As of June 30, 2004
Who We Are
Multi-bank holding company with significant operating autonomy at the individual banks Banking assets of $5.8 billion at June 30, 2004 Listed on the NYSE (CHZ), current market capitalization of $1.3 billion 119 full service banking offices and 155 ATM locations throughout VT, NH, MA, ME
Commercial loans make up 69% of the total loan portfolio and core funding comprises 97% of total funding Strong wealth management operation with assets under administration of $7.3 billion and assets under management of $1.9 billion Excellent credit quality with year-to-date charge-offs at .03% and an allowance for loan losses to loans of 1.50%
2
A Tradition of Success
Recognized competency in an attractive business mix Deep relationships with worthwhile customers Conservative underwriting standards and disciplined lending Efficient generator of low cost stable deposits Proven leadership focus to achieve superior financial results Well established and tangible shareholder orientation
3
Objectives and Outlook for 2004
Complete the merger of Granite into Ocean National Bank and other franchise streamlining initiatives
Complete the IT conversion from Fidelity to Jack Henry and realize the product, operating and financial benefits of the new system
Maintain a risk based capital ratio in excess of 11% and tangible common equity of 6% or higher
Maintain strong asset quality and an allowance for loan losses greater than 1.40%
Continue the steady growth in the Company’s earnings per share and improve the efficiency ratio by at least 2%
4
Our Target Markets
12/31/93 06/30/04 %
Assets (in millions)
Chittenden Bank $1,231 $2,850 49%
Ocean National Bank $1,621 28%
Bank of Western Mass $570 10%
Flagship Bank $488 8%
Maine Bank & Trust $307 5%
Total $1,231 $5,836 100%
Loans by State
12/31/93 06/30/04 VT 100% 40% NH 23% MA 26% ME 11%
Deposits by State
12/31/93 06/30/04
VT 100% 50% NH 21% MA 19% ME 10%
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Corporate Structure
CUSTOMERS
Chittenden Bank
Ocean National Bank
Flagship Bank & Trust
Bank of Western Massachusetts
Maine Bank & Trust
CHZ SERVICES GROUP
CORPORATE
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Our Target Markets
Vermont Market
State population over 600,000
Greater Burlington population over 150,000 11% population growth 1990-2000
Greater Burlington median household income of $48,000 Greater Burlington median age = 34 10,000 new business startups in 2003 23% new job growth 1990-2000 (Greater Burlington area) 30,000 businesses and 70,000 households Small Business Culture—50% of jobs are from companies with less than 100 employees
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Our Target Markets
Greater Springfield Market
Population of over 450,000 in Hampden Co. Median household income of $40,000 Median age = 36 Above national/regional employment averages in education, insurance, health services, manufacturing 13 colleges located in Greater Springfield 1993—2000 Pioneer Valley job growth over 15% 23,000 businesses and 90,000 households
Greater Worcester Market
3rd largest city in New England Population of 750,000 in Worcester Co. Median household income of $48,000 Median age = 36 38,000 new jobs created in Worcester Co. between 1991—2001 Over 18% job growth in region (1993—2000)
Value of Worcester’s total assessed property value up nearly 15% in FY2003 Downtown office space occupancy of 90% Over 25,000 businesses and 110,000 households Known as “The Center of Excellence in Biotechnology”
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Our Target Markets
Southern NH/Seacoast Market
Total regional population just under 1 million 12% population growth 1990—2000 Median household income of $50,000 Median age = 37
Large pool of professionals, 42% of Portsmouth residents hold a bachelor’s degree or > 75% of NH businesses employ <10 people Over 50% of all employees are with firms <250 people Over 5,000 new business startups in NH annually (1998-2002) 6.8 million tourist visits in 2002 resulting in $689 million in revenue Over 40,000 businesses and 150,000 households
Greater Portland Market
Combined population of Cumberland and York Co. exceeds 450,000 13% population growth 1990—2000 Median household income of $44,000 Median age = 35 15% growth in housing units 1990-2000 20% of Maine workforce in businesses with 4 or < employees Over 20,000 businesses and nearly 60,000 households
