BURLINGTON, Vt., Jan. 22 /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, 2003, of $74.8
million or $2.07 per diluted share, compared to $63.6 million or $1.96 a year
ago. For the fourth quarter of 2003, net income was $0.53 per diluted share,
compared to the $0.55 per diluted share earned in the fourth quarter of 2002.
The prior quarter amount exceeded the current quarter primarily due to higher
gains on sales of securities in 2002. Chittenden also announced its quarterly
dividend of $0.20 per share. The dividend will be paid on February 13, 2004,
to shareholders of record on January 30, 2004.
In making the announcement, Perrault said, "The past year has been a busy
one at Chittenden. In addition to our primary focus of delivering top quality
service to our customers, we completed the Granite acquisition in the first
quarter and there has been significant activity behind the scenes in
preparation for our IT conversion this coming spring. I am encouraged by our
progress on this important project as well as with the financial results that
we have achieved during 2003."
On February 28, 2003, Chittenden completed its acquisition of Granite
Bank, a $1.1 billion commercial bank headquartered in Keene, NH for $123
million in cash and approximately 4.4 million shares of Chittenden stock
valued at $116 million. Accordingly, Granite Bank's operations are reflected
in Chittenden's consolidated financial statements from the date of
acquisition.
Total loans increased $43 million from September 30, 2003 and $751 million
from December 31, 2002. The increase from a year ago was primarily
attributable to the acquisition of Granite, which contributed approximately
$626 million of total loans at the date of acquisition. The increase from
last quarter was due to continued growth in the Company's commercial and
commercial real estate loan portfolios. The Company experienced its normal
seasonal decline in municipal loans and a continued reduction in residential
real estate and consumer loans due to higher than normal prepayment speeds on
these portfolios.
Total deposits increased $844 million from a year ago and declined $48
million from last quarter. The increase from a year ago was primarily a
result of the Granite acquisition, which contributed $783 million in deposits
at the date of acquisition. The decrease from last quarter is primarily
related to the seasonal drop in municipal and captive insurance deposits,
which was partially offset by an increase in demand deposits. Borrowings
declined from last quarter due to the early redemption of $77 million of FHLB
advances, which had an effective rate of 3.50%.
The Company's net interest margin for the fourth quarter of 2003 was
4.14%, compared with 3.98% for the third quarter of 2003 and 4.38% for the
same period of 2002. The increase on a linked quarter basis is primarily
related to the recognition of additional accelerated fair value adjustments of
$1.7 million in the third quarter which were driven by heavy prepayments on
Granite's residential mortgages. Excluding the effect of the accelerated fair
value adjustment, the net interest margin was 4.11% in the third quarter of
2003. The net interest margin for the year ended December 31, 2003 was 4.12%
as compared to 4.53% for 2002. The decrease from 2002 is a result of the
Granite acquisition and the overall reduction in market interest rates. On a
pro forma basis the net interest margin without Granite for the fourth quarter
of 2003 was 4.21% and for 2003 was 4.33%.
Net charge-offs as a percentage of average loans were 8 basis points in
the fourth quarter and 16 basis points for the year ended December 31, 2003,
compared to 7 basis points and 28 basis points for the respective periods in
2002. Net charge-off activity on a year-to-date basis totaled $5.8 million
compared with $8.4 million in 2002. Nonperforming assets decreased $3.6
million from September 30, 2003 to $14.4 million at December 31, 2003 and as a
percentage of total loans declined to 39 basis points compared to 49 basis
points in the third quarter and 50 basis points at year end 2002. As a
percentage of loans, the allowance for loan losses was 1.54%, down from 1.61%
at September 30, 2003 and 1.62% at December 31, 2002.
The provision for loan losses was $7.2 million in 2003 compared to $8.3
million in 2002. For the fourth quarter, the provision was $1.0 million in
2003 compared to $2.1 million in the third quarter of 2003 and $2.3 million
for the fourth quarter of 2002. The lower provision in the fourth quarter of
2003 was primarily due to the reduction in the annual level of net charges-
offs as well as continued improvement in the Company's overall credit quality
and the general economic environment.
Noninterest income was $23.0 million for the fourth quarter of 2003,
compared with $25.0 million for the third quarter and $19.6 million for the
same period a year ago. The decline from the third quarter was primarily
attributable to lower gains on sales of mortgage loans and mortgage servicing
income. The increase in market interest rates during the second half of 2003
significantly slowed mortgage originations and resulted in lower volumes of
mortgage loans sold. Mortgage-servicing income declined in the fourth quarter
primarily due to lower impairment recoveries of $1.8 million, which was
partially offset by lower MSR amortization. The increase in other noninterest
income of $757,000 on a linked quarter basis was attributable to gains on
sales of real estate related to branch locations being consolidated. In
addition, gains on the sales of securities of $3.0 million were offset by
prepayment penalties on the redemption of FHLB borrowings of $916,000 and $2.2
million in conversion and restructuring charges, which were reported as part
of noninterest expense.
