##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly report pursuant to Section 13 or l5(d) of the Securities Exchange Act of 1934
 For the quarterly period ended June 30, 2008
 o
    
    Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number 000-24503
 WASHINGTON BANKING COMPANY
  Washington
    
    91-1725825(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 450 SW Bayshore Drive
Oak Harbor, Washington 98277
 (360) 679-3121
  þ o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer   o
(Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



Table of Contents
 PagePART I  FINANCIAL INFORMATIONItem 1. Financial StatementsCondensed Consolidated Statements of Financial Condition -
June 30, 2008 and December 31, 2007
    
    
    1Condensed Consolidated Statements of Income -
Three and Six Months Ended June 30, 2008 and 2007
    
    
    2Condensed Consolidated Statements of Shareholders Equity and Comprehensive Income -
Six Months Ended June 30, 2008 and 2007
    
    
    3Condensed Consolidated Statements of Cash Flows -
Six Months Ended June 30, 2008 and 2007
    
    
    4Notes to Condensed Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    11Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    21Item 4. Controls and Procedures
    
    
    21PART II  OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    22Item 1A. Risk Factors
    
    
    22Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    22Item 3. Defaults Upon Senior Securities
    
    
    22Item 4. Submission of Matters to a Vote of Security Holders
    
    
    22Item 5. Other Information
    
    
    22Item 6. Exhibits
    
    
    22Signatures
    
    
    23EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 32.1EXHIBIT 32.2
  i




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. Financial Statements
 WASHINGTON BANKING COMPANY
AND SUBSIDIARIES
 
   June 30,
    
    
    December 31,2008
    
    
    2007AssetsCash and due from banks
($3,481 and $3,496, respectively, are restricted)
    
    $
    22,783
    
    
    $
    18,795Interest-bearing deposits
    
    
    515
    
    
    
    257Federal funds sold
    
    
    3,280
    
    
    
    Total cash, restricted cash, and cash equivalents
    
    
    26,578
    
    
    
    19,052Investment securities available for sale
    
    
    11,310
    
    
    
    13,832Federal Home Loan Bank stock
    
    
    2,880
    
    
    
    1,984Loans held for sale
    
    
    562
    
    
    
    2,347Loans receivable
    
    
    824,600
    
    
    
    805,862Allowance for loan losses
    
    
    (11,585
    )
    
    
    (11,126
    )Total loans, net
    
    
    813,015
    
    
    
    794,736Premises and equipment, net
    
    
    24,662
    
    
    
    25,138Bank owned life insurance
    
    
    16,739
    
    
    
    16,517Other assets
    
    
    8,131
    
    
    
    8,683Total assets
    
    $
    903,877
    
    
    $
    882,289Liabilities and Shareholders EquityLiabilities:DepositsNoninterest-bearing
    
    $
    91,764
    
    
    $
    101,539Interest-bearing
    
    
    290,437
    
    
    
    315,298Time deposits
    
    
    350,667
    
    
    
    341,517Total deposits
    
    
    732,868
    
    
    
    758,354FHLB overnight borrowings
    
    
    34,000
    
    
    
    20,500Other borrowed funds
    
    
    30,000
    
    
    
    Junior subordinated debentures
    
    
    25,774
    
    
    
    25,774Other liabilities
    
    
    3,699
    
    
    
    4,091Total liabilities
    
    
    826,341
    
    
    
    808,719Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Preferred stock, no par value. Authorized 20,000 shares: no
shares issued or outstanding
    
    
    
    
    
    
    Common stock, no par value.
Authorized 13,679,757 shares:
issued
and outstanding 9,487,560 at 6/30/2008 and
9,453,767 at 12/31/2007
    
    
    33,208
    
    
    
    32,812Retained earnings
    
    
    44,226
    
    
    
    40,652Accumulated other comprehensive income
    
    
    102
    
    
    
    106Total shareholders equity
    
    
    77,536
    
    
    
    73,570Total liabilities and shareholders equity
    
    $
    903,877
    
    
    $
    882,289
  1




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##### Table of Contents



WASHINGTON BANKING COMPANY
AND SUBSIDIARY
 
   Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008
    
    
    2007
    
    
    2008
    
    
    2007Interest income:Interest and fees on loans
    
    $
    14,383
    
    
    $
    15,185
    
    
    $
    29,744
    
    
    $
    29,614Interest on taxable investment securities
    
    
    96
    
    
    
    136
    
    
    
    206
    
    
    
    269Interest on tax exempt investment securities
    
    
    51
    
    
    
    68
    
    
    
    102
    
    
    
    138Other
    
    
    3
    
    
    
    67
    
    
    
    8
    
    
    
    99Total interest income
    
    
    14,533
    
    
    
    15,456
    
    
    
    30,060
    
    
    
    30,120Interest expense:Interest on deposits
    
    
    4,542
    
    
    
    5,480
    
    
    
    9,837
    
    
    
    10,803Interest on other borrowings
    
    
    359
    
    
    
    137
    
    
    
    663
    
    
    
    170Interest on junior subordinated debentures
    
    
    284
    
    
    
    484
    
    
    
    689
    
    
    
    822Total interest expense
    
    
    5,185
    
    
    
    6,100
    
    
    
    11,189
    
    
    
    11,795Net interest income
    
    
    9,348
    
    
    
    9,356
    
    
    
    18,871
    
    
    
    18,325Provision for loan losses
    
    
    1,050
    
    
    
    850
    
    
    
    2,075
    
    
    
    1,400Net interest income after provision for loan losses
    
    
    8,298
    
    
    
    8,506
    
    
    
    16,796
    
    
    
    16,925Noninterest income:Service charges and fees
    
    
    711
    
    
    
    797
    
    
    
    1,437
    
    
    
    1,614Income from the sale of loans
    
    
    51
    
    
    
