<PAGE>   1
                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

                  Annual Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                   For the Fiscal Year Ended December 31, 1996

                         Commission File Number 0-15540

                         FRONTIER FINANCIAL CORPORATION

             (Exact Name of Registrant as Specified in its Charter)

         Washington                                91-1223535
-------------------------------            -------------------------
(State or Other Jurisdiction of            (IRS Employer Identification
Incorporation or Organization)                      Number)

                            332 S.W. Everett Mall Way
                                 P. O. Box 2215
                            Everett, Washington 98203

               (Address of Principal Executive Office) (Zip Code)

                                 (206) 514-0719

              (Registrant's Telephone Number, Including Area Code)

           Securities Registered Pursuant to Section 12(g) of the Act:

                           Common Stock (No Par Value)
                                (Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing 
requirements for the past 90 days.     Yes  [X]      No  [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (S229.405 of this chapter) is not contained herein, and will
not be contained, to the best of the registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]

The aggregate market value of common stock held by nonaffiliates at December 31,
1996 was $174,258,626 based on the price at December 31, 1996.

The issuer has one class of common stock (no par value) with 6,836,876 shares
outstanding as of February 28, 1997.

Documents Incorporated by Reference

Portions of Annual Report to Shareholders for the year ended:

December 31, 1996..................Part II
1997 Proxy Statement...............Part III


<PAGE>   2
                                     PART I
ITEM 1 - BUSINESS

Frontier Financial Corporation ("FFC" or "the Corporation") is a Washington
corporation which was incorporated in 1983 and is registered as a bank holding
company under the Bank Holding Company Act of 1956. As part of a plan of
reorganization consummated following the close of business September 30, 1983,
FFC acquired all of the stock of Frontier Bank (the Bank), issuing its common
stock in an exchange for the Bank's common stock on a share-for-share basis. FFC
has two subsidiaries; the Bank, which is engaged in a general banking business
and in businesses related to banking, and FFP, Inc., a nonbank corporation which
leases property and equipment to the Bank.

The Bank

The Bank is a state-chartered banking association with its principal office
located in Everett, Snohomish County, Washington. It was founded in September,
1978 by Robert J. Dickson and local business persons. The Bank is an "insured
bank" as defined in the Federal Deposit Insurance Act.

The Bank engages in general banking business, including the acceptance of
demand, time and savings deposits and the making of loans. As of December 31,
1996, the Bank conducted its business operations out of 18 offices located in
Snohomish, King and Skagit Counties, of which four offices are located in
Everett, one office each is located in Arlington, Snohomish, Smokey Point, Lake
Stevens, Marysville, Lynnwood, Mill Creek, Edmonds, Stanwood, Bothell,
Woodinville, Monroe, Lake City (Seattle), and Burlington.

Banking Services

The Bank provides a full range of consumer banking services including savings
accounts, checking accounts, installment and commercial lending, safe deposit
facilities, time deposits and other consumer and business related financial
services. In addition to consumer oriented activities, the Bank maintains a
strong commercial lending program, servicing businesses headquartered in the
Bank's principal market area. At the end of 1983, the Bank began to offer a
discount brokerage service to its customers. In September of 1984, the Bank
opened its Real Estate Division, offering a broad range of home, construction
and commercial long-term financing. The Trust Department opened for business in
March of 1985. This department offers a full array of trust services to its
customers. In May 1988, the Bank opened a Private Banking Office to give
personal service to upscale customers. In August 1989, the Bank acquired,
through a merger, three banking offices of Citizens Bank of Snohomish County,
and a real estate origination department. In January 1991, the Bank opened an
office in Mill Creek, providing a full range of consumer banking services.

In March 1991, the Bank opened an Insurance and Investment Center which markets
annuities, life insurance products, and mutual funds to Bank customers and the
general public. In July 1992, the Bank opened its Stanwood Office. In November
1992, the Bank acquired through merger, Edmonds National Bank, which had one
office. In July 1993, the Bank acquired through merger, The Bank of Northshore,
which had two offices located in Bothell and Woodinville, King County,
Washington. This merger marked the first time the Bank branched outside of
Snohomish County. In June 1995, the Bank opened an office in Monroe, providing a
full range of consumer banking services. In August 1996, the Bank opened the
Lake City Office, (North Seattle) and in December 1996 opened its first office
in Skagit county, in Burlington, named the Skagit County Office. In January
1997, the bank received approval for an office in Redmond, Washington, and this
branch will open during the second quarter of 1997.

                                       -1-

<PAGE>   3

Employees

At December 31, 1996, the Bank had 302 full and part time employees. The Bank
considers its relations with employees to be very good.

Competition

All phases of the Bank's activities are highly competitive. The Bank competes
actively with national and state banks, mutual savings banks, savings and loan
associations, finance companies, credit unions, brokerage houses, and other
financial institutions operating in its service area. Some of these financial
institutions have greater resources than those of the Bank. On December 31,
1996, the Bank had total assets of $802.0 million and deposits of $670.8
million.

Supervision and Regulation

FFC, as a bank holding company, is subject to regulation under the Bank Holding
Company Act of 1956 (the Act), as amended, and is registered with the Board of
Governors of the Federal Reserve System. FFC is required to file quarterly
reports with the Federal Reserve, and is subject to their examination.

The Act requires prior approval of the Board of Governors before acquiring
substantially all the assets of, or direct or indirect ownership or control of,
more than 5% of the voting shares of any bank.

The Act also prohibits the acquisition by a bank holding company of the assets
or shares of a bank located outside the state in which the principal operations
of the banking subsidiaries are conducted unless such acquisition is
specifically authorized by the laws of the state in which the Bank to be
acquired is located. The Act does not place territorial restrictions on the
activities of nonbank subsidiaries of bank holding companies.

Under the Act, FFC is prohibited, with certain exceptions, from acquiring direct
or indirect ownership or control of more than 5% of the voting shares of any
company which is not a bank, and from engaging in any business other than
banking, except that FFC may engage in, and may own shares of companies engaged
in certain businesses determined by the Board of Governors to be so closely
related to banking so "as to be a proper incident thereto". Such related
businesses include, by determination of the Board of Governors, the making or
acquiring of loans or extensions of credit such as would be made by a mortgage,
finance, credit card or factoring company; leasing of personal property where
the leasing arrangements are functionally equivalent to extensions of credit;
and acting as an insurance agent or broker of insurance directly related to
extensions of credit of the Bank or other closely related businesses. The Act,
however, prohibits tie-in arrangements in connection with the extension of
credit or provision of services.

