms of the agreement call for Frontier to pay approximately $21.40 per Washington Banking share. The range of potential per share consideration is $19.41 to $23.54 based on the price of Frontier’s shares prior to closing. The consideration will be paid in stock and cash, and prior to the deal close, Washington Banking shareholders will be asked to elect a preference for the form of payment they wish to receive which will be equalized based on the agreement terms. The terms of the agreement call for Frontier to issue an aggregate merger consideration consisting of 5,916,430 shares of Frontier common stock and $42.9 million cash for the 8,608,653 shares of Washington Banking common stock outstanding that Frontier currently does not own, as long as the average closing price of Frontier shares for the 20-trading day period ending the fifth trading day immediately before closing date is between $21.00 and $27.00. Frontier currently owns 782,506 shares of Washington Banking common stock at a cost basis of $3.1 million. Based on Frontier’s closing price on September 26, 2007 of $23.90 the consideration for the outstanding shares not currently owned by Frontier will be $184.3 million, and the value attributable to stock options outstanding of $3.7 million results in an aggregate estimated acquisition price of $191.1 million. Unexercised options to purchase Washington Banking common stock will vest at merger, and will be converted into options to purchase Frontier common stock, based on the closing exchange ratio. The aggregate estimated acquisition price represents 290.3% of Washington Banking Company’s June 30, 2007 tangible book value and 22.1 times the 12 month trailing earnings per share at June 30, 2007. The transaction is expected to close in the first quarter of 2008, pending Washington Banking shareholder approval, regulatory approvals and satisfaction of other customary closing conditions. The transaction is expected to be accretive to Frontier’s earnings per share in 2008. Following the completion of the merger, Washington Banking shareholders will own approximately 11% of the combined company. Following the merger, Michal Cann will continue as Senior Vice President and Regional Manager. Additionally, one member of the Washington Banking board will be chosen by Frontier to join the Boards of Frontier and that individual will stand for election to those Boards at the next Frontier shareowner meeting scheduled for April 2008. Frontier previously announced a merger with the Bank of Salem that it is expected to close in the fourth quarter of 2007. Following the mergers with Bank of Salem and Washington Banking, Frontier’s total assets will be approximately $4.6 billion. Additional information regarding Frontier Bank and its services can be found at the bank’s website: www.frontierbank.com. |
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