<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
FRONTIER FINANCIAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
FRONTIER FINANCIAL CORPORATION
332 S.W. EVERETT MALL WAY
P. O. BOX 2215
EVERETT, WASHINGTON 98203
NOTICE OF ANNUAL MEETING OF SHAREOWNERS
The 1999 Annual Meeting of Shareowners of Frontier Financial Corporation
will be held at the Everett Golf & Country Club, 1500 - 52nd Street, Everett,
Washington, on Thursday, April 15, at 7:30 p.m. for the following purposes:
1. To elect five (5) members to the Board of Directors; and
2. To act on such other matters as may properly come before the
meeting.
Only shareowners of record at the close of business on March 23,
1999, are entitled to notice of and to vote at the meeting and/or any
adjournment thereof.
All shareowners are cordially invited to attend the Annual
Meeting. However, to assure your representation at the meeting, you are urged to
mark, sign, date and return the enclosed proxy as promptly as possible in the
enclosed postage-prepaid envelope. Any shareowner attending the meeting may vote
in person even if he or she returned a proxy.
By Order of the Board of Directors,
/s/ James F. Felicetty
James F. Felicetty
Secretary/Treasurer
Everett, Washington
March 23, 1999
PLACE AND TIME OF ANNUAL MEETING
EVERETT GOLF & COUNTRY CLUB
1500 - 52ND STREET
EVERETT, WASHINGTON
APRIL 15, 1999, 7:30 P.M.
- -------------------------------------------------------------------------------
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED SELF-ADDRESSED, STAMPED ENVELOPE.
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<PAGE> 3
FRONTIER FINANCIAL CORPORATION
332 S.W. EVERETT MALL WAY
P. O. BOX 2215
EVERETT, WASHINGTON 98203
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PROXY STATEMENT
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This Proxy Statement is furnished by the Board of Directors of Frontier
Financial Corporation (the "Corporation") to the holders of common stock of the
Corporation ("Common Stock") in connection with the solicitation of proxies by
the Board of Directors for use at the Annual Meeting of Shareowners of the
Corporation to be held on Thursday, April 15, 1999 at 7:30 p.m. at the Everett
Golf & Country Club, 1500 - 52nd Street, Everett, Washington, and any
adjournment thereof. The shares represented by the enclosed proxy will be voted
in accordance with the shareowner's directions, if the proxy is duly executed
and returned prior to the Annual Meeting. If no directions are specified on the
proxy, it will be voted at the discretion of the proxy holders in accordance
with the recommendations of management on all matters as may properly come
before the meeting or any adjournment thereof. A proxy delivered pursuant to
this solicitation is revocable at the option of the person giving the proxy at
any time before it is exercised. A proxy may be revoked, prior to its exercise,
by executing and delivering a later-dated proxy to the Secretary of the
Corporation prior to the Annual Meeting, delivering written notice of revocation
of the proxy to the Secretary of the Corporation prior to the Annual Meeting, or
attending and voting at the Annual Meeting. Attendance at the Annual Meeting, in
and of itself, will not constitute revocation of a proxy.
All costs of the solicitation of the proxies will be borne by the
Corporation. These proxy materials, together with the 1998 Annual Report, are
being mailed to shareowners on or about March 23, 1999.
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PURPOSE OF THE MEETING
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At the Annual Meeting, shareowners will be asked:
1. To elect five (5) members to the Board of Directors; and
2. To act on such other matters as may properly come before the meeting.
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<PAGE> 4
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OUTSTANDING VOTING SECURITIES AND VOTING RIGHTS
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At March 23, 1999, the Corporation had 17,518,068 shares of Common Stock
outstanding and there are no outstanding shares of any other class of stock.
This total includes the shares of Common Stock issued pursuant to the 2-for-1
stock split effective March 19, 1999. Each share of Common Stock entitles the
holder thereof to one vote. Only shareowners of record at the close of business
on March 23, 1999, will be entitled to notice of, and to vote at, the meeting
and/or any adjournment thereof.