The Bank, as a state chartered bank, is subject to supervision, examination and
regulation by the State Supervisor of Banking and the Federal Deposit Insurance
Corporation (the FDIC). The deposits of the Bank are insured by the FDIC to the
extent provided by law.

Various requirements and restrictions under the laws of the United States and
the State of Washington affect the operations of the Bank. Federal regulations
include requirements to maintain reserves against deposits, restrictions on
interest which may be paid on business demand deposits, limitations on the
nature and the amount of loans which may be made and the interest that may be
charged thereon, restrictions relating to



                                       -2-

<PAGE>   4

investments or other activities, limitations based on capital and surplus, and
limitations on payments of dividends. The approval of the Supervisor is required
to pay dividends which exceed the Bank's net profits for that year plus its
retained net profits for the preceding two years. Federal law also restricts the
amount which can be loaned to the Corporation or any of its nonbank subsidiaries
to 10% of the Bank's capital stock and surplus, and restricts the total of such
loans to 20% of the Bank's capital stock and surplus.

The Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA)
became effective on August 9, 1989. Among other things, this far reaching
legislation: 1) phased in significant increases in the FDIC insurance premiums
by 1993; 2) created two deposit insurance pools within the FDIC, one to insure
commercial and savings bank deposits and the other to insure savings
associations deposits; 3) permitted bank holding companies to acquire healthy
savings associations; 4) permitted commercial banks that meet certain housing
related asset requirements to secure advances and other financial services from
their local Federal Home Loan Bank; 5) created the Resolution Trust Corporation
to pay the cost of resolving insolvent savings associations financed by the
taxpayers and the savings associations; 6) restructured the federal regulatory
agencies for savings associations; 7) required higher minimum capital levels for
savings associations; and 8) has greatly enhanced the regulator's enforcement
powers by removing procedural barriers, sharply increasing the civil and
criminal penalties for violating statutes and regulations, and providing
increased appropriations to the Justice Department to finance prosecutions for
crimes against depository institutions.

On December 19, 1991, the Federal Deposit Insurance Corporation Improvement Act
of 1991 (FDICIA) was enacted. FDICIA substantially revises the depository
institution regulatory and funding provisions in the Federal Deposit Insurance
Act and makes revisions to several other federal banking statutes. Among other
things, FDICIA requires the Federal Banking Regulators to take prompt corrective
action in respect to depository institutions that do not meet minimum capital
requirements. The FDICIA created regulations establishing five capital tiers:
"Well Capitalized"; "Adequately Capitalized"; "Under-Capitalized";
"Significantly Under-Capitalized"; and "Critically Under-Capitalized". Under the
regulations, a depository institution would be considered Well Capitalized if it
maintains a leverage ratio of at least five percent and a risk-based Tier I
capital ratio of at least six percent and a risk-based total capital ratio of at
least ten percent, and is not otherwise designated to be in troubled condition.
Also, a depository institution will be deemed Under-Capitalized if it fails to
meet any applicable minimum capital measure; Significantly Under-Capitalized if
it is significantly below such measure; and Critically Under-Capitalized if it
fails to meet a level of tangible equity of two percent of total assets. If a
depository institution is neither Well Capitalized nor Under-Capitalized, it
will be considered Adequately Capitalized. A depository institution may be
deemed to be in a capitalization category that is lower than is indicated by its
actual capital position if it receives an unsatisfactory examination rating.

The FDICIA generally prohibits a depository institution from making any capital
distribution, including the payment of dividends or payment of any management
fee to its holding company, if the depository institution would thereafter be
Under-Capitalized. Under-Capitalized depository institutions are subject to
restrictions on borrowing from the Federal Reserve System. In addition,
Under-Capitalized depository institutions are subject to growth limitations and
are required to submit capital restoration plans. A depository institution
holding company must guarantee the capital plan up to the amount equal to the
lesser of five percent of the depository institution's assets at the time it
becomes Under-Capitalized or the amount of the capital



                                       -3-

<PAGE>   5

deficiency when the institution fails to comply with the plan. The Federal
Banking Agencies may not accept a capital plan without determining, among other
things, if the plan is based on realistic assumptions and is likely to succeed
in restoring the depository institution's capital. If a depository institution
fails to submit an acceptable plan, it is treated as if it is Significantly
Under-Capitalized.

Significantly Under-Capitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become Adequately Capitalized, requirements to reduce total
assets, and the cessation of receipt of deposits from correspondent banks.
Critically Under-Capitalized depository institutions are subject to employment
of a receiver or a conservator.

The FDICIA also required the FDIC to revise its risk-based capital guidelines by
June 19, 1993 to take into account interest rate risk, concentration of credit
risk, and risk associated with nontraditional activities. It also required the
guidelines to reflect the actual performance and expected risk of loss of
multi-family mortgages. These provisions affect the capital standing of all
institutions, and may result in a need for increased capital.

As of December 31, 1996, the Bank was Well Capitalized, and maintained a
leverage ratio of 9.95%, a risk-based Tier I capital ratio of 11.94%, and a
risk-based total capital ratio of 13.20%.

The Corporation's common stock is registered under Section 12(g) of the
Securities Exchange Act of 1934 and the Corporation is subject to the periodic
reporting and proxy solicitation requirements, as well as other requirements of
federal and state securities law.

Effect of Governmental Policies

The Bank is affected not only by general economic conditions, but also by the
monetary and fiscal policies of the United States Government and various
agencies, particularly the Federal Reserve System. In its role of implementing
its monetary policy, the Federal Reserve Board has the power to regulate the
national supply of bank credit through such methods as open market operations in
the United States Government securities markets, control of the discount rate on
member bank borrowings, and establishment of reserve requirements against bank
deposits. These means are used in varying combinations and have an influence
over the growth of bank loans, investments, and deposits. They may also affect
interest rates charged on loans or paid on deposits.

The nature and timing of future changes in monetary policies and their impact on
the Bank are not predictable. As a consequence of extensive regulation of
commercial banking activities in the United States, the Bank's business is
particularly susceptible to being affected by Federal legislation and
regulations which may have the effect of increasing the cost of doing business
or limiting permissible activities.

FFP, Inc.

