EXHIBIT 99.1

Washington Banking Company Earns $2.9 Million, or $0.19 per Share, in 2Q13

 

OAK HARBOR, WA – July 25, 2013 – Washington Banking Company (NASDAQ: WBCO)

, the holding company for Whidbey Island Bank, today reported it earned $2.9 million, or $0.19 per diluted share, down from $4.6 million or $0.30 per diluted share, in the preceding quarter and up 2% from $2.8 million, or $0.18 per diluted share in the second quarter of 2012. For the first six months of 2013, Washington Banking earned $7.5 million, or $0.48 per diluted share, compared to $7.6 million, or $0.49 per diluted share in the first half of 2012. The quarterly reforecast of expected cash flows of covered loans prompted additional provisions for these loans, particularly in the hospitality sector, as cash flows are now projected to be lower than previously expected. The net costs associated with the covered loan portfolio were $1.0 million, or $0.07 per share, in the second quarter of 2013 and $1.2 million, or $0.08 per diluted share, in the first six months of 2013. Despite these adjustments, Washington Banking remains solidly profitable, non-covered asset quality continues to improve and loan growth is accelerating.

“While we have predicted that the impact of the FDIC-assisted transactions would taper off as the portfolio ages, that was not the case this quarter,” said Jack Wagner, President and Chief Executive Officer, “as the $61 million pool of covered hospitality loans deteriorated considerably in the second quarter. Consequently, we booked a $10.9 million provision for covered loans, partially offset by an $8.7 million write-up of the FDIC indemnification asset and a $626,000 reversal of the clawback accrual in the quarter.” For the first six months of 2013, the provision for covered loans totaled $12.4 million, and for the life of both FDIC-assisted acquisitions, the provision for covered loans has been $15.9 million. Offsetting these provisions were changes in the FDIC indemnification asset and a reduction in the clawback expense, bringing the net costs down to $1.0 million in the second quarter and $1.2 million year to date. The following table details the impact of these items:

    Quarter Ended   Quarter Ended   Quarter Ended   Six Months Ended
    June 30,   March 31,   June 30,   June 30,
Impact of Reforecast of Cashflows of Covered Assets   2013   2013   2012   2013   2012
($ in thousands, except per share data)                    
Provision for Loan Losses, Covered Loans    $        10,914    $          1,500    $             398    $     12,414    $          398
Write-up of FDIC Indemnification Asset               (8,731)               (1,200)                      -               (9,931)                  -   
Reversal of Accrued FDIC Clawback Liability                  (626)                        -                      -                  (626)                  -   
Impact of Reforecast of Cashflows                1,557                   300                   398             1,857                398
Provision (Benefit) for Income Taxes                  (545)                  (105)                  (139)               (650)               (139)
Net Impact of Reforecast of Cashflows    $          1,012    $             195    $             259    $       1,207    $          259
                     
Fully Diluted Average Common and Equivalent Shares Outstanding      15,552,000        15,519,000        15,446,000    15,529,000    15,449,000
                     
Fully diluted Earning per Share Impact    $           (0.07)    $           (0.01)    $           (0.02)    $        (0.08)    $        (0.02)

“There is no doubt that the CityBank and North County Bank acquisitions made meaningful contributions to our profitability and franchise value over the past three years,” Wagner continued. “Since the two FDIC-assisted acquisitions, we have generated covered interest income of over $100 million, produced a net interest margin well above the industry averages, and have several full-service locations in the fastest growing parts of the region.”

“Our general business outlook is continuing to get better as the economic recovery takes hold,” said Bryan McDonald, Whidbey Island Bank’s President and CEO. “Loan demand is improving and our pipeline of activity is growing. During the second quarter, we closed $50.1 million in new commercial loans, renewed or extended $53.7 million in existing commercial loans and funded $53.3 million in residential mortgages, for both refinance and purchase transactions. While we believe the refinance mortgage market is likely to decline in the coming months, residential purchase activity looks like it will continue to be strong. We are also opening a significant number of home equity lines of credit (HELOCs) and seeing more use on the HELOCs that we booked last year, which demonstrates that market pricing is improving and consumer confidence is returning.”


The following information was filed by Washington Banking Co (WBCO) on Friday, July 26, 2013 as an 8K 2.02 statement, which is an earnings press release pertaining to results of operations and financial condition. It may be helpful to assess the quality of management by comparing the information in the press release to the information in the accompanying 10-Q Quarterly Report statement of earnings and operation as management may choose to highlight particular information in the press release.

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