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Previous: AMERICAN GENERAL SERIES PORTFOLIO CO 2, NSAR-A, 1999-07-15 |
Next: NBG RADIO NETWORK INC, 10QSB, 1999-07-15 |
<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1998
Commission File Number 000-24503
WHIDBEY ISLAND BANK 401(K) PLAN
(Full title of the plan)
WASHINGTON BANKING COMPANY
1421 S.W. BARLOW STREET
OAK HARBOR, WASHINGTON 98277
- --------------------------------------------------------------------------------
(Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office)
<PAGE> 2
FORM 11-K
WHIDBEY ISLAND BANK
401(K) PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES
YEAR ENDED DECEMBER 31, 1998
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statement of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4
Schedule 1 - Line 27(a)--Schedule of Assets Held for Investment Purposes 12
Schedule 2 - Line 27(d)--Schedule of Reportable Transactions 13
Exhibits
23.1 Consent of Independent Accountants
Signatures
</TABLE>
<PAGE> 3
INDEPENDENT AUDITORS' REPORT
The Participants and the Plan Administrator
Whidbey Island Bank 401(K) Plan:
We have audited the accompanying statements of net assets available for benefits
of Whidbey Island Bank 401(K) Plan (Plan) as of December 31, 1998 and 1997, and
the related statement of change in net assets available for benefits for the
year ended December 31, 1998. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 1998 and 1997, and the changes in net assets available for benefits
for the year ended December 31, 1998, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes at December 31, 1998 and reportable transactions for the
year ended December 31, 1998 are presented for the purpose of additional
analysis and are not a required part of the basic financial statements, but are
supplementary information required by the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974. These supplemental schedules are the responsibility of the
Plan's management. The supplemental schedules have been subjected to the
auditing procedures applied in the audits of the basic financial statements and,
in our opinion, are fairly stated in all material respects in relation to the
basic financial statements taken as a whole.
The Plan has not reported certain historical cost information in the schedule of
reportable transactions. Disclosure of this information is required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974.
/s/ KPMG LLP
Seattle, Washington
July 2, 1999
<PAGE> 4
WHIDBEY ISLAND BANK
401(K) PLAN
Statements of Net Assets Available for Benefits
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
Assets:
Investments at fair value:
Money market funds $ 134,988 302,255
Mutual funds 1,481,956 1,743,849
Bonds -- 12,103
Common stock 691,492 --
Participant notes receivable -- 2,613
---------- ----------
2,308,436 2,060,820
---------- ----------
Receivables:
Sponsor 2,769 --
Participants 10,174 6,848
---------- ----------
12,943 6,848
---------- ----------
Net assets available for benefits $2,321,379 2,067,668
========== ==========
</TABLE>
See accompanying notes to financial statements.
2
<PAGE> 5
WHIDBEY ISLAND BANK
401(K) PLAN
Statement of Changes in Net Assets Available for Benefits
Year ended December 31, 1998
<TABLE>
<S> <C>
Additions to net assets available for benefits attributed to:
Investment income:
Interest and dividends $ 20,519
Net depreciation in fair value of investments (107,749)
-----------
(87,230)
-----------
Contributions:
Participants 241,088
Sponsor 67,440
Rollovers 66,145
-----------
374,673
-----------
Total additions 287,443
-----------
Deductions from net assets available for benefits
paid to participants 33,732
-----------
Net increase in net assets available for benefits 253,711
Net assets available for benefits at beginning of year 2,067,668
-----------
Net assets available for benefits at end of year $ 2,321,379
===========
</TABLE>
See accompanying notes to financial statements.
3
<PAGE> 6
WHIDBEY ISLAND BANK 401(K) PLAN
Notes to Financial Statements
December 31, 1998
(1) PLAN DESCRIPTION
The following description of the Whidbey Island Bank 401(K) Plan (Plan)
provides only general information. Participants should refer to the Plan
document for a more complete description of the Plan's provisions.
(a) GENERAL
The Plan is a defined contribution plan established for employees of
Whidbey Island Bank (Sponsor) and the Bank's subsidiary, WIB
Financial Services, Inc., who are at least 21 years of age and have
completed 1 year of service.
The Plan is subject to provisions of the Employee Retirement Income
Security Act of 1974 (ERISA).
