##### 



Exhibit 99.1
 CONTACT:
    
    Michal D. Cann  President & CEO
Rick A. Shields  SVP & Chief Financial Officer
360.679.3121
    
    corporate investor relations5333  15
THAvenue South, Suite 1500Seattle, WA 98108206.762.0993
www.stockvalues.com
 NEWS RELEASE
   WASHINGTON BANKING COMPANY FIRST QUARTER 2006 NET INCOME UP 25% AS LOAN GROWTH CONTINUES
   FINANCIAL HIGHLIGHTS
  
    
    Net income increased 25% to a record $2.6 million.
 
    
    Total loans were up 10%, with real estate and construction remaining strong.
 
    
    Net interest margin expanded 39 basis points from a year ago to 5.59%; essentially flat on a sequential-quarter basis.
 
    
    Total deposits grew 10%, with noninterest-bearing demand deposits increasing 17%.
 
    
    Nonperforming assets decreased to 0.22% of total assets from 0.53%.
 
    
    Return on average equity (ROE) improved to 17.68% from 16.38%.
 
    
    Return on average assets (ROA) improved to 1.45% from 1.24%.
 
    
    The efficiency ratio improved to 60.49% from 63.10%.




---



##### 



EARNINGS CONFERENCE CALL AND WEBCAST
  ABOUT WASHINGTON BANKING COMPANY
  This news release may contain forward-looking statements that are subject to risks and
uncertainties. These forward-looking statements describe managements expectations regarding
future events and developments such as future operating results, growth in loans and deposits,
maintenance of the net interest margin, credit quality and loan losses, the efficiency ratio and
continued success of the Companys business plan. Readers should not place undue reliance on
forward-looking statements, which reflect managements views only as of the date hereof. The words
should, anticipate, expect, will, believe, and words of similar meaning are intended, in
part, to help identify forward-looking statements. Future events are difficult to predict, and the
expectations described above are subject to risk and uncertainty that may cause actual results to
differ materially. In addition to discussions about risks and uncertainties set forth from time to
time in the Companys filings with the Securities and Exchange Commission, factors that may cause
actual results to differ materially from those contemplated in these forward-looking statements
include, among others: (1) local and national general and economic condition; (2) changes in
interest rates and their impact on net interest margin; (3) competition among financial
institutions; (4) legislation or regulatory requirements; and (5) success of the Companys
expansion efforts. Washington Banking Company does not undertake to update forward-looking
statements to reflect circumstances or events that occur after the date the forward-looking
statements were made. Any such statements are made in reliance on the safe harbor protections
provided under the Securities Exchange Act of 1934, as amended.
 www.wibank.com






---



##### 



CONSOLIDATED BALANCE SHEETS(unaudited)($ in thousands, except per share data)


March 31,2006


December 31,2005

    ThreeMonthChange

March 31,2005

    OneYearChangeAssetsCash and Due from Banks
    
    $
    22,433
    
    
    
    
    
    
    $
    19,949
    
    
    
    12
    %
    
    $
    20,855
    
    
    
    8
    %Interest-Bearing Deposits with Banks
    
    
    692
    
    
    
    
    
    
    
    983
    
    
    
    -30
    %
    
    
    736
    
    
    
    -6
    %Fed Funds Sold
    
    
    8,530
    
    
    
    
    
    
    
    21,095
    
    
    
    -60
    %
    
    
    1,005
    
    
    
    749
    %Total Cash and Cash Equivalents
    
    
    31,655
    
    
    
    
    
    
    
    42,027
    
    
    
    -25
    %
    
    
    22,596
    
    
    
    40
    %Investment Securities Available for Sale
    
    
    19,013
    
    
    
    
    
    
    
    19,077
    
    
    
    0
    %
    
    
    19,059
    
    
    
    0
    %FHLB Stock
    
    
    1,984
    
    
    
    
    
    
    
    1,984
    
    
    
    0
    %
    
    
    1,984
    
    
    
    0
    %Loans Held for Sale
    
    
    1,356
    
    
    
    
    
    
    
    2,829
    
    
    
    -52
    %
    
    
    5,684
    
    
    
    -76
    %Loans Receivable
    
    
    651,134
    
    
    
    
    
    
    
    630,258
    
    
    
    3
    %
    
    
    590,431
    
    
    
    10
    %Less: Allowance for Loan Losses
    
    
    (9,130
    )
    
    
    
    
    
    
    (8,810
    )
    
    
    4
    %
    
    
    (8,052
    )
    
    
    13
    %Loans, Net
    
    
    642,004
    
    
    
    
    
    
    
    621,448
    
    
    
    3
    %
    
    
    582,379
    
    
    
    10
    %Premises and Equipment, Net
    
    
    20,591
    
    
    
