EX-28 3 dex28.htm ADDITIONAL EXHIBITS Prepared by R.R. Donnelley Financial -- Additional Exhibits
EXHIBIT 28
 
[LETTERHEAD OF CHITTENDEN CORPORATION]
For Immediate Release
 
July 17, 2002 43/02
 
CHITTENDEN REPORTS EARNINGS AND QUARTERLY DIVIDEND
 
Burlington, VT—Chittenden Corporation (NYSE:CHZ) Chairman, President and Chief Executive Officer, Paul A. Perrault, today announced second quarter 2002 net income of $0.47 per diluted share, compared to the $0.44 per diluted share earned in the second quarter of 2001. For the first six months of 2002, earnings were $0.92 per diluted share, compared to $0.88 for the first six months of last year. Chittenden also announced its quarterly dividend of $0.20 per share. The dividend will be paid on August 16, 2002, to shareholders of record on August 2, 2002.
 
In making the announcement, Perrault said, “I am particularly pleased with our asset quality at June 30, 2002, which showed a significant improvement from their already outstanding levels of the last several quarters, despite the mixed signals that the broader markets have been sending in recent months.”
 
On February 28, 2002, Chittenden completed its acquisition of Ocean National Bank (ONB), a $272 million commercial bank headquartered in Kennebunk, Maine for $53.25 million in cash. The transaction has been accounted for as a purchase and, accordingly, the operations of ONB are included in Chittenden’s consolidated financial statements from the date of acquisition.
 
Total loans decreased slightly from a quarter ago primarily as a result of normal seasonal declines in the municipal portfolio, which was down $44 million from March 31, 2002. Residential real estate loans declined $12 million from a quarter ago and increased $59 million from December 31, 2001. The acquisition of ONB increased residential real estate loans by approximately $97 million in the first quarter of 2001, leading to the increase from that date. Consumer loans declined $23 million from March 31, 2002 due primarily to paydowns on the automotive finance portfolio, driven by lower market interest rates, which outpaced originations. These declines were offset by growth of $38 million in the commercial and commercial real estate portfolios.
 
The allowance for possible loan losses was $49.0 million at June 30, 2002, down slightly from $49.4 million at March 31, 2002 and up from $45.3 million at December 31, 2001. ONB accounted for approximately $3.0 million of the increase from last year-end. Nonperforming assets plus loans 90 days past due and still accruing were $13.3 million at June 30, 2002, down 24% from the first quarter of 2002 and the year ended December 31, 2001. As a percentage of total loans, nonperforming assets decreased to 36 basis points from 46 basis points in the prior quarters. Net charge-off activity totaled $2.1 million (7 basis points of average loans outstanding) for the second quarter of 2002, compared with $931,000 (3 bp) for the first quarter of this year and $1.1 million (4 bp) for the second quarter of 2001. Net charge offs year-to-date were $3.0 million (10 bp) in 2002 compared with $3.8 million (13 bp) in 2001.
 
-more-

 
 
[LETTERHEAD OF CHITTENDEN CORPORATION]
 
Total deposits increased $372 million from a year ago and decreased approximately $60 million from the last quarter. The increase from June 30, 2001 was primarily due to the acquisition of ONB, which contributed $236 million at the date of acquisition, and to strong deposit flows in the last six months of 2001. The decrease from the prior quarter was due to seasonal fluctuations in municipal deposits.
 
Total assets increased from $4.4 billion at March 31, 2002 to $4.6 billion at June 30, 2002 largely due to the public offering of five million shares of Trust Preferred Securities of Chittenden Capital Trust I, a subsidiary of Chittenden Corporation. Net proceeds of approximately $121 million were invested primarily in the securities portfolio.
 
The net interest margin for the second quarter of 2002 was 4.69%, compared with 4.87% for the same period of 2001, and 4.61% for the first quarter of 2002. Net interest income was $48.3 million for the second quarter of 2002 and $42.7 million a year ago. The increase in net interest income from the second quarter of 2001 was attributed primarily to higher levels of average earning assets and deposits that resulted from the acquisition of ONB, growth of affiliate banks, and the retail trust preferred issuance.
 
Noninterest income amounted to $15.6 million for the second quarter of 2002, up from $15.2 million for the second quarter of 2001. Service charges on deposit accounts increased $393,000 primarily as a result of the ONB acquisition. Other income increased $489,000, driven by higher sales volumes in retail investment services and higher ATM fees due to the ONB acquisition. Offsetting these increases were declines in mortgage servicing income resulting from increased amortization of originated mortgage servicing rights assets and credit card income as a result of the sale of the Company’s retail credit card portfolio in the first quarter of 2001. The Company continued to earn servicing fees on that portfolio in the second quarter of 2001 until the acquirer assumed servicing in May of 2001.
 
Noninterest expenses were $38.6 million for the second quarter of 2002, up from the $33.6 million for the second quarter of 2001. Salaries and employee benefits increased $4.0 million from the second quarter of 2001. The inclusion of ONB in 2002 and an additional month of MBT in the second quarter of 2002 (the MBT acquisition was closed as of April 30, 2001) amounted to approximately $2.2 million of the variance in salaries and benefits. In addition, sales based incentive compensation increased $406,000 and employee benefits increased $514,000 from the same period a year ago, driven primarily by pension and medical insurance costs. Amortization of intangibles decreased $393,000 from the second quarter of 2001 to $348,000 due to the adoption of FAS 142, which eliminated the amortization of unidentified intangibles (goodwill). The amortization recognized in 2002 consists primarily of the amortization of core deposit intangibles relating to ONB and the Bank of Western Massachusetts. Other expenses were up $822,000 as a result of the acquisition of ONB.
 
