BURLINGTON, Vt., April 20 /PRNewswire-FirstCall/ -- Chittenden
Corporation (NYSE: CHZ) Chairman, President and Chief Executive Officer,
Paul A. Perrault, today announced earnings for the quarter ended March 31,
2006 of $20.2 million, or $0.43 per diluted share, compared to $19.1
million or $0.41 per diluted share from the same period a year ago.
Earnings for both periods reflect the Company's adoption of Statement of
Financial Accounting Standard No. 123-R, which mandates the expensing of
stock options and other equity awards. Chittenden also announced an 11%
increase in its quarterly dividend to $0.20 per share. The dividend will be
paid on May 12, 2006 to shareholders of record on April 28, 2006.
FIRST QUARTER 2006 FINANCIAL HIGHLIGHTS
* Earnings were 6% higher than the same period in 2005 driven by higher
net interest income and strong expense control.
* Total loans increased 10% from March 31, 2005 with strong growth in
several commercial categories.
* Total deposits experienced solid organic growth of 6.3% from March 31,
2005.
* The Company's tangible capital ratio was 7.02% at March 31, 2006, which
was up 36 basis points from the first quarter of 2005.
In making the announcement, Perrault said, "I am pleased to announce
these results for the first quarter, as we continue working diligently to
manage our business through these volatile times. This performance is
consistent with the quality results that have come to be expected by our
stakeholders."
ASSETS
Total assets increased 6% from a year ago to $6.5 billion at March 31,
2006. Total loans increased $420 million to $4.5 billion at March 31, 2006.
The increases were attributable to continued growth across all loan
categories, particularly in the commercial portfolios and municipal loans.
The growth in C&I and commercial real estate loans was particularly strong
in Vermont, New Hampshire and Massachusetts. In addition, financings for
commercial customers were the primary drivers for the growth in the
construction loan portfolio, which increased $79 million from March 31,
2005.
LIABILITIES
Total deposits increased $320 million from a year ago to $5.4 billion
at March 31, 2006. The increase was driven primarily by the Company's
commercial and municipal customers, with higher levels of demand, CMA/money
market, and CD deposits. Repurchase agreements and other borrowings at
March 31, 2006 declined $4.1 million to $342 million from March 31, 2005.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the three months
ended March 31, 2006 was $61.7 million, which was up $2.4 million or 4%
from the same period a year ago. The Company's net interest margin for the
first quarter was 4.20%, a decrease of 10 basis points from the first
quarter of 2005. The decline in the net interest margin primarily related
to higher funding costs driven by strong competition for both commercial
and consumer deposits as well as the Federal Reserve increasing short-term
interest rates.
NONINTEREST INCOME
Noninterest income was essentially flat from the same period a year ago
at $17.6 million. Gains on sales of loans were $1.4 million for the first
quarter of 2006 compared with $2.1 million in the first quarter of 2005.
The decline was attributable to lower volumes of loans sold due to higher
long-term market interest rates. Mortgage servicing income increased from
the same period a year ago by $308,000 due to lower amortization of
mortgage servicing rights. Insurance commissions also decreased from the
first quarter of 2005 by $318,000 due to lower levels of performance based
commissions. The increase in other noninterest income was primarily
attributable to interest income on an Internal Revenue Service refund
related to the Granite acquisition.
NONINTEREST EXPENSE
Noninterest expense was $46.4 million for the first quarter of 2006, an
increase of $188,000 from the same period a year ago. The increase was
primarily a result of higher salary expense, which was partially offset by
lower employee benefits expense. The increase in salary expense primarily
resulted from the adoption of SFAS 123-R, which requires companies to
expense share-based payments. In the first quarter of 2006 the Company
recognized $815,000 of share-based compensation in salary expense. The
Company had no similar share based expense in the first quarter of 2005
since the Company did not grant any stock options during that period. The
decrease in employee benefits expense from the first quarter of 2005 was
due to lower medical/dental and pension expenses, which was partially
offset by higher payroll taxes. In addition, the Company experienced a
decrease in other noninterest expense, primarily due to lower consulting
and telephone expenses, which were partially offset by higher marketing
costs.
INCOME TAXES
The effective income tax rate for the first quarter of 2006 was 34.1%,
compared with 34.8% for the comparable quarter in 2005. The decrease in the
effective tax rate from the first quarter of 2005 was due to an increase in
tax-exempt municipal loan interest and higher tax credits received on
investments that generate rehabilitation and low income housing tax
credits. The State of Vermont assesses a franchise tax on banks in lieu of
an income tax. In the first quarter, franchise taxes were reclassified for
the current and prior periods to other noninterest expense based on recent
accounting guidance. The franchise tax is assessed based on deposits and
amounted to approximately $818,000 and $772,000 for the quarters ended
March 31, 2006 and 2005, respectively.
