BURLINGTON, Vt., July 22 /PRNewswire-FirstCall/ -- Chittenden Corporation
(NYSE: CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault,
today announced earnings for the quarter ended June 30, 2004 of $18.2 million
or $0.49 per diluted share, compared to $18.6 million or $0.51 per diluted
share a year ago. Included in the current quarter results were conversion and
restructuring charges of $1.3 million (pre-tax), or approximately $0.02 per
share on an after-tax basis. For the first six months of 2004, earnings were
$35.6 million or $0.96 per diluted share, compared to $35.2 million or $1.00
per diluted share a year ago. Chittenden also announced its quarterly dividend
of $0.22 per share. The dividend will be paid on August 13, 2004, to
shareholders of record on July 30, 2004.
In addition, Chittenden's Board of Directors declared a 5-for-4 common
stock split. The effect will be an increase in outstanding shares of
Chittenden's common stock from 36.9 million to 46.1 million based on shares
outstanding on June 30, 2004. The record date for the stock split is as of the
close of business on August 27, 2004. The additional shares will be
distributed on or about September 10, 2004.
In making the announcement, Perrault said, "I'm pleased to report that we
successfully completed the most comprehensive information technology
conversion in Chittenden's history, as expected, during the second quarter.
The completion of this important project well positions us to more effectively
serve our customers, and enhance efficiencies in providing Chittenden's
hallmark high-quality service. At the same time, we merged the former Granite
Bank into Ocean National Bank, and consolidated Granite's insurance operation
into Chittenden Insurance Group. We're encouraged that, in spite of all this
internal activity, loan growth during the quarter was solid, including double-
digit annualized growth in C&I loans, and strong growth in deposits outpaced
the same period of a year ago."
Total loans at June 30, 2004 increased $45.7 million from March 31, 2004
and $101.2 million from year-end. The increase, consistent throughout the
franchise, from the first quarter of 2004 was predominately in the commercial
and commercial real estate loan portfolios; combined, these two portfolios
increased $74.3 million from March 31, 2004 and $156.1 million from year-end.
Municipal loans experienced their historical seasonal trend, declining $25.8
million from March 31, 2004, as June 30th coincides with the end of the fiscal
year for most municipalities.
Total deposits increased $80.0 million from the first quarter and declined
$55.6 million from year-end. Chittenden's municipal deposit balances
typically peak at year-end and decline steadily to their lows at mid-year.
Declines in this sector were approximately $60 million and $45 million in the
first and second quarters of 2004, respectively. Meanwhile, the non-municipal
book grew approximately $125 million from March 31, 2004, after declining
approximately $75 million in the first quarter. At June 30, 2004 borrowings
declined $32.3 million from the first quarter. This decline was associated
with lower levels of overnight Fed Funds purchased as a result of higher
deposit levels.
The Company's net interest margin for the second quarter of 2004 was
4.18%, a slight increase from the first quarter of 2004 and up four basis
points from the second quarter of 2003. Net interest income was $54.9 million
for the second quarter of 2004 compared with $56.1 million for the same period
a year ago. The decline in net interest income is primarily due to lower
interest income earned on investments. Investments declined from the second
quarter of 2003 due to the sales of securities throughout 2003 to fund the
prepayment of borrowings totaling $164 million.
Net charge-offs as a percentage of average loans were 2 basis points for
the quarter ended June 30, 2004, down from 3 in the same period in 2003. Net
charge-offs in the second quarter of 2004 totaled $631,000 compared with
$391,000 in the first quarter of 2004 and $1.2 million for the second quarter
of 2003. Nonperforming assets were flat from March 31, 2004 at $20.6 million
and as a percentage of total loans decreased to 54 basis points compared to 55
basis points in the first quarter of 2004. The provision for loan losses was
$1.1 million for the second quarter of 2004 compared to $2.1 million for the
second quarter of 2003. The lower provision for the second quarter of 2004 was
driven by the lower net charge-offs, and continued strong asset quality. As a
percentage of total loans, the allowance for loan losses was 1.50%, down
slightly from 1.52% at March 31, 2004.