(b) ADMINISTRATION
The Sponsor is the Plan administrator and has appointed certain
designated directors of the Company to serve as trustees of the
Plan's assets. The assets of the Plan are held by Safeco Mutual Funds
(Safeco) at December 31, 1998, and were held by Fidelity Investments
(Fidelity) at December 31, 1997. The assets were transferred from
Fidelity to Safeco in May, 1998.
(c) ELIGIBILITY, CONTRIBUTIONS AND PARTICIPANTS' ACCOUNTS
All employees of the Sponsor who are age 21 or older and have
completed a 12-month period in which employees work 1,000 hours of
service or more are eligible to contribute to the Plan and are
eligible for the employer matching contribution. All eligible
employees are participants in the Plan whether or not actual
contributions are made.
Accounts are established for each participant and include the
participant's contributions (including those rolled over from another
qualified plan or trust), employer matching contributions, any
discretionary contributions from the Sponsor and earnings thereon.
Discretionary contributions totaled $0 and $16,934 in 1998 and 1997,
respectively.
Participants may contribute up to 15% of pretax annual compensation,
limited by the Internal Revenue Code to $10,000 in 1998. The
Sponsor's matching contribution is 50 cents for each dollar
contributed on the first 5% of the participant's eligible
compensation.
4 (Continued)
<PAGE> 7
WHIDBEY ISLAND BANK 401(K) PLAN
Notes to Financial Statements
December 31, 1998
(d) VESTING
Participants are immediately vested in their contributions, Sponsor
matching contributions and earnings thereon. Vesting of the Sponsor's
discretionary contribution and actual earnings thereon is based on
years of credited service of participants. The following schedule
sets forth the vesting schedule:
<TABLE>
<CAPTION>
YEARS OF VESTING SERVICE VESTED PERCENT
------------------------------- ----------------
<S> <C>
Less than 1 $ 0%
1 0
2 20
3 40
4 60
5 80
6 100
</TABLE>
Participants become fully vested at the age of 65, upon the
participant's death or upon permanent disability.
Forfeitures of nonvested sponsor contributions are allocated to
remaining participants and treated as Sponsor non-elective
contributions for the Plan year. Forfeited nonvested balances during
1998 and 1997 amounted to approximately $500 and $1,300,
respectively.
(e) INVESTMENT OPTIONS
Effective May, 1998, participants have the option of directing their
contributions in 1% increments into any one or more of the Plan's
investment fund options: Washington Banking Company Common Stock,
Safeco International Stock Fund, Janus Worldwide Fund, Safeco Small
Company Fund, Safeco Growth Fund, Safeco Northwest Fund, Neuberger &
Berman Equity Fund, Janus Fund, Safeco Equity Fund, Scudder Growth &
Income Fund, Safeco Income Fund, American Century Group Value Equity
Income Fund, Safeco High Yield Bond Fund, Loomis Sayles Bond Fund,
and Safeco Money Market Fund. Prior to May 1998, participants had the
following investment options: Fidelity Advisor Equity Growth Fund,
Fidelity Advisor Balanced Fund, and Fidelity Advisor Intermediate
Bond Fund. Prior to May 1998, Sponsor contributions were invested in
Whidbey Island Bank Money Market Fund.
Participants may change their investment options at anytime. The
Sponsor contribution is made in cash and allocated to a participant's
account balance in accordance with the participant's contributions
elections.
5 (Continued)
<PAGE> 8
WHIDBEY ISLAND BANK 401(K) PLAN
Notes to Financial Statements
December 31, 1998
(f) PARTICIPANT LOANS
In 1997, participants had the option to borrow from the vested
portion of their account balance a minimum of $1,000 up to a maximum
equal to the lesser of $50,000 or 50% of their vested account
balance. One participant had a loan balance at December 31, 1997 of
$2,613. Effective May 1998, the Plan was amended and participants are
not allowed to borrow from their account. There were no loans
outstanding as of December 31, 1998.
