BURLINGTON, Vt., July 21 /PRNewswire-FirstCall/ -- Chittenden Corporation
(NYSE: CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault,
today announced earnings for the quarter ended June 30, 2005, of $20.8 million
or $0.44 per diluted share, an increase in earnings per share of 13% from the
$18.2 million or $0.39 per diluted share a year ago. For the first six months
of 2005, earnings were $39.9 million or $0.85 per diluted share, an increase
of 12% on a per share basis from the $35.6 million or $0.76 per diluted share
a year ago. Chittenden also announced its quarterly dividend of $0.18 per
share, which will be paid on August 12, 2005, to shareholders of record on
July 29, 2005.
SECOND QUARTER 2005 FINANCIAL HIGHLIGHTS
-- Total loans increased $429 million or 11% from June 30, 2004. Strong
growth was noted on a year over year basis in several categories with
commercial and commercial real estate loans up 14% and residential real
estate loans up 10%.
-- The Company's deposits also experienced solid growth of 4.7% and
increased by $230 million from June 30, 2004.
-- In April Flagship Bank and Trust opened a new branch in Westborough,
Massachusetts to further support its customers in the Metro West
market. Flagship has approximately $28 million in loans and $21 million
in deposits in this market.
-- Second quarter net interest income increased over 9% from the same
period in 2004 and the net interest margin expanded by 11 basis points.
-- The Company continued to experience low net charge-offs in the second \
quarter of 2005. The current quarter was the 6th consecutive quarterly
period that net charge-offs were 3 basis points or less.
In making the announcement, Perrault said, "I am extremely pleased with
the quarter's results, not only in the bottom line but the solid increases
seen in loans and deposits. We expect this growth, coupled with continued
outstanding performance on the credit front, to position us well for the
future. In today's environment of rapid change, it is essential that we
continue to know our markets and business lines and make good decisions
focused on serving our customers exceptionally well."
ASSETS
Total loans increased $429 million from June 30, 2004 and $177 million
from year-end. The increases were driven by strong growth in commercial,
commercial real estate and residential real estate loans. The Company's
commercial and commercial real estate loan portfolios have continued to
achieve stellar growth of over 14% from a year ago. This growth has been
achieved consistently over the last few quarters and momentum in these product
lines remains strong. The residential real estate loan portfolio continued its
steady growth and increased $66 million from June 30, 2004 as a result of
higher originations of adjustable-rate mortgages and private banking loans.
Municipal loans experienced their historical seasonal trend, declining 25%
from December 31, 2004, as June 30th coincides with the end of the fiscal year
for most municipalities. Consumer loans increased $15 million from year-end
due primarily to higher originations of indirect loans.
LIABILITIES
Total deposits increased 2.1% from December 31, 2004 and 4.7% from June
30, 2004. The Company experienced its normal seasonal declines in municipal
deposits that primarily affected CMA/money market accounts, which was offset
by higher demand and CD deposits. The growth in demand deposits at June 30,
2005 was from the Company's commercial customers and generally reflects the
normal seasonality in their business cycles. The CD growth was a result of
customers desiring higher yielding products as well as a willingness to invest
for longer periods of time. The increase in repurchase agreements and
borrowings of $75 million from the second quarter of last year was primarily
utilized to fund loan growth.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the quarter ended June
30, 2005 was $60.5 million, an increase of 9.5% from the same period a year
ago. The increase in net interest income was primarily due to continued
growth in average earning assets and a higher net interest margin. The
Company's net interest margin for the second quarter was 4.29%, effectively
flat with the prior quarter and up 11 basis points from the second quarter of
2004. The increase in the net interest margin from a year ago was primarily
related to higher yields on loans driven by increases in the prime rate, as
well as continued improvement in the Company's asset mix which was partially
offset by higher funding costs. On a linked quarter basis, the increase in
loan yield of 23 basis points was offset by higher funding costs. The
increased funding costs were primarily driven by a change in the deposit mix
with increased levels of higher rate CDs and lower balances in CMA/money
market accounts.
