BURLINGTON, Vt., April 19 /PRNewswire-FirstCall/ -- Chittenden
Corporation (NYSE: CHZ) Chairman, President and Chief Executive Officer,
Paul A. Perrault, today announced earnings for the quarter ended March 31,
2007 of $20.0 million, or $0.44 per diluted share, compared to $20.2
million or $0.43 per diluted share from the same period a year ago.
Chittenden also announced a 10% increase in its quarterly dividend to $0.22
per share. The dividend will be paid on May 11, 2007 to shareholders of
record on April 27, 2007.
In making the announcement, Perrault said, "Although the economic
activity in our markets has seen a slowdown, fundamentals continue to be
reasonably sound. This, coupled with intense competition, has challenged us
in making progress. Nonetheless, the Company's focus and effort has again
produced good results."
Perrault also announced that the Board of Directors approved a new
share repurchase plan on April 18, 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.
FIRST QUARTER 2007 FINANCIAL HIGHLIGHTS
- Commercial loans increased 7% from March 31, 2006.
- Investment management and trust income increased 10% from the same
period a year ago.
- Nonperforming assets (NPAs) declined from the first quarter of 2006 and
net charge-offs remained low at two basis points.
- The Company repurchased 778,000 common shares in the first quarter of
2007.
On January 19, 2007, the Company announced that it had signed a
definitive merger agreement whereby Chittenden will acquire Merrill
Merchants Bancshares, Inc and its subsidiary, Merrill Merchants Bank, for
approximately $111.4 million in cash and stock. Merrill Merchants is a $449
million commercial bank headquartered in Bangor, Maine and the acquisition
is expected to close in the second quarter of 2007. The completion of the
acquisition remains subject to the approval of the shareholders of Merrill
Merchants, as well as various regulatory agencies. Following the completion
of the transaction, Merrill Merchants Bank will operate as a separate unit
of Chittenden Corporation, maintaining its name and senior management team.
Perrault added "We look forward to Merrill Merchants joining us in the
second quarter. Merrill's relationship-based banking model is a great match
with Chittenden's."
ASSETS
Total assets increased $156 million from a year ago to $6.6 billion at
March 31, 2007. Total loans increased 5% from March 31, 2006 to $4.8
billion at the end of the first quarter of 2007. The increases were
attributable to growth in the C&I, commercial real estate and multi-family
residential properties. The Company's securities portfolio declined by 10%
from the first quarter of 2006 to $1.2 billion at March 31, 2007. The
decrease in the securities portfolio from March 31, 2006 was due to
maturities and sales that were utilized to fund loan growth.
LIABILITIES
Total deposits increased $146 million from a year ago to $5.5 billion
at March 31, 2007. The increase from March 31, 2006 was driven primarily by
the Company's commercial customers and resulted in higher activity in
CMA/money market accounts, and CDs. Other borrowings increased from
December 31, 2006 due to the February 14, 2007 issuance of $125 million in
subordinated debt securities with a coupon of 5.8%. The Company expects to
utilize the proceeds from the issuance of the subordinated debt to redeem
its 8.0% trust preferred securities ("TPS") that are callable on July 1,
2007.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the three months
ended March 31, 2007 was $59.9 million, which was down $1.8 million from
the same period a year ago. The decrease in net interest income was
primarily attributable to the repurchase of 2.4 million shares of common
stock over the last twelve months ($815,000) and the termination of the
interest rate swaps on the TPS ($712,000).
The Company's net interest margin for the first quarter of 2007 was
4.06%, a decrease of 14 basis points from the similar period in 2006. The
decline in the net interest margin primarily related to the 2007 issuance
of subordinated debt securities (6 basis points), the repurchase of common
stock (4 basis points), and the termination of the TPS interest rate swaps
(4 basis points).
The Company's net interest margin for the first quarter of 2007
declined 23 basis points from the fourth quarter of 2006. The decrease in
the net interest margin was primarily attributable to higher deposit costs
(10 basis points), lower recoveries on nonperforming loans (6 basis
points), the subordinated debt securities (6 basis points) and the
repurchase of common stock.
NONINTEREST INCOME
Noninterest income increased 3% from the same period a year-ago due to
higher investment management and trust fees and insurance commissions. The
increase in investment management and trust fees were primarily driven by
higher brokerage and mutual fund sales at Chittenden Securities, LLC, and
retirement plan services income. The increase in insurance commissions from
the first quarter of 2006 was primarily due to higher performance based
income.
NONINTEREST EXPENSE
Noninterest expense was $47.3 million for the first quarter of 2007, an
increase of 2% from the same period a year ago. The increase from the
comparable quarter in 2006 was primarily a result of higher salaries and
other expense. Salary expense increased due to normal cost of living
adjustments, additional wealth management staffing and the opening of two
new branches in 2006. In addition, the Company experienced an increase in
other noninterest expense, primarily due to higher accounting and marketing
expenses.