    211
    
    
    
    141
    
    
    
    366SBA premium income
    
    
    45
    
    
    
    123
    
    
    
    189
    
    
    
    261Other
    
    
    831
    
    
    
    822
    
    
    
    1,665
    
    
    
    1,517Total noninterest income
    
    
    1,638
    
    
    
    1,953
    
    
    
    3,432
    
    
    
    3,758Noninterest expense:Salaries and benefits
    
    
    3,798
    
    
    
    4,132
    
    
    
    7,788
    
    
    
    8,543Occupancy and equipment
    
    
    902
    
    
    
    980
    
    
    
    1,851
    
    
    
    1,936Office supplies and printing
    
    
    120
    
    
    
    179
    
    
    
    240
    
    
    
    309Data processing
    
    
    153
    
    
    
    167
    
    
    
    314
    
    
    
    308Consulting and professional fees
    
    
    147
    
    
    
    99
    
    
    
    362
    
    
    
    270Other
    
    
    1,208
    
    
    
    1,313
    
    
    
    2,653
    
    
    
    2,428Total noninterest expense
    
    
    6,328
    
    
    
    6,870
    
    
    
    13,208
    
    
    
    13,794Income before provision for income taxes
    
    
    3,608
    
    
    
    3,589
    
    
    
    7,020
    
    
    
    6,889Provision for income taxes
    
    
    1,187
    
    
    
    1,129
    
    
    
    2,262
    
    
    
    2,161Net income
    
    $
    2,421
    
    
    $
    2,460
    
    
    $
    4,758
    
    
    $
    4,728Net income per share, basic
    
    $
    0.25
    
    
    $
    0.26
    
    
    $
    0.50
    
    
    $
    0.50Net income per share, diluted
    
    $
    0.25
    
    
    $
    0.26
    
    
    $
    0.50
    
    
    $
    0.50Average number of shares outstanding, basic
    
    
    9,464,000
    
    
    
    9,363,000
    
    
    
    9,445,000
    
    
    
    9,403,000Average number of shares outstanding, diluted
    
    
    9,519,000
    
    
    
    9,486,000
    
    
    
    9,511,000
    
    
    
    9,548,000
  2




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WASHINGTON BANKING COMPANY
AND SUBSIDIARY
 
    Accumulatedother
    
    
    TotalCommon stock
    
    
    Retained
    
    
    comprehensive
    
    
    ShareholdersShares
    
    
    Amount
    
    
    earnings
    
    
    Income (loss)
    
    
    equityBalances at December 31, 2006
    
    
    9,389
    
    
    $
    33,016
    
    
    $
    33,422
    
    
    $
    (45
    )
    
    $
    66,393Comprehensive income:Net income
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    4,728
    
    
    
    3⁄4
    
    
    
    4,728Net change in unrealized loss on
securities available for sale, net
of tax of ($32)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (59
    )
    
    
    (59
    )Total comprehensive income
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    4,669Cash dividend, $0.11 per share
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,042
    )
    
    
    3⁄4
    
    
    
    (1,042
    )Stock-based compensation
    
    
    3⁄4
    
    
    
    155
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    155Common stock repurchased and retired
    
    
    (116
    )
    
    
    (1,851
    )
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,851
    )Stock options exercised
    
    
    109
    
    
    
    675
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    675Forfeited and cancelled restricted stock
    
    
    (2
    )
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Tax benefit associated with stock awards
    
    
    3⁄4
    
    
    
    122
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    122Balances at June 30, 2007
    
    
    9,380
    
    
    $
    32,117
    
    
    $
    37,108
    
    
    $
    (104
    )
    
    $
    69,121Balances at December 31, 2007
    
    
    9,454
    
    
    $
    32,812
    
    
    $
    40,652
    
    
    $
    106
    
    
    $
    73,570Comprehensive income:Net income
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    4,758
    
    
    
    3⁄4
    
    
    
    4,758Net change in unrealized loss on securities available for sale,
net of tax of ($3)
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (4
    )
    
    
    (4
    )Total comprehensive income
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    4,754Cash dividend, $0.125 per share
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    (1,184
    )
    
    
    3⁄4
    
    
    
    (1,184
    )Tax benefit associated with stock awards
    
    
    3⁄4
    
    
    
    40
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    40Stock based compensation expense
    
    
    3⁄4
    
    
    
    184
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    184Exercise of common stock- stock options
    
    
    32
    
    
    
    172
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    172Issuance of restricted stock
    
    
    3
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Cancellation of restricted stock
    
    
    (1
    )
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    3⁄4Tax benefit associated with stock awards
    
    
    3⁄4
    
    
    
    40
    
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    40Balances at June 30, 2008
    
    
    9,488
    
    
    $
    33,208
    
    
    $
    44,226
    
    
    $
    102
    
    
    $
    77,536
 3




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WASHINGTON BANKING COMPANY
AND SUBSIDIARY
 
   Six Months EndedJune 30,2008
    
    
    2007Cash flows from operating activities:Net income from continuing operations
    
    $
    4,758
    
    
    $
    4,728Adjustments to reconcile net income to net cash
provided by operating activities:Accretion of investment discounts, net
    
    
    (6
    )
    
    
    (3
    )Deferred income tax expense (benefit)
    
    
    (116
    )
    
    
    223Depreciation and amortization
    
    
    893
    
    
    
    886Earnings on bank owned life insurance
    
    
    (222
    )
    
    
    (247
    )Provision for loan losses
    
    
    2,075
    
    
    
    1,400Net gain on sale of other real estate
    
    
    (88
    )
    
    
    (71
    )Write-downs of other real estate
    
    
    134
    
    
    
    3⁄4Amortization of stock-based compensation
    
    
    184
    
    
    
    155Excess tax benefit from stock-based compensation
    
    
    (40
    )
    
