<PAGE> 1
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the
[X] Definitive Proxy Statement Commission Only (as permitted
[ ] Definitive Additional Materials by Rule 14a-6(e)(2))
[ ] Soliciting Material Pursuant
to Rule 14a-11(c) or Rule 14a-12
Frontier Financial Corporation
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(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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(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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
------------------------------------------------------------------------
(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:
------------------------------------------------------------------------
(5) Total fee paid:
------------------------------------------------------------------------
[ ] 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 paid previously. Identify the previous
filing by registration statement number, or the form or schedule
and the date of its filing.
(1) Amount Previously Paid:
--------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
----------------------------
(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 2000 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 20, 2000, at 7:30 p.m. for the following
purposes:
1. To elect four (4) 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 10, 2000,
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 24, 2000
PLACE AND TIME OF ANNUAL MEETING
EVERETT GOLF & COUNTRY CLUB
1500 - 52ND STREET
EVERETT, WASHINGTON
APRIL 20, 2000, 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.
================================================================================
<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 20, 2000 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 1999 Annual Report, are
being mailed to shareowners on or about March 24, 2000.
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PURPOSE OF THE MEETING
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At the Annual Meeting, shareowners will be asked:
1. To elect four (4) 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 10, 2000, the Corporation had 17,458,193 shares of Common Stock
outstanding. There are no outstanding shares of any other class of stock. Each
share of Common Stock entitles the holder thereof to one vote. Only shareowners
of record at the close of business on March 10, 2000, 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. At the Annual Meeting of
Shareowners, four (4) directors will be elected to the class of directors to
hold office until the Annual Meeting of Shareowners held in the year 2003, and
until their successors are elected and qualified. All the nominees currently
serve as directors of the Corporation.
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 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. The mailing address for all of the
above-named persons is 332 S.W. Everett Mall Way, P. O. Box 2215, Everett, WA
98203.
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<PAGE> 5
NOMINEES FOR ELECTION TO TERM EXPIRING 2003
<TABLE>
<CAPTION>
YEAR FIRST YEAR FIRST
BECAME A BECAME A
DIRECTOR OF DIRECTOR OF
NAME AGE CORPORATION BANK PRINCIPAL OCCUPATION
---- --- ----------- ----------- --------------------
<S> <C> <C> <C> <C>
Lucy DeYoung 50 1997 1997 President, Red Rock Enterprises, Inc. (financial
investment advisory services)
J. Donald Regan 74 1983 1983 Retired dairyman
William J. Robinson 56 1983 1978 Manager, Robinson Properties and Investments, LLC
(real estate management and development)
Edward C. Rubatino 69 1983 1978 President, Rubatino Refuse Removal, Inc.
</TABLE>
THE BOARD RECOMMENDS THAT THESE NOMINEES
BE ELECTED AS DIRECTORS
INCUMBENT DIRECTORS, TERM EXPIRING 2001
<TABLE>
<CAPTION>
YEAR FIRST YEAR FIRST
BECAME A BECAME A
DIRECTOR OF DIRECTOR OF
NAME AGE CORPORATION BANK PRINCIPAL OCCUPATION
---- --- ----------- ----------- --------------------
<S> <C> <C> <C> <C>
George E. Barber 57 1997 1997 Chairman, First Western Investments, Inc.
(hospitality, retail and other real estate
investments)
David A. Dujardin 68 1983 1978 President, Dujardin Custom Homes, Inc.
James H. Mulligan 68 1989 1989 President, Emerald Real Estate Development, Inc.
Roger L. Rice, DDS 75 1983 1978 Retired dentist
</TABLE>
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<PAGE> 6
INCUMBENT DIRECTORS, TERM EXPIRING 2002
<TABLE>
<CAPTION>
YEAR FIRST YEAR FIRST
BECAME A BECAME A
DIRECTOR OF DIRECTOR OF
NAME AGE CORPORATION BANK PRINCIPAL OCCUPATION
---- --- ----------- ----------- --------------------
<S> <C> <C> <C> <C>
Robert J. Dickson 66 1983 1978 President and Chief Executive Officer Frontier
Financial Corporation, Frontier Bank and FFP, Inc.
Edward D. Hansen 60 1983 1978 Mayor of the City of Everett, Washington;
President, Golf N.W.
