UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
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¨ | Definitive Revised Proxy Statement |
¨ | Definitive Additional Materials |
þ | Soliciting Material Pursuant to § 240.14a-12 |
CHITTENDEN CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Filed by Chittenden Corporation
Pursuant to Rule 14a-12
Under the Securities Exchange Act of 1934
This filing relates to a press release dated July 19, 2007 issued by Chittenden Corporation. The following is a copy of the press release.
Chittenden Corporation | ||||
2 Burlington Square | ||||
P.O. Box 820 | ||||
Burlington, Vermont 05402-0820 | Kirk W. Walters | |||
802-658-4000 | (802) 660-1561 |
For Immediate Release
July 19, 2007 | 46/07 |
Chittenden Corporation Reports Higher Core Earnings Per Share and Announces
Quarterly Dividend of $0.22 per share
Burlington, VT – Chittenden Corporation (NYSE:CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault, today announced earnings for the quarter ended June 30, 2007 of $9.0 million, or $0.20 per diluted share. Excluding the non-recurring loss on the repositioning of the securities portfolio and the one time charge related to the merger of Merrill Merchants Bancshares Inc., the Company’s second quarter core earnings per share (non-GAAP) were $0.47 per diluted share or $21.6 million, compared to $21.0 million or $0.45 per diluted share for the same period a year ago.
For the first six months of 2006, GAAP earnings were $29.1 million or $0.64 per diluted share. Core earnings (non-GAAP) for the first six months of 2007 were $41.6 million or $0.91 per diluted share, compared to $41.2 million or $0.87 per diluted share for the same period of a year ago. Chittenden also announced its quarterly dividend of $0.22 per share, which will be paid on August 10, 2007 to shareholders of record on July 27, 2007.
In making the announcement, Perrault said, “We are extremely pleased with the integration of Merrill Merchants onto the Chittenden platform. The successful systems conversion and operations integration was the result of exceptional efforts by many people throughout both organizations. In addition, the Company’s strong credit quality coupled with an increase in the net interest margin from the first quarter of 2007 shows our continued success in dealing with a difficult environment.”
SECOND QUARTER 2007 FINANCIAL HIGHLIGHTS
• | Commercial loans increased 6%(1) from June 30, 2006 with continued solid growth in C&I and commercial real estate loans. |
• | Net interest margin increased eight basis points to 4.14% from the first quarter of 2007. |
• | Investment management and trust income increased 13%(1) from the same period a year ago. |
• | Noninterest expenses, excluding the Merrill Merchants Bank acquisition, were flat with the first quarter of 2007 and the efficiency ratio improved to 57.16%. |
• | Net charge-offs remained low at two basis points and the Company’s allowance for credit losses was conservatively maintained at 1.34% of total loans. |
• | The tangible capital ratio of 6.39% remained strong at June 30, 2007. |
(1) | Excluding Merrill Merchants Bank |
Chittenden Corporation | ||||
2 Burlington Square | ||||
P.O. Box 820 | ||||
Burlington, Vermont 05402-0820 | Kirk W. Walters | |||
802-658-4000 | (802) 660-1561 |
For Immediate Release
MERGERS AND ACQUISITIONS
On June 27, 2007, Chittenden announced that it had signed a definitive merger agreement to be acquired by People’s United Financial, Inc. (“People’s United”), in a stock and cash transaction valued at approximately $1.9 billion. The transaction, which is expected to close in the first quarter of 2008, remains subject to approvals by regulators and Chittenden’s shareholders. At closing Chittenden shareholders will have the right, subject to proration, to elect to receive cash or People’s United common stock, in either case having a value equal to $20.35 plus the product of .8775 times the average closing price of People’s United shares for the five day period prior to the closing. Based on the average closing price of People’s United for the three day period ending June 25, 2007, the transaction was valued at $37.00 per Chittenden share. The actual per share value on consummation of the acquisition will depend on the share price of People’s United at that time. People’s United Bank currently operates 160 branches, 75 of which offer seven-day banking in Super Stop & Shop locations across Connecticut. Chittenden currently has 133 branches in New England through six bank subsidiaries.
