BURLINGTON, Vt., Oct. 20 /PRNewswire-FirstCall/ -- Chittenden Corporation
(NYSE: CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault,
today announced earnings for the quarter ended September 30, 2005, of $21.7
million or $0.46 per diluted share. For the first nine months of 2005,
earnings were $61.6 million or $1.31 per diluted share. Chittenden also
announced a share repurchase plan as well as its quarterly dividend of $0.18
per share, which will be paid on November 11, 2005, to shareholders of record
on October 28, 2005.
THIRD QUARTER 2005 FINANCIAL HIGHLIGHTS
-- Earnings per share were 10% higher than the same period in 2004 fueled
by expanding net interest income and strong expense control.
-- Total loans increased 11% from September 30, 2004. Strong growth was
noted on a year over year basis in several categories with commercial
and commercial real estate loans up 13% and home equity loans up 10%.
-- The Company's deposits also experienced solid organic growth of 6% from
September 30, 2004.
-- The third quarter net interest margin increased 6 basis points from the
second quarter of 2005 and 15 basis points from the third quarter of
2004.
-- The Company's efficiency ratio declined to 54.56% for the third quarter
of 2005, the lowest level recorded in five years.
-- The Company continued to experience low net charge-offs in the third
quarter of 2005. The current quarter was the third consecutive
quarterly period, and fifth out of the last seven, that net charge-offs
were 1 basis point. Cumulative charge-offs since the first quarter of
2004 have only been 10 basis points.
In making the announcement, Perrault said, "I continue to be very pleased
with the financial results that we are achieving in 2005, both in terms of
bottom line earnings improvement and the consistent successes in our core
businesses of lending and deposit gathering. We are very focused on growing
these businesses in each of our markets while remaining vigilant to maintain
Chittenden's stellar credit quality. This focus continues to benefit
Chittenden's many constituencies: shareholders, customers, and employees."
Mr. Perrault also announced that the Board of Directors has authorized the
repurchase of up to 1,000,000 shares of the Corporation's common stock
(approximately 2% of the Company's outstanding Common Stock) in negotiated
transactions or open market purchases. Chittenden, depending on market
conditions, may repurchase its common stock without further Board
authorization over the next two years.
ASSETS
Total assets increased approximately $144 million from June 30, 2005 to
$6.3 billion at September 30, 2005. Total loans increased $172 million, driven
by increases in commercial, commercial real estate, municipal and construction
loans. The Company's commercial and commercial real estate loan portfolios
have continued to achieve steady growth throughout the year and are not
specifically concentrated in any one industry. The increase in municipal loans
reflects a seasonal trend, as June 30th is historically the low point with
respect to borrowing needs of municipalities, coinciding with their fiscal
year-ends. The construction portfolio increased $49 million, primarily as a
result of loans to our commercial customers in the Vermont, Massachusetts and
New Hampshire markets.
LIABILITIES
Total deposits increased $249 million from June 30, 2005. The increase was
driven primarily by the Company's commercial and municipal customers, with
higher levels of demand, CMA/money market deposits, and jumbo CDs. Customer
repurchase agreements and borrowings at September 30, 2005 declined by 31%
from June 30, 2005. The decrease was due to higher levels of deposits, which
were utilized to pay off short-term borrowings and fund loan growth.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the quarter ended
September 30, 2005 was $62.8 million, an increase of 10.2% 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 third quarter was 4.35%, an increase
from both the prior quarter and from the third 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.
NONINTEREST INCOME
Noninterest income for the third quarter of 2005 was $17.8 million, up on
a linked quarter basis and essentially flat with the same period a year ago.
Investment management and trust income declined $532,000 from the same period
in 2004 primarily due to lower annuity sales at Chittenden Securities, Inc.
Mortgage servicing income increased from both the second quarter of 2005 and
third quarter of 2004 due to higher impairment recoveries and lower
amortization. Other noninterest income declined by $352,000 primarily due to
the sale of a branch in the third quarter of 2004 which generated a gain of
$757,000.