    
    
    
    
    20,514
    
    
    
    0
    %
    
    
    20,987
    
    
    
    -2
    %Bank Owned Life Insurance
    
    
    10,646
    
    
    
    
    
    
    
    10,558
    
    
    
    1
    %
    
    
    10,302
    
    
    
    3
    %Other Real Estate Owned
    
    
    

    
    

    
    

    
    
    
    
    
    
    
    0
    %
    
    
    924
    
    
    
    -100
    %Other Assets
    
    
    8,372
    
    
    
    
    
    
    
    7,539
    
    
    
    11
    %
    
    
    8,201
    
    
    
    2
    %Total Assets
    
    $
    735,621
    
    
    
    
    
    
    $
    725,976
    
    
    
    1
    %
    
    $
    672,116
    
    
    
    9
    %Liabilities and Shareholders EquityDeposits:Noninterest-Bearing Demand
    
    $
    100,537
    
    
    
    
    
    
    $
    105,365
    
    
    
    -5
    %
    
    $
    85,891
    
    
    
    17
    %NOW Accounts
    
    
    154,170
    
    
    
    
    
    
    
    143,042
    
    
    
    8
    %
    
    
    135,875
    
    
    
    13
    %Money Market
    
    
    89,086
    
    
    
    
    
    
    
    84,537
    
    
    
    5
    %
    
    
    95,124
    
    
    
    -6
    %Savings
    
    
    56,840
    
    
    
    
    
    
    
    59,635
    
    
    
    -5
    %
    
    
    57,160
    
    
    
    -1
    %Time Deposits
    
    
    245,373
    
    
    
    
    
    
    
    244,910
    
    
    
    0
    %
    
    
    213,489
    
    
    
    15
    %Total Deposits
    
    
    646,006
    
    
    
    
    
    
    
    637,489
    
    
    
    1
    %
    
    
    587,539
    
    
    
    10
    %FHLB Overnight Borrowings
    
    
    
    

    
    
    
    
    
    
    
    
    
    
    0
    %
    
    
    9,000
    
    
    
    -100
    %Other Borrowed Funds
    
    
    10,000
    
    
    
    
    
    
    
    10,000
    
    
    
    0
    %
    
    
    5,000
    
    
    
    100
    %Junior Subordinated Debentures
    
    
    15,007
    
    
    
    
    
    
    
    15,007
    
    
    
    0
    %
    
    
    15,007
    
    
    
    0
    %Other Liabilities
    
    
    4,559
    
    
    
    
    
    
    
    5,631
    
    
    
    -19
    %
    
    
    4,395
    
    
    
    4
    %Total Liabilities
    
    
    675,572
    
    
    
    
    
    
    
    668,127
    
    
    
    1
    %
    
    
    620,941
    
    
    
    9
    %Shareholders Equity:Common Stock (no par value)
Authorized 11,822,706 Shares:Issued
and Outstanding 7,409,115 at 3/31/06,
7,382,210 at 12/31/05, 7,290,824 at 3/31/05
(1)
    
    32,662
    
    
    
    
    
    
    
    32,492
    
    
    
    1
    %
    
    
    31,586
    
    
    
    3
    %Retained Earnings
    
    
    27,879
    
    
    
    
    
    
    
    25,789
    
    
    
    8
    %
    
    
    19,576
    
    
    
    42
    %Unearned Compensation
    
    
    (411
    )
    
    
    
    
    
    
    (386
    )
    
    
    6
    %
    
    
    
    
    
    
    -100
    %Other Comprehensive Income
    
    
    (81
    )
    
    
    
    
    
    
    (46
    )
    
    
    76
    %
    
    
    13
    
    
    
    -723
    %Total Shareholders Equity
    
    
    60,049
    
    
    
    
    
    
    
    57,849
    
    
    
    4
    %
    
    
    51,175
    
    
    
    17
    %Total Liabilities and Shareholders Equity
    
    $
    735,621
    
    
    
    
    
    
    $
    725,976
    
    
    
    1
    %
    
    $
    672,116
    
    
    
    9
    %
 (1)




---



##### 



Quarter Ended
    
    
    Quarter Ended
    
    
    Quarter Ended
    
    
    OneCONSOLIDATED STATEMENTS OF OPERATIONS(unaudited)
    
    March 31,
    
    
    December 31,
    
    
    March 31,
    
    
    Year($ in thousands, except per share data)

    2006

    2005

    2005


    ChangeInterest IncomeLoans
    
    $
    12,407
    
    
    $
    12,192
    
    
    $
    10,094
    
    
    
    23
    %Taxable Investment Securities
    
    
    103
    
    
    
    98
    
    
    
    88
    
    
    
    17
    %Tax Exempt Securities
    
    
    80
    
    
    
