----

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|                                                                    |   |                                         |
|-------------------------------------------------------------------------|--------|----------------------------------------------|
| Washington                                                              |   | 91-1223535                                   |
| (State      or Other Jurisdictionof      Incorporation or Organization) |   | (I.R.S.      Employer Identification Number) |

| Title      of each class                  |   | Name      of each exchange on which registered |
|-------------------------------------------|--------|------------------------------------------------|
| Common      Stock, no par value per share |   | The      NASDAQ Stock Market LLC               |

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TABLE OF CONTENTS

|      |                                                                          | Page   |
|-----------|-------------------------------------------------------------------------------|--------|
| Part I.   |                                                                          |   |
| Item 1.   | Business                                                                      |   | 1 |
| Item 1A.  | Risk Factors                                                                  |   | 14 |
| Item 1B.  | Unresolved Staff Comments                                                     |   | 20 |
| Item 2.   | Properties                                                                    |   | 20 |
| Item 3.   | Legal Proceedings                                                             |   | 20 |
| Item 4.   | Submission of Matters to a Vote of      Shareowners                           |   | 20 |
|      |                                                                          |   |   |
| Part II.  |                                                                          |   |   |
| Item 5.   | Market for Registrant's Common Equity, Related Shareowner      Matters        |   |  |
|      | and Issuer Purchases of Equity    Securities                                  |   | 21 |
| Item 6.   | Selected Financial Data                                                       |   | 23 |
| Item 7.   | Management's Discussion and Analysis of Financial Condition      and          |   |   |
|      | Results of Operations                                                         |   | 24 |
| Item 7A.  | Quantitative and Qualitative Disclosures about Market      Risk               |   | 39 |
| Item 8.   | Financial Statements and Supplementary    Data                                |   | 43 |
| Item 9.   | Changes in and Disagreements With Accountants on      Accounting              |   |   |
|      | and Financial Disclosure                                                      |   | 43 |
| Item 9A.  | Controls and Procedures                                                       |   | 43 |
| Item 9B.  | Other Information                                                             |   | 43 |
|      |                                                                          |   |   |
| Part III. |                                                                          |   |   |
| Item 10.  | Directors and Executive Officers and Corporate      Governance                |   | 44 |
| Item 11.  | Executive Compensation                                                        |   | 45 |
| Item 12.  | Security Ownership of Certain Beneficial Owners and      Management           |   |   |
|      | and Related Shareowner Matters                                                |   | 45 |
| Item 13.  | Certain Relationships and Related Transactions and      Director Independence |   | 45 |
| Item 14.  | Principal Accountant Fees and Services                                        |   | 45 |
|      |                                                                          |   |   |
| Part IV.  |                                                                          |   |   |
| Item 15.  | Exhibits and Financial Statement    Schedules                                 |   | 46 |
|      | Signatures                                                                    |   | 47 |

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PART I

ITEM1.   

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| 1.   | Loans      for construction of residential and commercial income-producing properties      that generally have terms of less than two years and typically bear an      interest rate that floats with our baserate. |
|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2.   | Loans      for construction of single-family spec and owner-occupied properties that      generally have terms of one year or less and typically bear an interest      rate that floats with our baserate. |
|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                    |   | 2007   |      | 2006   |   | 2005      |   | 2004   |      |   | 2003   |      |
|-----------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|
| Real      estate commercial loans       |   | $      | 1,003,916 |   | $      | 897,714   |   | $      | 859,251   |   | $      | 848,737   |   |   | $ | 809,307 |   |
|                                    |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| Real      estate construction loans     |   | $      | 1,062,662 |   | $      | 735,926   |   | $      | 554,021   |   | $      | 342,287   |   |   | $ | 296,568 |   |
|                                    |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| Real      estate land development loans |   | $      | 537,410   |   | $      | 399,950   |   | $      | 269,662   |   | $      | 182,032   |   |   | $ | 138,517 |   |
|                                    |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| Total      loans at end of period (1)   |   | $      | 3,612,122 |   | $      | 2,908,000 |   | $      | 2,389,224 |   | $      | 1,977,521 |   |   | $ | 1,771,716 |   |
|                                    |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| Real      estate commercial loans       |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| as      a percent of total loans        |   |   | 27.8      | %      |   | 30.9      | %      |   | 36.0      | %      |   | 42.9      | % |   |   | 45.7 | % |
| Real      estate construction loans     |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| as      a percent of total loans        |   |   | 29.4      | %      |   | 25.3      | %      |   | 23.2      | %      |   | 17.3      | % |   |   | 16.7 | % |
| Real      estate land development loans |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| as      a percent of total loans        |   |   | 14.9      | %      |   | 13.8      | %      |   | 11.3      | %      |   | 9.2       | % |   |   | 7.8 | % |
|                                    |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |
| (1)      Includes loans held for resale |   |   |      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |

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| ·   | increasing      the percentage of our assets consisting of business, construction and      commercial real estate loans with higher risk-adjusted returns, shorter      maturities and greater sensitivity to interest rate      fluctuations; |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | increasing      deposits by attracting lower cost transaction accounts (such as checking,      savings and money market accounts) through an enhanced branch network and      online banking; |
|--------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | maintaining      cost-effective operations by efficiently offering products and      services; |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | maintaining      our capital position at or above the “well-capitalized” (as defined for      regulatory purposes) levels; and |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | exploring      prudent means to grow our business internally and/or through      acquisitions. |
|--------------------|------------------------------------------------------------------------------------------------|

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| •   | securities      underwriting; |
|---------------------|-------------------------------|

| •   | dealing      and market making; |
|---------------------|---------------------------------|

| •   | sponsoring      mutual funds and investmentcompanies; |
|---------------------|-------------------------------------------------------|

| •   | insurance      underwriting and brokerage; |
|---------------------|--------------------------------------------|

| •   | merchant      banking; and |
|---------------------|----------------------------|

| •   | activities      that the Federal Reserve, in consultation with the Secretary of the      Treasury, determines from time to time to be so closely related to banking      or managing or controlling banks as to be a proper incident      thereto. |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | acquiring      direct or indirect ownership or control of any voting shares of any bank      if, after the acquisition, the bank holding company will directly or      indirectly own or control more than 5% of the bank’s voting      shares; |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | acquiring      all or substantially all of the assets of any bank;  or |
|---------------------|------------------------------------------------------------------------|

| •   | merging      or consolidating with any other bank holding  company. |
|---------------------|---------------------------------------------------------------------|

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| •   | Truth-In-Lending      Act, governing disclosures of credit terms to consumer      borrowers; |
|---------------------|----------------------------------------------------------------------------------------------|

| •   | Home      Mortgage Disclosure Act of 1975, requiring financial institutions to      provide information to enable the public and public officials to determine      whether a financial institution is fulfilling its obligation to help meet      the housing needs of the community itserves; |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Equal      Credit Opportunity Act, prohibiting discrimination on the basis of race,      creed or other prohibited factors in extending  credit; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Fair      Credit Reporting Act of 1978, governing the use and provision of      information to credit reportingagencies; |
|---------------------|--------------------------------------------------------------------------------------------------------------------------|

| •   | Fair      Debt Collection Practices Act, governing the manner in which consumer      debts may be collected by collectionagencies; |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------|

| •   | Servicemembers      Civil Relief Act, which amended the Soldiers’ and Sailors’ Civil Relief      Act of 1940, governing the repayment terms of, and property rights      underlying, secured obligations of persons in military service;      and |
|---------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | Rules      and regulations of the various federal agencies charged with the      responsibility of implementing these federal  laws. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------|

| •   | the      Right to Financial Privacy Act, which imposes a duty to maintain      confidentiality of consumer financial records and prescribes procedures      for complying with administrative subpoenas of financial records;      and |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | the      Electronic Funds Transfer Act and Regulation E issued by the Federal      Reserve Board to implement that act, which govern automatic deposits to      and withdrawals from deposit accounts and customers’ rights and      liabilities arising from the use of automated teller machines and other      electronic banking services. |
|---------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| •   | initial      notices to customers about their privacy policies, describing the      conditions under which they may disclose nonpublic personal information to      nonaffiliated third-parties andaffiliates; |
|---------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | annual      notices of their privacy policies to current customers;  and |
|---------------------|--------------------------------------------------------------------------|

| •   | a      reasonable method for customers to “opt out” of disclosures to      nonaffiliated third-parties. |
|---------------------|---------------------------------------------------------------------------------------------------------------------|

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| •   | raised      the deposit insurance limit on certain retirement accounts to $250,000 and      indexes that limit for inflation; |
|---------------------|-------------------------------------------------------------------------------------------------------------------------------|

| •   | required      the FDIC and National Credit Union Administration boards, starting in 2010      and every succeeding five years, to consider raising the standard maximum      deposit insurance; and |
|---------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| •   | eliminated      the current fixed 1.25 percent Designated Reserve Ratio (“DRR”) and      provided the FDIC with the discretion to set the DRR within a range of      1.15 to 1.50 percent for any givenyear. |
|---------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| ITEM 1A. | RISK      FACTORS |
|----------|-------------------|

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| ·   | Our      ability to develop and execute strategic plans and      initiatives. |
|--------------------|-------------------------------------------------------------------------------|

| ·   | Our      ability to develop, maintain and build upon long-term customer      relationships based on quality service, high ethical standards and safe,      sound assets. |
|--------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Our      ability to expand our marketposition. |
|--------------------|------------------------------------------------|

| ·   | The      scope, relevance and pricing of the products and services we offer to meet      customer needs and demands. |
|--------------------|----------------------------------------------------------------------------------------------------------------------|

| ·   | The      rate at which we introduce new products and services relative to our      competitors. |
|--------------------|-------------------------------------------------------------------------------------------------|

| ·   | Industry      and general economic trends. |
|--------------------|--------------------------------------------|

| ·   | Our      ability to attract and retain qualified  employees. |
|--------------------|--------------------------------------------------------------|

| ·   | Our      ability to respond to and resolve unexpected legal, regulatory or other      compliance issues. |
|--------------------|----------------------------------------------------------------------------------------------------------|

