reaching more customers by reaching out with more
As of December 31, 2004
Who We Are
Multi-bank holding company with significant operating autonomy at the individual banks Banking assets of $6.1 billion at December 31, 2004 Listed on the NYSE (CHZ), current market capitalization of $1.3 billion 120 full service banking offices and 152 ATM locations throughout VT, NH, MA, ME
Commercial loans make up 70% of the total loan portfolio and core funding comprises 94% of total funding Strong wealth management operation with assets under administration of $8.2 billion and assets under management of $2.0 billion Excellent credit quality with annual net charge-offs at .07% and an allowance for loan losses to loans of 1.45%
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
Our Target Markets
12/31/93 12/31/04 %
Assets (in millions)
Chittenden Bank $1,231 $3,034 50%
Ocean National Bank $1,608 27%
Bank of Western Mass $617 10%
Flagship Bank $494 8%
Maine Bank & Trust $317 5%
Total $1,231 $6,070 100%
Loans by State
12/31/93 12/31/04
VT 100% 41%
NH 22%
MA 27%
ME 10%
Deposits by State
12/31/93 12/31/04
VT 100% 53%
NH 20%
MA 18%
ME 9%
4
Corporate Structure
CUSTOMERS
Chittenden Bank
Ocean National Bank
Flagship Bank & Trust
Bank of Western Massachusetts
Maine Bank & Trust
CHZ SERVICES GROUP
CORPORATE
5
Our Target Markets
Vermont Market
State population of nearly 620,000
Greater Burlington population over 150,000
13% population growth in Chittenden County since 1990 Greater Burlington median household income of $48,000 Greater Burlington median age = 34 Nearly 9,000 new business startups in 2004 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
6
Our Target Markets
Greater Springfield Market
Population nearly 700,000 in Pioneer Valley (Hampden, Hampshire and Franklin Counties) Median household income of $40,000 Median age = 36 Above national/regional employment averages in education, insurance, health services, manufacturing Over 20 colleges located in Pioneer Valley 1993 - 2000 Pioneer Valley job growth over 15% 23,000 businesses and 90,000 households Telecommunications crossroads for New England
Greater Worcester Market
3rd largest city in New England Population of 775,000 in Worcester Co. 6 million people within a 50 mile radius Median household income of $48,000 Median age = 36 32,000 new jobs created in Worcester area between 1991 - 2003 Over 18% job growth in region (1993 - 2000)
Value of Worcester’s total assessed property value up nearly 15% in FY2003 Over 25,000 businesses and 110,000 households 16 colleges in Worcester Co.
Known as “The Center of Excellence in Biotechnology”
7
Our Target Markets
Southern NH/Seacoast Market
Total regional population just over 1 million 17% population growth 1990—2003 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) New Hampshire gross domestic product up 5.6% in 2003, 16th fastest growth in the United States Over 40,000 businesses and 150,000 households
Greater Portland Market
Combined population of Cumberland and York Co. nearly 470,000 15% population growth 1990 - 2003 Median household income of $44,000 Median age = 35 25% increase in residential building permits from 2000-2003 in the state 20% of Maine workforce in businesses with 4 or < employees Over 20,000 businesses and nearly 60,000 households 36 million tourist visits annually to Portland area
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Our Target Customers
Commercial Banking Businesses with Revenues of $1 to $100 Million; Loan Needs up to $20 Million and Multiple Product and Service Needs
Community Banking Individuals and Families, Age 30+ who are Financially Sophisticated with Multiple Product and Service Needs and with Household Incomes ³ $50,000
