BURLINGTON, Vt., Oct. 21 /PRNewswire-FirstCall/ -- Chittenden Corporation
(NYSE: CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault,
today announced earnings for the quarter ended September 30, 2004 of $19.5
million or $0.42 per diluted share, compared to $19.9 million or $0.43 per
diluted share a year ago. For the first nine months of 2004, earnings were
$55.1 million or $1.18 per diluted share, compared to $55.1 million or $1.23
per diluted share a year ago. Chittenden also announced its quarterly dividend
of $0.18 per share. The dividend will be paid on November 12, 2004, to
shareholders of record on October 29, 2004.
In making the announcement, Perrault said, "As I reported last quarter, we
completed the most comprehensive information technology conversion in
Chittenden's history. Because we were just one month into running our banks
on the new system as the third quarter began, there was much activity during
the past quarter dealing with the post-conversion issues that are typical in
an undertaking of this magnitude. I'm happy to report that with the
extraordinary effort and customer focus that are Chittenden's hallmarks, we
are successfully meeting these challenges and completing the transition to the
systems and processes that will take us into the future. We continue to be
encouraged by certain aspects of the quarter's financial results, particularly
continued strong loan growth, steady asset quality and net interest margins
that have begun to improve as variable rate loans adjust due to the recent
prime-rate increases."
Total loans increased $155 million from June 30, 2004 and $256 million
from year-end. The increases were primarily driven by commercial, commercial
real estate and municipal loans. The Company's commercial and commercial real
estate loan portfolios have continued to achieve steady growth throughout the
year with an annualized growth rate of over 15%. Residential real estate loans
increased approximately $21 million from June 30, 2004 driven by growth in the
1-4 family category and home equity lines of credit, which was partially
offset by slightly lower balances in loans secured by multi-family residential
properties. 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.
Total deposits at September 30, 2004 increased $178 million from the prior
quarter and $123 million from December 31, 2003. The Company experienced solid
deposit growth in CMA/money market accounts and jumbo CDs. This increase was
primarily associated with the Company's municipal and commercial customers.
At September 30, 2004 borrowings declined $26 million from the second quarter
due to lower levels of overnight Fed Funds purchased as a result of higher
deposit levels. Borrowings also declined approximately $112 million from the
same quarter a year ago, primarily due to the early redemption in late 2003
and early 2004 of FHLB borrowings that were assumed as part of the Granite
Bank acquisition.
Net interest income was $56.7 million for the third quarter of 2004
compared with $54.7 million for the same period a year ago. The Company's net
interest margin for the third quarter of 2004 was 4.20%, an increase of two
basis points from the second quarter of 2004 and up 22 basis points from the
third quarter of 2003. In the third quarter of 2003, the Company recognized
accelerated purchase accounting amortization of $1.7 million primarily due to
heavy prepayments on Granite's residential mortgages. The accelerated
amortization accounted for 13 basis points of the increase from that period.
Net charge-offs as a percentage of average loans were 1 basis point for
the quarter ended September 30, 2004, flat with the same period in 2003. Net
charge-offs in the third quarter of 2004 totaled $396,000 compared with
$631,000 in the second quarter of 2004 and $470,000 for the third quarter of
2003. For the first nine months of 2004, net charge-offs totaled $1.4 million
or 4 basis points, compared to $3.1 million or 9 basis points in 2003.
Nonperforming assets were $21.6 million at September 30, 2004, up $941,000
from June 30, 2004. As a percentage of total loans this represented 54 basis
points, flat with the second quarter and up from the third quarter of 2003.
The provision for loan losses was $1.0 million for the third quarter of 2004
compared to $2.0 million for the third quarter of 2003. Continued lower levels
of net charge-offs, and strong asset quality drove the provision for the third
quarter of 2004. As a percentage of total loans, the allowance for loan losses
was 1.47%, down from 1.52% at June 30, 2004, as a result of continued strong
loan growth.