The presence in person or by proxy of holders of record of a majority of
the outstanding shares of Common Stock is required to constitute a quorum for
the transaction of business at the Annual Meeting. Under Washington law and the
Corporation's Articles of Incorporation, if a quorum is present, a nominee for
election to a position on the Board of Directors will be elected as a director
if the votes cast for the nominee exceed the votes cast against the nominee and
exceed the votes cast for any other nominee for that position. Abstentions and
"broker non-votes" (shares held by a broker or nominee as to which a broker or
nominee indicates on the proxy that it does not have the authority, either
express or discretionary, to vote on a particular matter) are counted for
purposes of determining the presence or absence of a quorum for the transaction
of business at the Annual Meeting. For the election of directors, an abstention
from voting and broker non-votes will have the legal effect of neither a vote
for nor against the nominee. For all other matters, an abstention from voting
and broker non-votes, since they are not affirmative votes, will have the same
practical effect as a vote against the respective matters.
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ELECTION OF DIRECTORS
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Pursuant to the Corporation's Articles of Incorporation, the Board of
Directors has set the number of directors at 14. The directors are divided into
three classes, with each class as nearly equal in number as possible. The
members of each class serve three-year terms with one class elected annually. A
director appointed to fill a vacancy or fill a position that was created by
increasing the number of directors must stand for election at the next
shareowners' meeting at which directors are elected. Five (5) directors in Class
1 will be elected at the 1999 Annual Meeting of Shareowners to hold office until
the Annual Meeting of Shareowners held in the year 2002, and until their
successors are elected and qualified. All the nominees currently serve as
directors of the Corporation and all except Michael J. Corliss have been
previously elected by the shareowners. Michael J. Corliss was appointed to the
Board of Directors on December 16, 1998, to fill a vacancy.
Should any of these nominees become unavailable for any reason, which is
not anticipated, the Board of Directors may, unless the Board by resolution
provides for a lesser number of directors, designate substitute nominees, in
which event the persons named in the enclosed proxy will vote for the election
of such substitute nominee or nominees.
Set forth below are the names of each nominee for director, the nominee's
age, the year in which the nominee became a director, the nominee's principal
occupation and business experience for the past 5 years, and the names of other
publicly held companies for which the
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<PAGE> 5
nominee serves as a director. The same information is provided thereafter for
each director whose term of office does not expire until a later date.
NOMINEES FOR ELECTION TO TERM EXPIRING 2002 (CLASS 1)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YEAR FIRST BECAME A
NAME AGE DIRECTOR PRINCIPAL OCCUPATION
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Robert J. Dickson 65 1978 President and Chief Executive Officer, Frontier
Financial Corporation and Frontier Bank
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Edward D. Hansen 59 1978 Mayor of the City of Everett, Washington;
President, Golf N.W.
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William H. Lucas, DC 71 1978 Chiropractor
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Michael J. Corliss 38 1998 Chief Executive Officer, Investco Financial
Corporation (diversified real estate company)
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Darrell J. Storkson 56 1997 Owner, Evergreen Lanes
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</TABLE>
THE BOARD RECOMMENDS THAT THESE NOMINEES
BE ELECTED AS DIRECTORS
INCUMBENT DIRECTORS, TERM EXPIRING 2000 (CLASS 2)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
YEAR FIRST BECAME A
NAME AGE DIRECTOR PRINCIPAL OCCUPATION
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
Lucy DeYoung 49 1997 President, DeYoung & Company (financial investment
advisory services)
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J. Donald Regan 73 1983 Retired dairyman
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Roy A. Robinson 71 1978 President, Roy Robinson Chevrolet, Inc.
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William J. Robinson 55 1978 Manager, Robinson Properties and Investments, LLC
(real estate management and development)
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Edward C. Rubatino 68 1978 President, Rubatino Refuse Removal, Inc.
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</TABLE>
-3-
<PAGE> 6
INCUMBENT DIRECTORS, TERM EXPIRING 2001 (CLASS 3)
<TABLE>
<CAPTION>
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YEAR FIRST BECAME A
NAME AGE DIRECTOR PRINCIPAL OCCUPATION
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<S> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------------
George E. Barber 56 1997 Chairman, First Western Investments, Inc.
