BURLINGTON, Vt., July 20 /PRNewswire-FirstCall/ -- Chittenden
Corporation (NYSE: CHZ) Chairman, President and Chief Executive Officer,
Paul A. Perrault, today announced earnings for the quarter ended June 30,
2006 of $21.0 million, or $0.45 per diluted share, compared to $19.5
million or $0.41 per diluted share from the same period a year ago. For the
first six months of 2006, earnings were $41.2 million or $0.87 per diluted
share, compared to $38.5 million or $0.82 per diluted share for the same
period of a year ago. Chittenden also announced its quarterly dividend of
$0.20 per share, which will be paid on August 11, 2006, to shareholders of
record on July 28, 2006.
SECOND QUARTER 2006 FINANCIAL HIGHLIGHTS
* Earnings per share were 10% higher than the same period in 2005 driven
by higher revenues and lower income taxes.
* Total loans increased 8% from June 30, 2005 with strong growth in
several commercial categories.
* Noninterest income increased 8% from the same period in 2005 with solid
growth from wealth management and business services.
* Noninterest expenses were well controlled and the efficiency ratio
improved by 3.0% to 56.87%.
In making the announcement, Perrault said, "Despite intense
competition, our banks continue to make progress, as our approach to local
banking with broad capabilities continues to be attractive to our markets.
I am particularly proud of how our bankers are bringing true value to our
customers." In addition, Perrault announced that the Company had completed
the buyback of one million shares of common stock, which was authorized by
the Board of Directors on October 19, 2005.
Perrault also announced that the Board of Directors approved a new
share repurchase plan on July 19, 2006 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.
ASSETS
Total loans increased $320 million from the second quarter of 2005 to
$4.6 billion at June 30, 2006. The increases were attributable to solid
growth in the commercial, construction and residential real estate
portfolios. The growth in commercial and commercial real estate was
particularly strong in Vermont and New Hampshire. Municipal loans
experienced their historical seasonal trend, declining 48% from March 31,
2006, as June 30th coincides with the end of the fiscal year for most
municipalities.
LIABILITIES
Total deposits increased $173 million from June 30, 2005 and decreased
$66 million from March 31, 2006. On a linked quarter basis the Company
experienced its normal seasonal declines in municipal deposits, which was
partially offset by higher demand deposits and CDs from our commercial
customers. Borrowings at June 30, 2006 were $424 million, compared with
$354 million at June 30, 2005. The increase was primarily due to higher
customer and wholesale repurchase agreements, which were utilized to fund
loan growth.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the three months
ended June 30, 2006 was $62.8 million, which was up $2.3 million from the
same period a year ago. The Company's net interest margin for the second
quarter was 4.22%, an increase of 2 basis points from the first quarter of
2006 and a decrease of 7 basis points from the same period a year ago. The
increase in net interest margin from the first quarter of 2006 was
attributable to higher interest recoveries on former non-performing loans.
The decline from the same period a year ago was due to higher funding
costs, which were primarily driven by the Federal Reserve increasing
short-term interest rates as well as strong competition for deposits.
NONINTEREST INCOME
Noninterest income for the second quarter of 2006 increased $1.4
million or 8% from the same period a year ago. The increase from 2005 was
driven by higher investment management and trust fees, service charges on
deposits, mortgage servicing, and other noninterest income. Investment
management and trust fees increased $319,000 primarily due to higher
brokerage and annuity sales at Chittenden Securities, LLC. Service charges
on deposits increased due to higher overdraft and cash management fees. The
increase in mortgage servicing income was attributable to lower MSR
amortization and increased impairment recoveries driven by higher long-term
interest rates. Other noninterest income increased $379,000 due to higher
gains on the sale of assets.
NONINTEREST EXPENSE
Noninterest expenses for the second quarter of 2006 were $47.6 million,
an increase of $1.4 million from the same period in 2005. The increase from
the prior year was attributable to a one-time gain of $1.5 million which
reduced employee benefit expense in 2005. This gain resulted from the
Company's decision to change the delivery mechanism for its employees'
pension benefits. The Company's efficiency ratio improved by 3% from the
similar quarter in 2005 to 56.87% for the second quarter of 2006.
INCOME TAXES
The effective income tax rate was 32.7% for the second quarter and
33.4% year to date compared with 34.3% and 34.5% respectively for the same
periods in 2005. The lower effective income tax rates were primarily
attributable to higher levels of tax-exempt municipal loan interest and tax
credits from qualified low-income housing projects.
CREDIT QUALITY
The provision for credit losses was $1.8 million for the second quarter
of 2006 compared to $1.4 million for the same quarter of 2005. Higher net
charge-offs and continued loan growth primarily drove the increase in the
provision for credit losses from the comparable period in 2005.
Non-performing assets as a percentage of total loans at June 30, 2006 were
54 basis points, which was flat with the second quarter of 2005. Net
charge-offs as a percentage of average loans were 2 basis points for the
second quarter of 2006, up from 1 basis point for the same quarter a year
ago. The increase in 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 1.43% at June 30, 2005.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer
of Chittenden Corporation, will host a conference call on July 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, 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 866-578-5801,
passcode 95332695. International dial-in number is 617-213-8058.
