BURLINGTON, Vt., Jan. 18 /PRNewswire-FirstCall/ -- Chittenden
Corporation (NYSE: CHZ) Chairman, President and Chief Executive Officer,
Paul A. Perrault, today announced higher earnings for the year ended
December 31, 2006 of $85.5 million or $1.83 per diluted share, compared to
$82.0 million or $1.74 per diluted share a year ago. For the fourth quarter
of 2006, net income was $22.5 million or $0.48 per diluted share, compared
to $21.8 million or $0.46 per diluted share earned in the fourth quarter of
2005.
In making the announcement, Perrault said, "I am pleased to report to
shareholders that your Company's discipline and strong strategic
implementation continues to deliver solid results despite the challenging
environment." Chittenden also announced its quarterly dividend of $0.20 per
share, which will be paid on February 9, 2007, to shareholders of record on
January 26, 2007.
Perrault also announced that the Board of Directors approved a new
share repurchase plan on January 17, 2007 for one million shares of the
Corporation's common stock. The repurchase of the common stock may be done
in negotiated transactions or open market purchases over the next two
years.
FOURTH QUARTER 2006 FINANCIAL HIGHLIGHTS
* Commercial loans increased 7% from the end of 2005.
* Average deposits for 2006 increased 4% from 2005 with solid growth in
CMA/money market deposits of over 4%.
* Net interest margin held steady for 2006 at 4.24% and the fourth quarter
increased 6 basis points to 4.29%.
* Nonperforming assets declined 22% from the third quarter of 2006.
* The efficiency ratio improved to 54.6% for the fourth quarter of 2006.
* The Company repurchased 762,500 common shares in the fourth quarter and
the tangible capital ratio remained over 7.00% at year end.
ASSETS
The Company's securities portfolio declined from both the prior year
end and on a linked quarter basis to $1.1 billion. The decrease in
securities was primarily utilized to fund loan growth and reduce
borrowings. Total loans increased by $210 million from the end of last year
to $4.7 billion at December 31, 2006. The Company experienced solid loan
growth in 2006 throughout all of its markets with particularly strong
increases in its multifamily real estate, commercial real estate and
construction portfolios.
LIABILITIES
Total deposits decreased $20 million from September 30, 2006 reflecting
the start of the normal seasonal decline in deposits, which is primarily
driven by the operating cycles of the Company's municipal and commercial
customers. Borrowings at December 31, 2006, were $210 million, a decrease
of $17 million from the end of last year due to lower FHLB advances.
NET INTEREST INCOME
Tax-equivalent net interest income for the fourth quarter of 2006 was
$64.0 million, compared to $63.7 million for the same quarter of 2005 and
$63.5 million for the third quarter of 2006. The increase in net interest
income from the same period a year ago was due to higher average earning
assets, which was partially offset by a slightly lower net interest margin.
The Company's net interest margin for the fourth quarter was 4.29%, an
increase of 6 basis points from the third quarter of 2006 and a decline of
1 basis point from the same period a year ago. The increase in net interest
margin from the third quarter of 2006 was attributable to higher interest
recoveries on former non-performing loans. The decline in the net interest
margin from the fourth quarter of 2005 was due to an increase in funding
costs, which was partially offset by an increase in the yield on interest
earning assets. The increase in funding costs was driven by strong
competition for both commercial and consumer deposits as well as increases
in the federal funds rate in 2005 and 2006.
NONINTEREST INCOME
Noninterest income was $17.9 million for the fourth quarter of 2006,
compared with $16.1 million for the third quarter and $17.4 million for the
same period a year ago. The increase in noninterest income was primarily
attributable to higher investment management and trust fees and other
noninterest income, which was partially offset by lower gains on the sales
of mortgage loans. The increase in other noninterest income from the fourth
quarter of 2005 was due to $1.1 million received in relation to the
Company's interest in a mortgage insurance captive, which was partially
offset by higher amortization on investments in low income housing limited
partnerships.
