BURLINGTON, Vt., Oct. 16 /PRNewswire-FirstCall/ -- Chittenden Corporation
(NYSE: CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault,
today announced third quarter 2003 net income of $0.54 per diluted share,
compared to the $0.48 per diluted share earned in the third quarter of 2002.
For the first nine months of 2003, earnings were $1.54 per diluted share,
compared to $1.41 a year ago. Chittenden also announced its quarterly dividend
of $0.20 per share. The dividend will be paid on November 14, 2003, to
shareholders of record on October 31, 2003.
In making the announcement, Perrault said, "I am extremely pleased with
our progress in organizing ourselves to be most responsive to our customers,
shareholders, and employees, and with the financial results that we have
achieved at the same time. With our early-summer decision to migrate to a new
information technology platform, work has begun in earnest to convert all of
our banks by the second quarter of next year. I am pleased to report that we
are on schedule to meet that objective. The end result will be greater
effectiveness in serving our customers, enhanced efficiencies in our processes
and lower costs associated with providing that service."
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 was 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 loans increased $85 million from June 30, 2003, due to increases in
municipal, commercial real estate and construction loans. The increase in
municipal loans reflects a seasonal trend, as the second quarter is
historically the low point for municipal borrowings, coinciding with the
borrowers' fiscal year-ends. Commercial real estate loans increased $50
million from June 30th with growth throughout Chittenden's markets. The
Company's residential real estate portfolio declined $43 million due to
continued heavy prepayments emanating from the decline in long term interest
rates which hit their recent lows in the second quarter of 2003. This decline
was substantially offset by growth in construction loans due to the financing
of several projects within Chittenden's commercial customer base, continuing a
trend that has been seen for the last several quarters.
Total deposits increased $151 million from June 30th to $5.0 billion at
September 30, 2003. The increase was driven primarily by higher activity in
demand, savings and money market/cash management accounts associated with
municipal and commercial customers. The Company's deposit base primarily
consists of demand, savings and NOW accounts, which comprise 46% of total
deposits and have an average weighted cost of 0.20%, and money market/cash
management accounts which comprise 32% of total deposits and have an average
weighted cost of 0.73%. Borrowings declined $159 million to $240 million at
September 30, 2003, primarily as a result of the early redemption of FHLB
borrowings and customer repurchase agreements.
The operating net interest margin for the third quarter of 2003 was 4.11%
compared to 4.14% for the second quarter of 2003. In addition to scheduled
amortization of Granite's purchase accounting adjustments to loans, deposits,
and borrowings which reduced net interest income by $900,000, the Company
recognized accelerated amortization of $1.7 million in the third quarter
primarily due to heavy prepayments on Granite's residential mortgages. The
net interest margin for the third quarter, including the accelerated purchase
accounting amortization, was 3.98%. Net interest income was $54.7 million for
the third quarter of 2003 and $49.7 million for the same period a year ago.
The increase was driven by a larger balance sheet, as average-earning assets
increased $1.1 billion to $5.5 billion in 2003 due primarily to the Granite
acquisition.
Net charge-offs as a percentage of average loans were 1 basis point in the
third quarter and 8 basis points in the first nine months of 2003 compared to
10 basis points and 20 basis points for the respective periods in 2002. Net
charge-off activity on a year-to-date basis totaled $3.1 million compared with
$6.1 million in 2002. Nonperforming assets were $18.0 million at September
30, 2003 unchanged from June 30, 2003 and as a percentage of total loans
decreased to 48 basis points compared to 49 basis points a quarter ago and 54
basis points for the third quarter of 2002. As a percentage of loans, the
allowance for loan losses was 1.57%, which was consistent with the last
several quarters.
Noninterest income was $25.0 million for the third quarter of 2003 down
from $29.8 million for the second quarter and up from $13.8 million for the
same period a year ago. The change from the second quarter was primarily due
to fluctuations in securities gains, impairments on mortgage servicing rights,
and losses on prepayments of borrowings. Excluding these items, noninterest
income grew approximately $1.6 million on a linked-quarter basis. Gains on
sales of loans increased $860,000 from the second quarter of 2003 due to a
slightly higher margin on mortgage loans sold and insurance commissions were
up $610,000 primarily due to higher levels of performance based commissions.
