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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
FORM 10-Q
 
x Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
For Six Months Ended June 30, 2002
 
or
 
¨ Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
For the transition period from              to             
 
Commission File Number 0-7974
 
CHITTENDEN CORPORATION
(Exact Name of Registrant as Specified in its Charter)
 
VERMONT
  
03-0228404
(State of Incorporation)
  
(IRS Employer Identification No.)
     
     
TWO BURLINGTON SQUARE
BURLINGTON, VERMONT
  
05401
(Address of Principal Executive Offices)
  
(Zip Code)
 
Registrant’s Telephone Number: (802) 658-4000
 
NOT APPLICABLE
Former Name, Former Address and Formal Fiscal Year
If Changed Since Last Report
 
Indicate by checkmark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     YES x    NO ¨
 
At August 9, 2002, there were 32,250,282 shares of the Corporation’s $1.00 par value common stock issued and outstanding.
 

 
PART I. FINANCIAL INFORMATION
 
Item 1. Financial Statements
 

2

Chittenden Corporation
Consolidated Balance Sheets
(Unaudited)
 
    
June 30,
2002
     
December 31, 2001
  
    
(in thousands)
  
Assets
                  
Cash and cash equivalents
   
$
195,884
 
   
$
308,023
 
Securities available for sale
   
 
1,232,549
 
   
 
826,495
 
FHLB stock
   
 
14,967
 
   
 
13,613
 
Loans held for sale
   
 
27,556
 
   
 
50,208
 
Loans:
                  
Commercial
   
 
583,557
 
   
 
559,752
 
Municipal
   
 
44,107
 
   
 
85,479
 
Real Estate:
                  
Residential
   
 
914,141
 
   
 
855,561
 
Commercial
   
 
1,043,889
 
   
 
903,819
 
Construction
   
 
78,995
 
   
 
79,801
 
    
  
Total Real Estate
   
 
2,037,025
 
   
 
1,839,181
 
Consumer
   
 
301,634
 
   
 
353,765
 
    
  
Total Loans
   
 
2,966,323
 
   
 
2,838,177
 
Less: Allowance for loan losses
   
 
(48,994
)
   
 
(45,268
)
    
  
Net loans
   
 
2,917,329
 
   
 
2,792,909
 
Accrued interest receivable
   
 
28,051
 
   
 
23,357
 
Other real estate owned
   
 
230
 
   
 
703
 
Other assets
   
 
36,284
 
   
 
33,934
 
Premises and equipment, net
   
 
57,381
 
   
 
55,104
 
Mortgage servicing rights
   
 
16,917
 
   
 
16,020
 
Identified intangibles
   
 
10,175
 
   
 
4,007
 
Goodwill
   
 
58,249
 
   
 
29,341
 
    
  
Total assets
   
$
4,595,572
 
   
$
4,153,714
 
    
  
                   
                   
Liabilities:
                  
Deposits:
                  
Demand deposits
   
$
627,498
 
   
$
620,828
 
Savings deposits
   
 
393,025
 
   
 
346,974
 
NOW and money market deposits
   
 
1,922,452
 
   
 
1,870,835
 
Certificates of deposit less than $100,000
   
 
682,636
 
   
 
634,992
 
Certificates of deposit $100,000 and over
   
 
198,607
 
   
 
196,217
 
    
  
Total deposits
   
 
3,824,218
 
   
 
3,669,846
 
Borrowings
   
 
177,729
 
   
 
44,409
 
Company obligated, mandatorily redeemable securities of subsidiary trust
   
 
125,000
 
   
 
—  
 
Accrued expenses and other liabilities
   
 
69,298
 
   
 
68,805
 
    
  
Total liabilities
   
 
4,196,245
 
   
 
3,783,060
 
Stockholders’ Equity:
                  
Preferred stock—$100 par value
authorized – 200,000 shares; issued and outstanding—none
                  
Common stock—$1 par value; authorized – 60,000,000 shares;
issued – 35,748,653 in 2002 and 35,743,473 in 2001
   
 
35,749
 
   
 
35,743
 
Surplus
   
 
145,201
 
   
 
145,687
 
Retained earnings
   
 
274,266
 
   
 