-more-

 
 
[LETTERHEAD OF CHITTENDEN CORPORATION]
 
The return on average equity was 15.95% for the second quarter of 2002, compared with 16.63% in the same quarter of 2001 and 16.07% in the first quarter of 2002. The decline in ROE from the second quarter of 2001 was a result of higher levels of average stockholders’ equity in 2002. The return on average assets for the second quarter of 2002 was 1.38%, down from 1.51% for the second quarter of 2001. The decline in ROA for the quarter was primarily due to higher levels of average assets caused by the acquisition of ONB and the issuance of the retail trust preferred stock.
 
Kirk W. Walters, Executive Vice President and Chief Financial Officer of Chittenden Corporation, will host a conference call to discuss these earnings results at 10:30 a.m. eastern time on July 18, 2002. Interested parties may access the conference call by calling 877-691-0878 or 973-582-2762 in the New York City area. Participants are asked to call in a few minutes prior to the call in order to register for the event. Internet access to the call is also available (listen only) by going to the Shareholders’ Resource section of the Company’s website at https://www.chittendencorp.com. A replay of the call will be available through July 25, 2002, by calling 877-519-4471 or 973-341-3080 in the New York City area (pin number is 3362888) or by going to the chittenden.com website.
 
The Company may answer one or more questions concerning business and financial developments and trends and other business and financial matters affecting the Company, some of the responses to which may contain information that has not previously been disclosed.
 
Chittenden is a bank holding company with total assets of $4.6 billion at June 30, 2002. Its subsidiary banks are Chittenden Bank, The Bank of Western Massachusetts, Flagship Bank and Trust Company, Maine Bank & Trust Company and Ocean National Bank. Chittenden Bank also operates under the name Mortgage Service Center, and it owns Chittenden Insurance Group, and Chittenden Securities, Inc. The Company offers a broad range of financial products and services, including deposit accounts and services; consumer, commercial, and public sector loans; insurance; brokerage; and investment and trust services to individuals, businesses, and the public sector. To find out more about Chittenden and its products, visit our web site at www.chittenden.com. Chittenden Corporation news releases, including earnings announcements, are available via fax by calling 800-758-5804. The six-digit code is 124292.
 
-more-

 
CHITTENDEN CORPORATION
 
SELECTED FINANCIAL DATA
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
 
      
6/30/02
       
3/31/02
       
12/31/01
       
6/30/01
  
Period End Balance Sheet Data
                                            
Cash and Cash Equivalents
     
$
195,884
 
     
$
222,372
 
     
$
308,023
 
     
$
228,073
 
Securities Available For Sale
     
 
1,232,549
 
     
 
922,414
 
     
 
826,495
 
     
 
571,025
 
FHLB Stock
     
 
14,967
 
     
 
14,967
 
     
 
13,613
 
     
 
13,613
 
Loans Held For Sale
     
 
27,556
 
     
 
38,432
 
     
 
50,208
 
     
 
34,327
 
Loans:
                                            
Commercial
     
 
583,557
 
     
 
566,746
 
     
 
559,752
 
     
 
632,768
 
Municipal
     
 
44,107
 
     
 
88,134
 
     
 
85,479
 
     
 
62,535
 
Real Estate:
                                            
Residential
     
 
914,141
 
     
 
926,463
 
     
 
855,561
 
     
 
997,019
 
Commercial
     
 
1,043,889
 
     
 
1,022,858
 
     
 
903,819
 
     
 
785,223
 
Construction
     
 
78,995
 
     
 
91,325
 
     
 
79,801
 
     
 
52,772
 
      
    
    
    
Total Real Estate
     
 
2,037,025
 
     
 
2,040,646
 
     
 
1,839,181
 
     
 
1,835,014
 
Consumer
     
 
301,634
 
     
 
324,292
 
     
 
353,765
 
     
 
405,185
 
      
    
    
    
Total Loans
     
 
2,966,323
 
     
 
3,019,818
 
     
 
2,838,177
 
     
 
2,935,502
 
Less: Allowance for Loan Losses
     
 
(48,994
)
     
 
(49,384
)
     
 
(45,268
)
     
 
(44,541
)
      
    
    
    
Net Loans
     
 
2,917,329
 
     
 
2,970,434
 
     
 
2,792,909
 
     
 
2,890,961
 
Other Real Estate Owned
     
 
230
 
     
 
351
 
     
 
703
 
     
 
625
 
Goodwill
     
 
58,249
 
     
 
58,249
 
     
 
29,341
 
     
 
30,693
 
Other Assets
     
 
148,808
 
     
 
138,590
 
     
 
132,422
 
     
 
128,712
 
      
    
    
    
Total Assets
     
$
4,595,572
 
     
$
4,365,809
 
     
$
4,153,714
 
     
$
3,898,029
 
      
    
    
    
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                            
Liabilities:
                                            
Deposits:
                                            
Demand
     
$
627,498
 
     
$
597,680
 
     
$
620,828
 
     
$
567,788
 
Savings
     
 
393,025
 
     
 
389,504
 
     
 
346,974
 
     
 
338,093
 
NOW and Money Market Accounts
     
 
1,922,452
 
     
 
1,993,050
 
     
 
1,870,835
 
     
 
1,706,291
 
Certificates of Deposit less than $100,000
     
 
682,636
 
     
 
674,653
 
     
 
634,992
 
     
 
644,701
 
Certificates of Deposit $100,000 and Over
     
 
198,607
 
     
 
229,536
 
     
 
196,217
 
     
 
195,832
 
      
    
    
    
Total Deposits
     
 
3,824,218
 
     
 
3,884,423
 
     
 
3,669,846
 
     
 
3,452,705
 
Borrowings
     
 
177,729
 
     
 
45,182
 
     
 
44,409
 
     
 
45,422
 
Company Obligated, Mandatorily Redeemable Securities Of Subsidiary Trust
     
 
125,000
 
     
 
—  
 
     
 
—  
 
     
 
—  
 
Accrued Expenses and Other Liabilities
     
 
69,298
 
     
 
61,832
 
     
 
68,805
 
     
 
50,969
 
      
    
    
    