On April 4, 1988, the Corporation formed a new subsidiary corporation called
FFP, Inc. The purpose of this corporation is to purchase and lease property and
equipment to the Bank. The reason for this approach was to preclude placing
nonearning assets on the books of the Bank or the Corporation.


                                       -4-

<PAGE>   6
It is intended that future purchases of fixed assets will be made by FFP, Inc.
The assets of FFP, Inc. as of December 31, 1996 are the land and buildings of
the Bank's Drive-Up, Lynnwood, Stanwood, Administrative, Monroe, Smokey Point,
Snohomish, Seattle (Lake City), Woodinville and Redmond Offices. At this time,
it is not anticipated that FFP, Inc. will engage in any other type of business.

Washington Banking Company

In April 1996, the Corporation purchased 4.99% of the common stock of Whidbey
Island Bank, located approximately 15 miles west of Everett. Shortly thereafter,
the bank converted to the holding company structure and is now called Washington
Banking Company. Subsequent to the initial investment, the Corporation made
application to the Board of Governors of the Federal Reserve System to purchase
up to 10.0% ownership in the company. Approval was received, and the Corporation
has since purchased an additional .4% ownership, to total 5.4%. The bank has
eight offices, and is well managed.



                                       -5-

<PAGE>   7
                          STATISTICAL DISCLOSURE INDEX

The schedules listed below set forth the statistical information relating to
Frontier Financial Corporation and subsidiaries (unless otherwise stated) in
accordance with Guide 3. This information should be read in conjunction with the
consolidated financial statements.
                                                                        
<TABLE>
<CAPTION>
                                                                         Annual
                                                       Form 10-K         Report
                                                         Page             Page
                                                       ---------         ------
 <S>                                                   <C>              <C>
  I.Distribution of Assets, Liabilities
    and Stockholders' Equity; Interest
    Rates and Interest Differential:

    A.  Consolidated Average Balance
          Sheets/Interest Income and
          Expense/Rates                                                    35
    B.  Changes in Net Interest Income
          and Expense due to Rate and                                      36
          Volume

 II.Investment Portfolio:

    A.  Analysis of Investment Securities
          at Year-end                                       7              10
    B.  Maturity Distribution of Investment
          Securities                                        7              11

III.Loan Portfolio:

    A.  Types of Loans                                      8              12
    B.  Loan Maturities and Sensitivity to
          Changes in Interest Rates                         8           12, 31-32
    C.  Risk Elements                                       9
    D.  Credit Concentrations                               14

 IV.Summary of Loan Loss Experience:

    A.  Analysis                                            12
    B.  Allocation of Allowance for Possible
          Loan Losses                                       13

  V.Deposits:

    Average Interest and Noninterest
    Bearing Deposit Balances                                               35

 VI.Return on Equity and Assets:

    Selected Financial Ratios                               14

VII.Short-term Borrowings                                   15
</TABLE>



                                       -6-



<PAGE>   8

Analysis of Investment Securities

The Aggregate amortized recorded values of investment securities at December 31
are as follows:

<TABLE>
<CAPTION>
                                                      1996          1995          1994
(In thousands)                                   Amortized     Amortized     Amortized
                                                      Cost          Cost          Cost
                                                 -------------------------------------
<S>                                               <C>           <C>           <C>     
U.S. Treasury                                     $    758      $  2,759      $  2,758
U.S. Agencies                                       45,824        48,591        39,588
Municipal Bonds                                     29,727        30,046        32,814
Corporate Bonds                                     40,578        51,567        55,869
Equities                                             9,270         7,542         7,083
Certificates of Deposit                              4,775         3,050             0
                                                 -------------------------------------
                                      Totals      $130,932      $143,555      $138,112
                                                 =====================================
</TABLE>

Maturity Distribution of Investment Securities

The following table sets forth the maturities of investment securities at
December 31, 1996. Taxable equivalent values are used in calculating yields
assuming a tax rate of 35%.

<TABLE>
<CAPTION>
(In thousands)                                             After 1 Yr        After 5 Yrs                          Totals &
(Amortized cost used)                      Within          But Within        But Within          After            Weighted
                                           1 Year/          5 Years/          10 Years/        10 Years/          Average
                                            Yield            Yield              Yield            Yield             Yield
                                        ----------------------------------------------------------------------------------
<S>                                      <C>              <C>                 <C>              <C>                <C>     
U.S. Treasury                                 $0             $506                  $0            $252                 $758
                                            0.00%            7.71%               0.00%           7.16%                7.53%
                                                                                           
U.S. Agencies                              1,051           13,328              30,178           1,267               45,824
                                            7.36%            5.83%               7.12%           8.23%                6.78%
                                                                                           
Municipal Bonds                              125            1,123              25,448           3,031               29,727
                                            9.92%           10.04%               8.67%           9.20%                8.78%
                                                                                           
Corporate Bonds                           11,894            8,881              19,803               0               40,578
                                            5.60%            7.68%               6.77%           0.00%                6.63%
                                                                                           
Equities                                   9,270                0                   0               0                9,270
                                            7.60%            0.00%               0.00%           0.00%                7.60%
                                                                                           
Certificates of Deposit                    4,775                0                   0               0                4,775
                                            5.40%            0.00%               0.00%           0.00%                5.40%
                                        ----------------------------------------------------------------------------------
              TOTALS                     $27,115          $23,838             $75,429          $4,550             $130,932
                                        ==================================================================================
                                            6.34%            6.76%               7.55%           8.82%                7.20%
                                        ==================================================================================
</TABLE>


                                       -7-

<PAGE>   9

Types of Loans

Major classifications of loans, net of deferred loan fees, at December 31 are as
follows:

<TABLE>
<CAPTION>
(In thousands)                  1996          1995          1994          1993          1992
                                ----          ----          ----          ----          ----
<S>                           <C>           <C>           <C>           <C>           <C>     
Commercial                    $117,258      $126,914      $121,218      $118,871      $113,706
Real Estate Commercial         230,341       171,590       151,829        89,430        67,130
Real Estate Construction       131,148        94,393        99,278        71,355        67,425
Real Estate Mortgage            98,580        92,342        79,264        70,600        52,312
Installment                     23,067        19,749        18,923        19,350        20,247
                              ----------------------------------------------------------------
              TOTAL           $600,394      $504,988      $470,512      $369,606      $320,820
                              ================================================================
</TABLE>

Loan Maturities and Sensitivity to Changes in Interest Rates

The following table shows the amounts and maturity analysis of loans outstanding
as of December 31, 1996. Also, the amounts are classified as to fixed and
variable rate sensitivity for amounts due after one year.

