BURLINGTON, Vt., Jan. 15 /PRNewswire-FirstCall/--
Chittenden Corporation (NYSE: CHZ) Chairman, President and Chief Executive
Officer, Paul A. Perrault, today announced fourth quarter 2002 net income of
$0.55 per diluted share, compared with the $0.46 per diluted share earned in
the fourth quarter of 2001. For the year ended December 31, 2002, earnings
were $1.96 per diluted share, compared with $1.80 per diluted share earned
last year. Chittenden also announced its quarterly dividend of $0.20 per
share. The dividend will be paid on February 14, 2003, to shareholders of
record on January 31, 2003.
In making the announcement, Perrault said, "Despite its challenges, I am
pleased with the results for the year of 2002. Chittenden has enjoyed several
successes in the past year, including the completion of the Ocean National
acquisition and the signing of a definitive agreement to purchase Granite
State Bank, headquartered in Keene, New Hampshire. These are exciting times
for Chittenden, its shareholders, employees, and customers, as we chart the
course which will propel our future achievements."
Total loans decreased from a quarter ago, due to the seasonal effect of
municipal loans and continued paydowns in the residential real estate and
leasing portfolios. These decreases were partially offset by increases in
commercial and construction loans. Total loans at December 31, 2002 were $136
million higher than at December 31, 2001 primarily due to the acquisition of
Ocean National Bank (ONB), in which approximately $84 million in commercial
mortgages and $97 million in residential real estate loans were obtained. On
February 28, 2002, Chittenden completed its acquisition of ONB, a $272 million
commercial bank headquartered in Kennebunk, Maine for $53.25 million in cash.
The transaction has been accounted for as a purchase and, accordingly, ONB's
operations are included in Chittenden's consolidated financial statements from
the date of acquisition.
Total deposits increased $456 million from a year ago and were down
slightly from the third quarter. The increase from December 31, 2001 was
partially attributable to the acquisition of ONB, which contributed $239
million in deposits at the date of acquisition, and to continued strong
deposit flows throughout the franchise over the last twelve months. The
variance from the third quarter of 2002 related primarily to the seasonal drop
in the municipal and captive insurance sectors.
Chittenden's net interest income was $50.1 million for the fourth quarter
of 2002, $49.7 million for the third quarter of 2002 and $43.9 million for the
fourth quarter a year ago. The 14% increase in net interest income from the
fourth quarter of 2001 was attributed primarily to higher levels of average
earning assets and deposits that resulted from the acquisition of ONB, growth
in deposits, and the Trust Preferred Securities (TPS) issuance. The Company's
net interest margin for the fourth quarter of 2002 was 4.38%, compared with
4.59% for the same period of 2001 and 4.49% for the third quarter of 2002.
This decrease in the Company's net interest margin primarily relates to the
strong deposit flows, which were invested in securities. Despite the decline
of the Company's net interest margin, overall net interest income continues to
reflect good growth.
The provision for loan losses of $2.25 million was flat from the third
quarter of 2002 and up $225,000 from the same quarter a year ago. The
allowance for possible loan losses was $48.2 million at December 31, 2002,
unchanged from September 30, 2002 and up from $45.3 million at December 31,
2001. Nonperforming assets plus loans 90 days past due and still accruing were
$17.9 million at December 31, 2002, down $1.7 million from the third quarter
of 2002 and up $253,000 from December 31, 2001. As a percentage of total
loans, nonperforming assets decreased to 49 basis points at December 31, 2002
compared to 54 basis points at September 30, 2002 and 46 basis points for the
same quarter a year ago. Net charge-off activity totaled $2.2 million for the
fourth quarter of 2002, compared with $2.0 million for the fourth quarter of
2001. Net charge-offs were $8.4 million for 2002 compared with $7.1 million in
2001. As a percentage of average loans, charge-offs were 28 basis points in
2002 compared with 25 basis points for 2001.
Noninterest income amounted to $19.6 million for the fourth quarter of
2002, up from $15.6 million for the same quarter of 2001. The primary drivers
of the increase were higher gains on sales of mortgages due to increasingly
strong refinancing activity, and higher levels of other noninterest income.
The increase in other noninterest income was driven by gains on sales of
securities of $10.2 million, which was offset by higher amortization on
mortgage servicing rights (MSR) of $250,000 and further provisions for
impairment to the MSR asset of $7.3 million. The company rebalanced its
securities portfolio during the fourth quarter and realized significant gains
as a result of continued declining market interest rates. The impairment
charge on the MSR asset resulted from a rapid acceleration of prepayment
speeds associated with the underlying loans in the fourth quarter. Additional
offsets to the gains of sales of securities were higher employee benefits of
approximately $900,000 (primarily due to increased medical costs) and $800,000
of increased operating charge-offs (see below).
