Chittenden Corporation Reports Increased Earnings Per Share, and Announces
New Share Repurchase Plan
Burlington, VT Chittenden Corporation (NYSE:CHZ) Chairman, President and Chief Executive
Officer, Paul A. Perrault, today announced higher earnings for the year ended December 31,
2006 of $85.5 million or $1.83 per diluted share, compared to $82.0 million or $1.74 per diluted
share a year ago. For the fourth quarter of 2006, net income was $22.5 million or $0.48 per
diluted share, compared to $21.8 million or $0.46 per diluted share earned in the fourth quarter of
2005.
In making the announcement, Perrault said, I am pleased to report to shareholders that your
Companys discipline and strong strategic implementation continues to deliver solid results
despite the challenging environment . Chittenden also announced its quarterly dividend of $0.20
per share, which will be paid on February 9, 2007, to shareholders of record on January 26,
2007.
Perrault also announced that the Board of Directors approved a new share repurchase plan on
January 17, 2007 for one million shares of the Corporations common stock. The repurchase of
the common stock may be done in negotiated transactions or open market purchases over the
next two years.
FOURTH QUARTER 2006 FINANCIAL HIGHLIGHTS
À‰ Commercial loans increased 7% from the end of 2005.
À‰ Average deposits for 2006 increased 4% from 2005 with solid growth in CMA/money
market deposits of over 4%.
À‰ Net interest margin held steady for 2006 at 4.24% and the fourth quarter increased 6
basis points to 4.29%.
À‰ Nonperforming assets declined 22% from the third quarter of 2006.
À‰ The efficiency ratio improved to 54.6% for the fourth quarter of 2006.
À‰ The Company repurchased 762,500 common shares in the fourth quarter and the
tangible capital ratio remained over 7.00% at year end.
ASSETS
The Companys securities portfolio declined from both the prior year end and on a linked quarter
basis to $1.1 billion. The decrease in securities was primarily utilized to fund loan growth and
reduce borrowings. Total loans increased by $210 million from the end of last year to $4.7 billion
at December 31, 2006. The Company experienced solid loan growth in 2006 throughout all of its
markets with particularly strong increases in its multifamily real estate, commercial real estate
and construction portfolios.
LIABILITIES
Total deposits decreased $20 million from September 30, 2006 reflecting the start of the normal
seasonal decline in deposits, which is primarily driven by the operating cycles of the Companys
municipal and commercial customers. Borrowings at December 31, 2006, were $210 million, a
decrease of $17 million from the end of last year due to lower FHLB advances.
NET INTEREST INCOME
Tax-equivalent net interest income for the fourth quarter of 2006 was $64.0 million, compared to
$63.7 million for the same quarter of 2005 and $63.5 million for the third quarter of 2006. The
increase in net interest income from the same period a year ago was due to higher average
earning assets, which was partially offset by a slightly lower net interest margin. The Companys
net interest margin for the fourth quarter was 4.29%, an increase of 6 basis points from the third
quarter of 2006 and a decline of 1 basis point from the same period a year ago. The increase in
net interest margin from the third quarter of 2006 was attributable to higher interest recoveries on
former non-performing loans. The decline in the net interest margin from the fourth quarter of
2005 was due to an increase in funding costs, which was partially offset by an increase in the
yield on interest earning assets. The increase in funding costs was driven by strong competition
for both commercial and consumer deposits as well as increases in the federal funds rate in
2005 and 2006.
NONINTEREST INCOME
Noninterest income was $17.9 million for the fourth quarter of 2006, compared with $16.1 million
for the third quarter and $17.4 million for the same period a year ago. The increase in noninterest
income was primarily attributable to higher investment management and trust fees and other
noninterest income, which was partially offset by lower gains on the sales of mortgage loans.
The increase in other noninterest income from the fourth quarter of 2005 was primarily due to
$1.1 million received in relation to the Companys interest in a mortgage insurance captive, which
was partially offset by higher amortization on investments in low income housing limited
partnerships.
NONINTEREST EXPENSE
Noninterest expenses were $46.3 million for the fourth quarter of 2006, compared to $46.0
million for the fourth quarter of 2005. The increase from the same quarter a year ago is primarily
a result of higher salary expense which related to increased share-based compensation costs
and new branch openings in 2006. The Company recognized $785,000 of share-based
compensation in the fourth quarter of 2006 as compared to $4,000 in the same quarter a year
ago.
INCOME TAXES
The effective income tax rates for 2006 were 31.5% for the fourth quarter and 32.1% for the full
year compared with 34.2% and 34.5%, respectively, for the same periods in 2005. The lower
effective income tax rate was attributable to higher low-income housing and historic rehabilitation
tax credits.
CREDIT QUALITY
The provision for credit losses was $2.0 million for the fourth quarter of 2006 compared to $1.4
million for the same quarter of 2005. The increase in the provision for credit losses from the
comparable period in 2005 was primarily due to higher net charge offs and nonperforming loans.
Net charge-offs as a percentage of average loans were 4 basis points for the fourth quarter.
hittenden Corporation of 2006, up from 2 basis points for the same quarter a year ago. The increase in net charge-offs
primarily relates to one commercial finance loan that was placed on non-accrual status in the first
quarter of 2006. The allowance for credit losses as a percentage of total loans excluding
municipal loans was 1.39% at December 31, 2006 compared to 1.43% for the fourth quarter of
2005.