Total Liabilities
     
 
4,196,245
 
     
 
3,991,437
 
     
 
3,783,060
 
     
 
3,549,096
 
Total Stockholders’ Equity
     
 
399,327
 
     
 
374,372
 
     
 
370,654
 
     
 
348,933
 
      
    
    
    
Total Liabilities and Stockholders’ Equity
     
$
4,595,572
 
     
$
4,365,809
 
     
$
4,153,714
 
     
$
3,898,029
 
      
    
    
    
Book Value per Common Share
     
$
12.39
 
     
$
11.63
 
     
$
11.56
 
     
$
10.88
 
Common Shares Outstanding
     
 
32,235,058
 
     
 
32,180,488
 
     
 
32,070,446
 
     
 
32,061,910
 
Credit Quality Data
                                            
Nonperforming Assets (including OREO)
     
$
10,872
 
     
$
14,070
 
     
$
13,077
 
     
$
13,314
 
90 days past due and still accruing
     
 
2,477
 
     
 
3,430
 
     
 
4,583
 
     
 
3,082
 
      
    
    
    
Total
     
$
13,349
 
     
$
17,500
 
     
$
17,660
 
     
$
16,396
 
Nonperforming Assets to Loans Plus OREO
     
 
0.36
%
     
 
0.46
%
     
 
0.46
%
     
 
0.45
%
Allowance to Loans
     
 
1.64
%
     
 
1.61
%
     
 
1.59
%
     
 
1.52
%
Allowance to Nonperforming Loans (excluding OREO)
     
 
460.38
%
     
 
359.97
%
     
 
365.83
%
     
 
351.02
%
QTD Average Balance Sheet Data
                                            
Loans, Net
     
$
2,997,613
 
     
$
2,883,072
 
     
$
2,854,543
 
     
$
2,891,964
 
Earning Assets
     
 
4,163,108
 
     
 
3,923,707
 
     
 
3,855,444
 
     
 
3,567,430
 
Total Assets
     
 
4,436,263
 
     
 
4,172,820
 
     
 
4,091,763
 
     
 
3,796,249
 
Deposits
     
 
3,851,574
 
     
 
3,691,793
 
     
 
3,610,085
 
     
 
3,341,300
 
Stockholders’ Equity
     
 
385,039
 
     
 
374,148
 
     
 
370,032
 
     
 
345,566
 

4

CHITTENDEN CORPORATION
 
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
 
    
For the Three Months
     
For the Six Months
  
    
Ended June 30,
     
Ended June 30,
  
    
2002
     
2001
     
2002
     
2001
  
Interest Income:
                                    
Interest on Loans
   
$
49,656
 
   
$
57,955
 
   
$
97,983
 
   
$
116,063
 
Interest on Investments
   
 
15,448
 
   
 
9,931
 
   
 
28,361
 
   
 
19,962
 
    
  
  
  
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 and Employee Benefits
   
 
22,450
 
   
 
18,452
 
   
 
43,282
 
   
 
36,237
 
Net Occupancy Expense
   
 
4,859
 
   
 
4,260
 
   
 
9,780
 
   
 
8,995
 
Other Real Estate Owned, 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
 
    
  
  
  
Weighted Average Common Shares Outstanding
   
 
32,218,570
 
   
 
32,123,233
 
   
 
32,137,282
 
   
 
32,285,753
 
Weighted Average Common and
Common Equivalent Shares Outstanding
   
 
32,684,149
 
   
 
32,490,203
 
   
 
32,611,036
 
   
 
32,644,389
 
Earnings Per Share, Basic
   
$
0.48
 
   
$
0.45
 
   
$
0.94
 
   
$
0.89
 
Earnings Per Share, Diluted
   
 
0.47
 
   
 
0.44
 
   
 
0.92
 
   
 
0.88
 
Dividends Per Share
   
 
0.20
 
   
 
0.19
 
   
 
0.39
 
   
 
0.38
 
Return on Average Equity
   
 
15.95
%
   
 
16.63
%
   
 
16.01
%
   
 
16.89
%
Return on Average Assets
   
 
1.38
%
   
 
1.51
%
   
 
1.41
%
   
 
1.56
%
Net Yield on Earning Assets
   
 
4.69
%
   
 
4.87
%
   
 
4.65
%
   
 
4.83
%
 
-end-

CHITTENDEN CORPORATION
 
CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in thousands)
    
06/30/00
     
09/30/00
     
12/31/00
     
03/31/01
     
06/30/01
     
09/30/01
     
12/31/01
     
03/31/02
     
06/30/02
  
ASSETS
                                                                                 
Cash and Cash Equivalents
   
$
155,785
 
   
$
135,361
 
   
$
178,621
 
   
$
192,047
 
   
$
228,073
 
   
$
278,006
 
   
$
308,023
 
   
$
222,372
 
   
$
195,884
 
Securities Available For Sale
   
 
625,415
 
   
 
587,687
 
   
 
597,592
 
   
 
559,918
 
   
 
584,638
 
   
 
661,103
 
   
 
840,108
 
   
 
937,381
 
   
 
1,247,516
 
Loans Held For Sale
   
 
8,848
 
   
 
6,893
 
   
 
44,950
 
   
 
25,422
 
   
 
34,327
 
   
 
33,220
 
   
 
50,208
 
   
 
38,432
 
   
 
27,556
 
Loans:
                                                                                 
Commercial
   
 
492,238
 
   
 
495,178
 
   
 
515,926
 
   
 
535,518
 
   
 
632,768
 
   
 
632,553
 
   
 
559,752
 
   
 
566,746
 
   
 
583,557
 
Municipal
   
 
67,942
 
   
 
94,670
 
   
 
83,566
 
   
 
93,848
 
   
 
62,535
 
   
 
108,491
 
   
 
85,479
 
   
 
88,134
 
   
 
44,107
 
Real Estate:
                                                                                 
Residential
   
 
1,065,837
 
   
 