(hospitality, retail and other real estate
investments)
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David A. Dujardin 67 1978 President, Dujardin Custom Homes, Inc.
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James H. Mulligan 67 1989 President, Emerald Real Estate Development, Inc.
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Roger L. Rice, DDS 74 1978 Retired dentist
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</TABLE>
The Corporation's Board of Directors, once elected by the shareowners, will
also serve as the Board of Directors of Frontier Bank and FFP, Inc., which are
wholly-owned subsidiaries of the Corporation.
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DIRECTORS' MEETINGS AND COMMITTEES
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The Board of Directors of the Corporation held 10 meetings in 1998.
However, since the Boards of Frontier Bank and the Corporation are the same, the
directors at each Board meeting of Frontier Bank, of which 12 were held in 1998,
review the financial records of the Corporation. Frontier Bank's Board of
Directors has established certain standing committees, including the Audit
Committee and Personnel Committee. Each member of the Board of Directors
attended at least 75 percent of the Board and committee meetings of which they
were a member.
Audit Committee. The main functions performed by the Audit Committee
include making or causing to be made suitable audits of the Corporation and its
subsidiaries; reviewing with the independent public accountants the plan, scope
and results of the audit engagement; reviewing the Federal Deposit Insurance
Corporation and State examination reports; and reviewing the adequacy of
internal accounting systems and controls. The results of the audits and
recommendations are reported to the full Boards of Directors of the Corporation
and Frontier Bank. The members of the Audit Committee during 1998 were Dr. Rice,
Chairman of the committee, Mr. Dujardin, Mr. Novack (now deceased), Mr. Regan,
Mr. Rubatino, Mr. Storkson and Ms. DeYoung. The committee held 5 meetings in
1998.
Compensation (Personnel) Committee. The functions of the Compensation
(Personnel) Committee (the "Committee") include establishment of policies with
respect to the compensation of officers and employees of the Corporation and its
subsidiaries. During 1998, the members of the Committee were Mr. Hansen,
Chairman of the committee, Mr. Novack (now deceased), Mr. Dickson, Dr. Lucas,
Mr. Mulligan, Mr. Roy Robinson and Mr. Storkson. The committee held 1 meeting in
1998.
No Nominating Committee has been established.
-4-
<PAGE> 7
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COMPENSATION OF DIRECTORS
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For 1998, all directors of the Corporation and Frontier Bank received an
annual retainer of $20,000 for service on the Corporation's Board, and a fee of
$2,000 for each Frontier Bank Board meeting attended. Directors do not receive
any fees for attendance at committee meetings. The Chairman of the Board
receives an additional fee of $200 for each Frontier Bank Board meeting
attended.
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STOCK OWNERSHIP OF OFFICERS AND DIRECTORS
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The beneficial ownership by executive officers and directors of the
Corporation's stock and the percentages of such ownership to the total amount of
the Corporation's stock outstanding as of December 31, 1998, is set forth in the
following table. As of March 23, 1999, there was no individual or entity known
to the Corporation to be the beneficial owner of more than 5 percent of the
outstanding shares of its stock.
<TABLE>
<CAPTION>
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NUMBER OF COMMON SHARES PERCENTAGE OF
NAME OF BENEFICIAL OWNER BENEFICIALLY OWNED (1)(2) OUTSTANDING SHARES
- -------------------------------------------------------------------------------
<S> <C> <C>
George E. Barber 51,217(3) *
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Michael J. Corliss 142,099(2)(4) 1.63%
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Lucy DeYoung 585 *
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Robert J. Dickson ** 293,817(2)(5) 3.37%
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David A. Dujardin 22,093 *
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Edward D. Hansen 129,610(6) 1.49%
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William H. Lucas, DC 43,222 *
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James H. Mulligan 78,730 *
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J. Donald Regan 101,065 1.16%
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Roger L. Rice, DDS 77,859 *
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Roy A. Robinson 116,801 1.34%
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William J. Robinson 134,073 1.54%
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Edward C. Rubatino 110,166(7) 1.27%
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Darrell J. Storkson 126,978 1.46%
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All Directors and
Executive Officers as
a group (16 persons) 1,439,045(2) 16.49%
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</TABLE>
- --------
* Less than 1%.
