Washington Banking pulls plug on merger with Frontier Financial; companies at odds over termination fee

By Lisa Kerner

Charlotte, N.C., June 4 - Washington Banking Co. notified Frontier Financial Corp. of its intent to terminate the companies' Sept. 26, 2007 merger agreement in the belief that required regulatory approvals cannot be obtained by June 30.

According to a Frontier Financial news release, Washington Banking is not willing to extend the merger agreement although its shareholders have already approved the transaction.

Under the agreement, either company may terminate the agreement if the merger is not completed by June 30.

However, each company claims the other is in breach of the agreement and is seeking a $5 million termination fee.

"We continue to believe this merger would have been positive for both organizations," Frontier Financial president and chief executive officer John Dickson stated in the release.

"However, any further delay would have been detrimental to both organizations and reduced our chances for a successful combination," Dickson added.

Frontier Financial is an Everett, Wash., financial holding company.

Washington Banking, located in Oak Harbor, Wash., is the holding company for Whidbey Island Bank.

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