06/14/2008: "Whidbey Island Bank Merger Off"

Washington Banking Company has announced that it has withdraw from a deal to merge Whidbey Island Bank with Frontier Bank. Frontier Financial Corporation is the holding company for Frontier Bank. Washington Banking Company is the holding company for Whidbey Island Bank. The two corporations will however still be talking to each other, but the talking may be in court.

Frontier and Whidbey are both making claims resulting from a $5 million fee due to whomever breached the merger agreement that both parties had agreed to. Whidbey pulled out first, but they claim they did so because an audit cast doubt on compliance issues that govern mergers such as the one the two corporations had embarked on.

There is some good news coming out of this for some. Whidbey is reported to have started to shed administrative staff in anticipation of the merger, but are now looking to hire back those that have not already moved on to other companies There are also some sighs of relief in the main offices of the corporations, and in the branch offices, that jobs will not be eliminated as a result of the merger.

There were no sighs of relief from those who had bet shares would continue to rise due to the merger. After the news broke that the deal was off, the stock fell by over 20%’ which brought it back in line where some brokers said it would had been had not speculation over the merger inflated the stock