EXHIBIT 99.1

     Washington Banking Company Earns $23.6 Million, or $1.53 per Diluted Common Share, in 2010
Operating Profits Increase to $12.4Million, or $0.80 per Diluted Common Sharebefore Gains on Acquisitions

OAK HARBOR, WA –February 1, 2011 – Washington Banking Company (NASDAQ: WBCO), the holding company for Whidbey Island Bank, today reported its core banking business generated strong operating profits in 2010 augmented by two FDIC-assisted acquisitions, which contributed an $18.9 million one-time bargain purchase gain in pretax income for the year.Before preferred dividends, net income grew to $25.3 million in 2010,compared to $6.2 million in 2009.Net income available to common shareholders was$23.6millionor $1.53per diluted common share in2010, compared to $4.6 million, or $0.46per diluted common share, in 2009.

In the fourth quarter of 2010, Washington Banking earned $4.1 million, compared to $1.7 million for the same period last year. For the fourth quarter of 2010, net income available to common shareholders, after preferred dividend payments increased to $3.7 million, or $0.24 per diluted common share, compared to $1.3 million, or $0.11 per diluted common share, for the fourth quarter of 2009.

“It has been a pivotal year for our franchise,” said Jack Wagner, President and Chief Executive Officer. “The two FDIC-assisted acquisitions have proven to be strategically and financially attractive, filling out our branch network in Snohomish County and North King County. We’ve added some very talented bankers to our ranks, not only from the institutions we acquired, but also from other banks, and they have been successful in bringing some terrific customer relationships to our franchise. In the short term, the acquisitions contributed a significant one-time pretax gain, added $4.9 million in goodwill to our balance sheet and greatly complicated the accounting and reporting process.In addition, the gain and goodwill recognized are subject to future adjustment up to one year from the date of each acquisition. With all the accounting ‘noise’ from the acquisitions, we have included certain non-GAAP presentations that illustrate the earnings power of our franchise, which we hope will be useful to investors.

“Another item of significance is that we repaid $26.6 million to the US Treasury to redeem the preferred shares issued under the TARP Capital Purchase Program, while maintaining well-capitalized status. Since the redemption took place in January 2011, it is not reflected in the 2010 yearend statements,” Wagner added.

The core operating earnings available to common shareholders, which exclude merger related costs and the bargain purchase gain on the FDIC-assisted transactions, totaled $12.4million, or $0.80 per diluted common share, in 2010, compared to $5.5 million, or $0.55 per diluted share in 2009.Core operating earnings and core operating earnings per share are non-GAAP financial measures; please refer to the GAAP reconciliation table in this release.

2010 Financial Highlights (December 31, 2010 compared to December 31, 2009)

• Capital ratios exceeded all regulatory requirements for well-capitalized institutions, with Total Risk Based Capital to risk-adjusted assets of 21.05% compared to 22.15%.
• Tangible book value per common share increased to $9.69 compared to $8.79.
• Deposits, including $633 million acquiredthrough acquisitions, increased 76%year over year to $1.49 billion. Transaction account deposits in the acquired institutions increased $10.8 million since closing.
• Low cost demand, money market, savings and NOW accounts totaled $826 million and make up55% of total deposits.
• Net non-covered loans increased $17.8 million from a year agoand totaled $815 million.
• The provision for non-covered loan losses was $12.2million in 2010, a19% increase from the $10.2 million a year ago.
• Loan loss reserves increased to 2.25% of non-covered loans, from 1.99% a year ago.
• A cash dividend of $0.05 per share will be paid March 1to shareholders of record as of February 11.

Acquisition Update

Whidbey Island Bank completed two FDIC-assisted acquisitions in 2010 which include theformerNorth County Bank, Arlington, WA and CityBank of Lynnwood, WA. “The accounting for these transactions is complex and our year-end results include a number of accounting adjustments for both transactions,” said Rick Shields, Chief Financial Officer.“These

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February 1, 2011
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adjustments include changes to the pre-tax bargain purchase gain for both transactions, which decreased that line item for the year by approximately $348,000. In addition, we recorded approximately $4.9 million in goodwill for the CityBank acquisition. In accordance with accounting standards, we have adjusted our financial statements retrospectively.” The adjusted June 30, 2010, and September 30, 2010, consolidated statements of income and balance sheets are included in this release for reference. Additionally,an analysis of actual versus expected cash flows for the City Bank acquired loan portfolio resulted in recording a covered loan provision of $1.3 million related to four of the 18 loan pools acquired. The provision was due to the timing of expected cash flows and was not credit quality driven. For the remaining pools, where the cash flows exceed day-1 valuation assumptions, Washington Banking is recognizing additional interest income and as a result is now amortizing the indemnification asset.

