<PAGE>
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 (Date of earliest event reported): January 24, 2000
CHITTENDEN CORPORATION
(Exact name of Registrant
as specified in charter)
Vermont 0-7974 03-0228404
(State or other (Commission (IRS Employer
jurisdiction of incorporation) File Number) Identification No.)
Two Burlington Square, Burlington, Vermont 05401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (802) 660-1410
Not Applicable
(Former name or former address,
if changed since last report)
<PAGE>
ITEM 5. OTHER EVENTS
On January 19, 2000, the Registrant announced that the Chittenden Corporation's
Board of Directors had authorized the repurchase of up to 2,000,000 shares of
the Corporation's common stock (approximately 7% of the Company's outstanding
Common Stock) in negotiated transactions or open market purchases. A copy of the
press release dated January 20, 2000 is attached as an exhibit to this Form 8-K.
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NUMBER PAGE NUMBER
(28) Additional Exhibits 5
Press Release related to announcement
of authorization to repurchase up to 2,000,000 shares
of the Company's common stock.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CHITTENDEN CORPORATION
(Registrant)
BY: /S/ F. Sheldon Prentice
Senior Vice President, General Counsel and Secretary
DATE: January 26, 2000
<PAGE>
EXHIBIT 28
[THE LETTER HEAD OF CHITTENDEN CORPORATION]
January 20, 2000
03/00
CHITTENDEN REPORTS EARNINGS, ANNOUNCES SHARE REPURCHASE AND QUARTERLY DIVIDEND
- ------------------------------------------------------------------------------
Burlington, VT -- Chittenden Corporation (NYSE:CHZ) Chairman, President and
Chief Executive Officer, Paul A. Perrault, today announced fourth quarter 1999
operating net income of $16.1 million compared to $13.0 million earned in the
same period last year. This represents $0.56 per diluted share, an increase of
22% compared to the $0.46 per diluted share earned in the fourth quarter of
1998. Operating earnings were $1.92 per diluted share for the year ended
December 31, 1999, an increase of 11% from the $1.73 for the same period last
year.
In making the announcement, Perrault said, "As expected, our systems passed into
Y2K uneventfully. We continue to make excellent progress integrating the
operations of VFSC into Chittenden and we have completed all but one of the
branch divestitures required as a condition of the approval of the merger. This
quarter's financial results are very encouraging as we approach the final steps
in the integration plan."
Mr. Perrault also announced that the Board of Directors has authorized the
repurchase of up to 2,000,000 shares of the Corporation's common stock
(approximately 7% of the Company's outstanding Common Stock) in negotiated
transactions or open market purchases. Chittenden, depending on market
conditions, may repurchase its Common Stock without further Board authorization
for two years and may effect any such purchases for Chittenden employee and
director compensation plans.
Chittenden also announced its quarterly dividend of $0.22 per share. The
dividend will be paid on February 18, 2000, to shareholders of record on
February 4, 2000.
The Company recorded net gains on the sale of Vermont National branches of
approximately $1.7 million in the third quarter and approximately $36.5 million
in the fourth quarter of 1999, as a result of the sale of one branch and sixteen
branches during those respective periods. The sales complete all but one of the
eighteen branches required to be divested as a condition of regulatory approval
of the VFSC acquisition. The remaining branch will be divested in the first
quarter of 2000. The net gain of $10.8 million consists of the net proceeds from
branch sales of $38.2 million less goodwill attributed to those branches of
$25.7 million and is reflected in the special charges line on the fourth quarter
income statement. After income taxes, the net loss recorded in the fourth
quarter as a result of the divestitures was $2.0 million. The magnitude of the
loss is caused by the non-deductibility for income tax purposes of the goodwill
allocation. Including the gains on the sale of the seventeen branches, net of
the associated goodwill allocation, net income for the fourth quarter of 1999
was $14.1 million, or $0.49 per diluted share.
- more -
<PAGE>
On May 28, 1999, Chittenden Corporation completed its acquisition of Vermont
Financial Services Corp. (VFSC) in a stock-for-stock merger. The acquisition has
been accounted for as a pooling of interests and accordingly, all financial data
has been restated to reflect the combined financial condition and results of
operations as if the acquisition had been in effect for all periods presented.
In the second quarter of 1999, the Company recorded $71 million (pre-tax) of
special charges. Merger related charges totaled $49.9 million on a pre-tax
basis. These merger expenses included conversion, severance and transaction
costs, such as legal, advisory and accounting fees, and write offs of disposed
fixed assets. Additionally, impaired goodwill, related to VFSC's purchase of
Eastern Bancorp, totaling approximately $21.1 million was written off as a
result of the divestitures required by the U.S. Department of Justice and
Federal Reserve. Net special charges for the year consist of the $71 million
recorded in the second quarter, plus the $25.7 million of goodwill allocated to
the branches sold in the fourth quarter, less the $38.2 million in gains
recorded upon the sale of those branches, for a total of $58.5 million. As a
result of these special charges, Chittenden's net loss for the year was $2.5
million or $0.09 per diluted share.