1,047,749
 
   
 
1,024,174
 
   
 
987,142
 
   
 
997,019
 
   
 
962,420
 
   
 
855,561
 
   
 
926,463
 
   
 
914,141
 
Commercial
   
 
720,532
 
   
 
722,601
 
   
 
723,339
 
   
 
703,336
 
   
 
785,223
 
   
 
799,999
 
   
 
903,819
 
   
 
1,022,858
 
   
 
1,043,889
 
Construction
   
 
70,684
 
   
 
53,742
 
   
 
57,701
 
   
 
52,814
 
   
 
52,772
 
   
 
66,053
 
   
 
79,801
 
   
 
91,325
 
   
 
78,995
 
    
  
  
  
  
  
  
  
  
Total Real Estate
   
 
1,857,053
 
   
 
1,824,092
 
   
 
1,805,214
 
   
 
1,743,292
 
   
 
1,835,014
 
   
 
1,828,472
 
   
 
1,839,181
 
   
 
2,040,646
 
   
 
2,037,025
 
Consumer
   
 
512,265
 
   
 
515,013
 
   
 
451,392
 
   
 
429,588
 
   
 
405,185
 
   
 
384,865
 
   
 
353,765
 
   
 
324,292
 
   
 
301,634
 
    
  
  
  
  
  
  
  
  
Total Loans
   
 
2,929,498
 
   
 
2,928,953
 
   
 
2,856,098
 
   
 
2,802,246
 
   
 
2,935,502
 
   
 
2,954,381
 
   
 
2,838,177
 
   
 
3,019,818
 
   
 
2,966,323
 
Less:    Allowance for Loan Losses
   
 
(39,643
)
   
 
(39,945
)
   
 
(40,255
)
   
 
(39,546
)
   
 
(44,541
)
   
 
(45,261
)
   
 
(45,268
)
   
 
(49,384
)
   
 
(48,994
)
    
  
  
  
  
  
  
  
  
Net Loans
   
 
2,889,855
 
   
 
2,889,008
 
   
 
2,815,843
 
   
 
2,762,700
 
   
 
2,890,961
 
   
 
2,909,120
 
   
 
2,792,909
 
   
 
2,970,434
 
   
 
2,917,329
 
Other Real Estate Owned
   
 
579
 
   
 
430
 
   
 
513
 
   
 
328
 
   
 
625
 
   
 
298
 
   
 
703
 
   
 
351
 
   
 
230
 
Goodwill
   
 
16,745
 
   
 
16,234
 
   
 
15,721
 
   
 
10,666
 
   
 
30,693
 
   
 
30,017
 
   
 
29,341
 
   
 
58,249
 
   
 
58,249
 
Other Assets
   
 
118,864
 
   
 
114,492
 
   
 
116,621
 
   
 
121,616
 
   
 
128,712
 
   
 
123,527
 
   
 
132,422
 
   
 
138,590
 
   
 
148,808
 
    
  
  
  
  
  
  
  
  
Total Assets
   
$
3,816,091
 
   
$
3,750,105
 
   
$
3,769,861
 
   
$
3,672,697
 
   
$
3,898,029
 
   
$
4,035,291
 
   
$
4,153,714
 
   
$
4,365,809
 
   
 
4,595,572
 
    
  
  
  
  
  
  
  
  
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                                 
Liabilities:
                                                                                 
Deposits:
                                                                                 
Demand
   
$
496,762
 
   
$
511,599
 
   
$
530,975
 
   
$
481,119
 
   
$
567,788
 
   
$
575,821
 
   
$
620,828
 
   
$
597,680
 
   
$
627,498
 
Savings
   
 
1,828,440
*
   
 
375,500
 
   
 
302,122
 
   
 
304,131
 
   
 
338,093
 
   
 
343,722
 
   
 
346,974
 
   
 
389,504
 
   
 
393,025
 
NOW and Money Market Accounts
            
 
1,506,373
 
   
 
1,632,105
 
   
 
1,597,920
 
   
 
1,706,291
 
   
 
1,800,877
 
   
 
1,870,835
 
   
 
1,993,050
 
   
 
1,922,452
 
Certificates of Deposit less than $100,000
   
 
617,941
 
   
 
612,300
 
   
 
615,336
 
   
 
617,988
 
   
 
644,701
 
   
 
634,815
 
   
 
634,992
 
   
 
674,653
 
   
 
682,636
 
Certificates of Deposit $100,000 and over
   
 
221,762
 
   
 
208,803
 
   
 
211,869
 
   
 
222,097
 
   
 
195,832
 
   
 
206,401
 
   
 
196,217
 
   
 
229,536
 
   
 
198,607
 
    
  
  
  
  
  
  
  
  
Total Deposits
   
 
3,164,905
 
   
 
3,214,575
 
   
 
3,292,407
 
   
 
3,223,255
 
   
 
3,452,705
 
   
 
3,561,636
 
   
 
3,669,846
 
   
 
3,884,423
 
   
 
3,824,218
 
Borrowings
   
 
286,013
 
   
 
162,386
 
   
 
93,757
 
   
 
45,425
 
   
 
45,422
 
   
 
45,415
 
   
 
44,409
 
   
 
45,182
 
   
 
302,729
 
Accrued Expenses and Other Liabilities
   
 
31,429
 
   
 
36,262
 
   
 
41,631
 
   
 
58,641
 
   
 
50,969
 
   
 
62,792
 
   
 
68,805
 
   
 
61,832
 
   
 
69,298
 
    
  
  
  
  
  
  
  
  
Total Liabilities
   
 
3,482,347
 
   
 
3,413,223
 
   
 
3,427,795
 
   
 
3,327,321
 
   
 
3,549,096
 
   
 
3,669,843
 
   
 
3,783,060
 
   
 
3,991,437
 
   
 
4,196,245
 
Total Stockholders’ Equity
   
 
333,744
 
   
 
336,882
 
   
 
342,066
 
   
 
345,376
 
   
 
348,933
 
   
 
365,448
 
   
 
370,654
 
   
 
374,372
 
   
 
399,327
 
    
  
  
  
  
  
  
  
  
Total Liabilities and Stockholders’ Equity
   
$
3,816,091
 
   
$
3,750,105
 
   
$
3,769,861
 
   
$
3,672,697
 
   
$
3,898,029
 
   
$
4,035,291
 
   
$
4,153,714
 
   
$
4,365,809
 
   
$
4,595,572
 
    
  
  
  
  
  
  
  
  
*    Now and Money Market Accounts included in Savings.

