BURLINGTON, Vt., April 16 /PRNewswire-FirstCall/ --
Chittenden Corporation (NYSE: CHZ) Chairman, President and Chief Executive
Officer, Paul A. Perrault, today announced first quarter 2003 net income of
$0.49 per diluted share, compared to the $0.46 per diluted share earned in the
first quarter of 2002. Chittenden also announced its quarterly dividend of
$0.20 per share. The dividend will be paid on May 16, 2003, to shareholders of
record on May 2, 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 in shares of Chittenden stock
valued at $116 million. This transaction has been accounted for as a purchase
and, accordingly, Granite's operations are reflected in Chittenden's
consolidated financial statements from the date of acquisition.
In making the announcement, Perrault said, "I was extremely pleased that
through the hard work of many, we were able to complete the Granite
acquisition sooner than expected. On a broader level, this is a time of great
excitement within the companies of Chittenden as we continue the work of
organizing ourselves to be most responsive to our customers, shareholders, and
employees."
Total assets increased from $4.9 billion at December 31, 2002 to $6.0
billion at March 31, 2003 with total loans increasing $655 million from a
quarter ago to $3.6 billion. Granite contributed total assets of $1.3 billion
and total loans of $625 million. Commercial loans increased $57 million and
commercial real estate loans increased $210 million from the previous quarter,
with Granite accounting for $36 million and $195 million of those amounts,
respectively. Residential real estate loans increased $377 million from
December 31, 2002 with the Granite acquisition accounting for substantially
all of the increase. Runoff of consumer loans slowed considerably from prior
quarters. Net of the Granite acquisition, consumer loans declined to $267
million compared with $277 million a quarter ago.
The Granite transaction also led to the increases in securities available
for sale, FHLB stock, other assets and goodwill. A total of $150 million of
goodwill was recorded as a result of the acquisition. Total deposits increased
$688 million from a quarter ago, due to the acquisition of Granite, which
contributed $806 million in deposits at March 31, 2003. Borrowings increased
$255 million from December 31, 2002, of that increase Granite accounted for
$237 million.
The net interest margin for the first quarter of 2003 was 4.22%, compared
with 4.61% in the same period of 2002, and 4.38% for the fourth quarter of
2002. Net interest income was $50.9 million for the first quarter of 2003 and
$44.5 million a year ago. Excluding the impact of Granite, the net interest
margin for the quarter would have been 4.33% and net interest income would
have been $48.3 million.
The provision for loan losses of $2.1 million was flat with the first
quarter of 2002. The allowance for loan losses was $56.7 million at March 31,
2003, up from $48.2 million at December 31, 2002. The Granite acquisition led
to $8.0 million of the increase from the December 31, 2002 balance.
Nonperforming assets (NPAs) were $15.0 million at March 31, 2003 compared with
$14.1 million in the first quarter of 2002 and $15.0 million at December 31,
2002. Included in the March 31, 2003 NPAs is approximately $1.1 million
attributable to Granite so that within the other affiliate banks NPAs declined
by a similar amount from the prior year-end. As a percentage of total loans,
nonperforming assets decreased to 40 basis points at March 31, 2003 compared
to 49 basis points at December 31, 2002 and 46 basis points for the same
quarter a year ago. Net charge-off activity totaled $1.5 million for the first
quarter of 2003, compared with $931,000 for the first quarter of 2002. As a
percentage of average loans, charge-offs were 5 basis points for the first
quarter of 2003 compared with 3 basis points for the first quarter of 2002.
Noninterest income amounted to $19.3 million for the first quarter of
2003, up from $16.2 million for the first quarter 2002. Gains on sales of
loans were $4.4 million for the first quarter of 2003 compared with $2.8
million in the first quarter of 2002. The increase is a result of continued
heavy mortgage refinancing activity and the acquisition of Granite, which
contributed $319,000 in mortgage gains. Service charges on deposits increased
$640,000 from a year ago due to continued strong deposit flows and the
acquisitions of Granite and Ocean (ONB). Insurance commissions increased
$676,000 from the first quarter of 2002 due to higher levels of performance
based commissions (up $397,000) based on the Company's achievement of targets
related to sales performance and loss experience and $162,000 of regular
commissions income from Granite's insurance subsidiary. Retail investment
income increased $322,000 from $574,000 for the same quarter a year ago. This
increase is primarily attributable to increased sales activity within the
Chittenden Securities, Inc brokerage service. Included in the other category
of noninterest income were two significant fluctuations from the first quarter
of 2002. The first was in mortgage servicing income which was down $1.5
million from 2002 due to higher amortization of mortgage servicing rights
which resulted from continued high prepayment activity on the underlying
mortgages. The cash servicing fees collected from these mortgage customers
were comparable to the 2002 amounts. The second was a $1.2 million increase in
gains on sales of investments which resulted from the sale of securities to
fund a portion of the cash consideration paid in the Granite transaction.