William H. Lucas, DC 72 1983 1978 Chiropractor
Michael J. Corliss 39 1998 1998 Chief Executive Officer, Investco Financial
Corporation (diversified real estate company)
Darrell J. Storkson 57 1997 1997 Owner, Evergreen Lanes
</TABLE>
The Corporation's Board of Directors also serves as the Board of Directors of
Frontier Bank and FFP, Inc., wholly-owned subsidiaries of the Corporation.
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DIRECTORS' MEETINGS, COMMITTEES AND COMPENSATION
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The Board of Directors of the Corporation held 9 meetings in 1999.
However, since the Board of Frontier Bank and the Board of the Corporation are
the same, the directors at each Board meeting of Frontier Bank, of which 12 were
held in 1999, 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, Federal Reserve Bank 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 Board of Directors of the
Corporation and Frontier Bank. The members of the Audit Committee during 1999
were Dr. Rice, Chairman of the committee, Mr. Dujardin, Mr. Regan, Mr. Rubatino,
Mr. Storkson, Ms. DeYoung and Mr. Corliss. The committee held 5 meetings in
1999.
Compensation (Personnel) Committee. The functions of the Compensation
(Personnel) Committee include establishment of policies with respect to the
compensation of officers and employees of the Corporation and its subsidiaries.
During 1999, the members of the committee
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<PAGE> 7
were Mr. Hansen, Chairman of the committee, Mr. Dickson, Dr. Lucas, Mr. Mulligan
and Mr. Storkson. The committee held 1 meeting in 1999.
No Nominating Committee has been established.
For 1999, all directors of the Corporation and Frontier Bank received an
annual retainer of $22,500 for service on the Corporation's Board, and a fee of
$2,200 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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BENEFICIAL STOCK OWNERSHIP BY DIRECTORS AND EXECUTIVE OFFICERS
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The following table sets forth information, as of December 31, 1999, as
to the shares of common stock beneficially owned by each director, the Chief
Executive Officer of the Corporation and other executive officers who during the
year ended December 31, 1999, received salaries and bonuses which, in the
aggregate, exceeded $100,000 ("Named Executive Officers"), and by all executive
officers and directors of the Corporation as a group and each beneficial owner
of more than 5 percent of the Corporation's voting securities.
<TABLE>
<CAPTION>
NUMBER OF COMMON SHARES PERCENTAGE OF
NAME OF BENEFICIAL OWNER(1) BENEFICIALLY OWNED(2) OUTSTANDING SHARES(3)
- --------------------------- ------------------------ ---------------------
<S> <C> <C>
DIRECTORS
George E. Barber 93,088(4) *
Michael J. Corliss 289,498(5) 1.65%
Lucy DeYoung 1,170 *
David A. Dujardin 43,028 *
Edward D. Hansen 240,440(6) 1.38%
William H. Lucas, DC 84,452 *
James H. Mulligan 155,302 *
J. Donald Regan 202,130 1.15%
Roger L. Rice, DDS 155,718 *
William J. Robinson 268,546 1.53%
Edward C. Rubatino 220,732(7) 1.26%
Darrell J. Storkson 254,398 1.45%
NAMED EXECUTIVE OFFICERS
Robert J. Dickson ** 592,311(8) 3.37%
Lyle E. Ryan 33,504(9) *
Connie Pachek 56,477 *
Linda Dryden 63,092 *
All Directors and Executive
Officers as a group (18 persons) 2,814,015(10) 16.0%
</TABLE>
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* Less than 1%.
** Mr. Dickson also serves as a Director of the Corporation.
-5-
<PAGE> 8
(1) As of December 31, 1999, there was no individual or entity known to the
Corporation to be the beneficial owner of more than 5 percent of the
Corporation's voting stock.
(2) In determining beneficial ownership, a beneficial owner of a security
includes any person who, directly or indirectly, through any contract,
arrangement, understanding, relationship or otherwise has or shares (1)
voting power which includes the power to vote, or to direct the voting
of, such securities and/or (2) investment power which includes the power
to dispose, or to direct the disposition, of such security. In addition,
for the purposes of this chart, a person is deemed to be the beneficial
owner of a security if that person has the right to acquire beneficial
ownership of such security within 60 days, including, but not limited
to, any right to acquire: (a) through exercise of an option, warrant or
right; (b) through the conversion of security; (c) pursuant to the power
to revoke a trust, discretionary account or similar arrangement; or (d)
pursuant to the automatic termination of a trust, discretionary account
or similar arrangement.