NONINTEREST INCOME
Noninterest income for the second quarter of 2005 declined $3.5 million or
16.8% from the same period a year ago and was flat with the first quarter of
2005. Lower mortgage banking revenues, service charges on deposits and
investment management and trust income were the primary factors in the decline
from a year ago. Investment management and trust income declined $473,000
primarily due to lower annuity sales at Chittenden Securities, Inc. Mortgage
banking revenues were $2.2 million for the second quarter of 2005, a decline
of $2.0 million from the same period in 2004. This decline was primarily
attributable to lower impairment recoveries on the Company's MSRs and lower
volumes of loans sold. The decline of $682,000 in service charges on deposits
reflects the Company's expansion of its relationship accounts that minimize
service charges and lower overdraft fee income from customers. Noninterest
income for the first six months of 2005 was $34.7 million, a decline of $3.9
million from the same period in 2004.
NONINTEREST EXPENSE
Noninterest expenses for the second quarter of 2005 were $43.4 million, a
decline of $2.6 million from 2004. The decline from 2004 was related to lower
employee benefits, data processing and conversion and restructuring charges.
These declines were partially offset by higher net occupancy and other
expenses. The lower employee benefits expense was largely due to the Company's
second quarter decision to change the delivery mechanism, effective January 1,
2006, for its employees' pension benefit by redirecting it through the
Company's 401(k) plan. This decision resulted in the immediate recognition of
$1.5 million in deferred credits relating to previous pension plan changes
made in the mid-1990s. Lower data processing expense (a decrease of $1.2
million) and conversion and restructuring charges (a decrease of $1.3 million)
related to the conversion of the Company's IT platform in the second quarter
of 2004. For the first six months of 2005, noninterest expenses were $88.8
million a decline of $1.7 million from 2004. The decline was primarily
attributable to lower employee benefits expense and conversion and
restructuring charges, which were partially offset by increases in other
noninterest expense.
INCOME TAXES
The effective income tax rate for the second quarter was 35.9% in 2005,
compared with 36.3% in 2004. For the first six months of 2005 the effective
income tax rate was 36.2%, compared with 36.6% in 2004. The lower effective
income tax rate for both periods was primarily attributable to higher tax
credits from qualified low-income housing projects.
CREDIT QUALITY
Net charge-offs as a percentage of average loans was only 1 basis point
for the second quarter of 2005, flat with the prior quarter and down from the
same quarter a year ago. Nonperforming assets as a percentage of total loans
at the end of the second quarter of 2005 were 54 basis points, which was up
slightly from the prior quarter and flat with the similar quarter in 2004. The
provision for loan losses was $1.4 million for the second quarter of 2005, an
increase of $300,000 compared to the second quarter of 2004. As a percentage
of total loans, the allowance for loan losses was 1.43%, down from 1.45% at
March 31, 2005, and 1.52% at June 30, 2004.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call on July 21, 2005 at 10:30
a.m. eastern time to discuss these earnings results. Interested parties may
access the conference call by calling 800-798-2864, passcode 60253309.
International dial-in number is 617-614-6206. 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 28, 2005 by calling 888-286-8010 (International dial number is 617-801-
6888), passcode 21857070. A replay of the call will also be available on the