Noninterest expenses were $42.2 million for the first quarter of 2003, up
from the $36.0 million for the first quarter of 2002. Salaries and employee
benefits increased $4.3 million from the first quarter of 2002. Granite
represented $1.3 million; the inclusion of ONB for the full quarter (vs one-
month in 2002) accounted for $1.0 million and increased pension costs made up
$300,000. The remaining increases were primarily attributable to increases in
benefits, particularly medical and dental insurance which was up $330,000 and
other benefit expenses of $300,000, franchise wide. Amortization of
intangibles increased $276,000 from the first quarter of 2002 to $511,000 due
to the amortization of the core deposit intangible (CDI) associated with
Granite ($138,000), the amortization of a customer list intangible associated
with Granite's insurance subsidiary ($25,000) and an additional two months of
amortization of Ocean's CDI ($113,000). Other expenses were up $1.4 million
of which $422,000 can be attributed to Granite. The remaining increase is
associated with charge-offs relating to Chittenden's auto leasing portfolio of
$175,000, increased software amortization of $373,000 and two additional
months of ONB in 2003 ($412,000).
Income tax expense for the first quarter of 2003 was $9.4 million, up from
$7.7 million the same period a year ago. Effective tax rates were 36.13% and
34.27% in the respective periods. There were several drivers of the increased
effective tax rate, including state taxes (net of federal benefit), whose
effective tax rate increased 61 basis points from 2.19% to 2.80% in 2003.
Approximately 37 basis points of this increase was due to legislation passed
by the Commonwealth of Massachusetts eliminating the dividends received
deduction (DRD) for amounts distributed by Real Estate Investment Trust (REIT)
subsidiaries to their parent banks. Prior to the new legislation, parent
banking organizations were entitled to a 95% DRD on amounts distributed to it
by their REIT subsidiaries. The remainder of the increase in the effective
tax rate is attributed to an increase in the proportion of the Company's
taxable income that is generated outside of the state of Vermont. Also
contributing to the higher effective tax rate were proportionately lower
levels of tax-exempt interest income, which increased the effective tax rate
by 43 basis points, and proportionately lower levels of tax credits from
qualified low income housing projects, which increased the effective tax rate
by 32 basis points.
The return on average equity was 14.53% for the first quarter of 2003,
compared with 16.07% in the same quarter of 2002. This decline from a year ago
is attributed to the issuance of additional equity in the Granite acquisition,
and higher unrealized gains on securities (average for 2003 was $30.5 million
compared to $9 million in 2002). Excluding the effect on average equity of the
Granite transaction and the unrealized securities gains, return on average
equity would have been 16.28% in 2003 as compared to 16.46% in 2002. The
return on average assets for the first quarter of 2003 was 1.29%, down from
1.44% for the first quarter of 2002. The decline in ROA is attributable to
the acquisitions of Granite and ONB which increased total assets, increased
deposit growth and the issuance of the trust preferred securities. Excluding
the impact of the Granite acquisition, ROA would have been 1.34% in 2003.
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 April 17, 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 Shareholders' Resource section of the
Company's website at https://www.chittendencorp.com. A replay of the call will
be available through April 25, 2003, by calling 877-519-4471 or 973-872-3100
in the New York City area (pin number is 3862508) 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 $6.0 billion at
March 31, 2003. Its subsidiary banks 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
names Mortgage Service Center, and it owns The Chittenden Insurance Group, and
Chittenden Securities, Inc. Granite operates an insurance agency subsidiary
under the name of GSBI Insurance Group. 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 news releases, including
earnings announcements, are available via fax by calling 800-758-5804. The
six-digit code is 124292.