Noninterest income for the third quarter 2004 declined $2.8 million on a
linked-quarter basis and $7.2 million from the same period a year ago. Lower
mortgage banking revenues and insurance commissions were the primary factors
in the declines. Gains on sales of loans declined from $7.0 million in the
third quarter of 2003 to $2.3 million in the third quarter of 2004 due to
lower originations of mortgage loans caused by higher market interest rates.
Mortgage servicing income declined from both the third quarter in 2003 and the
second quarter of 2004 due to lower impairment recoveries. Recoveries in the
third quarter of 2003 were $3.3 million compared to $1.7 million in the second
quarter of 2004 and an impairment of $15,000 in the third quarter of 2004.
Insurance commissions declined from the third quarter of 2003 as a result of
lower levels of performance-based income. Net gains on sales of securities
were $186,000 in the third quarter of 2004, compared with $3.3 million in
2003. The prior quarter amount was substantially offset by $2.2 million in
losses on the prepayment of borrowings. The current quarter amount reflects
securities gains of $1.4 million, net of a $1.2 million impairment loss
recognized on the Company's only significant venture capital investment.
Partially offsetting these declines were increases in investment management
and trust income, due to stronger sales and improved equity markets, and other
non interest income, from the $757,000 gain on the sale of a branch in the
third quarter of 2004.
Noninterest income for the first nine months was $56.5 million in 2004
compared to $74.0 million for 2003. Mortgage-banking revenues declined $9.7
million primarily due to lower mortgage originations, which resulted from the
increase in mortgage rates. Gains on sales of securities, net of losses on
prepayment of borrowings, declined $11.2 million from 2003. The higher level
of gains in the prior year were substantially offset by $6.8 million in non-
recurring charges related to the Company's decision to convert its core data
processing systems. The remaining gains on sales of securities in 2003 were
the result of rebalancing the investment portfolio due to heavy prepayments on
mortgage backed securities and callable agencies. The declines in mortgage
banking and gains on securities sales were partially offset by higher levels
of investment management and trust income, which was $2.1 million higher than
a year ago, and higher levels of other noninterest income driven by a $1.3
million gain on the sale of two branches.
Noninterest expenses were $42.8 million for the third quarter of 2004
compared to $46.9 million for the same period a year ago. The decline from the
third quarter of 2003 is primarily attributable to lower salary and benefit
expenses, as well as lower data processing expense. Salaries declined $2.6
million primarily due to lower sales based commissions of $1.6 million and
incentive accruals of $856,000. Benefits expense declined due to lower medical
and dental expenses of $342,000. Data processing expense declined $1.3 million
from the same period a year ago due to the data processing system conversion
in the second quarter of this year.
Noninterest expenses for the first nine months of 2004 were $133.4 million
compared to $143.3 million for 2003. The decline from the same period a year
ago is primarily attributable to lower salaries, data processing and
conversion and restructuring expenses. Salaries declined $3.9 million from the
first nine months of 2003 primarily due to lower incentive accruals. In
addition, lower levels of sales based commissions for the nine months of 2004
were offset by higher salaries due to the inclusion of the former Granite Bank
branches for the entire nine-month period in 2004 versus only seven months in
2003. Employee Benefits expenses were $1.3 million higher in 2004 due to an
increase in medical and dental benefits expenses. Conversion and restructuring
expense declined from 2003 due to the non-recurring charges accrued in the
second quarter of 2003 related to the Company's decision to convert its core
data processing system.
The effective income tax rate for the first nine months of 2004 was 36.5%,
compared with 36.2% in 2003. For the third quarter, the effective tax rate was
36.5% in 2004 compared with 35.4% in 2003. The higher effective income tax
rate was primarily attributable to increased taxable income in New Hampshire,
which has a higher statutory tax rate than other states in which the Company
has operations.