(g) PAYMENT OF PLAN BENEFITS
Participants may elect to have payments of vested benefits paid
either in a lump sum or on an installment basis after their
retirement or termination date. With approval of the Sponsor, early
withdrawals may be paid by the Plan to those employees experiencing a
financial hardship, as defined by the Plan. Distributions are paid in
a single lump sum or, if the account balance exceeds $5,000 and at
the participant's election, by payment in monthly, quarterly or
annual installments over a fixed, reasonable period of time not to
exceed the combined life expectancy of the participant and
beneficiary.
(h) PLAN EXPENSES
Expenses of the Plan are paid by the Sponsor and, therefore, are not
included in the accompanying financial statements of the Plan.
(i) PLAN TERMINATION
Although it has not expressed an intent to do so, the Sponsor has the
right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. Should the
Plan be terminated at some future date, all participants would become
fully vested in their account balances.
(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION AND ACCOUNTING
The Plan financial statements are presented on the accrual basis of
accounting.
(b) VALUATION OF INVESTMENTS
Investments are stated at fair value based on quoted market prices.
Participant notes receivable are stated at cost which approximates
fair value based upon prevailing interest rates.
Net appreciation or depreciation of investments includes both
realized and unrealized gains and losses. Purchases and sales of
securities are recorded on a trade-date basis.
(c) PAYMENT OF BENEFITS
Benefits are recorded when paid.
6 (Continued)
<PAGE> 9
WHIDBEY ISLAND BANK 401(K) PLAN
Notes to Financial Statements
December 31, 1998
(d) USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan administrator to
make estimates and assumptions that affect the reported amounts of
assets, liabilities, and changes therein, and disclosure of
contingent assets and liabilities. Actual results could differ from
those estimates.
(3) TAX STATUS
The Internal Revenue Service has determined and informed the Sponsor by a
letter dated October 26, 1994, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code (IRC). The Plan has been amended since receiving the determination
letter. However, the Plan administrator believes that the Plan is designed
and is currently being operated in compliance with the applicable
requirements of the IRC.
(4) RELATED PARTY TRANSACTIONS
Certain Plan assets are managed by Safeco and Fidelity, through May, 1998,
and therefore these transactions qualify as party-in-interest
transactions.
7 (Continued)
<PAGE> 10
WHIDBEY ISLAND BANK 401(K) PLAN
Notes to Financial Statements
December 31, 1998
(5) INVESTMENTS
The following table presents the assets held for investment purposes at
December 31:
<TABLE>
<CAPTION>
1998 1997
-------------------------- --------------------------
PRINCIPAL PRINCIPAL
AMOUNT OR AMOUNT OR
NUMBER OF INVESTMENT NUMBER OF INVESTMENT
SHARES VALUE SHARES VALUE
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Money market funds:
Safeco Money Market Fund 134,988 $ 134,988 -- $ --
Whidbey Island Bank Money Market
Fund -- -- 302,255 302,255
---------- ----------
Total money market funds 134,988 302,255
Mutual funds:
Safeco International Stock Fund 117 1,534 -- --
Janus Worldwide Fund 4,819 228,211 -- --
Safeco Small Company Fund 10,387 115,917 -- --
Safeco Growth Fund 22,550 511,881 -- --
Safeco Northwest Fund 7,515 133,235 -- --
Neuberger & Berman Equity Fund 1,469 37,461 -- --
Janus Fund 4,376 147,247 -- --
Safeco Equity Fund 7,119 165,520 -- --
Scudder Growth & Income Fund 4,773 125,573 -- --
Safeco Income Fund 501 11,770 -- --
American Century Group Value
Equity Income Fund 529 3,337 -- --
Safeco High Yield Bond Fund 31 270 -- --
Fidelity Advisor Equity Growth Fund -- -- 30,492 1,412,209
Fidelity Advisor Balanced Fund -- -- 18,222 331,640
---------- ----------
Total mutual funds 1,481,956 1,743,849
---------- ----------
Bonds:
Fidelity Advisor Intermediate
Bond Fund -- -- 807 12,103
Common stock:
Washington Banking Company 81,352 691,492 -- --
Participant notes receivable -- 2,613
========== ==========
Total investments $2,308,436 2,060,820
========== ==========
</TABLE>
8 (Continued)
<PAGE> 11
(6) YEAR 2000
The Plan administrator has conducted a comprehensive review of its
internal systems and applications to mitigate the risks associated with
Year 2000 compliance issues and has developed a Year 2000 remediation
plan. Program conversions of systems and applications are underway and
expected to be completed by December 31, 1999. The Plan administrator has
inquired of the Plan's third-party service providers relating to their
Year 2000 compliance. While these entities indicate they are or will be
compliant, the Plan administrator has limited ability to evaluate their
responses or to evaluate what impact, if any, such entities' potential
noncompliance may have on the Plan's operations. Costs associated with the
Plan administrator's Year 2000 remediation efforts are paid by the
Sponsor.