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| ·   | Potential      exposure to unknown or contingent liabilities of the acquired      company. |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Exposure      to potential asset quality issues of the acquired  company. |
|--------------------|---------------------------------------------------------------------------|

| ·   | Difficulty      and expense of integrating the operations and personnel of the acquired      company. |
|--------------------|-------------------------------------------------------------------------------------------------------|

| ·   | Potential      disruption to our business. |
|--------------------|--------------------------------------------|

| ·   | Potential      diversion of our management’s time and  attention. |
|--------------------|-------------------------------------------------------------------------|

| ·   | The      possible loss of key employees and customers of the acquired      company. |
|--------------------|-------------------------------------------------------------------------------------|

| ·   | Difficulty      in estimating the value (including goodwill) of the acquired      company. |
|--------------------|--------------------------------------------------------------------------------------------|

| ·   | Difficulty      in estimating the fair value of acquired assets, liabilities and      derivatives of the acquiredcompany. |
|--------------------|---------------------------------------------------------------------------------------------------------------------------|

| ·   | Potential      changes in banking or tax laws or regulations that may affect the acquired      company. |
|--------------------|---------------------------------------------------------------------------------------------------------|

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| ·   | Actual      or anticipated variations in quarterly results of    operations. |
|--------------------|------------------------------------------------------------------------------|

| ·   | Recommendations      by securities analysts. |
|--------------------|----------------------------------------------|

| ·   | Operating      and stock price performance of other companies that investors deem      comparable to our business. |
|--------------------|--------------------------------------------------------------------------------------------------------------------|

| ·   | News      reports relating to trends, concerns and other issues in or affecting the      financial services industry. |
|--------------------|-----------------------------------------------------------------------------------------------------------------------|

| ·   | Perceptions      of us and/or our competitors in themarketplace. |
|--------------------|------------------------------------------------------------------|

| ·   | New      technology used, or services offered, by our competitors, or      ourselves. |
|--------------------|---------------------------------------------------------------------------------------|

| ·   | Significant      acquisitions or business combinations, strategic partnerships, joint      ventures or capital commitments entered into by us or our      competitors. |
|--------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Failure      to integrate acquisitions or realize anticipated benefits from      acquisitions. |
|--------------------|------------------------------------------------------------------------------------------------|

| ·   | Changes      in government regulations. |
|--------------------|-----------------------------------------|

| ·   | Geopolitical      conditions such as acts or threats of terrorism or military      conflicts. |
|--------------------|-----------------------------------------------------------------------------------------------|

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| ITEM 1B. | UNRESOLVED      STAFF COMMENTS |
|----------|--------------------------------|

| ITEM 2. | PROPERTIES |
|---------|------------|

| ITEM 3. | LEGAL      PROCEEDINGS |
|---------|------------------------|

| ITEM 4. | SUBMISSION      OF MATTERS TO A VOTE OF SHAREOWNERS |
|---------|-----------------------------------------------------|

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PART II

| ITEM 5. | MARKET      FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREOWNER MATTERS AND ISSUER      PURCHASES OF EQUITY SECURITIES |
|---------|-----------------------------------------------------------------------------------------------------------------------|

|                | Year      Ended December 31, |
|---------------------|------------------------------|
|                | 2007                         |   | 2006 |
|                | High                         |   | Low |   | High |   | Low |
| First      Quarter  | $                            | 29.97 |   | $ | 24.71 |   | $ | 22.43 |   | $ | 20.38 |
| Second      Quarter |                         | 26.92 |   |   | 22.21 |   |   | 23.96 |   |   | 20.82 |
| Third      Quarter  |                         | 26.17 |   |   | 20.17 |   |   | 28.00 |   |   | 21.78 |
| Fourth      Quarter |                         | 25.14 |   |   | 17.50 |   |   | 31.33 |   |   | 25.36 |

| Dividend      Declared | Record      Date | Payment      Date     |
|------------------------|------------------|-----------------------|
| $                      | 0.155            | January      9, 2007  | January      22, 2007 |
|                   | 0.160            | April      10, 2007   | April      24, 2007 |
|                   | 0.165            | July      10, 2007    | July      24, 2007 |
|                   | 0.170            | October      9, 2007  | October      23, 2007 |
|                   |             |                  |   |
| $                      | 0.113            | January      9, 2006  | January      24, 2006 |
|                   | 0.117            | April      11, 2006   | April      24, 2006 |
|                   | 0.120            | July      10, 2006    | July      24, 2006 |
|                   | 0.150            | October      10, 2006 | October      24, 2006 |

| Period                               | (a)      Total Number of Shares Purchased |    | (b)      Average Price Paid per Share |   | (c)      Total Number of Shares Purchased as Part of Publicly Announced      Plan |   | (d)      Maximum Number of Shares that May Yet Be Purchased Under the      Plans |
|--------------------------------------|-------------------------------------------|---------|---------------------------------------|--------|-----------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------|
| October      1 to October 31, 2007   |                                      | -       |                                  |   | -                                                                                 |   |                                                                             |   |   | 809,922 |
| November      1 to November 30, 2007 |                                      | 377,987 |                                  | $      | 18.90                                                                             |   |                                                                             | 1,831,388 |   |   | 431,935 |
| December      1 to December 31, 2007 |                                      | -       |                                  |   | -                                                                                 |   |                                                                             | - |   |   |   |
| Total                                |                                      | 377,987 |                                  | $      | 18.90                                                                             |   |                                                                             | 1,831,388 |   |   |   |

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| Index                               | 12/31/03 | 12/31/04 | 12/31/05 | 12/31/06 | 12/31/07 |
|-------------------------------------|----------|----------|----------|----------|----------|
| Frontier      Financial Corporation | $132.50  | $157.16  | $199.12  | $276.24  | $181.64  |
| NASDAQ      Bank Index              | $128.64  | $147.22  | $143.81  | $161.40  | $127.93  |
| S&P      500 Index              | $128.72  | $142.84  | $147.13  | $170.36  | $179.71  |

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ITEM6. 

| In Thousands, except per      share amounts |   |   |      |   |   |      |   |   |      |   |   |
|---------------------------------------------|--------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
|                                        |   |   |      |   |   |      |   |   |      |   |   | %      Change |   |
| AT      YEAR-END                            |   | 2007   |      | 2006   |   | 2005      |   | 2004   |      | 2003   |   |   | 2007-2006 |   |
| Total      assets                           |   | $      | 3,995,689 |   | $      | 3,238,464 |   | $      | 2,640,275 |   | $      | 2,243,396 |   | $ | 2,075,393 |   |   | 23.4 | % |
| Net      loans                              |   |   | 3,558,127 |   |   | 2,867,351 |   |   | 2,355,419 |   |   | 1,945,324 |   |   | 1,742,160 |   |   | 24.1 | % |
| Securities                                  |   |   | 135,121   |   |   | 114,711   |   |   | 110,617   |   |   | 153,451 |   |   | 187,915 |   |   | 17.8 | % |
| Deposits                                    |   |   | 2,943,236 |   |   | 2,453,632 |   |   | 2,061,380 |   |   | 1,795,842 |   |   | 1,667,017 |   |   | 20.0 | % |
| Shareowners'      equity                    |   |   | 459,612   |   |   | 395,283   |   |   | 296,097   |   |   | 254,230 |   |   | 219,406 |   |   | 16.3 | % |
|                                        |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |
| FOR      THE YEAR                           |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |
| Interest      income                        |   | $      | 299,672   |   | $      | 250,144   |   | $      | 178,886   |   | $      | 140,228 |   | $ | 135,201 |   |   | 19.8 | % |
| Interest      expense                       |   |   | 113,041   |   |   | 86,942    |   |   | 51,736    |   |   | 34,939 |   |   | 37,829 |   |   | 30.0 | % |
| Net      interest income                    |   |   | 186,631   |   |   | 163,202   |   |   | 127,150   |   |   | 105,289 |   |   | 97,372 |   |   | 14.4 | % |
| Securities      gains (losses)              |   |   | (937      | )      |   | (25       | )      |   | -         |   |   | (44 | ) |   | 190 |   | NM |   |
| Provision      for loan losses              |   |   | 11,400    |   |   | 7,500     |   |   | 4,200     |   |   | 3,500 |   |   | 4,250 |   |   | 52.0 | % |
| Net      income                             |   |   | 73,938    |   |   | 68,910    |   |   | 51,584    |   |   | 43,045 |   |   | 39,607 |   |   | 7.3 | % |
| Basic      earnings per share               |   | $      | 1.63      |   | $      | 1.53      |   | $      | 1.21      |   | $      | 1.03 |   | $ | 0.95 |   |   | 6.5 | % |
| Diluted      earnings per share             |   | $      | 1.62      |   | $      | 1.52      |   | $      | 1.21      |   | $      | 1.02 |   | $ | 0.94 |   |   | 6.6 | % |
| Cash      dividends declared                |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |
| per      common share                       |   | $      | 0.65      |   | $      | 0.50      |   | $      | 0.40      |   | $      | 0.34 |   | $ | 0.31 |   |   | 30.0 | % |
| Dividend      payout ratio                  |   |   | 40.1      | %      |   | 32.9      | %      |   | 33.1      | %      |   | 33.3 | % |   | 33.0 | % |   | 21.9 | % |
| Return      on Average                      |   |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |   |   |   |
|   Assets                          |   |   | 2.13      | %      |   | 2.27      | %      |   | 2.09      | %      |   | 1.98 | % |   | 1.96 | % |   |   |   |
|   Equity                          |   |   | 18.76     | %      |   | 18.91     | %      |   | 18.75     | %      |   | 18.35 | % |   | 19.23 | % |   |   |   |
| Avg.      equity/avg. assets                |   |   | 11.36     | %      |   | 11.98     | %      |   | 11.16     | %      |   | 10.76 | % |   | 10.21 | % |   |   |   |
| Efficiency      Ratio                       |   |   | 37        | %      |   | 38        | %      |   | 41        | %      |   | 42 | % |   | 41 | % |   |   |   |

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| ITEM 7. | MANAGEMENT’S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS |
|---------|-------------------------------------------------------------------------------------------------------|

