BURLINGTON, Vt., Oct. 19 /PRNewswire-FirstCall/ -- Chittenden
Corporation (NYSE: CHZ) Chairman, President and Chief Executive Officer,
Paul A. Perrault, today announced earnings for the quarter ended September
30, 2006 of $21.725 million, or $0.47 per diluted share, compared to
$21.684 million or $0.46 per diluted share for the third quarter of 2005.
For the first nine months of 2006, earnings were $62.932 million or $1.34
per diluted share, compared to $60.226 million or $1.28 per diluted share
for the same period of a year ago. In making the announcement, Perrault
said, "I am pleased to report that despite the difficult environment for
banking, we are carefully managing our business while producing strong
results for our shareholders." Chittenden also announced its quarterly
dividend of $0.20 per share, which will be paid on November 10, 2006, to
shareholders of record on October 27, 2006.
THIRD QUARTER 2006 FINANCIAL HIGHLIGHTS
* Loans increased 6% from September 30, 2005 with strong growth in several
commercial categories.
* Average deposits increased 3% from the third quarter of 2005, with
solid growth in CMA/money market deposits of 6%.
* Net interest margin held steady at 4.23%, up slightly from the first and
second quarters of 2006.
* Noninterest expenses decreased 3% from the second quarter of 2006 and
increased only 1% compared to the third quarter of 2005.
ASSETS
Total loans were up $251 million from the third quarter of 2005 to $4.7
billion at September 30, 2006. The increase was driven by solid growth in
the commercial real estate and construction portfolios, as well as loans
secured by multi-family residential properties. Loan yields were up 12.8%
as compared to the same period a year ago primarily due to the ongoing
repricing of variable rate portfolio loans as well as new loan originations
in a rising interest rate environment.
LIABILITIES
Total deposits were up $182 million from June 30, 2006 and $106 million
from September 30, 2005. The increase on a linked quarter basis was
primarily driven by the normal seasonal inflows from Chittenden's municipal
and captive insurance customers. The year-over-year increase was due to
higher levels of CMA/money market deposits and CDs, which were partially
offset by declines in NOW and savings deposits. At September 30, 2006 other
borrowings declined by $44 million from the same period in 2005 as a result
of increased deposit flows.
NET INTEREST INCOME
Tax-equivalent net interest income grew to $63.5 million in the third
quarter of 2006 as compared to $62.8 million for the same quarter of 2005.
The increase in net interest income was primarily due to higher average
earning assets, which was partially offset by a lower net interest margin.
The Company's net interest margin for the third quarter was 4.23%, an
increase of 1 basis point from the second quarter of 2006 and a decrease of
12 basis points from the same period a year ago. The decline in the net
interest margin from the third quarter of 2005 was primarily due to an
increase in funding costs, which was partially offset by an increase in the
yield on interest earning assets. The increase in the funding costs was
driven by aggressive competition for deposits as well as the Federal
Reserve increasing short-term interest rates.
NONINTEREST INCOME
Noninterest income was $16.1 million for the third quarter of 2006 as
compared to $17.8 million for the same period a year ago. The decrease from
2005 was primarily due to a slowdown in mortgage banking revenues, which
was partially offset by higher investment management fees and service
charges on deposits. Mortgage banking revenues are derived primarily from
two sources, the gain on sales of loans and mortgage servicing income. The
gain on sales of loans declined 37% from the same quarter a year ago due to
lower originations of mortgage loans. The decline in mortgage servicing
income for the third quarter of 2006 was driven by a mortgage servicing
rights impairment of $104,000 compared to a recovery of $146,000 in 2005.
The decrease in other income primarily related to the early termination of
the interest rate swaps on the Company's Trust Preferred Securities and the
reduction in accrued interest on income tax refunds.
NONINTEREST EXPENSE
Noninterest expenses for the third quarter of 2006 were $46.0 million,
up slightly from the same period in 2005. The increase from the prior year
was due to higher share-based compensation costs, which were $784,000 in
the third quarter of 2006 as compared to $5,000 in the similar quarter a
year ago. The decrease in noninterest expenses from the second quarter of
2006 primarily related to lower incentive, marketing and legal costs. The
Company's efficiency ratio increased to 55.9% from 54.6% for the same
period in 2005 due to lower noninterest income.