On June 4, 2007, Chittenden announced that it had signed a definitive merger agreement to acquire Community Bank & Trust Company (“Community”), for approximately $124.1 million in cash and stock. The acquisition is expected to close in the fourth quarter of 2007; however completion of the acquisition remains subject to the approval of the shareholders of Community, as well as various regulatory agencies. As a result of the transaction, Community will merge into Ocean Bank. Community had total assets of $426 million, deposits of $344 million, and $45 million of stockholders’ equity at March 31, 2007. Community had $400 million in total loans at March 31, 2007, of which $246 million were commercial loans and $153 million were residential real estate loans. Community presently operates 8 banking offices in Carroll, Merrimack, Hillsborough and Rockingham counties.
On May 31, 2007, Chittenden announced that it had completed its acquisition of Merrill Merchants Bancshares, Inc., a $457 million commercial bank headquartered in Bangor, Maine for $44 million in cash and approximately 2.2 million in shares of Chittenden common stock. This transaction has been accounted for as a purchase and, accordingly, Merrill Merchant’s operations are reflected in Chittenden’s consolidated financial statements from the date of acquisition. Merrill Merchants presently operates 11 banking offices in Kennebec, Penobscot, and Somerset counties in Maine. (See footnote three for the June 30, 2007 balances contributed by Merrill Merchants.)
ASSETS
Total assets increased from $6.4 billion at December 31, 2006 to $6.9 billion at June 30, 2007 with total loans increasing $412 million to $5.1 billion for that same period. Merrill Merchants Bank contributed total assets of $525 million and total loans of $360 million. A total of $66 million of goodwill and $7.3 million of core deposit intangibles were recorded as a result of the acquisition. The securities available for sale portfolio declined $219 million from December 31, 2006, which was partially offset by an increase in cash and cash equivalents of $162 million. These variances primarily resulted from the second quarter securities portfolio repositioning in which the Company sold approximately $572 million or 52% of the investment securities held in the available-for-sale investment portfolio.
LIABILITIES
Total deposits increased $196 million from the prior year end and $145 million from March 31, 2007. The Company experienced its normal seasonal declines in municipal and captive deposits, which was offset by the acquisition of Merrill Merchants, who contributed $360 million in deposits at June 30, 2007. Borrowings increased $195 million from December 31, 2006, of which Merrill accounted for $50 million and the remaining increase primarily related to the February 14, 2007 issuance of $125 million in subordinated debt securities. The Company utilized the proceeds from the issuance of the subordinated debt to redeem its 8.0% trust preferred securities (“TPS”) called on July 1, 2007. The all in rate for the first five years of the subordinated debt securities will be 5.99%. The cost of the trust preferred securities
Chittenden Corporation | ||||
2 Burlington Square | ||||
P.O. Box 820 | ||||
Burlington, Vermont 05402-0820 | Kirk W. Walters | |||
802-658-4000 | (802) 660-1561 |
For Immediate Release
was 8.92% and the Company amortized the issuance costs over the five year period which ended June 30, 2007. The redemption of the TPS will reduce interest costs by approximately 300 basis points or $3.7 million per year and is expected to increase the net interest margin 7 basis points in the third quarter of 2007.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the three months ended June 30, 2007 was $63.2 million, which was up $3.3 million or 5.6% from the first quarter of 2007. Merrill Merchants Bank contributed $1.5 million in net interest income during the second quarter. The Company’s net interest margin for the second quarter of 2007 was 4.14%, an increase of 8 basis points on a linked quarter basis. The increases in both net interest income and the net interest margin were primarily driven by the acquisition of Merrill Merchants, and the second quarter securities portfolio repositioning.
