EX-99 2 ex-991.htm EXHIBIT 99.1

Exhibit 99.1
 

For Release: August 1, 2006

Contact: Lisa Razo

(802) 865-1838
 

Merchants Bancshares, Inc. Announces 2006 Second Quarter Results
 

SOUTH BURLINGTON, VT - Merchants Bancshares, Inc. (NASDAQ: MBVT), the parent company of Merchants Bank, today announced net income of $2.67 million, or diluted earnings per share of 42 cents, for the quarter ended June 30, 2006. This compares with net income of $3.06 million, or diluted earnings per share of 48 cents for the quarter ended June 30, 2005. The return on average assets was 0.96% and the return on average equity was 16.62% for the second quarter of 2006, compared to 1.15% and 18.89%, respectively, for the second quarter of 2005. Merchants declared a dividend on July 20, 2006, of 28 cents per share payable August 17, 2006, to shareholders of record as of August 3, 2006. For more information on the quarter please refer to Merchants' quarterly Form 10-Q, which will be filed on or about August 1, 2006, and will be available on the SEC website at www.sec.gov.
 

Mr. Joseph Boutin, Merchants' President and Chief Executive Officer; Ms. Janet Spitler, Merchants' Chief Financial Officer; and Mr. Michael Tuttle, President and Chief Executive Officer of Merchants Bank will host a conference call to discuss these earnings results at 10:00 a.m. Eastern Time on Thursday August 3, 2006. Interested parties may participate in the conference call by dialing (800) 230-1085; the title of the call is Earnings Release Conference Call for Merchants Bancshares, Inc. Participants are asked to call a few minutes prior to register. A replay will be available until noon on Thursday August 10, 2006. The U.S. replay dial-in telephone number is (800) 475-6701. The international replay dial-in telephone number is (320) 365-3844. The replay access code is 806414.
 

The continuing mission of Merchants Bank is to provide Vermonters with a true community bank. It fulfills this commitment through a branch-based system that includes 35 bank offices and 42 ATMs throughout Vermont, personal bankers dedicated to top-quality customer service, and streamlined products: FreedomLYNX® Banking, which consists of Free Checking for Life®, a Money Market Account, Free Online Banking and Bill Pay, Overdraft Coverage, Direct Deposit, a Free Debit Card and Free Automated Phone Banking; TimeLYNX® Certificates of Deposit; HomeLYNX® Home Equity Loans; RealLYNX® Residential Mortgages and CommerceLYNX® Business Banking. Merchants Bank also includes a trust and investment division, known as Merchants Trust Company, serving individuals and institutions. For more information about Merchants Bank, visit mbvt.com. Merchants' stock is traded on the NASDAQ National Market system under the symbol MBVT. Member FDIC. Equal Housing Lender.
 

Some of the statements contained in this press release may 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 Merchants' current views about future events and are subject to risks, uncertainties, assumptions and changes in circumstances that may cause Merchants' actual results to differ significantly from those expressed in any forward-looking statement. Forward-looking statements should not be relied on since they involve known and unknown risks, uncertainties and other factors that are, in some cases, beyond Merchants' 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

<PAGE>

within Merchants' markets, and changes in the financial condition of Merchants' borrowers. The forward-looking statements contained herein represent Merchants' judgment as of the date of this release, and Merchants cautions readers not to place undue reliance on such statements. For further information, please refer to Merchants' reports filed with the Securities and Exchange Commission.

<PAGE>

Merchants Bancshares, Inc.

Financial Highlights

For the period ended June 30, 2006

(In thousands except share and per share data)
 
 

06/30/06

  

12/31/05

  

06/30/05

  

12/31/04
               

Balance Sheets - Period End

              

Total assets

$1,119,474

  

$1,075,236

  

$1,054,435

  

$1,032,405

Loans

650,431

  

605,926

  

595,176

  

584,332

Allowance for loan losses ("ALL")

6,688

  

7,083

  

7,497

  

7,512

Net loans

643,743

  

598,843

  

587,679

  

576,820

Investment securities

393,281

  

390,460

  

388,733

  

376,547

Other assets

82,450

  

85,933

  

78,023

  

79,038

Deposits

885,277

  

854,576

  

837,942

  

834,164

Short-term borrowings

20,369

  

52,988

  

41,957

  

57,374

Long-term debt

53,394

  

55,764

  

76,594

  

49,757

Securities sold under agreement to repurchase

70,455

  

20,000

  

--

  

--

Junior subordinated debentures issued to

              

  Unconsolidated subsidiary trust

20,619

  

20,619

  

20,619

  

20,619

Other liabilities

5,423

  

4,892

  

11,016

  

5,307

Shareholders' equity

63,937

  

66,397

  

66,307

  

65,184

Balance Sheets - Quarter-to-Date Averages

              

Total assets

$1,115,465

  

$1,059,923

  

$1,059,300

  

$1,041,944

Loans

639,655

  

598,159

  

590,400

  

586,268

Allowance for loan losses

6,669

  

7,101

  

7,505

  

7,862

Net loans

632,986

  

591,058

  

582,895

  

578,406

Investment securities, including Federal Home

              

  Loan Bank stock

415,353

  

396,034

  

406,871

  

391,967
               

Federal funds sold, securities purchased under agreements

              

  to resell, and interest bearing deposits with banks

121

  

58

  

55

  

433

Other assets

67,005

  

72,773

  

69,479

  

71,138

Deposits

853,132

  