6

 
CHITTENDEN CORPORATION
 
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
($ in thousands)
 
    
QTR
06/30/00
     
QTR
09/30/00
   
QTR
12/31/00
   
QTR
03/31/01
   
QTR
06/30/01
   
QTR
09/30/01
   
QTR
12/31/01
   
QTR
03/31/02
     
QTR
06/30/02
Interest Income:
                                                                   
Interest on Loans
   
$
61,555
 
   
$
62,962
   
$
62,337
   
$
58,108
   
$
57,955
   
$
56,507
   
$
51,091
   
$
48,327
 
   
$
49,656
Interest on Investments
   
 
10,366
 
   
 
10,240
   
 
9,976
   
 
10,031
   
 
9,931
   
 
10,313
   
 
12,561
   
 
12,913
 
   
 
15,448
    
  
  
  
  
  
  
  
  
Total Interest Income
   
 
71,921
 
   
 
73,202
   
 
72,313
   
 
68,139
   
 
67,886
   
 
66,820
   
 
63,652
   
 
61,240
 
   
 
65,104
Interest Expense:
                                                                   
Deposits
   
 
26,176
 
   
 
27,792
   
 
28,939
   
 
26,970
   
 
24,430
   
 
22,548
   
 
19,097
   
 
16,063
 
   
 
15,283
Borrowings
   
 
4,307
 
   
 
3,797
   
 
2,090
   
 
993
   
 
772
   
 
694
   
 
688
   
 
663
 
   
 
1,484
    
  
  
  
  
  
  
  
  
Total Interest Expense
   
 
30,483
 
   
 
31,589
   
 
31,029
   
 
27,963
   
 
25,202
   
 
23,242
   
 
19,785
   
 
16,726
 
   
 
16,767
Net Interest Income
   
 
41,438
 
   
 
41,613
   
 
41,284
   
 
40,176
   
 
42,684
   
 
43,578
   
 
43,867
   
 
44,514
 
   
 
48,337
Provision for Loan Losses
   
 
2,175
 
   
 
2,175
   
 
2,175
   
 
1,950
   
 
2,041
   
 
2,025
   
 
2,025
   
 
2,075
 
   
 
1,691
    
  
  
  
  
  
  
  
  
Net Interest Income after Provision for Loan Losses
   
 
39,263
 
   
 
39,438
   
 
39,109
   
 
38,226
   
 
40,643
   
 
41,553
   
 
41,842
   
 
42,439
 
   
 
46,646
    
  
  
  
  
  
  
  
  
Noninterest Income:
                                                                   
Investment Management Income
   
 
3,124
 
   
 
3,482
   
 
3,467
   
 
3,376
   
 
3,849
   
 
4,334
   
 
4,163
   
 
3,972
 
   
 
3,913
Service Charges on Deposit Accounts
   
 
3,393
 
   
 
3,335
   
 
3,485
   
 
3,349
   
 
3,705
   
 
3,570
   
 
3,670
   
 
3,754
 
   
 
4,098
Mortgage Servicing Income
   
 
1,121
 
   
 
1,029
   
 
992
   
 
978
   
 
944
   
 
893
   
 
749
   
 
690
 
   
 
625
Gains on Sales of Loans, Net
   
 
547
 
   
 
903
   
 
833
   
 
4,940
   
 
1,945
   
 
1,916
   
 
2,406
   
 
2,755
 
   
 
1,860
Credit Card Income, Net
   
 
1,428
 
   
 
1,440
   
 
1,364
   
 
1,000
   
 
1,114
   
 
927
   
 
923
   
 
792
 
   
 
897
Insurance Commissions, Net
   
 
688
 
   
 
774
   
 
651
   
 
894
   
 
834
   
 
966
   
 
697
   
 
937
 
   
 
882
Other
   
 
2,966
 
   
 
2,617
   
 
2,166
   
 
2,429
   
 
2,799
   
 
3,328
   
 
3,035
   
 
3,260
 
   
 
3,288
    
  
  
  
  
  
  
  
  
Total Noninterest Income
   
 
13,267
 
   
 
13,580
   
 
12,958
   
 
16,966
   
 
15,190
   
 
15,934
   
 
15,643
   
 
16,160
 
   
 
15,563
Noninterest Expense:
                                                                   
Salaries and Employee Benefits
   
 
15,924
 
   
 
16,259
   
 
16,059
   
 
17,785
   
 
18,452
   
 
19,447
   
 
19,167
   
 
20,832
 
   
 
22,450
Net Occupancy Expense
   
 
3,668
 
   
 
3,862
   
 
3,849
   
 
4,735
   
 
4,260
   
 
4,308
   
 
4,441
   
 
4,921
 
   
 
4,859
Other Real Estate Owned, Net
   
 
(23
)
   
 
54
   
 
67
   
 
39
   
 
8
   
 
21
   
 
18
   
 
(168
)
   
 
7
Amortization of Intangibles
   
 
520
 
   
 
521
   
 
520
   
 
512
   
 
741
   
 
855
   
 
855
   
 
235
 
   
 
348
Other
   
 
10,350
 
   
 
9,782
   
 
10,790
   
 
9,644
   
 
10,111
   
 
10,115
   
 
10,246
   
 
10,226
 
   
 
10,933
    
  
  
  
  
  
  
  
  