NONINTEREST INCOME
Investment management and trust fees increased $516,000 from the first quarter of 2007 and $861,000 from the second quarter of 2006. This increase was primarily driven by higher annuity income at Chittenden Securities, LLC, as well as increased sales of retirement plan services. As previously noted, Chittenden realized $14.1 million of losses on sales of investments for the second quarter of 2007 related to the Company’s repositioning of its securities portfolio. This strategy was designed to better position the Company’s cash flows for the acquisition of Merrill Merchants Bancshares, Inc. and to be consistent with its forecasts for future loan and deposit growth.
NONINTEREST EXPENSE
Noninterest expense was $52.6 million for the second quarter of 2007, compared with $47.3 million for March 31, 2007. In the second quarter of 2007 the Company recognized $4.1 million of non-recurring charges related to the merger of Merrill. Excluding the acquisition charge and noninterest expenses related to Merrill, noninterest expenses for the second quarter of 2007 would have been $47.4 million, an increase of only $100,000 on a linked quarter basis.
INCOME TAXES
The effective income tax rate for the second quarter was 28.7% consistent with the first quarter of 2007. The effective income tax rate in both periods was primarily attributable to higher low income housing credits and charitable contributions as well as a first quarter 2007 change in the tax accounting method for a customer list intangible related to a prior acquisition.
CREDIT QUALITY
The provision for credit losses was $1.5 million, down $250,000 from the same period of a year ago. Consistent low net charge-offs and solid asset quality supported the lower provision. NPAs were $29.5 million at June 30, 2007, compared to $24.7 million at June 30, 2006. The increase in NPAs related to a number of small commercial loans, the largest of which was $1.5 million and the addition of $1.4 million related to Merrill Merchants. NPAs as a percentage of total loans at the end of the second quarter of 2007 were 58 basis points, which was up from 54 basis points in the second quarter of 2006. Net charge-offs as a percentage of average loans were 2 basis points for both periods. As a percentage of total loans, the allowance for credit losses was 1.34%, down 4 basis points from the similar period in 2006.
Chittenden Corporation | ||||
2 Burlington Square | ||||
P.O. Box 820 | ||||
Burlington, Vermont 05402-0820 | Kirk W. Walters | |||
802-658-4000 | (802) 660-1561 |
For Immediate Release
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, Massachusetts and Connecticut, 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, among others: (1) changes in general, national or regional economic conditions; (2) changes in loan default and charge-off rates; (3) reductions in deposit levels necessitating increased borrowings to fund loans and investments; (4) changes in interest rates; (5) changes in levels of income and expense in noninterest income and expense-related activities; (6) competition and its effect on pricing, spending, third-party relationships and revenues; (7) failure of the parties to satisfy the closing conditions for the Chittenden/Community merger or the People’s United/Chittenden merger in a timely manner or at all; (8) failure to obtain governmental approvals of either merger, or imposition of adverse regulatory conditions in connection with such approvals; (9) failure of the Community shareholders to approve the Chittenden/Community merger or the Chittenden shareholders to approve the People’s United/Chittenden merger; (10) costs or difficulties related to the integration of the businesses following the completion of each merger; and (11) disruptions to Chittenden’s business as a result of the announcement and pendency of the People’s United/Chittenden merger.
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, 2006. 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.
Additional Information about the Mergers and Where to Find It
Chittenden and People’s United have filed and will be filing relevant documents concerning their transaction with the Securities and Exchange Commission, including a registration statement on Form S-4. Furthermore, Chittenden and Community have filed and will be filing relevant documents concerning their transaction with the Securities and Exchange Commission and the Federal Deposit Insurance Corporation, including a registration statement on Form S-4. INVESTORS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 CONTAINING A PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED TRANSACTION AND ANY OTHER DOCUMENTS FILED WITH THE SEC AND/OR THE FDIC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY CONTAIN (OR WILL CONTAIN) IMPORTANT INFORMATION. Investors are able to obtain those documents filed with the SEC free of charge at the SEC’s website (http://www.sec.gov). In addition, documents can be obtained, without charge, by directing a request to Chittenden Corporation, 2 Burlington Square, Burlington, Vermont 05402-0820, Attention: General Counsel.