    
    (122
    )Net change in assets and liabilities:Net (increase) decrease in loans held for sale
    
    
    1,785
    
    
    
    (2,377
    )Decrease (increase) in other assets
    
    
    469
    
    
    
    (778
    )Increase (decrease) in other liabilities
    
    
    (392
    )
    
    
    272Cash provided by operating activities:
    
    
    9,434
    
    
    
    4,066Cash flows from investing activities:Purchases of investment securities, available-for-sale
    
    
    (498
    )
    
    
    (2,635
    )Purchase of Federal Home Loan Bank Stock
    
    
    (896
    )
    
    
    3⁄4Maturities/calls/principal payments of investment and
    
    
    3⁄4
    
    
    
    3⁄4mortgage  backed securities, available for sale
    
    
    3,019
    
    
    
    2,318Net (increase) loans
    
    
    (20,954
    )
    
    
    (46,286
    )Purchases of premises and equipment
    
    
    (417
    )
    
    
    (681
    )Purchases of bank owned life insurance
    
    
    3⁄4
    
    
    
    (5,000
    )Proceeds from the sale of other real estate owned
    
    
    796
    
    
    
    940Cash flows used by investing activities
    
    
    (18,950
    )
    
    
    (51,344
    )Cash flows from financing activities:Net increase (decrease) in deposits
    
    
    (25,486
    )
    
    
    25,819Gross payments on other borrowed funds
    
    
    3⁄4
    
    
    
    (10,000
    )New borrowings on other borrowed funds
    
    
    30,000
    
    
    
    20,000Net increase (decrease) in FHLB overnight borrowings
    
    
    13,500
    
    
    
    7,925Gross payments on junior subordinated debentures
    
    
    3⁄4
    
    
    
    (15,007
    )New borrowings on junior subordinated debentures
    
    
    3⁄4
    
    
    
    25,774Dividends paid on common stock
    
    
    (1,184
    )
    
    
    (1,042
    )Common stock repurchased
    
    
    3⁄4
    
    
    
    (1,851
    )Excess tax benefits from stock-based compensation
    
    
    40
    
    
    
    122Proceeds from exercise of common stock- stock options
    
    
    172
    
    
    
    675Cash provided by financing activities
    
    
    17,042
    
    
    
    52,415Net change in cash and cash equivalents
    
    
    7,526
    
    
    
    5,137Cash and cash equivalents at beginning of period
    
    
    19,052
    
    
    
    19,745Cash and cash equivalents at end of period
    
    $
    26,578
    
    
    $
    24,882Supplemental information:Loans foreclosed and transferred to other real estate owned
    
    $
    600
    
    
    $
    548Cash paid for interest
    
    
    11,114
    
    
    
    12,054Cash paid for income taxes
    
    
    2,352
    
    
    
    1,360
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (1) Description of Business and Summary of Significant Accounting Policies
 (a) Description of Business:
 (b) Basis of Presentation:
 (c) Reclassifications:
 (2) Recent Financial Accounting Pronouncements
 Disclosures about Derivative Instruments and Hedging Activities  an Amendment of FASB Statement
133. a b Accounting for Derivative Instruments and Hedging Activities; c
 
    
    Disclosure of the objectives for using derivative instruments be disclosed in terms of
underlying risk and accounting designation;
    
    Disclosure of the fair values of derivative instruments and their gains and losses in a
tabular format;
    
    Disclosure of information about credit-risk-related contingent features; and
    
    Cross-reference from the derivative footnote to other footnotes in which
derivative-related information is disclosed.
  5




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (2) Recent Financial Accounting Pronouncements- (Continued)
 The
Hierarchy of Generally Accepted Accounting Principles
  Accounting for Financial Guarantee Insurance Contracts:
An interpretation of FASB Statement No. 60.
  (3) Earnings Per Share
   Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Weighted average shares-basic
    
    
    9,464,000
    
    
    
    9,363,000
    
    
    
    9,445,000
    
    
    
    9,403,000Effect of dilutive securities: stock awards
    
    
    55,000
    
    
    
    123,000
    
    
    
    66,000
    
    
    
    145,000Weighted average shares-diluted
    
    
    9,519,000
    
    
    
    9,486,000
    
    
    
    9,511,000
    
    
    
    9,548,000
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2008
    
    2007
    
    2008
    
    2007Antidilutive awards
not included in
diluted earnings per
share
    
    
    95,689
    
    
    
    43,595
    
    
    
    83,908
    
    
    
    23,675
 6




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (4) Stock-Based Compensation
 (a) Stock Options:
 Six Months EndedJune 30,2008
    
    2007Risk-free interest rate
    
    
    3.44
    %
    
    
    4.59
    %Dividend yield rate
    
    
    2.90
    %
    
    
    1.50
    %Price volatility
    
    
    40.50
    %
    
    
    33.00
    %Expected life of stock options
    
    5 years
    
    5 years
   Weighted
    
    Weighted average
    
    Aggregateaverage exercise
    
    remaining contractual
    
    intrinsicShares
    
    price per share
    
    terms (in years)
    
    valueOutstanding at January 1, 2008
    
    
    192,618
    
    
    $
    9.63Granted
    
    
    131,500
    
    
    
    9.11Exercised
    
    
    (31,629
    )
    
    
    5.48
    
    
    
    
    
    
    $
    274Forfeited, expired or cancelled
    
    
    (5,202
    )
    
    
    15.85Outstanding at June 30, 2008
    
    
    287,287
    
    
    $
    9.74
    
    
    
    7.77
    
    
    $
    209Exercisable at June 30, 2008
    
    
    103,141
    
    
    $
    7.48
    
    
    
