BURLINGTON, Vt., July 17 /PRNewswire-FirstCall/ --
Chittenden Corporation (NYSE: CHZ) Chairman, President and Chief Executive
Officer, Paul A. Perrault, today announced second quarter 2003 net income of
$0.51 per diluted share, compared to the $0.47 per diluted share earned in the
second quarter of 2002. For the first six months of 2003, earnings were $1.00
per diluted share, compared to $0.92 for the first six months of last year.
Chittenden also announced its quarterly dividend of $0.20 per share. The
dividend will be paid on August 15, 2003, to shareholders of record on August
1, 2003.
In making the announcement, Perrault said, "We are pleased that our
results continue to show progress, as we deal with the weak economy and
historically low level of interest rates. Integration of recent acquisitions
continues on schedule, and we are implementing those actions that will protect
and enhance our earnings and market position."
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. This transaction has been accounted for as a purchase
and, accordingly, Granite Bank's operations are reflected in Chittenden's
consolidated financial statements from the date of acquisition.
Total assets at June 30, 2003 increased $1.1 billion from year-end and
remained consistent with March 31, 2003 levels of $6.0 billion. Total loans
increased $623 million from year-end, and remained level from the first
quarter at $3.6 billion. The increase from year-end is attributable to the
Granite Bank acquisition in the first quarter of 2003. The Company's
commercial loan portfolios have continued to achieve steady growth throughout
the year and during the second quarter the municipal loan portfolio
experienced its normal trend of payoffs coinciding with the end of the fiscal
year for most municipalities in Vermont. The decline in residential real
estate loans from the prior quarter is due to heavy pre-payments emanating
from the decline in long term interest rates over the last two years.
Total deposits increased $53 million from the first quarter and $741
million from the prior year-end. The increase from the prior year-end
primarily relates to the Granite Bank acquisition while the growth from March
31, 2003 is due to increased activity with commercial customers across the
franchise. Borrowings declined $29.6 million due to matured FHLB borrowings
and customer repurchase agreements.
The net interest margin for the second quarter of 2003 was 4.14%, compared
with 4.22% a quarter ago, and 4.69% in the same period of 2002. Net interest
income was $56.1 million for the second quarter of 2003 and $48.3 million for
the same period a year ago. The net interest margin for the quarter, excluding
the impact of Granite Bank, declined slightly to 4.29% compared with 4.33% for
the first quarter. The Granite Bank acquisition reduced the Company's net
interest margin primarily due to their higher cost of funds.
The provision for loan losses of $2.1 million increased from $1.7 million
in the second quarter of 2002 primarily due to a higher mix of commercial
loans and a larger loan portfolio. As a percentage of loans, the allowance for
loan losses was 1.56% which was effectively flat with year-end, and up from
the first quarter ratio of 1.52%. Net charge-off activity on a year-to-date
basis totaled $2.6 million compared with $3.0 million for the first six months
of 2002. As a percentage of average loans, net charge-offs were 7 basis points
in 2003 compared with 10 basis points for the first six months of 2002.
Nonperforming assets (NPAs) were $18.0 million at June 30, 2003 compared with
$15.0 million at March 31, 2003 and as a percentage of total loans increased
to 49 basis points compared to 40 basis points a quarter ago. The increase of
$3.0 million from the first quarter of 2003 primarily relates to two
commercial credits at Granite Bank, both of which are current on their
payments. Loans 90 days past due and still accruing declined $1.2 million to
$1.9 million at June 30, 2003. Nonaccrual loans at June 30, 2003 consisted of
approximately 177 loans, which were diversified across a range of industries,
sectors and geography. Loans with payments less than 30 days past due
represent 52% of total loans on nonaccrual.
Chittenden realized $9.7 million of gains on sales of investments for the
second quarter of 2003 which was substantially offset by $6.8 million in non-
recurring charges related to the Company's decision to convert its core data
processing systems, $600,000 of write-downs related to its CRA low income
housing investments, and higher than normal mortgage servicing rights
amortization of $1.7 million. The sales of securities during the second
quarter were the result of rebalancing the investment portfolio due to the
heavy prepayments of mortgage backed securities and callable agencies. The
Company strives to keep its investment portfolio balanced equally between
agency securities, mortgage backed securities, and corporate bonds.
Chittenden anticipates that the new IT platform will provide a superior
level of integration and flexibility crucial to its employees, enhancing their
ability to provide top-quality service to customers. Approximately $3.1
million of the charge related to early termination fees payable under the
contract with the Company's current IT provider, while $3.7 million related to
the recognition of asset impairments associated with hardware and software
that will not be portable to the new system. The conversion also will ensure
that Chittenden is able to meet all of its data processing needs with enhanced
efficiency and the Company expects to reduce its data processing expense run
rate by $5 to $7 million per year once the conversion is completed in the
second quarter of 2004.