256,677
 
Treasury stock, at cost – 3,513,595 shares in 2002 and 3,673,027 shares in 2001
   
 
(76,272
)
   
 
(79,733
)
Accumulated other comprehensive income
   
 
16,604
 
   
 
8,621
 
Directors deferred compensation to be settled in stock
   
 
3,839
 
   
 
3,746
 
Unearned portion of employee restricted stock
   
 
(60
)
   
 
(87
)
    
  
Total stockholders’ equity
   
 
399,327
 
   
 
370,654
 
    
  
Total liabilities and stockholders’ equity
   
$
4,595,572
 
   
$
4,153,714
 
    
  
 
The accompanying notes are an integral part of these consolidated financial statements.

3

Chittenden Corporation
Consolidated Statements of Income
(Unaudited)
 
    
For the Three Months
Ended June 30,
   
For the Six Months
Ended June 30,
    
2002
   
2001
   
2002
     
2001
    
(in thousands, except per
share amounts)
Interest income:
                              
Interest on loans
   
$
49,656
   
$
57,955
   
$
97,983
 
   
$
116,063
Investment securities:
                              
Taxable
   
 
15,328
   
 
9,580
   
 
28,110
 
   
 
19,238
Tax-favored
   
 
114
   
 
248
   
 
209
 
   
 
387
Short-term investments
   
 
6
   
 
103
   
 
42
 
   
 
337
    
  
  
  
Total interest income
   
 
65,104
   
 
67,886
   
 
126,344
 
   
 
136,025
    
  
  
  
Interest expense:
                              
Deposits
   
 
15,283
   
 
24,430
   
 
31,346
 
   
 
51,400
Borrowings
   
 
1,484
   
 
772
   
 
2,147
 
   
 
1,765
    
  
  
  
Total interest expense
   
 
16,767
   
 
25,202
   
 
33,493
 
   
 
53,165
    
  
  
  
Net interest income
   
 
48,337
   
 
42,684
   
 
92,851
 
   
 
82,860
Provision for loan losses
   
 
1,691
   
 
2,041
   
 
3,766
 
   
 
3,991
    
  
  
  
Net interest income after provision for loan losses
   
 
46,646
   
 
40,643
   
 
89,085
 
   
 
78,869
    
  
  
  
Noninterest income:
                              
Investment management income
   
 
3,913
   
 
3,849
   
 
7,885
 
   
 
7,225
Service charges on deposit accounts
   
 
4,098
   
 
3,705
   
 
7,852
 
   
 
7,054
Mortgage servicing income
   
 
625
   
 
944
   
 
1,315
 
   
 
1,922
Gains on sales of loans, net
   
 
1,860
   
 
1,945
   
 
4,615
 
   
 
6,885
Credit card income, net
   
 
897
   
 
1,114
   
 
1,689
 
   
 
2,114
Insurance commissions, net
   
 
882
   
 
834
   
 
1,819
 
   
 
1,728
Other
   
 
3,288
   
 
2,799
   
 
6,548
 
   
 
5,228
    
  
  
  
Total noninterest income
   
 
15,563
   
 
15,190
   
 
31,723
 
   
 
32,156
    
  
  
  
Noninterest expense:
                              
Salaries
   
 
18,491
   
 
15,275
   
 
35,642
 
   
 
29,277
Employee benefits
   
 
3,959
   
 
3,177
   
 
7,640
 
   
 
6,960
Net occupancy expense
   
 
4,859
   
 
4,260
   
 
9,780
 
   
 
8,995
Other real estate owned, income and expense, net
   
 
7
   
 
8
   
 
(161
)
   
 
47
Amortization of intangibles
   
 
348
   
 
741
   
 
583
 
   
 
1,253
Other
   
 
10,933
   
 
10,111
   
 
21,159
 
   
 
19,755
    
  
  
  
Total noninterest expense
   
 
38,597
   
 
33,572
   
 
74,643
 
   
 
66,287
    
  
  
  
Income before income taxes
   
 
23,612
   
 
22,261
   
 
46,165
 
   
 
44,738
Income tax expense
   
 
8,297
   
 
7,935
   
 
16,027
 
   
 
15,900
    
  
  
  
Net income
   
$
15,315
   
$
14,326
   
$
30,138
 
   
$
28,838