BURLINGTON, Vt., Jan. 19 /PRNewswire-FirstCall/ -- Chittenden Corporation
(NYSE: CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault,
today announced record earnings for the quarter ended December 31, 2005, of
$21.8 million, or $0.46 per diluted share. For the twelve months of 2005,
earnings were a record $83.4 million, 11% higher than in 2004, or $1.77 per
diluted share. Chittenden also announced its quarterly dividend of $0.18 per
share, which will be paid on February 10, 2006, to shareholders of record on
January 27, 2006.
FOURTH QUARTER 2005 FINANCIAL HIGHLIGHTS
* Earnings were 9% higher than the same period in 2004 driven by expanding
net interest income, excellent credit quality and strong expense
control.
* Total loans increased more than 10% from year-end 2004 with strong
growth in several commercial categories.
* Total deposits also experienced strong organic growth of more than 9%
from December 31, 2004.
* The efficiency ratio declined to 54.37% for the fourth quarter of 2005,
which is the lowest level in the last six years.
* Nonperforming assets (NPAs) declined 19% from the end of 2004 and the
NPAs to loans ratio of 36 basis points is the lowest in six years.
Chittenden experienced only 5 basis points in net charge-offs for 2005
which is the lowest level in more than 10 years.
In making the announcement, Perrault said, "I am extremely pleased to
report these record setting results. We have proven time and time again that
we can make progress in a variety of economic cycles. I expect as interest
rates begin to stabilize in 2006 that the numerous competitive pressures we
face will only intensify. Maintaining our usual diligence and focus on
providing thoughtful financial solutions for customers will be critical to our
ability to continue to consistently deliver strong results."
ASSETS
Total assets increased approximately $394 million or 6.5% from a year ago
to $6.5 billion at December 31, 2005. Total loans increased $410 million to
$4.5 billion at December 31, 2005. The increases were attributable to
continued growth across all loan categories, particularly in the commercial
and commercial real estate portfolios, residential real estate loans, and
municipal loans. The growth in commercial and commercial real estate was
particularly strong in Vermont, New Hampshire and Massachusetts. In addition,
financings for commercial customers also influenced the construction loan
portfolio growth, which increased $18 million from year-end 2004.
LIABILITIES
Total deposits increased $476 million from year-end 2004 and $121 million
from September 30, 2005. The increase from December 31, 2004 was driven
primarily by commercial and municipal customers and resulted in higher
activity in demand, CMA/money market accounts, and jumbo CDs. Borrowings at
December 31, 2005 were $227 million, compared with $356 million at December
31, 2004 and $244 million at September 30, 2005. The decrease from December
31, 2004 was due to higher levels of deposits, which were utilized to reduce
short-term borrowings and fund loan growth.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the three months ended
December 31, 2005 was $63.7 million, which was up approximately $900,000 on a
linked quarter basis and $4.1 million from the same period a year ago. The
increase in net interest income from the same period a year ago was due to
continued growth in average earning assets as well as a higher net interest
margin. The Company's net interest margin for the fourth quarter was 4.30%, an
increase of 3 basis points from the fourth quarter of last year and a decrease
of 5 basis points from the third quarter of 2005. The increase in the net
interest margin from the same period a year ago primarily related to a higher
yield on loans, which was driven by increases in the prime rate, as well as
continued improvement in the Company's asset mix. The decline on a linked
quarter basis was due to higher funding costs, slower loan growth and lower
interest recoveries on non-performing assets. For 2005 the net interest margin
was 4.31% compared with 4.21% for 2004.
NONINTEREST INCOME
Noninterest income for the fourth quarter of 2005 was $17.4 million, up
$528,000 from the same period a year ago and down $327,000 on a linked quarter
basis. Investment management and trust income declined $275,000 from the same
period in 2004 primarily due to lower annuity sales. Mortgage servicing income
increased $867,000 from the fourth quarter of 2004 due to lower impairment
charges and lower amortization. Gains on sales of mortgage loans decreased
$303,000 from the fourth quarter of 2004 due to lower volumes of loan sales
caused by higher mortgage interest rates. Other noninterest income increased
$569,000 from the same period in 2004 primarily due to higher late fees,
payroll services income and other income. The decrease in noninterest income
from the third quarter of 2005 was due to lower gains on sales of loans and
insurance commissions.
NONINTEREST EXPENSE
Noninterest expense was $45.2 million for the fourth quarter of 2005, an
increase of $568,000 on a linked quarter basis and $2.2 million from the same
period a year ago. The increase on a linked quarter basis was due to higher
other expense, which was partially offset by lower salary expense. The
increase in other expense was primarily due to higher marketing, accounting
and miscellaneous charge-offs. The lower salary expense related to reduced
levels of incentive compensation, as well as lower sales based commissions.