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 July 27, 2006 by calling 888-286-8010
(International dial number is 617-801-6888), passcode 98460587. 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: 6/30/06 3/31/06 12/31/05 6/30/05
Cash and Cash
Equivalents $172,567 $142,887 $180,707 $176,425
Securities Available
For Sale 1,288,390 1,344,016 1,383,909 1,363,180
FRB / FHLB Stock 18,577 19,352 19,352 19,352
Loans Held For Sale 18,882 19,319 19,737 22,611
Loans:
Commercial &
Industrial (C&I) 851,692 836,986 848,420 831,537
Municipal 90,206 172,443 160,357 79,070
Multi-Family 205,443 195,809 196,590 185,920
Commercial Real
Estate 1,884,716 1,827,096 1,778,202 1,736,665
Construction 218,123 212,824 192,165 124,648
Residential Real
Estate 750,031 731,798 737,462 733,472
Home Equity Credit
Lines 319,606 316,355 316,465 307,866
Consumer 254,839 254,719 257,829 255,239
Total Loans 4,574,656 4,548,030 4,487,490 4,254,417
Less: Allowance for
Loan Losses (62,070) (61,464) (60,822) (60,805)
Net Loans 4,512,586 4,486,566 4,426,668 4,193,612
Accrued Interest
Receivable 31,138 32,772 32,621 29,689
Other Assets 102,079 93,673 93,377 87,492
Premises and
Equipment, net 69,503 68,568 69,731 71,632
Mortgage Servicing
Rights 14,529 13,966 13,741 12,073
Identified Intangibles 16,326 16,991 17,655 18,983
Goodwill 216,038 216,038 216,038 216,136
Total Assets $6,460,615 $6,454,148 $6,473,536 $6,211,185
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $965,794 $929,718 $973,752 $934,234
Savings 474,883 489,944 489,734 502,525
NOW 895,817 906,934 861,000 908,148
CMAs/ Money Market 1,441,573 1,584,777 1,749,878 1,418,634
Certificates of
Deposit less than
$100,000 878,181 853,645 814,289 811,389
Certificates of
Deposit $100,000
and Over 661,322 618,319 625,682 569,505
Total Deposits 5,317,570 5,383,337 5,514,335 5,144,435
Securities Sold
Under Agreements to
Repurchase 138,773 53,238 56,315 56,775
Other Borrowings 285,497 288,482 171,008 296,903
Accrued Expenses and
Other Liabilities 63,299 59,295 60,488 64,466
Total Liabilities 5,805,139 5,784,352 5,802,146 5,562,579
Stockholders' Equity:
Common Stock 50,235 50,235 50,220 50,210
Surplus 273,723 272,696 276,278 273,533
Retained Earnings 442,456 430,811 419,057 392,312
Treasury Stock, at
cost (85,678) (64,189) (60,801) (67,657)
Accumulated Other
Comprehensive Income (30,924) (25,216) (18,968) (4,978)
Directors' Deferred
Compensation to be
Settled in Stock 5,664 5,459 5,604 5,197
Unearned Portion of
Employee Restricted
Stock - - - (11)
Total Stockholders'
Equity 655,476 669,796 671,390 648,606
Total Liabilities
and Stockholders'
Equity $6,460,615 $6,454,148 $6,473,536 $6,211,185
Prior year amounts reflect the modified retrospective application of SFAS
123-R "Accounting for Stock-Based Compensation."
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,
2006 2005 2006 2005
Interest Income:
Loans $78,547 $62,786 $151,812 $120,937
Investments 14,120 14,829 28,814 29,890
Total Interest Income 92,667 77,615 180,626 150,827
Interest Expense:
Deposits 25,715 14,193 48,780 25,461
Borrowings 4,900 3,342 8,798 6,301
Total Interest Expense 30,615 17,535 57,578 31,762
Net Interest Income 62,052 60,080 123,048 119,065
Provision for Credit
Losses 1,750 1,400 3,283 2,475
Net Interest Income
after Provision for
Credit Losses 60,302 58,680 119,765 116,590
Noninterest Income:
Investment Management
and Trust 5,322 5,003 10,475 9,974
Service Charges on
Deposits 4,358 4,093 8,287 8,134
Mortgage Servicing 657 209 1,320 564
Gains on Sales of
Loans, Net 1,903 2,003 3,273 4,134
Credit Card Income,
Net 1,269 1,131 2,461 2,106
Insurance Commissions,
Net 1,429 1,526 3,475 3,890
Other 3,590 3,211 6,824 5,933
Total Noninterest
Income 18,528 17,176 36,115 34,735
Noninterest Expense:
Salaries 23,789 23,911 46,706 45,587
Employee Benefits 5,598 4,238 11,350 10,717
Net Occupancy 5,780 6,024 11,930 12,350
Data Processing 982 810 1,953 1,585
Amortization of
Intangibles 664 664 1,329 1,438
Other 10,823 10,583 20,768 20,765
Total Noninterest
Expense 47,636 46,230 94,036 92,442
Income Before Income
Taxes 31,194 29,626 61,844 58,883
Income Tax Expense 10,185 10,166 20,637 20,341
Net Income $21,009 $19,460 $41,207 $38,542
Basic Earnings Per
Share $0.45 $0.42 $0.88 $0.83
Diluted Earnings Per
Share 0.45 0.41 0.87 0.82
Dividends Per Share 0.20 0.18 0.38 0.36
Prior year amounts reflect the modified retrospective application of SFAS
123-R "Accounting for Stock-Based Compensation."