Chittenden and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the shareholders of Chittenden in connection with the People’s United/Chittenden merger. Chittenden and its executive officers and directors may be deemed to be participants in the solicitation of proxies from the shareholders of Community in connection with the Chittenden/Community merger. Information about the directors and executive officers of Chittenden and information about any other persons who may be deemed participants in each transaction will be included in the applicable proxy statement/prospectus. You can find information about Chittenden’s directors and executive officers in the proxy statement for Chittenden’s annual meeting of shareholders filed with the SEC on March 9, 2007.
1 | Chittenden’s subsidiaries are Chittenden Trust Company, The Bank of Western Massachusetts, Flagship Bank and Trust Company, Maine Bank & Trust Company, Ocean Bank and Merrill Merchants Bank. Chittenden Trust Company also operates under the names Chittenden Bank, Chittenden Services Group, Chittenden Mortgage Services and Chittenden Commercial Finance, and it owns Chittenden Insurance Group, LLC, Chittenden Securities, LLC. |
CHITTENDEN CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In Thousands)
6/30/07 | 3/31/07 | 12/31/06 | 6/30/06 | |||||||||||||
Assets: | ||||||||||||||||
Cash and Cash Equivalents | $ | 361,240 | $ | 232,259 | $ | 199,358 | $ | 172,567 | ||||||||
Securities Available For Sale | 918,214 | 1,205,593 | 1,137,352 | 1,288,390 | ||||||||||||
FRB / FHLB Stock | 9,136 | 15,027 | 13,403 | 18,577 | ||||||||||||
Loans Held For Sale | 23,495 | 21,991 | 17,354 | 18,882 | ||||||||||||
Loans: | ||||||||||||||||
Commercial & Industrial (C&I) | 944,752 | 865,347 | 853,839 | 851,692 | ||||||||||||
Municipal | 115,972 | 159,459 | 141,522 | 90,206 | ||||||||||||
Multi-Family | 254,068 | 247,029 | 216,049 | 205,443 | ||||||||||||
Commercial Real Estate | 2,103,461 | 1,977,258 | 1,942,685 | 1,884,716 | ||||||||||||
Construction | 239,493 | 217,068 | 232,000 | 218,123 | ||||||||||||
Residential Real Estate | 849,557 | 749,018 | 751,450 | 750,031 | ||||||||||||
Home Equity Credit Lines | 344,210 | 319,235 | 322,124 | 319,606 | ||||||||||||
Consumer | 258,168 | 231,221 | 237,541 | 254,839 | ||||||||||||
Total Loans | 5,109,681 | 4,765,635 | 4,697,210 | 4,574,656 | ||||||||||||
Less: Allowance for Loan Losses | (67,400 | ) | (62,768 | ) | (62,160 | ) | (62,070 | ) | ||||||||
Net Loans | 5,042,281 | 4,702,867 | 4,635,050 | 4,512,586 | ||||||||||||
Accrued Interest Receivable | 32,377 | 32,802 | 33,123 | 31,138 | ||||||||||||
Other Assets | 97,831 | 86,512 | 83,938 | 102,079 | ||||||||||||
Premises and Equipment, net | 74,151 | 68,541 | 67,036 | 69,503 | ||||||||||||
Mortgage Servicing Rights | 16,128 | 14,209 | 14,155 | 14,529 | ||||||||||||
Identified Intangibles | 20,986 | 14,332 | 14,996 | 16,326 | ||||||||||||
