Exhibit 99.1
For Immediate Release
July 22, 2004 | 43/04 |
CHITTENDEN REPORTS EARNINGS AND QUARTERLY DIVIDEND;
ANNOUNCES STOCK SPLIT
Burlington, VT — 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.
For Immediate Release
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 athttp://www.chittendencorp.com. A replay of the call will be available through July 29, 2004 by calling 888-286-8010 (International dial
For Immediate Release
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 banks1, 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 Securites, Inc. |
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
6/30/04 | 3/31/04 | 12/31/03 | 6/30/03 | |||||||||||||
ASSETS | ||||||||||||||||
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 Ended June 30, | For the Six Months 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 | % |