<TABLE>
<CAPTION>
                                                 Maturity
                              --------------------------------------------------
(In thousands)                  Within         1 - 5        After
                                1 Year         Years       5 Years        Total
                              --------------------------------------------------
<S>                           <C>           <C>           <C>           <C>     
Commercial                    $ 58,840      $ 51,122      $  7,296      $117,258
Real Estate Commercial          30,281       188,733        11,327       230,341
Real Estate Construction        95,457        35,691             0       131,148
Real Estate Mortgage            21,670        74,127         2,783        98,580
Installment                      6,238         9,819         7,010        23,067
                              --------------------------------------------------
              TOTAL           $212,486      $359,492      $ 28,416      $600,394
                              ==================================================
</TABLE>

Loans maturing after one year with:

<TABLE>
<CAPTION>
                                    1 - 5          After
                                    Years         5 Years
                                   ----------------------
<S>                                <C>           <C>     
Fixed Rates                        $316,353      $ 11,935
Variable Rates                       43,139        16,481
                                   --------      --------
                        TOTAL      $359,492      $ 28,416
                                   ========      ========
</TABLE>

It is not uncommon to rollover loans at the maturity period, provided that the
rate and terms of the loan conform to the current policy.



                                       -8-

<PAGE>   10

Loan Administration

The Bank provides revolving lines of credit to many of its borrowers. Such lines
are approved by the Director's Loan Committee ("Loan Committee") or other
administrative level committee or person if the amount exceeds the lending units
authorized loan limit.

Credit Review personnel, under the direction of the Credit Administrator,
examine the loan portfolio regularly. Reports are made by the Senior
Vice-President/Credit Administrator to senior management and the Loan Committee,
and follow-up corrective action is monitored. Problem loan reports are prepared
for management review on a regular basis.

Certain problem loans are placed on a nonaccrual basis in conformance with
defined policy. The Loan Committee and other administrative personnel regularly
review information reports on classified and delinquent loans. Comparative
summaries of delinquent loans are also provided on a regular basis to senior
management and to the Board of Directors.

Management closely monitors the adequacy of the loan loss reserve and an
analysis is performed four times a year. The allowance is maintained at a level
deemed sufficient to meet potential losses.

The reviews, examinations and actions described above are in addition to the
periodic examinations by federal and state regulatory agencies, as well as the
Bank's internal audit department and the Bank's outside public accounting firm.

Risk Elements - Impaired Assets

Loans are placed in a nonaccrual status when, in the opinion of management, the
collection of additional interest is doubtful, or when the loan becomes ninety
(90) days past due in principal or interest. When a loan is placed on a
nonaccrual status, all interest previously accrued but not collected is reversed
and charged against interest income. Income on nonaccrual loans is then
recognized only to the extent cash is received and where the future collection
of principal is probable. Accruals are resumed only when the loan is brought
current, or when, in the opinion of management, the borrower has demonstrated
the ability to resume payments of principal and interest on a regular basis. As
a consequence, some of these loans are current in their payments at this time.

The dollar amount of loans placed in nonaccrual or past due 90 days or more as a
percentage of total loans was .60%, .87%, and .57% for year-end 1996, 1995 and
1994, respectively. These loans have a variety of situations, some of which may
lead to foreclosure or involve a bankruptcy case. Others may continue payment as
the borrower's financial situation improves. A very small amount represents
federally insured loans. The rise at year-end 1995 occurred primarily as a
result of two particular borrowers which, together, constituted $4.0 million, or
91% of total nonaccruing loans. Although these loans were adequately secured by
real estate, it was nonetheless felt prudent to place them in nonaccrual. At
year-end 1996, two particular borrowers comprise 72% of the totals, the majority
of which is real estate secured.

Management monitors these loans on a frequent basis and conducts aggressive
collection efforts, unless constraints are placed on the Bank by the bankruptcy
courts. These efforts are directed toward the best long-term results for the
Bank, and to the extent reasonable, to the borrower as well. If, in the

                                       -9-

<PAGE>   11
opinion of management, it is felt, or if it can be determined, that full
collection of these loans or their payment streams will not occur, then they are
charged off against the loan loss reserve.

Loans past due 90 days or more and nonaccruing loans on which the accrual of
interest has been discontinued as of December 31st are as follows:

(In thousands)

<TABLE>
<CAPTION>
                             1996           1995           1994           1993           1992
                             ----           ----           ----           ----           ----
<S>                      <C>            <C>            <C>            <C>            <C>     
Commercial               $    478       $    175       $    866       $    893       $  1,068
Real Estate                 3,144          4,228          1,736            721          1,028
Installment                     4             14             59             21             19
                         --------------------------------------------------------------------
              Total      $  3,626       $  4,417       $  2,661       $  1,635       $  2,115
                         ====================================================================
Total Loans at end
    of period            $600,394       $504,988       $470,512       $369,606       $320,820
                         ====================================================================
As a percent of
    total loans              0.60%          0.87%          0.57%          0.44%          0.66%
                         ====================================================================
</TABLE>


There are certain amounts of interest collected on the above loans and included
in income, and amounts that have not been accrued which are indicated in the
table below:

<TABLE>
<CAPTION>
(In thousands)
At December 31,                    1996      1995      1994      1993     1992
---------------                    ----      ----      ----      ----     ----
<S>                                <C>       <C>       <C>       <C>       <C> 
Total interest income which
would have been recorded
during the period under
original terms of loans above      $289      $501      $261      $203      $229

Portion of interest
income included in
net income for the
period                             $264      $378      $207      $ 98      $112

Commitments for additional
funds related to loans
above                               -0-       -0-       -0-       -0-       -0-
</TABLE>

Restructured loans are those loans that had problems in the past, and a
concession was made in the interest rate, principal amount, and/or the repayment
schedule has been modified to the extent that there has been tangible impairment
of value. These loans are monitored on a regular basis for performance.


                                      -10-

<PAGE>   12


The recorded value of restructured loans at year-end for the last five years was
insignificant, and therefore not shown.

The Bank originates commercial, commercial real estate, residential mortgage and
installment loans primarily in Snohomish, north King and Skagit Counties. Loan
growth in 1996 was much stronger than in 1995. Total loans as of December 31,
1996 and 1995 were $600.4 and $505.0 million, respectively. The percent of the
growth in loans for year-end 1996 was 18.9%, or an addition of $95.4 million in
net loans during 1996.