Total Noninterest Expense
   
 
30,439
 
   
 
30,478
   
 
31,285
   
 
32,715
   
 
33,572
   
 
34,746
   
 
34,727
   
 
36,046
 
   
 
38,597
Income Before Income Taxes
   
 
22,091
 
   
 
22,540
   
 
20,782
   
 
22,477
   
 
22,261
   
 
22,741
   
 
22,758
   
 
22,553
 
   
 
23,612
Income Tax Expense
   
 
7,620
 
   
 
7,792
   
 
5,905
   
 
7,965
   
 
7,935
   
 
7,930
   
 
7,906
   
 
7,730
 
   
 
8,297
    
  
  
  
  
  
  
  
  
Net Income
   
 
14,471
 
   
 
14,748
   
 
14,877
   
$
14,512
   
$
14,326
   
$
14,811
   
$
14,852
   
$
14,823
 
   
$
15,315
    
  
  
  
  
  
  
  
  

7

 
CHITTENDEN CORPORATION
 
AVERAGE BALANCE SHEETS
 
    
For the Three Months
Ended June 30, 2002
     
For the Three Months
Ended June 30, 2001
     
For the Six Months
Ended June 30, 2002
     
For the Six Months
Ended June 30, 2001
  
Description
   
Average
Balance
     
Interest
Income/
Expense(1)
   
Average
Yield/
Rate(1)
     
Average
Balance
     
Interest
Income/
Expense(1)
   
Average
Yield/
Rate(1)
     
Average
Balance
     
Interest Income/ Expense(1)
   
Average
Yield/
Rate(1)
     
Average
Balance
     
Interest Income/
Expense(1)
   
Average
Yield/
Rate(1)
  
ASSETS
                                                                                            
Interest-Earning Assets:
                                                                                            
Loans:
                                                                                            
Commercial
   
$
577,932
 
   
$
        8,782
   
6.10
%
   
$
457,981
 
   
$
        9,369
   
8.21
%
   
$
566,206
 
   
$
      17,233
   
6.14
%
   
$
424,410
 
   
$
      18,088
   
8.59
%
Municipal
   
 
84,786
 
   
 
935
   
4.41
%
   
 
89,136
 
   
 
1,316
   
5.92
%
   
 
85,109
 
   
 
1,948
   
4.58
%
   
 
88,004
 
   
 
2,598
   
5.95
%
Real Estate:
                                                                                            
Residential
   
 
950,808
 
   
 
16,090
   
6.78
%
   
 
1,130,754
 
   
 
21,308
   
7.56
%
   
 
933,142
 
   
 
31,757
   
6.83
%
   
 
1,124,519
 
   
 
42,710
   
7.66
%
Commercial
   
 
1,037,386
 
   
 
16,489
   
6.38
%
   
 
796,391
 
   
 
16,570
   
8.35
%
   
 
994,083
 
   
 
31,919
   
6.48
%
   
 
774,571
 
   
 
32,744
   
8.52
%
Construction
   
 
84,710
 
   
 
1,734
   
8.21
%
   
 
91,507
 
   
 
1,928
   
8.45
%
   
 
86,344
 
   
 
3,424
   
8.00
%
   
 
93,589
 
   
 
3,930
   
8.47
%
    
  
         
  
         
  
         
  
      
Total Real Estate
   
 
2,072,904
 
   
 
34,313
   
6.63
%
   
 
2,018,652
 
   
 
39,806
   
7.96
%
   
 
2,013,569
 
   
 
67,100
   
6.70
%
   
 
1,992,679
 
   
 
79,384
   
8.06
%
Consumer
   
 
311,521
 
   
 
5,962
   
7.68
%
   
 
368,860
 
   
 
7,968
   
8.66
%
   
 
323,950
 
   
 
12,394
   
7.72
%
   
 
378,193
 
   
 
17,003
   
9.07
%
    
  
         
  
         
  
         
  
      
Total loans
   
 
3,047,143
 
   
 
49,992
   
6.58
%
   
 
2,934,629
 
   
 
58,459
   
7.99
%
   
 
2,988,834
 
   
 
98,675
   
6.65
%
   
 
2,883,286
 
   
 
117,073
   
8.19
%
Investments:
                                                                                            
Taxable
   
 
1,095,216
 
   
 
15,328
   
5.60
%
   
 
600,233
 
   
 
9,580
   
6.40
%
   
 
1,032,851
 
   
 
28,111
   
5.45
%
   
 
596,509
 
   
 
19,238
   
6.50
%
Tax-Favored Securities
   
 
19,697
 
   
 
162
   
3.31
%
   
 
24,680
 
   
 
347
   
5.64
%
   
 
17,382
 
   
 
298
   
3.46
%
   
 
18,644
 
   
 
544
   
5.88
%
Interest-Bearing Deposits
   
 
225
 
   
 
2
   
3.40
%
   
 
225
 
   
 
2
   
3.55
%
   
 
225
 
   
 
4
   
3.39
%
   
 
225
 
   
 
4
   
3.80
%
Federal Funds Sold
   
 
827
 
   
 
4
   
1.96
%
   
 
7,663
 
   
 
101
   
5.29
%
   
 
4,765
 
   
 
38
   
1.63
%
   
 
12,179
 
   
 
333
   
5.51
%
    
  
         
  
         
  
         
  
      
Total Interest-Earning Assets
   
 
4,163,108
 
   
 
65,488
   
6.30
%
   
 
3,567,430
 
   
 
68,489
   
7.70
%
   
 
4,044,057
 
   
 
127,126
   
6.32
%
   
 
3,510,843
 
   
 
137,192
   
7.88
%
             
                  
                  
                  
      
Noninterest-Earning Assets
   
 
322,685
 
                 
 
271,484
 
                 
 
316,639
 
                 
 
258,063
 
              
Allowance for Loan Losses
   
 
(49,530
)
                 
 
(42,665
)
                 