** Mr. Dickson is the CEO and President of the Corporation.
(1) Shares have not been adjusted to reflect the 2-for-1 stock split paid on
March 19, 1999.
(2) The amounts shown also include amounts of Common Stock which the following
individuals have the right to acquire through the exercise of stock
options. Mr. Corliss has the right to acquire 4,528 shares of Common Stock
through the exercise of vested stock options that were originally granted
under the Valley Bancorporation stock option plan and that were assumed by
the Corporation in the December 21, 1998 merger of Valley Bancorporation
with and into the Corporation. Mr. Dickson has the right to acquire 20,658
shares of Common Stock through the exercise of vested stock options granted
pursuant to the Corporation's stock option plan. All
-5-
<PAGE> 8
executive officers and directors as a group have the right to acquire
28,912 shares of Common Stock through the exercise of vested stock options.
In accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, a person is deemed to be the beneficial owner, for purposes of this
table, of any shares of Common Stock if he or she has voting and/or investment
power with respect to such security. The table includes shares owned by spouses,
other immediate family members in trust, shares held in retirement accounts or
funds for the benefit of the named individuals, and other forms of ownership,
over which shares the persons named in the table possess voting and/or
investment power as follows:
(3) Includes 23,765 shares owned by trusts for the benefit of Mr. Barber's
children, of which Mr. Barber's son is trustee and has voting and
dispositive power, and 8,487 shares held by a partnership in which Mr.
Barber's son is a partner.
(4) Includes 43,871 shares held by a family trust of which Mr. Corliss is
trustee and has voting and dispositive power, 88,275 shares owned by
Evergreen Capital Trust of which Mr. Corliss is trustee and has voting and
dispositive power, and 5,425 shares held by Mr. Corliss in custody for his
son.
(5) Includes 2,239 shares held in trust for Mr. Dickson's daughter of which Mr.
Dickson is trustee and has voting and dispositive power, 2,302 shares held
in trust for Mr. Dickson's daughter of which Mr. Dickson's spouse is
trustee and has voting and dispositive power, 707 shares held in trust for
Mr. Dickson's grandchild of which Mr. Dickson is trustee and has voting and
dispositive power, and 152,985 shares held by a limited partnership in
which Mr. Dickson and his spouse have voting and dispositive power.
(6) Includes 2,670 shares held in trust of which Mr. Hansen is trustee and has
voting and dispositive power, 2,020 shares held by Mr. Hansen's spouse as
separate property, 1,556 shares held in trust for Mr. Hansen's grandchild
of which Mr. Hansen's spouse is trustee and has voting and dispositive
power, 15,279 shares held by Mr. Hansen or Mr. Hansen's spouse in custody
for a child and a grandchild, and 443 shares held directly by Mr. Hansen's
grandchild.
(7) Includes 53,129 shares held in trust for family members of which Mr.
Rubatino is trustee and has voting and dispositive power.
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EXECUTIVE OFFICERS
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The following table shows the name of each executive officer of the
Corporation, his age and the offices he holds with the Corporation and Frontier
Bank. All offices are held at the discretion of the Board of Directors.
<TABLE>
<CAPTION>
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NAME AGE OFFICE AND YEAR ASSUMED OFFICE
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<S> <C> <C>
Robert J. Dickson 65 President and Chief Executive Officer of
the Corporation (1983) and Frontier Bank
(1978)
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James F. Felicetty 54 Secretary and Treasurer of the Corporation
(1983)
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F. Earl Carey 65 Vice President of the Corporation (1985)
and Senior Vice President of Frontier
Bank (1986)
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</TABLE>
COMPENSATION OF EXECUTIVES
The following table sets forth certain compensation information with
respect to the Corporation's Chief Executive Officer for the fiscal years ended
December 31, 1998, 1997 and 1996. No other executive officer of the Corporation
received compensation in excess of $100,000 during the fiscal year ended
December 31, 1998.