Compared with the third quarter of a year ago, increases were also seen in
service charges on deposit accounts due to the Granite Bank acquisition, as
well as investment management income, and retail investment services. The
Company realized $3.3 million of gains on sales of securities compared to $9.7
million during the second quarter of 2003 and $6 thousand in the comparable
quarter of 2002. Partially offsetting the securities gains recognized in the
current quarter were losses of $2.1 million associated with the prepayment of
borrowings. In addition, mortgage servicing income was $2.1 million higher on
a linked-quarter basis and $2.2 million higher from the same quarter of 2002
due to recoveries recognized in the current quarter associated with the fair
value of the Company's serviced loan portfolio, net of continued heavy
amortization of those assets. During the third quarter the Company recognized
approximately $3.3 million in impairment recoveries versus $3.5 million in
amortization expense on its mortgage servicing rights.
Noninterest expenses decreased $7.4 million from the second quarter of
2003 and increased $9.9 million from the third quarter of 2002. The increase
in noninterest expenses from the same period a year ago were primarily a
result of the Granite Bank acquisition which contributed approximately $4.0
million in salary and benefits expenses, $1.2 million of net occupancy expense
and $1.5 million of other noninterest expenses. The decrease from the second
quarter of 2003 was largely due to $6.8 million in non-recurring charges
accrued in the second quarter related to the Company's decision to convert its
core data processing system and lower compensation expense due to reductions
in staffing.
Effective income tax rates for 2003 were 35.4% for the third quarter and
36.2% year to date compared to 34.7% for both respective periods in 2002. The
higher effective rates in 2003 are due primarily to a larger proportion of the
Company's taxable income being generated in New Hampshire. The lower
effective tax rate in the third quarter of 2003 versus year-to-date was due to
the recognition of the settlement of tax assessments by the Massachusetts
Department of Revenue relating to the taxation of Real Estate Investment
Trusts. This settlement benefited the current quarter's provision by
approximately $250,000.
The return on average equity was 14.19% for the third quarter of 2003,
compared with 13.34% for the second quarter and 15.36% in the same quarter of
2002. This decline from a year ago is primarily due to the issuance of
additional equity in the Granite acquisition. The return on average assets
for the third quarter of 2003 was 1.32%, flat with the third quarter of 2002
and up from 1.26% for the second quarter of 2003.
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 Investors' Resource section of the
Company's website at https://www.chittendencorp.com. A replay of the call
will be available through October 23, 2003, by calling 877-519-4471 or 973-
341-3080 in the New York City area (pin number is 4230246) 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 news releases,
including earnings announcements, are available on the Company's website or
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.
Kirk W. Walters
(802) 660-1561
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
ASSETS
9/30/03 6/30/03 3/31/03 12/31/02 9/30/02
Cash and Cash
Equivalents $209,697 $212,674 $190,537 $192,142 $300,184
Securities
Available
For Sale 1,653,111 1,769,715 1,714,494 1,497,111 1,424,513