NONINTEREST EXPENSE
Noninterest expense was $44.7 million for the third quarter of 2005, an
increase of $1.3 million on a linked quarter basis and $1.8 million from the
same period a year ago. The increase from the second quarter of 2005 was
attributable to a one-time benefit of $1.5 million recognized in pension
expense in the prior quarter. The increase from the comparable quarter in 2004
is primarily a result of higher salary, employee benefit and net occupancy
expenses, which was partially offset by lower conversion and restructuring
charges.
INCOME TAXES
The effective income tax rate for 2005 was 36.2% for both the third
quarter and year to date compared with 36.5% and 36.6% for the respective
periods 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 were 1 basis point for
the third quarter of 2005, flat with the prior quarter and the same quarter a
year ago. Nonperforming assets declined by 21% and as a percentage of total
loans at the end of the third quarter of 2005 were 41 basis points, which was
down from 54 basis points in the second quarter. As a percentage of total
loans, the allowance for loan losses was 1.39%, down from 1.43% at June 30,
2005, and 1.47% at September 30, 2004.
EARNINGS CONFERENCE CALL
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call on October 20, 2005 at
10:30 am eastern time to discuss these earnings results. 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. Interested parties
may access the conference call by calling 866-831-6291, passcode 38033271.
International dial-in number is 617-213-8860. 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, 2005 by calling 888-286-8010 (International dial number is 617-
801-6888), passcode 55845991. 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 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: 9/30/05 6/30/05 3/31/05 12/31/04 9/30/04
Cash and Cash
Equivalents $150,409 $176,425 $146,861 $136,468 $165,191
Securities
Available
For Sale 1,348,521 1,363,180 1,409,434 1,446,221 1,458,149
FRB / FHLB
Stock 19,352 19,352 19,352 19,243 19,243
Loans Held
For Sale 34,774 22,611 22,131 33,535 35,723
Loans:
Commercial
& Industrial 841,430 831,537 812,050 801,369 770,933
Municipal 156,630 79,070 98,128 106,120 105,781
Multi-Family 192,563 185,920 180,632 182,541 181,622
Commercial
Real
Estate 1,760,621 1,736,665 1,651,247 1,590,457 1,558,221
Construction 173,909 124,648 133,799 174,283 143,871
Residential
Real Estate 724,873 733,472 712,133 688,017 685,714
Home Equity
Credit Lines 316,733 307,866 297,649 294,656 287,479
Consumer 259,865 255,239 242,239 239,750 246,889
Total Loans 4,426,624 4,254,417 4,127,877 4,077,193 3,980,510
Less: Allowance
for Loan
Losses (61,468) (60,805) (59,811) (59,031) (58,598)
Net Loans 4,365,156 4,193,612 4,068,066 4,018,162 3,921,912
Accrued Interest
Receivable 29,202 29,689 28,443 28,956 26,607
Other Assets 81,616 78,629 66,746 64,970 67,056
Premises and
Equipment,
net 70,509 71,632 72,336 74,271 73,927
Mortgage
Servicing
Rights 12,970 12,073 12,074 11,826 12,119
Identified
Intangibles 18,320 18,983 19,648 20,422 21,196
Goodwill 216,136 216,136 216,136 216,136 216,697
Total
Assets $6,346,965 $6,202,322 $6,081,227 $6,070,210 $6,017,820
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $988,096 $934,234 $881,954 $890,561 $907,396
Savings 499,119 502,525 514,215 519,623 534,286