Goodwill | 282,448 | 216,038 | 216,038 | 216,038 | ||||||||||||
Total Assets | $ | 6,878,287 | $ | 6,610,171 | $ | 6,431,803 | $ | 6,460,615 | ||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||
Liabilities: | ||||||||||||||||
Deposits: | ||||||||||||||||
Demand | $ | 997,538 | $ | 909,309 | $ | 966,758 | $ | 965,794 | ||||||||
Savings | 501,248 | 462,935 | 468,294 | 474,883 | ||||||||||||
NOW | 913,155 | 864,364 | 861,435 | 895,817 | ||||||||||||
CMAs / Money Market | 1,547,971 | 1,663,107 | 1,655,349 | 1,441,573 | ||||||||||||
Certificates of Deposit less than $100,000 | 971,505 | 880,993 | 848,814 | 878,181 | ||||||||||||
Certificates of Deposit $100,000 and Over | 743,720 | 749,061 | 678,243 | 661,322 | ||||||||||||
Total Deposits | 5,675,137 | 5,529,769 | 5,478,893 | 5,317,570 | ||||||||||||
Securities Sold Under Agreements to Repurchase | 114,798 | 87,017 | 73,611 | 138,773 | ||||||||||||
Other Borrowings | 290,067 | 261,656 | 136,409 | 285,497 | ||||||||||||
Accrued Expenses and Other Liabilities | 75,007 | 67,569 | 71,804 | 63,299 | ||||||||||||
Total Liabilities | 6,155,009 | 5,946,011 | 5,760,717 | 5,805,139 | ||||||||||||
Stockholders’ Equity: | ||||||||||||||||
Common Stock | 52,425 | 50,261 | 50,235 | 50,235 | ||||||||||||
Surplus | 342,392 | 276,843 | 276,034 | 273,723 | ||||||||||||
Retained Earnings | 478,499 | 479,271 | 468,331 | 442,456 | ||||||||||||
Treasury Stock, at cost | (139,535 | ) | (126,987 | ) | (105,666 | ) | (85,678 | ) | ||||||||
Accumulated Other Comprehensive Income | (14,369 | ) | (21,263 | ) | (24,008 | ) | (30,924 | ) | ||||||||
Directors Deferred Compensation to be Settled in Stock | 6,164 | 6,035 | 6,160 | 5,664 | ||||||||||||
Unearned Portion of Employee Restricted Stock | (2,298 | ) | — | — | — | |||||||||||
Total Stockholders’ Equity | 723,278 | 664,160 | 671,086 | 655,476 | ||||||||||||
Total Liabilities and Stockholders’ Equity | $ | 6,878,287 | $ | 6,610,171 | $ | 6,431,803 | $ | 6,460,615 | ||||||||
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for per share amounts)
For the Three Months Ended | For the Six Months Ended | |||||||||||||
6/30/07 | 6/30/06 | 6/30/07 | 6/30/06 | |||||||||||
Interest Income: | ||||||||||||||
Loans | $ | 87,780 | $ | 78,547 | $ | 170,589 | $ | 151,812 | ||||||
Investments | 13,637 | 14,120 | 26,152 | 28,814 | ||||||||||
Total Interest Income | 101,417 | 92,667 | 196,741 | 180,626 | ||||||||||
Interest Expense: | ||||||||||||||
Deposits | 33,536 | 25,715 | 64,887 | 48,780 | ||||||||||
Borrowings | 5,927 | 4,900 | 11,119 | 8,798 | ||||||||||
Total Interest Expense | 39,463 | 30,615 | 76,006 | 57,578 | ||||||||||
Net Interest Income | 61,954 | 62,052 | 120,735 | 123,048 | ||||||||||
Provision for Credit Losses | 1,500 | 1,750 | 3,000 | 3,283 | ||||||||||
Net Interest Income after Provision for Credit Losses | 60,454 | 60,302 | 117,735 | 119,765 | ||||||||||