    73
    
    
    
    80
    
    
    
    0
    %Other
    
    
    59
    
    
    
    209
    
    
    
    31
    
    
    
    90
    %Total Interest Income
    
    
    12,649
    
    
    
    12,572
    
    
    
    10,293
    
    
    
    23
    %Interest ExpenseDeposits
    
    
    3,095
    
    
    
    2,891
    
    
    
    2,107
    
    
    
    47
    %Other Borrowings
    
    
    150
    
    
    
    95
    
    
    
    169
    
    
    
    -11
    %Junior Subordinated Debentures
    
    
    309
    
    
    
    296
    
    
    
    237
    
    
    
    30
    %Total Interest Expense
    
    
    3,554
    
    
    
    3,282
    
    
    
    2,513
    
    
    
    41
    %Net Interest Income
    
    
    9,095
    
    
    
    9,290
    
    
    
    7,780
    
    
    
    17
    %Provision for Loan Losses
    
    
    500
    
    
    
    750
    
    
    
    425
    
    
    
    18
    %Net Interest Income after Provision for Loan Losses
    
    
    8,595
    
    
    
    8,540
    
    
    
    7,355
    
    
    
    17
    %Noninterest IncomeService Charges and Fees
    
    
    817
    
    
    
    844
    
    
    
    699
    
    
    
    17
    %Income from the Sale of Loans
    
    
    182
    
    
    
    109
    
    
    
    172
    
    
    
    6
    %Other Income
    
    
    884
    
    
    
    812
    
    
    
    780
    
    
    
    13
    %Total Noninterest Income
    
    
    1,883
    
    
    
    1,765
    
    
    
    1,651
    
    
    
    14
    %Noninterest ExpenseCompensation and Employee Benefits
    
    
    4,276
    
    
    
    4,067
    
    
    
    3,431
    
    
    
    25
    %Occupancy and Equipment
    
    
    860
    
    
    
    846
    
    
    
    789
    
    
    
    9
    %Office Supplies and Printing
    
    
    181
    
    
    
    156
    
    
    
    185
    
    
    
    -2
    %Data Processing
    
    
    82
    
    
    
    99
    
    
    
    118
    
    
    
    -31
    %Consulting and Professional Fees
    
    
    119
    
    
    
    220
    
    
    
    266
    
    
    
    -55
    %Other
    
    
    1,165
    
    
    
    1,355
    
    
    
    1,198
    
    
    
    -3
    %Total Noninterest Expense
    
    
    6,683
    
    
    
    6,743
    
    
    
    5,987
    
    
    
    12
    %Income Before Income Taxes
    
    
    3,796
    
    
    
    3,562
    
    
    
    3,019
    
    
    
    26
    %Provision for Income Taxes
    
    
    1,244
    
    
    
    1,165
    
    
    
    976
    
    
    
    27
    %Net Income
    
    $
    2,552
    
    
    $
    2,397
    
    
    $
    2,043
    
    
    
    25
    %Earnings per Common Share (1)BasicNet Income per share, basic
    
    $
    0.35
    
    
    $
    0.33
    
    
    $
    0.28
    
    
    
    24
    %DilutedNet Income per share, diluted
    
    $
    0.34
    
    
    $
    0.32
    
    
    $
    0.27
    
    
    
    25
    %Average Number of Common Shares Outstanding (1)
    
    
    7,362,843
    
    
    
    7,306,827
    
    
    
    7,249,213Fully Diluted Average Common and Common Equivalent Shares
Outstanding (1)
    
    
    7,578,177
    
    
    
    7,564,667
    
    
    
    7,521,261




---



##### 



Quarter Ended
    
    
    Quarter Ended
    
    
    Quarter EndedFINANCIAL STATISTICS (unaudited)
    
    March 31,
    
    
    December 31,
    
    
    March 31,($ in thousands, except per share data)
    2006


    2005


    2005Revenues(1)(2)
    
    $
    11,048
    
    
    $
    11,120
    
    
    $
    9,488AveragesTotal Assets
    
    $
    712,053
    
    
    $
    710,596
    
    
    $
    659,647Loans and Loans Held for Sale
    
    $
    639,742
    
    
    $
    622,434
    
    
    $
    585,952Interest Earning Assets
    
    $
    665,351
    
    
    $
    663,183
    
    
    $
    610,170Deposits
    
    $
    619,844
    
    
    $
    624,154
    
    
    $
    569,105Shareholders Equity
    
    $
    58,543
    
    
    $
    56,246
    
    
    $
    49,891Financial RatiosReturn on Average Assets, Annualized
    
    
    1.45%
    
    
    
    1.34%
    
    
    
    1.24%Return on Average Equity, Annualized
    
    
    17.68%
    
    
    
