BURLINGTON, Vt., April 21 /PRNewswire-FirstCall/ -- Chittenden Corporation
(NYSE: CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault,
today announced earnings for the quarter ended March 31, 2004 of $17.5 million
or $0.47 per diluted share, compared to $16.6 million or $0.49 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 14, 2004, to shareholders of
record on April 30, 2004.
In making the announcement, Perrault said, "By and large, most core
businesses are doing well. However, the volatility of market interest rates
and the timing of their movements during the quarter adversely impacted the
mortgage banking business. On the whole, we consider the quarter's results a
little disappointing, though there is cause for optimism. Commercial loan
growth was particularly good during the quarter and accelerated in the month
of March. In mortgage banking, the interest rate dip in March led to
significant mortgage application activity late in the quarter, which should
bode well for better mortgage gains as we move forward into the coming
months."
Total loans increased $55.5 million from December 31, 2003 and $151.6
million from March 31, 2003. The Company's banks continued their strong growth
in commercial lending by increasing their commercial and commercial real
estate portfolios at an annualized rate of 16% on a linked-quarter basis.
Partially offsetting the growth in commercial loans was the continued decline
in the residential real estate loan portfolio, which experienced faster than
expected prepayments. The increase in the loan portfolio from March 31, 2003
was entirely attributable to double-digit growth in the Company's commercial
and commercial real estate loan portfolios.
Total deposits increased $20.3 million from March 31, 2003 and decreased
$135.5 million from the prior year-end. The decline from December 31, 2003 is
primarily attributable to normal seasonal trends relating to the Company's
municipal, commercial, and captive insurance customers. Borrowings at March
31, 2004 were $312.5 million, a decrease of $241.1 million from the same
period a year ago. The decline was due to maturities and the early redemption
of $214 million of FHLB borrowings assumed in the Granite acquisition.
The Company's net interest margin for the first quarter of 2004 was 4.17%,
an increase from the fourth quarter of last year and a decrease from the first
quarter of 2003. On a linked quarter basis, the increase in the net interest
margin was due to a better asset mix with a higher proportion of loans in
average earning assets, and a lower cost of funds driven primarily by reduced
costs of borrowings. The decline in net interest margin from the first quarter
of 2003 was primarily attributable to lower earning asset yields and the
inclusion of Granite for the full quarter of 2004 as compared to just one
month in 2003.
Net charge-offs as a percentage of average loans were 1 basis point for
the first quarter of 2004, compared to 8 basis points for the fourth quarter
of last year and 4 basis points for the first quarter in 2003. Net charge-offs
in 2004 totaled $391,000, compared with $2.7 million in the fourth quarter of
2003 and $1.5 million for the first quarter of 2003. Nonperforming assets
increased $6.3 million from December 31, 2003 to $20.7 million at March 31,
2004 and as a percentage of total loans increased to 55 basis points compared
to 39 basis points in the fourth quarter of 2003. The increase in
nonperforming assets primarily resulted from two commercial relationships and
the Company believes that the loans are well secured. The level of
nonperforming assets in 2004 is consistent with the Company's historical
experience which has averaged approximately 50 basis points over the last six
years.
The provision for loan losses was $427,000 for the first quarter of 2004
compared to $1.0 million for the fourth quarter of last year, and $2.1 million
in the first quarter of 2003. The provision for the first quarter of 2004 was
driven by significantly lower net charge-offs, continued strong asset quality,
and minimal growth in the total loan portfolio. As a percentage of total
loans, the allowance for loan losses was 1.52%, down slightly from 1.54% at
December 31, 2003.
Noninterest income declined $5.0 million from the prior quarter and $1.2
million from the same period a year ago. The decline from the fourth quarter
of 2003 was attributable to reduced gains on sales of mortgages, lower
mortgage servicing income, and a decline in gains on sales of securities.
Gains on sales of mortgage loans decreased $2.4 million from the fourth
quarter of 2003 due to lower volumes of loan sales caused by higher mortgage
interest rates. Mortgage servicing income declined $1.4 million in the first
quarter of 2004 due to higher forward-looking prepayment speeds which were
driven by the dip in interest rates in early March, continued heavy paydowns
on adjustable rate mortgages, and the decision by one of the Company's credit
union customers to service its portfolio in house. Gains on sales of
securities, net of losses on prepayments of borrowings, were $608,000 in the
first quarter of 2004, compared to $2.1 million in the fourth quarter of last
year and $1.4 million in the first quarter of 2003. Partially offsetting
these declines, on a linked quarter and year-over-year basis, were
significantly higher insurance commissions and increased investment management
income. Insurance commissions increased $1.1 million from the prior quarter
primarily due to the timing of policy renewals and increased performance-based
income. The increase from the same quarter a year ago was due to the inclusion
of Granite's insurance operations for the full quarter in 2004 versus only one
month in 2003. In addition, on a year-over-year basis, the Company
experienced higher investment management income, which was attributable to
stronger equity markets and better penetration in the non-Vermont banks.