NOW 891,058 908,148 898,720 890,701 903,307
CMAs/ Money
Market 1,592,743 1,418,634 1,527,753 1,577,474 1,603,059
Certificates
of Deposit
less than
$100,000 814,435 811,389 763,502 735,577 737,641
Certificates
of Deposit
$100,000
and Over 607,897 569,505 477,019 424,794 406,788
Total
Deposits 5,393,348 5,144,435 5,063,163 5,038,730 5,092,477
Securities
Sold Under
Agreements
to Repurchase 64,114 56,775 91,443 76,716 71,056
Other
Borrowings 179,552 296,903 254,418 279,755 182,450
Accrued
Expenses
and Other
Liabilities 63,428 64,466 54,721 54,752 60,769
Total
Liabilities 5,700,442 5,562,579 5,463,745 5,449,953 5,406,752
Stockholders' Equity:
Common Stock 50,220 50,210 50,207 50,204 50,202
Surplus 250,009 249,117 248,864 249,036 248,828
Retained
Earnings 421,180 407,865 395,410 384,679 372,980
Treasury Stock,
at cost (65,684) (67,657) (68,233) (69,246) (71,017)
Other
Comprehensive
Income (14,595) (4,978) (13,747) 672 5,377
Directors
Deferred
Compensation
to be Settled
in Stock 5,400 5,197 4,996 4,930 4,720
Unearned Portion
of Employee
Restricted Stock (7) (11) (15) (18) (22)
Total Stockholders'
Equity 646,523 639,743 617,482 620,257 611,068
Total Liabilities
and
Stockholders'
Equity $6,346,965 $6,202,322 $6,081,227 $6,070,210 $6,017,820
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,
2005 2004 2005 2004
Interest Income:
Loans $68,588 $53,090 $189,525 $152,805
Investments 14,033 14,879 43,923 45,303
Total Interest Income 82,621 67,969 233,448 198,108
Interest Expense:
Deposits 17,561 9,411 43,022 26,139
Borrowings 2,845 1,889 9,146 5,664
Total Interest Expense 20,406 11,300 52,168 31,803
Net Interest Income 62,215 56,669 181,280 166,305
Provision for Loan
Losses 1,325 1,025 3,800 2,553
Net Interest Income
after Provision
for Loan Losses 60,890 55,644 177,480 163,752
Noninterest Income:
Investment Management
and Trust 4,996 5,528 14,970 16,300
Service Charges
on Deposits 4,053 4,241 12,187 13,707
Mortgage Servicing 658 (162) 1,222 419
Gains on Sales
of Loans, Net 2,586 2,261 6,720 7,057
Gains on Sales
of Securities 7 186 6 2,228
Loss on Prepayments
of Borrowings - - - (1,194)
Credit Card, Net 1,237 1,146 3,343 3,076
Insurance Commissions,
Net 1,341 1,389 5,231 5,742
Other 2,900 3,252 8,834 9,147
Total Noninterest
Income 17,778 17,841 52,513 56,482
Noninterest Expense:
Salaries 22,245 20,652 65,719 63,317
Employee Benefits 5,784 5,027 16,501 16,677
Net Occupancy 5,844 5,481 18,194 17,259
Data Processing 921 994 2,506 5,271
Amortization
of Intangibles 665 776 2,103 2,303
Conversion and
Restructuring Charges - 505 - 1,975
Other 9,201 9,376 28,457 26,574
Total Noninterest
Expense 44,660 42,811 133,480 133,376
Income Before Income
Taxes 34,008 30,674 96,513 86,858
Income Tax Expense 12,321 11,196 34,938 31,759
Net Income $21,687 $19,478 $61,575 $55,099
Basic Earnings
Per Share $0.47 $0.42 $1.33 $1.20
Diluted Earnings
Per Share 0.46 0.42 1.31 1.18
Dividends Per Share 0.18 0.18 0.54 0.52
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
9/30/05 6/30/05 3/31/05 12/31/04 9/30/04
Selected Financial Ratios
Return on Average
Tangible
Equity(1) 21.25% 21.37% 20.35% 21.25% 22.13%
Return on
Average
Equity 13.39% 13.27% 12.46% 12.95% 13.11%
Return on
Average
Tangible
Assets(1) 1.46% 1.44% 1.36% 1.39% 1.40%
Return on
Average Assets 1.38% 1.36% 1.28% 1.31% 1.31%
Net Yield
on Earning
Assets 4.35% 4.29% 4.30% 4.27% 4.20%
Efficiency