CREDIT QUALITY
The provision for credit losses was $1.5 million for the first quarter
of 2006 compared to $1.1 million for the similar quarter of last year. The
increase from the comparable period in 2005 was driven by higher net
charge-offs, and increased nonperforming assets. NPAs were $24.8 million at
March 31, 2006, compared to $20.7 million at March 31, 2005. NPAs as a
percentage of total loans at the end of the first quarter of 2006 were 55
basis points, which was up from 50 basis points in the first quarter of
2005. Net charge-offs as a percentage of average loans were 2 basis points
for the first quarter of 2006, up from 1 basis point from the same quarter
a year ago. Net charge-offs for the first quarter of 2006 totaled $891,000
compared with $295,000 for the first quarter of 2005. The increases in
nonperforming assets and net charge-offs primarily relates to one
commercial finance loan that was placed on non-accrual status in the first
quarter of 2006. As a percentage of total loans, the allowance for credit
losses was 1.38%, flat with year-end, and down from 1.45% at March 31,
2005.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer
of Chittenden Corporation, will host a conference call on April 20, 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
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 800-299-6183, passcode
25714312. International dial-in number is 617-801-9713. 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, 2006 by calling 888-286-8010
(International dial number is 617-801- 6888), passcode 10134707. 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, 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, CHZ Services Group,
Mortgage Service Center, and it owns Chittenden Insurance Group, LLC,
and Chittenden Securities, LLC.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
Assets: 3/31/06 12/31/05 3/31/05
Cash and Cash Equivalents $142,887 $180,707 $146,861
Securities Available For Sale 1,344,016 1,383,909 1,409,434
FRB/FHLB Stock 19,352 19,352 19,352
Loans Held For Sale 19,319 19,737 22,131
Loans:
Commercial & Industrial (C&I) 836,986 848,420 812,050
Municipal 172,443 160,357 98,128
Multi-Family 195,809 196,590 180,632
Commercial Real Estate 1,827,096 1,778,202 1,651,247
Construction 212,824 192,165 133,799
Residential Real Estate 731,798 737,462 712,133
Home Equity Credit Lines 316,355 316,465 297,649
Consumer 254,719 257,829 242,239
Total Loans 4,548,030 4,487,490 4,127,877
Less: Allowance for Loan
Losses (61,464) (60,822) (59,811)
Net Loans 4,486,566 4,426,668 4,068,066
Accrued Interest Receivable 32,772 32,621 28,443
Other Assets 93,673 93,377 74,841
Premises and Equipment, net 68,568 69,731 72,336
Mortgage Servicing Rights 13,966 13,741 12,074
Identified Intangibles 16,991 17,655 19,648
Goodwill 216,038 216,038 216,136
Total Assets $6,454,148 $6,473,536 $6,089,322
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $929,718 $973,752 $881,954
Savings 489,944 489,734 514,215
NOW 906,934 861,000 898,720
CMAs/ Money Market 1,584,777 1,749,878 1,527,753
Certificates of Deposit
less than $100,000 853,645 814,289 763,502
Certificates of Deposit
$100,000 and Over 618,319 625,682 477,019
Total Deposits 5,383,337 5,514,335 5,063,163
Securities Sold Under
Agreements to Repurchase 53,238 56,315 91,443
Other Borrowings 288,482 171,008 254,418
Accrued Expenses and Other
Liabilities 59,295 60,488 54,721
Total Liabilities 5,784,352 5,802,146 5,463,745
Stockholders' Equity:
Common Stock 50,235 50,220 50,207
Surplus 272,696 276,278 271,166
Retained Earnings 430,811 419,057 381,203
Treasury Stock, at cost (64,189) (60,801) (68,233)
Accumulated Other Comprehensive
Income (25,216) (18,968) (13,747)
Directors Deferred Compensation
to be Settled in Stock 5,459 5,604 4,996
Unearned Portion of Employee
Restricted Stock - - (15)
Total Stockholders' Equity 669,796 671,390 625,577
Total Liabilities and
Stockholders' Equity $6,454,148 $6,473,536 $6,089,322
Prior year amounts reflect the modified retrospective application of
SFAS 123-R.