The increase from the same quarter a year ago is primarily a result of higher
employee benefits, net occupancy and other expense. The increase in employee
benefits related to higher pension costs. Net occupancy expense increased due
to higher utility and property expenses as well as the opening of new branches
in Westborough, Massachusetts and Manchester, New Hampshire. The increase in
other expenses was primarily due to higher marketing, accounting and legal
expense.
INCOME TAXES
The effective income tax rates for 2005 were 35.7% for the fourth quarter
and 36.1% for the full year compared with 36.0% and 36.4% for the respective
periods in 2004. The lower effective income tax rates were primarily
attributable to higher levels of tax-exempt municipal loan interest income.
CREDIT QUALITY
Net charge-offs as a percentage of average loans were 2 basis points in
the fourth quarter and 5 basis points for the year ended December 31, 2005,
compared to 3 basis points and 7 basis points for the respective periods in
2004. Net charge-offs on a year-to-date basis totaled $2.2 million compared
with $2.8 million in 2004. Nonperforming assets were $16.2 million at December
31, 2005, down 11% from September 30, 2005 and 19% from December 31, 2004.
Nonperforming assets as a percentage of total loans at the end of the fourth
quarter of 2005 were 36 basis points, which was down from 41 basis points in
the third quarter of 2005 and 49 basis points at the end of 2004. As a
percentage of total loans, the allowance for credit losses was 1.38%, down
from 1.39% at September 30, 2005, and 1.45% at December 31, 2004.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call on January 19, 2006 at
10:30 am eastern time to discuss these earnings results. The Company may
answer one or more questions concerning business and financial developments
and 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 800-659-1966, passcode 70580966.
International dial-in number is 617-614-2711. 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 26, 2006 by calling 888-286-8010 (International dial number is 617-
801-6888), passcode 34931005. 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 and
Massachusetts, 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
borrowing 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, 2004. 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, CHZ Services Group, Mortgage Service Center, and it
owns Chittenden Insurance Group, and Chittenden Securities, Inc.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
Assets: 12/31/05 9/30/05 6/30/05 3/31/05 12/31/04
Cash and Cash
Equivalents $180,707 $150,409 $176,425 $146,861 $136,468
Securities
Available For
Sale 1,383,909 1,348,521 1,363,180 1,409,434 1,446,221
FRB / FHLB Stock 19,352 19,352 19,352 19,352 19,243
Loans Held For
Sale 19,737 34,774 22,611 22,131 33,535
Loans:
Commercial &
Industrial 848,420 841,430 831,537 812,050 801,369
Municipal 160,357 156,630 79,070 98,128 106,120
Multi-Family 196,590 192,563 185,920 180,632 182,541
Commercial Real
Estate 1,778,202 1,760,621 1,736,665 1,651,247 1,590,457
Construction 192,165 173,909 124,648 133,799 174,283
Residential Real
Estate 737,462 724,873 733,472 712,133 688,017
Home Equity
Credit Lines 316,465 316,733 307,866 297,649 294,656
Consumer 257,829 259,865 255,239 242,239 239,750
Total Loans 4,487,490 4,426,624 4,254,417 4,127,877 4,077,193
Less: Allowance
for Loan Losses (60,822) (61,468) (60,805) (59,811) (59,031)
Net Loans 4,426,668 4,365,156 4,193,612 4,068,066 4,018,162
Accrued Interest
Receivable 32,621 29,202 29,689 28,443 28,956
Other Assets 84,511 81,616 78,629 66,746 64,970
Premises and
Equipment, net 69,731 70,509 71,632 72,336 74,271
Mortgage
Servicing Rights 13,741 12,970 12,073 12,074 11,826
