-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Mb9vUhzLX4cPubywkya71ZnDsQj+kwkCo3Wl6SkcfTfVfkaSCMJl7A0QABfO8CUv gSWx+eEwqgyJ7l0fP+JWVA== 0000910647-03-000016.txt : 20030116 0000910647-03-000016.hdr.sgml : 20030116 20030116170216 ACCESSION NUMBER: 0000910647-03-000016 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030116 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20030116 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MERCHANTS BANCSHARES INC CENTRAL INDEX KEY: 0000726517 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 030287342 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-11595 FILM NUMBER: 03516695 BUSINESS ADDRESS: STREET 1: 164 COLLEGE ST CITY: BURLINGTON STATE: VT ZIP: 05401 BUSINESS PHONE: 8026583400 MAIL ADDRESS: STREET 1: PO BOX 1009 CITY: BURLINGTON STATE: VT ZIP: 05401 8-K 1 merc-8k1.txt FORM 8-K FOR JANUARY 16, 2003 ___________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 __________________________ FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report: January 16, 2003 Merchants Bancshares, Inc. (Exact name of registrant as specified in its charter) Vermont 0-11595 03-0287342 (State or other jurisdiction of (Commission File No.) (IRS Employer incorporation) Identification No.) 275 Kennedy Drive So. Burlington, Vermont 05403 (Address of principal executive offices) (Zip Code) (802) 658-3400 (Registrant's telephone number, including area code) ___________________________________________________________________________ Item 5. Other Events. On January 16, 2003, Merchants Bancshares, Inc. (the "Company"), the Delaware bank holding company for Merchants Bank, issued a press release announcing the Company's results for the year ended December 31, 2002. The Company is attaching this press release as Exhibit 99.1 to this Current Report on Form 8-K Item 7. Financial Statements, Pro forma Financial Information and Exhibits. (A)(B) Inapplicable (C) Exhibits 99.1 Press Release issued by the Company on January 16, 2003 for the year ended December 31, 2002. 2 SIGNATURES Pursuant to the requirement of the Securities and Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MERCHANTS BANCSHARES, INC. /s/ Joseph L. Boutin Joseph L. Boutin President and Chief Executive Officer Dated: January 16, 2003 3 EX-99 3 mer8k1-99.txt EXHIBIT 99.1 Exhibit 99.1 For Release: January 16, 2003 Contact: Tricia Post 802/863-2568 Merchants Bancshares, Inc. Announces Record 2002 Results Increases Quarterly Dividend BURLINGTON, VT - Merchants Bancshares, Inc. (Nasdaq: MBVT), the parent company of Merchants Bank, today announced its fifth consecutive record earnings year with net income of $12.62 million, or diluted earnings of $2.02 per share, for the year ended December 31, 2002. This compares with net income of $12.16 million, or diluted earnings per share of $1.98, for the previous year. For the quarter ended December 31, 2002, the Company earned a net profit of $3.12 million, or diluted earnings per share of 50 cents, compared to net income of $3.31 million, or 54 cents per diluted share, for the same quarter of the previous year. The return on average assets was 1.48% for the fourth quarter of 2002 and 1.54% for the year, and the return on average equity was 14.77% for the fourth quarter and 15.73% for the year. The Company declared a cash dividend on January 16, 2003, of 25 cents per share, payable February 13, 2003, to shareholders of record as of January 30, 2003. In 2002 net income excluding non-recurring income and expenses, loan recoveries (negative loan loss provision) and amortization of intangibles increased 3.5% to $11.68 million, or diluted earnings per share of $1.85, versus $11.28 million, or $1.84 per diluted share for 2001. In the fourth quarter of 2002 net income excluding non-recurring income and expenses, loan recoveries and amortization of intangibles increased slightly to $2.91 million, or diluted earnings of 47 cents per share, versus $2.89 million, or 47 cents per diluted share, for the fourth quarter of 2001. One-time charges and credits that influenced fourth quarter 2002 earnings included security gains of $437 thousand, and increases in anticipated incentive payouts of $250 thousand. Combined with loan recoveries of $241 thousand and amortization of intangibles of $103 thousand these events increased fourth quarter after tax income by $211 thousand. "Our earnings reflect our conservative approach to our business," stated Merchants Bank President and CEO Joseph L. Boutin. "Even in these problematic economic times we are experiencing overall balance sheet growth, leading to growth in net interest income, a key driver of our success. During 2002 our balance sheet increased by $54 million (6.75%) to $854 million, and total deposits increased by $43 million (6.11%) to $755 million," continued Boutin. Loans outstanding at year-end were $496 million, a $16 million (3.32%) increase from December 31, 2001. Mr. Boutin added, "Our modest loan growth reflects management's concern with