INCOME TAXES
The effective income tax rate for the first quarter of 2007 was 29%,
compared with 34% for the comparable quarter in 2006. The lower effective
income tax rate for the first quarter of 2007 was primarily attributable to
higher low income housing credits and charitable contributions as well as a
one time change in the tax accounting method for a customer list intangible
related to a prior acquisition.
CREDIT QUALITY
The provision for credit losses was $1.5 million, consistent with the
first quarter of 2006. NPAs were $23.3 million at March 31, 2007, compared
to $24.8 million at March 31, 2006. NPAs as a percentage of total loans at
the end of the first quarter of 2007 were 49 basis points, which was down
from 55 basis points in the first quarter of 2006. Net charge-offs as a
percentage of average loans were 2 basis points for both periods. As a
percentage of total loans, the allowance for credit losses excluding
municipals was 1.39%, down 4 basis points from the similar period in 2006
and flat with December 31, 2006.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer
of Chittenden Corporation, will host a conference call on April 19, 2007 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
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 877-407-8031.
International dial-in number is 201-689-8031. 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 April 27, 2007 by calling 877- 660-6853, international callers dial
in number is 201-612-7415. Replay passcodes (both required for playback):
Account #286, Conference ID #236959. 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.
(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, Chittenden Securities, LLC and Chittenden Commercial Finance.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
Assets: 3/31/07 12/31/06 3/31/06
Cash and Cash Equivalents $232,259 $199,358 $142,887
Securities Available For Sale 1,205,593 1,137,352 1,344,016
FRB / FHLB Stock 15,027 13,403 19,352
Loans Held For Sale 21,991 17,354 19,319
Loans:
Commercial & Industrial (C&I) 865,347 853,839 836,986
Municipal 159,459 141,522 172,443
Multi-Family 247,029 216,049 195,809
Commercial Real Estate 1,977,258 1,942,685 1,827,096
Construction 217,068 232,000 212,824
Residential Real Estate 749,018 751,450 731,798
Home Equity Credit Lines 319,235 322,124 316,355
Consumer 231,221 237,541 254,719
Total Loans 4,765,635 4,697,210 4,548,030
Less: Allowance for Loan Losses (62,768) (62,160) (61,464)
Net Loans 4,702,867 4,635,050 4,486,566
Accrued Interest Receivable 32,802 33,123 32,772
Other Assets 86,512 83,938 93,673
Premises and Equipment, net 68,541 67,036 68,568
Mortgage Servicing Rights 14,209 14,155 13,966
Identified Intangibles 14,332 14,996 16,991
Goodwill 216,038 216,038 216,038
Total Assets $6,610,171 $6,431,803 $6,454,148
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $909,309 $966,758 $929,718
Savings 462,935 468,294 489,944
NOW 864,364 861,435 906,934
CMAs/ Money Market 1,663,107 1,655,349 1,584,777
Certificates of Deposit less than
$100,000 880,993 848,814 853,645
Certificates of Deposit $100,000
and Over 749,061 678,243 618,319
Total Deposits 5,529,769 5,478,893 5,383,337
Securities Sold Under Agreements to
Repurchase 87,017 73,611 53,238
Other Borrowings 261,656 136,409 288,482
Accrued Expenses and Other
Liabilities 67,569 71,804 59,295
Total Liabilities 5,946,011 5,760,717 5,784,352
Stockholders' Equity:
Common Stock 50,261 50,235 50,235
Surplus 276,843 276,034 272,696
Retained Earnings 479,271 468,331 430,811
Treasury Stock, at cost (126,987) (105,666) (64,189)
Accumulated Other Comprehensive
Income (21,263) (24,008) (25,216)
Directors Deferred Compensation to
be Settled in Stock 6,035 6,160 5,459
Total Stockholders' Equity 664,160 671,086 669,796
Total Liabilities and
Stockholders' Equity $6,610,171 $6,431,803 $6,454,148
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months Ended
3/31/07 3/31/06
Interest Income:
Loans $82,809 $73,265
Investments 12,515 14,694
Total Interest Income 95,324 87,959
Interest Expense:
Deposits 31,351 23,065
Borrowings 5,192 3,898
Total Interest Expense 36,543 26,963
Net Interest Income 58,781 60,996
Provision for Credit Losses 1,500 1,533
Net Interest Income after
Provision for Credit Losses 57,281 59,463
Noninterest Income:
Investment Management
and Trust 5,667 5,153
Service Charges on Deposits 4,144 3,929
Mortgage Servicing 792 663
Gains on Sales of Loans, Net 1,172 1,370
Credit Card income, Net 1,125 1,192
Insurance Commissions, Net 2,156 2,046
Other 3,027 3,234
Total Noninterest Income 18,083 17,587
Noninterest Expense:
Salaries 23,432 22,917
Employee Benefits 5,867 5,752
Net Occupancy 6,127 6,150
Data Processing 1,043 971
Amortization of Intangibles 665 665
Other 10,153 9,945
Total Noninterest Expense 47,287 46,400
Income Before Income Taxes 28,077 30,650