Identified
Intangibles 17,655 18,320 18,983 19,648 20,422
Goodwill 216,038 216,136 216,136 216,136 216,136
Total Assets $6,464,670 $6,346,965 $6,202,322 $6,081,227 $6,070,210
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $973,752 $988,096 $934,234 $881,954 $890,561
Savings 489,734 499,119 502,525 514,215 519,623
NOW 861,000 891,058 908,148 898,720 890,701
CMAs/ Money
Market 1,749,878 1,592,743 1,418,634 1,527,753 1,577,474
Certificates of
Deposit less
than $100,000 814,289 814,435 811,389 763,502 735,577
Certificates of
Deposit $100,000
and Over 625,682 607,897 569,505 477,019 424,794
Total Deposits 5,514,335 5,393,348 5,144,435 5,063,163 5,038,730
Securities Sold
Under Agreements
to Repurchase 56,315 64,114 56,775 91,443 76,716
Other Borrowings 171,008 179,552 296,903 254,418 279,755
Accrued Expenses
and Other
Liabilities 60,488 63,428 64,466 54,721 54,752
Total
Liabilities 5,802,146 5,700,442 5,562,579 5,463,745 5,449,953
Stockholders'
Equity:
Common Stock 50,220 50,220 50,210 50,207 50,204
Surplus 251,825 250,009 249,117 248,864 249,036
Retained Earnings 434,644 421,180 407,865 395,410 384,679
Treasury Stock,
at cost (60,801) (65,684) (67,657) (68,233) (69,246)
Other Comprehensive
Income (18,968) (14,595) (4,978) (13,747) 672
Directors Deferred
Compensation to
be Settled in
Stock 5,604 5,400 5,197 4,996 4,930
Unearned Portion
of Employee
Restricted Stock - (7) (11) (15) (18)
Total Stockholders'
Equity 662,524 646,523 639,743 617,482 620,257
Total
Liabilities and
Stockholders'
Equity $6,464,670 $6,346,965 $6,202,322 $6,081,227 $6,070,210
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,
2005 2004 2005 2004
Interest Income:
Loans $71,834 $56,302 $261,359 $209,107
Investments 14,960 15,359 58,883 60,660
Total Interest Income 86,794 71,661 320,242 269,767
Interest Expense:
Deposits 20,904 10,300 63,926 36,439
Borrowings 2,857 2,167 12,003 7,830
Total Interest Expense 23,761 12,467 75,929 44,269
Net Interest Income 63,033 59,194 244,313 225,498
Provision for Credit
Losses 1,354 1,825 5,154 4,377
Net Interest Income
after Provision for
Credit Losses 61,679 57,369 239,159 221,121
Noninterest Income:
Investment Management
and Trust 5,047 5,322 20,017 21,622
Service Charges on
Deposits 3,926 4,179 16,113 17,886
Mortgage Servicing
Income (Loss) 607 (260) 1,829 159
Gains on Sales of
Loans, Net 2,301 2,604 9,021 9,661
Gains on Sales of
Securities - 107 6 2,335
Loss on Prepayments
of Borrowings - - - (1,194)
Credit Card, Net 1,193 1,074 4,536 4,150
Insurance Commissions,
Net 1,134 1,223 6,365 6,966
Other 3,243 2,674 12,077 11,820
Total Noninterest
Income 17,451 16,923 69,964 73,405
Noninterest Expense:
Salaries 21,655 21,302 87,374 84,619
Employee Benefits 5,717 5,281 22,218 21,958
Net Occupancy 5,900 5,410 24,094 22,669
Data Processing 951 916 3,457 6,188
Amortization of
Intangibles 665 774 2,768 3,077
Conversion and
Restructuring Charges - 291 - 2,266
Other 10,340 9,022 38,797 35,595
Total Noninterest
Expense 45,228 42,996 178,708 176,372
Income Before Income
Taxes 33,902 31,296 130,415 118,154
Income Tax Expense 12,086 11,268 47,024 43,027
Net Income $21,816 $20,028 $83,391 $75,127
Basic Earnings
Per Share $0.46 $0.43 $1.79 $1.63
Diluted Earnings
Per Share 0.46 0.43 1.77 1.61
Dividends Per Share 0.18 0.18 0.72 0.70
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
12/31/05 9/30/05 6/30/05 3/31/05 12/31/04
Selected Financial
Ratios
Return on Average
Tangible Equity (1) 20.91% 21.25% 21.37% 20.35% 21.25%
Return on Average
Equity 13.29% 13.39% 13.27% 12.46% 12.95%
Return on Average
Tangible Assets (1) 1.43% 1.46% 1.44% 1.36% 1.39%
Return on Average
Assets 1.35% 1.38% 1.36% 1.28% 1.31%
Net Yield on Earning
Assets 4.30% 4.35% 4.29% 4.30% 4.27%