Noninterest expenses were $44.6 million for the quarter ending March 31,
2004, a decrease of $3.5 million from the prior quarter and an increase of
$2.4 million from a year ago. The decline from the fourth quarter of 2003 is
primarily attributable to lower conversion and restructuring expenses,
decreased incentives and commissions costs, and lower levels of other expense.
The higher conversion and restructuring expenses in the fourth quarter of 2003
were due to the accrual of certain costs in relation to the Company's plan to
consolidate branches, close offsite ATMs and to recognize severance for
related staff reductions. The increase from a year ago is attributable to the
acquisition of Granite Bank, which in 2004 contributed three months of
expenses compared to one month in 2003.
The effective income tax rate for first quarter 2004 was 36.9%, compared
with 36.1% for the comparable quarter in 2003. The higher effective income tax
rate was primarily attributable to increased taxable income in New Hampshire,
which has a higher statutory tax rate than other states in which the Company
has operations.
The return on average tangible equity was 20.38% in the first quarter of
2004, compared to 23.63% in the prior quarter and 19.95% in the same quarter a
year ago. The return on average equity was 11.97% for the first quarter of
2004, compared with 13.66% for the fourth quarter of 2003 and 14.53% for the
first quarter a year ago. The decrease in ROE from the first quarter of 2003
is primarily due to the issuance of additional equity of $116 million in the
Granite acquisition, which was included for only one month in the 2003
calculation. The return on average assets for the quarter ended March 31, 2004
was 1.21%, down from 1.31% for the quarter ended December 31, 2003 and 1.29%
for the first quarter of last year. The decline from a year ago was due to
higher levels of average assets caused by the acquisition of Granite Bank and
the reduction from the fourth quarter of 2004 was due to lower net income.
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call on April 22, 2004 at 10:30
am eastern time to discuss these earnings results. Interested parties may
access the conference call by calling 866-761-0748, passcode 98379287.
International dial-in number is 617-614-2706. 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 clicking "webcasts" under the
Investor Resources section of the Company's website at
https://www.chittendencorp.com. A replay of the call will be available through
April 29, 2004 by calling 888-286-8010 (International dial number is 617-801-
6888), passcode 75685592, 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'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
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 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 from historical
performance or future expectations. For further information on these risk
factors and uncertainties, please see page 1 of Chittenden's December 31, 2003
annual report filed on Form 10-K/A.
(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 Securites, Inc. Granite Bank operates an insurance agency
subsidiary under the name GSBI Insurance Group.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
ASSETS 3/31/04 12/31/03 3/31/03
Cash and Cash Equivalents $154,178 $174,939 $190,537
Securities Available For Sale 1,473,497 1,588,151 1,714,494
FHLB Stock 20,753 20,753 24,356
Loans Held For Sale 32,276 25,262 98,578
Loans:
Commercial 686,304 658,615 625,177
Municipal 92,338 87,080 82,005
Real Estate:
Residential:
1-4 family 666,753 700,671 832,284
Multi-family 182,085 176,478 167,010
Home equity 277,062 270,959 239,021
Commercial 1,485,031 1,430,945 1,314,095
Construction 138,497 140,801 96,859
Total Real Estate 2,749,428 2,719,854 2,649,269
Consumer 252,097 259,135 272,159
Total Loans 3,780,167 3,724,684 3,628,610
Less: Allowance for
Loan Losses (57,500) (57,464) (56,708)
Net Loans 3,722,667 3,667,220 3,571,902
Accrued Interest Receivable 25,582 29,124 32,255
Other Real Estate Owned 36 100 37
Other Assets 51,834 68,487 48,737
Premises and Equipment, net 77,534 75,179 72,524
Mortgage Servicing Rights 10,866 12,265 9,306
Identified Intangibles 21,978 22,733 28,282
Goodwill 216,431 216,431 205,579
Total Assets $5,807,632 $5,900,644 $5,996,587