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|                 | 2007      |    | 2006      |   | 2005      |
|----------------------|-----------|---------|-----------|--------|-----------|
|                 | Amortized |    | Amortized |   | Amortized |
|                 | Cost      |    | Cost      |   | Cost      |
| Equities             | $         | 27,606  |      | $      | 29,052    |   | $ | 23,400 |
| U.S.      Treasuries |      | 6,223   |      |   | 4,204     |   |   | 7,232 |
| U.S.      Agencies   |      | 71,385  |      |   | 50,004    |   |   | 49,621 |
| Corporate      Bonds |      | 17,062  |      |   | 18,198    |   |   | 19,326 |
| Municipal      Bonds |      | 5,352   |      |   | 3,753     |   |   | 4,231 |
|                 | $         | 127,628 |      | $      | 105,211   |   | $ | 103,810 |

|                 |         |   |   | After      1 Yr |   |   | After      5 Yrs |   |   |           |   |   | Totals      & |   |
|----------------------|--------------|--------|--------|-----------------|--------|--------|------------------|--------|--------|----------------|--------|--------|-------------------|--------|
|                 | Within       |   |   | But      Within |   |   | But      Within  |   |   | After          |   |   | Weighted          |   |
|                 | 1      Year/ |   |   | 5      Years/   |   |   | 10      Years/   |   |   | 10      Years/ |   |   | Average           |   |
|                 | Yield        |   |   | Yield           |   |   | Yield            |   |   | Yield          |   |   | Yield             |   |
| Equities             | $            | 21,681 |   |            | $      | -      |             |   | $      | -              |   |   | $                 | 5,925  |   |   | $ | 27,606 |   |
|                 |         | 3.47   | %      |            |   | -      |             |   |   | -              |   |   |              | 3.32   | % |   |   | 2.50 | % |
|                 |         |   |   |            |   |   |             |   |   |           |   |   |              |   |   |   |   |   |   |
| U.S.      Treasury   |         | 5,972  |   |            |   | -      |             |   |   | 251            |   |   |              | -      |   |   |   | 6,223 |   |
|                 |         | 4.98   | %      |            |   | -      |             |   |   | 7.20           | %      |   |              | -      |   |   |   | 5.07 | % |
|                 |         |   |   |            |   |   |             |   |   |           |   |   |              |   |   |   |   |   |   |
| U.S.      Agencies   |         | 6,978  |   |            |   | 34,550 |             |   |   | 29,857         |   |   |              | -      |   |   |   | 71,385 |   |
|                 |         | 4.54   | %      |            |   | 4.74   | %                |   |   | 5.47           | %      |   |              | -      |   |   |   | 5.03 | % |
|                 |         |   |   |            |   |   |             |   |   |           |   |   |              |   |   |   |   |   |   |
| Corporate      Bonds |         | 7,996  |   |            |   | 5,024  |             |   |   | -              |   |   |              | 4,042  |   |   |   | 17,062 |   |
|                 |         | 4.07   | %      |            |   | 5.38   | %                |   |   | -              |   |   |              | 10.19  | % |   |   | 5.91 | % |
|                 |         |   |   |            |   |   |             |   |   |           |   |   |              |   |   |   |   |   |   |
| Municipal      Bonds |         | 814    |   |            |   | 3,382  |             |   |   | 1,130          |   |   |              | 26     |   |   |   | 5,352 |   |
|                 |         | 7.72   | %      |            |   | 5.81   | %                |   |   | 5.40           | %      |   |              | 5.05   | % |   |   | 6.01 | % |
|                 | $            | 43,441 |   |            | $      | 42,956 |             |   | $      | 31,238         |   |   | $                 | 9,993  |   |   | $ | 127,628 |   |
|                 |         | 4.04   | %      |            |   | 4.90   | %                |   |   | 5.48           | %      |   |              | 6.10   | % |   |   | 4.84 | % |

|                             | 2007   |      | 2006   |   | 2005      |   | 2004   |      | 2003   |
|----------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|
| Commercial      and industrial   | $      | 402,569   |   | $      | 380,939   |   | $      | 321,303   |   | $ | 301,961 |   | $ | 268,963 |
| Real      Estate:                |   |      |   |   |      |   |   |      |   |   |   |   |   |   |
| Commercial                       |   | 1,003,916 |   |   | 897,714   |   |   | 859,251   |   |   | 848,737 |   |   | 809,307 |
| Construction                     |   | 1,062,662 |   |   | 735,926   |   |   | 554,021   |   |   | 342,287 |   |   | 296,568 |
| Land      development            |   | 537,410   |   |   | 399,950   |   |   | 269,662   |   |   | 182,032 |   |   | 138,517 |
| Completed      lots              |   | 249,573   |   |   | 188,032   |   |   | 143,652   |   |   | 84,102 |   |   | 72,787 |
| Residential      1-4 family      |   | 282,344   |   |   | 235,169   |   |   | 188,772   |   |   | 165,063 |   |   | 143,420 |
| Installment      and other loans |   | 67,421    |   |   | 63,050    |   |   | 46,852    |   |   | 50,057 |   |   | 40,201 |
| Total      loans                 | $      | 3,605,895 |   | $      | 2,900,780 |   | $      | 2,383,513 |   | $ | 1,974,239 |   | $ | 1,769,763 |

----

Table of Contents

|                             | Within      1 Year |      | 1      -5 Years |   | After      5 Years |   | Total  |
|----------------------------------|--------------------|-----------|-----------------|--------|--------------------|--------|--------|
|                             |               |      |            |   |               |   |   |
| Commercial      and industrial   | $                  | 247,355   |            | $      | 125,725            |   | $      | 29,489 |   | $ | 402,569 |
| Real      Estate:                |               |      |            |   |               |   |   |   |   |   |   |
| Commercial                       |               | 208,168   |            |   | 418,368            |   |   | 377,380 |   |   | 1,003,916 |
| Construction                     |               | 1,007,781 |            |   | 48,174             |   |   | 6,707 |   |   | 1,062,662 |
| Land      development            |               | 486,633   |            |   | 50,777             |   |   | - |   |   | 537,410 |
| Completed      lots              |               | 198,682   |            |   | 45,841             |   |   | 5,050 |   |   | 249,573 |
| Residential      1-4 family      |               | 109,719   |            |   | 111,784            |   |   | 60,841 |   |   | 282,344 |
| Installment      and other loans |               | 15,085    |            |   | 15,118             |   |   | 37,218 |   |   | 67,421 |
| Total      loans                 | $                  | 2,273,423 |            | $      | 815,787            |   | $      | 516,685 |   | $ | 3,605,895 |

|                |   |   |   | 1      -5 Years |    | After      5 Years |   |    |   |
|---------------------|--------|--------|--------|-----------------|---------|--------------------|--------|---------|--------|
|                |   |   |   |            |    |               |   |    |   |   |   |
| Fixed      rates    |   |   |   | $               | 617,733 |               | $      | 80,798  |   |   |   |
| Variable      rates |   |   |   |            | 198,054 |               |   | 435,887 |   |   |   |
|                |   |   |   | $               | 815,787 |               | $      | 516,685 |   |   |   |

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Table of Contents

|                                               | 2007   |      | 2006   |   | 2005      |   | 2004   |      | 2003   |   |
|----------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
| Balance      at beginning of year                  | $      | 44,195    |   | $      | 37,075    |   | $      | 32,728    |   | $      | 29,556 |   | $ | 28,175 |   |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Provision      for loan losses                     |   | 11,400    |   |   | 7,500     |   |   | 4,200     |   |   | 3,500 |   |   | 4,250 |   |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Loans      charged-off:                            |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Commercial      and industrial                     |   | (1,183    | )      |   | (2,283    | )      |   | (342      | )      |   | (612 | ) |   | (1,617 | ) |
| Real      estate:                                  |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Commercial                                         |   | -         |   |   | -         |   |   | (4        | )      |   | - |   |   | (1,486 | ) |
| Construction                                       |   | (201      | )      |   | (855      | )      |   | -         |   |   | - |   |   | (48 | ) |
| Land      development                              |   | -         |   |   | -         |   |   | -         |   |   | - |   |   | - |   |
| Completed      lots                                |   | -         |   |   | -         |   |   | -         |   |   | - |   |   | - |   |
| Residential      1-4 family                        |   | (300      | )      |   | -         |   |   | (116      | )      |   | (387 | ) |   | (120 | ) |
| Installment      and other                         |   | (222      | )      |   | (156      | )      |   | (244      | )      |   | (413 | ) |   | (351 | ) |
| Total      charged-off loans                       |   | (1,906    | )      |   | (3,294    | )      |   | (706      | )      |   | (1,412 | ) |   | (3,622 | ) |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Recoveries:                                        |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Commercial      and industrial                     |   | 845       |   |   | 353       |   |   | 623       |   |   | 741 |   |   | 620 |   |
| Real      estate:                                  |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Commercial                                         |   | -         |   |   | -         |   |   | -         |   |   | 176 |   |   | 6 |   |
| Construction                                       |   | -         |   |   | -         |   |   | 142       |   |   | 60 |   |   | - |   |
| Land      development                              |   | -         |   |   | -         |   |   | -         |   |   | - |   |   | - |   |
| Completed      lots                                |   | -         |   |   | -         |   |   | -         |   |   | - |   |   | - |   |
| Residential      1-4 family                        |   | -         |   |   | -         |   |   | 27        |   |   | 51 |   |   | 62 |   |
| Installment      and other                         |   | 141       |   |   | 60        |   |   | 61        |   |   | 56 |   |   | 65 |   |
| Total      recoveries                              |   | 986       |   |   | 413       |   |   | 853       |   |   | 1,084 |   |   | 753 |   |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Net      (charge-offs) recoveries                  |   | (920      | )      |   | (2,881    | )      |   | 147       |   |   | (328 | ) |   | (2,869 | ) |
| Balance      before portion identified             |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
|     for      undisbursed loans |   | 54,675    |   |   | 41,694    |   |   | 37,075    |   |   | 32,728 |   |   | 29,556 |   |
| Reserve      acquired in merger                    |   | 2,983     |   |   | 2,501     |   |   | -         |   |   | - |   |   | - |   |
| Portion      of reserve identified for             |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| undisbursed      loans and                         |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| reclassified      as a liability                   |   | (3,663    | )      |   | (3,546    | )      |   | (3,270    | )      |   | (2,307 | ) |   | (1,768 | ) |
| Balance      at end of year                        | $      | 53,995    |   | $      | 40,649    |   | $      | 33,805    |   | $      | 30,421 |   | $ | 27,788 |   |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Total      loans at end of period (1)              | $      | 3,612,122 |   | $      | 2,908,000 |   | $      | 2,389,224 |   | $      | 1,978,052 |   | $ | 1,771,716 |   |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Daily      average loans                           | $      | 3,185,751 |   | $      | 2,731,257 |   | $      | 2,200,344 |   | $      | 1,887,528 |   | $ | 1,691,051 |   |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Ratio      of net charged-offs                     |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| (recoveries)      during the period                |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| to      average loans outstanding                  |   | 0.03      | %      |   | 0.11      | %      |   | -0.01     | %      |   | 0.02 | % |   | 0.17 | % |
| Loan      loss reserve as a                        |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| percentage      of total loans                     |   | 1.49      | %      |   | 1.40      | %      |   | 1.41      | %      |   | 1.54 | % |   | 1.57 | % |
|                                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| (1)      Includes loans held for resale            |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |

