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June 19 (Reuters) - Frontier Financial Corp (FTBK.O: Quote, Profile, Research) slashed its quarterly dividend by two-thirds to preserve cash, and said it expects provision for bad loans to increase "significantly" in the second quarter, sending its shares down as much as 8 percent to their lowest in more than seven years.

"This action comes as a result of our concern with a continuing deterioration in the housing market and the impact it is having on many of our borrowers," Chief Executive John Dickson said in a statement.

The financial holding company, which had recorded a first-quarter provision for bad loans of $9 million, said the third-quarter dividend of 6 cents per share would be paid on July 22 to shareholders of record as of July 8.

In April, the company had increased its quarterly cash dividend by 12.5 percent to 18 cents a share.

Shares of the company were down 3 percent at $9.89 in afternoon trade, after having fallen to a low of $9.44. The stock has lost 45 percent of its value since January. (Reporting by Sweta Singh in Bangalore; Editing by Deepak Kannan)