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months Ended
3/31/06 12/31/05 3/31/05
Interest Income:
Loans $73,265 $71,834 $58,151
Investments 14,694 14,960 15,061
Total Interest Income 87,959 86,794 73,212
Interest Expense:
Deposits 23,065 20,904 11,268
Borrowings 3,898 2,857 2,959
Total Interest Expense 26,963 23,761 14,227
Net Interest Income 60,996 63,033 58,985
Provision for Credit Losses 1,533 1,354 1,075
Net Interest Income after Provision
for Credit Losses 59,463 61,679 57,910
Noninterest Income:
Investment Management and Trust 5,153 5,047 4,971
Service Charges on Deposits 3,929 3,926 4,041
Mortgage Servicing 663 607 355
Gains on Sales of Loans, Net 1,370 2,301 2,131
Credit Card income, Net 1,192 1,193 975
Insurance Commissions, Net 2,046 1,134 2,364
Other 3,234 3,243 2,722
Total Noninterest Income 17,587 17,451 17,559
Noninterest Expense:
Salaries 22,917 21,659 21,676
Employee Benefits 5,752 5,717 6,479
Net Occupancy 6,150 5,900 6,326
Data Processing 971 951 775
Amortization of Intangibles 665 665 774
Other 9,945 11,097 10,182
Total Noninterest Expense 46,400 45,989 46,212
Income Before Income Taxes 30,650 33,141 29,257
Income Tax Expense 10,452 11,328 10,175
Net Income $20,198 $21,813 $19,082
Basic Earnings Per Share $0.43 $0.46 $0.41
Diluted Earnings Per Share 0.43 0.46 0.41
Dividends Per Share 0.18 0.18 0.18
Prior year amounts reflect the modified retrospective application of
SFAS 123-R and the reclassification of franchise tax from income tax
expense to other noninterest expense.
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
3/31/06 12/31/05 3/31/05
Selected Financial Ratios
Return on Average Tangible Equity(1) 18.92% 20.47% 19.94%
Return on Average Equity 12.21% 13.11% 12.30%
Return on Average Tangible Assets(1) 1.35% 1.43% 1.36%
Return on Average Assets 1.27% 1.35% 1.28%
Net Yield on Earning Assets 4.20% 4.30% 4.30%
Efficiency Ratio(1) 56.61% 54.37% 58.07%
Tangible Capital Ratio 7.02% 7.01% 6.66%
Leverage Ratio 9.38% 9.21% 8.79%
Tier 1 Capital Ratio 11.61% 11.23% 10.62%
Total Capital Ratio 12.82% 12.40% 11.81%
Common Share Data
Common Shares Outstanding 46,748 46,829 46,402
Weighted Average Shares Outstanding 46,804 46,690 46,385
Weighted Average and Common
Equivalent Shares Outstanding 47,401 47,291 46,918
Book Value per Share $14.33 $14.34 $13.48
Tangible Book Value per Share(1) $9.34 $9.35 $8.40
Credit Quality Data
Nonperforming Assets
(including OREO) $24,844 $16,194 $20,692
90 days past due and still
accruing 3,323 3,038 4,543
Total $28,167 $19,232 $25,235
Nonperforming Assets to Loans
Plus OREO 0.55% 0.36% 0.50%
Allowance for Loan Losses $61,464 $60,822 $59,811
Reserve for Unfunded Commitments(2) 1,200 1,200 -
Allowance for Credit Losses $62,664 $62,022 $59,811
Allowance for credit losses to
Loans 1.38% 1.38% 1.45%
Allowance for credit losses to
Loans (excluding Municipals) 1.43% 1.43% 1.48%
Allowance for credit losses to
Nonperforming Loans 257.81% 392.06% 289.29%
Gross Charge-offs $1,753 $1,840 $1,154
Gross Recoveries 862 1,040 859
Net Charge-offs $891 $800 $295
Net Charge-offs to Average Loans 0.02% 0.02% 0.01%
QTD Average Balance Sheet Data
Securities $1,391,413 $1,378,688 $1,450,210
Loans, Net 4,455,403 4,408,205 4,057,647
Earning Assets 5,915,366 5,895,121 5,568,124
Total Assets 6,430,410 6,418,971 6,068,272
Deposits 5,377,674 5,454,388 5,000,949
Borrowings 321,073 246,660 386,613
Stockholders' Equity 671,058 660,353 629,371
Prior year amounts reflect the modified retrospective application of
SFAS 123-R.
(1) Reconciliation of non-GAAP measurements to GAAP
Net Income (GAAP) $20,198 $21,813 $19,082
Amortization of core deposit
intangible, net of tax 432 432 503
Tangible Net Income (A) 20,630 22,245 19,585
Average Equity (GAAP) 671,058 660,353 629,371
Average Core Deposit Intangible 17,323 17,992 20,155
Average Deferred Tax on CDI (4,610) (4,785) (5,311)
Average Goodwill 216,038 216,103 216,136
Average Tangible Equity (B) 442,307 431,043 398,391
Return on Average Tangible
Equity (A)/(B) 18.92% 20.47% 19.94%
Average Assets (GAAP) 6,430,410 6,418,971 6,068,272
Average Core Deposit Intangible 17,323 17,992 20,155
Average Deferred Tax on CDI (4,610) (4,785) (5,311)
Average Goodwill 216,038 216,103 216,136
Average Tangible Assets (C) 6,201,659 6,189,661 5,837,292
Return on Average Tangible
Assets (A)/(C) 1.35% 1.43% 1.36%
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.
($46,400-$19-$665-$818)/($61,724+$17,587) = 56.61%.
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. ($669,796-$16,991-$216,038)/46,748 = $9.34.
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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