ITEM 2 PROPERTIES
The Company's principal banking subsidiary, CTC, operates banking facilities in 39 locations in Vermont. The offices of CTC are in good physical condition with modern equipment and facilities considered adequate to meet the banking needs of customers in the communities serviced.
The offices of the Company are located in the main office of the CTC, which occupied all of the five-floor Chittenden Building at Two Burlington Square in Burlington as of December 31, 1995. The Chittenden Building is owned by CTC.
BWM operates banking facilities in 3 locations in Massachusetts. The offices of BWM are in good physical condition with modern equipment and facilities consid- ered adequate to meet thebanking needs of customers in the communities serviced.
The Company continues to conduct business out of properties owned or leased by FBT in the area of Worcester, Massachusetts. Reference is made to The Company's Registration Statement No. 33-64527 on Form S-4 under the Securities Act of 1933, filed in connection with the Company's acquisition of FBT.
ITEM 3
ITEM 3 LEGAL PROCEEDINGS
A number of legal claims against the Company arising in the normal course of business were outstanding at December 31, 1995. Management, after reviewing these claims with legal counsel, is of the opinion that these matters, when resolved, will not have a material effect on the consolidated financial statements.
ITEM 4
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters.
PART II
ITEM 5
ITEM 5 MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Information regarding the market in which the Company's common stock is traded, and the quarterly high and low bid quotations for the Company's common stock during the past five years are included in the Company's 1995 Annual Report to Stockholders on page 57, and is attached hereto as Exhibit 13. The approximate number of stockholders at March 1, 1996 was 3,354. Note 8 of the Consolidated Financial Statements appearing on page 27 of the Company's 1995 Annual Report to Stockholders contains a discussion of restrictions on dividends and is attached hereto as Exhibit 13.
ITEM 6
ITEM 6 SELECTED FINANCIAL DATA
A five-year summary of selected consolidated financial data for the Company and its subsidiaries is included on page 39 of the Company's 1995 Annual Report to Stockholders and is attached hereto as Exhibit 13.
The Company consummated an acquisition of FBT on February 29, 1996. Reference is made to the Company's Registration Statement No. 33-64527 on Form S-4 under the Securities Act of 1933, filed in connection with the Company's acquisition of FBT, Worcester, Massachusetts.
ITEM 7
ITEM 7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Management's Discussion and Analysis of Financial Condition and Results of Operations is included on pages 40 to 54 of the Company's 1995 Annual Report to Stockholders and is attached hereto as Exhibit 13.
ITEM 8
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Company and its subsidiaries appear in the Company's 1995 Annual Report to Stockholders at the pages indicated and are attached hereto as Exhibit 13:
Report of Independent Public Accountants Page 38
Consolidated Balance Sheets at December 31, 1995 and 1994 Page 13
Consolidated Statements of Income for the Years Ended December 31, 1995, 1994, and 1993 Page 14
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1995, 1994, and 1993 Page 15
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994, and 1993 Page 16
Notes to Consolidated Financial Statements Pages 17-37
ITEM 9
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
Not Applicable
PART III
ITEM 10
ITEM 10 DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information regarding the directors and director-nominees of the Registrant is included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders at pages 5-11, and is specifically incorporated herein by reference.
At December 31, 1995, the principal officers of the Company and its principal subsidiary, CTC, with their ages, positions, and years of appointment, were as follows:
YEAR NAME AND AGE APPOINTED POSITIONS - --------------------------------------------------------------------------------
Barbara W. Snelling, 68 1990 Chair of the Company
Paul A. Perrault, 44 1990 President and Chief Executive Officer of the Company and Chittenden Trust
Lawrence W. DeShaw, 49 1990 Executive Vice President of the Company and Chittenden Trust
John W. Kelly, 46 1990 Executive Vice President of the Company and Chittenden Trust
Nancy Rowden Brock, 39 1984 Treasurer of the Company and Senior Vice President, Chief Financial Officer, and Treasurer of Chittenden Trust
F. Sheldon Prentice, 45 1985 Secretary of the Company and Senior Vice President, General Counsel, and Secretary of Chittenden Trust
John P. Barnes, 40 1990 Senior Vice President of the Company and Chittenden Trust
Danny H. O'Brien, 45 1990 Senior Vice President of the Company and Chittenden Trust
- --------------------------------------------------------------------------------
All of the current officers have been principally employed in executive positions with CTC for more than five years.
In accordance with the provisions of the Company's By-Laws, the officers, with the exception of the Secretary, hold office at the pleasure of the Board of Directors. The Secretary is elected annually by the Board of Directors.
ITEM 11
ITEM 11 EXECUTIVE COMPENSATION
Information regarding remuneration of the directors and officers of the Company is included in the Company's definitive Proxy Statement for the 1996 Annual Meeting of Stockholders at pages 11-19 and is specifically incorporated herein by reference.
ITEM 12
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information regarding the security ownership of directors and director-nominees of the Company, all directors and officers of the Company as a group, and certain beneficial owners of the Company's common stock, as of February 1, 1996, is included in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders, at pages 4-10, and is specifically incorporated herein by reference.