Company's website at the address above for an extended period of time. 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 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 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, 2004. 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 name Chittenden Bank, CHZ Services Group, Mortgage Service Center, and it
owns Chittenden Insurance Group, and Chittenden Securities, Inc.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
ASSETS 6/30/05 3/31/05 12/31/04 6/30/04
Cash and Cash
Equivalents $176,425 $146,861 $136,468 $170,940
Securities Available
For Sale 1,363,180 1,409,434 1,446,221 1,412,206
FRB / FHLB Stock 19,352 19,352 19,243 12,240
Loans Held For Sale 22,611 22,131 33,535 49,497
Loans:
Commercial 831,537 812,050 801,369 740,410
Municipal 79,070 98,128 106,120 66,533
Multi-Family 185,920 180,632 182,541 189,589
Commercial
Real Estate 1,736,665 1,651,247 1,590,457 1,505,880
Construction 124,648 133,799 174,283 129,901
Residential
Real Estate 733,472 712,133 688,017 667,676
Home Equity
Credit Lines 307,866 297,649 294,656 276,640
Consumer 255,239 242,239 239,750 249,208
Total Loans 4,254,417 4,127,877 4,077,193 3,825,837
Less: Allowance
for Loan Losses (60,805) (59,811) (59,031) (57,969)
Net Loans 4,193,612 4,068,066 4,018,162 3,767,868
Accrued Interest
Receivable 29,689 28,443 28,956 27,376
Other Assets 78,629 66,746 64,970 71,581
Premises and
Equipment, net 71,632 72,336 74,271 72,805
Mortgage Servicing
Rights 12,073 12,074 11,826 12,562
Identified Intangibles 18,983 19,648 20,422 21,972
Goodwill 216,136 216,136 216,136 216,697
Total Assets $6,202,322 $6,081,227 $6,070,210 $5,835,744
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $934,234 $881,954 $890,561 $891,244
Savings 502,525 514,215 519,623 541,138
NOW 908,148 898,720 890,701 912,175
CMAs/ Money Market 1,418,634 1,527,753 1,577,474 1,491,522
Certificates of
Deposit less
than $100,000 829,117 781,111 752,828 779,492
Certificates of
Deposit $100,000
and Over 551,777 459,410 407,543 298,721
Total Deposits 5,144,435 5,063,163 5,038,730 4,914,292
Securities Sold
Under Agreements
to Repurchase 56,775 91,443 76,716 75,016
Other Borrowings 296,903 254,418 279,755 204,122
Accrued Expenses
and Other Liabilities 64,466 54,721 54,752 54,452
Total Liabilities 5,562,579 5,463,745 5,449,953 5,247,882
Stockholders' Equity:
Common Stock 50,210 50,207 50,204 50,202
Surplus 249,117 248,864 249,036 248,241
Retained Earnings 407,865 395,410 384,679 361,623
Treasury Stock,
at cost (67,657) (68,233) (69,246) (72,967)
Unrealized Gains
(Losses) on
Securities Available
for Sale (4,978) (13,747) 672 (3,772)
Directors Deferred
Compensation to be
Settled in Stock 5,197 4,996 4,930 4,562
Unearned Portion of
Employee Restricted
Stock (11) (15) (18) (27)
Total Stockholders'
Equity 639,743 617,482 620,257 587,862
Total Liabilities
and Stockholders'
Equity $6,202,322 $6,081,227 $6,070,210 $5,835,744
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,
2005 2004 2005 2004
Interest Income:
Loans $62,786 $50,461 $120,937 $99,715
Investment Securities:
Taxable 14,809 14,757 29,852 30,337
Tax-favored 14 13 27 26
Short-term Investments 6 52 11 59
Total Interest Income 77,615 65,283 150,827 130,137
Interest Expense:
Deposits 14,193 8,539 25,461 16,728
Borrowings 3,342 1,820 6,301 3,774
Total Interest Expense 17,535 10,359 31,762 20,502
Net Interest Income 60,080 54,924 119,065 109,635
Provision for
Loan Losses 1,400 1,100 2,475 1,527
Net Interest Income
after Provision
for Loan Losses 58,680 53,824 116,590 108,108
Noninterest Income:
Investment Management
and Trust 5,003 5,476 9,974 10,772
Service Charges on
Deposits 4,093 4,775 8,134 9,466
Mortgage Servicing 209 1,348 564 581
Gains on Sales of
Loans, Net 2,003 2,895 4,134 4,796
Gains (Losses) on
Sales of Securities (1) 240 (1) 2,042
Loss on Prepayments
of Borrowings - - - (1,194)
Credit Card, Net 1,131 1,022 2,106 1,930
Insurance Commissions,