Wealth Management Businesses and Individuals with Investment Management, Brokerage, Trust and/or Private and Professional Banking Needs
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Commercial & Community Banking
10
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%
12/31/04
Municipal 3%
C&I 20%
Construction 4%
Multi Family 4%
Commercial RE
39%
Home Equity 7%
Residential 1-4 17%
Consumer 6%
Growth in C&I and CRE
40% 30% 20% 10% 0%
9%
25%
2%
22%
16%
30%
22%
11%
2001 2002 2003 2004
C&I CRE
80% 60% 40% 20% 0%
60%
40%
65%
35%
67%
33%
70%
30%
2001 2002 2003 2004
Commercial Consumer
Total loans as of December 31, 2001 and December 31, 2004 were $2.8 billion and $4.0 billion respectively
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Commercial Loan Diversification by Industry
Other 6.55%
Agriculture, Forestry, Fishing & Hunting 1.24%
Construction 5.35%
Real Estate, Rental & Leasing 29.45%
Finance & Insurance 2.30%
Manufacturing 9.29%
Mining 0.15%
Public Admin 1.82%
Educational Srvc 1.95%
Retail Trade 8.15%
Information 1.35%
Professional, Scientific, & Tech Srvc 2.56%
Mgmt of Companies & Enterprises 0.49%
Health Care & Soc Assist 4.54%
Arts, Entertainment & Rec 2.93%
Admin/Support & Waste Mgmt & Remediation Svcs 1.14%
Accomodation & Food Srvc 10.92%
Other Srvc (except Public Admin) 2.96%
Transportation & Warehousing 1.67%
Utilities 0.04%
Wholesale Trade 5.15%
Based on loan data at 12/31/04
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Real Estate, Rental and Leasing
Development 1.09%
Educational 0.29%
Elderly Housing 0.41%
A partments 22.46%
A uto Sales/Svc Station 0.98%
Hotel/Motel 0.42%
Industrial 11.16%
Land 1.67%
Manufacturing 2.45%
Mercantile 1.31%
Mixed 11.69%
Mobile Home Park 0.85%
Office 22.08%
Other 4.15%
Other Business A ssets 1.78%
Recreational 0.42%
Restaurant/Bar 1.39%
Shopping Ctr/Stores 10.28%
Warehouse 3.83%
Cash Secured 0.96%
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Continuing Core Deposit Growth
12/31/01
Borrowings 1%
Demand Deposits 17%
NOW 13%
Savings 10%
MMA 37%
CDs < $100,000 17%
CDs > $100,000 5%
12/31/04
CDs > $100,000 8%
Borrowings 4%
Demand Deposits 17%
NOW 17%
Savings 10%
MMA 30%
CDs < $100,000 14%
40% 30% 20% 10% 0%
30%
1%
29%
4%
35%
3%
34%
2%
2001 2002 2003 2004
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 2004
Consumer Commercial
Total Deposits as of December 31, 2001 and December 31, 2004 were $3.7 billion and $5.0 billion respectively
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Business Services
Insurance (7%)
Specializes in commercial property and casualty insurance Wholesale brokerage operation covering ten states Gross premiums for the nine months ending December 31, 2004 were $68 million
Cash Management (6%)
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 (3%) Over 1,000 customers Full menu of products
Annualized three year growth rate of 19%
Business Credit Cards (2%)
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 $694 million
* Numbers in ( ) are a percentage of total non interest income
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Captive Insurance
The captive insurance market has grown 15% annually over the last 3 years Vermont is the U.S. domicile of choice for captive insurance companies
65% of the active captive insurers bank with Chittenden* Vermont has more captive insurance companies than all other states combined Over $200 million in bank deposits and over $700 million in Corporate Trust Assets under administration Over $75 million in stand-by letters of credit that are fully collateralized by cash or government securities held in trust at Chittenden Bank
Captives in Vermont
800 600 400 200 0
2001 2002 2003 2004
527
597
674
717
*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 $106 million in loan balances and over $492 million in deposits and repos
Loans