FHLB Stock 24,352 24,356 24,356 17,030 14,967
Loans Held
For Sale 95,777 97,500 98,578 94,874 62,055
Loans:
Commercial 633,221 632,816 625,177 568,224 567,939
Municipal 106,512 54,917 82,005 77,820 97,912
Real Estate:
Residen-
tial 1,155,832 1,199,021 1,238,315 861,706 895,472
Commer-
cial 1,375,027 1,324,943 1,314,095 1,103,897 1,067,702
Construc-
tion 143,515 113,044 96,859 85,512 81,232
Total Real
Estate 2,674,374 2,637,008 2,649,269 2,051,115 2,044,406
Consumer 267,615 272,085 272,159 276,704 293,248
Total Loans 3,681,722 3,596,826 3,628,610 2,973,863 3,003,505
Less:
Allowance
for Loan
Losses (59,171) (57,591) (56,708) (48,197) (48,187)
Net Loans 3,622,551 3,539,235 3,571,902 2,925,666 2,955,318
Accrued
Interest
Receivable 29,277 30,208 32,255 27,992 28,586
Other Real
Estate Owned 52 30 37 158 0
Other Assets 61,451 46,571 48,737 35,269 42,039
Premises and
Equipment,
net 75,624 73,742 72,524 57,074 56,901
Mortgage
Servicing
Rights 10,615 8,686 9,306 8,491 15,482
Identified
Intangibles 23,488 24,243 28,282 9,480 9,827
Goodwill 216,431 215,721 205,579 55,257 55,911
Total
Assets $6,022,426 $6,042,681 $5,996,587 $4,920,544 $4,965,783
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $880,354 $864,526 $799,506 $684,077 $681,595
Savings 523,497 512,775 503,415 400,616 397,545
NOW 912,563 923,572 874,439 578,272 567,017
Money Market
Accounts 1,617,176 1,468,731 1,491,329 1,540,267 1,595,614
Certificates
of Deposit
less than
$100,000 822,634 848,320 874,722 691,467 691,873
Certificates
of Deposit
$100,000
and Over 262,137 249,250 270,627 231,393 237,948
Total
Deposits 5,018,361 4,867,174 4,814,038 4,126,092 4,171,591
Borrowings 240,367 399,027 428,597 173,654 178,189
Company
Obligated,
Mandatorily
Redeemable
Securities
Of Subsidiary
Trust 125,000 125,000 125,000 125,000 125,000
Accrued
Expenses
and Other
Liabilities 64,427 83,829 77,627 77,006 76,651
Total
Liabili-
ties 5,448,155 5,475,030 5,445,262 4,501,752 4,551,431
Stockholders' Equity:
Common Stock 40,134 40,134 40,135 35,749 35,749
Surplus 256,215 255,974 256,057 145,191 145,193
Retained
Earnings 329,035 316,472 305,140 294,943 283,536
Treasury
Stock,
at cost (80,951) (81,543) (83,254) (85,382) (85,383)
Accumulated Other Comprehensive Income:
Unrealized
Gains (Losses)
on Securities
Available
for Sale 25,610 36,375 33,388 28,573 31,402
Accrued Minimum
Pension
Liability,
net of tax - (3,829) (4,058) (4,284) -
Directors
Deferred
Compensation
to be settled
in stock 4,266 4,111 3,963 4,052 3,909
Unearned
Portion
of Employee
Restricted
Stock (38) (43) (46) (50) (54)
Total
Stockholders'
Equity 574,271 567,651 551,325 418,792 414,352
Total Liabilities
and Stockholders'
Equity $6,022,426 $6,042,681 $5,996,587 $4,920,544 $4,965,783
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2003 2002 2003 2002
Interest Income:
Loans $49,434 $48,734 $149,558 $146,717
Investment Securities:
Taxable 17,648 17,954 54,375 46,065
Tax-favored 61 96 148 304
Short-term Investments 88 83 223 125
Total Interest Income 67,231 66,867 204,304 193,211
Interest Expense:
Savings 432 1,089 1,690 3,321
NOW 713 530 2,517 1,542
Money Market 2,830 5,968 10,615 18,838
Certificates of
Deposits under
$100,000 4,491 5,406 14,118 17,470
Certificates of
Deposits $100,000
and over 1,139 1,479 3,725 4,648
Borrowings 2,965 2,734 9,930 4,881
Total Interest Expense 12,570 17,206 42,595 50,700
Net Interest Income 54,661 49,661 161,709 142,511
Provision for
Loan Losses 2,050 2,315 6,150 6,081
Net Interest Income
after Provision
for Loan Losses 52,611 47,346 155,559 136,430
