8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or l5 (d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 24, 2008

Washington Banking Company

(Exact name of registrant as specified in its charter)

Washington
(State or other jurisdiction of incorporation)

000-24503
(Commission File Number) 91-1725825
(IRS Employer Identification No.)

450 Bayshore Drive
Oak Harbor, WA 98277
(Address of principal executive offices) (Zip Code)

(360) 679-3121
(Registrant’s telephone number, including area code)

No Change
(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On April 24, 2008, Washington Banking Company announced by press release its earnings for the first quarter ended March 31, 2008. A copy of the press release is attached hereto as Exhibit 99.1.

Item 7.01 Regulation FD Disclosure

The information in this Form 8-K and the attached Exhibits shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

Item 8.01. Other Events

On April 24, 2008, Washington Banking Company announced by press release a cash dividend. A copy of the press release is attached hereto as Exhibit 99.2.

Item 9.01. Financial Statements and Exhibits

          Exhibit 99.1   Press Release dated April 24, 2008

          Exhibit 99.2   Press Release dated April 24, 2008

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

		WASHINGTON BANKING COMPANY
Date: April 25, 2008	By:	/s/ Michal D. Cann
		Michal D. Cann
		President and Chief Executive Officer

EX-99.1

EXHIBIT 99.1

CONTACT:	Michal D. Cann — President & CEO
	Rick A. Shields — EVP & Chief Financial Officer	NEWS RELEASE
	360.679.3121

Washington Banking Profits Rise 3% to $2.3 Million and Diluted EPS to $0.25 in First Quarter of 2008
with Solid Asset Quality

OAK HARBOR, WA – April 24, 2008 – 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.

(more)

WBCO – 1Q07 Results
April 24, 2007
Page 2

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.

(more)

WBCO — 1Q07 Results
April 24, 2007
Page 3

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Quarter Ended		Quarter Ended		Three			Quarter Ended		One
	March 31,		December 31,		Month			March 31,		Year
($ in thousands, except per share data)	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		772		-6	%		816		-11	%
Income from the Sale of Loans		90		109		-17	%		155		-42	%
Other Income		979		927		6	%		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.

(more)

WBCO — 1Q07 Results
April 24, 2007
Page 4

CONSOLIDATED BALANCE SHEETS (unaudited)

							Three						One
	March 31,			December 31,			Month			March 31,			Year
($ in thousands except per share data)	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	%

(more)

WBCO – 1Q07 Results
April 24, 2007
Page 5

ASSET QUALITY (unaudited)

	Quarter Ended			Quarter Ended			Quarter Ended
	March 31,			December 31,			March 31,
($ in thousands, except per share data)	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	%

	March31,			December31,			March31,
	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.

(more)

WBCO — 1Q07 Results
April 24, 2007
Page 6

FINANCIAL STATISTICS (unaudited)

	Quarter Ended			Quarter Ended			Quarter Ended
	March 31,			December 31,			March 31,
($ in thousands, except per share data)	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	%

	March31,		December31,		March31,
	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.

Note: Transmitted on Business Wire at 3:30 a.m. PDT, April 24, 2008.

-0-

EX-99.2

EXHIBIT 99.2

CONTACT:	Michal D. Cann - President & CEO	NEWS RELEASE
	Rick A. Shields - EVP & Chief Financial Officer
	360.679.3121

WASHINGTON BANKING COMPANY INCREASES QUARTERLY CASH DIVIDEND

OAK HARBOR, WA – April 24, 2008 – Washington Banking Company (Nasdaq: WBCO), the holding company for Whidbey Island Bank, announced today that its Board of Directors has increased its quarterly cash dividend 8%. The board declared a cash dividend of $0.065 per common share. The dividend will be paid May 19 to shareholders of record on May 5, 2008. Washington Banking has paid a quarterly cash dividend since its 1998 initial public offering, and has increased the cash payout each year.

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 such as future operating results, growth in loans and deposits, credit quality and loan losses, and continued success of the Company’s business plan. 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 the Company’s 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 our previously announced merger with Frontier Financial, the closing of which remains subject to customary closing conditions. Washington Banking Company does not 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.

www.wibank.com

Note: Transmitted on Prime Newswire at 03:45 pm, PDT on April 24, 2008.

-0-