Chittenden Corporation Reports 11% Higher Earnings and Announces Quarterly Dividend.BURLINGTON, Vt. -- Chittenden Corporation (NYSE NYSE See: New York Stock Exchange :CHZ CHZ Circumstellar Habitable Zone ) Chairman, President and Chief Executive Officer, Paul A. Perrault, today announced earnings for the quarter ended September 30, 2007 of $24.0 million, or $0.51 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, compared to $21.7 million or $0.47 per diluted share for the same period a year ago. For the first nine months of 2007, GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). earnings were $53.1 million or $1.15 per diluted share. Core earnings (non-GAAP) for the first nine months of 2007 were $65.6 million or $1.42 per diluted share , compared to $62.9 million or $1.34 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 November 9, 2007 to shareholders of record on October 26, 2007. In making the announcement, Perrault said, "I am pleased to report to shareholders that our fundamentals continue to be strong and growing, as our style of banking attracts deeper relationships with our customers and prospects in our market." THIRD QUARTER 2007 FINANCIAL HIGHLIGHTS * Earnings per share were up 8% from the third quarter of 2006. * Commercial loans increased 6% (1)from September 30, 2006 with continued solid growth in C&I and commercial real estate loans. * Net interest margin increased 19 basis points to 4.33% from the second quarter of 2007 and 10 basis points from the third quarter of 2006. * Investment management and trust income increased 17% (1) from the same period a year ago. * Net charge-offs remained low at 4 basis points and Chittenden's allowance for credit losses was conservatively maintained at 1.35% of total loans. (2) * The tangible capital ratio of 6.72% remained strong at September 30, 2007. (1) Excluding Merrill Merchants Bank (2) Excluding municipal loans ASSETS Total assets increased $449 million from a year ago to $6.9 billion at September 30, 2007. Total loans increased 12% or $559 million from September 30, 2006 to $5.2 billion at the end of the third quarter of 2007. Merrill Merchants Bank contributed total assets of $525 million and total loans of $360 million at June 30, 2007. Excluding Merrill Merchants, the loan increases were attributable to growth in the commercial loan portfolio, which was partially offset by lower consumer lending Consumer lending or consumer loans refers to any type of loan product that is not a mortgage; such as a car, boat, manufactured home, home equity loan, home equity line of credit, signature loan, signature line of credit, recreational vehicle, or Certificate of Deposit loans. activities. Chittenden's securities portfolio declined by 25% from the third quarter of 2006 to $919 million at September 30, 2007. The decrease in the securities portfolio from September 30, 2006 was primarily utilized for the common stock repurchases Stock repurchase A firm's repurchase of outstanding shares of its common stock. , and to fund loan growth. LIABILITIES Total deposits were up $310 million from September 30, 2006 and $134 million from June 30, 2007. The increase on a linked quarter basis was primarily driven by normal seasonal inflows from Chittenden's municipal and captive insurance Captive insurance companies are limited purpose insurance companies established with the specific objective of financing risks emanating from their parent group or groups, they sometimes also insure risks of the parent company's customers. customers. Excluding Merrill Merchants, which contributed $360 million in deposits at June 30, 2007, the year-over-year decrease was attributable to declines in savings, NOW and CMA/money market deposits which were partially offset by higher levels of CDs. Borrowings at September 30, 2007, were $285 million, an increase of $62 million from September 30, 2006, and a decline of $120 million from June 30, 2007. The increase from a year ago related to the acquisition of Merrill Merchants. The decline on a linked quarter basis was due to the July 1, 2007 redemption of Chittenden's $125 million of 8.0% trust preferred securities ("TPS (1) (Transactions Per Second) The number of transactions processed within one second. TPS is a better rating for the performance of hardware and software than the common MHz and GHz rating of the computer. "). The redemption of the TPS reduced interest costs and increased the net interest margin approximately 7 basis points in the third quarter of 2007. NET INTEREST MARGIN Net interest income on a tax equivalent basis for the three months ended September 30, 2007 was $68.1 million, which was up $4.6 million from the same period a year ago. The increase in net interest income was primarily attributable to the acquisition of Merrill Merchants. Chittenden's net interest margin for the third quarter of 2007 was 4.33%, an increase of 19 basis points on a linked quarter basis and 10 basis points from the third quarter of 2006. The increases in the net interest margin for both periods were primarily driven by the redemption of the TPS and the securities portfolio repositioning repositioning Laparoscopic surgery The changing of a Pt's position during a procedure to improve access or visualization of the operative field, which may be linked to complications, as it changes anatomic planes of operation. Cf Laparoscopic surgery. in the second quarter of 2007. NONINTEREST INCOME Noninterest income was $21.4 million for the third quarter of 2007 as compared to $16.1 million for the same period a year ago. The increase was driven by higher investment management and trust revenue, other noninterest income and $1.7 million from Merrill Merchants. The higher investment management and trust revenue was a result of increased assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. and higher sales at Chittenden Securities, LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control . Other noninterest income increased $3.9 million due to a gain on the sale of MasterCard shares of $2.4 million and the recognition in 2006 of a $372,000 loss related to the early termination of the interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. on Chittenden's TPS and the reduction of $275,000 in accrued interest Accrued Interest The interest that has accumulated on a bond since the last interest payment up to but not including the settlement date. There are two methods for calculating accrued interest: 1) 360-day year method, used for corporate and municipal bonds. on income tax refunds Tax refund Money back from the government when too much tax has been paid or withheld from a salary. . NONINTEREST EXPENSE Noninterest expense was $52.0 million for the third quarter of 2007, an increase of $6.0 million from the same period a year ago and a decrease of $542,000 from the second quarter of 2007. The increase in noninterest expense from the third quarter of 2006 was primarily due to the operating costs operating costs npl → gastos mpl operacionales of Merrill Merchants ($3.3 million) and higher levels of incentive compensation ($2.0 million). On a linked quarter basis the decline in noninterest expense was driven by lower legal expenses and non-recurring merger costs of $4.1 million, which was partially offset by operating costs at Merrill Merchants of $2.1 million and higher incentive accruals Accruals Accounts on a balance sheet that represent liabilities and non-cash-based assets used in accrual-based accounting. These accounts include, among many