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| (In      thousands)                                |   |    |   |     |   |   |    |   |     |   |   |    |   |     |   |
|----------------------------------------------------|--------|---------|--------|----------|--------|--------|---------|--------|----------|--------|--------|---------|--------|----------|--------|
|                                               |   |    |   | Loan     |   |   |    |   | Loan     |   |   |    |   | Loan     |   |
|                                               |   | 2007    |   | Category |   |   | 2006    |   | Category |   |   | 2005    |   | Category |   |
|                                               |   | Reserve |   | Percent  |   |   | Reserve |   | Percent  |   |   | Reserve |   | Percent  |   |
| Commercial      and agriculture                    |   | $       | 9,856  |     |   | 11.2   | %       |   | $        | 9,726  |   |    | 13.1   | %        |   | $ | 11,061 |   |   | 13.5 | % |
| Real      estate:                                  |   |    |   |     |   |   |    |   |     |   |   |    |   |     |   |   |   |   |   |   |   |
| Commercial                                         |   |    | 12,373 |     |   | 27.8   | %       |   |     | 11,040 |   |    | 30.9   | %        |   |   | 12,622 |   |   | 36.0 | % |
| Construction                                       |   |    | 824    |     |   | 29.5   | %       |   |     | 809    |   |    | 25.4   | %        |   |   | 504 |   |   | 23.2 | % |
| Land      development                              |   |    | 5,257  |     |   | 14.9   | %       |   |     | 4,123  |   |    | 13.8   | %        |   |   | 1,699 |   |   | 11.3 | % |
| Completed      lots                                |   |    | 3,443  |     |   | 6.9    | %       |   |     | 1,560  |   |    | 6.5    | %        |   |   | 907 |   |   | 6.0 | % |
| Residential      1-4 family                        |   |    | 16,900 |     |   | 7.8    | %       |   |     | 7,168  |   |    | 8.1    | %        |   |   | 4,088 |   |   | 7.9 | % |
| Installment      and other                         |   |    | 1,060  |     |   | 1.9    | %       |   |     | 1,012  |   |    | 2.2    | %        |   |   | 724 |   |   | 2.1 | % |
| Unallocated                                        |   |    | 4,282  |     |   |   |    |   |     | 5,211  |   |    |   |     |   |   | 2,200 |   |   |   |   |
|                                               |   |    | 53,995 |     |   |   |    |   |     | 40,649 |   |    |   |     |   |   | 33,805 |   |   |   |   |
| Portion      of reserve identified for undisbursed |   |    |   |     |   |   |    |   |     |   |   |    |   |     |   |   |   |   |   |   |   |
| loans      and reclassifed as a liability          |   |    | 3,663  |     |   |   |    |   |     | 3,546  |   |    |   |     |   |   | 3,270 |   |   |   |   |
|                                               |   | $       | 57,658 |     |   | 100.0  | %       |   | $        | 44,195 |   |    | 100.0  | %        |   | $ | 37,075 |   |   | 100.0 | % |

|                                               |   |    |   | Loan     |   |   |    |   | Loan     |   |
|----------------------------------------------------|--------|---------|--------|----------|--------|--------|---------|--------|----------|--------|
|                                               |   | 2004    |   | Category |   |   | 2003    |   | Category |   |
|                                               |   | Reserve |   | Percent  |   |   | Reserve |   | Percent  |   |
| Commercial      and agriculture                    |   | $       | 9,658  |     |   | 15.3   | %       |   | $        | 13,465 |   |   | 15.2 | % |
| Real      estate:                                  |   |    |   |     |   |   |    |   |     |   |   |   |   |   |
| Commercial                                         |   |    | 10,843 |     |   | 43.0   | %       |   |     | 8,948  |   |   | 45.7 | % |
| Construction                                       |   |    | 473    |     |   | 17.3   | %       |   |     | 543    |   |   | 16.8 | % |
| Land      development                              |   |    | 1,194  |     |   | 9.2    | %       |   |     | 262    |   |   | 7.8 | % |
| Completed      lots                                |   |    | 1,142  |     |   | 4.3    | %       |   |     | 132    |   |   | 4.1 | % |
| Residential      1-4 family                        |   |    | 3,846  |     |   | 8.4    | %       |   |     | 2,084  |   |   | 8.1 | % |
| Installment      and other                         |   |    | 461    |     |   | 2.5    | %       |   |     | 376    |   |   | 2.3 | % |
| Unallocated                                        |   |    | 2,700  |     |   |   |    |   |     | 1,978  |   |   |   |   |
|                                               |   |    | 30,317 |     |   |   |    |   |     | 27,788 |   |   |   |   |
| Portion      of reserve identified for undisbursed |   |    |   |     |   |   |    |   |     |   |   |   |   |   |
| loans      and reclassifed as a liability          |   |    | 2,411  |     |   |   |    |   |     | 1,768  |   |   |   |   |
|                                               |   | $       | 32,728 |     |   | 100.0  | %       |   | $        | 29,556 |   |   | 100.0 | % |

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|                                            | 2007   |      | 2006   |   | 2005      |   | 2004   |      | 2003   |   |
|-------------------------------------------------|--------|-----------|--------|--------|-----------|--------|--------|-----------|--------|--------|
| Commercial      and industrial                  | $      | 159       |   | $      | 574       |   | $      | 4,939     |   | $      | - |   | $ | 120 |   |
| Real      estate:                               |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Commercial                                      |   | -         |   |   | -         |   |   | -         |   |   | 6,847 |   |   | 6,187 |   |
| Construction                                    |   | 19,842    |   |   | 47        |   |   | -         |   |   | - |   |   | - |   |
| Land      development                           |   | -         |   |   | 7,143     |   |   | -         |   |   | - |   |   | - |   |
| Completed      lots                             |   | 804       |   |   | -         |   |   | -         |   |   | 356 |   |   | - |   |
| Residential      1-4 family                     |   | 93        |   |   | 889       |   |   | -         |   |   | 6,904 |   |   | 344 |   |
| Installment      and other                      |   | 10        |   |   | -         |   |   | 10        |   |   | - |   |   | 43 |   |
| Total      nonaccruing loans                    |   | 20,908    |   |   | 8,653     |   |   | 4,949     |   |   | 14,107 |   |   | 6,694 |   |
| Other      real estate owned                    |   | 367       |   |   | -         |   |   | -         |   |   | - |   |   | 4,162 |   |
| Total      nonperforming assets                 | $      | 21,275    |   | $      | 8,653     |   | $      | 4,949     |   | $      | 14,107 |   | $ | 10,856 |   |
|                                            |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Restructured      loans                         | $      | -         |   | $      | -         |   | $      | -         |   | $      | - |   | $ | 6,178 |   |
|                                            |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Total      loans at end of period (1)           | $      | 3,612,122 |   | $      | 2,908,000 |   | $      | 2,389,224 |   | $      | 1,978,052 |   | $ | 1,771,716 |   |
| Total      assets at end of period              | $      | 3,995,689 |   | $      | 3,238,464 |   | $      | 2,640,275 |   | $      | 2,243,396 |   | $ | 2,075,393 |   |
|                                            |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| Total      nonperforming assets to total loans  |   | 0.59      | %      |   | 0.30      | %      |   | 0.21      | %      |   | 0.71 | % |   | 0.61 | % |
| Total      nonperforming assets to total assets |   | 0.53      | %      |   | 0.27      | %      |   | 0.19      | %      |   | 0.63 | % |   | 0.52 | % |
| Total      impaired assets to total assets      |   | 0.53      | %      |   | 0.27      | %      |   | 0.19      | %      |   | 0.63 | % |   | 0.82 | % |
|                                            |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |
| (1)      Includes loans held for resale         |   |      |   |   |      |   |   |      |   |   |   |   |   |   |   |

|                                     | 2007   |   | 2006   |   | 2005   |   | 2004   |   | 2003   |
|------------------------------------------|--------|--------|--------|--------|--------|--------|--------|--------|--------|
| Additional      interest income which    |   |   |   |   |   |   |   |   |   |
| would      have been recorded during the |   |   |   |   |   |   |   |   |   |
| period      under original loan terms    | $      | 757    |   | $      | 761    |   | $      | 67     |   | $ | 925 |   | $ | 443 |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      collected and included in  |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| net      income for the period           | $      | 1,131  |   | $      | 344    |   | $      | 327    |   | $ | 350 |   | $ | 429 |
|                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commitments      for additional funds    |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| related      to loans above              | $      | -      |   | $      | -      |   | $      | -      |   | $ | - |   | $ | - |

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Table of Contents

|                                      |   | 2007   |      | %      |   |   | 2006 |   | %      |      |   | 2005   |   | % |   |
|-------------------------------------------|--------|--------|-----------|--------|--------|--------|------|--------|--------|-----------|--------|--------|--------|---|--------|
| Money      market, sweep and NOW accounts |   | $      | 745,780   |   |   | 29.2   | %    |   | $      | 683,948   |   |   | 33.4   | % |   | $ | 322,283 |   |   | 19.4 | % |
| Savings                                   |   |   | 254,722   |   |   | 10.0   | %    |   |   | 305,669   |   |   | 14.9   | % |   |   | 495,108 |   |   | 29.7 | % |
| Time      deposits, $100,000 and over     |   |   | 832,373   |   |   | 32.6   | %    |   |   | 545,173   |   |   | 26.6   | % |   |   | 471,726 |   |   | 28.3 | % |
| Other      time deposits                  |   |   | 719,835   |   |   | 28.2   | %    |   |   | 512,221   |   |   | 25.1   | % |   |   | 376,411 |   |   | 22.6 | % |
| Total      interest bearing deposits      |   | $      | 2,552,710 |   |   | 100.0  | %    |   | $      | 2,047,011 |   |   | 100.0  | % |   | $ | 1,665,528 |   |   | 100.0 | % |