    4.50
    
    
    $
    209
  (b) Restricted Stock Awards:
  Weighted average
    
    Weighted average remainingShares
    
    grant price per share
    
    contractual terms (in years)Outstanding at January 1, 2008
    
    
    29,561
    
    
    $
    13.08Granted
    
    
    3⁄4
    
    
    
    3⁄4Vested
    
    
    (13,341
    )
    
    
    12.24Forfeited, expired or cancelled
    
    
    (1,290
    )
    
    
    13.41Outstanding at June 30, 2008
    
    
    14,930
    
    
    $
    13.80
    
    
    
    2.00
 7




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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   (c) Restricted Stock Units:
  Weighted average
    
    Weighted average remainingShares
    
    grant price per share
    
    contractual terms (in years)Outstanding at January 1, 2008
    
    
    17,815
    
    
    $
    15.98Granted
    
    
    17,925
    
    
    
    11.86Vested
    
    
    (3,866
    )
    
    
    3⁄4Forfeited, expired or cancelled
    
    
    (1,036
    )
    
    
    15.98Outstanding at June 30, 2008
    
    
    30,838
    
    
    $
    13.58
    
    

    

    3.14
  (5) Fair Value Measurements
 Fair Value Measurements
  Level 1:
    
    Quoted prices for identical instruments in active markets.Level 2:
    
    Quoted prices for similar instruments in active markets; quoted prices for
identical or similar instruments in markets that are not active; and model-derived
valuations whose inputs are observable or whose significant value drives are
observable.Level 3:
    
    Significant inputs to the valuation model are unobservable.
  Investments in debt and equity securities
 8




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##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Impaired loans :
 Other real estate owned :
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsInvestment securities
    
    $
    3⁄4
    
    
    $
    11,310
    
    
    $
    3⁄4
    
    
    $
    11,310Total
    
    $
    3⁄4
    
    
    $
    11,310
    
    
    $
    3⁄4
    
    
    $
    11,310
  Level 1
    
    
    Level 2
    
    
    Level 3
    
    
    TotalAssetsImpaired loans
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    2,515
    
    
    $
    2,515Other real estate owned
    
    
    3⁄4
    
    
    
    3⁄4
    
    
    
    932
    
    
    
    932Total
    
    $
    3⁄4
    
    
    $
    3⁄4
    
    
    $
    3,447
    
    
    $
    3,447
 Accounting by Creditors for Impairment of a Loan
 Accounting for the Impairment or Disposal of Long-Lived
Assets
 (6) Subsequent Events
  9




---



##### Table of Contents



NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  (7) Commitments and Guarantees
  
 10




---



##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Note Regarding Forward-Looking Statements
  Overview
   Summary of Critical Accounting Policies
  Allowance for Loan Losses:
 Stock-based Compensation:
 11




---



##### Table of Contents



Results of Operations Overview
   Net Interest Income:
 §      The volume, pricing, mix and maturity of interest-earning assets and interest-bearing
liabilities;§      The volume of free funds (consisting of noninterest-bearing deposits and other
liabilities and shareholders equity);§      The volume of noninterest-earning assets;§      Market interest rate fluctuations; and§      Asset quality.
  Average Balance Sheet and Analysis of Net Interest Income and Yields/RatesThree Months Ended
    
    
    Three Months EndedJune 30, 2008
    
    
    June 30, 2007Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average(Dollars in thousands)
    
    balance
    
    
    earned/paid
    
    
    yield
    
    
    balance
    
    
    earned/paid
    
    
    yieldAssetsLoans (1) (2)
    
    $
    823,052
    
    
    $
    14,499
    
    
    
    7.07
    %
    
    $
    747,645
    
    
    $
    15,317
    
    
    
    8.22
    %Federal funds sold
    
    
    252
    
    
    
    1
    
    
    
    2.05
    %
    
    
    2,600
    
    
    
    35
    
    
    
    5.41
    %Interest-bearing cash
    
    
    378
    
    
    
    2
    
    
    
    2.45
    %
    
    
    2,437
    
    
    
    32
    
    
    
    5.26
    %InvestmentsTaxable
    
    
    9,195
    
    
    
    96
    
    
    
    4.18
    %
    
    
    12,300
    
    
    
    136
    
    
    
    4.44
    %Non-taxable (2)
    
    
    5,262
    
    
    
    76
    
    
    
    5.76
    %
    
    
    6,817
    
    
    
    99
    
    
    
    5.84
    %Interest-earning assets
    
    
    838,139
    
    
    
    14,674
    
    
    
    7.02
    %
    
    
    771,799
    
    
    
    15,619
    
    
    
    8.12
    %Noninterest-earning assets
    
    
    52,858
    
    
    
    
    
    
    
    
    
    
    
    55,838Total assets
    
    $
    890,997
    
    
    
    
    
    
    
    
    
    
    $
    827,636Liabilities and shareholders equityDeposits:Interest demand and
money market
    
    $
    253,850
    
    
    $
    933
    
    
    
    1.47
    %
    
    $
    262,008
    
    
    $
    1,690
    
    
    
    2.59
    %Savings
    
    
    41,674
    
    
    
    42
    
    
    
    0.41
    %
    
    
    47,185
    
    
    
    84
    
    
    
    0.71
    %CDs
    
    
    348,276
    
    
    
    3,567
    
    
    
    4.11
    %
    
    
    306,774
    
    
    
    3,706
    
    
    
    4.85
    %Total interest-bearing deposits
    
    
    643,800
    
    
    
    4,542
    
    
    
    2.83
    %
    
    
    615,967
    
    
    
    5,480
    
    
    
    3.57
    %Federal funds purchased
    
    
    18,334
    
    
    
    115
    
    
    
    2.51
    %
    
    
    6,815
    
    
    
    94
    
    
    
    5.53
    %Junior subordinated debentures
    
    
    25,774
    
    
    
    284
    
    
    