The area's economy is diversified with trade, high-tech, military and service
industries. Military personnel assigned to the new Everett Naval facility began
arriving in the later part of 1995, and it is expected that continuing increases
in personnel will serve to further diversify and stabilize the local economy.
While management estimates that the loan portfolio is reasonably diversified,
the quality of the portfolio is significantly related to the strength and
stability of real estate values which are controlled by the local economy.

The Boeing Company continues to be one of the major employers in Snohomish
County. It would appear that concerns over the past (1994-1995) downsizing at
Boeing were somewhat mitigated by the increased diversification of the local
economy. Boeing is now showing significant net employment growth. However,
concern still persists regarding the employment stability of Boeing, and,
accordingly, management will continue to exercise caution in the execution of
the Bank's lending activities.

A concern on the national level is the continued negotiations on balancing the
federal budget and policies going forward. Changes in the monetary and fiscal
policies, as well as military base locations, may have adverse effects on the
credit and equity markets, which could affect consumer and business confidence
locally.

Other Real Estate Owned

As of December 31, 1996, the Bank had three parcels of other real estate owned
(OREO) on its books, which totaled $.4 million. One residential parcel is under
a contingent earnest money agreement to purchase. The remaining two parcels are
commercial land. No losses are expected on sales of OREO which are recorded at
the lower of cost or fair value, less estimated costs to sell. The current
levels are felt to be nominal, and no particular trends are noted at this time.

The table below shows the carrying value of OREO at December 31st:

<TABLE>
<CAPTION>
(In thousands)                  1996      1995      1994     1993      1992
                                ----      ----      ----     ----      ----
<S>                             <C>       <C>     <C>        <C>     <C>   
Other Real Estate Owned         $444      $590    $1,118     $683    $1,139
</TABLE>




                                      -11-

<PAGE>   13

Summary of Loan Loss Experience

The following table provides an analysis of net losses by loan type for the last
five years at December 31st:

<TABLE>
<CAPTION>
(In thousands)                    1996          1995         1994          1993          1992   
--------------                    ----          ----         ----          ----          ----   
<S>                           <C>           <C>           <C>           <C>           <C>       
Balance at beginning
of year                       $  11,897     $  10,410     $   7,368     $   5,906     $   4,117 

Provision charged to
operating expense                 1,980         1,525         3,900         3,012         2,249 

Deduct:
  Loans charged-off:

              Commercial           (526)       (1,250)       (1,111)       (1,886)       (1,556)
              Real Estate        (1,333)         (875)         (879)         (290)         (390)
              Installment           (84)          (87)         (100)          (93)          (56)
                              -----------------------------------------------------------------
  Total charged-off loans        (1,943)       (2,212)       (2,090)       (2,269)       (2,002)

  Less recoveries:
              Commercial            752         1,245           613           500           222 
              Real Estate           535           901           557           151           157 
              Installment            47            28            62            68            53 
                              -----------------------------------------------------------------
  Total recoveries                1,334         2,174         1,232           719           432 

Net charge-offs                    (609)          (38)         (858)       (1,550)       (1,570)

Allowance for possible loan
losses assumed in merger                                                                  1,110      
                              -----------------------------------------------------------------

Balance at end of year        $  13,268     $  11,897     $  10,410     $   7,368     $   5,906 
                              =================================================================

Net total loans at
end of period                 $ 600,394     $ 504,988     $ 470,512     $ 369,606     $ 320,820 

Daily average loans           $ 555,105     $ 485,430     $ 426,344     $ 338,029     $ 284,239 

Ratio of net charged-off
loans during period to
average loans outstanding          0.11%         0.01%         0.20%         0.46%         0.55%
                              =================================================================
</TABLE>


                                      -12-

<PAGE>   14


It is the policy of Frontier Financial Corporation and its subsidiary to
charge-off any loan or portion of a loan that is deemed uncollectible in the
ordinary course of business. The entire allowance for possible loan losses is
available to absorb such charge-offs.

In the opinion of management, if a loan represents a long-term liquidation
project, particularly when the liquidation is under the control of the
bankruptcy courts, a decision may be made to write off the asset. Many
charge-offs will ultimately have recoveries in full or a significant part, and
some are currently under repayment programs.

For fiscal year-end 1996, net loan losses were $609 thousand, or .11% of average
loans outstanding. Although somewhat larger than the negligible loan loss in
1995, it is well below 1994 and other years in recent history.

As indicated by the previous chart, the Bank has recovered a significant portion
of its charged-off loans for fiscal years 1996 and 1995. The chart also
indicates that the Bank's net charge-offs for fiscal years 1992 and 1993 were
substantially higher. The higher level for those fiscal years is primarily
attributed to loans acquired through acquisition.

Charged-off loans that continue to be actively pursued for collection as of
fiscal year-end 1996, total $2.9 million. While additional recoveries are
expected, the amounts and timing cannot be determined with certainty.

Based on certain characteristics of the portfolio, potential losses can be
anticipated for major loan categories. In the following table, the allowance for
possible loan losses at year-end, for the last five years, has been allocated
among major loan categories based primarily on their historical net charge-off
experience, along with consideration of factors such as quality, volume,
anticipated economic conditions, and other business considerations.

(In thousands, except percents)

<TABLE>
<CAPTION>
                                   Loan               Loan                Loan              Loan                  Loan
                         1996    Category    1995   Category   1994     Category   1993   Category    1992      Category
                       Reserve    Percent  Reserve   Percent  Reserve    Percent  Reserve  Percent   Reserve     Percent
                       -------    -------  -------   -------  -------    -------  -------  -------   -------     -------
<S>                    <C>         <C>     <C>        <C>     <C>         <C>     <C>        <C>     <C>           <C>  
Commercial             $ 7,960     19.5%   $ 7,138    25.1%   $ 6,246     25.8%   $ 4,781    32.2%   $ 4,370       35.3%
Real Estate              4,953     76.7%     4,283    71.0%     3,748     70.2%     2,425    62.6%     1,359       58.4%
Installment                355      3.8%       476     3.9%       416      4.0%       162     5.2%       177        6.3%
                       ------------------------------------------------------------------------------------------------
              TOTAL    $13,268    100.0%   $11,897   100.0%   $10,410    100.0%   $ 7,368   100.0%   $ 5,906      100.0%
                       ================================================================================================
</TABLE>

Historical net charge-offs are not necessarily accurate indicators of future
losses since net charge-offs vary from period to period due to economic
conditions and other factors that cannot be accurately predicted. Thus, an
evaluation based on historical loss experience of individual loan categories is
only one of many factors considered by management in evaluating the adequacy of
the overall allocation, and in determining the amount of the provision for
possible loan losses. Other factors are the continuing level of nonperforming
loans, credit concentrations, and uncertain economic conditions. At December 31,
1996, based on current economic conditions, the total of the allocation for
possible loan losses is, in management's opinion, adequate to provide for future
losses. However, a worsening of the economy in the Bank's market area could
negatively affect loan performance and underlying collateral values. The full
impact of such a trend on the condition of the Bank cannot be estimated.


