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 Three Months Ended March 31, 2004
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 001-13769
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 April 30, 2004, there were 36,805,926 shares of the Corporation’s $1.00 par value common stock issued and outstanding.
1
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
2
Chittenden Corporation
Consolidated Balance Sheets
(Unaudited)
| March 31, 2004 |
December 31, 2003 |
|||||||
| (in thousands) | ||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 154,178 | $ | 174,939 | ||||
| Securities available for sale |
1,473,497 | 1,588,151 | ||||||
| FHLB stock |
20,753 | 20,753 | ||||||
| Loans held for sale |
32,276 | 25,262 | ||||||
| Loans: |
||||||||
| Commercial |
686,304 | 658,615 | ||||||
| Municipal |
92,338 | 87,080 | ||||||
| Real Estate: |
||||||||
| Residential |
||||||||
| 1-4 family |
666,753 | 700,671 | ||||||
| Multi-family |
182,085 | 176,478 | ||||||
| Home equity |
277,062 | 270,959 | ||||||
| Commercial |
1,485,031 | 1,430,945 | ||||||
| Construction |
138,497 | 140,801 | ||||||
| Total Real Estate |
2,749,428 | 2,719,854 | ||||||
| Consumer |
252,097 | 259,135 | ||||||
| Total Loans |
3,780,167 | 3,724,684 | ||||||
| Less: Allowance for loan losses |
(57,500 | ) | (57,464 | ) | ||||
| Net loans |
3,722,667 | 3,667,220 | ||||||
| Accrued interest receivable |
25,582 | 29,124 | ||||||
| Other assets |
51,870 | 68,587 | ||||||
| Premises and equipment, net |
77,534 | 75,179 | ||||||
| Mortgage servicing rights |
10,866 | 12,265 | ||||||
| Identified intangibles |
21,978 | 22,733 | ||||||
| Goodwill |
216,431 | 216,431 | ||||||
| Total assets |
$ | 5,807,632 | $ | 5,900,644 | ||||
| Liabilities: |
||||||||
| Deposits: |
||||||||
| Demand |
$ | 848,758 | $ | 898,920 | ||||
| Savings |
526,625 | 517,789 | ||||||
| NOW |
894,575 | 899,018 | ||||||
| CMAs/ Money market deposits |
1,472,377 | 1,604,138 | ||||||
| Certificates of deposit less than $100,000 |
780,940 | 789,066 | ||||||
| Certificates of deposit $100,000 and over |
311,067 | 260,960 | ||||||
| Total deposits |
4,834,342 | 4,969,891 | ||||||
| Securities sold under agreements to repurchase |
76,051 | 78,980 | ||||||
| Borrowings |
236,446 | 208,454 | ||||||
| Accrued expenses and other liabilities |
61,308 | 63,368 | ||||||
| Total liabilities |
5,208,147 | 5,320,693 | ||||||
| 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 – 40,156,617 in 2004 and 40,142,289 in 2003 |
40,157 | 40,142 | ||||||
| Surplus |
257,503 | 256,974 | ||||||
| Retained earnings |
351,569 | 341,441 | ||||||
| Treasury stock, at cost – 3,393,249 shares in 2004 and 3,505,739 shares in 2003 |
(76,058 | ) | (78,579 | ) | ||||
| Accumulated other comprehensive income |
21,964 | 15,595 | ||||||
| Directors deferred compensation to be settled in stock |
4,381 | 4,413 | ||||||
| Unearned portion of employee restricted stock |
(31 | ) | (35 | ) | ||||
| Total stockholders’ equity |
599,485 | 579,951 | ||||||
| Total liabilities and stockholders’ equity |
$ | 5,807,632 | $ | 5,900,644 | ||||
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 March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (in thousands, except per share amount) |
||||||||
| Interest income: |
||||||||
| Loans |
$ | 49,258 | $ | 47,580 | ||||
| Investment securities: |
||||||||
| Taxable |
15,580 | 18,216 | ||||||
| Tax-favored |
13 | 46 | ||||||
| Short-term investments |
7 | 12 | ||||||
| Total interest income |
64,858 | 65,854 | ||||||
| Interest expense: |
||||||||
| Deposits |
8,220 | 11,796 | ||||||
| Borrowings |
1,925 | 3,110 | ||||||
| Total interest expense |
10,145 | 14,906 | ||||||
| Net interest income |
54,713 | 50,948 | ||||||
| Provision for loan losses |