NONINTEREST EXPENSE
Noninterest expense was $46.3 million for the fourth quarter of 2006,
compared to $46.0 million for the same quarter of 2005. The increase from
the fourth quarter a year ago is primarily a result of higher salary
expense which related to increased share-based compensation costs and new
branch openings in 2006. The Company recognized $785,000 of share-based
compensation in the fourth quarter of 2006 as compared to $4,000 in the
same quarter a year ago.
INCOME TAXES
The effective income tax rates for 2006 were 31.5% for the fourth
quarter and 32.1% for the full year compared with 34.2% and 34.5%,
respectively, for the same periods in 2005. The lower effective income tax
rate was attributable to higher low-income housing and historic
rehabilitation tax credits.
CREDIT QUALITY
The provision for credit losses was $2.0 million for the fourth quarter
of 2006 compared to $1.4 million for the same quarter of 2005. The increase
in the provision for credit losses from the comparable period in 2005 was
primarily due to higher net charge offs and nonperforming loans. Net
charge- offs as a percentage of average loans were 4 basis points for the
fourth quarter of 2006, up from 2 basis points for the same quarter a year
ago. The increase in net charge-offs primarily relates to one commercial
finance loan that was placed on non-accrual status in the first quarter of
2006. The allowance for credit losses as a percentage of total loans
excluding municipal loans was 1.39% at December 31, 2006 compared to 1.43%
for the fourth quarter of 2005.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer
of Chittenden Corporation, will host a conference call on January 18, 2006
at 10:30 a.m. eastern time to discuss these earnings results. The Company
may answer one or more questions concerning business and financial
developments, trends and other business. Some of the responses to these
questions may contain information that has not been previously disclosed.
Interested parties may access the conference call by calling 800-561-2718,
passcode 37851780. International dial-in number is 617-614-3525.
Participants are asked to call in a few minutes prior to the call to allow
time for registration. Internet access to the call is also available
(listen only) by clicking "webcasts" under the Investor Resources section
of the Company's website at http://www.chittendencorp.com. A replay of the
call will be available through January 25, 2007 by calling 888-286-8010
(International dial number is 617-801-6888), passcode 51014444. A replay of
the call will also be available on the Company's website at the address
above for an extended period of time.
Chittenden is a bank holding company headquartered in Burlington,
Vermont. Through its subsidiary banks(1), the Company offers a broad range
of financial products and services to customers throughout Northern New
England, Massachusetts and Connecticut, including deposit accounts and
services; commercial and consumer loans; insurance; and investment and
trust services to businesses, individuals, and the public sector.
Chittenden Corporation's news releases, including earnings announcements,
are available on the Company's website.
This press release contains statements that may be considered forward-
looking statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. Chittenden
intends for these forward-looking statements to be covered by the safe
harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995 and is including this statement
for purposes of complying with these safe harbor provisions. These
forward-looking statements are based on current plans and expectations,
which are subject to a number of risk factors and uncertainties that could
cause future results to differ materially from historical performance or
future expectations. These differences may be the result of various
factors, including changes in general, national or regional economic
conditions, changes in loan default and charge-off rates, reductions in
deposit levels necessitating increased borrowings to fund loans and
investments, changes in interest rates, changes in levels of income and
expense in noninterest income and expense related activities, competition
and other risk factors.
For further information on these risk factors and uncertainties, please
see Chittenden's filings with the Securities and Exchange Commission,
including Chittenden's Annual Report on Form 10-K for the year ended
December 31, 2005. Chittenden undertakes no obligation to publicly update
or revise any forward-looking statement, whether as a result of new
information, future events or other changes.