 
(48,186
)
                 
 
(41,486
)
              
    
                
                
                
             
Total Assets
   
$
4,436,263
 
                 
$
3,796,249
 
                 
$
4,312,510
 
                 
$
3,727,420
 
              
    
                
                
                
             
LIABILITIES AND STOCKHOLDERS’ EQUITY
                                                                                            
Interest-Bearing Liabilities:
                                                                                            
Savings
   
$
390,679
 
   
 
1,130
   
1.16
%
   
$
378,033
 
   
 
2,163
   
2.30
%
   
$
376,798
 
   
 
2,231
   
1.19
%
   
$
371,027
 
   
$
4,481
   
2.44
%
NOW and Money Market Accounts
   
 
1,949,626
 
   
 
6,812
   
1.40
%
   
 
1,589,282
 
   
 
11,316
   
2.86
%
   
 
1,921,719
 
   
 
13,881
   
1.46
%
   
 
1,554,999
 
   
 
24,816
   
3.22
%
Certificates of Deposit less than $100,000
   
 
676,065
 
   
 
5,758
   
3.42
%
   
 
636,409
 
   
 
8,225
   
5.18
%
   
 
662,057
 
   
 
12,065
   
3.67
%
   
 
626,900
 
   
 
16,386
   
5.27
%
Certificates of Deposit $100,000 and over
   
 
229,598
 
   
 
1,583
   
2.77
%
   
 
214,184
 
   
 
2,723
   
5.10
%
   
 
216,294
 
   
 
3,169
   
2.95
%
   
 
212,119
 
   
 
5,716
   
5.43
%
    
  
         
  
  
  
  
  
  
  
  
Total Interest-Bearing Deposits
   
 
3,245,968
 
   
 
15,283
   
1.89
%
   
 
2,817,909
 
   
 
24,427
   
3.48
%
   
 
3,176,868
 
   
 
31,346
   
1.99
%
   
 
2,765,045
 
   
 
51,399
   
3.75
%
Borrowings
   
 
135,697
 
   
 
1,484
   
4.39
%
   
 
53,972
 
   
 
773
   
5.74
%
   
 
90,394
 
   
 
2,147
   
4.79
%
   
 
60,535
 
   
 
1,766
   
5.88
%
    
  
         
  
         
  
         
  
      
Total Interest-Bearing Liabilities
   
 
3,381,665
 
   
 
16,767
   
1.99
%
   
 
2,871,880
 
   
 
25,200
   
3.52
%
   
 
3,267,262
 
   
 
33,493
   
2.07
%
   
 
2,825,580
 
   
 
53,165
   
3.79
%
NonInterest-Bearing Liabilities:
                                                                                            
Demand Deposits
   
 
605,606
 
                 
 
523,392
 
                 
 
603,376
 
                 
 
502,891
 
              
Other Liabilities
   
 
63,953
 
                 
 
55,411
 
                 
 
62,248
 
                 
 
54,726
 
              
    
                
                
                
             
Total Liabilities
   
 
4,051,224
 
                 
 
3,450,683
 
                 
 
3,932,886
 
                 
 
3,383,197
 
              
Stockholders’ Equity
   
 
385,039
 
                 
 
345,566
 
                 
 
379,624
 
                 
 
344,223
 
              
    
                
                
                
             
Total Liabilities and Stockholders’ Equity
   
$
4,436,263
 
                 
$
3,796,249
 
                 
$
4,312,510
 
                 
$
3,727,420
 
              
    
                
                
                
             
Net Interest Income
            
$
48,721
                   
$
43,289
                   
$
93,633
                   
$
84,027
       
             
                  
                  
                  
      
Interest Rate Spread(2)
                   
4.31
%
                   
4.18
%
                   
4.25
%
                   
4.09
%
Net Yield on Earning Assets(3)
                   
4.69
%
                   
4.87
%
                   
4.65
%
                   
4.83
%
(1)
 
On a fully taxable equivalent basis, calculated using a Federal income tax rate of 35%. Loan income includes fees.
(2)
 
Interest rate spread is the average rate earned on total interest-earning assets less the average rate paid on interest-bearing liabilities.
(3)
 
Net yield on earning assets is net interest income divided by total interest-earning assets.

8

CHITTENDEN CORPORATION
 
SELECTED FINANCIAL DATA (Unaudited) *
($ in thousands, except share and per share data)
 
    
QTD
     
QTD
     
QTD
     
QTD
     
QTD
     
QTD
     
QTD
     
QTD
     
QTD
  
    
6/30/2000
     
9/30/2000
     
12/31/2000
     
3/31/2001
     
6/30/2001
     
9/30/2001
     
12/31/2001
     
3/31/2002
     
6/30/2002
  
Book Value per Common Share
   
$
9.98
 
   
$
10.22
 
   
$
10.49
 
   
$
10.73
 
   
$
10.88
 
   
$
11.41
 
   
$
11.56
 
   
$
11.63
 
   
$
12.39
 
Tangible Book Value Per Share
   
 
9.48
 
   
 
9.73
 
   
 
10.00
 
   
 
10.26
 
   
 
9.79
 
   
 
10.34
 
   
 
10.52
 
   
 
9.50
 
   
 
10.27
 
Common Shares Outstanding
   
 
33,443,710
 
   
 
32,971,239
 
   
 
32,621,355
 
   
 
32,178,013
 
   
 
32,061,910
 
   
 
32,025,220
 
   
 
32,070,446
 
   
 
32,180,488
 
   
 
32,235,058
 
CREDIT QUALITY
                                                                                 
Nonperforming Assets (including OREO)
   
 
11,603
 
   
 
10,212
 
   
 
11,889
 
   
 
11,888
 
   
 
13,314
 
   
 
14,958
 
   
 
13,077
 
   
 
14,070
 
   
 
10,872
 
90 Days past due and still accruing
   
 
4,751
 
   
 
4,133
 
   
 
4,595
 
   
 