(3) Any securities not outstanding but which are subject to options,
warrants, rights or conversion privileges set forth in footnote (1)
above are deemed to be outstanding for the purpose of computing the
percentage of outstanding securities of the class owned by such person,
but not for the purpose of computing the percentage of the class by any
other person.
(4) Includes 38,184 shares owned by trusts for the benefit of Mr. Barber's
children, of which Mr. Barber's son (a resident of Mr. Barber's
household) is trustee and has voting and dispositive power, and 16,974
shares held by a partnership in which Mr. Barber's son is a partner.
(5) Includes 4,000 shares held by Valley South Land LLC of which Evergreen
Capital Trust is a member, 265,050 shares owned by Evergreen Capital
Trust of which Mr. Corliss is trustee and has voting and dispositive
power, and 11,392 shares held by Mr. Corliss in custody for his son.
(6) Includes 5,382 shares held in a trust of which Mr. Hansen is trustee and
has voting and dispositive power, 4,040 shares held by Mr. Hansen's
spouse as separate property, 3,382 shares held in a trust for Mr.
Hansen's grandchild of which Mr. Hansen's spouse is trustee and has
voting and dispositive power, and 15,172 shares held by Mr. Hansen or
Mr. Hansen's spouse in custody for children.
(7) Includes 106,319 shares held in a trust of which Mr. Rubatino is trustee
and has voting and dispositive power.
(8) Includes 37,775 shares of common stock which Mr. Dickson has the right
to acquire through the exercise of stock options; 1,414 shares held in a
trust for Mr. Dickson's grandchild of which Mr. Dickson is trustee and
has voting and dispositive power, and 305,970 shares held by a limited
partnership in which Mr. Dickson and his spouse have voting and
dispositive power.
(9) Includes options granted to spouse, who is also an employee of Frontier
Bank.
(10) Includes 60,129 shares not reflected elsewhere in the chart.
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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>
NAME AGE OFFICE AND YEAR ASSUMED OFFICE
---- --- ------------------------------
<S> <C> <C>
Robert J. Dickson 66 President and Chief Executive Officer of the Corporation (1983),
Frontier Bank (1978) and FFP, Inc. (1988)
James F. Felicetty 55 Secretary and Treasurer of the Corporation (1983)
John J. Dickson (1) 39 Vice President of the Corporation (1999); Senior Vice President of
Frontier Bank (1993); and Vice President of FFP, Inc. (1999)
- ---------------------
</TABLE>
(1) John J. Dickson is the son of Robert J. Dickson.
-6-
<PAGE> 9
COMPENSATION OF EXECUTIVES
The following table sets forth certain compensation information with
respect to the Corporation's Chief Executive Officer and other Named Executive
Officers for the fiscal years ended December 31, 1999, 1998 and 1997.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
----------------------------------------------- Awards
Securities
Name and Principal Other Annual Underlying All Other
Position Year Salary Bonus Compensation(1) Options Compensation(2)
- ------------------ ---- ------ -------- --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Dickson 1999 $275,000 $241,760 $78,223 4,545 $6,400
President and CEO 1998 250,000 221,313 70,649 2,100 6,400
1997 240,000 139,612 65,785 2,700 4,800
Lyle E. Ryan 1999 $101,500 $13,678 $17,322 560(3) $4,607
Executive Vice President, 1998 90,227 13,231 15,577 288(3) 3,049
Frontier Bank 1997 82,066 8,096 14,520 240(3) 2,465
Connie Pachek 1999 $94,500 $21,759 $18,008 280 $3,488
Senior Vice President, 1998 85,600 22,834 16,702 144 3,253
Frontier Bank 1997 80,000 9,871 14,907 160 2,696
Linda Dryden 1999 $98,750 $6,018 $16,400 280 $2,591
Senior Vice President, 1998 6,700(4)
Frontier Bank
</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.
(3) Includes options granted to spouse, who is also an employee of Frontier
Bank.
(4) Reflects compensation earned from December 21, 1998, the date Ms. Dryden
became an employee of Frontier Bank.
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 and other Named Executive Officers during the fiscal
year ended December 31, 1999.