1. Chittenden's subsidiaries are Chittenden Trust Company, The Bank of
Western Massachusetts, Flagship Bank and Trust Company, Maine Bank & Trust
Company, and Ocean National Bank. Chittenden Trust Company also operates
under the names Chittenden Bank, Chittenden Services Group, Chittenden
Mortgage Services, and it owns Chittenden Insurance Group, LLC, and
Chittenden Securities, LLC.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
Assets: 12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
Cash and Cash
Equivalents $199,358 $145,393 $172,567 $142,887 $180,707
Securities
Available
For Sale 1,137,352 1,231,369 1,288,390 1,344,016 1,383,909
FRB and FHLB
Stock 13,403 16,124 18,577 19,352 19,352
Loans Held
For Sale 17,354 21,646 18,882 19,319 19,737
Loans:
Commercial &
Industrial
(C&I) 853,839 854,475 851,692 836,986 848,420
Municipal 141,522 144,152 90,206 172,443 160,357
Multi-Family 216,049 213,153 205,443 195,809 196,590
Commercial
Real Estate 1,942,685 1,933,279 1,884,716 1,827,096 1,778,202
Construction 232,000 211,187 218,123 212,824 192,165
Residential
Real
Estate 751,450 749,106 750,031 731,798 737,462
Home Equity
Credit Lines 322,124 325,814 319,606 316,355 316,465
Consumer 237,541 246,394 254,839 254,719 257,829
Total Loans 4,697,210 4,677,560 4,574,656 4,548,030 4,487,490
Less:
Allowance
for Loan
Losses (62,160) (62,153) (62,070) (61,464) (60,822)
Net Loans 4,635,050 4,615,407 4,512,586 4,486,566 4,426,668
Accrued Interest
Receivable 33,123 32,393 31,138 32,772 32,621
Other Assets 83,938 89,759 102,079 93,673 93,377
Premises and
Equipment 67,036 67,952 69,503 68,568 69,731
Mortgage
Servicing
Rights 14,155 14,347 14,529 13,966 13,741
Identified
Intangibles 14,996 15,661 16,326 16,991 17,655
Goodwill 216,038 216,038 216,038 216,038 216,038
Total Assets $6,431,803 $6,466,089 $6,460,615 $6,454,148 $6,473,536
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demands $966,758 $971,378 $965,794 $929,718 $973,752
Savings 468,294 481,380 474,883 489,944 489,734
NOWs 861,435 866,134 895,817 906,934 861,000
CMAs / Money
Markets 1,655,349 1,658,319 1,441,573 1,584,777 1,749,878
Certificates
of Deposit
Less than
$100,000 848,814 858,834 878,181 853,645 814,289
Certificates
of Deposit
$100,000
and Over 678,243 663,086 661,322 618,319 625,682
Total Deposits 5,478,893 5,499,131 5,317,570 5,383,337 5,514,335
Securities Sold
Under Agreements
to Repurchase 73,611 87,112 138,773 53,238 56,315
Other Borrowings 136,409 135,975 285,497 288,482 171,008
Accrued Expenses
and Other
Liabilities 71,804 63,162 63,299 59,295 60,488
Total
Liabilities 5,760,717 5,785,380 5,805,139 5,784,352 5,802,146
Stockholders'
Equity:
Common Stock 50,235 50,235 50,235 50,235 50,220
Surplus 276,034 274,834 273,723 272,696 276,278
Retained
Earnings 468,331 454,985 442,456 430,811 419,057
Treasury Stock,
at cost (105,666) (85,613) (85,678) (64,189) (60,801)
Accumulated
Other
Comprehensive
Income (24,008) (19,470) (30,924) (25,216) (18,968)
Directors'
Deferred
Compensation to
be Settled in
Stock 6,160 5,738 5,664 5,459 5,604
Total
Stockholders'
Equity 671,086 680,709 655,476 669,796 671,390
Total Liabilities
and
Stockholders'
Equity $6,431,803 $6,466,089 $6,460,615 $6,454,148 $6,473,536
Prior year amounts reflect the modified retrospective application of
SFAS 123-R "Accounting for Stock-Based Compensation."