Noninterest expenses were $48.1 million for the fourth quarter of 2003,
compared to $46.9 million for the third quarter and $39.9 million for the
fourth quarter of 2002. Conversion and restructuring charges of $2.2 million
were recognized in the fourth quarter of 2003. These were comprised of
$378,000 in additional technology expenses related to the Company's second
quarter announcement that it would convert its core data processing systems
and $1.8 million of restructuring charges. The restructuring charges were
associated with the Company's plan to consolidate 11 branches and close 30
offsite ATMs, as well as to recognize severance for related staff reductions.
Salaries and employee benefits decreased $1.2 million from the third quarter
of 2003 and increased $4.7 million from the fourth quarter of 2002. Granite
represented $3.4 million of the increase from a year ago, while higher
commissions and sales based incentive expenses accounted for $1.3 million.
Other increases driven by the Granite acquisition were noted in occupancy
expense ($470,000) and amortization of intangibles ($407,000) related to the
Granite core deposit and customer list intangibles.
Effective income tax rates for 2003 were 34.8% for the fourth quarter and
35.8% year to date compared to 35.4% and 34.9% for the respective periods in
2002. The lower effective tax rate in the fourth quarter of 2003 was a result
of the recovery of prior year tax reserves that were no longer necessary. The
increase year over year was primarily attributable to the Granite acquisition.
The return on average equity was 13.90% for 2003, compared with 16.12% for
2002. The decline from a year ago is primarily due to the issuance of
additional equity of $116 million in the Granite acquisition. The return on
average assets for 2003 was 1.29%, compared with 1.40% for 2002. The ROE and
ROA without Granite for 2003 would have been 15.32% and 1.38% respectively.
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call on January 22, 2004 at
10:30 am eastern time to discuss these earnings results. Interested parties
may access the conference call by calling 877-375-2162 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. Internet access to the call is also available
(listen only) by going to the Investors' Resource section of the Company's
website at https://www.chittendencorp.com. A replay of the call will be
available through January 29, 2004, by calling 877-519-4471 or 973-341-3080 in
the New York City area (pin number is 4438541) 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.
Some of the responses to these questions may contain information that has not
been previously disclosed.
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 individuals,
businesses, and the public sector. Chittenden Corporation news releases,
including earnings announcements, are available on the Company's website or
via fax by calling 800-758-5804. The six-digit code is 124292.
This press release contains statements that may be considered forward-
looking statements within the meaning of Section 27A of the Securities Act of
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 Reform Act
of 1995 and are 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 from historical
performance or future expectations. For further information on these risk
factors and uncertainties, please see page 1 of Chittenden's December 31, 2002
annual report filed on Form 10-K.
(1) Chittenden's subsidiaries are Chittenden Bank, The Bank of Western
Massachusetts, Flagship Bank and Trust Company, Maine Bank & Trust
Company, Ocean National Bank, and Granite Bank. Chittenden Bank also
operates under the name Mortgage Service Center, and it owns
Chittenden Insurance Group, and Chittenden Securities, Inc. Granite