Table on following page
-7-
<PAGE> 10
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR
- ----------------------------------------------------------------------------------------------------------------------
Potential Realizable Value
at Assumed Annual Rate of
Stock Price Appreciation for
Option Term(2)
------------------------------
Number of Percent of
Securities Total Options
Underlying Granted to
Options Employees in Exercise Expiration
Name Granted Fiscal Year Price(1) Date 5% 10%
- ----------------------- --------------- ----------------- ---------------- ------------ --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Robert J. Dickson 4,545 15.1% $22.00 12/09 $62,883 $159,358
Lyle E. Ryan(3) 560 1.9% $22.00 12/09 $7,748 $19,635
Connie Pachek 280 .9% $22.00 12/09 $3,874 $9,817
Linda Dryden 280 .9% $22.00 12/09 $3,874 $9,817
</TABLE>
- -------------------
(1) The exercise price of the options is the fair market value of the Common
Stock on the date of the grant. Any shareowners who purchased stock at
the same time would have the same value realized in their holdings.
(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.
(3) Includes options granted to spouse, who is also an employee of Frontier
Bank.
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, 1999, and options held as of
December 31, 1999, by the Corporation's Chief Executive Officer and other Named
Executive Officers.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
- ----------------------------------------------------------------------------------------------------------------------
Value of Unexercised
Number of in-the-Money Options
Unexercised Options at Fiscal Year-End
at Fiscal Year-End (1)
Shares Acquired on Exercisable/ Exercisable/
Name Exercise Value Realized Unexercisable Unexercisable
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
<S> <C> <C> <C> <C>
Robert J. Dickson 4,043 138,000 37,775 / 0 195,400 / 0
Lyle E. Ryan(2) 2,664 57,687 11,405 / 0 139,712 / 0
Connie Pachek 1,467 26,132 4,320 / 0 42,611 / 0
Linda Dryden 4,528 172,250 280 / 0 0 / 0
</TABLE>
- ---------------
(1) On December 31, 1999, the closing price of Common Stock was $20.00. For
purposes of the foregoing table, stock options with an exercise price
less than that amount are considered to be "in-the-money" and are
considered to have a value equal to the difference between this amount
and the exercise price of the stock
-8-
<PAGE> 11
option multiplied by the number of shares covered by the stock option,
and are not reduced to reflect taxes payable with respect to such
amount.
(2) Includes options granted to spouse, who is also an employee of Frontier
Bank.
- --------------------------------------------------------------------------------
COMPENSATION (PERSONNEL) COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
- --------------------------------------------------------------------------------
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.
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 1999, the Committee
particularly took into consideration the Corporation's increased profits.
Additionally, Mr. Dickson oversaw the successful integration of the Bank of
Sumner into Frontier following the acquisition of the Bank of Sumner 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 1999 reached $25.7 million, or $1.46 per fully diluted share, an increase of
18.5 percent over 1998. The Corporation continued to maintain a quality loan
portfolio and paid its 18th dividend to shareowners since its inception.
Additionally, during 1999 Frontier Bank was rated the number 1 mid-sized bank in
America by US Banker Magazine. Also for the year, total assets increased $97.7
million, or 8.5 percent, and total loans increased $155 million, or 17.3
percent. The Corporation was able to maintain a net interest margin for the year
of 5.65 percent, which the Committee considered to be high compared to industry
standards. Accordingly, the Committee increased Mr. Dickson's base salary by
$25,000 to $275,000 and awarded him a bonus of $241,760. In addition, Mr.
Dickson was awarded a stock option grant to purchase 4,545 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
Darrell J. Storkson
-9-
<PAGE> 12
- --------------------------------------------------------------------------------
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 Composite Index, the S&P Major Regional Banks (MRB) Index,
the Nasdaq Bank Stocks Index and the S&P 500 Index.