The return on average equity was 13.11% for the third quarter of 2004,
compared with 12.40% for the second quarter of 2004 and 14.19% for the third
quarter a year ago. The decrease from the same period in 2003 primarily
resulted from higher average equity. The return on average assets for the
quarter ended September 30, 2004 was 1.31%, an increase of 5 basis points from
the second quarter and a decline of 1 basis point from the third quarter of
last year. The return on average tangible equity was 22.13% in the third
quarter of 2004, compared to 21.01% in the prior quarter and 25.07% in the
same quarter a year ago. A reconciliation regarding the measures included in
these ratios is provided in the attachments to this news release.
Kirk W. Walters, Executive Vice President and Chief Financial Officer of
Chittenden Corporation, will host a conference call on October 21, 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 75416688.
International dial-in number is 617-801-9715. 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
October 28, 2004 by calling 888-286-8010 (International dial number is 617-
801-6888), passcode 10611230. 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.
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/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 9/30/04 6/30/04 3/31/04 12/31/03 9/30/03
Cash and Cash
Equivalents $165,191 $170,940 $154,178 $174,939 $209,697
Securities Available
For Sale 1,458,149 1,412,206 1,473,497 1,588,151 1,653,111
FRB and FHLB
Stock 19,243 12,240 20,753 20,753 24,352
Loans Held For
Sale 35,723 49,497 32,276 25,262 95,777
Loans:
Commercial 770,933 740,410 686,304 658,615 633,221
Municipal 105,781 66,533 92,338 87,080 106,512
Real Estate:
Residential:
1-4 family 685,714 667,676 666,753 700,671 724,749
Multi-family 181,622 189,589 182,085 176,478 172,419
Home equity 287,479 276,640 277,062 270,959 258,664
Commercial 1,558,221 1,505,880 1,485,031 1,430,945 1,375,027
Construction 143,871 129,901 138,497 140,801 143,515
Total Real
Estate 2,856,907 2,769,686 2,749,428 2,719,854 2,674,374
Consumer 246,889 249,208 252,097 259,135 267,615
Total Loans 3,980,510 3,825,837 3,780,167 3,724,684 3,681,722
Less: Allowance for
Loan Losses (58,598) (57,969) (57,500) (57,464) (59,171)
Net Loans 3,921,912 3,767,868 3,722,667 3,667,220 3,622,551
Accrued Interest
Receivable 26,607 27,376 25,582 29,124 29,277
Other Real Estate
Owned 987 47 36 100 52
Other Assets 57,587 64,098 51,834 68,487 61,451
Premises and
Equipment, net 82,409 80,241 77,534 75,179 75,624
Mortgage Servicing
Rights 12,119 12,562 10,866 12,265 10,615
Identified
Intangibles 21,196 21,972 21,978 22,733 23,488
Goodwill 216,697 216,697 216,431 216,431 216,431
Total
Assets $6,017,820 $5,835,744 $5,807,632 $5,900,644 $6,022,426
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $907,396 $891,244 $848,758 $898,920 $880,354
Savings 534,286 541,138 526,625 517,789 523,497
NOW 903,307 912,175 894,575 899,018 912,563
CMAs/ Money
Market 1,603,059 1,491,522 1,472,377 1,604,138 1,617,176
Certificates
of Deposit
less than
$100,000 755,494 779,492 780,940 789,066 822,634
Certificates