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
2006 2005 2006 2005
Interest Income:
Loans $84,752 $71,834 $319,307 $261,359
Investments 13,052 14,960 55,405 58,883
Total Interest Income 97,804 86,794 374,712 320,242
Interest Expense:
Deposits 30,905 20,904 108,553 63,926
Borrowings 3,670 2,857 17,157 12,003
Total Interest Expense 34,575 23,761 125,710 75,929
Net Interest Income 63,229 63,033 249,002 244,313
Provision for Credit Losses 1,967 1,354 6,920 5,154
Net Interest Income after Provision
for Credit Losses 61,262 61,679 242,082 239,159
Noninterest Income:
Investment Management and Trust 5,585 5,047 21,293 20,017
Service Charges on Deposits 4,164 3,926 16,728 16,113
Mortgage Servicing 404 607 2,106 1,829
Gains on Sales of Loans 1,397 2,301 6,294 9,021
Credit Card Income 1,270 1,193 5,107 4,536
Insurance Commissions 1,055 1,134 5,805 6,365
Other 4,062 3,243 12,856 12,083
Total Noninterest Income 17,937 17,451 70,189 69,964
Noninterest Expense:
Salaries 23,311 21,659 93,217 89,496
Employee Benefits 5,168 5,717 22,155 22,218
Net Occupancy 5,789 5,900 23,424 24,094
Data Processing 1,092 951 4,079 3,457
Amortization of Intangibles 665 665 2,659 2,768
Other 10,288 11,097 40,833 41,808
Total Noninterest Expense 46,313 45,989 186,367 183,841
Income Before Income Taxes 32,886 33,141 125,904 125,282
Income Tax Expense 10,350 11,328 40,436 43,243
Net Income $22,536 $21,813 $85,468 $82,039
Basic Earnings Per Share $0.50 $0.46 $1.85 $1.76
Diluted Earnings Per Share 0.48 0.46 1.83 1.74
Dividends Per Share 0.20 0.18 0.78 0.72
Prior year amounts reflect the modified retrospective application of
SFAS 123-R "Accounting for Stock-Based Compensation."
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
12/31/06 9/30/06 6/30/06 3/31/06 12/31/05
Selected Financial Ratios
Return on
Average
Tangible
Equity (1) 20.25% 20.20% 19.87% 18.92% 20.47%
Return on
Average
Equity 13.20% 13.00% 12.75% 12.21% 13.11%
Return on
Average
Tangible
Assets (1) 1.47% 1.41% 1.38% 1.35% 1.43%
Return on
Average Assets 1.39% 1.33% 1.30% 1.27% 1.35%
Net Yield on
Earning Assets 4.29% 4.23% 4.22% 4.20% 4.30%
Efficiency
Ratio (1) 54.56% 55.91% 56.87% 56.61% 54.37%
Tangible Capital
Ratio 7.10% 7.20% 6.79% 7.02% 7.01%
Leverage Ratio 9.24% 9.24% 9.04% 9.38% 9.21%
Tier 1 Capital
Ratio 11.56% 11.59% 11.29% 11.61% 11.23%
Total Capital
Ratio 12.78% 12.80% 12.49% 12.82% 12.40%
Common Share Data
Common Shares
Outstanding 45,360 45,994 45,978 46,748 46,829
Weighted Average
Shares
Outstanding 45,745 45,982 46,423 46,804 46,690
Weighted Average
and Common
Equivalent
Shares
Outstanding 46,388 46,504 46,903 47,401 47,291
Book Value
per Share $14.79 $14.80 $14.26 $14.33 $14.34
Tangible Book
Value per
Share (1) $9.70 $9.76 $9.20 $9.34 $9.35
Credit Quality Data
Nonperforming
Assets (NPAs) $20,358 $26,089 $24,727 $24,844 $16,194
90 days Past
Due and
Still
Accruing 3,352 3,196 2,283 3,323 3,038
NPAs to Loans
Plus OREO 0.43% 0.56% 0.54% 0.55% 0.36%
Allowance for
Loan Losses $62,160 $62,153 $62,070 $61,464 $60,822
Reserve for
Unfunded
Commitments (2) 1,200 1,200 1,200 1,200 1,200
Allowance for
Credit
Losses (ACL) $63,360 $63,353 $63,270 $62,664 $62,022
ACL to Loans 1.35% 1.35% 1.38% 1.38% 1.38%
ACL to Loans
(excluding
Municipals) 1.39% 1.40% 1.41% 1.43% 1.43%
ACL to
Nonperforming