Noninterest income at June 30, 2004 declined $9.1 million from the same
period a year ago. The primary driver was lower gains on sales of securities
of $8.8 million. The securities gains generated in the second quarter of 2003
resulted from the rebalancing of the Company's investment portfolio; these
gains were largely offset by conversion charges related to the Company's
decision to change its data processing system. Increases from the same quarter
in the prior year in investment management and trust, credit card income, and
insurance commissions offset declines in mortgage banking and retail
investment services.
Noninterest expenses were $46.0 million for the second quarter of 2004, a
decline of $8.3 million from the same period a year ago. Decreases were
recorded in salaries, net occupancy, and conversion expense. Salaries declined
$1.9 million, which was entirely due to lower levels of incentive accruals and
sales-based commissions. Sales-based commissions were down as a result of
lower volumes of mortgage loan sales and retail investments.
The Company incurred conversion and restructuring charges of $1.3 million
in the second quarter of 2004, down from $6.8 million in the same period of
2003. Personnel costs totaled $600,000, due primarily to stay bonuses and
vacation payouts for employees who had previously been notified that they
would not be retained after the IT conversion and the consolidation of
Granite's GSBI insurance into Chittenden Insurance Group. Other costs
consisted of $335,000 related to printing and postage, outsourcing costs of
$192,000, and approximately $132,000 of employees meals and travel costs.
The return on average equity was 12.40% for the second quarter of 2004,
compared with 11.97% for the first quarter of 2004 and 13.34% for the second
quarter a year ago. The return on average assets for the quarter ended June
30, 2004 was 1.26%, an increase from the first quarter of 1.21% and flat with
the second quarter of last year. The return on average tangible equity was
21.01% in the second quarter of 2004, compared to 20.38% in the prior quarter
and 23.13% in the same quarter a year ago.
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call on July 22, 2004 at 10:30
am eastern time to discuss these earnings results. Interested parties may
access the conference call by calling 800-299-7635, passcode 78936274.
International dial-in number is 617-786-2901. 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
http://www.chittendencorp.com. A replay of the call will be available through
July 29, 2004 by calling 888-286-8010 (International dial number is 617-801-
6888), passcode 62670100. 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 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
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 from
historical performance or future expectations. 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/A for the year ended December 31, 2003. 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 Bank, The Bank of Western
Massachusetts, Flagship Bank and Trust Company, Maine Bank & Trust
Company, and Ocean National Bank. Chittenden Bank also operates under
the name Mortgage Service Center, and it owns Chittenden Insurance
Group, and Chittenden Securities, Inc.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
ASSETS 6/30/04 3/31/04 12/31/03 6/30/03
Cash and Cash
Equivalents $170,940 $154,178 $174,939 $212,674
Securities Available
For Sale 1,412,206 1,473,497 1,588,151 1,769,715
FHLB Stock 12,240 20,753 20,753 24,356
Loans Held For Sale 49,497 32,276 25,262 97,500