NH 8%
VT 71%
MA 21%
Deposits & Repurchase Agreements
NH 18%
MA 14%
VT 68%
17
Mortgage Banking
Originations for 2003 were $1.5 billion, and $693 million for the year ending December 31, 2004, of which $1.4 billion and $491 million, respectively, were sold in the secondary markets Underlying coupons in the mortgage servicing portfolio continue to decline
2001 2003 2004
Under 5% 0% 10% 11%
5%<6% 2% 42% 52%
6%<7% 38% 32% 30%
7%<8% 50% 12% 6%
Over 8% 10% 4% 1%
Mortgage servicing portfolio of $2.1 billion at December 31, 2004 with a conservative valuation of $11.8 million or 55 basis points* Continued expansion through our affiliate banks into other states:
Originations by Bank
BWM 9%
Chittenden 66%
FBT 3%
ONB 18%
MBT 4%
*The mortgage servicing portfolio is carried at the lower of cost or market and the fair market value at December 31, 2004 was $17.1 million, or 83 basis points
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Wealth Management
19
Wealth Management
Assets under administration
Assets under management $2.0 billion
Personal Trust/Custody 2.0 billion
Retail Investments .2 billion
Corporate Trust 2.6 billion
Captive Insurance .7 billion
Retirement Plan Services .7 billion
Total $8.2 billion
Private Banking
Loans $61.0 million
Deposits $45.5 million
20
Asset Management Services
Services include asset management and personal trust Over $2.0 billion in assets under management Over $2.8 billion in assets under administration Average managed account size of $553,000 Average fee of 76 bps Operating margin of approximately 40%
Assets Under Management
60% 40% 20% 0%
51%
39%
10%
Equity Bonds Cash
As of 12/31/04
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Wealth Management
Retail Investments – Broker/Dealer
Over $200 million in assets under administration
2004 Revenue: (as of December 31, 2004)
60% Annuity Sales
38% Brokerage Sales
2% Other
Serving over 5,000 customers in four states
Corporate Trust
Operates throughout New England Over $2.6 billion in assets under administration
Total revenue for the year ended December 31, 2004 was approximately $3.1 million
Revenue by State
NH/ME 17%
VT 77%
MA 6%
Corporate Trust
ME NH MA VT
0% 20% 40% 60%
2%
5%
41%
52%
22
Financial Performance
23
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 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0
2001 2002 2003 2004 $170,305 $192,615 $218,063 $225,498
Net Interest Margin
5.00% 4.00% 3.00%
2001 2002 2003 2004
4.74%
4.53%
4.12%
4.21%
4.08%
4.20%
3.82%
3.89%
CHZ
SNL*
*SNL Securities $5-$10 Billion index
24
Yield on Loans
9.0% 8.0% 7.0% 6.0% 5.0% 4.0%
8.0% 6.9% 6.0% 5.7% 7.7% 6.5% 5.5% 5.4%
2001 2002 2003 2004
CHZ Loans
SNL* Loans
Yield on Securities
9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0%
6.4% 5.6% 4.4% 4.2% 6.0% 5.2% 4.3% 4.1%
2001 2002 2003 2004
CHZ
SNL*
Cost of Deposits
5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
3.2% 2.0% 1.3% 1.1% 2.7% 1.5% 0.9% 0.7%
2001 2002 2003 2004
CHZ
SNL*
Cost of Funds
5.0% 4.0% 3.0% 2.0% 1.0% 0.0%
4.1% 2.6% 1.9% 1.7% 3.3% 1.9% 1.2% 0.8%
2001 2002 2003 2004
CHZ
SNL*
*SNL Securities $5-$10 Billion index
25
Non-Interest Income
2000
Other 9%
Wealth Management 30%
Business Services 22%
Mortgage Banking 13%
Deposit Services 26%
2004
Other 11%
Wealth Management 28%
Business Services 24%
Mortgage Banking 14%
Deposit Services 23%
Noninterest Income/Operating Revenue
35.00% 25.00% 15.00%
2000 2001 2002 2003 2004
24.26% 26.89% 26.60% 31.75% 29.98% 22.46% 26.66% 25.01% 30.75% 24.56%
CHZ
SNL*
*SNL Securities $5-$10 Billion index
26
Non-Interest Expenses
2000
Other 25%
Compensation 44%
Benefits 7%
Occupancy 13%
DP Exp 9%
Amort of Intang 2%
2004
Restructuring Costs 1%
Compensation 48%
Benefits 12%
Occupancy 13%
DP Exp 4%
Amort of Intang 2%
Other 20%
Efficiency Ratio