9 (Continued)
<PAGE> 12
WHIDBEY ISLAND BANK
401(K) PLAN
Notes to Financial Statements
December 31, 1998 and 1997
(7) NET ASSETS AVAILABLE FOR BENEFITS AND CHANGES IN NET ASSETS AVAILABLE
FOR BENEFITS BY FUND
Net assets available for benefits by fund as of December 31, 1998 and
1997, and the statement of changes in net assets by fund for December 31, 1998,
are as follows:
<TABLE>
<CAPTION>
1998
--------------------------------------------------------------------------------------
SAFECO
WASHINGTON SAFECO JANUS SMALL SAFECO SAFECO
BANKING INTERNATIONAL WORLDWIDE COMPANY GROWTH NORTHWEST
COMPANY STOCK FUND FUND FUND FUND FUND
------------ ------------- --------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value
Money market funds $ -- -- -- -- -- --
Mutual funds -- 1,534 228,211 115,917 511,881 133,235
Bonds -- -- -- -- -- --
Common stock 691,492 -- -- -- -- --
Participant notes receivable -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
691,492 1,534 228,211 115,917 511,881 133,235
--------- --------- --------- --------- --------- ---------
Receivables:
Sponsor -- 7 278 215 928 221
Participants -- 15 1,052 832 3,438 820
--------- --------- --------- --------- --------- ---------
-- 22 1,330 1,047 4,366 1,041
--------- --------- --------- --------- --------- ---------
Net assets available for benefits $ 691,492 1,556 229,541 116,964 516,247 134,276
========= ========= ========= ========= ========= =========
1997
--------------------------------------------------------------------------------------
Assets:
Investments at fair value
Money market funds $ -- -- -- -- -- --
Mutual funds -- -- -- -- -- --
Bonds -- -- -- -- -- --
Common stock -- -- -- -- -- --
Participant notes receivable -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
-- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Receivables:
Sponsor -- -- -- -- -- --
Participants -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
-- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net assets available for benefits $ -- -- -- -- -- --
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1998
---------------------------------------------------------------------------------------
AMERICAN
CENTURY
GRAIN
SCUDDER VALUE
NEUBERGER SAFECO GROWTH AND SAFECO EQUITY
& BERMAN JANUS EQUITY INCOME INCOME INCOME
EQUITY FUND FUND FUND FUND FUND FUND
------------ ------------- ------------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value
Money market funds -- -- -- -- -- --
Mutual funds 37,461 147,247 165,520 125,573 11,770 3,337
Bonds -- -- -- -- -- --
Common stock -- -- -- -- -- --
Participant notes receivable -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
37,461 147,247 165,520 125,573 11,770 3,337
--------- --------- --------- --------- --------- ---------
Receivables:
Sponsor 45 92 152 112 18 3
Participants 190 332 655 364 75 8
--------- --------- --------- --------- --------- ---------
235 424 807 476 93 11
--------- --------- --------- --------- --------- ---------
Net assets available for benefits 37,696 147,671 166,327 126,049 11,863 3,348
========= ========= ========= ========= ========= =========
1997
---------------------------------------------------------------------------------------
Assets:
Investments at fair value
Money market funds -- -- -- -- -- --
Mutual funds -- -- -- -- -- --
Bonds -- -- -- -- -- --
Common stock -- -- -- -- -- --
Participant notes receivable -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
-- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Receivables:
Sponsor -- -- -- -- -- --
Participants -- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
-- -- -- -- -- --
--------- --------- --------- --------- --------- ---------
Net assets available for benefits -- -- -- -- -- --
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------------------------------
SAFECO WHIDBEY FIDELITY
HIGH SAFECO ISLAND BANK ADVISOR FIDELITY
YIELD MONEY MONEY EQUITY ADVISOR