                                      -13-

<PAGE>   15
Credit Concentrations

At year-end 1996, 19.7% of the Bank's loan portfolio was in residential and
commercial construction and land development projects centered in Snohomish,
King and Skagit Counties. Management has established a Real Estate Review
Committee which meets periodically to monitor local economic conditions, and the
performance of borrowers in this industry. The chart below indicates the amount
of those loans, and as a percent of total loans for the period:

<TABLE>
<CAPTION>
At December 31,
(In thousands)                       1996          1995        1994         1993         1992
                                     ----          ----        ----         ----         ----
<S>                                <C>          <C>          <C>          <C>          <C>     
Construction                       $ 66,065     $ 50,675     $ 55,551     $ 38,324     $ 34,399
Land Development                     52,186       33,946       38,582       28,835       29,012
                                   ------------------------------------------------------------
             TOTAL                 $118,251     $ 84,621     $ 94,133     $ 67,159     $ 63,411
                                   ============================================================

Total Loans at end of period       $600,394     $504,988     $470,512     $369,606     $320,820
                                   ============================================================

Construction and Land
Development loans as a
percent of total loans                 19.7%        16.8%        20.0%        18.2%        19.8%
                                   ============================================================
</TABLE>

Deposits

For the average amount of deposits and rates paid on such deposits for years
ended December 31, 1996, 1995, and 1994 please refer to page 35 of Annual Report
to Shareholders.

Maturities of time certificates of deposit $100,000 and over at year end 1996,
are shown below:

<TABLE>
<CAPTION>
(In thousands)
<S>                                                   <C>    
3 months or less                                      $27,975
Over 3 months through 6 months                         28,938
6 months through 12 months                             30,530
Over 12 months                                         21,512
                                                     --------
                       TOTAL                         $108,955
                                                     ========
</TABLE>

Significant Financial Ratios

Ratios for the years ended December 31, 1996, 1995 and 1994 are as follows:

<TABLE>
<CAPTION>
                                              1996          1995         1994
                                              ----          ----         ----
<S>                                           <C>           <C>          <C>  
Return on Average Assets                      1.94%         1.82%        1.69%
Return on Average Equity                     20.01%        21.59%       22.21%
Cash dividends paid/dividend payout           -0-           -0-          -0-
Average Equity to Average Assets              9.70%         8.45%        7.63%
</TABLE>


                                      -14-

<PAGE>   16
Borrowings

<TABLE>
<CAPTION>
Short-Term Borrowings                                Weighted                Weighted                   Weighted
(In thousands)                                        Average                 Average                    Average
                                                     Interest                Interest                   Interest
At December 31,                             1996         Rate        1995        Rate         1994          Rate
                                          ----------------------------------------------------------------------
<S>                                       <C>           <C>        <C>           <C>        <C>           <C>  
Year-end balance:                         $12,011       4.89%      $ 7,596       5.51%      $ 9,615       4.58%

Highest month end
balance during
the period:                               $12,390                  $12,400                  $34,000
                                          -------                  -------                  -------
</TABLE>

For information regarding average balances and yields, please refer to page 35
of 1996 Annual Report to Shareholders.

Long-Term Debt

For detailed information relating to long term debt, please refer to Note 9,
page 15, of 1996 Annual Report to Shareholders.

                                      -15-

<PAGE>   17


ITEM 2 - PROPERTIES

The Bank's Evergreen Way Office (previously the Main Office) is a two story
building constructed in 1979, and owned by the Bank. This building has
approximately 13,000 square feet, and is fully utilized by the Bank.

The Bank's first branch, the Downtown Everett Office, opened in 1980 in rented
facilities at 2831 Wetmore Ave, was relocated in 1994 one block from its
previous location to 2831 Colby Ave, in downtown Everett. FFP, Inc. has entered
into a long term lease on the property which is subleased to the Bank. In this
same building, is the Bank's Trust Department, and Private Banking Office. The
Bank utilizes 12,000 square feet, which is all of the main floor of the
building.

The Bank owns the Arlington Office premises which consists of a single story
building with approximately 3,000 square feet. Contiguous to the Arlington
Office is a parcel of land on which five apartments are located. The Bank owns
these apartments. The Arlington Office was acquired through merger with The Bank
of Arlington in August, 1982. The Bank of Arlington had one office.

In September 1985, a drive-up facility was constructed at 2612 Wetmore Ave.,
Everett, to service the Bank's downtown community. This facility has
approximately 600 square feet, three drive-up lanes, and a card-access-control
merchant reception room. This property is owned by FFP, Inc.

FFP owns the Bank's Snohomish Office property in Snohomish, on which a new
permanent facility was completed in 1996. The new facility has 3,500 square feet
and is fully occupied by the Bank. Previously, this office was operating out of
a double-wide mobile facility, and there were eight apartments sharing the
property. The apartments have been removed to make way for the new branch
office. This office originally opened in April 1987.

FFP, Inc. owns the property in Lynnwood, which is rented by the Bank for its
Lynnwood Office. The office opened for business in June 1988, has approximately
3,200 square feet, and is fully utilized by the Bank.

The Bank acquired the Marysville Office by merger with Citizens Bank of
Snohomish County in August 1989. This building has approximately 5,000 square
feet, and is fully utilized by the Bank. On the same property are two buildings,
which are presently rented to other business concerns. The Bank owns the land
and the buildings.

The Smokey Point Office was added to the branch network by the same merger in
August 1989. This office was relocated within a few blocks of the original site
in June 1995. FFP owns the land and building and leases it to the Bank. The
office has 3,500 square feet and is fully utilized by the Bank.