CHITTENDEN CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
Period End Balance
Sheet Data 3/31/03 12/31/02 3/31/02
Cash and Cash Equivalents $190,537 $192,142 $222,372
Securities Available
For Sale 1,714,494 1,497,111 922,414
FHLB Stock 24,356 17,030 14,967
Loans Held For Sale 98,578 94,874 38,432
Loans:
Commercial 625,177 568,224 566,746
Municipal 82,005 77,820 88,134
Real Estate:
Residential 1,238,315 861,706 926,463
Commercial 1,314,095 1,103,897 1,022,858
Construction 96,859 85,512 91,325
Total Real Estate 2,649,269 2,051,115 2,040,646
Consumer 272,159 276,704 324,292
Total Loans 3,628,610 2,973,863 3,019,818
Less: Allowance for
Loan Losses (56,708) (48,197) (49,384)
Net Loans 3,571,902 2,925,666 2,970,434
Other Real Estate Owned 37 158 351
Goodwill 205,579 55,257 58,249
Other Assets 191,104 138,306 138,590
Total Assets $5,996,587 $4,920,544 $4,365,809
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $799,506 $684,077 $597,680
Savings 503,415 400,616 389,504
NOW and Money
Market Accounts 2,365,768 2,118,539 1,993,050
Certificates of Deposit
less than $100,000 874,722 691,467 674,653
Certificates of Deposit
$100,000 and Over 270,627 231,393 229,536
Total Deposits 4,814,038 4,126,092 3,884,423
Borrowings 428,597 173,654 45,182
Company Obligated, Mandatorily
Redeemable Securities
Of Subsidiary Trust 125,000 125,000 -
Accrued Expenses and
Other Liabilities 77,627 77,006 61,832
Total Liabilities 5,445,262 4,501,752 3,991,437
Total Stockholders' Equity 551,325 418,792 374,372
Total Liabilities and
Stockholders' Equity $5,996,587 $4,920,544 $4,365,809
Book Value per Common Share $15.14 $13.11 $11.63
Common Shares Outstanding 36,420,367 31,939,470 32,180,488
Credit Quality Data
Nonperforming Assets
(including OREO) $14,981 $14,960 $14,070
90 days past due and
still accruing 3,106 2,953 3,430
Total $18,087 $17,913 $17,500
Nonperforming Assets to
Loans Plus OREO 0.40% 0.49% 0.46%
Allowance to Loans 1.52% 1.57% 1.61%
Allowance to Nonperforming Loans
(excluding OREO) 379.48% 325.64% 359.97%
QTD Average Balance Sheet Data
Loans, Net $3,236,735 $3,007,081 $2,883,072
Earning Assets 4,879,771 4,588,801 3,923,707
Total Assets 5,224,669 4,869,802 4,172,820
Deposits 4,278,877 4,088,425 3,691,793
Stockholders' Equity 463,149 413,449 374,148
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
For the Three Months
Ended March 31,
2003 2002
Interest Income:
Interest on Loans $47,580 $48,327
Interest on Investments 18,274 12,913
Total Interest Income $65,854 61,240
Interest Expense:
Deposits:
Savings 635 1,101
NOW and money market 4,930 7,080
Certificates of deposit
under $100,000 4,932 6,307
Certificates of deposit
$100,000 and over 1,299 1,575
Borrowings 3,110 663
Total Interest Expense 14,906 16,726
Net Interest Income 50,948 44,514
Provision for Loan Losses 2,050 2,075
Net Interest Income after Provision
for Loan Losses 48,898 42,439
Noninterest Income:
Investment Management Income 3,810 3,972
Service Charges on
Deposit Accounts 4,393 3,754
Gains on Sales of Loans, Net 4,436 2,755
Credit Card Income, Net 903 792
Insurance Commissions, Net 1,613 937
Retail Investment Services 896 574
Other 3,205 3,376
Total Noninterest Income 19,256 16,160
Noninterest Expense:
Salaries and Employee Benefits 25,139 20,832
Net Occupancy Expense 5,479 4,921
Data Processing 2,501 2,902
Amortization of Intangibles 511 235
Other 8,546 7,156
Total Noninterest Expense 42,176 36,046
Income Before Income Taxes 25,978 22,553
Income Tax Expense 9,387 7,730
Net Income $16,591 $14,823
Weighted Average Common
Shares Outstanding 33,493,106 32,134,266
Weighted Average Common and
Common Equivalent Shares
Outstanding 33,799,406 32,537,191
Earnings Per Share, Basic $0.50 $0.46
Earnings Per Share, Diluted 0.49 0.46
Dividends Per Share 0.20 0.19
Return on Average Equity 14.53% 16.07%
Return on Average Assets 1.29% 1.44%
Net Yield on Earning Assets 4.22% 4.61%
SOURCE Chittenden Corporation
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