BOND MARKET MARKET GROWTH BALANCED
FUND FUND FUND FUND FUND
----------- ------------ -------------- --------- ---------
<S> <C> <C> <C> <C> <C>
Assets:
Investments at fair value
Money market funds -- 134,988 -- -- --
Mutual funds 270 -- -- -- --
Bonds -- -- -- -- --
Common stock -- -- -- -- --
Participant notes receivable -- -- -- -- --
--------- --------- --------- --------- ---------
270 134,988 -- -- --
--------- --------- --------- --------- ---------
Receivables:
Sponsor 7 691 -- -- --
Participants 19 2,374 -- -- --
--------- --------- --------- --------- ---------
26 3,065 -- -- --
--------- --------- --------- --------- ---------
Net assets available for benefits 296 138,053 -- -- --
========= ========= ========= ========= =========
1997
---------------------------------------------------------------------
Assets:
Investments at fair value
Money market funds -- -- 302,255 -- --
Mutual funds -- -- -- 1,412,209 331,640
Bonds -- -- -- -- --
Common stock -- -- -- -- --
Participant notes receivable -- -- -- 2,613 --
--------- --------- --------- --------- ---------
-- -- 302,255 1,414,822 331,640
--------- --------- --------- --------- ---------
Receivables:
Sponsor -- -- -- -- --
Participants -- -- 7 6,114 720
--------- --------- --------- --------- ---------
-- -- 7 6,114 720
--------- --------- --------- --------- ---------
Net assets available for benefits -- -- 302,262 1,420,936 332,360
========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
1998
--------------------------
FIDELITY
ADVISOR
INTERMEDIATE
BOND
FUND TOTAL
-------------- ---------
<S> <C> <C>
Assets:
Investments at fair value
Money market funds -- 134,988
Mutual funds -- 1,481,956
Bonds -- --
Common stock -- 691,492
Participant notes receivable -- --
--------- ---------
-- 2,308,436
--------- ---------
Receivables:
Sponsor -- 2,769
Participants -- 10,174
--------- ---------
-- 12,943
--------- ---------
Net assets available for benefits -- 2,321,379
========= =========
1997
--------------------------
Assets:
Investments at fair value
Money market funds -- 302,255
Mutual funds -- 1,743,849
Bonds 12,103 12,103
Common stock -- --
Participant notes receivable -- 2,613
--------- ---------
12,103 2,060,820
--------- ---------
Receivables:
Sponsor -- --
Participants 7 6,848
--------- ---------
7 6,848
--------- ---------
Net assets available for benefits 12,110 2,067,668
========= =========
</TABLE>
10
<PAGE> 13
WHIDBEY ISLAND BANK
401(K) PLAN
Notes to Financial Statement
December 31, 1998 and 1997
<TABLE>
<CAPTION>
1998
---------------------------------------------------
SAFECO
WASHINGTON SAFECO JANUS SMALL
BANKING INTERNATIONAL WORLDWIDE COMPANY
COMPANY STOCK FUND FUND FUND
---------- ------------- --------- ----------
<S> <C> <C> <C> <C>
Additions to net assets available for benefits attributed to:
Investment income:
Interest and dividends $ -- -- -- --
Net appreciation (depreciation) in fair value
of investments (284,732) 16 17,610 (45,768)
---------- ---------- ---------- ----------
(284,732) 16 17,610 (45,768)
---------- ---------- ---------- ----------
Contributions:
Sponsor -- 172 5,492 4,648
Participants -- 250 15,355 12,740
Rollovers -- -- 1,847 1,847
---------- ---------- ----------
-- 422 22,694 19,235
---------- ---------- ---------- ----------
Total additions (284,732) 438 40,304 (26,533)
---------- ---------- ---------- ----------
Net interfund transfer 976,224 1,118 189,237 143,497
---------- ---------- ---------- ----------
Deductions from net assets available for benefits
paid to participants -- -- -- --
---------- ---------- ---------- ----------
Net increase (decrease) in net assets available for benefits 691,492 1,556 229,541 116,964
Net assets available for benefits at beginning of year -- -- -- --
---------- ---------- ---------- ----------
Net assets available for benefits at end of year $ 691,492 1,556 229,541 116,964
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------------