Noninterest Income: | ||||||||||||||
Investment Management and Trust | 6,183 | 5,322 | 11,850 | 10,475 | ||||||||||
Service Charges on Deposits | 4,420 | 4,358 | 8,564 | 8,287 | ||||||||||
Mortgage Servicing | 910 | 657 | 1,702 | 1,320 | ||||||||||
Gains on Sales of Loans, Net | 1,535 | 1,903 | 2,707 | 3,273 | ||||||||||
Losses on Sales of Securities | (14,137 | ) | — | (14,137 | ) | — | ||||||||
Credit Card Income, Net | 1,292 | 1,269 | 2,417 | 2,461 | ||||||||||
Insurance Commissions, Net | 1,393 | 1,429 | 3,549 | 3,475 | ||||||||||
Other | 3,176 | 3,590 | 6,203 | 6,824 | ||||||||||
Total Noninterest Income | 4,772 | 18,528 | 22,855 | 36,115 | ||||||||||
Noninterest Expense: | ||||||||||||||
Salaries | 23,811 | 23,789 | 47,243 | 46,706 | ||||||||||
Employee Benefits | 5,518 | 5,598 | 11,385 | 11,350 | ||||||||||
Net Occupancy | 6,207 | 5,780 | 12,334 | 11,930 | ||||||||||
Data Processing | 1,163 | 982 | 2,206 | 1,953 | ||||||||||
Amortization of Intangibles | 726 | 664 | 1,391 | 1,329 | ||||||||||
Merger Costs | 4,130 | — | 4,130 | — | ||||||||||
Other | 10,996 | 10,823 | 21,149 | 20,768 | ||||||||||
Total Noninterest Expense | 52,551 | 47,636 | 99,838 | 94,036 | ||||||||||
Income Before Income Taxes | 12,675 | 31,194 | 40,752 | 61,844 | ||||||||||
Income Tax Expense | 3,636 | 10,185 | 11,688 | 20,637 | ||||||||||
Net Income | $ | 9,039 | $ | 21,009 | $ | 29,064 | $ | 41,207 | ||||||
Basic Earnings Per Share | $ | 0.20 | $ | 0.45 | $ | 0.64 | $ | 0.88 | ||||||
Diluted Earnings Per Share | 0.20 | 0.45 | 0.64 | 0.87 | ||||||||||
Dividends Per Share | 0.22 | 0.20 | 0.42 | 0.38 |
CHITTENDEN CORPORATION
SELECTED QUARTERLY FINANCIAL DATA
(Unaudited)
(In thousands, except ratios and per share amounts)
6/30/07 | 3/31/07 | 12/31/06 | 6/30/06 | |||||||||||||
Selected Financial Ratios | ||||||||||||||||
Return on Average Tangible Equity1 | 8.92 | % | 18.93 | % | 20.25 | % | 19.87 | % | ||||||||
Core Return on Average Tangible Equity1 | 20.61 | % | 18.93 | % | 20.25 | % | 19.87 | % | ||||||||
Return on Average Equity | 5.35 | % | 12.21 | % | 13.20 | % | 12.75 | % | ||||||||
Core Return on Average Equity1 | 12.75 | % | 12.21 | % | 13.20 | % | 12.75 | % | ||||||||
Return on Average Tangible Assets1 | 0.60 | % | 1.34 | % | 1.47 | % | 1.38 | % | ||||||||
Core Return on Average Tangible Assets1 | 1.38 | % | 1.34 | % | 1.47 | % | 1.38 | % | ||||||||
Return on Average Assets | 0.55 | % | 1.26 | % | 1.39 | % | 1.30 | % | ||||||||
Core Return on Average Assets1 | 1.30 | % | 1.26 | % | 1.39 | % | 1.30 | % | ||||||||
Net Yield on Earning Assets | 4.14 | % | 4.06 | % | 4.29 | % | 4.22 | % | ||||||||
Efficiency Ratio1 | 57.16 | % | 58.72 | % | 54.56 | % | 56.87 | % | ||||||||
Tangible Capital Ratio | 6.39 | % | 6.80 | % | 7.10 | % | 6.79 | % | ||||||||
Leverage Ratio | 8.73 | % | 9.11 | % | 9.24 | % | 9.04 | % | ||||||||