854,591

  

839,639

  

844,958

Short-term borrowings

75,924

  

50,741

  

47,251

  

45,652

Long-term debt

55,054

  

59,365

  

80,066

  

52,157

Securities sold under agreement to repurchase

38,813

  

851

  

-

  

--

Junior subordinated debentures issued to

              

  Unconsolidated subsidiary trust

20,619

  

20,619

  

20,619

  

3,214

Other liabilities

7,641

  

9,249

  

7,006

  

14,113

Shareholders' Equity

64,282

  

64,507

  

64,719

  

81,850

Interest earning assets

1,055,129

  

994,251

  

997,326

  

978,668

Interest bearing liabilities

926,823

  

863,077

  

872,081

  

822,601

Ratios and Supplemental Information

              

Book value per share

$10.21

  

$10.55

  

$10.53

  

$10.44

Tier I leverage ratio

8.21%

  

8.54%

  

8.19%

  

8.09%

Period end common shares outstanding

6,260,991

  

6,290,889

  

6,296,640

  

6,243,710

Credit Quality - Period End

              

Nonperforming loans ("NPLs")

$1,866

  

$2,364

  

$3,597

  

$3,336

Nonperforming assets ("NPAs")

2,178

  

2,364

  

3,597

  

3,336

NPLs as a percent of total loans

0.29%

  

0.39%

  

0.60%

  

0.57%

NPAs as a percent of total assets

0.19%

  

0.22%

  

0.34%

  

0.32%

ALL as a percent of NPLs

358%

  

300%

  

208%

  

225%

ALL as a percent of total loans

1.03%

  

1.17%

  

1.26%

  

1.29%

<PAGE>  

Merchants Bancshares, Inc.

Financial Highlights

For the period ended June 30, 2006

(In thousands except share and per share data)
 
 

For the Three Months Ended

  

For the Six Months Ended
 

June 30,
2006

  

June 30,
2005

  

June 30,
2006

  

June 30,
2005
               

Operating Results

              

Interest income

              

Interest and fees on loans

$10,633 

  

$9,030

  

$20,538 

  

$17,586 

Interest and dividends on investments

4,646 

  

4,255 

  

9,276 

  

8,477 

Total interest income

15,279 

  

13,285 

  

29,814 

  

26,063 

Interest expense

              

Deposits

3,509 

  

2,072 

  

6,602 

  

3,723 

Short-term borrowings

1,421 

  

365 

  

2,482 

  

716 

Long-term debt

893 

  

926 

  

1,645 

  

1,688 

Total interest expense

5,823 

  

3,363 

  

10,729 

  

6,127 

Net interest income

9,456 

  

9,922 

  

19,085 

  

19,936 

Provision for loan losses

-- 

  

-- 

  

-- 

  

-- 

Net interest income after provision for loan losses

9,456 

  

9,922 

  

19,085 

  

19,936 

Noninterest income

              

Trust Company income

434 

  

414 

  

892 

  

835 

Service charges on deposits

1,234 

  

1,126 

  

2,347 

  

2,202 

Gain (loss) on sale of investments, net

-- 

  

23 

  

-- 

  

84 

Equity in losses of real estate limited partnerships

(424)

  

(420)

  

(847)

  

(850)

Other noninterest income

813 

  

740 

  

1,531 

  

1,366 

Total noninterest income

2,057 

  

1,883 

  

3,923 

  

3,637 

Noninterest expense

              

Salaries and employee benefits

4,058 

  

4,016 

  

8,126 

  

8,022 

Occupancy and equipment expenses

1,518 

  

1,563 

  

3,016 

  

3,181 

Legal and professional fees

578 

  

472 

  

1,115 

  

897 

Marketing expenses

359 

  

226 

  

699 

  

574 

Other noninterest expense

1,527 

  

1,537 

  

3,026 

  

3,096 

Total noninterest expense

8,040 

  

7,814 

  

15,982 

  

15,770 

Income before income taxes

3,473 

  

3,991 

  

7,026 

  

7,803 

Income taxes

802 

  

934 

  

1,633 

  

1,846 

Net income

$  2,671 

  

$3,057 

  

$  5,393 

  

$  5,957 

Ratios and Supplemental Information

              

Weighted average common shares outstanding

6,289,468 

  

6,316,227 

  

6,295,759 

  

6,322,872 

Weighted average diluted shares outstanding

6,315,204 

  

6,358,506 

  

6,321,584 

  

6,366,141 

Basic earnings per common share

$  0.42 

  

$  0.48 

  

$  0.85 

  

$  0.94 

Diluted earnings per common share

0.42 

  

0.48 

  

0.85

 

0.94 

Return on average assets

0.96%

  

1.15%

  

0.98%

  

1.13%

Return on average shareholders' equity

16.62%

  

18.89%

  

16.55%

  

18.29%

Net interest rate spread

3.29%

  

3.80%

  

3.42%

  

3.88%

Net interest margin

3.60%

  

3.99%

  

3.71%

  

4.06%

Efficiency ratio (1)

64.51%

  

61.36%

  

64.14%

  

62.15%
               

(1)

The efficiency ratio excludes amortization of intangibles, equity in losses of real estate limited partnerships, OREO expenses, gain/loss on sales of securities, state franchise taxes, and any significant nonrecurring items.

Note:

As of June 30, 2006, the Bank had off-balance sheet liabilities in the form of standby letters of credit to customers in the amount of $6.13 million.

<PAGE>