of Deposit
$100,000 and
Over 388,935 298,721 311,067 260,960 262,137
Total
Deposits 5,092,477 4,914,292 4,834,342 4,969,891 5,018,361
Securities Sold
Under
Agreements to
Repurchase 71,056 75,016 76,051 78,980 79,510
Other
Borrowings 182,450 204,122 236,446 208,454 285,857
Accrued Expenses
and Other
Liabilities 60,769 54,452 61,308 63,368 64,427
Total
Liabilities 5,406,752 5,247,882 5,208,147 5,320,693 5,448,155
Stockholders' Equity:
Common Stock 50,202 50,202 50,196 50,178 50,168
Surplus 248,828 248,241 247,464 246,938 246,181
Retained
Earnings 372,980 361,623 351,569 341,441 329,035
Treasury Stock,
at cost (71,017) (72,967) (76,058) (78,579) (80,951)
Accumulated Other Comprehensive Income:
Unrealized Gains
on Securities
Available for
Sale 5,377 (3,772) 21,964 15,595 25,610
Directors Deferred
Compensation to
be Settled in
Stock 4,720 4,562 4,381 4,413 4,266
Unearned Portion
of Employee
Restricted
Stock (22) (27) (31) (35) (38)
Total Stockholders'
Equity 611,068 587,862 599,485 579,951 574,271
Total Liabilities
and Stockholders'
Equity $6,017,820 $5,835,744 $5,807,632 $5,900,644 $6,022,426
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,
2004 2003 2004 2003
Interest Income:
Loans $53,090 $49,434 $152,805 $149,558
Investment Securities:
Taxable 14,807 17,648 45,144 54,375
Tax-favored 13 61 40 148
Short-term Investments 59 88 119 223
Total Interest Income 67,969 67,231 198,108 204,304
Interest Expense:
Deposits 9,411 9,605 26,139 32,665
Borrowings 1,889 2,965 5,664 9,930
Total Interest Expense 11,300 12,570 31,803 42,595
Net Interest Income 56,669 54,661 166,305 161,709
Provision for
Loan Losses 1,025 2,050 2,553 6,150
Net Interest Income after Provision
for Loan Losses 55,644 52,611 163,752 155,559
Noninterest Income:
Investment Management
and Trust 4,813 3,983 13,735 11,634
Service Charges
on Deposits 4,241 4,583 13,707 13,711
Mortgage Servicing (162) 1,275 419 (311)
Gains on Sales of
Loans, Net 2,261 6,959 7,057 17,494
Gains on Sales of
Securities, Net 186 3,305 2,228 14,349
Loss on Prepayments
of Borrowings - (2,154) (1,194) (2,154)
Credit Card Income, Net 1,146 1,149 3,076 3,022
Insurance Commissions,
Net 1,389 2,041 5,742 5,185
Retail Investment
Services 715 1,287 2,565 3,497
Other 3,252 2,570 9,147 7,611
Total Noninterest
Income 17,841 24,998 56,482 74,038
Noninterest Expense:
Salaries 20,652 23,234 63,317 67,183
Employee Benefits 5,027 5,419 16,677 15,421
Net Occupancy Expense 5,481 5,977 17,259 17,654
Data Processing 994 2,319 5,271 6,980
Amortization of
Intangibles 776 755 2,303 1,993
Conversion and
Restructuring Charges 505 - 1,975 6,800
Other 9,376 9,154 26,574 27,264
Total Noninterest
Expense 42,811 46,858 133,376 143,295
Income Before Income
Taxes 30,674 30,751 86,858 86,302
Income Tax Expense 11,196 10,887 31,759 31,221
Net Income $19,478 $19,864 $55,099 $55,081
Earnings Per Share,
Basic $0.42 $0.43 $1.20 $1.24
Earnings Per Share,
Diluted 0.42 0.43 $1.18 1.23
Dividends Per Share 0.18 0.16 0.52 0.48
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
Selected
Financial Ratios 9/30/04 6/30/04 3/31/04 12/31/03 9/30/03
Return on
Average Equity 13.11% 12.40% 11.97% 13.66% 14.19%