general economic conditions and the highly competitive local marketplace. During the fourth quarter of this year we started to see some positive signs on the competitive front. Our calling efforts have produced some great opportunities at a reasonable price with an acceptable risk profile. Our patience and discipline should benefit our shareholders over the long-term." Credit quality remains strong with nonperforming assets at $3.8 million, or 0.44% of total assets, and nonperforming loans at $3.7 million, or .75% of total loans, at year end. Although overall margin dollars have increased $1.8 million from 2001 to 2002, the net interest margin has decreased year over year. The net interest margin for the fourth quarter of this year was 4.81%, a slight decrease from the same quarter one year ago. The net interest margin for the year 2002 was 4.85%, down from 4.96% for 2001. This decrease reflects the continuing effect of the current low interest rate environment. The Bank's excess deposits have primarily been deployed in investment securities which carry lower overall yields than the Bank's loan portfolio. Additionally, many of our commercial loan customers have opted to move to variable rate loans. This change will allow us to maintain our spread when interest rates start to increase. Excluding net gains (losses) on sales of investments, noninterest income decreased $695 thousand (7.95%) for 2002 compared to 2001. The Bank experienced increases in overdraft service charges and electronic banking fees during 2002 and decreases in its merchants credit card servicing income of $188 thousand due to the sale of that portfolio during 2001. The decrease in noninterest revenue when comparing 2002 to 2001 is due primarily to several one-time events that occurred during the two years. During 2002 the Bank recorded a gain on the sale of a Bank branch building totaling $272 thousand, the Bank also recognized income of $449 thousand from resolution of a claim by the Company against its previous insurance carrier. During 2001 the Bank sold its credit card portfolio for a gain of $563 thousand, received interest income of $199 thousand related to a Vermont franchise tax refund, and booked gains related to the sales of loan servicing rights and merchants credit card services portfolio totaling $134 thousand. Additionally, during 2001, the Bank recognized income of $312 thousand related to the resolution of certain ongoing litigation. Noninterest expense increased $725 thousand (2.6%) for 2002 compared to 2001. Salaries and benefits increased $474 thousand (3.33%), while legal and professional fees decreased $338 thousand (17.9%) primarily due to the timing of expenses as the Bank defended itself or settled certain ongoing litigation. Marketing expenses were down $475 thousand from 2001 to 2002, as the Bank repositioned its marketing efforts in anticipation of the opening of two new branches. The Bank experienced a $678 thousand increase in Vermont franchise taxes from 2001 to 2002, primarily a result of a $538 thousand Vermont franchise tax refund received in 2001. The Bank also experienced a $504 thousand increase in the amortization of investments in real estate limited partnerships as the Bank continued to invest in community-based affordable housing partnerships. These partnerships give us an opportunity to invest in affordable housing in the communities in which we do business, as well as providing federal tax credits which can be used as an offset to the income tax provision. The Company's stockholder's equity increased by $7.2 million during 2002. Stockholder's equity was increased by 2002 net income of $12.62 million, and an increase in the market value of the Bank's available for sale security portfolio of $2.53 million. Stockholder's equity was decreased by dividends paid of $5.67 million, and a $2.90 million minimum pension liability recorded by the Company during the fourth quarter of 2002. The mission of Merchants Bank is to provide best-in-class community banking services to Vermonters. This commitment is fulfilled through a community, branch-based, system that includes 34 bank offices throughout the state of Vermont, employees dedicated to quality customer service, and innovative banking products such as FreedomLYNX(R) checking, MoneyLYNX(R) money market accounts, and CommerceLYNX(R) small business products. Merchants Bank also includes a trust, investment and discount brokerage division, known as Merchants Trust Company, which provides services to individuals and institutions. The stock is traded on the NASDAQ National Market system under the symbol MBVT. Member FDIC. Some of the statements contained in this press release constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements reflect our current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause our actual results to differ significantly from those expressed in any forward-looking statement. You should not rely on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond the Company's control and which could materially affect actual results. The factors that could cause actual results to differ materially from current expectations include changes in general economic conditions in Vermont, changes in interest rates, changes in competitive product and pricing pressures among financial institutions within the Company's markets, and changes in the financial condition of the Company's borrowers. The forward-looking statements contained herein represent the Company's judgment as of the date of this report, and the Company cautions readers not to place undue reliance on such statements. For further information, please refer to the Company's reports filed with the SEC. Merchants Bancshares, Inc. Financial Highlights For the period ended December 31, 2002 (In thousands except share and per share data)
12/31/02 09/30/02 12/31/01 09/30/01 -------- -------- -------- -------- Balance Sheets - Period End Total Assets $ 854,495 $ 840,711 $ 800,467 $ 782,612 Loans 495,588 489,147 479,685 478,240 Allowance for Loan Losses (ALL) 8,497 8,679 8,815 9,878 Net Loans 487,091 480,468 470,870 468,362 Investment Securities 270,215 278,880 212,454 183,142 Fed Funds Sold and Securities Purchased Under Resale Agreements 31,500 12,000 51,000 69,500 Other Real Estate Owned 57 46 225 1,590 Other Assets 65,632 69,317 65,918 60,018 Deposits 755,274 744,248 711,812 695,601 Short-term Borrowings 4,000 3,598 1,248 4,000 Long-term Debt 2,383 2,211 2,255 2,260 Other Liabilities 10,080 5,609 9,589 6,964 Stockholders' Equity 82,758 85,045 75,563 73,787 Balance Sheets - Quarter-to-Date Averages Total Assets $ 844,656 $ 827,862 $ 795,397 $ 778,300 Loans 491,494 480,743 478,265 481,954 Allowance for Loan Losses 8,678 8,819 9,680 9,931 Net Loans 482,816 471,924 468,585 472,023 Investment Securities 276,056 278,404 206,529 195,769 Interest Earning Assets 788,098 770,382 744,193 727,164 Total Deposits 748,585 735,968 707,790 693,772 Borrowings 5,065 4,182 4,984 4,798 Interest Bearing Liabilities 655,914 645,795 619,543 609,476 Stockholders' Equity 84,574 81,954 74,986 72,030 Ratios and Supplemental Information Book Value Per Share $ 13.39 $ 13.78 $ 12.32 $ 12.07 Tier I Leverage Ratio 9.51% 9.55% 9.12% 9.00% Period End Common Shares Outstanding 6,178,438 6,170,232 6,132,533 6,114,528 Credit Quality - Period End Nonperforming Loans (NPLs) $ 3,699 $ 3,886 $ 2,610 $ 3,009 Nonperforming Assets (NPAs) 3,756 3,932 2,835 4,599 NPLs as a % of Total Loans 0.75% 0.79% 0.54% 0.63% NPAs as a % of Total Assets 0.44% 0.47% 0.35% 0.59% ALL as a % of NPLs 230% 223% 338% 328%
For the Three For the Twelve Months Months Ended December 31, Ended December 31, -------------------------- -------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Interest Income Interest and Fees on Loans $ 8,450 $ 9,391 $ 34,131 $ 39,869 Interest on Investments 3,495 3,385 14,219 14,129 Total Interest Income 11,945 12,776 48,350 53,998 Interest Expense Deposits 2,356 3,692 10,900 18,322 Short-term Borrowings 8 12 28 84 Long-term Debt 29 26 88 76 Total Interest Expense 2,393 3,730 11,016 18,482 Net Interest Income 9,552 9,046 37,334 35,516 Provision for Loan Losses (241) (633) (945) (1,004) Net Interest Income After Provision for Loan Losses 9,793 9,679 38,279 36,520 Noninterest Income Trust Company Income 384 416 1,593 1,632 Service Charges on Deposits 1,128 1,016 4,102 3,942 Gain (Loss) on sale of investments, Net 437 -- 610 (224) Other 518 1,065 2,349 3,165 Total Noninterest Income 2,467 2,497 8,654 8,515 Noninterest Expense Salaries and Employee Benefits 4,002 3,852 14,677 14,203 Occupancy and Equipment Expenses 1,345 1,284 5,067 4,948 Legal and Professional Fees 456 374 1,542 1,880 Marketing 397 570 1,181 1,656 Equity in Losses of Real Estate Limited Partnerships 352 180 1,317 813 Expenses Other Real Estate Owned 34 86 115 268 Other 1,397 1,406 5,600 5,006 Total Noninterest Expense 7,983 7,752 29,499 28,774 Income Before Income Taxes 4,277 4,424 17,434 16,261 Income Taxes 1,156 1,113 4,817 4,097 Net Income $ 3,121 $ 3,311 $ 12,617 $ 12,164 Ratios and Supplemental Information Weighted Average Common Shares Outstanding 6,174,932 6,124,555 6,163,546 6,097,775 Weighted Average Diluted Shares Outstanding 6,220,052 6,181,446 6,231,316 6,135,840 Basic Earnings Per Common Share $ 0.51 $ 0.54 $ 2.05 $ 1.99 Diluted Earnings Per Common Share 0.50 0.54 2.02 1.98 Return on Average Assets 1.48% 1.67% 1.54% 1.59% Return on Average Stockholders' Equity 14.77% 17.67% 15.73% 17.06% Net Interest Rate Spread 4.57% 4.43% 4.56% 4.45% Net Interest Margin 4.81% 4.83% 4.85% 4.96% Efficiency Ratio (1) 60.44% 60.95% 59.43% 60.44% (1) The efficiency ratio excludes amortization of intangibles, OREO expenses, gain/loss on sale of securities, state franchise taxes, and any significant nonrecurring items. Note: As of December 31, 2002, the Bank had off-balance sheet liabilities in the form of standby letters of credit to customers in the amount of $6.3 million.
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