Continued heavy mortgage refinancing activity and the acquisition of
Granite Bank produced gains on sales of loans of $6.1 million for the second
quarter compared with $4.4 million for the first quarter. Granite Bank
contributed $1.8 million in gains for the second quarter of 2003 as compared
to $319,000 in gains for the first quarter. Mortgage servicing income was down
from the second quarter of 2002 due to higher amortization of mortgage
servicing rights. Service charges on deposits, insurance commissions and
retail investments all increased from a year ago, primarily because of the
Granite Bank acquisition.
Noninterest expenses were $54.3 million for the second quarter of 2003, up
from the $38.6 million for the second quarter of 2002. Salaries and employee
benefits increased $6.3 million from the second quarter of 2002 of which
Granite Bank represented $4.2 million of the increase. The remaining $2.1
million was attributed to $1.4 million in sales based incentives, and higher
benefits expenses of $700,000. Increases in occupancy, amortization of
intangibles, and other non-interest expenses were primarily attributable to
the inclusion of Granite Bank's operations for a full quarter.
Income tax expense for the second quarter of 2003 was $10.9 million, up
from $8.3 million the same period a year ago. Effective tax rates were 37.0%
and 35.1% in the respective periods. There were several drivers of the
increased effective tax rate, including higher state income taxes (net of
federal benefit), proportionately lower levels of tax-exempt interest income
and tax credits from qualified low-income housing projects.
The return on average equity (ROE) was 13.34% for the second quarter of
2003, compared with 15.95% in the same quarter of 2002. This decline from a
year ago is due to the issuance of additional equity in the Granite Bank
acquisition, and higher unrealized gains on securities available for sale.
Excluding the Granite Bank acquisition and the increase in unrealized gains on
securities, ROE would have been 15.38% for the just completed quarter. The
return on average assets (ROA) for the second quarter of 2003 was 1.26%, down
from 1.38% for the second quarter of 2002. The decline in ROA is attributable
to the acquisition of Granite Bank, which increased total average assets for
the quarter.
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 today. 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 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 July 24, 2003, by calling 877-519-4471 or 973-341-3080 in
the New York City area (pin number is 4049434) 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. 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 name Mortgage Service Center, and it owns
Chittenden Insurance Group, and Chittenden Securities, Inc. Granite Bank
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.
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 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.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
ASSETS 6/30/03 3/31/03 12/31/02 6/30/02
Cash and Cash
Equivalents $212,674 $190,537 $192,142 $195,884
Securities Available
For Sale 1,769,715 1,714,494 1,497,111 1,232,549
FHLB Stock 24,356 24,356 17,030 14,967
Loans Held For Sale 97,500 98,578 94,874 27,556
Loans:
Commercial 632,816 625,177 568,224 583,557
Municipal 54,917 82,005 77,820 44,107
Real Estate:
Residential 1,199,021 1,238,315 861,706 914,141
Commercial 1,324,943 1,314,095 1,103,897 1,043,889
Construction 113,044 96,859 85,512 78,995
Total Real Estate 2,637,008 2,649,269 2,051,115 2,037,025
Consumer 272,085 272,159 276,704 301,634
Total Loans 3,596,826 3,628,610 2,973,863 2,966,323
Less: Allowance for
Loan Losses (57,591) (56,708) (48,197) (48,994)
Net Loans 3,539,235 3,571,902 2,925,666 2,917,329
Accrued interest
receivable 30,208 32,255 27,992 28,051
Other Real Estate Owned 30 37 158 230
Other Assets 46,571 48,737 35,269 36,284
Premises and
equipment, net 73,742 72,524 57,074 57,381
Mortgage servicing
rights 8,686 9,306 8,491 16,917
Identified Intangibles 24,243 28,282 9,480 10,175
Goodwill 215,721 205,579 55,257 58,249
Total Assets $6,042,681 $5,996,587 $4,920,544 $4,595,572
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $864,526 $799,506 $684,077 $627,498
Savings 512,775 503,415 400,616 393,025
NOW and Money Market
Accounts 2,392,303 2,365,768 2,118,539 1,922,452
Certificates of Deposit
less than $100,000 848,320 874,722 691,467 682,636
Certificates of Deposit
$100,000 and Over 249,250 270,627 231,393 198,607
Total Deposits 4,867,174 4,814,038 4,126,092 3,824,218
Borrowings 399,027 428,597 173,654 177,729
