Whidbey Island Bank, based in Oak Harbor, eliminated 20 positions from its workforce just before Christmas.

The move by the Washington Bank Company, the holding company for Whidbey Island Bank, is expected to save the company $1.2 million a year, but the company will have to pay a one-time $600,000 charge for restructuring in the fourth quarter of 2006.

“We have identified long-term goals of generating a return on equity in excess of 18 percent and achieving double-digit annual earnings per share growth,” Michal Cann, president and CEO said in a press release. “We did not meet those targets in 2006, and we believe we need to be a leaner organization if we are going to reach them in future years.”

Cann cited a flat yield curve, intense competition and slower economic growth as a reason for improving the company’s operational efficiency.

The 20 eliminated positions were primary back office and from all levels of the bank.

According to the company’s Web site, the idea of Whidbey Island Bank started in 1960 when “a group of Whidbey Island business people saw a need for a locally-owned, independent bank that would serve the people of the community.”

The first office was opened in Coupeville in 1961.

Whidbey Island Bank now operates 20 full-service branches located in five counties in Northwest Washington. The company employs about 250 people.

In September, Ryan Beck & Co. ranked Washington Banking Company as number 33 on its list of the top 100 U.S. Banks and Thrifts, based on five-year total return.

In 2005, Washington Banking Company generated a 17.9 percent return on equity and earned $1.01 per diluted share, up 47 percent from the previous year.

In the first nine months of 2006, the return on equity was 16.9 percent and the company earned $0.81 per diluted share, up 8 percent from the same period in 2005.