Loans 315.32% 248.90% 260.13% 257.81% 392.06%
Charge-offs $3,070 $2,093 $1,871 $1,753 $1,840
Recoveries 1,110 506 728 862 1,040
Net Charge-offs $1,960 $1,587 $1,143 $891 $800
Net Charge-offs
to Average
Loans 0.04% 0.03% 0.03% 0.02% 0.02%
QTD Average Balance Sheet Data
Securities $1,201,734 $1,269,907 $1,333,444 $1,391,413 $1,378,688
Loans, Net 4,632,538 4,626,194 4,552,727 4,455,403 4,408,205
Earning
Assets 5,926,319 5,959,599 5,948,463 5,915,366 5,895,121
Total Assets 6,426,533 6,482,127 6,462,457 6,430,410 6,418,971
Deposits 5,434,889 5,442,894 5,372,367 5,377,674 5,454,388
Borrowings 249,344 312,430 367,521 321,073 246,660
Stockholders'
Equity 677,244 662,964 661,020 671,058 660,353
Prior year amounts reflect the modified retrospective application of
SFAS 123-R "Accounting for Stock-Based Compensation."
1. Reconciliation of non-GAAP measurements
12/31/06 9/30/06 6/30/06 3/31/06 12/30/05
Net
Income
(GAAP) $22,536 $21,725 $21,009 $20,198 $21,813
Amortization
of Core
Deposit
Intangible,
net of tax 432 432 431 432 432
Tangible
Net
Income (A) $22,968 22,157 $21,440 $20,630 $22,245
Average
Stockholders'
Equity
(GAAP) $677,244 $662,964 $661,020 $671,058 $660,353
Average
Core
Deposit
Intangible
(CDI) 15,328 15,996 16,659 17,323 17,992
Average
Deferred
Tax on CDI (4,168) (4,345) (4,435) (4,610) (4,785)
Average
Goodwill 216,038 216,038 216,038 216,038 216,103
Average
Tangible
Equity (B) $450,046 $435,275 $432,758 $442,307 $431,043
Return on
Average
Tangible
Equity
(A) / (B) 20.25% 20.20% 19.87% 18.92% 20.47%
Average
Assets
(GAAP) $6,426,533 $6,482,127 $6,462,457 $6,430,410 $6,418,971
Average CDI 15,328 15,996 16,659 17,323 17,992
Average
Deferred
Tax on CDI (4,168) (4,345) (4,435) (4,610) (4,785)
Average
Goodwill 216,038 216,038 216,038 216,038 216,103
Average
Tangible
Assets (C) $6,199,335 $6,254,438 $6,234,195 $6,201,659 $6,189,661
Return on
Average
Tangible
Assets
(A) / (C) 1.47% 1.41% 1.38% 1.35% 1.43%
Efficiency Ratio: is computed by dividing total noninterest expense
(less oreo expense, amortization expense, franchise tax and any
nonrecurring items) by the sum of net interest income on a tax equivalent
basis and total noninterest income (exclusive of gains and losses from
securities, and nonrecurring items). This non-GAAP measure is used widely
in the banking industry to provide important information regarding
operational efficiency, e.g. ($46,313-$98-$665-$852) / ($64,001+$17,937-
10) = 54.56%.
Tangible book value per share: is computed by subtracting goodwill and
identified intangibles from equity, and dividing the resulting number by
common shares outstanding, e.g. ($671,086-$216,038-$14,996) / 45,360=
$9.70.
While the Company's management uses non-GAAP measures for operational and
investment decisions and believes that these measures are among several
useful measures for understanding its operating results and financial
condition, these measures should not be construed as a substitute for GAAP
measures. Non-GAAP measures should be read and used in conjunction with
the Company's reported GAAP operating results and financial information.
2. The reserve for unfunded commitments is included in other liabilities
on the accompanying consolidated balance sheet.
SOURCE Chittenden Corporation
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