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Table of Contents

| 3      months or less                | $      | 220,256 |
|--------------------------------------|--------|---------|
| Over      3 months through 6 months  |   | 190,458 |
| Over      6 months through 12 months |   | 324,292 |
| Over      12 months                  |   | 97,367  |
| Total                                | $      | 832,373 |

|                           |   |    | Weighted |   |   |   |   | Weighted |   |   |   |   | Weighted |   |
|--------------------------------|--------|---------|----------|--------|--------|--------|--------|----------|--------|--------|--------|--------|----------|--------|
|                           |   |    | Average  |   |   |   |   | Average  |   |   |   |   | Average  |   |
|                           |   |    | Interest |   |   |   |   | Interest |   |   |   |   | Interest |   |
|                           | 2007   |    | Rate     |   |   | 2006   |   | Rate     |   |   | 2005   |   | Rate     |   |
| Year      end balance          | $      | 258,145 |     |   | 4.92   | %      |   | $        | 81,673 |   |   | 5.24   | %        |   | $ | 20,813 |   |   | 2.72 | % |
|                           |   |    |     |   |   |   |   |     |   |   |   |   |     |   |   |   |   |   |   |   |
| Highest      month end balance |   |    |     |   |   |   |   |     |   |   |   |   |     |   |   |   |   |   |   |   |
| during      the period         | $      | 260,554 |     |   |   |   |   | $        | 81,673 |   |   |   |     |   | $ | 52,444 |   |   |   |   |

|                                      | 2007   |    |   | 2006   |   |    | 2005   |   |
|-------------------------------------------|--------|---------|--------|--------|--------|---------|--------|--------|
| Maximum      outstanding at any month end | $      | 341,704 |   |   | $      | 282,017 |   |   | $ | 240,075 |   |
| Average      outstanding                  |   | 294,169 |   |   |   | 258,991 |   |   |   | 221,392 |   |
|                                      |   |    |   |   |   |    |   |   |   |   |   |
| Weighted      average interest rates      |   |    |   |   |   |    |   |   |   |   |   |
| Annual                                    |   | 4.15    | %      |   |   | 4.72    | %      |   |   | 4.71 | % |
| End      of year                          |   | 4.43    | %      |   |   | 4.69    | %      |   |   | 4.70 | % |

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Table of Contents

|                                                                                                                | Year      Ended December 31, |      |
|---------------------------------------------------------------------------------------------------------------------|------------------------------|-----------|
|                                                                                                                | 2007                         |      |   | 2006 |   |   | 2005 |   |
|                                                                                                                |                         |      |   | TE |   |   | Average |   |   |   |   |   | TE |   |   | Average |   |   |   |   |   | TE |   |   | Average |   |
|                                                                                                                |                         |      |   | Interest |   |   | Rates |   |   |   |   |   | Interest |   |   | Rates |   |   |   |   |   | Interest |   |   | Rates |   |
|                                                                                                                | Average                      |      |   | Income/ |   |   | Earned/ |   |   | Average |   |   | Income/ |   |   | Earned/ |   |   | Average |   |   | Income/ |   |   | Earned/ |   |
|                                                                                                                | Balance                      |      |   | Expense |   |   | Paid |   |   | Balance |   |   | Expense |   |   | Paid |   |   | Balance |   |   | Expense |   |   | Paid |   |
| Interest      Earning Assets                                                                                        |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable      investments                                                                                            | $                            | 109,798   |   |   | $ | 4,585 |   |   |   | 4.18 | % |   | $ | 102,488 |   |   | $ | 4,097 |   |   |   | 4.00 | % |   | $ | 117,268 |   |   | $ | 4,586 |   |   |   | 3.91 | % |
| Nontaxable      investments (1)                                                                                     |                         | 2,907     |   |   |   | 209 |   |   |   | 7.19 | % |   |   | 4,872 |   |   |   | 306 |   |   |   | 6.28 | % |   |   | 5,810 |   |   |   | 423 |   |   |   | 7.28 | % |
| Total                                                                                                               |                         | 112,705   |   |   |   | 4,794 |   |   |   | 4.25 | % |   |   | 107,360 |   |   |   | 4,403 |   |   |   | 4.10 | % |   |   | 123,078 |   |   |   | 5,009 |   |   |   | 4.07 | % |
| Federal      funds sold                                                                                             |                         | 18,405    |   |   |   | 958 |   |   |   | 5.21 | % |   |   | 28,534 |   |   |   | 1,448 |   |   |   | 5.07 | % |   |   | 11,445 |   |   |   | 361 |   |   |   | 3.15 | % |
| Loans      (1) (2)                                                                                                  |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                                                                                                         |                         | 62,841    |   |   |   | 6,083 |   |   |   | 9.68 | % |   |   | 60,871 |   |   |   | 5,764 |   |   |   | 9.47 | % |   |   | 47,930 |   |   |   | 4,244 |   |   |   | 8.85 | % |
| Commercial(1)                                                                                                       |                         | 383,242   |   |   |   | 33,776 |   |   |   | 8.81 | % |   |   | 366,601 |   |   |   | 31,013 |   |   |   | 8.46 | % |   |   | 320,923 |   |   |   | 23,364 |   |   |   | 7.28 | % |
| Real      estate                                                                                                    |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial      (1)                                                                                                 |                         | 919,028   |   |   |   | 72,313 |   |   |   | 7.87 | % |   |   | 897,258 |   |   |   | 68,350 |   |   |   | 7.62 | % |   |   | 866,647 |   |   |   | 60,468 |   |   |   | 6.98 | % |
| Construction                                                                                                        |                         | 890,404   |   |   |   | 91,963 |   |   |   | 10.33 | % |   |   | 698,777 |   |   |   | 72,152 |   |   |   | 10.33 | % |   |   | 465,475 |   |   |   | 42,751 |   |   |   | 9.18 | % |
| Land      development                                                                                               |                         | 457,116   |   |   |   | 48,310 |   |   |   | 10.57 | % |   |   | 299,604 |   |   |   | 31,429 |   |   |   | 10.49 | % |   |   | 208,580 |   |   |   | 18,936 |   |   |   | 9.08 | % |
| Completed      lots                                                                                                 |                         | 209,916   |   |   |   | 20,784 |   |   |   | 9.90 | % |   |   | 182,105 |   |   |   | 17,738 |   |   |   | 9.74 | % |   |   | 105,309 |   |   |   | 9,468 |   |   |   | 8.99 | % |
| Residential      1-4 family                                                                                         |                         | 263,204   |   |   |   | 21,965 |   |   |   | 8.35 | % |   |   | 226,041 |   |   |   | 18,826 |   |   |   | 8.33 | % |   |   | 185,480 |   |   |   | 15,111 |   |   |   | 8.15 | % |
| Total      loans                                                                                                    |                         | 3,185,751 |   |   |   | 295,194 |   |   |   | 9.27 | % |   |   | 2,731,257 |   |   |   | 245,272 |   |   |   | 8.98 | % |   |   | 2,200,344 |   |   |   | 174,342 |   |   |   | 7.92 | % |
| Total      earning assets/total                                                                                     |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      interest      income                                                                  |                         | 3,316,861 |   |   |   | 300,946 |   |   |   | 9.07 | % |   |   | 2,867,151 |   |   |   | 251,123 |   |   |   | 8.76 | % |   |   | 2,334,867 |   |   |   | 179,712 |   |   |   | 7.70 | % |
| Reserve      for loan losses                                                                                        |                         | (43,972   | ) |   |   |   |   |   |   |   |   |   |   | (38,766 | ) |   |   |   |   |   |   |   |   |   |   | (32,031 | ) |   |   |   |   |   |   |   |   |
| Cash      and due from banks                                                                                        |                         | 68,285    |   |   |   |   |   |   |   |   |   |   |   | 83,351 |   |   |   |   |   |   |   |   |   |   |   | 80,644 |   |   |   |   |   |   |   |   |   |
| Other      assets                                                                                                   |                         | 129,390   |   |   |   |   |   |   |   |   |   |   |   | 129,836 |   |   |   |   |   |   |   |   |   |   |   | 85,205 |   |   |   |   |   |   |   |   |   |
| TOTAL      ASSETS                                                                                                   | $                            | 3,470,564 |   |   |   |   |   |   |   |   |   |   | $ | 3,041,572 |   |   |   |   |   |   |   |   |   |   | $ | 2,468,685 |   |   |   |   |   |   |   |   |   |
|                                                                                                                |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest      Bearing Liabilities                                                                                   |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money      Market, Sweep &                                                                                      |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      NOW      accounts                                                                     | $                            | 716,777   |   |   | $ | 23,990 |   |   |   | 3.35 | % |   | $ | 542,335 |   |   |   | 17,123 |   |   |   | 3.16 | % |   | $ | 302,497 |   |   |   | 4,195 |   |   |   | 1.39 | % |
| Savings      accounts                                                                                               |                         | 268,017   |   |   |   | 6,207 |   |   |   | 2.32 | % |   |   | 374,167 |   |   |   | 8,718 |   |   |   | 2.33 | % |   |   | 575,164 |   |   |   | 11,539 |   |   |   | 2.01 | % |
| Other      time deposits                                                                                            |                         | 1,325,777 |   |   |   | 66,883 |   |   |   | 5.04 | % |   |   | 1,063,229 |   |   |   | 47,685 |   |   |   | 4.48 | % |   |   | 708,201 |   |   |   | 24,980 |   |   |   | 3.53 | % |
| Total      interest bearing                                                                                         |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      deposits                                                                              |                         | 2,310,571 |   |   |   | 97,080 |   |   |   | 4.20 | % |   |   | 1,979,731 |   |   |   | 73,526 |   |   |   | 3.71 | % |   |   | 1,585,862 |   |   |   | 40,714 |   |   |   | 2.57 | % |
|                                                                                                                |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term      borrowings                                                                                          |                         | 42,542    |   |   |   | 2,212 |   |   |   | 5.20 | % |   |   | 20,089 |   |   |   | 910 |   |   |   | 4.53 | % |   |   | 21,614 |   |   |   | 588 |   |   |   | 2.72 | % |
| FHLB      borrowings                                                                                                |                         | 294,169   |   |   |   | 13,402 |   |   |   | 4.56 | % |   |   | 258,991 |   |   |   | 12,195 |   |   |   | 4.71 | % |   |   | 221,392 |   |   |   | 10,434 |   |   |   | 4.71 | % |
| Subordinated      debt                                                                                              |                         | 5,156     |   |   |   | 347 |   |   |   | 6.73 | % |   |   | 4,726 |   |   |   | 311 |   |   |   | 6.58 | % |   |   | - |   |   |   | - |   |   |   |   |   |
| Total      interest bearing                                                                                         |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      liabilities/total                                                                     |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      interest      expense                                                                 |                         | 2,652,438 |   |   |   | 113,041 |   |   |   | 4.26 | % |   |   | 2,263,537 |   |   |   | 86,942 |   |   |   | 3.84 | % |   |   | 1,828,868 |   |   |   | 51,736 |   |   |   | 2.83 | % |
| Noninterest      bearing                                                                                            |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      deposits                                                                              |                         | 396,293   |   |   |   |   |   |   |   |   |   |   |   | 389,945 |   |   |   |   |   |   |   |   |   |   |   | 348,737 |   |   |   |   |   |   |   |   |   |
| Other      liabilities                                                                                              |                         | 27,657    |   |   |   |   |   |   |   |   |   |   |   | 23,722 |   |   |   |   |   |   |   |   |   |   |   | 15,979 |   |   |   |   |   |   |   |   |   |
| Shareowners'      equity                                                                                            |                         | 394,176   |   |   |   |   |   |   |   |   |   |   |   | 364,368 |   |   |   |   |   |   |   |   |   |   |   | 275,101 |   |   |   |   |   |   |   |   |   |
| TOTAL      LIABILITIES                                                                                              |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      AND      CAPITAL                                                                      | $                            | 3,470,564 |   |   |   |   |   |   |   |   |   |   | $ | 3,041,572 |   |   |   |   |   |   |   |   |   |   | $ | 2,468,685 |   |   |   |   |   |   |   |   |   |
| NET      INTEREST INCOME                                                                                            |                         |      |   |   | $ | 187,905 |   |   |   |   |   |   |   |   |   |   | $ | 164,181 |   |   |   |   |   |   |   |   |   |   | $ | 127,976 |   |   |   |   |   |
| NET      YIELD ON INTEREST                                                                                          |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|      EARNING      ASSETS                                                                   |                         |      |   |   |   |   |   |   |   | 5.67 | % |   |   |   |   |   |   |   |   |   |   | 5.73 | % |   |   |   |   |   |   |   |   |   |   | 5.48 | % |
|                                                                                                                |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)      Includes amounts to convert nontaxable amounts to a fully taxable      equivalent basis at a 35% tax rate. |                         |      |   |   |   |   |   |   |   |   |   |   |   |
| (2)      Includes nonaccruing loans.                                                                                |                         |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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|                           | Year      ended December 31, |   |
|--------------------------------|------------------------------|--------|
|                           | 2007      versus 2006        |   |   | 2006      versus 2005 |   |
|                           | Increase      (Decrease) Due |   |   | Increase      (Decrease) Due |   |
|                           | to      Change in            |   |   | to      Change in |   |
|                           |                         |   |   |   |   |   | Total |   |   |   |   |   |   |   |   | Total |   |
|                           | Average                      |   |   | Average |   |   | Increase |   |   | Average |   |   | Average |   |   | Increase |   |
|                           | Volume                       |   |   | Rate |   |   | (Decrease) |   |   | Volume |   |   | Rate |   |   | (Decrease) |   |
| INTEREST      INCOME           |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable      investments       | $                            | 292    |   |   | $ | 196 |   |   | $ | 488 |   |   | $ | (578 | ) |   | $ | 89 |   |   | $ | (489 | ) |
| Nontaxable      investments    |                         | (123   | ) |   |   | 26 |   |   |   | (97 | ) |   |   | (68 | ) |   |   | (49 | ) |   |   | (117 | ) |
| Total                          |                         | 169    |   |   |   | 222 |   |   |   | 391 |   |   |   | (646 | ) |   |   | 40 |   |   |   | (606 | ) |
|                           |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal      funds sold        |                         | (514   | ) |   |   | 24 |   |   |   | (490 | ) |   |   | 539 |   |   |   | 548 |   |   |   | 1,087 |   |
|                           |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Loans                          |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Installment                    |                         | 187    |   |   |   | 132 |   |   |   | 319 |   |   |   | 1,146 |   |   |   | 374 |   |   |   | 1,520 |   |
| Commercial                     |                         | 1,408  |   |   |   | 1,355 |   |   |   | 2,763 |   |   |   | 3,325 |   |   |   | 4,324 |   |   |   | 7,649 |   |
| Real      estate               |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Commercial                     |                         | 1,658  |   |   |   | 2,305 |   |   |   | 3,963 |   |   |   | 2,136 |   |   |   | 5,746 |   |   |   | 7,882 |   |
| Construction                   |                         | 19,786 |   |   |   | 25 |   |   |   | 19,811 |   |   |   | 21,427 |   |   |   | 7,974 |   |   |   | 29,401 |   |
| Land      development          |                         | 16,523 |   |   |   | 358 |   |   |   | 16,881 |   |   |   | 8,264 |   |   |   | 4,229 |   |   |   | 12,493 |   |
| Completed      lots            |                         | 2,709  |   |   |   | 337 |   |   |   | 3,046 |   |   |   | 6,904 |   |   |   | 1,366 |   |   |   | 8,270 |   |
| Residential      1-4 family    |                         | 3,095  |   |   |   | 44 |   |   |   | 3,139 |   |   |   | 3,304 |   |   |   | 411 |   |   |   | 3,715 |   |
| Total      loans               |                         | 45,366 |   |   |   | 4,556 |   |   |   | 49,922 |   |   |   | 46,506 |   |   |   | 24,424 |   |   |   | 70,930 |   |
| TOTAL      INTEREST            |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INCOME                         |                         | 45,021 |   |   |   | 4,802 |   |   |   | 49,823 |   |   |   | 46,399 |   |   |   | 25,012 |   |   |   | 71,411 |   |
|                           |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| INTEREST      EXPENSE          |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Money      Market, Sweep & |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| NOW      accounts              |                         | 5,508  |   |   |   | 1,359 |   |   |   | 6,867 |   |   |   | 3,326 |   |   |   | 9,602 |   |   |   | 12,928 |   |
| Savings      accounts          |                         | (2,473 | ) |   |   | (38 | ) |   |   | (2,511 | ) |   |   | (4,032 | ) |   |   | 1,211 |   |   |   | (2,821 | ) |
| Other      time deposits       |                         | 11,775 |   |   |   | 7,423 |   |   |   | 19,198 |   |   |   | 12,523 |   |   |   | 10,182 |   |   |   | 22,705 |   |
| Total      interest bearing    |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| deposits                       |                         | 14,810 |   |   |   | 8,744 |   |   |   | 23,554 |   |   |   | 11,817 |   |   |   | 20,995 |   |   |   | 32,812 |   |
|                           |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Short-term      borrowings     |                         | 1,017  |   |   |   | 285 |   |   |   | 1,302 |   |   |   | (41 | ) |   |   | 363 |   |   |   | 322 |   |
| FHLB      borrowing            |                         | 1,656  |   |   |   | (449 | ) |   |   | 1,207 |   |   |   | 1,772 |   |   |   | (11 | ) |   |   | 1,761 |   |
| Subordinated      debt         |                         | 28     |   |   |   | 8 |   |   |   | 36 |   |   |   | - |   |   |   | 311 |   |   |   | 311 |   |
| TOTAL      INTEREST            |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| EXPENSE                        |                         | 17,511 |   |   |   | 8,588 |   |   |   | 26,099 |   |   |   | 13,548 |   |   |   | 21,658 |   |   |   | 35,206 |   |
|                           |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| CHANGE      IN NET             |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|  INTEREST      INCOME     | $                            | 27,510 |   |   | $ | (3,786 | ) |   | $ | 23,724 |   |   | $ | 32,851 |   |   | $ | 3,354 |   |   | $ | 36,205 |   |