The net interest margin for the fourth quarter of 1999 was 4.76%, compared with
4.60% in the same period of 1998, and 4.73% for the third quarter of 1999. Net
interest income was $43.8 million for the fourth quarter of 1999 and $44.0
million for the fourth quarter of 1998. The decrease in net interest income from
the fourth quarter of 1998 was attributed primarily to lower levels of earning
assets resulting from branch sales which occurred during 1999. For the year
ended December 31, 1999, net interest income was $175.0 million, compared with
$173.7 million in 1998. The net interest margin for the year ended December 31,
1999 was 4.67%, compared with 4.71% for the 1998 period.
Noninterest income amounted to $15.6 million for the fourth quarter of 1999 and
$64.2 million for the year ended December 31, 1999, down from $16.7 million and
$66.7 million for the same periods last year. The $1.1 million decline in
operating noninterest income for the fourth quarter of 1999 was primarily
attributable to reductions in gains on sales of mortgage loans related to lower
volumes due to higher interest rates. The $2.5 million decline in operating
noninterest income for the year was also primarily attributable to reductions in
gains on sales of mortgage loans.
Operating noninterest expenses were $33.4 million for the fourth quarter of
1999, and $145.5 million for the year ended December 31, 1999. These amounts
were 14% and 5%, respectively, lower than the same periods for the previous
year. The reduction in noninterest expense was due to lower levels of
amortization of intangibles resulting from the writedown of goodwill related to
the merger, reduced compensation expense caused by lower staffing levels, and
reduced depreciation expense related to duplicative fixed assets written off as
a result of the merger.
- more -
<PAGE>
The operating return on average equity was 17.80% for the fourth quarter of
1999, compared with 13.18% in the same quarter of 1998. For the year ended
December 31, 1999, operating return on average equity was 14.69%, compared with
13.05% for the same period last year. The operating return on average assets
for the fourth quarter of 1999 was 1.60%, up from 1.23% for the fourth quarter
of 1998. For the year ended December 31, 1999, the operating return on average
assets was 1.34%, up from 1.22% a year ago. The increases in operating ROE were
attributable to higher levels of operating net income and lower levels of
average stockholders equity in the third and fourth quarters of 1999, which
resulted from the one-time merger related charges taken in the second quarter,
as well as to the write off of goodwill associated with branches divested in the
fourth quarter of 1999.
The allowance for possible loan losses was $41.1 million at December 31, 1999,
down slightly from $41.2 million a year ago, and up from $40.8 million at
September 30, 1999. Nonperforming assets were $9.6 million at December 31,
1999, down substantially from $19.7 million at December 31, 1998 and $12.1
million at the end of the third quarter of 1999. Net charge-off activity totaled
$1.9 million for the fourth quarter of 1999 and $1.6 million for the fourth
quarter of 1998. For the year ended December 31, 1999 net charge-off activity
totaled $8.8 million compared to $12.7 million for the comparable period in 1998
or 0.30% and 0.46%, respectively, of average loans for the periods.
Chittenden is a bank holding company with total assets of $3.8 billion at
December 31, 1999. Its subsidiary banks are Chittenden Bank, Vermont National
Bank, The Bank of Western Massachusetts, and Flagship Bank and Trust Company. It
also operates under the names First Savings of New Hampshire, Mortgage Service
Center of New England, The Pomerleau Agency, 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.
<PAGE>
CHITTENDEN CORPORATION
SELECTED FINANCIAL DATA
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
<TABLE>
<CAPTION>
Restated
Period End Balance Sheet Data 12/31/99 9/30/99 12/31/98
- ----------------------------- -------- ------- --------
<S> <C> <C> <C>
Cash and Cash Equivalents $ 150,415 $ 257,711 $ 267,999
Securities 666,350 778,517 1,013,049
Loans:
Commercial 495,120 524,813 480,747
Municipal 90,148 119,673 99,727
Real Estate:
Residential 1,070,389 1,107,197 1,155,301
Commercial 641,660 654,040 574,178
Construction 55,329 57,156 68,133
---------------------------------------------------------------
Total Real Estate 1,767,378 1,818,393 1,797,612
Consumer 546,010 502,866 414,887
---------------------------------------------------------------
Total Loans 2,898,656 2,965,745 2,792,973
Less: Allowance for Possible Loan Losses (41,079) (40,844) (41,209)
---------------------------------------------------------------
Net Loans 2,857,577 2,924,901 2,751,764
Other Real Estate Owned 416 695 1,870
Goodwill 18,470 44,706 69,227
Other Assets 134,069 157,165 152,398
---------------------------------------------------------------
Total Assets $ 3,827,297 $ 4,163,695 $ 4,256,307
===============================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits:
Demand $ 532,120 $ 599,679 $ 614,729
Money Market and Savings 1,807,843 2,005,395 2,032,717
Certificates of Time less than $100,000 649,051 770,208 834,709
And Other Time Deposits
Certificates of Time $100,000 and Over 215,084 220,177 198,090
---------------------------------------------------------------
Total Deposits 3,204,098 3,595,459 3,680,245
Short-Term Borrowings 197,072 144,659 135,913
Accrued Expenses and Other Liabilities 63,814 67,782 48,587
---------------------------------------------------------------
Total Liabilities 3,464,984 3,807,900 3,864,745
Total Stockholders' Equity 362,313 355,795 391,562
---------------------------------------------------------------
Total Liabilities and Stockholders' Equity $ 3,827,297 $ 4,163,695 $ 4,256,307
===============================================================
Book Value per Common Share $12.77 $12.56 $14.02
Common Shares Outstanding 28,378,232 28,318,356 27,937,069
Credit Quality Data
- -------------------
Nonperforming Assets (including OREO) $ 9,588 $ 12,092 $ 19,735
90 days past due and still accruing 5,016 5,881 4,184
Nonperforming Assets to Loans Plus OREO 0.33% 0.41% 0.71%
Allowance to Loans 1.42% 1.38% 1.47%
Allowance to Nonperforming Loans (excluding OREO) 447.87% 358.38% 230.66%
QTD Average Balance Sheet Data
- ------------------------------
Loans, Net $ 2,874,550 $ 2,927,911 $ 2,783,411
Earning Assets 3,695,548 3,816,991 3,865,454
Total Assets 3,974,688 4,114,776 4,204,429
Deposits 3,377,295 3,594,198 3,616,573
Stockholders' Equity 358,098 323,140 389,405
</TABLE>
Prior periods have been restated to reflect the acquisition of Vermont Financial
Services Corp.
