Chittenden — Merger or Acquisition (June 2007)
27 slides from Chittenden's merger presentation, Jun 27, 2007
Slide 1: Schedule 14A
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 14A Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant x Filed by a Party other than the Registrant ¨ Check the appropriate box: ¨ Preliminary Proxy
Slide 2: Filed by Chittenden Corporation Pursuant to Rule 14a-12
Filed by Chittenden Corporation Pursuant to Rule 14a-12 Under the Securities Exchange Act of 1934 This filing consists of a certain communication made in connection with the announcement of an Agreement and Plan of Merger, dated as of June 26, 2007, by and between Chittenden Corporation, a Vermont c
Slide 3: Building the Premier Regional Bank in the Northeast
P B C T Building the Premier Regional Bank in the Northeast June 27, 2007 1
Slide 4: Forward-Looking Statement
P B C Forward-Looking Statement T This presentation contains statements that may be considered forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward- looking statements are intended to be cover
Slide 5: Additional Information about this Transaction and Participants
P B C Additional Information about this Transaction and Participants in this Transaction T Additional Information About this Transaction In connection with the proposed merger, People’s United will file with the Securities and Exchange Commission (the “SEC”) a Registration Statement on Form S-4 that
Slide 6: Transaction Rationale
P B C Transaction Rationale T Strategically Compelling • Creates premier regional banking franchise in New England • Combines two high-performing banks with similar balance sheets and businesses • Provides size and scale for future growth Financially Attractive • IRR in excess of People’s United cos
Slide 7: Promises Made… Promises Kept
P B C Promises Made… Promises Kept T Contiguous or near-contiguous markets Bank-like balance sheet, business model and operating philosophy IRR above People’s United cost of capital Accretive to EPS in year 1 5
Slide 8: Key Deal Terms
P B C Key Deal Terms T Purchase Price per CHZ Share: $37.00(1) Consideration: 55% cash / 45% stock Pricing Formula: PBCT stock price (1)*1.95*0.45 + $37*0.55 Aggregate Purchase Price: $1.9 billion (2) Premium to Market: 31% (3) Approvals: Regulatory and Chittenden shareholders Termination Fee: $65 m
Slide 9: Pricing Multiples in Line
P B C Pricing Multiples in Line T Mean of Comparable PBCT / CHZ(2) Transactions (1) (3) Price / NTM EPS (x) 18.2 18.6 Price / Book Value (x) 2.2 2.6 Price / Tangible Book Value (x) 4.3 3.7 Core Deposit Premium (%) 26 31 Financial Performance CHZ Seller Average ROA (%) 1.26 1.08 ROE (%) 12.2 12.0 Not
Slide 10: Overview of Chittenden
P B C Overview of Chittenden T • Multi-bank holding company headquartered in Burlington, VT • 141 branches in VT, NH, MA, ME and CT through six bank subsidiaries(1) • Assets of $7.6 billion; deposits of $6.2 billion(1) • Three primary business lines: Commercial Banking, Community Banking, Wealth Man
Slide 11: Expanding Outside CT
P B C Expanding Outside CT T • Diversified footprint with 300+ 89 branches and $16 billion in deposits Burlington across six states NH % of VT Branches Deposits 91 Portland CT 160 62 93 VT 51 18 Bennington Manchester NH(1) 39 8 495 MA 20 7 MA Boston ME (1) 30 5 Worcester Springfield NY 1 - 84 CT RI
Slide 12: Entry into Attractive New Markets
P B Entry into Attractive New Markets C Projected Population Growth (%) (1) T 3.5 2.6 PBCT CHZ CHZ Deposits(2) Total Median Market ($Bn) Population Age Businesses Vermont 2.9 620,000 34 30,000 Southern NH / Seacoast 1.4 1,000,000+ 37 40,000 Greater Springfield 0.6 850,000 36 23,000 Greater Worcester
Slide 13: Compatible Operating Models
P B C Compatible Operating Models T • Low cost, stable core deposit funding • Emphasis on relationship-driven commercial lending • Strong liquidity position – minimal wholesale leverage • Disciplined loan and deposit pricing • Conservative underwriting standards • Focus on customer experience and co
Slide 14: Low Execution Risk
P B C Low Execution Risk T • Multi-bank operating structure to remain in place • Conservative cost savings assumptions • Revenue enhancements identified but not assumed in financial analysis • Experienced combined senior management team • Comprehensive due diligence performed • Compatible cultures a