Bank operates an insurance agency subsidiary under the name GSBI
Insurance Group.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
ASSETS 12/31/03 9/30/03 6/30/03 3/31/03 1 2/31/02
Cash and Cash
Equivalents $174,939 $209,697 $212,674 $190,537 $192,142
Securities
Available
For Sale 1,588,151 1,653,111 1,769,715 1,714,494 1,497,111
FHLB Stock 20,753 24,352 24,356 24,356 17,030
Loans Held
For Sale 25,262 95,777 97,500 98,578 94,874
Loans:
Commercial 658,615 633,221 632,816 625,177 568,224
Municipal 87,080 106,512 54,917 82,005 77,820
Real Estate:
Residen-
tial 1,148,108 1,155,832 1,199,021 1,238,315 861,706
Commer-
cial 1,430,945 1,375,027 1,324,943 1,314,095 1,103,897
Construc-
tion 140,801 143,515 113,044 96,859 85,512
Total Real
Estate 2,719,854 2,674,374 2,637,008 2,649,269 2,051,115
Consumer 259,135 267,615 272,085 272,159 276,704
Total Loans 3,724,684 3,681,722 3,596,826 3,628,610 2,973,863
Less:
Allowance
for Loan
Losses (57,464) (59,171) (57,591) (56,708) (48,197)
Net Loans 3,667,220 3,622,551 3,539,235 3,571,902 2,925,666
Accrued
Interest
Receivable 29,124 29,277 30,208 32,255 27,992
Other Real
Estate Owned 100 52 30 37 158
Other Assets 62,977 61,451 46,571 48,737 35,269
Premises and
Equipment,
net 75,179 75,624 73,742 72,524 57,074
Mortgage
Servicing
Rights 12,265 10,615 8,686 9,306 8,491
Identified
Intangibles 22,733 23,488 24,243 28,282 9,480
Goodwill 216,431 216,431 215,721 205,579 55,257
Total
Assets $5,895,134 $6,022,426 $6,042,681 $5,996,587 $4,920,544
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $898,920 $880,354 $864,526 $799,506 $684,077
Savings 517,789 523,497 512,775 503,415 400,616
NOW 899,018 912,563 923,572 874,439 578,272
CMAs/
Money
Market 1,604,138 1,617,176 1,468,731 1,491,329 1,540,267
Certificates
of Deposit
less than
$100,000 789,066 822,634 848,320 874,722 691,467
Certificates
of Deposit
$100,000
and Over 260,960 262,137 249,250 270,627 231,393
Total
Deposits 4,969,891 5,018,361 4,867,174 4,814,038 4,126,092
Securities
Sold Under
Agreements
to Repurchase 78,980 79,510 104,543 120,050 44,238
Other
Borrowings 83,454 160,857 294,484 308,547 129,416
Company
Obligated,
Mandatorily
Redeemable
Securities
Of Subsidiary
Trust 125,000 125,000 125,000 125,000 125,000
Accrued
Expenses
and Other
Liabilities 58,277 64,427 83,829 77,627 77,006
Total
Liabili-
ties 5,315,602 5,448,155 5,475,030 5,445,262 4,501,752
Stockholders'
Equity:
Common Stock 40,142 40,134 40,135 40,135 35,749
Surplus 256,947 256,215 255,973 256,057 145,191
Retained
Earnings 341,441 329,035 316,472 305,140 294,943
Treasury
Stock,
at cost (78,579) (80,951) (81,543) (83,254) (85,382)
Accumulated
Other
Comprehensive
Income:
Unrealized
Gains on
Securities
Available
for Sale 15,203 25,610 36,375 33,388 28,573
Accrued Minimum
Pension
Liability,
net of tax - - (3,829) (4,058) (4,284)
Directors
Deferred
Compensation
to be Settled
in Stock 4,413 4,266 4,111 3,963 4,052
Unearned
Portion of
Employee
Restricted
Stock (35) (38) (43) (46) (50)
Total
Stockholders'
Equity 579,532 574,271 567,651 551,325 418,792
Total
Liabilities
and
Stockholders'
Equity $5,895,134 $6,022,426 $6,042,681 $5,996,587 $4,920,544
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months For the Year
Ended December 31, Ended December 31,
2003 2002 2003 2002
Interest Income:
Loans $49,878 $47,404 $199,436 $194,121
Investment Securities:
Taxable 17,176 18,173 71,551 64,238
Tax-favored 13 187 162 491
Short-term Investments 71 44 293 169
Total Interest Income 67,138 65,808 271,442 259,019
Interest Expense:
Deposits 8,507 12,994 41,172 58,813
Borrowings 2,277 2,710 12,207 7,591
Total Interest Expense 10,784 15,704 53,379 66,404
Net Interest Income 56,354 50,104 218,063 192,615
Provision for
Loan Losses 1,025 2,250 7,175 8,331