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
6/30/06 3/31/06 12/31/05 6/30/05
Selected Financial Ratios
Return on Average Tangible
Equity (1) 19.87% 18.92% 20.47% 19.58%
Return on Average Equity 12.75% 12.21% 13.11% 12.24%
Return on Average Tangible
Assets (1) 1.38% 1.35% 1.43% 1.35%
Return on Average Assets 1.30% 1.27% 1.35% 1.27%
Net Yield on Earning Assets 4.22% 4.20% 4.30% 4.29%
Efficiency Ratio (1) 56.87% 56.61% 54.37% 59.87%
Tangible Capital Ratio 6.79% 7.02% 7.01% 6.92%
Leverage Ratio 9.04% 9.38% 9.21% 9.10%
Tier 1 Capital Ratio 11.29% 11.61% 11.23% 10.73%
Total Capital Ratio 12.49% 12.82% 12.40% 11.92%
Common Share Data
Common Shares Outstanding 45,978 46,748 46,829 46,437
Weighted Average Shares
Outstanding 46,423 46,804 46,690 46,414
Weighted Average and Common
Equivalent Shares
Outstanding 46,903 47,401 47,291 46,901
Book Value per Share $14.26 $14.33 $14.34 $13.97
Tangible Book Value per
Share (1) $9.20 $9.34 $9.35 $8.90
Credit Quality Data
Nonperforming Assets (NPAs) $24,727 $24,844 $16,194 $23,150
90 days Past Due and Still
Accruing 2,283 3,323 3,038 1,981
Total $27,010 $28,167 $19,232 $25,131
NPAs to Loans Plus OREO 0.54% 0.55% 0.36% 0.54%
Allowance for Loan Losses $62,070 $61,464 $60,822 $60,805
Reserve for Unfunded
Commitments (2) 1,200 1,200 1,200 -
Allowance for Credit Losses
(ACL) $63,270 $62,664 $62,022 $60,805
ACL to Loans 1.38% 1.38% 1.38% 1.43%
ACL to Loans (excluding
Municipals) 1.41% 1.43% 1.43% 1.46%
ACL to Nonperforming Loans 260.13% 257.81% 392.06% 262.71%
Gross Charge-offs $1,872 $1,753 $1,840 $1,313
Gross Recoveries 728 862 1,040 907
Net Charge-offs $1,144 $891 $800 $406
Net Charge-offs to Average
Loans 0.02% 0.02% 0.02% 0.01%
QTD Average Balance Sheet Data
Securities $1,333,444 $1,391,413 $1,378,688 $1,409,045
Loans, Net 4,552,727 4,455,403 4,408,205 4,174,491
Earning Assets 5,948,463 5,915,366 5,895,121 5,644,833
Total Assets 6,462,457 6,430,410 6,418,971 6,151,863
Deposits 5,372,367 5,377,674 5,454,388 5,085,064
Borrowings 367,521 321,073 246,660 367,617
Stockholders' Equity 661,020 671,058 660,353 637,904
Prior year amounts reflect the modified retrospective application of SFAS
123-R "Accounting for Stock-Based Compensation."
1. Reconciliation of non-GAAP measurements to GAAP
6/30/06 3/31/06 12/30/05 6/30/05
Net Income (GAAP) $21,009 $20,198 $21,813 $19,460
Amortization of core
deposit intangible,
net of tax 431 432 432 431
Tangible Net Income(A) $21,440 $20,630 $22,245 $19,891
Average Stockholders'
Equity (GAAP) $661,020 $671,058 $660,353 $637,904
Average Core Deposit
Intangible 16,659 17,323 17,992 19,417
Average Deferred Tax
on CDI (4,435) (4,610) (4,785) (5,136)
Average Goodwill 216,038 216,038 216,103 216,136
Average Tangible
Equity (B) $432,758 $442,307 $431,043 $407,487
Return on Average
Tangible Equity
(A) / (B) 19.87% 18.92% 20.47% 19.58%
Average Assets
(GAAP) $6,462,457 $6,430,410 $6,418,971 $6,151,864
Average Core
Deposit Intangible 16,659 17,323 17,992 19,417
Average Deferred Tax
on CDI (4,435) (4,610) (4,785) (5,136)
Average Goodwill 216,038 216,038 216,103 216,136
Average Tangible
Assets (C) $6,234,195 $6,201,659 $6,189,661 $5,921,447
Return on Average
Tangible Assets
(A) / (C) 1.38% 1.35% 1.43% 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 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. ($47,636-$3-$664-$722) /
($62,799+$18,528) = 56.87%.
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. ($655,476-$16,326-$216,038) / 45,978=
$9.20.
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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