Noninterest expenses were $39.9 million for the fourth quarter of 2002, up
from $37.0 million in the third quarter of 2002 and $34.7 million for the
fourth quarter of 2001. Salaries and employee benefits increased $3.5 million
from the fourth quarter of 2001. The inclusion of ONB in 2002 amounted to
approximately $1.3 million of the variance in salaries and benefits. In
addition, sales-based incentive compensation increased $664,000 and, as
discussed above, employee benefits increased from the same period a year ago.
Other noninterest expense increased $1.6 million, of which approximately half
resulted from higher levels of operating charge-offs. This increase in
operating charge-offs primarily related to the auto lease portfolio in which
the Company continues to experience losses in excess of its insurance
proceeds, due to softness in the wholesale auto market. The Company has exited
the lease financing market and the portfolio continues to run off.
Amortization of intangibles decreased $507,000 from the fourth quarter of
2001 to $348,000 in the fourth quarter of 2002 due to the adoption of FAS 142,
which eliminated goodwill amortization effective January 1, 2002. The
intangible amortization recognized in 2002 relates to the core deposit
intangibles from the ONB and the Bank of Western Massachusetts acquisitions.
In noninterest income on a year-over-year basis, increases were seen in
service charges on deposit accounts, insurance commissions and other income.
Gains on sales of loans were down $1.1 million from 2001 primarily because of
the sale of the Company's retail credit card portfolio in 2001, which
generated a $4.6 million gain. Gains on sales of residential mortgage loans
were $3.5 million higher in 2002 due to increased market activity, as noted
above. Total securities gains realized in 2002 were $10.6 million compared
with a $72,000 loss in 2001. Year-to-date items offsetting the securities
gains were MSR impairment provisions of $8.5 million, increased MSR
amortization of $1.3 million, and a $571,000 write-down taken in the third
quarter relating to one of the Company's CRA equity investments.
Year-to-date noninterest expenses were up $15.8 million from 2001
primarily due to increases in salaries and benefits, net occupancy expense and
other noninterest expenses. Salaries and benefits increased primarily due to
the acquisition of ONB and MBT, which accounted for $6.8 million of the
increase, sales-based incentive payments, which were $1.9 million higher in
2002 and performance-based incentive accruals, which were up $1.5 million from
a year ago. Net occupancy increased $1.8 million; substantially all of which
is attributed to the ONB acquisition. Amortization of intangibles decreased
$1.7 million from 2001 due to the adoption of FAS 142. In addition, other
noninterest expense increased approximately $2.8 million from a year ago, with
operating charge-offs comprising approximately $1.3 million of the increase.
The return on average equity was 16.12% for 2002, compared with 16.55% in
2001. The return on average assets for 2002 was 1.40%, compared with 1.51% for
2001.
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call to discuss these earnings
results at 10:30 a.m. Eastern Time on January 16, 2003. Interested parties
may access the conference call by calling 877-692-2137 or 973-872-3100 in the
New York City area. Participants are asked to call in a few minutes prior to
the call in order to register for the event. Internet access to the call is
also available (listen only) by going to the Investor Resources section of the
Company's website at http://www.chittendencorp.com. A replay of the call will
be available through January 23, 2003, by calling 877-519-4471 or 973-341-3080
in the New York City area (pin number is 3684563 for both telephone numbers)
or by going to the chittendencorp.com website.
The Company may answer one or more questions concerning business and
financial developments and trends and other business and financial matters
affecting the Company, some of the responses to which may contain information
that has not previously been disclosed.
Chittenden is a bank holding company with total assets of $4.9 billion at
December 31, 2002. Its subsidiary banks are Chittenden Bank, The Bank of
Western Massachusetts, Flagship Bank and Trust Company, Maine Bank & Trust
Company and Ocean National Bank. Chittenden Bank also operates under the name
Mortgage Service Center, and it owns Chittenden Insurance Group, and
Chittenden Securities, Inc. The Company offers a broad range of financial
products and services, including deposit accounts and services; consumer,
commercial, and public sector loans; insurance; brokerage; and investment and
trust services to individuals, businesses, and the public sector. To find out
more about Chittenden and its products, visit our web site at
http://www.chittenden.com.