The Bank acquired its Lake Stevens Office by the same merger. The Bank owns the
building, but leases the land from nonaffiliates. The building is a mobile
facility type construction, and has 1,800 square feet, which is fully utilized
by the Bank.



                                      -16-

<PAGE>   18

The Bank's Mill Creek Office is located approximately five miles east of
Lynnwood, Washington. The office was opened in January 1991, and has 2,600
square feet, all being utilized by the Bank. The property and building are
leased from nonaffiliates.

In July 1992, the Bank opened its Stanwood Office in leased quarters. In 1994,
FFP constructed a new facility in the immediate area, on land purchased. The
building has 3,500 square feet, and is fully utilized by the Bank.

In November 1992, the Bank acquired its Edmonds Office by merger with Edmonds
National Bank. This building has approximately 11,300 square feet and is fully
utilized by the Bank. The land is being leased by the Bank from nonaffiliates,
but the Bank owns the building.

In May 1993, FFP completed construction of an Administration/Financial Center in
south Everett. This facility houses the Main Office of the Bank and the
Executive Offices of the Corporation. The three story building has approximately
42,100 square feet and is fully utilized by the Bank and Corporation. The
building houses all of the operation functions of the Bank, including the data
processing center and the real estate loan center.

In July 1993, the Bank acquired the Bothell Office through merger with The Bank
of Northshore. This office, previously the Main Office of the Bank of
Northshore, has approximately 1,800 square feet, and is fully utilized by the
Bank. Both the land and building are owned by the Bank.

The Bank acquired its Woodinville Office through the same merger. This office
has approximately 1,300 square feet, and is one of three suites in an office
building. The Bank is renting the office from nonaffiliates. FFP has purchased
land for construction of a new facility which is expected to be occupied in the
third quarter of 1997.

In 1994, FFP purchased property for the Bank's Monroe office. This office opened
in June 1995. The building has 3,500 square feet, and is fully utilized by the
Bank.

In May 1996, FFP purchased property for the Bank's Lake City Office, located in
North Seattle. The property has 5,000 square feet, is two story construction,
and was previously a branch office of a larger regional bank which had to divest
itself of the office as a condition to merger. This office opened for business
in August 1996.

Also in May 1996, the Bank entered into a lease agreement, with nonaffiliates,
for the Bank's Skagit County Office, located in Burlington. This office has
1,600 square feet, and is fully utilized by the Bank.
This office opened for business in December 1996.

In June 1996, FFP purchased property for the Bank's Redmond Office, located in
Redmond, which is approximately 15 miles east of Seattle. The office has 5,000
square feet, and will be fully utilized by the Bank. This office was also
purchased from a larger regional bank which had to divest itself of the office
as a condition to merger.

As of December 31, 1996, the Bank had eighteen branch offices, including the
Main Office.



                                      -17-

<PAGE>   19
ITEM 3 - LEGAL PROCEEDINGS

         There are no material legal proceedings.

ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         No matters were submitted to security holders during the fourth
         quarter of 1996.

                                     PART II

ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS

         Please see 1996 Annual Report to Shareholders, page 34.

ITEM 6 - SELECTED FINANCIAL DATA
(In thousands, except per share data)

                              FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
                                                                                                          % Change
AT YEAR-END                           1996         1995         1994          1993          1992          1995-1996
                                   --------------------------------------------------------------------------------
<S>                                <C>          <C>           <C>           <C>           <C>               <C> 
Total assets                       $803,619     $735,183      $642,568      $558,043      $486,656          9.3%
Net loans                           587,126      493,091       460,102       362,238       314,914         19.1%
Deposits                            670,516      641,218       539,603       506,538       448,818          4.6%
Long-term debt                          100          136           565           737         1,414        -26.5%
Investment securities               131,130      144,976       136,326       151,509        89,062         -9.6%
Shareholders' equity                 80,317       65,353        50,459        41,167        33,257         22.9%
FOR THE YEAR
Interest income                      68,000       63,086        52,945        44,324        40,251          7.8%
Interest expense                     30,100       29,347        20,639        17,782        18,938          2.6%
Securities gains(losses)                  0           (4)         (355)            0            45          NM
Provision for loan losses             1,980        1,525         3,900         3,012         2,249         29.8%
Net income                           14,617       12,615        10,360         7,746         5,647         15.9%
Earnings per share                    $2.15        $1.87         $1.54         $1.16         $0.85         15.0%
Return on Average
  Assets                               1.94%        1.82%         1.69%         1.50%         1.36%
  Equity                              20.01%       21.59%        22.21%        20.59%        19.39%
Avg. equity/avg. assets                9.70%        8.45%         7.63%         7.28%         7.00%
</TABLE>


NM=Not Meaningful

ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

        Please see 1996 Annual Report to Shareholders, pages 26 through 36.


                                      -18-

<PAGE>   20
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                         Annual
                                                          Form          Report to
                                                          10-K        Shareholders
                                                          Page            Page
                                                         -------------------------
<S>                                                        <C>            <C> 
Report of Independent Public Accountants                   23

Report of Management                                                        1

Consolidated Balance Sheet at
December 31, 1996 and 1995                                                  3

Consolidated Statement of Income for the Years
Ended December 31, 1996, 1995 and 1994                                      4

Consolidated Statement of Cash Flows for the
Years Ended December 31, 1996, 1995 and 1994                                5

Consolidated Statement of Changes in
Shareholders' Equity                                                        6

Condensed Balance Sheet (Parent Only) at
December 31, 1996 and 1995                                                 23

Condensed Statement of Income (Parent Only) for the
Years Ended December 31, 1996, 1995 and 1994                               24

Condensed Statement of Cash Flows (Parent Only)
for Years Ended December 31, 1996, 1995 and 1994                           25

Notes to Consolidated Financial Statements                                7-25
</TABLE>


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

        None.



                                      -19-



<PAGE>   21
                                    PART III


ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF FRONTIER FINANCIAL CORPORATION

        Please see pages 2 thru 6 of 1997 Proxy Statement.


ITEM 11 - EXECUTIVE COMPENSATION

        Please see pages 5 thru 8 1997 Proxy Statement.


ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

        Please see page 4 of 1997 Proxy Statement.


ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

        Please see page 7 of 1997 Proxy Statement; and, Note 13, page 20 of 1996
        Annual Report to Shareholders; and, Page 22 of this Form 10-K report.