4
<PAGE>
CHITTENDEN CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In Thousands, except for ratios, shares and per share amounts)
<TABLE>
<CAPTION>
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
1999 1998 1999 1998
---- ---- ---- ----
Restated Restated
<S> <C> <C> <C> <C>
Interest Income:
Interest on Loans $ 59,266 $ 59,116 $ 233,059 $ 237,172
Interest on Investments 11,907 16,202 55,157 62,693
------------------------------------ ------------------------------
Total Interest Income 71,173 75,318 288,216 299,865
------------------------------------ ------------------------------
Interest Expense:
Deposits 25,349 29,312 106,364 117,468
Short-term Borrowings 2,070 1,962 6,871 8,691
------------------------------------ ------------------------------
Total Interest Expense 27,419 31,274 113,235 126,159
Net Interest Income 43,754 44,044 174,981 173,706
Provision for Possible Loan Losses 2,175 1,275 8,700 8,235
------------------------------------ ------------------------------
Net Interest Income after Provision
for Possible Loan Losses 41,579 42,769 166,281 165,471
------------------------------------ ------------------------------
Noninterest Income:
Investment Management and Trust Income 3,485 3,409 14,290 12,913
Service Charges on Deposit Accounts 3,997 4,944 17,534 19,785
Mortgage Servicing Income 1,114 841 3,589 3,274
Gains on Sales of Mortgage Loans, Net 1,115 2,015 5,254 7,734
Credit Card Income, Net 1,598 1,416 6,248 6,114
Insurance Commissions, Net 744 477 2,538 2,878
Securities Gains - 429 - 785
Other 3,583 3,199 14,773 13,211
------------------------------------ ------------------------------
Total Noninterest Income 15,636 16,730 64,226 66,694
------------------------------------ ------------------------------
Noninterest Expense:
Salaries and Employee Benefits 17,628 19,462 74,877 76,977
Net Occupancy Expense 4,933 6,364 23,452 25,248
Other Real Estate Owned, Expense, Net (395) (156) (147) 472
Amortization of Intangibles 547 1,467 4,023 5,895
Special Charges (10,785) - 58,472 -
Other 10,675 11,868 43,252 43,955
------------------------------------ ------------------------------
Total Noninterest Expense 22,603 39,005 203,929 152,547
------------------------------------ ------------------------------
Income Before Income Taxes 34,612 20,494 26,578 79,618
Income Tax Expense 20,535 7,490 29,074 29,840
------------------------------------ ------------------------------
Net Income (Loss) $ 14,077 $ 13,004 $ (2,496) $ 49,778
==================================== ==============================
Weighted Average Common Shares Outstanding 28,351,377 27,924,260 28,172,425 28,322,911
Weighted Average Common and
Common Equivalent Shares Outstanding 28,788,077 28,390,496 28,635,839 28,830,483
Earnings Per Share, Basic $ 0.50 $ 0.47 $ (0.09) $ 1.76
Earnings Per Share, Diluted 0.49 0.46 (0.09) 1.73
Dividends Per Share 0.22 0.18 0.81 0.69
Operating Net Income $ 16,068 $ 13,004 $ 54,909 $ 49,778
Operating Earnings Per Share, Basic 0.57 0.47 1.95 1.76
Operating Earnings Per Share, Diluted 0.56 0.46 1.92 1.73
Operating Return on Average Equity 17.80% 13.18% 14.69% 13.05%
Operating Return on Average Assets 1.60% 1.23% 1.34% 1.22%
Net Yield on Earning Assets 4.76% 4.60% 4.67% 4.71%
</TABLE>
Prior periods have been restated to reflect the acquisition of Vermont Financial
Services Corp.
5