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|                                           | Frontier      Financial Corporation |   |   | Frontier      Bank |   |   | Well      Capitalized Minimum |   |
|------------------------------------------------|-------------------------------------|--------|--------|--------------------|--------|--------|-------------------------------|--------|
| Total      capital to risk-weighted assets     |                                | 11.38  | %      |               |   | 10.62  | %                             |   |   | 10.00 | % |
| Tier      1 capital to risk-weighted assets    |                                | 10.13  | %      |               |   | 9.37   | %                             |   |   | 6.00 | % |
| Tier      1 leverage capital to average assets |                                | 10.55  | %      |               |   | 9.74   | %                             |   |   | 5.00 | % |

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|                          | Payments      due per period |      |           |
|-------------------------------|------------------------------|-----------|----------------|
|                          | Less      Than               |      |           |   |   |   |   |   |   |
|                          | One      Year                |      | 1-3      Years |   | 3-5      Years |   | Thereafter |   | Total |
| Time      deposits            | $                            | 1,340,726 |           | $ | 150,418 |   | $ | 57,797 |   | $ | 3,267 |   | $ | 1,552,208 |
| FHLB      borrowings          |                         | 32,556    |           |   | 70,452 |   |   | 100,628 |   |   | 95,000 |   |   | 298,636 |
| Junior      subordinated debt |                         | -         |           |   | - |   |   | - |   |   | 5,156 |   |   | 5,156 |
| Operating      leases         |                         | 2,044     |           |   | 3,033 |   |   | 1,349 |   |   | 1,399 |   |   | 7,825 |
| Total                         | $                            | 1,375,326 |           | $ | 223,903 |   | $ | 159,774 |   | $ | 104,822 |   | $ | 1,863,825 |

|                                          | Amount |
|-----------------------------------------------|--------|
| Commitments      to extend credit             | $      | 956,753 |
| Credit      card arrangements                 |   | 41,771 |
| Standby      and commercial letters of credit |   | 21,225 |
|                                          | $      | 1,019,749 |

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ITEM7A. 

|                     |   | 2008      Estimated Change |   |   | 2007      Estimated Change |   |   | 2006      Estimated Change |   |
|--------------------------|--------|----------------------------|--------|--------|----------------------------|--------|--------|----------------------------|--------|
| Rate      shock          |   |                       | (1.0   | %)     |                       |   | 2.0    | %                          |   |   | (1.0 | %) |   |   | 2.0 | % |   |   | (1.0 | %) |   |   | 2.0 | % |
| Net      interest income |   | $                          | (974   | )      |                       | $      | 4,837  |                       |   | $ | (6,034 | ) |   | $ | 14,162 |   |   | $ | (5,213 | ) |   | $ | 19,922 |   |
| Net      income          |   |                       | (643   | )      |                       |   | 3,192  |                       |   |   | (3,817 | ) |   |   | 9,004 |   |   |   | (3,409 | ) |   |   | 12,768 |   |