Tier 1 Capital Ratio | 10.26 | % | 10.93 | % | 11.56 | % | 11.29 | % | ||||||||
Total Capital Ratio | 13.83 | % | 14.52 | % | 12.78 | % | 12.49 | % | ||||||||
Common Share Data | ||||||||||||||||
Common Shares Outstanding | 46,464 | 44,722 | 45,360 | 45,978 | ||||||||||||
Weighted Average Shares Outstanding | 45,187 | 45,105 | 45,745 | 46,423 | ||||||||||||
Weighted Average and Common Equivalent Shares Outstanding | 45,746 | 45,750 | 46,388 | 46,903 | ||||||||||||
Book Value per Share | $ | 15.57 | $ | 14.85 | $ | 14.79 | $ | 14.26 | ||||||||
Tangible Book Value per Share1 | $ | 9.04 | $ | 9.70 | $ | 9.70 | $ | 9.20 | ||||||||
Credit Quality Data | ||||||||||||||||
Nonperforming Assets (NPAs) | $ | 29,539 | $ | 23,312 | $ | 20,358 | $ | 24,727 | ||||||||
90 days past due and still accruing | 4,141 | 3,930 | 3,352 | 2,283 | ||||||||||||
NPAs to Loans Plus OREO | 0.58 | % | 0.49 | % | 0.43 | % | 0.54 | % | ||||||||
Allowance for Loan Losses | $ | 67,400 | $ | 62,768 | $ | 62,160 | $ | 62,070 | ||||||||
Reserve for Unfunded Commitments2 | 1,226 | 1,200 | 1,200 | 1,200 | ||||||||||||
Allowance for Credit Losses (ACL) | $ | 68,626 | $ | 63,968 | $ | 63,360 | $ | 63,270 | ||||||||
ACL to Loans | 1.34 | % | 1.34 | % | 1.35 | % | 1.38 | % | ||||||||
ACL to Loans (excluding Municipals) | 1.37 | % | 1.39 | % | 1.39 | % | 1.41 | % | ||||||||
ACL to Nonperforming Loans | 235.72 | % | 274.75 | % | 315.32 | % | 260.13 | % | ||||||||
Charge-offs | $ | 1,663 | $ | 1,617 | $ | 3,070 | $ | 1,872 | ||||||||
Recoveries | 741 | 725 | 1,110 | 728 | ||||||||||||
Net Charge-offs | $ | 922 | $ | 892 | $ | 1,960 | $ | 1,144 | ||||||||
Net Charge-offs to Average Loans | 0.02 | % | 0.02 | % | 0.04 | % | 0.02 | % | ||||||||
QTD Average Balance Sheet Data | ||||||||||||||||
Securities | $ | 1,056,954 | $ | 1,191,388 | $ | 1,201,734 | $ | 1,333,444 | ||||||||
Loans, Net | 4,855,054 | 4,663,406 | 4,632,538 | 4,552,727 | ||||||||||||
Earning Assets | 6,107,388 | 5,927,704 | 5,926,319 | 5,948,463 | ||||||||||||
Total Assets | 6,637,111 | 6,427,488 | 6,426,533 | 6,462,457 | ||||||||||||
Deposits | 5,509,524 | 5,365,049 | 5,434,889 | 5,372,367 | ||||||||||||
Borrowings | 383,029 | 328,039 | 249,344 | 367,521 | ||||||||||||
Stockholders’ Equity | 677,370 | 664,993 | 677,244 | 661,020 |
1. Reconciliation of non-GAAP measurements to GAAP
For the three months ended | For the six months ended | |||||||||||||||
6/30/07 | ||||||||||||||||
Net income (GAAP) | $ | 9,039 | $ | 29,064 | ||||||||||||
Losses on sales of securities (after tax) | 9,676 | 9,676 | ||||||||||||||
Non recurring charge for Merrill (after tax) | 2,859 | 2,859 | ||||||||||||||
Core net income (non-GAAP) (D) | $ | 21,574 | $ | 41,599 | ||||||||||||
Fully diluted earnings per share decrease (GAAP) | $ | 0.20 | $ | 0.64 | ||||||||||||
Fully diluted core earnings per share increase (non-GAAP) | $ | 0.47 | $ | 0.91 | ||||||||||||