Loans:
Commercial 740,410 686,304 658,615 632,816
Municipal 66,533 92,338 87,080 54,917
Real Estate:
Residential:
1-4 family 667,676 666,753 700,671 781,715
Multi-family 189,589 182,085 176,478 167,363
Home equity 276,640 277,062 270,959 249,943
Commercial 1,505,880 1,485,031 1,430,945 1,324,943
Construction 129,901 138,497 140,801 113,044
Total Real Estate 2,769,686 2,749,428 2,719,854 2,637,008
Consumer 249,208 252,097 259,135 272,085
Total Loans 3,825,837 3,780,167 3,724,684 3,596,826
Less: Allowance for
Loan Losses (57,969) (57,500) (57,464) (57,591)
Net Loans 3,767,868 3,722,667 3,667,220 3,539,235
Accrued Interest
Receivable 27,376 25,582 29,124 30,208
Other Real Estate Owned 47 36 100 30
Other Assets 64,098 51,834 68,487 46,571
Premises and Equipment,
net 80,241 77,534 75,179 73,742
Mortgage Servicing
Rights 12,562 10,866 12,265 8,686
Identified Intangibles 21,972 21,978 22,733 24,243
Goodwill 216,697 216,431 216,431 215,721
Total Assets $5,835,744 $5,807,632 $5,900,644 $6,042,681
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $891,244 $848,758 $898,920 $864,526
Savings 541,138 526,625 517,789 512,775
NOW 912,175 894,575 899,018 923,572
CMAs/ Money Market 1,491,522 1,472,377 1,604,138 1,468,731
Certificates of
Deposit less
than $100,000 779,492 780,940 789,066 848,320
Certificates of
Deposit $100,000
and Over 298,721 311,067 260,960 249,250
Total Deposits 4,914,292 4,834,342 4,969,891 4,867,174
Securities Sold
Under Agreements
to Repurchase 75,016 76,051 78,980 104,543
Other Borrowings 204,122 236,446 208,454 419,484
Accrued Expenses and
Other Liabilities 54,452 61,308 63,368 83,829
Total Liabilities 5,247,882 5,208,147 5,320,693 5,475,030
Stockholders' Equity:
Common Stock 40,163 40,157 40,142 40,134
Surplus 258,280 257,503 256,974 255,974
Retained Earnings 361,623 351,569 341,441 316,472
Treasury Stock,
at cost (72,967) (76,058) (78,579) (81,543)
Accumulated Other Comprehensive Income:
Unrealized Gains on
Securities Available
for Sale (3,772) 21,964 15,595 36,375
Accrued Minimum Pension
Liability, net of tax - - - (3,829)
Directors Deferred
Compensation to be
Settled in Stock 4,562 4,381 4,413 4,111
Unearned Portion of
Employee Restricted
Stock (27) (31) (35) (43)
Total Stockholders'
Equity 587,862 599,485 579,951 567,651
Total Liabilities
and Stockholders'
Equity $5,835,744 $5,807,632 5,900,644 $6,042,681
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,
2004 2003 2004 2003
Interest Income:
Loans $50,461 $52,543 $99,715 $100,124
Investment Securities:
Taxable 14,757 18,511 30,337 36,727
Tax-favored 13 42 26 87
Short-term Investments 52 123 59 135
Total Interest Income 65,283 71,219 130,137 137,073
Interest Expense:
Deposits 8,539 11,264 16,728 23,060
Borrowings 1,820 3,855 3,774 6,965
Total Interest Expense 10,359 15,119 20,502 30,025
Net Interest Income 54,924 56,100 109,635 107,048
Provision for Loan
Losses 1,100 2,050 1,527 4,100
Net Interest Income
after Provision for
Loan Losses 53,824 54,050 108,108 102,948
Noninterest Income:
Investment Management
and Trust 4,573 3,841 8,922 7,652
Service Charges on
Deposits 4,775 4,735 9,466 9,128
Mortgage Servicing 1,348 (829) 581 (1,587)
Gains on Sales of
Loans, Net 2,895 6,099 4,796 10,535
Gains on Sales of
Securities 240 9,054 2,042 10,444
Loss on Prepayments
of Borrowings - - (1,194) -
Credit Card Income,
Net 1,022 970 1,930 1,873
Insurance Commissions,
Net 1,728 1,531 4,354 3,144
Retail Investment
Services 903 1,314 1,850 2,210
Other 3,154 3,069 5,894 5,641
Total Noninterest
Income 20,638 29,784 38,641 49,040
Noninterest Expense:
Salaries 21,786 23,668 42,665 43,949
Employee Benefits 5,679 5,145 11,650 10,002
Net Occupancy Expense 5,752 6,198 11,778 11,676
Data Processing 1,985 2,161 4,278 4,661
Amortization of
Intangibles 772 727 1,527 1,238
Conversion and
Restructuring Charges 1,318 6,800 1,470 6,800
Other 8,671 9,561 17,197 18,110
Total Noninterest
Expense 45,963 54,260 90,565 96,436
Income Before Income
Taxes 28,499 29,574 56,184 55,552
Income Tax Expense 10,345 10,947 20,563 20,334
Net Income $18,154 $18,627 $35,621 $35,218
Earnings Per Share,
Basic $0.49 $0.51 $0.97 $1.01
Earnings Per Share,
Diluted 0.49 0.51 0.96 1.00
Dividends Per Share 0.22 0.20 0.42 0.40
Return on Average Equity 12.40% 13.34% 12.18% 13.87%
Return on Average Assets 1.26% 1.26% 1.23% 1.27%
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
6/30/04 3/31/04 12/31/03 6/30/03
Selected Financial Ratios
Return on Average
Tangible Equity 1 21.01% 20.38% 23.63% 23.13%
Return on Average
Tangible Assets 1 1.35% 1.30% 1.40% 1.34%
Net Yield on Earning
Assets 4.18% 4.17% 4.14% 4.14%
Efficiency Ratio 58.05% 60.34% 59.58% 60.70%
Tangible Capital Ratio 6.24% 6.48% 6.02% 5.65%
Leverage Ratio 8.22% 8.28% 7.79% 7.22%
Tier 1 Capital Ratio 10.46% 10.36% 10.07% 9.28%
Total Capital Ratio 11.73% 11.61% 11.32% 10.53%
Common Share Data
Common Shares
Outstanding 36,908 36,763 36,637 36,497
Weighted Average Common
Shares Outstanding 36,836 36,719 36,583 36,475
Weighted Average Common
and Common Equivalent
Shares Outstanding 37,245 37,218 37,112 36,765
Book Value per Share $15.93 $16.31 $15.82 $15.55
Tangible Book Value
per Share $9.46 $9.82 $9.30 $8.98
Credit Quality Data
Nonperforming Assets
(including OREO) $20,624 $20,657 $14,431 $17,970
90 days past due and
still accruing 3,777 3,201 4,029 1,921
Total $24,401 $23,858 $18,460 $19,891
Nonperforming Assets
to Loans Plus OREO 0.54% 0.55% 0.39% 0.49%
Allowance to Loans 1.50% 1.52% 1.54% 1.56%
Allowance to
Nonperforming Loans
(excluding OREO) 281.70% 278.85% 400.99% 321.01%
Gross Charge-offs $1,433 $1,251 $4,176 $2,373
Gross Recoveries 802 860 1,444 1,206
Net Charge-offs $631 $391 $2,732 $1,167
Net Charge-offs to
Average Loans 0.02% 0.01% 0.08% 0.03%
QTD Average Balance Sheet Data
Securities $1,448,877 $1,533,480 $1,647,313 $1,760,773
Loans, Net 3,777,039 3,701,494 3,697,490 3,638,769
Earning Assets 5,294,057 5,292,868 5,446,055 5,456,572
Total Assets 5,799,583 5,792,012 5,960,054 5,943,041
Deposits 4,868,682 4,808,334 5,033,498 4,797,953
Borrowings 290,730 339,983 298,478 512,230
Stockholders' Equity 589,067 586,788 572,512 560,209
1. Reconciliation of non-GAAP measurements to GAAP
Net Income (GAAP) $18,154 $17,467 $19,718 $18,627
Amortization of
core deposit
intangible, net
of tax 502 491 491 473
Tangible Net
Income (A) $18,656 $17,958 $20,209 $19,100
Average Equity
(GAAP) 589,067 586,788 572,512 560,209
Average Core
Deposit
Intangible 21,960 22,405 23,148 26,791
Average Deferred
Tax on CDI (6,392) (6,392) (6,392) (6,392)
Average Goodwill 216,439 216,431 216,431 208,544
Average Tangible
Equity (B) 357,060 354,344 339,325 331,266
Return on Average
Tangible Equity
(A)/(B) 21.01% 20.38% 23.69% 23.13%
Average Assets
(GAAP) 5,799,583 5,792,012 5,960,054 5,943,041
Average Core
Deposit
Intangible 21,960 22,405 23,148 26,791
Average Deferred
Tax on CDI (6,392) (6,392) (6,392) (6,392)
Average Goodwill 216,439 216,431 216,431 208,544
Average Tangible
Assets (C) 5,567,576 5,559,568 5,726,867 5,714,098
Return on Average
Tangible Assets
(A)/(C) 1.35% 1.30% 1.40% 1.34%
SOURCE Chittenden Corporation
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