    16.91%
    
    
    
    16.38%Average Equity to Average Assets
    
    
    8.22%
    
    
    
    7.92%
    
    
    
    7.56%Efficiency Ratio (2)
    
    
    60.49%
    
    
    
    60.64%
    
    
    
    63.10%Yield on Earning Assets (2)
    
    
    7.75%
    
    
    
    7.56%
    
    
    
    6.88%Cost of Interest Bearing Liabilities
    
    
    2.62%
    
    
    
    2.39%
    
    
    
    1.96%Net Interest Spread
    
    
    5.13%
    
    
    
    5.17%
    
    
    
    4.92%Net Interest Margin (2)
    
    
    5.59%
    
    
    
    5.60%
    
    
    
    5.20%March 31,
    
    
    December 31,
    
    
    March 31,2006


    2005


    2005Period EndBook Value Per Share (3)
    
    $
    8.10
    
    
    $
    7.44
    
    
    $
    7.02
 (1)
 (2)
 (3)




---



##### 



Quarter Ended
    
    

    Quarter Ended
    
    
    Quarter EndedASSET QUALITY (unaudited)
    
    March 31,
    
    
    December 31,
    
    
    March 31,($ in thousands, except per share data)
    2006

    2005

    2005Allowance for Loan Losses Activity:Balance at Beginning of Period
    
    $
    8,810
    
    
    $
    8,593
    
    
    $
    7,903Indirect Loans:Charge-offs
    
    
    (231
    )
    
    
    (389
    )
    
    
    (318
    )Recoveries
    
    
    131
    
    
    
    68
    
    
    
    82Indirect Net Charge-offs
    
    
    (100
    )
    
    
    (321
    )
    
    
    (236
    )Other Loans:Charge-offs
    
    
    (324
    )
    
    
    (406
    )
    
    
    (265
    )Recoveries
    
    
    244
    
    
    
    194
    
    
    
    225Other Net Charge-offs
    
    
    (80
    )
    
    
    (212
    )
    
    
    (40
    )Total Net Charge-offs
    
    
    (180
    )
    
    
    (533
    )
    
    
    (276
    )Provision for Loan Losses
    
    
    500
    
    
    
    750
    
    
    
    425Balance at End of Period
    
    $
    9,130
    
    
    $
    8,810
    
    
    $
    8,052Net Charge-offs to Average Loans:Indirect Loans Net Charge-Offs to Avg Indirect Loans, Annualized (1)
    
    
    0.43%
    
    
    
    1.40%
    
    
    
    0.96%Other Loans Net Charge-Offs to Avg Other Loans, Annualized (1)
    
    
    0.06%
    
    
    
    0.16%
    
    
    
    0.03%Net Charge-offs to Average Total Loans, Annualized (1)
    
    
    0.11%
    
    
    
    0.34%
    
    
    
    0.19%
 March 31,
    
    
    December 31,
    
    
    March 31,Nonperforming Assets
    2006

    2005

    2005Nonperforming Loans (2)
    
    $
    1,599
    
    
    $
    2,159
    
    
    $
    2,655Other Real Estate Owned
    
    
    
    
    
    
    
    
    
    
    924Total Nonperforming Assets
    
    $
    1,599
    
    
    $
    2,159
    
    
    $
    3,579Nonperforming
Loans to Loans
    
    
    0.25%
    
    
    
    0.34%
    
    
    
    0.45%Nonperforming Assets to Assets
    
    
    0.22%
    
    
    
    0.30%
    
    
    
    0.53%Allowance for Loan Losses to Nonperforming Loans
    
    
    570.98%
    
    
    
    408.06%
    
    
    
    303.28%Allowance for Loan Losses to Nonperforming Assets
    
    
    570.98%
    
    
    
    408.06%
    
    
    
    224.98%Allowance
for Loan Losses to Loans
    
    
    1.40%
    
    
    
    1.40%
    
    
    
    1.36%Loan CompositionCommercial
    
    $
    80,667
    
    
    $
    79,341
    
    
    $
    81,741Real Estate MortgagesOne-to-Four
Family Residential
    
    
    50,095
    
    
    
    45,278
    
    
    
    43,825Commercial
    
    
    223,979
    
    
    
    218,260
    
    
    
    181,190Real Estate Construction
    
    
    120,600
    
    
    
    113,661
    
    
    
    106,789ConsumerIndirect
    
    
    93,900
    
    
    
    91,251
    
    
    
    98,059Direct
    
    
    81,712
    
    
    
    82,425
    
    
    
    78,476Deferred Fees
    
    
    181
    
    
    
    42
    
    
    
    351Total Loans
    
    $
    651,134
    
    
    $
    630,258
    
    
    $
    590,431