62% 60% 58% 56% 54% 52%
2000 2001 2002 2003 2004
54.47% 56.13% 58.56% 60.48% 59.13% 54.24% 54.59% 56.91% 57.70% 57.38%
CHZ
SNL*
*SNL Securities $5-$10 Billion index
27
Financial Summary
Earnings Ratios Credit Capital
2001 2002 2003 2004
Per Common Share
Diluted Earnings $1.44 $1.57 $1.66 $1.61
Cash Earnings $1.49 $1.58 $1.70 $1.65
Dividends $0.61 $0.63 $0.64 $0.70
Book Value $9.25 $10.49 $12.66 $13.38
Tangible Book Value $8.42 $8.87 $7.44 $8.28
Dividend Payout Ratio 42.15% 39.88% 37.84% 42.45%
Return on Average Equity 16.55% 16.12% 13.90% 12.70%
Return on Average Tangible Equity* 18.52% 19.27% 22.92% 21.43%
Return on Average Assets 1.51% 1.40% 1.29% 1.27%
Return on Average Tangible Assets* 1.57% 1.44% 1.37% 1.36%
Net Interest Margin 4.74% 4.53% 4.12% 4.21%
Efficiency Ratio 56.13% 58.56% 60.48% 57.38%
NPAs to Loans & OREO 0.46% 0.49% 0.39% 0.49%
Loan Loss Reserve to Loans 1.59% 1.62% 1.54% 1.45%
Net Charge-Offs to Average Loans 0.24% 0.28% 0.16% 0.07%
Tangible 8.19% 7.29% 6.02% 6.58%
Leverage 7.99% 9.28% 7.79% 8.42%
Tier 1 10.32% 12.25% 10.07% 10.44%
Risk-Based 11.57% 13.50% 11.32% 11.64%
* see Appendix
28
Risk Management
29
Credit Quality
Net Charge-offs to Average Loans
0 . 4 5 % 0 . 3 0 % 0 .15 % 0 . 0 0 %
0.35% 0.33% 0.27% 0.20% 0.24% 0.28% 0.16% 0.07%
2001 2002 2003 2004
CHZ SNL*
NPA to Loans & OREO
0.85% 0.75% 0.65% 0.55% 0.45% 0.35%
0.71% 0.75% 0.65% 0.60% 0.46% 0.49% 0.39% 0.49%
2001 2002 2003 2004
CHZ SNL*
Reserves/Loans
1.80% 1.60% 1.40% 1.20% 1.00%
1.59% 1.62% 1.54% 1.45% 1.35% 1.41% 1.44% 1.29%
2001 2002 2003 2004
CHZ SNL*
*SNL Securities $5-$10 Billion index
30
Granularity of Non-Accrual Loans
Size of Total Relationship $ Total % # %
>$1.0 MM $8,120 41% 5 4%
$500 M to $1 MM 3,801 19% 5 4%
$100 M to $500 M 5,553 28% 22 17%
<$100 M 2,440 12% 96 75%
Total $19,914 100% 128 100%
As of 12/31/04
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Interest Rate Risk
Naturally Hedged
Net Interest Income Sensitivity (Ramped)* Net Income Sensitivity (Ramped)*
+50 bps +0.83% +50 bps +1.42%
+25 bps +0.42% +25 bps +0.72%
-25 bps –0.55% -25 bps -0.96%
-50 bps –2.62% -50 bps -4.82%
Net Interest Income Sensitivity (Shocked)* Net Income Sensitivity (Shocked)*
+200 bps +2.74% +200 bps +4.76%
+100 bps +1.41% +100 bps +2.42%
-100 bps –2.27% -100 bps -4.25%
-200 bps –8.93% -200 bps -16.70%
Static Gap
6 month -4.18% 12 month 1.37%
*12 month forward estimates as of 12/31/04
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In Summary
33
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%
12.18%
3.58%
4.70%
CHZ S&P 500 Dow Jones Ind Avg
Annual Equivalent
10-Year Period
30% 20% 10% 0%
18.95%
12.05%
13.09%
CHZ S&P 500 Dow Jones Ind Avg
Annual Equivalent
34
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.
35
Appendix
36
Reconciliation of non-GAAP measurements to GAAP
YTD Dec 2001 YTD Dec 2002 YTD Dec 2003 YTD Dec 2004
Net Income (GAAP) $58,501 $63,645 $74,799 $75,127
Amortization of identified intangibles, net of tax 1,925 831 1,786 2,000
Tangible Net Income (A) $60,426 $64,476 $76,585 $77,127
Average Equity (GAAP) 353,529 394,740 538,217 591,693
Average Identified Intangibles 0 9,108 22,493 21741
Average Deferred Tax on Identified Intangibles (594) (2,280) (5,763) (6,392)
Average Goodwill 28,147 53,293 187,369 216,519
Average Tangible Equity (B) 325,976 334,619 334,118 359,825
Return on Average Tangible Equity (A) / (B) 18.54% 19.27% 22.92% 21.43%
Average Assets (GAAP) 3,871,017 4,551,879 5,777,538 5,895,720
Average Identified Intangibles 0 9,108 22,493 21,741
Average Deferred Tax on Identified Intangibles (594) (2,280) (5,763) (6,392)
Average Goodwill 28,147 53,293 187,369 216,519
Average Tangible Assets (C) 3,843,464 4,491,759 5,573,439 5,663,852
Return on Average Tangible Assets (A) / (C) 1.57% 1.44% 1.37% 1.36%
37