Ratio(1) 54.56% 57.14% 58.07% 55.64% 56.87%
Tangible Capital
Ratio 6.74% 6.78% 6.53% 6.58% 6.46%
Leverage Ratio 9.08% 8.78% 8.66% 8.42% 8.39%
Tier 1 Capital
Ratio 10.72% 10.56% 10.46% 10.44% 10.51%
Total Capital
Ratio 11.89% 11.75% 11.65% 11.64% 11.76%
Common Share Data
Common Shares
Outstanding 46,557 46,437 46,402 46,342 46,241
Weighted Average
Shares
Outstanding 46,519 46,414 46,385 46,293 46,188
Weighted Average
and Common
Equivalent
Shares
Outstanding 47,109 46,901 46,918 46,960 46,863
Book Value
per Share $13.89 $13.78 $13.31 $13.38 $13.21
Tangible Book Value
per Share(1) $8.85 $8.71 $8.23 $8.28 $8.07
Credit Quality Data
Nonperforming Assets
(including
OREO) $18,299 $23,150 $20,692 $20,024 $21,565
90 days past due
and still
accruing 2,720 1,981 4,543 2,604 3,140
Total $21,019 $25,131 $25,235 $22,628 $24,705
Nonperforming
Assets to Loans
Plus OREO 0.41% 0.54% 0.50% 0.49% 0.54%
Allowance
to Loans 1.39% 1.43% 1.45% 1.45% 1.47%
Allowance
to Loans
(excluding
Municipal) 1.44% 1.46% 1.48% 1.49% 1.51%
Allowance to
Nonperforming
Loans 335.92% 262.71% 289.29% 296.41% 284.76%
Gross
Charge-offs $1,668 $1,313 $1,154 $2,821 $1,654
Gross
Recoveries 1,006 907 859 1,428 1,258
Net
Charge-offs $662 $406 $295 $1,393 $396
Net Charge-offs
to Average
Loans 0.01% 0.01% 0.01% 0.03% 0.01%
QTD Average Balance Sheet Data
Securities $1,341,648 $1,409,045 $1,450,210 $1,495,302 $1,440,938
Loans, Net 4,316,317 4,174,491 4,057,647 4,000,917 3,892,431
Earning
Assets 5,738,499 5,644,833 5,568,124 5,572,226 5,414,750
Total
Assets 6,248,866 6,143,001 6,060,179 6,089,616 5,930,272
Deposits 5,270,406 5,085,064 5,000,949 5,128,344 5,017,991
Borrowings 272,257 367,617 386,613 291,919 267,323
Stockholders'
Equity 642,803 629,042 621,276 615,420 591,137
1. Reconciliation of non-GAAP measurements to GAAP
Net Income
(GAAP) $21,687 $20,806 $19,082 $20,028 $19,478
Amortization
of core
deposit
intangible,
net of tax 432 431 503 503 504
Tangible Net
Income (A) 22,119 21,237 19,585 20,531 19,982
Average Equity
(GAAP) 642,803 629,042 621,276 615,420 591,137
Average Core
Deposit
Intangible 18,688 19,417 20,155 20,919 21,695
Average
Deferred
Tax
on CDI (4,960) (5,136) (5,311) (6,392) (6,392)
Average
Goodwill 216,136 216,136 216,136 216,502 216,697
Average
Tangible
Equity(B) 412,939 398,625 390,296 384,391 359,137
Return on
Average
Tangible
Equity
(A)/(B) 21.25% 21.37% 20.35% 21.25% 22.13%
Average
Assets
(GAAP) 6,248,866 6,143,001 6,060,179 6,089,616 5,930,272
Average
Core
Deposit
Intangible 18,688 19,417 20,155 20,919 21,695
Average
Deferred
Tax on CDI(4,960) (5,136) (5,311) (6,392) (6,392)
Average
Goodwill 216,136 216,136 216,136 216,502 216,697
Average
Tangible
Assets(C) 6,019,002 5,912,764 5,829,199 5,858,587 5,698,272
Return
on Average
Tangible
Assets
(A)/(C) 1.46% 1.44% 1.36% 1.39% 1.40%
Efficiency Ratio: is computed by dividing total noninterest expense (less
oreo expense, amortization expense 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 bank investment 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. (44,660-6-665) / (62,849+17,778-7) = 54.56%
Tangible book value: is computed by subtracting goodwill and identified
intangibles from equity, and dividing the resultant number by common shares
outstanding, e.g. (645,523-18,320-216,136) / 46,557= $8.85.
SOURCE Chittenden Corporation
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