4,318
 
   
 
3,082
 
   
 
3,400
 
   
 
4,583
 
   
 
3,430
 
   
 
2,477
 
    
  
  
  
  
  
  
  
  
Total
   
 
16,354
 
   
 
14,345
 
   
 
16,484
 
   
 
16,206
 
   
 
16,396
 
   
 
18,358
 
   
 
17,660
 
   
 
17,500
 
   
 
13,349
 
Nonperforming Assets to Loans Plus OREO
   
 
0.40
%
   
 
0.35
%
   
 
0.42
%
   
 
0.42
%
   
 
0.45
%
   
 
0.50
%
   
 
0.46
%
   
 
0.46
%
   
 
0.36
%
Allowance to Loans
   
 
1.35
%
   
 
1.36
%
   
 
1.41
%
   
 
1.41
%
   
 
1.52
%
   
 
1.53
%
   
 
1.59
%
   
 
1.61
%
   
 
1.64
%
Allowance to Nonperforming Loans (excluding OREO)
   
 
359.61
%
   
 
408.39
%
   
 
353.86
%
   
 
342.09
%
   
 
351.02
%
   
 
308.74
%
   
 
365.83
%
   
 
359.97
%
   
 
460.38
%
Net Charge-off Ratio
   
 
0.12
%
   
 
0.07
%
   
 
0.07
%
   
 
0.09
%
   
 
0.04
%
   
 
0.04
%
   
 
0.07
%
   
 
0.03
%
   
 
0.07
%
                                                                                  
QTR Average Balance Sheet Data
                                                                                 
Loans, Net
   
 
2,921,259
 
   
 
2,904,900
 
   
 
2,879,986
 
   
 
2,791,707
 
   
 
2,891,964
 
   
 
2,951,718
 
   
 
2,854,543
 
   
 
2,883,072
 
   
 
2,997,613
 
Earning Assets
   
 
3,604,521
 
   
 
3,578,436
 
   
 
3,543,882
 
   
 
3,453,851
 
   
 
3,567,430
 
   
 
3,700,113
 
   
 
3,855,444
 
   
 
3,923,707
 
   
 
4,163,108
 
Total Assets
   
 
3,840,153
 
   
 
3,804,885
 
   
 
3,751,586
 
   
 
3,658,274
 
   
 
3,796,249
 
   
 
3,937,682
 
   
 
4,091,763
 
   
 
4,172,820
 
   
 
4,436,263
 
Deposits
   
 
3,192,879
 
   
 
3,212,766
 
   
 
3,256,504
 
   
 
3,193,635
 
   
 
3,341,300
 
   
 
3,482,122
 
   
 
3,610,085
 
   
 
3,691,793
 
   
 
3,851,574
 
Stockholders’ Equity
   
 
336,093
 
   
 
332,601
 
   
 
338,316
 
   
 
343,077
 
   
 
345,566
 
   
 
355,764
 
   
 
370,032
 
   
 
374,148
 
   
 
385,039
 
Earnings Per Share, Basic
   
 
0.43
 
   
 
0.44
 
   
 
0.45
 
   
 
0.45
 
   
 
0.45
 
   
 
0.46
 
   
 
0.46
 
   
 
0.46
 
   
 
0.48
 
Earnings Per Share, Diluted
   
 
0.42
 
   
 
0.44
 
   
 
0.45
 
   
 
0.44
 
   
 
0.44
 
   
 
0.46
 
   
 
0.46
 
   
 
0.46
 
   
 
0.47
 
Dividends Per Share
   
 
0.19
 
   
 
0.19
 
   
 
0.19
 
   
 
0.19
 
   
 
0.19
 
   
 
0.19
 
   
 
0.19
 
   
 
0.19
 
   
 
0.20
 
Weighted Average Common Shares Outstanding
   
 
33,961,338
 
   
 
33,151,103
 
   
 
32,789,048
 
   
 
32,448,558
 
   
 
32,123,233
 
   
 
32,047,482
 
   
 
32,039,223
 
   
 
32,134,266
 
   
 
32,218,570
 
Weighted Average Common and Common
                                                                                 
Equivalent Shares Outstanding
   
 
34,321,950
 
   
 
33,456,271
 
   
 
33,041,273
 
   
 
32,795,994
 
   
 
32,490,203
 
   
 
32,442,906
 
   
 
32,420,335
 
   
 
32,537,191
 
   
 
32,684,149
 
Return on Average Equity
   
 
17.32
%
   
 
17.64
%
   
 
17.49
%
   
 
17.15
%
   
 
16.63
%
   
 
16.52
%
   
 
15.92
%
   
 
16.07
%
   
 
15.95
%
Return on Average Assets
   
 
1.52
%
   
 
1.54
%
   
 
1.58
%
   
 
1.61
%
   
 
1.51
%
   
 
1.49
%
   
 
1.44
%
   
 
1.44
%
   
 
1.38
%
Net Yield on Earning Assets
   
 
4.66
%
   
 
4.67
%
   
 
4.70
%
   
 
4.78
%
   
 
4.87
%
   
 
4.76
%
   
 
4.59
%
   
 
4.61
%
   
 
4.69
%
Tier 1 Capital Ratio
   
 
10.71
%
   
 
10.83
%
   
 
10.82
%
   
 
11.12
%
   
 
9.88
%
   
 
9.94
%
   
 
10.32
%
   
 
9.15
%
   
 
11.84
%
Total Capital Ratio
   
 
11.97
%
   
 
12.09
%
   
 
12.08
%
   
 
12.38
%
   
 
11.13
%
   
 
11.19
%
   
 
11.57
%
   
 
10.40
%
   
 
15.96
%
Leverage Ratio
   
 
8.27
%
   
 
8.18
%
   
 
8.65
%
   
 
8.97
%
   
 
8.13
%
   
 
8.05
%
   
 
7.99
%
   
 
7.28
%
   
 
9.35
%

9