Covered loans are shown as a separate line item of the balance sheet and are not included in the net loan totals. Covered loans are also not included in any of the reported credit quality metrics, as they are accounted for separately per generally accepted accounting principles (GAAP) requirements. Both the FDIC indemnification asset and the covered loan portfolio will decline over time, as the loans mature, payoff,or are otherwise resolved.

The following table shows the acquired deposits in both the NorthCounty and CityBank transactions. “We have kept mostof the local deposits we wanted and allowed some brokered and other non-core deposits to run off. Consequently, about $273 million in time deposits ran off during the second half of the year,” noted Wagner. “As you can see with the City acquisition, we have increased low-cost transaction deposits and reduced high cost certificates. At North County, most of the reduction in deposits was in high-cost time certificates. We continue to be very pleased with the deposit retention rate achieved by our new employees.”

With a 63% increase in assets and expanding the branch network to 30 locations from 18 a year ago, thefull time equivalent employees (FTEs) count has increased to 448 from 281 FTEs at the end of 2009. “Most of this growth was from the acquisitions, and we also hired a team of lenders who are working out of our new Everett Commercial Lending Center,” Wagner said. “We now have three lending teams in our new region covering North King County and Snohomish County. These lending teams are doing a great job of bringing new relationships to the bank and serving our existing customers.”

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Credit Quality

“With the continuing high unemployment in the region, our legacy loan portfolio has performed relatively well during the year, but has shown an incremental increase in nonperforming loans,”said Joe Niemer, Chief Credit Officer.Nonperforming, non-coveredloans (NPLs) increased by $4.3 million during the quarter and by $22.5 million in the year, primarily from land development projects, construction and commercial real estate. “While some of the projects are still current on their payments, we have added them to nonaccrual status due to prospective evaluation of future values and the lengthening of the sales cycle,” stated Niemer.NPL/Loans grew to 3.10% at year end from 2.57% in the prior quarter and 0.42% a year ago. NPA/Assets was 1.73% compared to 1.40% in the third quarter and 0.76% a year ago. Other real estate owned (OREO) was $4.1 million, relatively unchanged from the prior quarter and down from $4.5 million a year ago. NPLs are concentrated primarily in the Skagit County market as shown in the following table:

The provision for loan losses on non-covered loanswas $12.2million, which exceeded net charge-offs by $2.6 million in 2010.Net charge-offs in 2010 were $9.6 million,or 1.15% of average loans, compared to $6.2 million, or 0.76% of average loans in 2009. Net charge-offs in the indirect lending portfolio improved to $954,000 in 2010, compared to $1.6 million in 2009.The reserve for loan losses increased to 2.25% of non-covered loans from 2.14% of loans at the end of September and 1.99% of loans a year ago.

Balance Sheet

Total assetsincreased63% to $1.71 billion at December 31, 2010,compared to $1.05billion a year ago. Total non-covered loansincreased to $834.3 million from $813.9million at the end of 2009. The non-covered loan portfolio is well diversified with commercial and industrial loans making up 17% and residential mortgages accounting for 6% of the portfolio. Owner-occupied commercial real estate loans represent approximately 20%of the portfolio and non-owner occupied commercial real estate loans account for approximately 22%of loans. Indirect consumer loans account for 11% of the portfolio and other consumer loans account for 10%. Construction and land development loans for residential properties represent 9% and commercial construction and land development loans represent 5% of the portfolio.

Covered loans totaled $367.8 million and covered OREO totaled $28.8 million, and the FDIC indemnification asset totaled $107.0 million at December 31, 2010.