SAFECO SAFECO NEUBERGER
GROWTH NORTHWEST & BERMAN JANUS
FUND FUND EQUITY FUND FUND
---------- ---------- ------------ ----------
<S> <C> <C> <C> <C>
Additions to net assets available for benefits attributed to:
Investment income:
Interest and dividends -- -- -- --
Net appreciation (depreciation) in fair value
of investments (53,392) 1,172 (845) 22,465
---------- ---------- ---------- ----------
(53,392) 1,172 (845) 22,465
---------- ---------- ---------- ----------
Contributions:
Sponsor 21,240 4,738 924 1,868
Participants 55,998 12,664 2,915 5,436
Rollovers 25,433 1,847 -- 35,171
---------- ---------- ---------- ----------
102,671 19,249 3,839 42,475
---------- ---------- ---------- ----------
Total additions 49,279 20,421 2,994 64,940
---------- ---------- ---------- ----------
Net interfund transfer 466,968 113,855 34,702 82,731
---------- ---------- ---------- ----------
Deductions from net assets available for benefits
paid to participants -- -- -- --
---------- ---------- ---------- ----------
Net increase (decrease) in net assets available for benefits 516,247 134,276 37,696 147,671
Net assets available for benefits at beginning of year -- -- -- --
---------- ---------- ---------- ----------
Net assets available for benefits at end of year 516,247 134,276 37,696 147,671
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998
----------------------------------------------------
AMERICAN
CENTURY
GROUP
SCUDDER VALUE
SAFECO GROWTH AND SAFECO EQUITY
EQUITY INCOME INCOME INCOME
FUND FUND FUND FUND
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Additions to net assets available for benefits attributed to:
Investment income:
Interest and dividends -- -- -- --
Net appreciation (depreciation) in fair value
of investments 15,148 (4,614) (278) 308
---------- ---------- ---------- ----------
15,148 (4,614) (278) 308
---------- ---------- ---------- ----------
Contributions:
Sponsor 3,045 2,596 456 81
Participants 9,830 6,393 1,200 184
Rollovers -- -- -- --
---------- ---------- ---------- ----------
12,875 8,989 1,656 265
---------- ---------- ---------- ----------
Total additions 28,023 4,375 1,378 573
---------- ---------- ---------- ----------
Net interfund transfer 138,304 121,674 10,485 2,775
---------- ---------- ---------- ----------
Deductions from net assets available for benefits
paid to participants -- -- -- --
---------- ---------- ---------- ----------
Net increase (decrease) in net assets available for benefits 166,327 126,049 11,863 3,348
Net assets available for benefits at beginning of year -- -- -- --
---------- ---------- ---------- ----------
Net assets available for benefits at end of year 166,327 126,049 11,863 3,348
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998
--------------------------------------------------
SAFECO WHIDBEY FIDELITY
HIGH SAFECO ISLAND BANK ADVISOR
YIELD MONEY MONEY EQUITY
BOND MARKET MARKET GROWTH
FUND FUND FUND FUND
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Additions to net assets available for benefits attributed to:
Investment income:
Interest and dividends -- -- 5,129 12,806
Net appreciation (depreciation) in fair value
of investments 7 26,198 -- 185,436
---------- ---------- ---------- ----------
7 26,198 5,129 198,242
---------- ---------- ---------- ----------
Contributions:
Sponsor 76 19,026 3,078 --
Participants 213 48,665 -- 67,976
Rollovers -- -- -- --
---------- ---------- ---------- ----------
289 67,691 3,078 67,976
---------- ---------- ---------- ----------
Total additions 296 93,889 8,207 266,218
---------- ---------- ---------- ----------
Net interfund transfer -- 59,649 (292,222) (1,687,154)
---------- ---------- ---------- ----------
Deductions from net assets available for benefits
paid to participants -- (15,485) (18,247) --
---------- ---------- ---------- ----------
Net increase (decrease) in net assets available for benefits 296 138,053 (302,262) (1,420,936)