    4.42
    %
    
    
    25,540
    
    
    
    484
    
    
    
    7.60
    %Other interest bearing liabilities
    
    
    30,000
    
    
    
    245
    
    
    
    3.27
    %
    
    
    3,516
    
    
    
    43
    
    
    
    4.91
    %Total interest bearing liabilities
    
    
    717,908
    
    
    
    5,185
    
    
    
    2.90
    %
    
    
    651,838
    
    
    
    6,100
    
    
    
    3.75
    %Noninterest-bearing DDA
    
    
    93,191
    
    
    
    
    
    
    
    
    
    
    
    101,433Other liabilities
    
    
    3,695
    
    
    
    
    
    
    
    
    
    
    
    5,988Total liabilities
    
    
    814,794
    
    
    
    
    
    
    
    
    
    
    
    759,259Total shareholders equity
    
    
    76,203
    
    
    
    
    
    
    
    
    
    
    
    68,377Total liabilities and shareholders equity
    
    $
    890,997
    
    
    
    
    
    
    
    
    
    
    $
    827,636Net interest income /Spread
    
    
    
    
    
    $
    9,489
    
    
    
    4.12
    %
    
    
    
    
    
    $
    9,520
    
    
    
    4.36
    %Credit for interest bearing funds
    
    
    
    
    
    
    
    
    
    
    0.43
    %
    
    
    
    
    
    
    
    
    
    
    0.58
    %Net interest margin (2)
    
    
    
    
    
    
    
    
    
    
    4.54
    %
    
    
    
    
    
    
    
    
    
    
    4.95
    %
 12




---



##### Table of Contents



(1)
    
    Average balance includes nonaccrual loans.(2)
    
    Interest income on non-taxable investments and loans is
presented on a taxable-equivalent basis using the federal statutory rate of
35%. These adjustments were $140 and $164 for the three months ended June 30,
2008 and 2007, respectively. Taxable-equivalent is a Non GAAP performance
measurement that management believes provides investors with a more accurate
picture of the net interest margin and efficiency ratio for comparative
purposes. Average Balance Sheet and Analysis of Net Interest Income and Yields/RatesSix Months Ended
    
    
    Six Months EndedJune 30, 2008
    
    
    June 30, 2007Average
    
    
    Interest
    
    
    Average
    
    
    Average
    
    
    Interest
    
    
    Average(Dollars in thousands)
    
    balance
    
    
    earned/paid
    
    
    yield
    
    
    balance
    
    
    earned/paid
    
    
    yieldAssetsLoans (1) (2)
    
    $
    817,090
    
    
    $
    29,988
    
    
    
    7.36
    %
    
    $
    735,756
    
    
    $
    29,879
    
    
    
    8.19
    %Federal funds sold
    
    
    259
    
    
    
    3
    
    
    
    2.48
    %
    
    
    2,188
    
    
    
    57
    
    
    
    5.23
    %Interest-bearing cash
    
    
    330
    
    
    
    5
    
    
    
    2.98
    %
    
    
    1,608
    
    
    
    42
    
    
    
    5.27
    %InvestmentsTaxable
    
    
    9,456
    
    
    
    206
    
    
    
    4.37
    %
    
    
    12,349
    
    
    
    269
    
    
    
    4.39
    %Non-taxable (2)
    
    
    5,264
    
    
    
    150
    
    
    
    5.70
    %
    
    
    6,808
    
    
    
    203
    
    
    
    6.00
    %Interest-earning assets
    
    
    832,399
    
    
    
    30,352
    
    
    
    7.31
    %
    
    
    758,709
    
    
    
    30,450
    
    
    
    8.09
    %Non-earning assets
    
    
    53,240
    
    
    
    
    
    
    
    
    
    
    
    53,739Total assets
    
    $
    885,639
    
    
    
    
    
    
    
    
    
    
    $
    812,447Liabilities and shareholders equityDeposits:Interest demand and money market
    
    $
    262,559
    
    
    $
    2,283
    
    
    
    1.74
    %
    
    $
    257,497
    
    
    $
    3,274
    
    
    
    2.56
    %Savings
    
    
    41,801
    
    
    
    93
    
    
    
    0.45
    %
    
    
    48,175
    
    
    
    175
    
    
    
    0.73
    %Time deposits
    
    
    342,615
    
    
    
    7,460
    
    
    
    4.37
    %
    
    
    307,678
    
    
    
    7,355
    
    
    
    4.82
    %Total interest-bearing deposits
    
    
    646,976
    
    
    
    9,837
    
    
    
    3.05
    %
    
    
    613,350
    
    
    
    10,804
    
    
    
    3.55
    %Federal funds purchased
    
    
    18,458
    
    
    
    290
    
    
    
    3.15
    %
    
    
    4,565
    
    
    
    127
    
    
    
    5.59
    %Junior subordinated debentures
    
    
    25,774
    
    
    
    689
    
    
    
    5.36
    %
    
    
    20,302
    
    
    
    822
    
    
    
    8.17
    %Other interest-bearing liabilities
    
    
    22,747
    
    
    
    374
    
    
    
    3.29
    %
    
    
    1,768
    
    
    
    43
    
    
    
    4.96
    %Total interest-bearing liabilities
    
    
    713,955
    
    
    
    11,189
    
    
    
    3.14
    %
    
    
    639,986
    
    
    
    11,796
    
    
    
    3.72
    %Noninterest-bearing DDA
    
    
    92,859
    
    
    
    
    
    
    
    
    
    
    
    98,780Other liabilities
    
    
    3,593
    
    
    
    
    
    
    
    
    
    
    
    5,908Total liabilities
    
    
    810,406
    
    
    
    
    
    
    
    
    
    
    
    744,673Total equity
    
    
    75,234
    
    
    
    
    
    
    