Slide 15: Superior Profitability and Balance Sheet
P B C Superior Profitability and Balance Sheet(1) T Net Interest Margin (%) Return on Assets (%) 4.06 3.94 1.26 1.27 3.44 1.11 (2) CHZ PBCT Peers (2) CHZ PBCT Peers Borrowings / Assets (%) Loans / Deposits (%) 106.0 19.2 93.0 86.0 5.3 0.6 (2) (2) CHZ PBCT Peers CHZ PBCT Peers Notes: (1) At or for th
Slide 16: Low Cost Funding Sources
P B C Low Cost Funding Sources T People’s As a % of Total Funding (1) Chittenden United Peers(2) Noninterest-Bearing Deposits 16 23 11 Interest-Bearing Deposits 78 76 62 Borrowings 6 1 24 Cost of Funds 2.60 2.38 3.32 Advantage Over Peers 72bp 94bp – Notes: (1) Based on average balances for the quart
Slide 17: Conservative Financial Assumptions
P B C Conservative Financial Assumptions T • 55% cash / 45% stock consideration • Net income estimates based on I/B/E/S mean EPS • $38MM pre-tax cost-savings (approximately 18% of CHZ noninterest expense); 50% realized in 2008, 100% thereafter • After-tax restructuring charge of $38MM • Pre-tax cost
Slide 18: Illustrative Financial Impact – Significant Accretion
Illustrative Financial Impact – Significant Accretion 2007E with 100% ($MM, Except per Share Amounts) Cost Saves (Illustrative) PBCT Estimated EPS (Based on I/B/E/S)(1) 0.70 CHZ Estimated EPS (Based on I/B/E/S)(2) 1.92 PBCT Net Income 204 CHZ Net Income 96 Combined Net Income 300 Acquisition Adjustm
Slide 19: IRR Exceeds Cost of Capital
IRR Exceeds Cost of Capital Projections 2007 2008 2009 2010 2011 2012 Aggregate Price (1) (1,875) A/T Restructuring Charge (38) Net Income(2) 106 114 123 133 144 Dividends (3) 30 89 96 102 110 117 A/T Synergies 13 27 28 29 30 Terminal Value – Company (4) 2,139 Terminal Value – Synergies (4) 454 Tota
Slide 20: Conclusion: A Compelling Transaction
Conclusion: A Compelling Transaction • Diversifies franchise outside of Connecticut Expanding into New • Preserves strategic value – unique Northeast footprint Markets • Platform for additional de novo and acquisition-driven growth • Combines two high performing, commercial-oriented banks Meets All
Slide 21: Appendix
Appendix 19
Slide 22: Commercial Oriented Loan Mix
Commercial Oriented Loan Mix CHZ(2) PBCT Combined Loan Type (1) ($MM) (%) ($MM) (%) ($MM) (%) Residential Mortgage 976 18 3,764 40 4,740 32 Commercial 1,588 29 2,440 26 4,028 27 Commercial Real Estate 2,311 42 1,822 20 4,133 28 Consumer 662 12 1,285 14 1,947 13 Total 5,537 9,310 14,847 Notes: (1) At
Slide 23: Strong Core Deposit Base
Strong Core Deposit Base CHZ (2) PBCT Combined Deposit Type (1) ($MM) (%) ($MM) (%) ($MM) (%) Non-Interest-Bearing 993 16 2,333 23 3,326 21 Savings, Interest-Bearing 3,318 53 3,298 33 6,616 41 Checking and Money Market Time 1,913 31 3,695 37 5,608 35 Escrow Funds – – 643 6 643 4 Total Deposits 6,223
Slide 24: Conservative Credit Culture
Conservative Credit Culture Metric (1) CHZ PBCT Peers (2) Reserves / Loans (%) 1.34 0.80 1.00 Reserves / NPAs + 90s (%) 235 384 194 NCOs / Avg. Loans (%) 0.08 0.01 0.14 NPAs / Assets (%) 0.36 0.17 0.32 Notes: (1) At March 31, 2007; not pro forma for Merrill Merchants Bankshares which closed on 5/31/
Slide 25: Pro Forma Balance Sheet
Pro Forma Balance Sheet PBCT PBCT CHZ PBCT ($MM) 3/31/07 Adjustments Post-Conversion Standalone (3) Pro Forma Assets Securities and S-T Investments 1,286 2,976 4,262 1,225 4,429 Loans 9,310 9,310 5,537 14,847 Intangibles 105 105 395 1,646 Other Assets 902 20(1) 922 418 1,302 Total Assets 11,602 14,5
Slide 26: Exchange Ratio Illustration
Exchange Ratio Illustration Current PBCT Price 18.71 Pricing Formula = $37*0.55 + 0.45*1.95*PBCT average stock Purchase Price per Share 37.00 price 5 days prior to Closing Date % Stock 45.0 % Cash 55.0 Implied Exchange Value of Approximate Percent Approximate Percent Ratio for Hypothetical Considera
Slide 27: Peer Group Composition
Peer Group Composition • Peer group includes banks and thrifts with market values from $2 – 11Bn in the Northeast, Mid-Atlantic and Midwest regions (1) • Peer group members: – Sovereign Bancorp (Thrift) – Comerica (Bank) – Hudson City (Thrift) – Commerce Bancorp (Bank) – Huntington (Bank) – New York