There are no arrangements known to the registrant which may, at a subsequent date, result in a change of control of the registrant.
ITEM 13
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and transactions between the Company and its Directors, Director-Nominees, Executive Officers, and family members of these individuals, is included in the Company's definitive Proxy Statement for its 1996 Annual Meeting of Stockholders at pages 10 and 21, and is specifically incorporated herein by reference.
PART IV
ITEM 14
ITEM 14 EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(l) FINANCIAL STATEMENTS
The following consolidated financial statements of the Company and its subsidiaries appear in the Company's 1995 Annual Report to Stockholders:
Report of Independent Public Accountants Page 38
Consolidated Balance Sheets at December 31, 1995 and 1994 Page 13
Consolidated Statements of Income for the Years Ended December 31, 1995, 1994, and 1993 Page 14
Consolidated Statements of Changes in Stockholders' Equity for the Years Ended December 31, 1995, 1994, and 1993 Page 15
Consolidated Statements of Cash Flows for the Years Ended December 31, 1995, 1994, and 1993 Page 16
Notes to Consolidated Financial Statements Pages 17-37
(2) FINANCIAL STATEMENT SCHEDULES
There are no financial statement schedules required to be included in this report.
(3) REPORTS ON FORM 8-K
A report was filed by the Company on Form 8-K December 13, 1995 in connection with the Company's acquisition of FBT so as to file with the Securities and Exchange Commission certain paper reports that would be incorporated by reference into its Registration Statement on Form S-4.
(4) EXHIBITS
The following are included as exhibits to this report:
3. By-Laws of the Company, as amended, incorporated herein by reference to Exhibit 3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1985.
3.01 Amendment to the By-Laws of the Company, dated February 16, 1988, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987.
3.02 Amendment to the By-Laws of the Company, dated January 17, 1990, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1989.
3.03 Amendment to the By-Laws of the Company, dated June 19, 1991, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1991.
3.04 Amendment to the By-Laws of the Company, dated November 15, 1995. CHANGED FROM: "A director elected to fill a vacancy shall hold office until the next regular election of directors." CHANGED TO: "A director elected to fill a vacancy shall hold office until the expiration of the term of the departed director who creates the vacancy."
3.1 Articles of Association of the Company, as amended, incorporated herein by reference to the Proxy Statement for the 1994 Annual Meeting of Stockholders.
4. Statement of the Company regarding its Dividend Reinvestment Plan is incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1993.
10.1 Directors' Deferred Compensation Plan, dated April 1972, as amended January 1, 1992, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1992.
10.2 Pension Plan of CTC, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, as amended on March 15, 1995 and December 20, 1995 and attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
10.3 Incentive Savings and Profit Sharing Plan, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1994, as amended on March 15, 1995 and attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1995.
10.4 The Company's Stock Option Plan, incorporated herein by reference to the Company's Proxy Statement in connection with the 1986 Annual Meeting of Stockholders.
10.5 The Company's Stock Option Plan, incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 1987.
10.6 The Company's Restricted Stock Plan, incorporated herein by reference to the Company's Proxy Statement in connection with the 1986 Annual Meeting of Stockholders.
10.7 Executive Management Incentive Compensation Plan, attached to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and is incorporated herein by reference.
10.8 The Company's Stock Incentive Plan, dated January 1, 1993, incorporated herein by reference to the Company's Proxy Statement for the 1993 Annual Meeting of Stockholders.
13. The Company's 1995 Annual Report to Stockholders.
21. List of subsidiaries of the Registrant.
23. Consent of Arthur Andersen LLP.
EXHIBITS
EXHIBIT 3.04 AMENDMENT TO THE BY-LAWS OF THE COMPANY
EXHIBIT 10.2 AMENDMENT NUMBER ONE
AMENDMENT NUMBER ONE TO THE PENSION PLAN FOR EMPLOYEES OF THE CHITTENDEN CORPORATION
(As Amended and Restated Effective January 1, 1989)
WHEREAS, Chittenden Corporation (the "Principal Employer") heretofore adopted the Pension Plan for Employees of The Chittenden Corporation (the "Plan"); and
WHEREAS, Article X permits the Principal Employer to amend the Plan from time to time; and
WHEREAS, the Principal Employer will acquire the Bank of Western Massachusetts (such date to be known as the "Acquisition Date"); and
WHEREAS, the Principal Employer intends to maintain the qualified retirement plans of the Bank of Western Massachusetts on and after the Acquisition Date;
NOW, THEREFORE, the Plan is hereby amended effective as of the Acquisition Date, as follows:
Section 3.1, "MEMBERSHIP" shall be amended by adding the following paragraph (d) immediately after paragraph (c) thereof:
"(d) Notwithstanding the foregoing, each Employee who is employed by the Bank of Western Massachusetts shall not be eligible for membership hereunder."
IN WITNESS WHEREOF, Chittenden Corporation has caused this amendment to be executed by its officer thereunto duly authorized and its corporate seal to be hereunto affixed as of the 15th day of March, 1995.
