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 the Quarterly Period Ended September 30, 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 October 29, 2004, there were 46,278,740 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)
| September 30, 2004 |
December 31, 2003 |
|||||||
| (in thousands) | ||||||||
| Assets |
||||||||
| Cash and cash equivalents |
$ | 165,191 | $ | 174,939 | ||||
| Securities available for sale |
1,458,149 | 1,588,151 | ||||||
| FRB and FHLB stock |
19,243 | 20,753 | ||||||
| Loans held for sale |
35,723 | 25,262 | ||||||
| Loans: |
||||||||
| Commercial |
770,933 | 658,615 | ||||||
| Municipal |
105,781 | 87,080 | ||||||
| Real Estate: |
||||||||
| Residential |
||||||||
| 1-4 family |
685,714 | 700,671 | ||||||
| Multi-family |
181,622 | 176,478 | ||||||
| Home equity |
287,479 | 270,959 | ||||||
| Commercial |
1,558,221 | 1,430,945 | ||||||
| Construction |
143,871 | 140,801 | ||||||
| Total Real Estate |
2,856,907 | 2,719,854 | ||||||
| Consumer |
246,889 | 259,135 | ||||||
| Total Loans |
3,980,510 | 3,724,684 | ||||||
| Less: Allowance for loan losses |
(58,598 | ) | (57,464 | ) | ||||
| Net loans |
3,921,912 | 3,667,220 | ||||||
| Accrued interest receivable |
26,607 | 29,124 | ||||||
| Other assets |
58,574 | 68,587 | ||||||
| Premises and equipment, net |
82,409 | 75,179 | ||||||
| Mortgage servicing rights |
12,119 | 12,265 | ||||||
| Identified intangibles |
21,196 | 22,733 | ||||||
| Goodwill |
216,697 | 216,431 | ||||||
| Total assets |
$ | 6,017,820 | $ | 5,900,644 | ||||
| Liabilities: |
||||||||
| Deposits: |
||||||||
| Demand |
$ | 907,396 | $ | 898,920 | ||||
| Savings |
534,286 | 517,789 | ||||||
| NOW |
903,307 | 899,018 | ||||||
| CMAs/ Money market |
1,603,059 | 1,604,138 | ||||||
| Certificates of deposit less than $100,000 |
755,494 | 789,066 | ||||||
| Certificates of deposit $100,000 and over |
388,935 | 260,960 | ||||||
| Total deposits |
5,092,477 | 4,969,891 | ||||||
| Securities sold under agreements to repurchase |
71,056 | 78,980 | ||||||
| Borrowings |
182,450 | 208,454 | ||||||
| Accrued expenses and other liabilities |
60,769 | 63,368 | ||||||
| Total liabilities |
5,406,752 | 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 – 50,201,523 in 2004 and 50,177,861 in 2003 |
50,202 | 50,178 | ||||||
| Surplus |
248,828 | 246,938 | ||||||
| Retained earnings |
372,980 | 341,441 | ||||||
| Treasury stock, at cost – 3,960,432 shares in 2004 and 4,514,421 shares in 2003 |
(71,017 | ) | (78,579 | ) | ||||
| Accumulated other comprehensive income |
5,377 | 15,595 | ||||||
| Directors deferred compensation to be settled in stock |
4,720 | 4,413 | ||||||
| Unearned portion of employee restricted stock |
(22 | ) | (35 | ) | ||||
| Total stockholders’ equity |
611,068 | 579,951 | ||||||
| Total liabilities and stockholders’ equity |
$ | 6,017,820 | $ | 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 September 30, |
For the Nine Months Ended September 30, |
|||||||||||||||
| 2004 |
2003 |
2004 |
2003 |
|||||||||||||
| (in thousands, except per share amounts) | ||||||||||||||||
| Interest income: |
||||||||||||||||
| Interest on loans |
$ | 53,090 | $ | 49,434 | $ | 152,805 | $ | 149,558 | ||||||||
| Investment securities: |
||||||||||||||||
| Taxable |
14,807 | 17,648 | 45,144 | 54,375 | ||||||||||||
| Tax-favored |
13 | 61 | 40 | 148 | ||||||||||||
| Short-term investments |
59 | 88 | 119 | 223 | ||||||||||||
| Total interest income |
67,969 | 67,231 | 198,108 | 204,304 | ||||||||||||
| Interest expense: |
||||||||||||||||
| Deposits |
9,411 | 9,605 | 26,139 | 32,665 | ||||||||||||
| Borrowings |
1,889 | 2,965 | 5,664 | 9,930 | ||||||||||||
| Total interest expense |
11,300 | 12,570 | 31,803 | 42,595 | ||||||||||||
| Net interest income |
56,669 | 54,661 | 166,305 | 161,709 | ||||||||||||
| Provision for loan losses |
1,025 | 2,050 | 2,553 | 6,150 | ||||||||||||
| Net interest income after provision for loan losses |
55,644 | 52,611 | 163,752 | 155,559 | ||||||||||||
| Noninterest income: |
||||||||||||||||
| Investment management and trust |
4,813 | 3,983 | 13,735 | 11,634 | ||||||||||||
| Service charges on deposits |
4,241 | 4,583 | 13,707 | 13,711 | ||||||||||||
| Mortgage servicing |
(162 | ) | 1,275 | 419 | (311 | ) | ||||||||||
| Gains on sales of loans, net |
2,261 | 6,959 | 7,057 | 17,494 | ||||||||||||
| Gains on sales of securities |
186 | 3,305 | 2,228 | 14,349 | ||||||||||||
| Loss on prepayments of borrowings |
— | (2,154 | ) | (1,194 | ) | (2,154 | ) | |||||||||
| Credit card income, net |
1,146 | 1,149 | 3,076 | 3,022 | ||||||||||||
| Insurance commissions, net |
1,389 | 2,041 | 5,742 | 5,185 | ||||||||||||
| Retail investment services |
715 | 1,287 | 2,565 | 3,497 | ||||||||||||
| Other |
3,252 | 2,570 | 9,147 | 7,611 | ||||||||||||
| Total noninterest income |
17,841 | 24,998 | 56,482 | 74,038 | ||||||||||||
| Noninterest expense: |
||||||||||||||||
| Salaries |
20,652 | 23,233 | 63,317 | 67,183 | ||||||||||||
| Employee benefits |
5,027 | 5,419 | 16,677 | 15,421 | ||||||||||||
| Net occupancy expense |
5,481 | 5,977 | 17,259 | 17,654 | ||||||||||||
| Data processing |
994 | 2,319 | 5,271 | 6,980 | ||||||||||||
| Amortization of intangibles |
776 | 755 | 2,303 | 1,993 | ||||||||||||
| Conversion and restructuring charges |
505 | — | 1,975 | 6,800 | ||||||||||||
| Other |
9,376 | 9,155 | 26,574 | 27,264 | ||||||||||||
| Total noninterest expense |
42,811 | 46,858 | 133,376 | 143,295 | ||||||||||||
| Income before income taxes |
30,674 | 30,751 | 86,858 | 86,302 | ||||||||||||
| Income tax expense |
11,196 | 10,887 | 31,759 | 31,221 | ||||||||||||
| Net income |
$ | 19,478 | $ | 19,864 | $ | 55,099 | $ | 55,081 | ||||||||
| Basic earnings per share |
$ | 0.42 | $ | 0.43 | $ | 1.20 | $ | 1.24 | ||||||||
| Diluted earnings per share |
0.42 | |||||||||||||||