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, 2003
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 check mark 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 ¨
Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). YES x NO ¨
At July 17, 2003, there were 36,496,532 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, 2003 |
December 31, 2002 |
|||||||
| (in thousands) | ||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 212,674 | $ | 192,142 | ||||
| Securities available for sale |
1,769,715 | 1,497,111 | ||||||
| FHLB stock |
24,356 | 17,030 | ||||||
| Loans held for sale |
97,500 | 94,874 | ||||||
| Loans: |
||||||||
| Commercial |
632,816 | 568,224 | ||||||
| Municipal |
54,917 | 77,820 | ||||||
| Real Estate: |
||||||||
| Residential |
1,199,021 | 861,706 | ||||||
| Commercial |
1,324,943 | 1,103,897 | ||||||
| Construction |
113,044 | 85,512 | ||||||
| Total Real Estate |
2,637,008 | 2,051,115 | ||||||
| Consumer |
272,085 | 276,704 | ||||||
| Total Loans |
3,596,826 | 2,973,863 | ||||||
| Less: Allowance for loan losses |
(57,591 | ) | (48,197 | ) | ||||
| Net loans |
3,539,235 | 2,925,666 | ||||||
| Accrued interest receivable |
30,208 | 27,992 | ||||||
| Other real estate owned |
30 | 158 | ||||||
| Other assets |
46,571 | 35,269 | ||||||
| Premises and equipment, net |
73,742 | 57,074 | ||||||
| Mortgage servicing rights |
8,686 | 8,491 | ||||||
| Identified intangibles |
24,243 | 9,480 | ||||||
| Goodwill |
215,721 | 55,257 | ||||||
| Total assets |
$ | 6,042,681 | $ | 4,920,544 | ||||
| Liabilities: |
||||||||
| Deposits: |
||||||||
| Demand deposits |
$ | 864,526 | $ | 684,077 | ||||
| Savings deposits |
512,775 | 400,616 | ||||||
| NOW and money market deposits |
2,392,303 | 2,118,539 | ||||||
| Certificates of deposit less than $100,000 |
848,320 | 691,467 | ||||||
| Certificates of deposit $100,000 and over |
249,250 | 231,393 | ||||||
| Total deposits |
4,867,174 | 4,126,092 | ||||||
| Borrowings |
399,027 | 173,654 | ||||||
| Company obligated, mandatorily redeemable securities of subsidiary trust |
125,000 | 125,000 | ||||||
| Accrued expenses and other liabilities |
83,829 | 77,006 | ||||||
| Total liabilities |
5,475,030 | 4,501,752 | ||||||
| Stockholders’ Equity: |
||||||||
| Preferred stock—$100 par value authorized—1,000,000 shares; issued and outstanding—none |
— | — | ||||||
| Common stock—$1 par value; authorized—60,000,000 shares; issued—40,134,875 in 2003 and 35,748,653 in 2002 |
40,135 | 35,749 | ||||||
| Surplus |
255,973 | 145,191 | ||||||
| Retained earnings |
316,472 | 294,943 | ||||||
| Treasury stock, at cost—3,637,945 shares in 2003 and 3,809,183 shares in 2002 |
(81,543 | ) | (85,382 | ) | ||||
| Accumulated other comprehensive income |
32,546 | 24,289 | ||||||
| Directors deferred compensation to be settled in stock |
4,111 | 4,052 | ||||||
| Unearned portion of employee restricted stock |
(43 | ) | (50 | ) | ||||
| Total stockholders’ equity |
567,651 | 418,792 | ||||||
| Total liabilities and stockholders’ equity |
$ | 6,042,681 | $ | 4,920,544 | ||||
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, |
||||||||||||||
| 2003 |
2002 |
2003 |
2002 |
||||||||||||
| (in thousands, except per share amounts) | |||||||||||||||
| Interest income: |
|||||||||||||||
| Interest on loans |
$ | 52,543 | $ | 49,656 | $ | 100,124 | $ | 97,983 | |||||||
| Investment securities: |
|||||||||||||||
| Taxable |
18,511 | 15,328 | 36,727 | 28,110 | |||||||||||
| Tax-favored |
42 | 114 | 87 | 209 | |||||||||||
| Short-term investments |
123 | 6 | 135 | 42 | |||||||||||
| Total interest income |
71,219 | 65,104 | 137,073 | 126,344 | |||||||||||
| Interest expense: |
|||||||||||||||
| Deposits: |
|||||||||||||||
| Savings |
623 | 1,130 | 1,258 | 2,231 | |||||||||||
| NOW and money market |
4,659 | 6,812 | 9,589 | 13,882 | |||||||||||
| Certificates of deposit under $100,000 |
4,694 | 5,758 | 9,626 | 12,064 | |||||||||||
| Certificates of deposit $100,000 and over |
1,288 | 1,583 | 2,587 | 3,169 | |||||||||||
| Borrowings |
3,855 | 1,484 | 6,965 | 2,147 | |||||||||||
| Total interest expense |
15,119 | 16,767 | 30,025 | 33,493 | |||||||||||
| Net interest income |
56,100 | 48,337 | 107,048 | 92,851 | |||||||||||
| Provision for loan losses |
2,050 | 1,691 | 4,100 | 3,766 | |||||||||||
| Net interest income after provision for loan losses |
54,050 | 46,646 | 102,948 | 89,085 | |||||||||||
| Noninterest income: |
|||||||||||||||
| Investment management income |
3,841 | 3,913 | 7,652 | 7,885 | |||||||||||
| Service charges on deposit accounts |
4,735 | 4,098 | 9,128 | 7,852 | |||||||||||
| Mortgage servicing income |
(829 | ) | 625 | (1,587 | ) | 1,315 | |||||||||
| Gains on sales of loans, net |
6,099 | 1,860 | 10,535 | 4,615 | |||||||||||
| Credit card income, net |
970 | 897 | 1,873 | 1,689 | |||||||||||
| Gains on sales of securities |
9,654 | 95 | 11,044 | 323 | |||||||||||
| Insurance commissions, net |
1,531 | 882 | 3,144 | 1,819 | |||||||||||
| Retail investment services |
1,314 | 676 | 2,210 | 1,250 | |||||||||||
| Other |
2,469 | 2,517 | 5,041 | 4,975 | |||||||||||
| Total noninterest income |
29,784 | 15,563 | 49,040 | 31,723 | |||||||||||
| Noninterest expense: |
|||||||||||||||
| Salaries |
23,668 | 18,491 | 43,949 | 35,642 | |||||||||||
| Employee benefits |
5,145 | 3,959 | 10,002 | 7,640 | |||||||||||
| Net occupancy expense |
6,198 | 4,859 | 11,676 | 9,780 | |||||||||||
| Other Real Estate Owned, Net |
(106 | ) | 7 | (119 | ) | (161 | ) | ||||||||
| Amortization of intangibles |
727 | 348 | 1,238 | 583 | |||||||||||
| Data Processing |
2,161 | 2,818 | 4,661 | 5,720 | |||||||||||
| Information Technology Conversion |
6,800 | — | 6,800 | — | |||||||||||
| Other |
9,667 | 8,115 | 18,229 | 15,439 | |||||||||||