    
    
    
    
    67,774Total liabilities and shareholders equity
    
    $
    885,639
    
    
    
    
    
    
    
    
    
    
    $
    812,447Net interest income /Spread
    
    
    
    
    
    $
    19,163
    
    
    
    4.17
    %
    
    
    
    
    
    $
    18,655
    
    
    
    4.37
    %Credit for interest-bearing funds
    
    
    
    
    
    
    
    
    
    
    0.45
    %
    
    
    
    
    
    
    
    
    
    
    0.59
    %Net interest margin (2)
    
    
    
    
    
    
    
    
    
    
    4.62
    %
    
    
    
    
    
    
    
    
    
    
    4.96
    %
 
 (1)
    
    Average balance includes nonaccrual loans.(2)
    
    Interest income on non-taxable investments and loans is
presented on a taxable-equivalent basis using the federal statutory rate of
35%. These adjustments were $292 and $330 for the six months ended June 30,
2008 and 2007, respectively. Taxable-equivalent is a Non-GAAP performance
measurement that management believes provides investors with a more accurate
picture of the net interest margin and efficiency ratio for comparative
purposes.  13




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2008 vs. 2007
    
    
    2008 vs. 2007Increase (decrease) due to(2):
    
    
    Increase (decrease) due to(2):Volume
    
    
    Rate
    
    
    Total
    
    
    Volume
    
    
    Rate
    
    
    TotalAssets:Loans (1) (3)
    
    $
    2,101
    
    
    $
    (2,919
    )
    
    $
    (818
    )
    
    $
    1,284
    
    
    $
    (1,175
    )
    
    $
    109Federal funds sold
    
    
    (20
    )
    
    
    (14
    )
    
    
    (34
    )
    
    
    (34
    )
    
    
    (20
    )
    
    
    (54
    )Interest-bearing cash
    
    
    (18
    )
    
    
    (11
    )
    
    
    (29
    )
    
    
    (24
    )
    
    
    (13
    )
    
    
    (37
    )Investments (1)Taxable
    
    
    (32
    )
    
    
    (8
    )
    
    
    (40
    )
    
    
    (62
    )
    
    
    (1
    )
    
    
    (63
    )Non-taxable (2)
    
    
    (23
    )
    
    
    (1
    )
    
    
    (24
    )
    
    
    (43
    )
    
    
    (10
    )
    
    
    (53
    )Interest- earning assets
    
    $
    2,008
    
    
    $
    (2,953
    )
    
    $
    (945
    )
    
    $
    1,121
    
    
    $
    (1,219
    )
    
    $
    (98
    )Liabilities:Deposits:Interest demand and money market
    
    $
    (51
    )
    
    $
    (706
    )
    
    $
    (757
    )
    
    $
    65
    
    
    $
    (1,056
    )
    
    $
    (991
    )Savings
    
    
    (9
    )
    
    
    (33
    )
    
    
    (42
    )
    
    
    (21
    )
    
    
    (61
    )
    
    
    (82
    )Time deposits
    
    
    1,107
    
    
    
    (1,246
    )
    
    
    (139
    )
    
    
    616
    
    
    
    (511
    )
    
    
    105Total interest-bearing deposits
    
    
    1,047
    
    
    
    (1,985
    )
    
    
    (938
    )
    
    
    660
    
    
    
    (1,628
    )
    
    
    (968
    )Fed funds purchased
    
    
    31
    
    
    
    (10
    )
    
    
    21
    
    
    
    191
    
    
    
    (28
    )
    
    
    163Junior subordinated debentures
    
    
    4
    
    
    
    (204
    )
    
    
    (200
    )
    
    
    484
    
    
    
    (617
    )
    
    
    (133
    )Other interest-bearing liabilities
    
    
    211
    
    
    
    (9
    )
    
    
    202
    
    
    
    340
    
    
    
    (9
    )
    
    
    331Total interest-bearing liabilities
    
    $
    1,293
    
    
    $
    (2,208
    )
    
    $
    (915
    )
    
    $
    1,675
    
    
    $
    (2,282
    )
    
    $
    (607
    )
 
 (1)
    
    Interest on loans and investments is presented on a fully tax-equivalent basis.(2)


    The changes attributable to the combined effect of volume and interest rates have
been allocated proportionately.(3)
    
    Interest income previously accrued on nonaccrual loans is reversed in the period the
loan is placed on nonaccrual status. 14




---



##### Table of Contents



Provision for Loan Losses:
  Allowance for Loan Losses and Nonperforming Assets
 Noninterest Income:
  Noninterest Expense:
  Income Taxes:
 Financial Condition Overview
  15




---



##### Table of Contents



Loans:
  Loan Portfolio Composition as of:June 30, 2008
    
    
    December 31, 2007
    
    
    Change(Dollars in thousands)
    
    Balance
    
    
    % of total
    
    
    Balance
    
    
    % of totalCommercial
    
    $
    97,572
    
    
    
    11.9
    %
    
    $
    102,284
    
    
    
    12.7
    %
    
    $
    (4,712
    )Real estate mortgages:One-to-four family residential
    
    
    56,796
    
    
    
    6.9
    %
    
    
    56,636
    
    
    
    7.0
    %
    
    
    160Multi-family residential & commercial
    
    
    322,943
    
    
    
    39.3
    %
    
    
    296,902
    
    
    
    37.0
    %
    
    
    26,041Total real estate mortgages
    
    
    379,738
    
    
    
    46.2
    %
    
    
    353,538
    
    
    
    44.0
    %
    
    
    26,200Real estate construction:One-to-four family residential
    
    
    104,597
    
    
    
    12.7
    %
    
    
    101,912
    
    
    
    12.7
    %
    
    
    2,685Multi-family and commercial
    
    
    45,359
    
    
    