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|                                                                             |   | Expected      Maturity Date |      |   | Fair   |
|----------------------------------------------------------------------------------|--------|-----------------------------|-----------|--------|--------|
|                                                                             |   | 2008                        |      |   | 2009   |   |   | 2010 |   |   | 2011 |   |   | 2012 |   |   | Thereafter |   |   | Total |   |   | Value |
| Financial      Assets                                                            |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Cash      and due from banks                                                     |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest      bearing                                                         |   | $                           | 99,102    |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | - |   |   | $ | 99,102 |   |   | $ | 99,102 |
| Fed      Funds Sold                                                              |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable      Rate                                                               |   |                        | 5         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5 |   |   |   | 5 |
| Weighted      average interest rate                                              |   |                        | 4.35      | %      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4.35 | % |   |   |   |
| Securities      available for sale                                               |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate                                                                  |   |                        | 42,790    |   |   |   | 15,669 |   |   |   | 15,438 |   |   |   | 4,285 |   |   |   | 5,996 |   |   |   | 39,708 |   |   |   | 123,886 |   |   |   | 131,378 |
| Weighted      average interest rate (1)                                          |   |                        | 3.98      | %      |   |   | 4.67 | % |   |   | 4.67 | % |   |   | 5.42 | % |   |   | 5.39 | % |   |   | 5.47 | % |   |   | 4.73 | % |   |   |   |
| Securities      held to maturity                                                 |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate                                                                  |   |                        | 650       |   |   |   | 982 |   |   |   | 586 |   |   |   | - |   |   |   | - |   |   |   | 1,525 |   |   |   | 3,743 |   |   |   | 3,766 |
| Weighted      average interest rate (1)                                          |   |                        | 8.05      | %      |   |   | 6.70 | % |   |   | 5.26 | % |   |   |   |   |   |   |   |   |   |   | 9.68 | % |   |   | 7.93 | % |   |   |   |
| Loans      Receivable, net                                                       |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate                                                                  |   |                        | 315,386   |   |   |   | 156,549 |   |   |   | 143,309 |   |   |   | 142,042 |   |   |   | 175,831 |   |   |   | 80,798 |   |   |   | 1,013,915 |   |   |   | 1,047,140 |
| Weighted      average interest rate (2)                                          |   |                        | 7.23      | %      |   |   | 6.65 | % |   |   | 6.92 | % |   |   | 7.15 | % |   |   | 7.83 | % |   |   | 6.69 | % |   |   | 7.07 | % |   |   |   |
| Variable      Rate                                                               |   |                        | 1,958,037 |   |   |   | 100,465 |   |   |   | 16,569 |   |   |   | 15,042 |   |   |   | 65,980 |   |   |   | 435,887 |   |   |   | 2,591,980 |   |   |   | 2,591,980 |
| Weighted      average interest rate (2)                                          |   |                        | 9.51      | %      |   |   | 8.97 | % |   |   | 9.10 | % |   |   | 8.42 | % |   |   | 8.10 | % |   |   | 7.01 | % |   |   | 8.98 | % |   |   |   |
|                                                                             |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Financial      Liabilities                                                       |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest      bearing deposits                                                |   | $                           | 23,432    |   |   | $ | 22,026 |   |   | $ | 20,704 |   |   | $ | 19,462 |   |   | $ | 18,294 |   |   | $ | 286,608 |   |   | $ | 390,526 |   |   | $ | 390,526 |
| NOW,      Sweep and Money Market accounts                                        |   |                        | 59,662    |   |   |   | 54,889 |   |   |   | 50,498 |   |   |   | 46,458 |   |   |   | 42,742 |   |   |   | 491,531 |   |   |   | 745,780 |   |   |   | 745,780 |
| Weighted      average interest rate                                              |   |                        | 2.67      | %      |   |   | 2.67 | % |   |   | 2.67 | % |   |   | 2.67 | % |   |   | 2.67 | % |   |   | 2.67 | % |   |   | 2.67 | % |   |   |   |
| Savings      accounts                                                            |   |                        | 25,472    |   |   |   | 22,925 |   |   |   | 20,632 |   |   |   | 18,569 |   |   |   | 16,712 |   |   |   | 150,412 |   |   |   | 254,722 |   |   |   | 254,722 |
| Weighted      average interest rate                                              |   |                        | 2.28      | %      |   |   | 2.28 | % |   |   | 2.28 | % |   |   | 2.28 | % |   |   | 2.28 | % |   |   | 2.28 | % |   |   | 2.28 | % |   |   |   |
| Time      Certificates                                                           |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate                                                                  |   |                        | 1,340,726 |   |   |   | 110,045 |   |   |   | 40,373 |   |   |   | 20,921 |   |   |   | 36,876 |   |   |   | 3,267 |   |   |   | 1,552,208 |   |   |   | 1,573,766 |
| Weighted      average interest rate                                              |   |                        | 5.04      | %      |   |   | 4.69 | % |   |   | 4.64 | % |   |   | 5.03 | % |   |   | 5.15 | % |   |   | 5.14 | % |   |   | 4.95 | % |   |   |   |
| Federal      funds purchased & securities                                    |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|       sold      under agreements to repurchase     |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Variable      rate                                                               |   |                        | 258,145   |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 258,145 |   |   |   | 258,145 |
| Weighted      average interest rate                                              |   |                        | 4.92      | %      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 4.92 | % |   |   |   |
| Subordinated      debt                                                           |   |                        | -         |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | - |   |   |   | 5,156 |   |   |   | 5,156 |   |   |   | 4,976 |
| Weighted      average interest rate                                              |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   | 6.5 |   |   |   | 6.50 | % |   |   |   |
| FHLB      advances                                                               |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fixed      Rate                                                                  |   |                        | 32,556    |   |   |   | 39,015 |   |   |   | 31,437 |   |   |   | - |   |   |   | 100,628 |   |   |   | 95,000 |   |   |   | 298,636 |   |   |   | 298,105 |
| Weighted      average interest rate                                              |   |                        | 4.06      | %      |   |   | 4.16 | % |   |   | 4.86 | % |   |   |   |   |   |   | 4.54 | % |   |   | 4.42 | % |   |   | 4.43 | % |   |   |   |
|                                                                             |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| (1)       Represents tax equivalent yield                                   |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|        (2)  Represents weighted note rates exclusive of loan      fees |   |                        |      |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |

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Table of Contents

|                                                                           |   | 2008   |      |   | 2009   |   |    | 2010   |   |   | 2011    |   |   | 2012   |    |   | Thereafter |   |    | Total  |   |
|--------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|--------|---------|--------|--------|--------|---------|--------|--------|--------|---------|--------|------------|--------|---------|--------|--------|
| ASSETS                                                                         |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |
| Loans      (1)    (2)                                                          |   | $      | 2,575,109 |   |   | $      | 285,963 |   |   | $      | 239,874 |   |   | $      | 209,245 |   |       | $      | 232,343 |   |   | $ | 63,361 |   |   | $ | 3,605,895 |   |
|   Yield                                                              |   |   | 8.44      | %      |   |   | 7.05    | %      |   |   | 7.25    | %      |   |   | 7.56    | %      |       |   | 7.48    | %      |   |   | 6.31 | % |   |   | 8.10 | % |
| Investments (2) (3)                                                            |   |   | 43,440    |   |   |   | 16,651  |   |   |   | 16,024  |   |   |   | 4,285   |   |       |   | 5,996   |   |   |   | 41,232 |   |   |   | 127,628 |   |
|   Yield                                                              |   |   | 4.04      | %      |   |   | 4.79    | %      |   |   | 4.69    | %      |   |   | 5.42    | %      |       |   | 5.39    | %      |   |   | 5.63 | % |   |   | 4.48 | % |
| Fed      funds sold                                                            |   |   | 5         |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | - |   |   |   | 5 |   |
|   Yield                                                              |   |   | 4.35      | %      |   |   | -       |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | - |   |   |   | 4.35 | % |
| Total      earning assets                                                      |   | $      | 2,618,554 |   |   | $      | 302,614 |   |   | $      | 255,898 |   |   | $      | 213,530 |   |       | $      | 238,339 |   |   | $ | 104,593 |   |   | $ | 3,733,528 |   |
|   Yield                                                              |   |   | 8.32      | %      |   |   | 6.93    | %      |   |   | 7.09    | %      |   |   | 7.52    | %      |       |   | 7.43    | %      |   |   | 6.03 | % |   |   | 7.96 | % |
|                                                                           |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| LIABILITIES                                                                    |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| NOW,      money market,                                                        |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
|       and      sweep accounts                    |   | $      | 595,662   |   |   | $      | 43,437  |   |   | $      | 38,712  |   |   | $      | 28,636  |   |       | $      | 28,636  |   |   | $ | 10,697 |   |   | $ | 745,780 |   |
|   Cost                                                               |   |   | 2.67      | %      |   |   | 2.67    | %      |   |   | 2.67    | %      |   |   | 2.67    | %      |       |   | 2.67    | %      |   |   | 2.67 | % |   |   | 2.67 | % |
| Savings                                                                        |   |   | 8,830     |   |   |   | 8,830   |   |   |   | 8,830   |   |   |   | 8,830   |   |       |   | 8,830   |   |   |   | 210,572 |   |   |   | 254,722 |   |
|   Cost                                                               |   |   | 2.28      | %      |   |   | 2.28    | %      |   |   | 2.28    | %      |   |   | 2.28    | %      |       |   | 2.28    | %      |   |   | 2.28 | % |   |   | 2.28 | % |
| Time      deposits                                                             |   |   | 1,340,726 |   |   |   | 110,045 |   |   |   | 40,373  |   |   |   | 20,921  |   |       |   | 36,876  |   |   |   | 3,267 |   |   |   | 1,552,208 |   |
|   Cost                                                               |   |   | 5.04      | %      |   |   | 4.69    | %      |   |   | 4.64    | %      |   |   | 5.03    | %      |       |   | 5.15    | %      |   |   | 5.14 | % |   |   | 4.95 | % |
| Fed      funds purchased                                                       |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
|      and      repurchase agreements                   |   |   | 258,145   |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | - |   |   |   | 258,145 |   |
|   Cost                                                               |   |   | 4.92      | %      |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   | 4.92 | % |
| Subordinated      debt                                                         |   |   | -         |   |   |   | -       |   |   |   | -       |   |   |   | -       |   |       |   | -       |   |   |   | 5,156 |   |   |   | 5,156 |   |
|   Cost                                                               |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   | 6.50 | % |   |   | 6.50 | % |
| FHLB      borrowings                                                           |   |   | 32,556    |   |   |   | 39,015  |   |   |   | 31,437  |   |   |   | -       |   |       |   | 100,628 |   |   |   | 95,000 |   |   |   | 298,636 |   |
|   Cost                                                               |   |   | 4.06      | %      |   |   | 4.16    | %      |   |   | 4.86    | %      |   |   | -       |   |       |   | 4.54    | %      |   |   | 4.42 | % |   |   | 4.43 | % |
| Total      interest bearing liabilities                                        |   | $      | 2,235,919 |   |   | $      | 201,327 |   |   | $      | 119,352 |   |   | $      | 58,387  |   |       | $      | 174,970 |   |   | $ | 324,692 |   |   | $ | 3,114,647 |   |
|   Cost                                                               |   |   | 4.37      | %      |   |   | 4.05    | %      |   |   | 3.99    | %      |   |   | 3.46    | %      |       |   | 4.25    | %      |   |   | 2.96 | % |   |   | 4.14 | % |
|                                                                           |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| GAP                                                                            |   | $      | 382,635   |   |   | $      | 101,287 |   |   | $      | 136,546 |   |   | $      | 155,143 |   |       | $      | 63,369  |   |   | $ | (220,099 | ) |   | $ | 618,881 |   |
|                                                                           |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| (1)      Loan fees and costs are included in balance but not in the      yield |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |
| (2)      Taxable equivalent                                                    |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |
| (3)      Amortized cost                                                        |   |   |      |   |   |   |    |   |   |   |    |   |   |   |    |   |       |   |    |   |   |   |   |   |   |   |   |   |