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Our Target Customers
Businesses with Revenues of Commercial Banking $1 to $100 Million; Loan Needs up to $20 Million and Multiple Product and Service Needs
Individuals and Families, Age 30+ who are Financially Sophisticated with Multiple Product
Community Banking and Service Needs and with Household Incomes ³ $50,000
Businesses and Individuals with Investment Wealth Management Management, Brokerage, Trust and/or Private and Professional Banking Needs
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Commercial & Community Banking
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A Diversified Loan Portfolio
12/31/01
Municipal 3%
C&I 20%
Construction 3%
Multi Family 2%
Commercial RE
32%
Home Equity 6%
Residential 1-4 22%
Consumer 12%
06/30/04
Consumer 7%
Municipal 2%
C&I 19%
Residential 1-4 17%
Home Equity 7%
Construction 4%
Multi Family 5%
Commercial RE
39%
Growth in C&I and CRE
40% 30% 20% 10% 0%
9%
25%
2%
22%
16%
30%
17%
10%
2001
2002
2003
06/30/04*
CRE
C&I
80% 60% 40% 20% 0%
60%
40%
65%
35%
67%
33%
69%
31%
2001 2002 2003 06/30/04
Commercial
Consumer
Total loans as of December 31, 2001 and June 30, 2004 were $2.8 billion and $3.8 billion respectively
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*Annualized
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Commercial Loan Diversification by Industry
Utilities 0.03% Transportation and Warehousing 2.02%
Wholesale Trade 4.86%
Other 7.16%
Accommodation and Food Services 10.02%
Admin/Support & Waste Mgt & Remediation Svcs 0.99% Agriculture, Forestry, Fishing and Hunting 1.34%
Arts, Entertainment, and Recreation 2.61%
Construction 5.60%
Educational Services 1.64% Finance and Insurance 1.99%
Health Care and Social Assistance 5.38%
Information 1.34%
Management of Companies and Enterprises 0.53%
Manufacturing 9.45%
Mining 0.11%
Other Services (except Public Administration) 3.54%
Professional, Scientific, and Technical Services 2.47%
Public Administration 2.23%
Real Estate, Rental and Leasing 28.57%
Retail Trade 8.14%
1. Based on loan data at 06/30/04
2. Includes C&I and CRE
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Real Estate, Rental and Leasing
Shopping Centers/Stores 11.37%
Auto Sales/Svc Station 1.24%
Warehouse 2.85%
Cash Secured 0.72%
Industrial 13.41%
Land 1.86%
Manufacturing 3.17%
Mercantile 1.47%
Mixed 10.23%
Mobile Home Park 0.61%
Apartments 24.51%
Development 0.94%
Office 18.76%
Educational 0.27%
Elderly Housing 0.60%
Other 3.54%
Other Business Assets 2.13%
Recreational 0.48%
Restaurant/Bar 1.41%
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Continuing Core Deposit Growth
12/31/01
CDs > $100,000 Borrowings
1% Demand Deposits
5% 17%
CDs < $100,000 17%
MMA 37%
NOW 13%
Savings 10%
06/30/04
Borrowings CDs > $100,000 3% 6%
CDs < $100,000 15%
MMA 29%
Savings 11%
NOW 18%
Demand Deposits 18%
40% 30% 20% 10% 0%
30%
1%
29%
4%
35%
3%
36%
3%
2001 2002 2003 06/04
Transaction Accounts % of Total Funding Non-core Funding % of Total Funding
75%
60%
45% 30%
15%
0%
57%
43%
53%
47%
56%
44%
57%
43%
2001 2002 2003 06/04
Consumer
Commercial
Total Deposits as of December 31, 2001 and June 30, 2004 were $3.7 billion and $5.0 billion respectively
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Business Services
Insurance (11%)
Specializes in commercial property and casualty insurance Wholesale brokerage operation covering ten states Gross premiums for the six months ending June 30, 2004 were $18.5 million
Cash Management (9%)
High level of service to business clients Only offered within the franchise Full menu of products
Merchant Services ACH
Lock box Sweep accounts
Payroll Services (2%) Over 1,000 customers Full menu of products
Annualized three year growth rate of 22%
Business Credit Cards (1%)
Only available to commercial customers
Credit review performed as part of the normal commercial lending process
Retirement Plan Services (1%) Primary focus is on defined benefit and contribution plans Provides custodial/directed trustee services for non-qualified plans Total retirement plan assets of $757 million
* Numbers in ( ) are a percentage of total non interest income
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Captive Insurance
The captive insurance market has grown 10% annually over the last 5 years Vermont is the U.S. domicile of choice for captive insurance companies