Net assets available for benefits at beginning of year -- -- 302,262 1,420,936
---------- ---------- ---------- ----------
Net assets available for benefits at end of year 296 138,053 -- --
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998
--------------------------------------
FIDELITY
FIDELITY ADVISOR
ADVISOR INTERMEDIATE
BALANCED BOND
FUND FUND TOTAL
---------- ------------- ----------
<S> <C> <C> <C>
Additions to net assets available for benefits attributed to:
Investment income:
Interest and dividends 2,340 244 20,519
Net appreciation (depreciation) in fair value
of investments 13,552 (32) (107,749)
---------- ---------- ----------
15,892 212 (87,230)
---------- ---------- ----------
Contributions:
Sponsor -- -- 67,440
Participants 1,163 106 241,088
Rollovers -- -- 66,145
---------- ---------- ----------
1,163 106 374,673
---------- ---------- ----------
Total additions 17,055 318 287,443
---------- ---------- ----------
Net interfund transfer (349,415) (12,428) --
---------- ---------- ----------
Deductions from net assets available for benefits
paid to participants -- -- (33,732)
---------- ---------- ----------
Net increase (decrease) in net assets available for benefits (332,360) (12,110) 253,711
Net assets available for benefits at beginning of year 332,360 12,110 2,067,668
---------- ---------- ----------
Net assets available for benefits at end of year -- -- 2,321,379
========== ========== ==========
</TABLE>
11
<PAGE> 14
SCHEDULE 1
WHIDBEY ISLAND BANK
401(K) PLAN
Line 27(a)--Schedule of Assets Held for Investment Purposes
December 31, 1998
<TABLE>
<CAPTION>
DESCRIPTION OF INVESTMENT, INCLUDING
IDENTITY OF ISSUER, BORROWER, MATURITY DATE, RATE OF INTEREST,
LESSOR, OR SIMILAR PARTY COLLATERAL, AND PAR OR MATURITY VALUE COST CURRENT VALUE
- ------------------------------------- ------------------------------------------------- ------------- -------------------
<S> <C> <C> <C>
*Washington Banking Company Common Stock, 81,352 shares $ 976,224 691,492
*Safeco Mutual Funds International Stock Fund, 116.748 shares 1,519 1,534
*Janus Equity Funds Janus Worldwide Fund, 4,818.643 shares 221,382 228,211
*Safeco Mutual Funds Small Company Fund, 10,386.825 shares 160,558 115,917
*Safeco Mutual Funds Growth Fund, 22,549.836 shares 569,801 511,881
*Safeco Mutual Funds Northwest Fund, 7,514.662 shares 132,808 133,235
Neuberger & Berman Funds Equity Fund, 1,469.054 shares 41,156 37,461
Janus Equity Funds Janus Fund, 4,375.816 shares 128,106 147,247
*Safeco Mutual Funds Equity Fund, 7,119.147 shares 157,570 165,520
Scudder Growth & Income Fund, 4,772.84 shares 140,042 125,573
*Safeco Mutual Funds Income Fund, 501.479 shares 12,878 11,770
American Century Group Value Equity Income Fund, 528.793 shares 3,498 3,337
*Safeco Mutual Funds High Yield Bond Fund, 30.675 shares 270 270
*Safeco Mutual Funds Money Market Fund, 134,988.09 shares 134,988 134,988
</TABLE>
*A party-in-interest, as defined by Section 3(14) of ERISA
12
<PAGE> 15
Schedule 2
WHIDBEY ISLAND BANK
401(K) PLAN
Line 27(d)--Schedule of Reportable Transactions(1
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT VALUE
OF ASSET ON
PURCHASE SELLING COST OF TRANSACTION
IDENTITY OF PARTY INVOLVED DESCRIPTION OF ASSET PRICE PRICE ASSET DATE NET GAIN
- --------------------------- ---------------------------------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Series of Transactions
Safeco Mutual Funds Growth Fund $ 854,510 -- 854,510 854,510 --
Safeco Mutual Funds Growth Fund -- 273,256 285,710 273,256 12,454
Safeco Mutual Funds Equity Fund 201,679 -- 201,679 201,679 --
Safeco Mutual Funds Equity Fund -- 44,188 44,109 44,188 (79)
Safeco Mutual Funds Northwest Fund 156,402 -- 156,402 156,402 --
Safeco Mutual Funds Northwest Fund -- 22,969 23,594 22,969 625
Safeco Mutual Funds Small Company Fund 196,873 -- 196,873 196,873 --
Safeco Mutual Funds Small Company Fund -- 35,183 36,315 35,183 1,132
Safeco Mutual Funds Money Market Fund 1,211,170 -- 1,211,170 1,211,170 --