INCOME TAXES
The effective income tax rate was 30.3% in the third quarter of 2006
and 32.3% for the first nine months of 2006 compared with 34.8% and 34.6%
for the respective periods in 2005. The lower effective income tax rate was
primarily attributable to higher low-income housing and historic
rehabilitation tax credits.
CREDIT QUALITY
The provision for credit losses was $1.7 million for the third quarter
of 2006 compared to $1.3 million for the same quarter of 2005. The increase
in the provision for credit losses from the comparable period in 2005 was
primarily due to higher net charge offs and nonperforming loans. The
allowance for credit losses as a percentage of total loans excluding
municipal loans was 1.40% at September 30, 2006 as compared to 1.41% for
the second quarter of 2006 and 1.44% for the third quarter of 2005.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer
of Chittenden Corporation, will host a conference call on October 19, 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 866-202-4367,
passcode 50843158. International dial-in number is 617-213-8845.
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 October 27, 2006 by calling 888-286-8010
(International dial number is 617-801-6888), passcode 14220640. 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 borrowings 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,
Chittenden Mortgage Services, and it owns Chittenden Insurance Group,
LLC, and Chittenden Securities, LLC.
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
Assets: 9/30/06 6/30/06 3/31/06 12/31/05 9/30/05
Cash and Cash
Equivalents $145,393 $172,567 $142,887 $180,707 $150,409
Securities
Available
For Sale 1,231,369 1,288,390 1,344,016 1,383,909 1,348,521
FRB and FHLB
Stock 16,124 18,577 19,352 19,352 19,352
Loans Held
For Sale 21,646 18,882 19,319 19,737 34,774
Loans:
Commercial &
Industrial
(C&I) 854,475 851,692 836,986 848,420 841,430
Municipal 144,152 90,206 172,443 160,357 156,630
Multi-Family 213,153 205,443 195,809 196,590 192,563
Commercial
Real
Estate 1,933,279 1,884,716 1,827,096 1,778,202 1,760,621
Construction 211,187 218,123 212,824 192,165 173,909
Residential
Real Estate 749,106 750,031 731,798 737,462 724,873
Home Equity
Credit
Lines 325,814 319,606 316,355 316,465 316,733
Consumer 246,394 254,839 254,719 257,829 259,865
Total Loans 4,677,560 4,574,656 4,548,030 4,487,490 4,426,624
Less:
Allowance
for Loan
Losses (62,153) (62,070) (61,464) (60,822) (61,468)
Net Loans 4,615,407 4,512,586 4,486,566 4,426,668 4,365,156
Accrued
Interest
Receivable 32,393 31,138 32,772 32,621 29,202
Other Assets 89,759 102,079 93,673 93,377 90,480
Premises and
Equipment 67,952 69,503 68,568 69,731 70,509
Mortgage
Servicing
Rights 14,347 14,529 13,966 13,741 12,970
Identified
Intangibles 15,661 16,326 16,991 17,655 18,320
Goodwill 216,038 216,038 216,038 216,038 216,136
Total
Assets $6,466,089 $6,460,615 $6,454,148 $6,473,536 $6,355,829
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demands $971,378 $965,794 $929,718 $973,752 $988,096
Savings 481,380 474,883 489,944 489,734 499,119
NOWs 866,134 895,817 906,934 861,000 891,058
CMAs/ Money
Markets 1,658,319 1,441,573 1,584,777 1,749,878 1,592,743
Certificates
of Deposit
less than
$100,000 858,834 878,181 853,645 814,289 814,435
Certificates
of Deposit
$100,000
and Over 663,086 661,322 618,319 625,682 607,897