570 Captive Insurers are licensed in VT; 65% bank with Chittenden*
Vermont has more captive insurance companies than all other states combined Over $200 million in bank deposits and $600 million in Corporate Trust Assets under administration Over $71 million in stand-by letters of credit that are fully collateralized by cash or government securities held in trust at Chittenden Bank
800 600 400 200 0
527
597
674
2001 2002 2003
Captives in Vermont
*Some Chittenden customers have more than one captive
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Government Banking
Leader in government banking for Vermont
Expanding our presence within the Massachusetts and New Hampshire franchises Customers use a wide array of transaction, loan and deposit products Nearly $70 million in loan balances and over $347 million in deposits and repos
Loans
NH 6%
MA 30%
VT 64%
Deposits & Repurchase Agreements
NH 18%
MA 23%
VT 59%
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Mortgage Banking
Originations for 2003 were $1.5 billion, and $349 million for the first half of 2004, of which $1.4 billion and $261 million were sold respectively in the secondary markets Underlying coupons in the mortgage servicing portfolio continue to decline
2001 2003 06/30/04
Under 5% 0% 10% 11%
5%<6% 2% 42% 50%
6%<7% 38% 32% 31%
7%<8% 50% 12% 7%
Over 8% 10% 4% 1%
Mortgage servicing portfolio of $2.4 billion at June 30, 2004 with a conservative valuation of $12.6 million or 53 basis points* Continued expansion through our affiliate banks into other states:
Originations by Bank
BWM 7%
MBT 4%
ONB 18%
FBT 3%
Chittenden 68%
*The mortgage servicing portfolio is carried at the lower of cost or market and the fair market value at June 30, 2004 was $21 million
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Wealth Management
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Wealth Management
Assets under administration
Assets under management $1.9 billion Personal Trust/Custody 2.8 billion Retail Investments .2 billion Corporate Trust 2.0 billion Captive Insurance .6 billion Retirement Plan Services .8 billion
Total $8.3 billion
Private Banking
Loans $61.7 million Deposits $48.8 million
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Asset Management Services
Services include asset management and personal trust Over $1.9 billion in assets under management Over $2.8 billion in assets under administration Average account size of $488,000 Average fee of 76 bps Operating margin of 40%
Assets Under Management
60% 40% 20% 0%
59%
33%
8%
Equity Bonds Cash
As of 06/30/04
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Wealth Management
Retail Investments – Broker/Dealer
Over $202 million in assets under administration
2004 Revenue: (as of June 30, 2004)
57% Annuity Sales 41% Brokerage Sales 2% Other
Serving over 5,000 customers in three states
Corporate Trust
Operates throughout New England Annualized two year growth rate of 8% Over $2.6 billion in assets under administration* Total revenue for the first six months of 2004 was approximately $1.5 million
*Includes captive insurance assets under administration of $600 million
Revenue by State
NH 16%
MA 2%
VT 82%
Corporate Trust
ME NH MA VT
2%
5%
41%
52%
0% 20% 40% 60%
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Financial Performance
24
Consistent Superior Financial Performance
Strong net interest margin
Low cost stable sources of funding and excellent liquidity position
Strong fee based revenues in targeted businesses
Conservative reserves and excellent credit quality
Strong tier 1 capital base
Net Interest Income
$250,000 $200,000 $150,000 $100,000 $50,000 $0
2001 2002 2003
$170,305 $192,615 $218,063
Net Interest Margin
5.00%
4.00%
3.00%
2001 2002 2003 06/04
4.74% 4.53% 4.12% 4.18%
4.08% 4.20% 3.82% 3.75%
CHZ SNL*
*SNL Securities $5-$10 Billion index
25
Yield on Loans
9.0% 8.0% 7.0% 6.0% 5.0% 4.0%
2001 2002 2003 06/04
8.0% 6.9% 6.0% 5.3%
7.7% 6.5% 5.5% 5.3%
CHZ Loans SNL* Loans
Yield on Securities
9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0%
2001 2002 2003 06/04
6.4% 5.6% 4.4% 4.1%
6.0% 5.2% 4.3% 4.1%
CHZ SNL*
Cost of Deposits
5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
2001 2002 2003 06/04
3.2% 2.0% 1.3% 1.1%
2.7% 1.5% 0.9% 0.7%
CHZ SNL*
Cost of Funds
5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
2001 2002 2003 06/04
4.1% 2.6% 1.9% 1.5%
3.3% 1.9% 1.2% 1.0%
CHZ SNL*
*SNL Securities $5-$10 Billion index