6/30/07 | 3/31/07 | 12/31/06 | 6/30/06 | |||||||||||||
Net Income (GAAP) | $ | 9,039 | $ | 20,025 | $ | 22,536 | $ | 21,009 | ||||||||
Amortization of core deposit intangible, net of tax | 472 | 432 | 432 | 431 | ||||||||||||
Tangible Net Income (A) | $ | 9,511 | $ | 20,457 | $ | 22,968 | $ | 21,440 | ||||||||
Average Equity (GAAP) | $ | 677,370 | $ | 664,993 | $ | 677,244 | $ | 661,020 | ||||||||
Average Core Deposit Intangible | 16,430 | 14,662 | 15,328 | 16,659 | ||||||||||||
Average Deferred Tax on CDI | (4,669 | ) | (3,993 | ) | (4,168 | ) | (4,435 | ) | ||||||||
Average Goodwill | 237,932 | 216,038 | 216,038 | 216,038 | ||||||||||||
Average Tangible Equity (B) | $ | 427,677 | $ | 438,286 | $ | 450,046 | $ | 432,758 | ||||||||
Return on Average Tangible Equity (A) / (B) | 8.92 | % | 18.93 | % | 20.25 | % | 19.87 | % | ||||||||
Core Return on Average Tangible Equity (D) / (B | 20.61 | % | 18.93 | % | 20.25 | % | 19.87 | % | ||||||||
Average Assets (GAAP) | $ | 6,637,111 | $ | 6,427,488 | $ | 6,426,533 | $ | 6,462,457 | ||||||||
Average Core Deposit Intangible | 16,430 | 14,662 | 15,328 | 16,659 | ||||||||||||
Average Deferred Tax on CDI | (4,669 | ) | (3,993 | ) | (4,168 | ) | (4,435 | ) | ||||||||
Average Goodwill | 237,932 | 216,038 | 216,038 | 216,038 | ||||||||||||
Average Tangible Assets (C) | $ | 6,387,418 | $ | 6,200,781 | $ | 6,199,335 | $ | 6,234,195 | ||||||||
Return on Average Tangible Assets (A) / (C) | 0.60 | % | 1.34 | % | 1.47 | % | 1.38 | % | ||||||||
Core Return on Average Tangible Assets (D) / (C) | 1.38 | % | 1.34 | % | 1.47 | % | 1.38 | % |
Efficiency Ratio: is computed by dividing total noninterest expense (less oreo expense, amortization expense, franchise tax 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. ($52,551-$7-$726-$747-$4,130) / ($63,207+$4,772+$14,137) = 57.16%.
Tangible book value per share: is computed by subtracting goodwill and identified intangibles from equity, and dividing the resultant number by common shares outstanding, e.g. ($723,278-$20,986-$282,448) / 46,464= $9.04.
While the Company’s management uses non-GAAP measures for operational and investment decisions and believes that these measures are among several useful measures for understanding its operating results and financial condition, these measures should not be construed as a substitute for GAAP measures. Non-GAAP measures should be read and used in conjunction with the Company’s reported GAAP operating results and financial information.
2. The reserve for unfunded commitments is included in other liabilities on the accompanying consolidated balance sheet.
3. At June 30, 2007 Merrill contributed the following balances (in thousands):
Type | Amount | ||
Investments | $ | 64,799 | |
Total Loans | 360,341 | ||
Goodwill | 66,410 | ||
Total Assets | 525,386 | ||
Deposits | 359,983 | ||
Borrowings | 50,045 | ||
Equity | 106,532 |