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $848,758 $898,920 $799,506
Savings 526,625 517,789 503,415
NOW 894,575 899,018 874,439
CMAs/ Money Market 1,472,377 1,604,138 1,491,329
Certificates of Deposit
less than $100,000 780,940 789,066 874,722
Certificates of Deposit
$100,000 and Over 311,067 260,960 270,627
Total Deposits 4,834,342 4,969,891 4,814,038
Securities Sold Under
Agreements to Repurchase 76,051 78,980 120,050
Other Borrowings 236,446 208,454 433,547
Accrued Expenses and
Other Liabilities 61,308 63,368 77,627
Total Liabilities 5,208,147 5,320,693 5,445,262
Stockholders' Equity:
Common Stock 40,157 40,142 40,135
Surplus 257,503 256,974 256,057
Retained Earnings 351,569 341,441 305,139
Treasury Stock, at cost (76,058) (78,579) (83,254)
Accumulated Other
Comprehensive Income:
Unrealized Gains on
Securities Available for Sale 21,964 15,595 33,389
Accrued Minimum Pension
Liability, net of tax - - (4,058)
Directors Deferred Compensation
to be Settled in Stock 4,381 4,413 3,963
Unearned Portion of Employee
Restricted Stock (31) (35) (46)
Total Stockholders' Equity 599,485 579,951 551,325
Total Liabilities and
Stockholders' Equity $5,807,632 $5,900,644 $5,996,587
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months Ended
March 31,
2004 2003
Interest Income:
Loans $49,258 $47,580
Investment Securities:
Taxable 15,580 18,216
Tax-favored 13 46
Short-term Investments 7 12
Total Interest Income 64,858 65,854
Interest Expense:
Deposits 8,220 11,796
Borrowings 1,925 3,110
Total Interest Expense 10,145 14,906
Net Interest Income 54,713 50,948
Provision for Loan Losses 427 2,050
Net Interest Income after Provision
for Loan Losses 54,286 48,898
Noninterest Income:
Investment Management and Trust 4,371 3,810
Service Charges on Deposits 4,685 4,393
Mortgage Servicing (767) (757)
Gains on Sales of Loans, Net 1,899 4,436
Gains on Sales of Securities 1,802 1,391
Loss on Prepayments of Borrowings (1,194) -
Credit Card Income, Net 908 903
Insurance Commissions, Net 2,626 1,613
Retail Investment Services 947 896
Other 2,730 2,571
Total Noninterest Income 18,007 19,256
Noninterest Expense:
Salaries 20,895 20,282
Employee Benefits 5,983 4,857
Net Occupancy Expense 6,097 5,479
Data Processing 2,305 2,501
Amortization of Intangibles 755 511
Conversion and Restructuring Charges 152 -
Other 8,421 8,546
Total Noninterest Expense 44,608 42,176
Income Before Income Taxes 27,685 25,978
Income Tax Expense 10,218 9,387
Net Income $17,467 $16,591
Earnings Per Share, Basic $0.48 $0.50
Earnings Per Share, Diluted 0.47 0.49
Dividends Per Share 0.20 0.20
Return on Average Equity 11.97% 14.53%
Return on Average Assets 1.21% 1.29%
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
3/31/04 12/31/03 3/31/03
Selected Financial Ratios
Return on Average
Tangible Equity 20.38% 23.63% 19.95%
Return on Average
Tangible Assets 1.30% 1.40% 1.34%
Net Yield on Earning Assets 4.17% 4.14% 4.22%
Efficiency Ratio 60.34% 59.58% 60.36%
Tangible Capital Ratio 6.48% 6.02% 5.51%
Leverage Ratio 8.28% 7.79% 8.10%
Tier 1 Capital Ratio 10.36% 10.07% 9.22%
Total Capital Ratio 11.61% 11.32% 10.47%
Common Share Data
Common Shares Outstanding 36,763 36,637 36,420
Weighted Average Common
Shares Outstanding 36,719 36,583 33,493
Weighted Average Common and
Common Equivalent Shares
Outstanding 37,218 37,112 33,799
Book Value per Share $16.31 $15.82 $15.14
Tangible Book Value per Share $9.82 $9.30 $8.72
Credit Quality Data
Nonperforming Assets
(including OREO) $20,657 $14,431 $14,981
90 days past due and
still accruing 3,201 4,029 3,106
Total $23,858 $18,460 $18,087
Nonperforming Assets to
Loans Plus OREO 0.55% 0.39% 0.41%
Allowance to Loans 1.52% 1.54% 1.56%
Allowance to Nonperforming
Loans (excluding OREO) 278.85% 400.99% 379.48%
Gross Charge-offs $1,251 $4,176 $2,250
Gross Recoveries 860 1,444 774
Net Charge-offs $391 $2,732 $1,476
Net Charge-offs to Average Loans 0.01% 0.08% 0.04%
QTD Average Balance Sheet Data
Securities $1,533,480 $1,647,313 $1,591,751
Loans, Net 3,701,494 3,697,490 3,236,736
Earning Assets 5,292,868 5,446,055 4,879,771
Total Assets 5,792,012 5,959,994 5,224,669
Deposits 4,808,334 5,033,498 4,278,877
Borrowings 339,983 298,478 406,181
Stockholders' Equity 586,788 572,508 463,149
SOURCE Chittenden Corporation
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