Net 1,526 1,728 3,890 4,354
Other 3,212 3,154 5,934 5,894
Total Noninterest
Income 17,176 20,638 34,735 38,641
Noninterest Expense:
Salaries 21,798 21,786 43,474 42,665
Employee Benefits 4,238 5,679 10,717 11,650
Net Occupancy 6,024 5,752 12,350 11,778
Data Processing 810 1,985 1,585 4,278
Amortization of
Intangibles 664 772 1,438 1,527
Conversion and
Restructuring Charges - 1,318 - 1,470
Other 9,846 8,671 19,256 17,197
Total Noninterest
Expense 43,380 45,963 88,820 90,565
Income Before
Income Taxes 32,476 28,499 62,505 56,184
Income Tax Expense 11,670 10,345 22,617 20,563
Net Income $20,806 $18,154 $39,888 $35,621
Basic Earnings
Per Share $0.45 $0.40 $0.86 $0.78
Diluted Earnings
Per Share 0.44 0.39 0.85 0.76
Dividends Per Share 0.18 0.18 0.36 0.34
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
6/30/05 3/31/05 12/31/04 6/30/04
Selected Financial Ratios
Return on Average
Tangible Equity(1) 21.37% 20.35% 21.25% 21.01%
Return on Average
Equity 13.27% 12.46% 12.95% 12.40%
Return on Average
Tangible Assets(1) 1.44% 1.36% 1.39% 1.35%
Return on Average Assets 1.36% 1.28% 1.31% 1.26%
Net Yield on Earning
Assets 4.29% 4.30% 4.27% 4.18%
Efficiency Ratio(2) 57.14% 58.07% 55.64% 58.05%
Tangible Capital Ratio 6.78% 6.53% 6.58% 6.24%
Leverage Ratio 8.78% 8.66% 8.42% 8.22%
Tier 1 Capital Ratio 10.56% 10.46% 10.44% 10.46%
Total Capital Ratio 11.75% 11.65% 11.64% 11.73%
Common Share Data
Common Shares
Outstanding 46,437 46,402 46,342 46,135
Weighted Average
Common Shares
Outstanding 46,414 46,385 46,293 46,045
Weighted Average
Common and
Common Equivalent
Shares Outstanding 46,901 46,918 46,960 46,557
Book Value per Share $13.78 $13.31 $13.38 $12.74
Tangible Book Value
per Share $8.71 $8.23 $8.28 $7.57
Credit Quality Data
Nonperforming Assets
(including OREO) $23,150 $20,692 $20,024 $20,625
90 days past due
and still accruing 1,981 4,543 2,604 3,777
Total $25,131 $25,235 $22,628 $24,402
Nonperforming Assets
to Loans Plus OREO 0.54% 0.50% 0.49% 0.54%
Allowance to Loans 1.43% 1.45% 1.45% 1.52%
Allowance to
Nonperforming Loans
(excluding OREO) 262.71% 289.29% 296.41% 281.70%
Gross Charge-offs $1,313 $1,154 $2,821 $1,433
Gross Recoveries 907 859 1,428 802
Net Charge-offs $406 $295 $1,393 $631
Net Charge-offs
to Average Loans 0.01% 0.01% 0.03% 0.02%
QTD Average Balance Sheet Data
Securities $1,409,045 $1,450,210 $1,495,302 $1,449,419
Loans, Net 4,174,491 4,057,647 4,000,917 3,777,039
Earning Assets 5,644,833 5,568,124 5,572,226 5,294,057
Total Assets 6,143,001 6,060,179 6,089,616 5,799,583
Deposits 5,085,064 5,000,949 5,128,344 4,868,682
Borrowings 367,617 386,613 291,919 290,730
Stockholders' Equity 629,042 621,276 615,420 589,067
1. Reconciliation of non-GAAP measurements to GAAP
Net Income (GAAP) $20,806 $19,082 $20,028 $18,154
Amortization of core
deposit intangible,
net of tax 431 503 503 502
Tangible Net
Income (A) $21,237 $19,585 $20,531 $18,656
Average Equity (GAAP) 629,042 621,276 615,420 589,067
Average Core Deposit
Intangible 19,417 20,155 20,919 21,960
Average Deferred
Tax on CDI (5,136) (5,311) (6,392) (6,392)
Average Goodwill 216,136 216,136 216,502 216,439
Average Tangible
Equity (B) 398,625 390,296 384,391 357,060
Return on Average
Tangible Equity
(A) / (B) 21.37% 20.35% 21.25% 21.01%
Average Assets
(GAAP) $6,143,001 $6,060,179 $6,089,616 $5,799,583
Average Core
Deposit Intangible 19,417 20,155 20,919 21,960
Average Deferred
Tax on CDI (5,136) (5,311) (6,392) (6,392)
Average Goodwill 216,136 216,136 216,502 216,439
Average Tangible
Assets (C) 5,912,764 5,829,199 5,858,587 5,567,576
Return on Average
Tangible Assets
(A) / (C) 1.44% 1.36% 1.39% 1.35%
2. The June 30, 2005 efficiency ratio excludes the $1.5 million in
deferred pension credits. If this benefit had not been excluded the efficiency
ratio would have been 55.16%.
SOURCE Chittenden Corporation
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