CHITTENDEN CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
Period End Balance Sheet Data
12/31/02 9/30/02 6/30/02 12/31/01
Cash and Cash
Equivalents $192,142 $300,184 $195,884 $308,023
Securities Available
For Sale 1,497,111 1,424,513 1,232,549 826,495
FHLB Stock 17,030 14,967 14,967 13,613
Loans Held For Sale 94,874 62,055 27,556 50,208
Loans:
Commercial 568,224 567,939 583,557 559,752
Municipal 77,820 97,912 44,107 85,479
Real Estate:
Residential 861,706 895,472 914,141 855,561
Commercial 1,103,897 1,067,702 1,043,889 903,819
Construction 85,512 81,232 78,995 79,801
Total Real
Estate 2,051,115 2,044,406 2,037,025 1,839,181
Consumer 276,704 293,248 301,634 353,765
Total Loans 2,973,863 3,003,505 2,966,323 2,838,177
Less: Allowance
for Loan Losses (48,197) (48,187) (48,994) (45,268)
Net Loans 2,925,666 2,955,318 2,917,329 2,792,909
Other Real Estate Owned 158 - 230 703
Goodwill 55,257 55,911 58,249 29,341
Other Assets 138,306 152,835 148,808 132,422
Total Assets $4,920,544 $4,965,783 $4,595,572 $4,153,714
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $684,077 $681,595 $627,498 $620,828
Savings 400,616 397,545 393,025 346,974
NOW and Money
Market Accounts 2,118,539 2,162,630 1,922,452 1,870,835
Certificates of
Deposit less
than $100,000 691,467 691,873 682,636 634,992
Certificates
of Deposit
$100,000 and Over 231,393 237,948 198,607 196,217
Total Deposits 4,126,092 4,171,591 3,824,218 3,669,846
Borrowings 173,654 178,189 177,729 44,409
Company Obligated,
Mandatorily Redeemable
Securities
Of Subsidiary Trust 125,000 125,000 125,000 -
Accrued Expenses
and Other Liabilities 77,006 76,651 69,298 68,805
Total Liabilities 4,501,752 4,551,431 4,196,245 3,783,060
Total Stockholders'
Equity 418,792 414,352 399,327 370,654
Total Liabilities
and Stockholders'
Equity $4,920,544 $4,965,783 $4,595,572 $4,153,714
Book Value per
Common Share $13.11 $12.97 $12.39 $11.56
Common Shares
Outstanding 31,939,470 31,940,640 32,235,058 32,070,446
Credit Quality Data
Nonperforming Assets
(including OREO) $14,960 $16,415 $10,872 $13,077
90 days past due
and still accruing 2,953 3,213 2,477 4,583
Total $17,913 $19,628 $13,349 $17,660
Nonperforming Assets
to Loans Plus OREO 0.49% 0.54% 0.36% 0.46%
Allowance to Loans 1.57% 1.57% 1.64% 1.59%
Allowance to
Nonperforming Loans
(excluding OREO) 325.64% 293.56% 460.38% 365.83%
QTD Average Balance Sheet Data
Loans, Net $3,007,081 $2,988,405 $2,997,613 $2,854,543
Earning Assets 4,588,801 4,443,815 4,163,108 3,855,444
Total Assets 4,869,802 4,727,637 4,436,263 4,091,763
Deposits 4,088,425 3,951,162 3,851,574 3,610,085
Stockholders' Equity 413,449 405,783 385,039 370,032
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2002 2001 2002 2001
Interest Income:
Interest on Loans $47,404 $51,091 $194,121 $223,661
Interest on
Investments 18,404 12,561 64,898 42,836
Total Interest Income 65,808 63,652 259,019 266,497
Interest Expense:
Deposits 12,994 19,098 58,813 93,046
Borrowings 2,710 687 7,591 3,146
Total Interest Expense 15,704 19,785 66,404 96,192
Net Interest Income 50,104 43,867 192,615 170,305
Provision for Loan
Losses 2,250 2,025 8,331 8,041
Net Interest Income after Provision
for Loan Losses 47,854 41,842 184,284 162,264
Noninterest Income:
Investment
Management Income 3,851 4,163 15,601 15,722
Service Charges on
Deposit Accounts 4,107 3,670 16,026 14,294
Gains on Sales
of Loans, Net 3,366 2,406 10,068 11,207
Merchant Services &
Credit Card Income,
Net 941 922 3,656 3,964
Insurance Commissions,
Net 728 697 3,733 3,391
Other 6,568 3,785 15,976 15,155
Total Noninterest
Income 19,561 15,643 65,060 63,733
Noninterest Expense:
Salaries and Employee
Benefits 22,662 19,167 88,073 74,851
Net Occupancy Expense 4,980 4,441 19,526 17,744
Other Real Estate
Owned, Net (17) 18 (293) 86
Amortization of
Intangibles 348 855 1,279 2,963
Other 11,882 10,246 42,959 40,117
Total Noninterest
Expense 39,855 34,727 151,544 135,761
Income Before Income
Taxes 27,560 22,758 97,800 90,236
Income Tax Expense 9,764 7,906 34,155 31,735
Net Income $17,796 $14,852 $63,645 $58,501
Weighted Average Common
Shares Outstanding 31,939,820 32,039,223 32,105,864 32,163,734
Weighted Average
Common and Common
Equivalent Shares
Outstanding 32,259,266 32,420,335 32,495,402 32,547,029
Earnings Per Share,
Basic $0.56 $0.46 $1.98 $1.82
Earnings Per Share,
Diluted 0.55 0.46 1.96 1.80
Dividends Per Share 0.20 0.19 0.79 0.76
Return on Average
Equity 17.08% 15.92% 16.12% 16.55%
Return on Average
Assets 1.45% 1.44% 1.40% 1.51%
Net Yield on Earning
Assets 4.38% 4.59% 4.53% 4.74%
SOURCE Chittenden Corporation
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