    5.5
    %
    
    
    44,735
    
    
    
    5.6
    %
    
    
    624Total real estate construction
    
    
    149,955
    
    
    
    18.2
    %
    
    
    146,647
    
    
    
    18.3
    %
    
    
    3,308Consumer:Indirect
    
    
    109,167
    
    
    
    13.3
    %
    
    
    114,271
    
    
    
    14.2
    %
    
    
    (5,104
    )Direct
    
    
    85,603
    
    
    
    10.4
    %
    
    
    86,716
    
    
    
    10.8
    %
    
    
    (1,113
    )Total consumer
    
    
    194,770
    
    
    
    23.7
    %
    
    
    200,987
    
    
    
    25.0
    %
    
    
    (6,217
    )Subtotal
    
    
    822,036
    
    
    
    100.0
    %
    
    
    803,456
    
    
    
    100.0
    %
    
    
    18,580Deferred loan costs, net
    
    
    2,563
    
    
    
    
    
    
    
    2,406
    
    
    
    
    
    
    
    157Total loans, net
    
    $
    824,600
    
    
    
    
    
    
    $
    805,862
    
    
    
    
    
    
    $
    18,738
 Allowance for Loan Losses:
 
 Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Balance at beginning of period
    
    $
    11,404
    
    
    $
    10,212
    
    
    $
    11,126
    
    
    $
    10,048Charge-offs:Commercial
    
    
    (173
    )
    
    
    (246
    )
    
    
    (622
    )
    
    
    (616
    )Real estate
    
    
    (482
    )
    
    
    3⁄4
    
    
    
    (502
    )
    
    
    3⁄4ConsumerDirect
    
    
    (118
    )
    
    
    (196
    )
    
    
    (308
    )
    
    
    (285
    )Indirect
    
    
    (331
    )
    
    
    (263
    )
    
    
    (693
    )
    
    
    (398
    )Total charge-offs
    
    $
    (1,104
    )
    
    $
    (705
    )
    
    $
    (2,125
    )
    
    $
    (1,299
    )
 16




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##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,(Dollars in thousands)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Recoveries:Commercial
    
    
    92
    
    
    
    56
    
    
    
    147
    
    
    
    105Real estate
    
    
    1
    
    
    
    3
    
    
    
    3
    
    
    
    73ConsumerDirect
    
    
    25
    
    
    
    48
    
    
    
    71
    
    
    
    82Indirect
    
    
    117
    
    
    
    63
    
    
    
    288
    
    
    
    117Total recoveries
    
    $
    235
    
    
    $
    170
    
    
    $
    509
    
    
    $
    377Net charge-offs
    
    
    (869
    )
    
    
    (536
    )
    
    
    (1,616
    )
    
    
    (922
    )Provision for loan losses
    
    
    1,050
    
    
    
    850
    
    
    
    2,075
    
    
    
    1,400Balance at end of period
    
    $
    11,585
    
    
    $
    10,526
    
    
    $
    11,585
    
    
    $
    10,526Indirect loans net charge-offs to average indirect loans
    
    
    0.77
    %
    
    
    0.77
    %
    
    
    0.73
    %
    
    
    0.54
    %Other net charge-offs to average other loans
    
    
    0.37
    %
    
    
    0.21
    %
    
    
    0.34
    %
    
    
    0.20
    %Net charge-offs to average loans (1)
    
    
    0.42
    %
    
    
    0.28
    %
    
    
    0.40
    %
    
    
    0.25
    %
 
 (1) Excludes loans held for sale.   Allocation of the Allowance for Loan Losses as of:June 30, 2008
    
    
    December 31, 2007
    
    
    June 30, 2007% of
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    % of
    
    
    
    
    
    
    % of
    
    
    % of(Dollars in thousands)
    
    Amount
    
    
    Allowance(2)
    
    
    Loans(1)
    
    
    Amount
    
    
    Allowance(2)
    
    
    Loans(1)
    
    
    Amount
    
    
    Allowance(2)
    
    
    Loans(1)Balance applicable to:Commercial
    
    $
    971
    
    
    
    8.4
    %
    
    
    11.9
    %
    
    $
    976
    
    
    
    8.8
    %
    
    
    12.8
    %
    
    $
    937
    
    
    
    8.9
    %
    
    
    13.0
    %Real estate mortgage
    
    
    4,473
    
    
    
    38.6
    %
    
    
    46.2
    %
    
    
    3,928
    
    
    
    35.3
    %
    
    
    44.0
    %
    
    
    3,486
    
    
    
    33.1
    %
    
    
    41.6
    %Real estate construction
    
    
    1,942
    
    
    
    16.8
    %
    
    
    18.2
    %
    
    
    1,812
    
    
    
    16.3
    %
    
    
    18.3
    %
    
    
    1,862
    
    
    
    17.7
    %
    
    
    19.6
    %Consumer
    
    
    2,802
    
    
    
    24.2
    %
    
    
    23.7
    %
    
    
    2,773
    
    
    
    24.9
    %
    
    
    24.9
    %
    
    
    2,754
    
    
    
    26.2
    %
    
    
    25.8
    %Unallocated
    
    
    1,397
    
    
    
    12.2
    %
    
    
    N/A
    
    
    
    1,637
    
    
    
    14.7
    %
    
    
    N/A
    
    
    
    1,487
    
    
    
    14.1
    %
    
    
    N/ATotal
    
    $
    11,585
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    11,126
    
    
    
    100.0
    %
    
    
    100.0
    %
    
    $
    10,526
    
    
    
    100.0
    %
    
    
    100.0
    %
 
 (1) Represents the total of all outstanding loans in each category as a percent of total
loans outstanding.(2) Represents the total allowance allocated to each loan category as a percent of total
allowance for loan losses. 17