Company Obligated, Mandatorily
Redeemable Securities
Of Subsidiary Trust 125,000 125,000 125,000 125,000
Accrued Expenses and
Other Liabilities 83,829 77,627 77,006 69,298
Total Liabilities 5,475,030 5,445,262 4,501,752 4,196,245
Stockholders' Equity:
Common stock 40,135 40,135 35,749 35,749
Surplus 255,973 256,057 145,191 145,201
Retained earnings 316,472 305,140 294,943 274,266
Treasury stock,
at cost (81,543) (83,254) (85,382) (76,272)
Accumulated other
comprehensive income:
Unrealized gains (losses)
on securities
available for sale 36,375 33,388 28,573 16,604
Accrued minimum pension
liability,
net of tax (3,829) (4,058) (4,284) --
Directors deferred
compensation
to be settled
in stock 4,111 3,963 4,052 3,839
Unearned portion
of employee
restricted stock (43) (46) (50) (60)
Total Stockholders'
Equity 567,651 551,325 418,792 399,327
Total Liabilities and
Stockholders'
Equity $6,042,681 $5,996,587 $4,920,544 $4,595,572
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2003 2002 2003 2002
Interest Income:
Interest on Loans $52,543 $49,656 $100,124 $97,983
Investment securities:
Taxable 18,511 15,328 36,727 28,110
Tax-favored 42 114 87 209
Short-term investments 123 6 135 42
Total Interest Income 71,219 65,104 137,073 126,344
Interest Expense:
Savings 623 1,130 1,258 2,231
NOW and money market 4,659 6,812 9,589 13,882
Certificates of deposits
under $100,000 4,694 5,758 9,626 12,064
Certificates of
deposits $100,000
and over 1,288 1,583 2,587 3,169
Borrowings 3,855 1,484 6,965 2,147
Total Interest Expense 15,119 16,767 30,025 33,493
Net Interest Income 56,100 48,337 107,048 92,851
Provision for
Loan Losses 2,050 1,691 4,100 3,766
Net Interest Income
after Provision
for Loan Losses 54,050 46,646 102,948 89,085
Noninterest Income:
Investment Management
Income 3,841 3,913 7,652 7,885
Service Charges on
Deposit Accounts 4,735 4,098 9,128 7,852
Mortgage Servicing
Income (loss) (829) 625 (1,587) 1,315
Gains on Sales of Loans,
Net 6,099 1,860 10,535 4,615
Credit Card Income, Net 970 897 1,873 1,689
Gains on Sales of
Securities 9,654 95 11,044 323
Insurance Commissions,
Net 1,531 882 3,144 1,819
Retail Investment
Services 1,314 676 2,210 1,250
Other 2,469 2,517 5,041 4,975
Total Noninterest
Income 29,784 15,563 49,040 31,723
Noninterest Expense:
Salaries and Employee
Benefits 28,813 22,450 53,951 43,282
Net Occupancy Expense 6,198 4,859 11,676 9,780
Data Processing 2,161 2,818 4,661 5,720
Information Technology
Conversion 6,800 - 6,800 -
Amortization of
Intangibles 752 348 1,238 583
Other Real Estate Owned,
Net (106) 7 (119) (161)
Other 9,642 8,115 18,229 15,439
Total Noninterest
Expense 54,260 38,597 96,436 74,643
Income Before Income
Taxes 29,574 23,612 55,552 46,165
Income Tax Expense 10,947 8,297 20,334 16,027
Net Income $18,627 $15,315 $35,218 $30,138
Earnings Per Share,
Basic $0.51 $0.48 $1.01 $0.94
Earnings Per Share,
Diluted 0.51 0.47 1.00 0.92
Dividends Per Share 0.20 0.20 0.40 0.39
CHITTENDEN CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
6/30/03 3/31/03 12/31/02 6/30/02
Selected Financial Ratios
Return on Average
Equity 13.34% 14.53% 17.08% 15.95%
Return on Average
Assets 1.26% 1.29% 1.45% 1.38%
Net Yield on Earning
Assets 4.14% 4.22% 4.38% 4.69%
Tier 1 Capital Ratio 9.28% 9.22% 12.25% 12.60%
Total Capital Ratio 10.53% 10.47% 13.50% 13.85%
Leverage Ratio 7.22% 8.10% 9.28% 9.55%
Tangible Capital Ratio 5.65% 5.51% 7.30% 7.31%
Common Share Data
Weighted Average Common
Shares
Outstanding 36,475,443 33,493,106 31,939,820 32,137,282
Weighted Average
Common and
Common Equivalent
Shares Outstanding 36,764,758 33,799,406 32,259,266 32,611,036
Book Value per
Common Share $15.55 $15.14 $13.11 $12.39
Common Shares
Outstanding 36,496,930 36,420,367 31,939,470 32,235,058
Credit Quality Data($ in thousands)
Nonperforming Assets
(including OREO) $17,970 $14,981 $14,960 $10,872
90 days past due and
still accruing 1,921 3,106 2,953 2,477
Total $19,891 $18,087 $17,913 $13,349
Nonperforming Assets to
Loans Plus OREO 0.49% 0.40% 0.49% 0.36%
Allowance to Loans 1.56% 1.52% 1.57% 1.64%
Allowance to
Nonperforming
Loans
(excluding OREO) 321.01% 379.48% 325.64% 460.38%
Gross Charge-offs $2,373 $2,250 $2,992 $2,839
Gross Recoveries 1,206 774 752 758
Net Charge-offs $1,167 $1,476 $2,240 $2,081
QTD Average Balance Sheet Data ($ in thousands)
Loans, Net $3,638,769 $3,236,735 $3,007,081 $2,997,613
Earning Assets 5,456,572 4,879,771 4,588,801 4,163,108
Total Assets 5,943,041 5,224,669 4,869,802 4,436,263
Deposits 4,797,953 4,278,877 4,088,425 3,851,574
Stockholders' Equity 560,209 463,149 413,449 385,039
SOURCE Chittenden Corporation
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