----

Table of Contents

| ITEM 8. | FINANCIAL      STATEMENTS AND SUPPLEMENTARY DATA |
|---------|--------------------------------------------------|

| ITEM 9. | CHANGES      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL      DISCLOSURE |
|---------|------------------------------------------------------------------------------------------------|

ITEM9A.

----

Table of Contents

ITEM9B. 

PARTIII

ITEM10. 

----

Table of Contents

ITEM11. 

|                                                                |   | Number      of securities to be issued upon exercise of outstanding options, warrants      and rights |      | Weighted      average exercise price of outstanding options, warrants and      rights |   | Number      of securities remaining available for future issuance under equity      compensation plans (excluding securities reflected in the first      column) |
|---------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------|-----------|---------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Equity      compensation plans approved by security holders (A)     |   |                                                                                                  | 1,331,490 |                                                                                  | $      | 18.24                                                                                                                                                            |   |   | 4,695,647 |
|                                                                |   |                                                                                                  |      |                                                                                  |   |                                                                                                                                                             |   |   |   |
| Equity      compensation plans not approved by security holders (B) |   |                                                                                                  | 7,786     |                                                                                  |   | N/A                                                                                                                                                              |   |   | 37,214 |
|                                                                |   |                                                                                                  | 1,339,276 |                                                                                  |   |                                                                                                                                                             |   |   | 4,732,861 |
|                                                                |   |                                                                                                  |      |                                                                                  |   |                                                                                                                                                             |   |   |   |
| (A)      Consists of FFC Incentive Stock Options Plan               |   |                                                                                                  |      |                                                                                  |   |                                                                                                                                                             |   |   |   |
| (B)      Consists of FFC 1999 Employee Stock Award Plan             |   |                                                                                                  |      |                                                                                  |   |                                                                                                                                                             |   |   |   |

| ITEM 12. | SECURITY      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED      SHAREOWNER MATTERS |
|----------|---------------------------------------------------------------------------------------------------------|

| ITEM 13. | CERTAIN      RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR      INDEPENDENCE |
|----------|------------------------------------------------------------------------------------|

| ITEM 14. | PRINCIPAL      ACCOUNTANT FEES AND SERVICES |
|----------|---------------------------------------------|

----

Table of Contents

PART IV

| ITEM 15. | EXHIBITS      AND FINANCIAL STATEMENTSCHEDULES |
|----------|------------------------------------------------|

----

Table of Contents

SIGNATURES

|                   |   | FRONTIER      FINANCIAL CORPORATION        |
|------------------------|--------|--------------------------------------------|
| February      29, 2008 |   | /s/      John J. Dickson                   |   |
|                   |   | John      J. Dickson                       |
|                   |   | President      and Chief Executive Officer |

| February      29, 2008 |   | /s/      John J. Dickson                          |   |
|------------------------|--------|---------------------------------------------------|--------|
|                   |   | John      J. Dickson                              |   |
|                   |   | President      and Chief Executive Officer        |   |
|                   |   | (Principal      Executive Officer)                |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Carol E. Wheeler                         |   |
|                   |   | Carol      E. Wheeler                             |   |
|                   |   | Chief      Financial Officer                      |   |
|                   |   | (Principal      Financial and Accounting Officer) |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Michael J. Clementz                      |   |
|                   |   | Michael      J. Clementz, Director                |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      David M. Cuthill                         |   |
|                   |   | David      M. Cuthill, Director                   |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Lucy DeYoung                             |   |
|                   |   | Lucy      DeYoung, Director                       |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      John J. Dickson                          |   |
|                   |   | John      J. Dickson, Director                    |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Robert J. Dickson                        |   |
|                   |   | Robert      J. Dickson, Chairman of the Board     |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Patrick M. Fahey                         |   |
|                   |   | Patrick      M. Fahey, Director                   |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Edward D. Hansen                         |   |
|                   |   | Edward      D. Hansen, Director                   |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      William H. Lucas                         |   |
|                   |   | William      H. Lucas, Director                   |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      William J. Robinson                      |   |
|                   |   | William      J. Robinson, Director                |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Edward C. Rubatino                       |   |
|                   |   | Edward      C. Rubatino, Director                 |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Darrell J. Storkson                      |   |
|                   |   | Darrell      J. Storkson, Director                |   |
|                   |   |                                              |   |
| February      29, 2008 |   | /s/      Mark O. Zenger                           |   |
|                   |   | Mark      O. Zenger, Director                     |   |

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Table of Contents

EXHIBIT INDEX

| (3)(a)   | Articles      of Incorporation of Frontier Financial Corporation are incorporated herein      by reference to Appendix A to the registrant’s definitive Proxy Statement      on Schedule 14A filed on March 20, 1998 (File No.    000-15540).                                                                                                                                 |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| (3)(b)   | By-Laws      of Frontier Financial Corporation are incorporated herein by reference to      Exhibit 3(ii) to Form 10Q filed on October 29, 2003.                                                                                                                                                                                                                                    |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| *(10)(a) | Amended      and Restated Frontier Financial Corporation Incentive Stock Option Plan      incorporated by reference to Exhibit 99.1 to Registration Statement on      Form S-8, filed March 27, 1998 (File No. 333-48805).                                                                                                                                                          |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| *(10)(b) | Frontier      Financial Corporation 1999 Employee Stock Award Plan is incorporated      herein by reference to Exhibit 99.1 to Registration Statement on Form S-8,      filed March 2, 1999 (File No. 333-73217).                                                                                                                                                                   |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| *(10)(c) | Frontier      Financial Corporation 2001 Stock Award Plan, is incorporated herein by      reference to Exhibit 99.1 to Registration Statement on Form S-8, filed      January 26, 2001 (File No. 333-54362).                                                                                                                                                                        |
|     |                                                                                                                                                                                                                                                                                                                                                                                |
| *(10)(d) | Frontier      Financial Corporation Employee Stock Option Plan and Interbancorp, Inc.      Director Stock Option Plan, is incorporated herein by reference to Exhibit      10.1 to Registration Statement on Form S-8, filed January 26, 2001 (File      No. 333-37242).                                                                                                            |
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| *(10)(e) | Interbancorp,      Inc. Employee Stock Option Plan and Interbancorp, Inc. Director Stock      Option Plan, is incorporated herein by reference to Exhibit 10.1 to      Registration Statement on Form S-8, filed February 13, 2001 (File No.      333-50882).                                                                                                                       |
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| *(10)(f) | Frontier      Financial Corporation Employee Stock Option Plan and NorthStar Bank      Employee Stock Option Plan, NorthStar Bank 1994 Employee Stock Option      Plan, and NorthStar Bank Director Nonqualified Stock Option Plan, is      incorporated herein by reference to Exhibit 10.1 to Registration Statement      on Form S-8, filed March 16, 2006 (File No.333-132487). |
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| *(10)(g) | Frontier      Financial Corporation 2006 Stock Incentive Plan, is incorporated herein by      reference to Exhibit 99.1 to Registration Statement on Form S-8, filed      August 4, 2006 (File No. 333-136298).                                                                                                                                                                     |
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| *(10)(h) | Change      of Control Agreement with John J. Dickson is incorporated by reference to      Exhibit 10.1 to Current Report on Form 8-K, filed January 19, 2006 (File      No. 000-15540).                                                                                                                                                                                            |
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| *(10)(i) | Form      of Change of Control Agreement with other Executive    Officers.                                                                                                                                                                                                                                                                                                          |
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| (13)     | Portions      of the Annual Report to Shareowners for the year ended December 31, 2007,      are incorporated by reference herein.                                                                                                                                                                                                                                                  |
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| **(14)   | Code      of Ethics for Senior Financial Officers.                                                                                                                                                                                                                                                                                                                                  |
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| (21)     | Subsidiaries      of Registrant.                                                                                                                                                                                                                                                                                                                                                    |
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| (23.1)   | Consent      of Moss Adams LLP, Independent Registered Public Accounting      Firm.                                                                                                                                                                                                                                                                                                 |
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| (31.1)   | 302      Certification of Chief Executive Officer.                                                                                                                                                                                                                                                                                                                                  |
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| (31.2)   | 302      Certification of Chief Financial Officer.                                                                                                                                                                                                                                                                                                                                  |
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| (32)     | Certification      pursuant to 28 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act                                                                                                                                                                                                                                                            |

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