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<PAGE> 9
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SUMMARY COMPENSATION TABLE
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Compensation Awards
------------------- ------
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation(1) Options Compensation
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Dickson 1998 $250,000 $221,313 $70,649 2,100 $6,400(2)
President and CEO 1997 $240,000 $139,612 $65,785 2,700 $4,800(2)
1996 $225,000 $111,416 $68,390 3,200 $4,500(2)
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Includes Board fees, amounts paid pursuant to profit sharing and purchase
plans, and certain other employee benefits. Does not include earnings on
prior years' contributions to retirement plans.
(2) Represents the matching contribution to the Corporation's 401(k) plan.
OPTION GRANTS
The following table sets forth certain information regarding options to
purchase shares of the Corporation's Common Stock granted to the Corporation's
Chief Executive Officer during the fiscal year ended December 31, 1998.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Potential Realizable Value at
Assumed Annual Rate of Stock
Price Appreciation for Option
Term(2)
- ----------------------------------------------------------------------------------------------------------------------------------
Number Percent of
of Total
Securities Options
Underlying Granted to Exercise
Options Employees in Price(1) Expiration
Name Granted Fiscal Year Date 5% 10%
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Dickson 2,100 15.2% $46.00 12/09 $53,258 $131,178
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The exercise price of the options is the fair market value of the Common
Stock on the date of the grant.
(2) The hypothetical potential appreciation shown in these columns reflects the
required calculations at annual rates of 5% or 10% set by the Securities
and Exchange Commission, and therefore is not intended to represent either
historical appreciation or anticipated future appreciation of the
Corporation's Common Stock price.
OPTION EXERCISES IN LAST FISCAL YEAR AND YEAR-END OPTION VALUES
The following table sets forth certain information regarding options
exercised during the fiscal year ended December 31, 1998, and options held as of
December 31, 1998, by the Corporation's Chief Executive Officer.
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<PAGE> 10
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Value of
Unexercised
Number of in-the-Money
Unexercised Options Options at
at Fiscal Year-End Fiscal Year-End
Shares Acquired on Exercisable/ Exercisable/
Name Exercise (1) Value Realized (1) Unexercisable Unexercisable
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Robert J. Dickson 3,117 $85,329 20,658 / 0 426,429 / 0
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The shares exercised were granted in 1992 at the price of the stock at
that time. Any shareowners who purchased stock at that time would have
the same value realized in their holdings. The value realized is based
on the difference between the exercise price of the options and the
value of the Corporation's Common Stock on the date of exercise and is
not reduced to reflect taxes payable with respect to such amount.
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COMPENSATION (PERSONNEL) COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATIONS
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The following directors were members of the Compensation (Personnel)
Committee (the "Committee") during 1998, some of whom had loan transactions with
Frontier Bank during the year, and had outstanding balances at year-end 1998 as
follows:
Robert J. Dickson, President/CEO -0-
Edward D. Hansen, Director $596,277
William H. Lucas, Director $626,120
James H. Mulligan, Director $738,165
Roy A. Robinson, Director -0-
Darrell J. Storkson, Director $6,144,380
The only director on the Committee who is an officer of Frontier Bank is
Mr. Dickson. The above directors are not compensated for attending Committee
meetings.
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BOARD COMPENSATION (PERSONNEL) COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
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The policy of the Compensation (Personnel) Committee (the "Committee") with
respect to executive compensation is that such compensation should (a) assist
the Corporation in attracting, retaining and motivating key executives, (b)
align the interests of executives with the interests of shareowners, (c) reflect
the Corporation's performance, and (d) reward executives for their individual
performance. Executive compensation includes base salary, bonuses and stock
option grants. These programs are designed to provide incentives for both short-
and long-term performance.
-8-
<PAGE> 11
In setting the compensation of the Corporation's CEO and other executive
officers, the Committee considers, among other things, the financial performance
of the Corporation, the return to shareowners, the level of compensation paid by
other similarly sized financial corporations, and individual responsibility and
performance. Base salaries are reviewed on an annual basis and adjusted as the
Committee determines is appropriate.