                                      -20-



<PAGE>   22
                                     PART IV

ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

  (a)   The following documents are filed as part of the report:

    1.  Financial Statements.

        Financial statements required by Item 8 of this report are incorporated
        by reference, from the Annual Report to Shareholders, attached hereto as
        an exhibit.

    2.  Financial Statement Schedules.

        Additional financial statement schedules filed with this report are
        included in Item 14(d) and are as follows:

                Schedule I - Amounts Receivable from Certain Persons

                Schedules other than those listed above are omitted because of
                the absence of the condition under which they are required or
                because the information called for is included in the financial
                statements or notes thereto.

    3.  Exhibits.

          (3)   Articles of Incorporation and By-Laws are incorporated herein by
                reference to Exhibits 3(a) and 3(b) to Registration on Form
                S-14, File No. 2-82420.

          (11)  Statement Regarding Computation of Earnings Per Share.

          (13)  Annual Report to Shareholders for the year ended December 31, 
                1996. (Pages 1 to 36).

          (21)  Subsidiaries of Registrant is incorporated by reference from 
                Part I, page 1 thru 5 of this report.

          (27)  Financial Data Schedule (This exhibit is included only
                in the electronic EDGAR filing version of this Form 10-K. The
                Financial Data Schedule is not a separate financial statement,
                but a schedule that summarizes certain standard financial
                information extracted directly from the financial statements in
                this filing.)

  (b)   Reports on Form 8-K:

        No Form 8-K's were filed, nor required to be filed for any event during
        the fourth quarter ended December 31, 1996.

  (c)   Exhibits - See list of exhibits set forth above at Item 14 (a)3.

  (d)   Financial Statement Schedules:

        Schedules required to be filed in response to this portion of Item 14
        are listed above in Item 14 (a)1 and 2. The report of independent public
        accountants covering these items is included on page 23 of this Form
        10-K.



                                      -21-


<PAGE>   23
                                                                      SCHEDULE I

              FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
                  AMOUNTS RECEIVABLE FROM CERTAIN PERSONS

(In thousands)

<TABLE>
<CAPTION>
                                                                                    Balance at
 Year Ended      Balance at                              Deductions                 December 31
 December 31      January 1     Additions       Collections         Write-offs      all current
 -----------      ---------     ---------       -----------         ----------      -----------
<S>                <C>           <C>              <C>                   <C>             <C>   
    1996
    ----

    Eight          $8,552        $3,218           ($5,268)              $0              $6,502
  Directors                   
  and Three                   
  Officers                    
                              
    1995                      
    ----                              

    Nine          $10,044        $4,123           ($5,615)              $0              $8,552
  Directors                   
  and Three                   
  Officers                    
                              
    1994                      
    ----                              

    Eight          $5,969        $7,695           ($3,620)              $0             $10,044
  Directors                   
  and Three                   
  Officers                    
</TABLE>


                                      -22-




<PAGE>   24


[MOSS-ADAMS LLP LETTERHEAD]


                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS


To the Board of Directors and Shareholders
Frontier Financial Corporation

We have audited the consolidated financial statements and related financial
statement schedule of Frontier Financial Corporation and subsidiaries listed in
item 14(a)1 and 2 of the Annual Report on Form 10-K of Frontier Financial
Corporation for the year ended December 31, 1996. These financial statements
are the responsibility of the Corporation's management. Our responsibility is
to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free from
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Frontier Financial
Corporation and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1996, in conformity with generally accepted
accounting principles. In our opinion, the financial statement schedule
referred to above, when considered in relation to the basic financial
statements taken as a whole, presents fairly the information required to be
included therein.

                                  /s/  MOSS ADAMS LLP


Everett, Washington
January 21, 1997





                                      -23-
<PAGE>   25

                                   SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.

                                FRONTIER FINANCIAL CORPORATION

March 19, 1997                  /s/  Robert J. Dickson
----------------                ------------------------------------------
Date                            Robert J. Dickson
                                President & Chief Executive Officer

March 19, 1997                  /s/  James F. Felicetty
----------------                ------------------------------------------
Date                            James F. Felicetty
                                Secretary/Treasurer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated:

March 19, 1997                  /s/  Robert J. Dickson
----------------                ------------------------------------------
                                Robert J. Dickson, Director

March 19, 1997                  /s/  David A. Dujardin
----------------                ------------------------------------------
                                David A. Dujardin

March 19, 1997                  /s/  Edward D. Hansen
----------------                ------------------------------------------
                                Edward D. Hansen, Director

March 19, 1997                  /s/  William H. Lucas
----------------                ------------------------------------------
                                William H. Lucas, Director

March 19, 1997                  /s/  James H. Mulligan
----------------                ------------------------------------------
                                James H. Mulligan, Director

March 19, 1997                  /s/  Edward J. Novack
----------------                ------------------------------------------
                                Edward J. Novack, Secretary of the Board

March 19, 1997                  /s/  J. Donald Regan
----------------                ------------------------------------------
                                J. Donald Regan, Director

March 19, 1997                  /s/  Roger L. Rice
----------------                ------------------------------------------
                                Roger L. Rice, Director

March 19, 1997                  /s/  Roy A. Robinson
----------------                ------------------------------------------
                                Roy A. Robinson, Director

March 19, 1997                  /s/  William J. Robinson
----------------                ------------------------------------------
                                William J. Robinson, Chairman of the Board

March 19, 1997                  /s/  Edward C. Rubatino
----------------                ------------------------------------------
                                Edward C. Rubatino, Director




                                     -24-
<PAGE>   26

                                 Exhibit Index


          (3)   Articles of Incorporation and By-Laws are incorporated herein by
                reference to Exhibits 3(a) and 3(b) to Registration on Form
                S-14, File No. 2-82420.

          (11)  Statement Regarding Computation of Earnings Per Share.

          (13)  Annual Report to Shareholders for the year ended December 31, 
                1996. (Pages 1 to 36)

          (21)  Subsidiaries of Registrant is incorporated by reference from 
                Part I, page 1 thru 5 of this report.

          (27)  Financial Data Schedule (This exhibit is included only
                in the electronic EDGAR filing version of this Form 10-K. The
                Financial Data Schedule is not a separate financial statement,
                but a schedule that summarizes certain standard financial
                information extracted directly from the financial statements in
                this filing.)

                                      -25-