26
Non-Interest Income
2000
Other 9%
Deposit Services 26%
Wealth Management 30%
Mortgage Banking 13%
Business Services 22%
2004
Other 9%
Deposit Services 25%
Wealth Management 28%
Mortgage Banking 14%
Business Services 24%
Noninterest Income/Operating Revenue
35.00% 25.00% 15.00%
24.26%
22.46%
26.89%
26.66%
26.60%
25.01%
31.75%
30.75%
29.75%
26.06%
2000 2001 2002 2003 06/04
CHZ
SNL*
*SNL Securities $5-$10 Billion index 27
27
Non-Interest Expenses
2000
Other 25%
Amortization of Intangibles 2%
Data Processing 9%
Net Occupancy 13%
Emp Benefits 7%
Compensation 44%
2004
Restructuring Costs 2%
Other 19%
Amortization of Intangibles 2%
Data Processing 5%
Net Occupancy 13%
Emp Benefits 13%
Compensation 46%
Efficiency Ratio
62% 60% 58% 56% 54% 52%
54.47%
54.24%
2000
56.13%
54.59%
2001
58.91%
56.91%
2002
60.13%
57.70%
2003
60.89%
59.18%
06/04
CHZ
SNL*
*SNL Securities $5-$10 Billion index 28
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Financial Summary
Earnings
Ratios
Credit
Capital
2001 2002 2003 06/30/04
Per Common Share
Diluted Earnings $ 1.80 $ 1.96 $ 2.07 $0.96
Cash Earnings $ 1.86 $ 1.98 $ 2.12 $0.98
Dividends $ 0.76 $ 0.79 $ 0.80 $0.42
Book Value $ 11.56 $ 13.11 $ 15.82 $ 15.93
Tangible Book Value $ 10.52 $ 11.09 $ 9.30 $9.46
Dividend Payout Ratio 42.15% 39.88% 37.84% 43.31%
Return on Average Equity 16.55% 16.12% 13.90% 12.18%
Return on Average Tangible Equity 18.52% 19.27% 22.92% 20.70%
Return on Average Assets 1.51% 1.40% 1.29% 1.23%
Return on Average Tangible Assets 1.57% 1.44% 1.37% 1.32%
Net Interest Margin 4.74% 4.53% 4.12% 4.18%
Efficiency Ratio 56.13% 58.56% 60.48% 59.18%
NPAs to Loans & OREO 0.46% 0.49% 0.39% 0.54%
Loan Loss Reserve to Loans 1.59% 1.62% 1.54% 1.50%
Net Charge-Offs to Average Loans 0.24% 0.28% 0.16% 0.03%
Tangible Capital 8.19% 7.29% 6.02% 6.24%
Leverage 7.99% 9.28% 7.79% 8.22%
Tier 1 10.32% 12.25% 10.07% 10.46%
Risk-Based 11.57% 13.50% 11.32% 11.73%
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Risk Management
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Credit Quality
Net Charge-offs to Average Loans
0.45% 0.30% 0.15% 0.00%
0.35%
0.24%
2001
0.33%
0.28%
2002
0.27%
0.16%
2003
0.20%
0.03%
06/04
CHZ
SNL*
NPA to Loans & OREO
0.85% 0.75% 0.65% 0.55% 0.45% 0.35%
0.71%
0.46%
0.75%
0.49%
0.65%
0.39%
0.65%
0.54%
2001 2002 2003 06/04
CHZ
SNL*
Reserves/Loans
1.80% 1.60% 1.40%
1.20% 1.00%
1.59%
1.35%
1.62%
1.41%
1.54%
1.44%
1.50%
1.36%
2001 2002 2003 06/04
CHZ
SNL*
*SNL Securities $5-$10 Billion index
31
Granularity of Non-Accrual Loans
Size of Total
Relationship $ Total % # %
>$ 1.0 MM $10,055 49% 6 4%
$500 M to $1 MM 3,696 18% 5 4%
$100 M to $500 M 4,104 20% 19 14%
<$ 100 M 2,723 13% 106 78%
Total $20,578 100% 136 100%
As of 06/30/04
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Interest Rate Risk
Naturally Hedged
Net Interest Income Sensitivity (Ramped)*
+50 bps +.03% +25 bps +.03% -25 bps –.05% -50 bps –1.06%
Net Interest Income Sensitivity (Shocked)*
+200 bps +4.63% +100 bps +2.39% -100 bps –3.12% -200 bps –10.87%
Static Gap
6 month -.51% 12 month 2.18%
Net Income Sensitivity (Ramped)*
+50 bps +.55% +25 bps +.59% -25 bps +.52%
-50 bps –2.30%
Net Income Sensitivity (Shocked)*
+200 bps +8.82% +100 bps +4.82% -100 bps –5.17%
-200 bps –19.41%
*12 month forward estimates as of 06/30/04
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In Summary
34
A Compelling Story
Strong market share and a proven acquisition acumen Low risk balance sheet with a prudent growth strategy Diversified banking services with a solid balance of revenues Low exposure to volatile sectors with a fortress balance sheet
Total Shareholder Return
3-Year Period
15% 10% 5% 0% -5%
12.38%
-0.69%
1.92%
CHZ S&P 500 Dow Jones Ind Avg
Annual Equivalent
10-Year Period
30% 20% 10% 0%
18.55%
11.81%
13.40%
CHZ S&P 500 Dow Jones Ind Avg
Annual Equivalent
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Visit our website for a wide range of products, latest financial reports and many
other interactive services: www.chittendencorp.com
This presentation contains “forward-looking statements” which may describe future plans and strategic initiatives. These forward-looking statements are based on current plans and expectations, which are subject to a number of factors and uncertainties that could cause future results to differ from historical performance or future expectations.
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