In reviewing Mr. Dickson's performance in 1998, the Committee particularly
took into consideration the Corporation's increased profits and the increase in
the stock price for 1998. Additionally, Mr. Dickson negotiated and oversaw the
successful consummation of the merger of Valley Bancorporation with and into the
Corporation which closed on December 21, 1998. This merger added four additional
offices and approximately $100 million in assets to the Corporation's franchise.
Net income in 1998 reached $21.6 million, or $2.46 per fully diluted share, an
increase of 16.4 percent over 1997. The value of the Corporation's Common Stock
appreciated 32.3 percent in 1998, increasing in price from $37.00 per share to
$45.75 per share (as adjusted to reflect the 7 percent stock dividend paid in
March, 1998). The Corporation continued to maintain a quality loan portfolio and
paid its 17th stock dividend to shareowners since its inception. Also for the
year, total assets increased $175 million, or 18 percent, and total loans
increased $161 million, or 21.9 percent. The Corporation was able to maintain a
net interest margin for the year of 5.46 percent, which the Committee considered
to be high compared to industry standards. Accordingly, the Committee increased
Mr. Dickson's base salary by $10,000 to $250,000 and awarded him a bonus of
$221,313. In addition, Mr. Dickson was awarded a stock option grant to purchase
2,100 shares of Common Stock. Mr. Dickson does not participate in deliberations
of the Committee relating to his compensation.
Submitted by members of the Committee:
Robert J. Dickson
Edward D. Hansen
William H. Lucas, DC
James H. Mulligan
Roy A. Robinson
Darrell J. Storkson
- --------------------------------------------------------------------------------
FIVE YEAR PERFORMANCE COMPARISON
TOTAL CUMULATIVE RETURN TO SHAREOWNERS
- --------------------------------------------------------------------------------
The graph below provides a comparison of the cumulative shareowner returns
on the Corporation's Common Stock as compared with the cumulative total return
of the Nasdaq (U.S. Companies) Index and the S&P Major Regional Banks (MRB)
Index.
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<PAGE> 12
FRONTIER FINANCIAL CORPORATION
HISTORICAL PERFORMANCE COMPARISON
TOTAL CUMULATIVE RETURN TO SHAREOWNERS
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
PERIOD ENDING
- ---------------------------------------------------------------------------------------------------
INDEX 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Frontier Financial Corporation $100 $158.40 $191.35 $225.93 $288.54 $381.74
- ---------------------------------------------------------------------------------------------------
Nasdaq (U.S. Companies) Index $100 $97.75 $138.26 $170.02 $208.58 $293.22
- ---------------------------------------------------------------------------------------------------
S&P Major Regional Banks $100 $91.17 $143.62 $196.29 $297.83 $329.55
- ---------------------------------------------------------------------------------------------------
</TABLE>
The above presentation assumes $100 was invested on December 31, 1993, in
the Corporation's Common Stock, the Nasdaq (U.S. Companies) Index and the
S&P Major Regional Banks Index.
- -------------------------------------------------------------------------------
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING
- -------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's executive officers, directors and persons who
own more than 10 percent of a registered class of the Corporation's equity
securities, to file reports of ownership and changes in ownership of such
securities with the Securities and Exchange Commission. Officers, directors
and greater-than-10-percent beneficial owners are required by applicable
regulations to furnish the Corporation with copies of all Section 16(a)
forms they file. The Corporation is not aware of any beneficial owner of
more than 10 percent of its Common Stock.
Based solely on its review of the copies of the forms furnished to the
Corporation, or representations from certain reporting persons that no
filings were required, the Corporation believes that all filing
requirements applicable to its officers and directors were complied with
during the 1998 fiscal year, except that F. Earl Carey, an officer of the
Corporation, inadvertently filed one late report involving the disposition
of 1,500 shares.
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<PAGE> 13
- --------------------------------------------------------------------------------
MISCELLANEOUS TRANSACTIONS WITH DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
Frontier Bank, a subsidiary of the Corporation, has, as banking
customers, many of the Corporation's directors and officers, as well as the
businesses with which they are associated. All loans made to such persons
and entities during the past year were made in Frontier Bank's ordinary
course of business and on substantially the same terms, including interest
rates and collateral, as those prevailing at the time of comparable
transactions with other persons. These loans do not involve more than a
normal risk of collectability and do not present any other unfavorable
feature.