FRONTIER FINANCIAL CORPORATION
HISTORICAL PERFORMANCE COMPARISON
TOTAL CUMULATIVE RETURN TO SHAREOWNERS
[PERFORMANCE GRAPH]
<TABLE>
<CAPTION>
PERIOD ENDING
--------------------------------------------------------------------------------------
INDEX 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----- ------------ ------------ ------------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Frontier Financial $100 $120.80 $142.63 $182.15 $240.00 $213.44
Corporation
Nasdaq Composite Index $100 $141.33 $173.89 $213.07 $300.18 $545.67
S&P Major Regional Banks
(MRB) Index $100 $157.53 $215.30 $326.67 $361.46 $311.14
Nasdaq Bank Stocks Index
$100 $149.00 $196.73 $329.39 $318.77 $314.60
S&P 500 Index $100 $137.59 $169.48 $226.14 $291.80 $352.95
</TABLE>
The above presentation assumes $100 was invested on December 31, 1994,
in the Corporation's Common Stock and each of the above indexes. In the future,
the Corporation's proxy statement will include the Nasdaq Bank Stocks Index
rather than the S&P MRB Index because the Corporation`s common stock is included
in the Nasdaq Bank Stocks Index and not the S&P MRB Index. In addition, the
Nasdaq Composite Index will be replaced with the S&P
-10-
<PAGE> 13
500 Index because the Corporation believes that, in the aggregate, the 500
securities included in the S&P 500 Index provide a better broad equity
comparison to the Corporation's common stock than the over 3,000 securities
included in the Nasdaq Composite Index, which is highly weighted with technology
stocks.
- --------------------------------------------------------------------------------
SECTION 16(A) BENEFICIAL OWNERSHIP COMPLIANCE REPORTING
- --------------------------------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934 requires the
Corporation's directors, executive officers, and beneficial owners of more than
10 percent of a registered class of the Corporation's equity securities, to file
reports of their ownership of such securities, and any changes in that
ownership, with the Securities and Exchange Commission. All such persons are
required by regulation to provide copies of such reports to the Corporation. 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 reports furnished to the
Corporation and on representations from certain reporting persons, the
Corporation believes that in 1999 the Corporation's directors and executive
officers met all Securities and Exchange Commission filing requirements, except
that Lyle Ryan, an executive officer, inadvertently filed one late report
covering a gift of 10 shares of Common Stock, and Ed Hanson, a director,
inadvertently filed one late report covering a gift of 800 shares of Common
Stock.
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MISCELLANEOUS TRANSACTIONS WITH DIRECTORS AND OFFICERS
- --------------------------------------------------------------------------------
During 1999, certain directors and executive officers of the Corporation
and Frontier Bank, and their associates, were customers of Frontier Bank, and it
is anticipated that such individuals will continue to be customers of Frontier
Bank in the future. All transactions between Frontier Bank and its executive
officers and directors, and their associates, were made in the ordinary course
of business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time of comparable transactions with
other persons, and, in the opinion of management, did not involve more than the
normal risk of collectability or present other unfavorable features.
- --------------------------------------------------------------------------------
RELATIONSHIP WITH INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
The independent public accounting firm of Moss Adams LLP audited the
Corporation's consolidated financial statements for the year 1999 and has been
similarly engaged in 2000. Representatives from Moss Adams LLP are expected to
be present at the Annual Meeting of Shareowners and will be given an opportunity
to make a statement and will be available to respond to appropriate questions.
- --------------------------------------------------------------------------------
OTHER BUSINESS
- --------------------------------------------------------------------------------
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
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<PAGE> 14
matters come before the Meeting that are 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.
- --------------------------------------------------------------------------------
SHAREOWNER PROPOSALS FOR 2001 ANNUAL MEETING
- --------------------------------------------------------------------------------
In order for shareowner proposals to be included in the 2001 proxy
materials and considered at the 2001 Annual Meeting of Shareowners, proposals
must be received by the Secretary of the Corporation at Frontier Financial
Corporation, 332 S.W. Everett Mall Way, P.O. Box 2215, Everett, WA 98203, no
later than November 20, 2000.
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
--------------------
Upon written request, the Corporation will furnish, without charge to
any shareowner, a copy of the Corporation's Form 10-K Annual Report for 1999 as
filed with the Securities and Exchange Commission. Written requests should be
addressed to: Shareowner Services, Frontier Financial Corporation, 332 S.W.
Everett Mall Way, P. O. Box 2215, Everett, WA 98203.
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<PAGE> 15
PROXY
FRONTIER FINANCIAL CORPORATION
PROXY FOR ANNUAL MEETING OF SHAREOWNERS
TO BE HELD ON APRIL 20, 2000
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints ROBERT J. DICKSON and JAMES H. MULLIGAN,
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 20, 2000, 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.
Lucy DeYoung
J. Ronald Regan
William J. Robinson
Edward. C. Rubatino
[ ] 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:____________________________, 2000
________________________________________
________________________________________
Signature(s)
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.)