427 | 2,050 | ||||||
| Net interest income after provision for loan losses |
54,286 | 48,898 | ||||||
| Noninterest income: |
||||||||
| Investment management and trust |
4,371 | 3,810 | ||||||
| Service charges on deposits |
4,685 | 4,393 | ||||||
| Mortgage servicing |
(767 | ) | (757 | ) | ||||
| Gains on sales of loans, net |
1,899 | 4,436 | ||||||
| Gains on sales of securities |
1,802 | 1,391 | ||||||
| Loss on prepayments of borrowings |
(1,194 | ) | — | |||||
| Credit card income, net |
908 | 903 | ||||||
| Insurance commissions, net |
2,626 | 1,613 | ||||||
| Retail investment services |
947 | 896 | ||||||
| Other |
2,730 | 2,571 | ||||||
| Total noninterest income |
18,007 | 19,256 | ||||||
| Noninterest expense: |
||||||||
| Salaries |
20,895 | 20,282 | ||||||
| Employee benefits |
5,983 | 4,857 | ||||||
| Net occupancy expense |
6,097 | 5,479 | ||||||
| Data processing |
2,305 | 2,501 | ||||||
| Amortization of intangibles |
755 | 511 | ||||||
| Conversion and restructuring charges |
152 | — | ||||||
| Other |
8,421 | 8,546 | ||||||
| Total noninterest expense |
44,608 | 42,176 | ||||||
| Income before income taxes |
27,685 | 25,978 | ||||||
| Income tax expense |
10,218 | 9,387 | ||||||
| Net income |
$ | 17,467 | $ | 16,591 | ||||
| Basic earnings per share |
$ | 0.48 | $ | 0.50 | ||||
| Diluted earnings per share |
0.47 | 0.49 | ||||||
| Dividends per share |
0.20 | 0.20 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
4
Chittenden Corporation
Consolidated Statements of CashFlows
(Unaudited)
| For the Three Months Ended March 31, |
||||||||
| 2004 |
2003 |
|||||||
| (in thousands) | ||||||||
| Cash flows from operating activities: |
||||||||
| Net income |
$ | 17,467 | $ | 16,591 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Provision for loan losses |
427 | 2,050 | ||||||
| Depreciation |
2,153 | 1,943 | ||||||
| Amortization of intangible assets |
755 | 511 | ||||||
| Amortization of premiums, fees, and discounts, net |
2,016 | 2,708 | ||||||
| Provision for (recovery of) impairment of MSR asset |
(448 | ) | (133 | ) | ||||
| Investment securities gains |
(1,802 | ) | (1,391 | ) | ||||
| Deferred income taxes |
(2,104 | ) | (2,493 | ) | ||||
| Loans originated for sale |
(122,228 | ) | (286,632 | ) | ||||
| Proceeds from sales of loans |
117,113 | 300,215 | ||||||
| Gains on sales of loans, net |
(1,899 | ) | (4,436 | ) | ||||
| Changes in assets and liabilities, net of effect from purchase of acquired companies: |
||||||||
| Accrued interest receivable |
3,542 | 2,257 | ||||||
| Other assets |
19,836 | 8,976 | ||||||
| Accrued expenses and other liabilities |
(3,132 | ) | (8,215 | ) | ||||
| Net cash provided by operating activities |
31,696 | 31,952 | ||||||
| Cash flows from investing activities: |
||||||||
| Cash paid, net of cash acquired in acquisition |
— | (90,468 | ) | |||||
| Proceeds from sales of Federal Home Loan Bank stock |
— | 946 | ||||||
| Proceeds from sales of securities available for sale |
80,633 | 81,477 | ||||||
| Proceeds from maturing securities and principal payments on securities available for sale |
94,897 | 186,918 | ||||||
| Purchases of securities available for sale |
(51,301 | ) | (83,699 | ) | ||||
| Loans originated, net of principal repayments |
(56,956 | ) | (34,989 | ) | ||||
| Purchases of premises and equipment |
(4,508 | ) | (1,675 | ) | ||||
| Net cash provided by investing activities |
62,765 | 58,510 | ||||||
| Cash flows from financing activities: |
||||||||
| Net decrease in deposits |
(135,549 | ) | (94,948 | ) | ||||
| Net increase in borrowings |
25,063 | 7,841 | ||||||
| Proceeds from issuance of treasury and common stock |
2,603 | 1,433 | ||||||
| Dividends on common stock |
(7,339 | ) | (6,393 | ) | ||||