Total deposits grew 76% year-over-year to $1.49billion at December 31, 2010, compared to $847 million a year ago.Largely as a result of the acquisitions, noninterest-bearing demand deposits increased 77% year-over-year, now representing 12% of total deposits. Year-over-year, money market accounts increased69% and now comprise 23% of total deposits;time deposits increased 90% to $666 million and account for 45% of total deposits. Core deposits, excluding time deposits over $100,000, represent 82% of all deposits. “We continue to have no brokered certificates of deposits other than the CDARS (Certificate of Deposit Account Registry Service) program, which provides additional sources of insurance

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for local customers,” saidShields. “Because we only take CDARS from customers in our existing footprint, we consider them as part of our core deposit base.” Shareholders’ equity increased to $181.3million compared to $159.5 million a year ago. Included in shareholders’ equity is the $25.3million from the preferred shares issued to the U.S. Treasury in January of 2009 and recently repaid on January 12, 2011. Retained earnings increased 44% to $71.0 million, bringing tangible book value per common share to $9.69 at December 31, 2010, compared to $8.79 a year ago.

Operating Results

Revenue for 2010was $98.2 million, compared to $48.7million a year ago. Net interest income, before the provision for loan losses, increased 64%to $66.1million in 2010compared to $40.4 million a year ago. Interest income from covered loans contributed $21.2 million to 2010 revenues.

Noninterest income totaled $31.7 million in 2010, which included $18.9 million in the bargain purchase gain on acquisition and $1.1 millionrelated to the change in the FDIC indemnification asset.

Washington Banking’s net interest margin was 5.76% in the fourth quarter, an increase of 71basis points from the preceding quarter, and 107basis points from the year ago quarter. For2010, net interest margin was 5.01% up from 4.63% in 2009. “Our margin benefited from the contribution of the acquired loan portfolio, which had an average yield of 9.3% during 2010,” Shields noted.

Noninterest expense increased 63% year-over-yearprimarily due to additional expensesrelated to the acquisitions. Operating expenses were $46.8million in 2010 compared to $28.7million in 2009.

Conference Call Information

Management will host a conference call on Wednesday, February 2 at 10:00 a.m. PST (1:00 p.m. EST) to discuss the quarterly and year-to-date financial results. The call will also be broadcast live via the internet. Investment professionals and all current and prospective shareholders are invited to access the live call by dialing (480) 629-9722 at 10:00 a.m. PT for conference ID #4400199. To listen to the call online, either live or archived, visit the Investor Relations page of Whidbey Island Bank’s website at www.wibank.com. Shortly after the call concludes, the replay will also be available at (303) 590-3030, using access code #4400199.

ABOUT WASHINGTON BANKING COMPANY

Washington Banking Company is a bank holding company based in Oak Harbor, Washington, that operates Whidbey Island Bank, a state-chartered full-service commercial bank. Founded in 1961, Whidbey Island Bank provides various deposit, loan and investment services to meet customers’ financial needs. Whidbey Island Bank operates 30full-service branches located in six counties in Northwestern Washington. In June 2009, Washington Banking was added to the Russell 2000 Index, a subset of the Russell 3000 Index. Both indices are widely used by professional money managers as benchmarks for investment strategies.

www.wibank.com

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 asthe transition of CityBank and/or North County Bank operations, employees and customers, future operating results, availability of acquisition opportunities, growth in loans and deposits, credit quality and loan losses, 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 “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; (5) the ability to realize the efficiencies expected from investment in personnel and infrastructure;and (6) the inability to retain CityBank and/or North County Bank customers or employees and expenses associated with the integration of acquired bank operations. 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.

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February 1, 2011
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The following table provides the reconciliation of the Company's GAAP earnings to operating earnings (non-GAAP) for the periods presented:

Tangible common equity, tangible assets and tangible book value per common share are not measures that are calculated in accordance with GAAP. However, management uses these non-GAAP measures in their analysis of the Company's performance. Management believes that these non-GAAP measures are an important indication of the Company's ability to grow both organically and through business combinations, and, with respect to tangible common equity, the Company's ability to pay dividends and to engage in various capital management strategies.

Neither tangible common equity, tangible assets and tangible book value per common share should be considered in isolation or as a substitute for common shareholders' equity or book value per common share or any other measure calculated in accordance with GAAP. Moreover, the manner in which the Company calculates tangible common equity, tangible assets and tangible book value per share may differ from that of other companies reporting measures with similar names.

The following table provides the reconciliation of the Company's shareholders' equity (GAAP) to tangible common equity (non-GAAP) and total assets (GAAP) to tangible assets (non-GAAP)for the periods presented:

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Note: Transmitted on GlobeNewswire on February 1, 2011 at 4:33p.m. PT.