Total
Deposits 5,499,131 5,317,570 5,383,337 5,514,335 5,393,348
Securities Sold
Under Agreements
to Repurchase 87,112 138,773 53,238 56,315 64,114
Other
Borrowings 135,975 285,497 288,482 171,008 179,552
Accrued Expenses
and Other
Liabilities 63,162 63,299 59,295 60,488 63,428
Total
Liabilities5,785,380 5,805,139 5,784,352 5,802,146 5,700,442
Stockholders' Equity:
Common Stock 50,235 50,235 50,235 50,220 50,220
Surplus 274,834 273,723 272,696 276,278 274,429
Retained
Earnings 454,985 442,456 430,811 419,057 405,624
Treasury Stock,
at cost (85,613) (85,678) (64,189) (60,801) (65,684)
Accumulated
Other
Comprehensive
Income (19,470) (30,924) (25,216) (18,968) (14,595)
Directors'
Deferred
Compensation
to be Settled
in Stock 5,738 5,664 5,459 5,604 5,400
Unearned Portion
of Employee
Restricted Stock - - - - (7)
Total Stockholders'
Equity 680,709 655,476 669,796 671,390 655,387
Total Liabilities
and Stockholders'
Equity $6,466,089 $6,460,615 $6,454,148 $6,473,536 $6,355,829
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 Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
Interest Income:
Loans $82,743 $68,588 $234,555 $189,525
Investments 13,539 14,033 42,353 43,923
Total Interest Income 96,282 82,621 276,908 233,448
Interest Expense:
Deposits 28,868 17,561 77,648 43,022
Borrowings 4,689 2,845 13,487 9,146
Total Interest Expense 33,557 20,406 91,135 52,168
Net Interest Income 62,725 62,215 185,773 181,280
Provision for Credit
Losses 1,670 1,325 4,953 3,800
Net Interest Income
after Provision
for Credit Losses 61,055 60,890 180,820 177,480
Noninterest Income:
Investment Management
and Trust 5,233 4,996 15,708 14,970
Service Charges on
Deposits 4,277 4,053 12,564 12,187
Mortgage Servicing 382 658 1,702 1,222
Gains on Sales of Loans 1,624 2,586 4,897 6,720
Credit Card Income 1,376 1,237 3,837 3,343
Insurance Commissions 1,275 1,341 4,750 5,231
Other 1,970 2,907 8,794 8,840
Total Noninterest
Income 16,137 17,778 52,252 52,513
Noninterest Expense:
Salaries 23,200 22,250 69,906 67,837
Employee Benefits 5,637 5,784 16,987 16,501
Net Occupancy 5,705 5,844 17,635 18,194
Data Processing 1,034 921 2,987 2,506
Amortization of
Intangibles 665 665 1,994 2,103
Other 9,777 9,948 30,545 30,713
Total Noninterest
Expense 46,018 45,412 140,054 137,854
Income Before Income
Taxes 31,174 33,256 93,018 92,139
Income Tax Expense 9,449 11,572 30,086 31,913
Net Income $21,725 $21,684 $62,932 $60,226
Basic Earnings Per
Share $0.47 $0.47 $1.36 $1.30
Diluted Earnings Per
Share 0.47 0.46 1.34 1.28
Dividends Per Share 0.20 0.18 0.58 0.54
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)
9/30/06 6/30/06 3/31/06 12/31/05 9/30/05
Selected Financial Ratios
Return on
Average
Tangible
Equity (1) 20.20% 19.87% 18.92% 20.47% 20.80%
Return on
Average
Equity 13.00% 12.75% 12.21% 13.11% 13.20%
Return on
Average
Tangible
Assets (1) 1.41% 1.38% 1.35% 1.43% 1.46%
Return on
Average Assets 1.33% 1.30% 1.27% 1.35% 1.37%
Net Yield on
Earning Assets 4.23% 4.22% 4.20% 4.30% 4.35%
Efficiency
Ratio(1) 55.91% 56.87% 56.61% 54.37% 54.57%
Tangible Capital
Ratio 7.20% 6.79% 7.02% 7.01% 6.88%
Leverage Ratio 9.24% 9.04% 9.38% 9.21% 9.13%
Tier 1 Capital
Ratio 11.59% 11.29% 11.61% 11.23% 10.90%
Total Capital
Ratio 12.80% 12.49% 12.82% 12.40% 12.07%
Common Share Data
Common Shares
Outstanding 45,994 45,978 46,748 46,829 46,557
Weighted Average