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##### Table of Contents



Nonperforming Assets and Other Real Estate Owned Properties (OREO):
 Accounting by Creditors for
the Impairment of a Loan
   Nonperforming Assets as of:June 30,
    
    
    December 31,(Dollars in thousands)
    
    2008
    
    
    2007Nonaccrual loans
    
    $
    2,515
    
    
    $
    2,839Restructured loans
    
    
    
    
    
    
    Total nonperforming loans
    
    
    2,515
    
    
    
    2,839Other real estate owned properties
    
    
    1,198
    
    
    
    1,440Total nonperforming assets
    
    $
    3,713
    
    
    $
    4,279Total impaired loans
    
    $
    2,515
    
    
    $
    2,839Accruing loans past due 3 90 days
    
    
    
    
    
    
    Potential problem loans
    
    
    
    
    
    
    Allowance for loan losses
    
    $
    11,585
    
    
    $
    11,126Nonperforming loans to loans
    
    
    0.30
    %
    
    
    0.35
    %Nonperforming assets to total assets
    
    
    0.41
    %
    
    
    0.49
    %Allowance for loan losses to loans
    
    
    1.40
    %
    
    
    1.38
    %Allowance for loan losses to nonperforming loans
    
    
    460.64
    %
    
    
    395.41
    %Allowance for loan losses to nonperforming assets
    
    
    312.01
    %
    
    
    262.34
    %
  18




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##### Table of Contents



Deposits: Net Interest Income
  Deposit Composition as of:June 30, 2008
    
    
    December 31, 2007
    
    
    Change(Dollars in thousands)
    
    Balance
    
    
    % of total
    
    
    Balance
    
    
    % of totalNoninterest-bearing demand
    
    $
    91,764
    
    
    
    12.5
    %
    
    $
    101,539
    
    
    
    13.4
    %
    
    $
    (9,775
    )NOW accounts
    
    
    126,307
    
    
    
    17.2
    %
    
    
    140,145
    
    
    
    18.5
    %
    
    
    (13,838
    )Money market
    
    
    122,724
    
    
    
    16.8
    %
    
    
    133,265
    
    
    
    17.6
    %
    
    
    (10,541
    )Savings
    
    
    41,406
    
    
    
    5.7
    %
    
    
    41,888
    
    
    
    5.5
    %
    
    
    (482
    )Time deposits
    
    
    350,667
    
    
    
    47.8
    %
    
    
    341,517
    
    
    
    45.0
    %
    
    
    9,150Total deposits
    
    $
    732,868
    
    
    
    100
    %
    
    $
    758,354
    
    
    
    100
    %
    
    $
    (25,486
    )
  Borrowings:
 FHLB Overnight Borrowings and Other Borrowed Funds:
  §     $10.0 million advance with a fixed interest rate of 3.64% maturing in January 2009.§     $20.0 million advance with a fixed interest rate of 3.02% maturing in August 2008.
 Capital
 Shareholders Equity:
 Regulatory Capital Requirements:
 19




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##### Table of Contents



Regulatory Requirements
    
    Actual RatiosAdequately-
    
    Well-
    
    June 30,
    
    December 31,capitalized
    
    capitalized
    
    2008
    
    2007Total risk-based capital ratioCompany (consolidated)
    
    
    8
    %
    
    
    N/A
    
    
    
    12.79
    %
    
    
    12.45
    %Whidbey Island Bank
    
    
    8
    %
    
    
    10%
    
    
    
    12.58
    %
    
    
    12.03
    %Tier 1 risk-based capital ratioCompany (consolidated)
    
    
    4
    %
    
    
    N/A
    
    
    
    11.50
    %
    
    
    11.14
    %Whidbey Island Bank
    
    
    4
    %
    
    
    6%
    
    
    
    11.28
    
    
    
    10.78
    %Leverage ratioCompany (consolidated)
    
    
    4
    %
    
    
    N/A
    
    
    
    11.54
    %
    
    
    11.29
    %Whidbey Island Bank
    
    
    4
    %
    
    
    5%
    
    
    
    11.33
    %
    
    
    10.92
    %
  Liquidity and Cash Flows
 Liquidity:
  Consolidated Cash Flows: Condensed Consolidated Statements of Cash Flows
 Capital Resources:
 Off-Balance Sheet Items:
 20




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures about Market Risk
  
 Item 4. Controls and Procedures
 Evaluation of Disclosure Controls and Procedures
  Changes in Internal Control over Disclosure and Reporting
  21




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##### Table of Contents



PART II  OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3. Defaults Upon Senior Securities
  
 Item 4. Submission of Matters to a Vote of Security Holders
  
 Item 5. Other Information
 (a)
    
    Not applicable(b)
    
    There have been no material changes in the procedures for shareholders to
nominate directors to the Companys board.
 
 Item 6. Exhibits
  31.1
    
    Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule
15d-14(a) and Section 302 of the Sarbanes Oxley Act of 200231.2
    
    Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule
15d-14(a) and Section 302 of the Sarbanes Oxley Act of 200232.1
    
    Certification of Chief Executive Officer required by Rule 13a-14(b) or Rule
15d-14(b) and Section 906 of the Sarbanes Oxley Act of 2002, 18 U.S.C. Section 135032.2
    
    Certification of Chief Financial Officer required by Rule 13a-14(b) or Rule
15d-14(b) and Section 906 of the Sarbanes Oxley Act of 2002, 18 U.S.C. Section 1350
 22




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##### Table of Contents



SIGNATURES
  WASHINGTON BANKING COMPANY
 Date: August 8, 2008
    
    By
    
    /s/ Michal D. Cann

Michal D. CannPresident andChief Executive OfficerDate: August 8, 2008
    
    By
    
    /s/ Richard A. Shields

Richard A. ShieldsExecutive Vice President andChief Financial Officer
 23