Return on
Average Assets 1.31% 1.26% 1.21% 1.31% 1.32%
Return on Average
Tangible Equity (1) 22.13% 21.01% 20.38% 23.63% 25.07%
Return on Average
Tangible Assets (1) 1.40% 1.35% 1.30% 1.40% 1.41%
Net Yield on
Earning Assets 4.20% 4.18% 4.17% 4.14% 3.98%
Efficiency Ratio 56.87% 58.05% 60.34% 59.58% 59.87%
Tangible Capital Ratio 6.46% 6.24% 6.48% 6.02% 5.78%
Leverage Ratio 8.39% 8.22% 8.28% 7.79% 7.49%
Tier 1 Capital Ratio 10.51% 10.46% 10.36% 10.07% 9.72%
Total Capital Ratio 11.76% 11.73% 11.61% 11.32% 10.97%
Common Share Data
Common Shares
Outstanding 46,241 46,135 45,954 45,796 45,654
Weighted Avg Common
Shares Outstanding 46,188 46,045 45,899 45,729 45,637
Weighted Avg Common
and Common Equivalent
Shares Outstanding 46,863 46,556 46,522 46,390 46,071
Book Value per Share $13.21 $12.74 $13.05 $12.66 $12.58
Tangible Book Value
per Share $8.07 $7.57 $7.86 $7.44 $7.32
Credit Quality Data
Nonperforming Assets
(including OREO) $21,565 $20,624 $20,657 $14,431 $18,011
90 days past due and
still accruing 3,140 3,777 3,201 4,029 3,021
Total $24,705 $24,401 $23,858 $18,460 $21,032
Nonperforming Assets
to Loans Plus OREO 0.54% 0.54% 0.55% 0.39% 0.49%
Allowance to Loans 1.47% 1.52% 1.52% 1.54% 1.61%
Allowance to
Nonperforming Loans
(excluding OREO) 284.76% 281.70% 278.85% 400.99% 329.48%
Gross Charge-offs $1,654 $1,433 $1,251 $4,176 $1,239
Gross Recoveries 1,258 802 860 1,444 769
Net Charge-offs $396 $631 $391 $2,732 $470
Net Charge-offs to
Average Loans 0.01% 0.02% 0.01% 0.08% 0.01%
QTD Average
Balance Sheet Data
Securities $1,440,938 $1,447,419 $1,530,534 $1,647,313 $1,708,629
Loans, Net 3,892,431 3,777,039 3,701,494 3,697,490 3,693,594
Earning Assets 5,414,750 5,294,057 5,292,868 5,446,055 5,496,829
Total Assets 5,930,272 5,799,583 5,792,012 5,960,054 5,974,552
Deposits 5,017,991 4,868,682 4,808,334 5,033,498 4,941,066
Borrowings 267,323 290,730 339,983 298,478 409,621
Stockholders' Equity 591,137 589,067 586,788 572,512 555,567
(1) Reconciliation of non-GAAP
measurements to GAAP
Net Income (GAAP) $19,478 $18,154 $17,467 $19,718 $19,864
Amortization of
identified intangibles,
net of tax 504 502 491 491 491
Tangible Net
Income (A) $19,982 $18,656 $17,958 $20,209 $20,355
Average Equity
(GAAP) 591,137 589,067 586,788 572,512 555,567
Average Identified
Intangibles 21,695 21,960 22,405 23,148 23,926
Average Deferred
Tax on Identified
Intangibles (6,392) (6,392) (6,392) (6,392) (6,392)
Average Goodwill 216,697 216,439 216,431 216,431 215,980
Average Tangible
Equity (B) 359,137 357,060 354,344 339,325 322,053
Return on Average
Tangible
Equity (A)/(B) 22.13% 21.01% 20.38% 23.63% 25.07%
Average
Assets (GAAP) 5,930,272 5,799,583 5,792,012 5,960,054 5,974,552
Average Identified
Intangibles 21,695 21,960 22,405 23,148 23,926
Average Deferred
Tax on Identified
Intangibles (6,392) (6,392) (6,392) (6,392) (6,392)
Average Goodwill 216,697 216,439 216,431 216,431 215,980
Average Tangible
Assets (C) 5,698,272 5,567,576 5,559,568 5,726,867 5,714,038
Return on
Average Tangible
Assets (A)/(C) 1.40% 1.35% 1.30% 1.40% 1.41%
SOURCE Chittenden Corporation
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