others, accounts payable, accounts receivable, goodwill, future tax liability and future interest expense. of $2.0 million. INCOME TAXES The effective income tax rate was 29.8% in the third quarter of 2007 and 29.2% for the first nine months of 2007 compared with 30.3% and 32.3% for the respective periods in 2006. The lower effective income tax rates were primarily attributable to higher low income housing credits 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 $2.0 million, which was up from both the same period of a year ago and on a linked quarter basis. The increase was primarily due to higher net charge-offs and commercial loan growth. NPAs were $29.1 million at September 30, 2007, flat with June 30, 2007 and an increase of $3.0 million from the same period a year ago. NPAs as a percentage of total loans at the end of the third quarter of 2007 were 56 basis points, which was consistent with the third quarter of 2006 and down on a linked quarter basis. Net charge-offs as a percentage of average loans were 4 basis points compared to 3 basis points for the same quarter of 2006. The increase from the third quarter of last year was primarily due to higher consumer loan charge-offs. As a percentage of total loans, the allowance for credit losses excluding municipal loans was 1.35%, down 5 basis points from the similar period in 2006 and 2 basis points from the second quarter of 2007. PENDING MERGERS AND ACQUISITIONS On June 27, 2007, the Company announced that it had signed a definitive merger agreement to be acquired by People's United Financial, Inc. ("People's United Financial"), in a stock and cash transaction valued at approximately $1.9 billion of which approximately 55% is in cash and 45% in People's United Financial stock. The transaction, which is expected to close in the first quarter of 2008, remains subject to approvals by regulators and the Company's shareholders. At closing, Chittenden shareholders will have the right, subject to proration Proration A situation during a corporate action in which the available cash or shares are not sufficient to satisfy the offers tendered by shareholders. Therefore, a proportion of both cash and shares is granted for each offer tendered. , to elect to receive cash or People's United Financial 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 Financial shares for the five day period prior to the closing. People's United Financial currently operates 160 branches, 75 of which offer seven-day banking in Super Stop & Shop locations across Connecticut Connecticut, state, United States Connecticut (kənĕt`ĭkət), southernmost of the New England states of the NE United States. It is bordered by Massachusetts (N), Rhode Island (E), Long Island Sound (S), and New York (W). . Chittenden currently has 133 branches in New England New England, name applied to the region comprising six states of the NE United States—Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, and Connecticut. The region is thought to have been so named by Capt. through six bank subsidiaries. On June 4, 2007, the Company announced that it had signed a definitive merger agreement to acquire Community Bank & Trust Company ("Community Bank"), for approximately $124.1 million in cash and stock as of announcement date. 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 Bank, as well as various regulatory agencies regulatory agency Independent government commission charged by the legislature with setting and enforcing standards for specific industries in the private sector. The concept was invented by the U.S. . Under the terms of the merger agreement, October 24, 2007 has been set as the deadline for shareholders of Community Bank to elect to receive $33.37 per share in cash, with total cash consideration of approximately $33.4 million (assuming all stock options are cashed out at closing), or 1.1293 shares of Chittenden common stock for each share of Community Bank stock they own, with total stock consideration of approximately 3.1 million shares of Chittenden common stock. In addition, October 24, 2007 has been set as the shareholder meeting to approve the Chittenden and Community Bank merger. As a result of the transaction, Community Bank will merge into Ocean Bank. Chittenden is a bank holding company headquartered in Burlington, Vermont Burlington is the largest city in the U.S. state of Vermont and is the shire town of Chittenden County, Vermont. With a population of 38,889, the city is the core of one of the nation's smaller metropolitan areas, and is also the smallest U.S. . Through its subsidiary banks1, Chittenden offers a broad range of financial products and services to customers throughout Northern New England, Massachusetts Massachusetts (măsəch  `sĭts), most populous of the New England states of the NE United States. 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's news releases, including earnings announcements, are
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This press release contains statements that may be considered forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions for forward- looking statements contained in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. 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 Bank merger or the People's United Financial/Chittenden merger in a timely manner or at all; (8) failure to obtain governmental approvals of either merger, or imposition The printing of pages on a single sheet of paper in a particular order so that they come out in the correct sequence when cut and folded. of adverse regulatory conditions in connection with such approvals; (9) failure of the Community Bank shareholders to approve the Chittenden/Community Bank merger or the Chittenden shareholders to approve the People's United Financial 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 Pend´en`cy n. 1. The quality or state of being pendent or suspended. 2. The quality or state of being undecided, or in continuance; suspense; as, the pendency of a suit s>. of the People's United Financial/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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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 Financial 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 Bank have filed relevant documents concerning their transaction with the SEC and the Federal Deposit Insurance Corporation Federal Deposit Insurance Corporation (FDIC), an independent U.S. federal executive agency designed to promote public confidence in banks and to provide insurance coverage for bank deposits up to $100,000. , 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 FDIC See: Federal Deposit Insurance Corporation FDIC See Federal Deposit Insurance Corporation (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 solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual of proxies from the shareholders of Chittenden in connection with the People's United Financial/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 Bank in connection with the Chittenden/Community Bank 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 Proxy Statement A document containing the information that a company is required by the SEC to provide to shareholders so they can make informed decisions about matters that will be brought up at an annual stockholder meeting. 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 and Chittenden Securities, LLC. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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