Noninterest Income:
Investment Management
Income 3,983 3,865 11,634 11,750
Service Charges on
Deposit Accounts 4,583 4,067 13,711 11,919
Mortgage Servicing
Income (Loss) 1,275 (882) (311) 432
Gains on Sales of
Loans, Net 6,959 2,086 17,494 6,702
Credit Card
Income, Net 1,149 1,026 3,022 2,715
Gains on Sales
of Securities 3,305 6 14,349 328
Gain (Loss) on
Prepayments of
Borrowings (2,154) 0 (2,154) 0
Insurance
Commissions, Net 2,041 1,185 5,185 3,005
Retail Investment
Services 1,287 620 3,497 1,870
Other 2,570 1,803 7,611 6,778
Total Noninterest
Income 24,998 13,776 74,038 45,499
Noninterest Expense:
Salaries and Employee
Benefits 28,652 22,128 82,604 65,411
Net Occupancy Expense 5,977 4,766 17,654 14,546
Data Processing 2,319 2,830 6,980 8,550
Information Technology
Conversion 0 0 6,800 0
Amortization of
Intangibles 755 348 1,993 931
Other Real Estate
Owned, Net (20) (115) (139) (276)
Other 9,175 7,089 27,403 22,527
Total Noninterest
Expense 46,858 37,046 143,295 111,689
Income Before
Income Taxes 30,751 24,076 86,302 70,240
Income Tax Expense 10,887 8,364 31,221 24,391
Net Income $19,864 $15,712 $55,081 $45,849
Earnings Per
Share, Basic $0.54 $0.49 $1.55 $1.43
Earnings Per
Share, Diluted 0.54 0.48 1.54 1.41
Dividends Per Share 0.20 0.20 0.60 0.59
CHITTENDEN CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
9/30/03 6/30/03 3/31/03 12/31/02 9/30/02
Selected Financial Ratios
Return on
Average Equity14.19% 13.34% 14.53% 17.08% 15.36%
Return on
Average Assets 1.32% 1.26% 1.29% 1.45% 1.32%
Net Yield on
Earning Assets 3.98% 4.14% 4.22% 4.38% 4.49%
Tier 1 Capital
Ratio 9.72% 9.28% 9.22% 12.25% 12.04%
Total Capital
Ratio 10.97% 10.53% 10.47% 13.50% 13.29%
Leverage Ratio 7.49% 7.22% 8.10% 9.28% 9.37%
Tangible Capital
Ratio 5.78% 5.65% 5.51% 7.30% 7.12%
Efficiency
Ratio 59.87% 60.70% 60.39% 59.20% 57.71%
Common Share Data
Weighted Average
Common Shares
Outstand-
ing 36,509,450 36,475,443 33,493,106 31,939,820 32,132,628
Weighted Average
Common and
Common
Equivalent
Shares
Outstand-
ing 36,856,558 36,764,758 33,799,406 32,259,266 32,539,799
Book Value
per Share $15.72 $15.55 $15.14 $13.11 $12.97
Tangible Book
Value
per Share $9.15 $8.98 $8.72 $11.09 $10.91
Common Shares
Outstand-
ing 36,522,940 36,496,930 36,420,367 31,939,470 31,940,640
Credit Quality Data($ in thousands)
Nonperforming
Assets
(including
OREO) $18,011 $17,970 $14,981 $14,960 $16,415
90 days past
due and still
accruing 3,021 1,921 3,106 2,953 3,213
Total $21,032 $19,891 $18,087 $17,913 $19,628
Nonperforming
Assets to
Loans Plus
OREO 0.48% 0.49% 0.40% 0.49% 0.54%
Allowance to
Loans 1.57% 1.56% 1.52% 1.57% 1.57%
Allowance to
Nonperforming
Loans
(excluding
OREO) 329.48% 321.01% 379.48% 325.64% 293.56%
Gross
Charge-offs $1,239 $2,373 $2,250 $2,992 $3,849
Gross
Recoveries 769 1,206 774 752 727
Net
Charge-offs $470 $1,167 $1,476 $2,240 $3,121
Net Charge-offs
to Average
Loans 0.01% 0.03% 0.04% 0.07% 0.10%
QTD Average Balance Sheet Data ($ in thousands)
Loans,
Net $3,693,594 $3,638,769 3,236,735 $3,007,081 $2,988,405
Earning
Assets 5,496,829 5,456,572 4,879,771 4,588,801 4,443,815
Total
Assets 5,974,552 5,943,041 5,224,669 4,869,802 4,727,637
Deposits 4,941,066 4,797,953 4,278,877 4,088,425 3,951,162
Stock-
holders'
Equity 555,567 560,209 463,149 413,449 405,783
(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 Securities, Inc. Granite
Bank operates an insurance agency subsidiary under the name GSBI
Insurance Group.
SOURCE Chittenden Corporation
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