Efficiency Ratio (1) 54.37% 54.56% 57.14% 58.07% 55.64%
Tangible Capital Ratio 6.88% 6.74% 6.78% 6.53% 6.58%
Leverage Ratio 9.09% 9.08% 8.78% 8.66% 8.42%
Tier 1 Capital Ratio 11.05% 10.72% 10.56% 10.46% 10.44%
Total Capital Ratio 12.23% 11.89% 11.75% 11.65% 11.64%
Common Share Data
Common Shares
Outstanding 46,829 46,557 46,437 46,402 46,342
Weighted Average
Shares Outstanding 46,690 46,519 46,414 46,385 46,293
Weighted Average and
Common
Equivalent Shares
Outstanding 47,291 47,109 46,901 46,918 46,960
Book Value per Share $14.15 $13.89 $13.78 $13.31 $13.38
Tangible Book Value
per Share(1) $9.16 $8.85 $8.71 $8.23 $8.28
Credit Quality Data
Nonperforming Assets
(including OREO) $16,194 $18,299 $23,150 $20,692 $20,024
90 days past due and
still accruing 3,038 2,720 1,981 4,543 2,604
Total $19,232 $21,019 $25,131 $25,235 $22,628
Nonperforming Assets
to Loans Plus OREO 0.36% 0.41% 0.54% 0.50% 0.49%
Allowance for Loan
Losses $60,822 $61,468 $60,805 $59,811 $59,031
Reserve for Unfunded
Commitments 1,200 - - - -
Allowance for Credit
Losses $62,022 $61,468 $60,805 $59,811 $59,031
Allowance for credit
losses to Loans 1.38% 1.39% 1.43% 1.45% 1.45%
Allowance for credit
losses to Loans
(excluding
Municipals) 1.43% 1.44% 1.46% 1.48% 1.49%
Allowance for credit
losses to
Nonperforming Loans 392.06% 335.92% 262.71% 289.29% 296.41%
Gross Charge-offs $1,840 $1,668 $1,313 $1,154 $2,821
Gross Recoveries 1,040 1,006 907 859 1,428
Net Charge-offs $800 $662 $406 $295 $1,393
Net Charge-offs to
Average Loans 0.02% 0.01% 0.01% 0.01% 0.03%
QTD Average
Balance Sheet
Data
Securities $1,378,688 $1,341,648 $1,409,045 $1,450,210 $1,495,302
Loans, Net 4,408,205 4,316,317 4,174,491 4,057,647 4,000,917
Earning Assets 5,895,121 5,738,499 5,644,833 5,568,124 5,572,226
Total Assets 6,410,105 6,248,866 6,143,001 6,060,179 6,089,616
Deposits 5,454,388 5,270,406 5,085,064 5,000,949 5,128,344
Borrowings 246,660 272,257 367,617 386,613 291,919
Stockholders'
Equity 651,487 642,803 629,042 621,276 615,420
1. Reconciliation of non-GAAP measurements to GAAP
Net Income (GAAP) $21,816 $21,687 $20,806 $19,082 $20,028
Amortization of
core deposit
intangible,
net of tax 432 432 431 503 503
Tangible Net
Income (A) 22,248 22,119 21,237 19,585 20,531
Average Equity
(GAAP) 651,487 642,803 629,042 621,276 615,420
Average Core
Deposit Intangible 17,992 18,688 19,417 20,155 20,919
Average Deferred
Tax on CDI (4,785) (4,960) (5,136) (5,311) (6,392)
Average Goodwill 216,103 216,136 216,136 216,136 216,502
Average Tangible
Equity (B) 422,177 412,939 398,625 390,296 384,391
Return on Average
Tangible Equity
(A)/(B) 20.91% 21.25% 21.37% 20.35% 21.25%
Average Assets
(GAAP) 6,410,105 6,248,866 6,143,001 6,060,179 6,089,616
Average Core
Deposit
Intangible 17,992 18,688 19,417 20,155 20,919
Average Deferred
Tax on CDI (4,785) (4,960) (5,136) (5,311) (6,392)
Average Goodwill 216,103 216,136 216,136 216,136 216,502
Average Tangible
Assets (C) 6,180,795 6,019,002 5,912,584 5,829,199 5,858,587
Return on Average
Tangible Assets
(A)/(C) 1.43% 1.46% 1.44% 1.36% 1.39%
Efficiency Ratio: is computed by dividing total noninterest expense (less
oreo expense, amortization expense 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 bank investment securities, and
nonrecurring items). The Company uses this non-GAAP measure, which is used
widely in the banking industry, to provide important information regarding its
operational efficiency, e.g. (45,228+48-665-488) / (63,703+17,451) = 54.37%.
Tangible book value: is computed by subtracting goodwill and identified
intangibles from equity, and dividing the resultant number by common shares
outstanding, e.g. (662,524-17,655-216,038) / 46,829= $9.16.
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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