Safeco Mutual Funds Money Market Fund -- 1,076,654 1,075,222 1,076,654 (1,432)
Janus Equity Funds Worldwide Fund 256,086 256,086 256,086 --
Janus Equity Funds Worldwide Fund -- 34,651 34,704 34,651 53
Janus Equity Funds Janus Fund 147,615 -- 147,615 147,615 --
Janus Equity Funds Janus Fund -- 18,999 19,511 18,999 512
Scudder Growth and Income Fund 162,640 -- 162,640 162,640 --
Scudder Growth and Income Fund -- 22,333 22,598 22,333 265
Single Transactions
Safeco Mutual Funds Growth Fund 628,960 -- 628,960 628,960 --
Safeco Mutual Funds Growth Fund -- 173,126 173,925 173,126 (799)
Safeco Mutual Funds Equity Fund 109,324 -- 109,324 109,324 --
Safeco Mutual Funds Money Market Fund -- 976,224 975,429 976,224 795
Safeco Mutual Funds Money Market Fund 660,770 -- 660,770 660,770 --
Safeco Mutual Funds Money Market Fund 260,704 -- 260,704 260,704 --
Fidelity Investments Fidelity Advisor Equity Growth Fund -- 1,689,888 (*) 1,689,888 (*)
Fidelity Investments Fidelity Advisor Balanced Fund -- 362,642 (*) 362,642 (*)
Safeco Mutual Funds Small Company Fund 141,558 -- 141,558 141,558 --
Janus Equity Funds Worldwide Fund 151,500 -- 151,500 151,500 --
Scudder Growth and Income Fund 129,415 -- 129,415 129,415 --
Washington Banking Company Common Stock 976,224 -- 976,224 976,224 --
Washington Banking Company Whidbey Island Bank Money Market Fund -- 292,215 292,215 292,215 --
</TABLE>
(1) Reportable transactions as defined in the Department of Labor's reporting
regulations consist of (a) a single transaction in excess of 5% of the
current value of plan assets, (b) a series of transactions with or in
conjunction with the same person, involving property other than securities,
which amount in the aggregate to more than 5% of the current value of plan
asset (c) a series of transactions with respect to securities of the same
issue, which amount in the aggregate to more than 5% of the current value
of total plan assets and (d) any transactions with respect to securities
with or in conjunction with a person if a prior or subsequent single
transaction has occurred with respect to securities with or in conjunction
with that same person in an amount in excess of 5% of the current value of
plan assets. The current value of plan assets, to apply the definition of
reportable transactions, is determined at the beginning of the plan year.
(*) Information was not provided by Fidelity, the custodian of the Plan through
May, 1998
13
<PAGE> 16
EXHIBITS
23.1 Consent of Independent Accountants
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees or other persons who administer the employee benefit plan have duly
caused this annual report to be signed on its behalf by the undersigned hereunto
duly authorized.
Date: July 14, 1999
WHIDBEY ISLAND BANK 401(K) PLAN
By: /s/ Michal D. Cann
--------------------------------
Michal D. Cann, Trustee
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Board of Directors
Washington Banking Company:
We consent to incorporation by reference in the registration statement (No.
333-57431) on Form S-8 of Washington Banking Company of our report dated July 2,
1999 relating to the statements of net assets available for benefits of Whidbey
Island Bank 401(k) Plan (the "Plan") as of December 31, 1998 and 1997, and the
statement of changes in net assets available for benefits for the year ended
December 31, 1998, and the related supplemental schedules as of and for the year
ended December 31, 1998, which report appears in the December 31, 1998 annual
report on Form 11-K of the Plan.
Our report dated July 2, 1999, contains an explanatory paragraph that states
that the Plan has not reported certain historical cost information in the
schedule of reportable transactions. Disclosure of this information is required
by the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974.
/s/ KPMG LLP
Seattle, Washington
July 14, 1999
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