Income Tax Expense 8,052 10,452
Net Income $20,025 $20,198
Basic Earnings Per Share $0.44 $0.43
Diluted Earnings Per Share 0.44 0.43
Dividends Per Share 0.20 0.18
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
3/31/07 3/31/06
Selected Financial Ratios
Return on Average Tangible Equity(1) 18.93 % 18.92 %
Return on Average Equity 12.21 % 12.21 %
Return on Average Tangible Assets(1) 1.34 % 1.35 %
Return on Average Assets 1.26 % 1.27 %
Net Yield on Earning Assets 4.06 % 4.20 %
Efficiency Ratio(1) 58.72 % 56.61 %
Tangible Capital Ratio 6.80 % 7.02 %
Leverage Ratio 9.11 % 9.38 %
Tier 1 Capital Ratio 10.93 % 11.61 %
Total Capital Ratio 14.52 % 12.82 %
Common Share Data
Common Shares Outstanding 44,722 46,748
Weighted Average Shares Outstanding 45,105 46,804
Weighted Average and Common
Equivalent Shares Outstanding 45,750 47,401
Book Value per Share $14.85 $14.33
Tangible Book Value per Share(1) $9.70 $9.34
Credit Quality Data
Nonperforming Assets (NPAs) $23,312 $24,844
90 days past due and still accruing 3,930 3,323
NPAs to Loans Plus OREO 0.49 % 0.55 %
Allowance for Loan Losses $62,768 $61,464
Reserve for Unfunded Commitments(2) 1,200 1,200
Allowance for Credit Losses (ACL) $63,968 $62,664
ACL to Loans 1.34 % 1.38 %
ACL to Loans (excluding Municipals) 1.39 % 1.43 %
ACL to Nonperforming Loans 274.75 % 257.81 %
Charge-offs $1,617 $1,753
Recoveries 725 862
Net Charge-offs $892 $891
Net Charge-offs to Average Loans 0.02 % 0.02 %
QTD Average Balance Sheet Data
Securities $1,191,388 $1,391,413
Loans, Net 4,663,406 4,455,403
Earning Assets 5,927,704 5,915,366
Total Assets 6,427,488 6,430,410
Deposits 5,365,049 5,377,674
Borrowings 328,039 321,073
Stockholders' Equity 664,993 671,058
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, failure to satisfy the
closing conditions related to the acquisition of Merrill Merchants is a
timely manner or at all, costs or difficulties related to the integration
of the businesses following the merger, 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, 2006. 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.
Additional Information about the Merger and Where to Find It
In connection with the proposed merger of Merrill Merchants with and
into Chittenden, Chittenden has filed a registration statement on Form S-4
with the Securities and Exchange Commission containing a proxy
statement/prospectus dated March 27, 2007, which has been mailed to Merrill
Merchants shareholders. Investors are urged to read these materials, and
any other documents filed by Chittenden or Merrill Merchants with the SEC,
because they contain or will contain important information about
Chittenden, Merrill Merchants and the merger. Chittenden, Merrill Merchants
and their respective executive officers and directors may be deemed to be
participants in the solicitation of proxies from the shareholders of
Merrill Merchants in connection with the merger. Information about the
directors and executive officers of Chittenden and Merrill Merchants and
information about any other persons who may be deemed participants in this
transaction is included in the proxy statement/prospectus. The proxy
statement/prospectus and other relevant materials, and any other documents
filed by Chittenden or Merrill with the SEC, may be obtained free of charge
at the SEC's website at http://www.sec.gov. In addition, investors may obtain free
copies of these documents by directing a written request to Chittenden
Corporation, 2 Burlington Square, Burlington, Vermont 05402-0820,
Attention: General Counsel.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to buy any
securities.
1. Reconciliation of non-GAAP measurements to GAAP
Net Income (GAAP) $20,025 $20,198
Amortization of core deposit
intangible, net of tax 432 432
Tangible Net Income (A) $20,457 20,630
Average Equity (GAAP) $664,993 671,058
Average Core Deposit Intangible 14,662 17,323
Average Deferred Tax on CDI (3,993) (4,610)
Average Goodwill 216,038 216,038
Average Tangible Equity (B) $438,286 442,307
Return on Average Tangible Equity
(A) / (B) 18.93 % 18.92 %
Average Assets (GAAP) $6,427,488 6,430,410
Average Core Deposit Intangible 14,662 17,323
Average Deferred Tax on CDI (3,993) (4,610)
Average Goodwill 216,038 216,038
Average Tangible Assets (C) $6,200,781 6,201,659
Return on Average Tangible
Assets (A) / (C) 1.34 % 1.35 %
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 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.
($47,287-$14-$665-$833) / ($59,882+$18,083-14) = 58.72%.
Tangible book value per share: is computed by subtracting goodwill and
identified intangibles from equity, and dividing the resultant number by
common shares outstanding, e.g. ($664,160-$14,332-$216,038) /
44,722 = $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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