Shares
Outstanding 45,982 46,423 46,804 46,690 46,519
Weighted Average
and Common
Equivalent Shares
Outstanding 46,504 46,903 47,401 47,291 47,109
Book Value per
Share $14.80 $14.26 $14.33 $14.34 $14.08
Tangible Book
Value per
Share (1) $9.76 $9.20 $9.34 $9.35 $9.04
Credit Quality Data
Nonperforming
Assets (NPAs)$26,089 $24,727 $24,844 $16,194 $18,299
90 days Past
Due and Still
Accruing 3,196 2,283 3,323 3,038 2,720
Total $29,285 $27,010 $28,167 $19,232 $21,019
NPAs to Loans
Plus OREO 0.56% 0.54% 0.55% 0.36% 0.41%
Allowance for
Loan Losses $62,153 $62,070 $61,464 $60,822 $61,468
Reserve for
Unfunded
Commitments(2) 1,200 1,200 1,200 1,200 -
Allowance for
Credit Losses
(ACL) $63,353 $63,270 $62,664 $62,022 61,468
ACL to Loans 1.35% 1.38% 1.38% 1.38% 1.39%
ACL to Loans
(excluding
Municipals) 1.40% 1.41% 1.43% 1.43% 1.44%
ACL to
Nonperforming
Loans 248.90% 260.13% 257.81% 392.06% 335.92%
Charge-offs $2,093 $1,872 $1,753 $1,840 $1,668
Recoveries 506 728 862 1,040 1,006
Net Charge-offs$1,587 $1,144 $891 $800 $662
Net Charge-offs
to Average
Loans 0.03% 0.02% 0.02% 0.02% 0.01%
QTD Average Balance Sheet Data
Securities $1,269,907 $1,333,444 $1,391,413 $1,378,688 $1,341,648
Loans, Net 4,626,194 4,552,727 4,455,403 4,408,205 4,316,317
Earning
Assets 5,959,599 5,948,463 5,915,366 5,895,121 5,738,499
Total
Assets 6,482,127 6,462,457 6,430,410 6,418,971 6,257,730
Deposits 5,442,894 5,372,367 5,377,674 5,454,388 5,270,406
Borrowings 312,430 367,521 321,073 246,660 272,257
Stockholders'
Equity 662,964 661,020 671,058 660,353 651,667
Prior year amounts reflect the modified retrospective application of
SFAS 123-R "Accounting for Stock-Based Compensation."
(1). Reconciliation of non-GAAP measurements
9/30/06 6/30/06 3/31/06 12/30/05 9/30/05
Net Income
(GAAP) $21,725 $21,009 $20,198 $21,813 $21,684
Amortization
of Core Deposit
Intangible, net
of tax 432 431 432 432 432
Tangible Net
Income (A) 22,157 $21,440 $20,630 $22,245 22,116
Average
Stockholders'
Equity
(GAAP) $662,964 $661,020 $671,058 $660,353 $651,667
Average Core
Deposit
Intangible
(CDI) 15,996 16,659 17,323 17,992 18,688
Average Deferred
Tax on CDI (4,345) (4,435) (4,610) (4,785) (4,960)
Average
Goodwill 216,038 216,038 216,038 216,103 216,136
Average Tangible
Equity (B) $435,275 $432,758 $442,307 $431,043 $421,803
Return on Average
Tangible Equity
(A) / (B) 20.20% 19.87% 18.92% 20.47% 20.80%
Average Assets
(GAAP) $6,482,127 $6,462,457 $6,430,410 $6,418,971 $6,257,730
Average CDI 15,996 16,659 17,323 17,992 18,688
Average
Deferred Tax
on CDI (4,345) (4,435) (4,610) (4,785) (4,960)
Average
Goodwill 216,038 216,038 216,038 216,103 216,136
Average
Tangible
Assets (C)$6,254,438 $6,234,195 $6,201,659 $6,189,661 $6,027,866
Return on Average
Tangible Assets
(A) / (C) 1.41% 1.38% 1.35% 1.43% 1.46%
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). This non-GAAP measure is used widely in the
banking industry to provide important information regarding operational
efficiency, e.g. ($46,018-$3-$665-$838) / ($63,481+$16,137) = 55.91%
Tangible book value per share: is computed by subtracting goodwill and
identified intangibles from equity, and dividing the resulting number by
common shares outstanding, e.g. ($680,709-$216,038-$15,661) / 45,994=
$9.76.
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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