- --------------------------------------------------------------------------------
FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
The Corporation's 1998 Annual Report, which contains the Corporation's
financial statements, is being sent to the shareowners with this Proxy
Statement and is hereby incorporated by reference in its entirety.
- --------------------------------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
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The independent public accounting firm of Moss Adams LLP audited the
Corporation's consolidated financial statements for the year 1998 and has
been similarly engaged in 1999. Representatives from Moss Adams LLP are
expected to be present at the Annual Meeting of shareowners, will be given
an opportunity to make a statement and will be available to respond to
appropriate questions.
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OTHER BUSINESS
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The Board of Directors of the Corporation is not presently aware of
any other business to come before the Annual Meeting. As of the date of the
preparation of this Proxy Statement, no shareowner has submitted to the
Board any proposal to be acted on at the Meeting. If any matters come
before the Meeting, not referred to in the enclosed Proxy, including
matters incident to the conduct of the Meeting, the proxy holders will vote
the shares represented by the proxies in accordance with their best
judgment.
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SHAREOWNER PROPOSALS FOR 2000 ANNUAL MEETING
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In order for shareowner proposals to be included in the 2000 proxy
materials and considered at the 2000 Annual Meeting of Shareowners,
proposals must be received by the Secretary of the Corporation at the
address shown on the Notice of Annual Meeting no later than November 20,
1999.
THE ENCLOSED PROXY SHOULD BE COMPLETED, DATED, SIGNED AND RETURNED IN THE
ENCLOSED STAMPED ENVELOPE. PROMPT MAILING OF THE PROXY WILL BE APPRECIATED.
By Order of the Board of Directors,
/s/ James F. Felicetty
James F. Felicetty, Secretary
-11-
<PAGE> 14
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The Corporation will furnish, without charge to any shareowner
submitting a written request, a copy of the Corporation's Form 10-K Annual
Report for 1998 to the Securities and Exchange Commission, including the
financial statements and schedules thereto. Such written request should be
addressed to: Shareowner Services, Frontier Financial Corporation, 332 S.W.
Everett Mall Way, P. O. Box 2215, Everett, WA 98203.
<PAGE> 15
PROXY
FRONTIER FINANCIAL CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON APRIL 15, 1999
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT J. DICKSON and J. DONALD
REGAN, and each of them (with full power to act alone and to designate
substitutes), proxies of the undersigned, with authority to vote and act with
respect to all shares of stock of Frontier Financial Corporation which the
undersigned would be entitled to vote at the Annual Meeting of Shareowners to be
held on Thursday, April 15, 1999, at 7:30 p.m., local time, at the Everett Golf
& Country Club, 1500 - 52nd Street, Everett, Washington, and any adjournments
thereof, with all the powers the undersigned would possess if personally
present, upon matters noted below and upon such other matters as may properly
come before the meeting.
(WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH YOUR
INSTRUCTIONS. IF YOU GIVE NO INSTRUCTIONS, THIS PROXY WILL BE VOTED FOR PROPOSAL
1. THE DIRECTORS RECOMMEND A VOTE FOR THE NOMINEES FOR DIRECTOR.)
The shares represented by this Proxy shall be voted as follows:
1. Election of Directors. CLASS I (3 year term)
Robert J. Dickson
Edward D. Hansen
William H. Lucas, DC
Michael J. Corliss
Darrell J. Storkson
[ ] FOR the nominees listed above.
[ ] FOR the nominees listed above EXCEPT: ___________________
[ ] WITHHOLD AUTHORITY to vote for all nominees listed above.
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
DATED:__________________, 1999
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Signature
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Signature if held jointly
Please sign exactly as name appears above. When shares are held by joint
tenants, both should sign. When signing as attorney, executor, administrator,
trustee or guardian, please give full title as such. If a corporation, please
sign in full corporate name by president or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
(PLEASE MARK, SIGN, DATE AND RETURN THE PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE.)