Net Interest Income
after Provision
for Loan Losses 55,329 47,854 210,888 184,284
Noninterest Income:
Investment Management
Income 4,321 3,851 15,956 15,601
Service Charges
on Deposits 4,686 4,107 18,396 16,026
Mortgage Servicing
Income (Loss) 592 (6,875) 281 (6,442)
Gains on Sales
of Loans, Net 4,272 3,366 21,765 10,068
Gains on Sales of
Securities 3,031 10,234 17,380 10,562
Loss on Prepayments
of Borrowings (916) - (3,070) -
Credit Card Income, Net 1,057 941 4,079 3,656
Insurance Commissions,
Net 1,501 728 6,686 3,733
Retail Investment
Services 1,123 500 4,621 2,370
Other 3,327 2,709 10,937 9,486
Total Noninterest
Income 22,994 19,561 97,031 65,060
Noninterest Expense:
Salaries and Employee
Benefits 27,405 22,662 110,009 88,073
Net Occupancy Expense 5,603 4,980 23,256 19,526
Data Processing 2,404 2,926 9,384 11,476
Amortization of
Intangibles 755 348 2,748 1,279
Other Real Estate
Owned, Net 10 (17) (129) (293)
Conversion and
Restructuring Charges 2,169 - 8,969 -
Other 9,731 8,956 37,134 31,483
Total Noninterest
Expense 48,077 39,855 191,371 151,544
Income Before
Income Taxes 30,246 27,560 116,548 97,800
Income Tax Expense 10,528 9,764 41,749 34,155
Net Income $19,718 $17,796 $74,799 $63,645
Earnings Per Share,
Basic $0.54 $0.56 $2.09 $1.98
Earnings Per Share,
Diluted 0.53 0.55 2.07 1.96
Dividends Per Share 0.20 0.20 0.80 0.79
Return on Average
Equity 13.66% 17.09% 13.90% 16.12%
Return on Average
Assets 1.31% 1.45% 1.29% 1.40%
Net Yield on Earning
Assets 4.14% 4.38% 4.12% 4.53%
Efficiency Ratio 59.58% 59.20% 60.48% 58.56%
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
12/31/03 9/30/03 6/30/03 3/31/03 12/31/02
SelectedFinancial Ratios
Return on
Average Equity 13.66% 14.19% 13.34% 14.53% 17.08%
Return on
Average Assets 1.31% 1.32% 1.26% 1.29% 1.45%
Net Yield on
Earning Assets 4.14% 3.98% 4.14% 4.22% 4.38%
Tier 1 Capital
Ratio 10.08% 9.72% 9.28% 9.22% 12.25%
Total Capital
Ratio 11.33% 10.97% 10.53% 10.47% 13.50%
Leverage Ratio 7.79% 7.49% 7.22% 8.10% 9.28%
Tangible
Capital Ratio 6.02% 5.78% 5.65% 5.51% 7.30%
Efficiency
Ratio 59.58% 59.87% 60.70% 60.39% 59.20%
Common Share Data
Weighted
Average
Common
Shares
Outstand-
ing 36,583,054 36,509,450 36,475,443 33,493,106 31,939,820
Weighted
Average
Common and
Common
Equivalent
Shares
Outstand-
ing 37,112,500 36,856,558 36,764,758 33,799,406 32,259,266
Book Value
per Share $15.82 $15.72 $15.55 $15.14 $13.11
Tangible
Book Value
per Share $9.29 $9.15 $8.98 $8.72 $11.09
Common Shares
Outstand-
ing 36,636,550 36,522,940 36,496,930 36,420,367 31,939,470
Credit
Quality
Data
($ in thousands)
Nonperforming
Assets
(including
OREO) $14,430 $18,011 $17,970 $14,981 $14,960
90 days past
due and still
accruing 4,029 3,021 1,921 3,106 2,953
Total $18,459 $21,032 $19,891 $18,087 $17,913
Nonperforming
Assets to
Loans Plus
OREO 0.39% 0.49% 0.50% 0.41% 0.50%
Allowance to
Loans 1.54% 1.61% 1.60% 1.56% 1.62%
Allowance to
Nonperforming
Loans
(excluding
OREO) 400.99% 329.48% 321.01% 379.48% 325.64%
Gross
Charge-offs $4,176 $1,239 $2,373 $2,250 $2,992
Gross
Recoveries 1,444 769 1,206 774 752
Net
Charge-offs $2,732 $470 $1,167 $1,476 $2,240
Net Charge-offs
to Average
Loans 0.08% 0.01% 0.03% 0.04% 0.07%
QTD Average
Balance Sheet
Data
($ in thousands)
Securi-
ties $1,647,313 $1,670,644 $1,704,434 $1,580,098 $1,457,010
Loans,
Net 3,697,490 3,693,594 3,638,769 3,236,735 3,007,081
Earning
Assets 5,446,055 5,496,829 5,456,572 4,879,771 4,588,801
Total
Assets 5,959,994 5,974,552 5,943,041 5,224,669 4,869,802
Deposits 5,033,498 4,941,066 4,797,953 4,278,877 4,088,425
Borrowings 298,478 409,621 512,230 406,182 296,409
Stockholders'
Equity 572,508 555,567 560,209 463,149 413,449
Contact:
Kirk W. Walters
(802) 660-1561
SOURCE Chittenden Corporation
back to top