CHITTENDEN CORPORATION
BY: /s/ F. Sheldon Prentice, Esq. Secretary
CORPORATE SEAL
EXHIBIT 10.2 AMENDMENT NUMBER TWO
BOARD OF DIRECTORS RESOLUTION AUTHORIZING THE ADOPTION OF AMENDMENT NUMBER TWO TO THE PENSION PLAN FOR EMPLOYEES OF THE CHITTENDEN CORPORATION (As Amended and Restated Effective January 1, 1989)
WHEREAS, the Chittenden Corporation (the "Principal Employer") heretofore adopted the Pension Plan for Employees of the Chittenden Corporation (the "Plan"); and
WHEREAS, Article X permits the Principal Employer to amend the Plan at any time by means of a resolution of the Board of Directors;
WHEREAS, it is the desire of the Principal Employer to credit certain past service under the Plan;
NOW, THEREFORE, the Plan is amended effective January 1, 1995, as follows:
1. Section 3.3, ELIGIBILITY SERVICE, is amended by adding the following paragraph (f) to the end thereof:
"(f) Subject to the Break in Service provisions of Section 3.5, an Employee who terminates employment with the Employer and all Affiliated Companies on or after January 1, 1995, shall be credited with Eligibility Service in accordance with the provisions set forth in this Section 3.3 for periods of employment with the Employer or an Affiliated Company prior to December 1, 1976."
2. Section 3.4, BENEFIT SERVICE, is amended by adding the following paragraph (g) to the end thereof:
"(g) Subject to the Break in Service provisions of Section 3.5, a Member who terminates employment with the Employer on or after January 1, 1995, shall receive Benefit Service in accordance with the provisions set forth in this Section 3.4 for periods of employment with the Employer prior to December 1, 1976."
IN WITNESS WHEREOF, the Principal Employer has caused this instrument to be executed by its officer duly authorized and its corporate seal to be hereunto affixed as of the 20th day of December, 1995.
CHITTENDEN CORPORATION BY: /s/ Paul A. Perrault
ATTEST:
/s/ F. Sheldon Prentice
CORPORATE SEAL
EXHIBIT 10.2 AMENDMENT NUMBER THREE
BOARD OF DIRECTORS RESOLUTION AUTHORIZING THE ADOPTION OF PROPOSED AMENDMENT NUMBER THREE TO THE PENSION PLAN FOR EMPLOYEES OF THE CHITTENDEN CORPORATION (As Amended and Restated Effective January 1, 1989)
WHEREAS, Chittenden Corporation (the "Principal Employer") heretofore adopted the Pension Plan for Employees of The Chittenden Corporation (the "Plan"); and
WHEREAS, Article X permits the Principal Employer to amend the Plan at any time by means of a resolution of the Board of Directors; and
WHEREAS, the Internal Revenue Service (IRS) has requested that the Plan be amended in response to the Principal Employer's application for a letter of determination for the Plan;
NOW, THEREFORE, the following proposed amendments shall be effective January 1, 1989, and shall be adopted by the Board upon approval of the IRS:
Section 2.12, "COMPENSATION" shall be amended by deleting the last paragraph thereof and replacing it with the following:
"Effective for Plan Years beginning after December 31, 1988, Compensation taken in to account under the Plan shall not exceed $200,000 ($150,000 effective for Plan Years beginning after December 31, 1993) or such other amount as indexed pursuant to Sections 401(a)(17) and 415(d) of the Code. In any event, the Accrued Benefit of any Member determined in accordance with this provision shall not be less than the Accrued Benefit of such Member determined as of December 31, 1988, in accordance with the applicable provisions of the Plan as in effect on such date.
In determining the Compensation of an Employee for purposes of the Code Section 401(a)(17) limitation, the rules of Section 414(q)(6) of the Code shall apply; provided, however, that in applying such rules, the term "family" shall include only the spouse of the Employee and any lineal descendants of the Employee who have not attained age 19 before the close of the Plan Year.
If the Compensation of the Employee exceeds the Code Section 401(a)(17) limitation, then the Code Section 401(a)(17) limitation shall be prorated among the Compensation of the Employee and his family (as determined under this Section 2.12 prior to the application of the Code Section 401(a)(17) limitation) in proportion to each such individual's Compensation (as determined under the Section 2.12 prior to the application of the Code Section 401(a)(17) limitation)."
IN WITNESS WHEREOF, the Principal Employer has caused this instrument to be executed by is officer duly authorized and its corporate seal to be hereunto affixed as of the 20th day of December, 1995.
CHITTENDEN CORPORATION
BY: /s/ Paul A. Perrault
ATTEST:
/s/ F. Sheldon Prentice
CORPORATE SEAL
EXHIBIT 10.3 AMENDMENT NUMBER ONE
THE CHITTENDEN CORPORATION INCENTIVE SAVINGS AND PROFIT SHARING PLAN
(As Amended and Restated Effective January 1, 1989)
WHEREAS, Chittenden Corporation (the "Employer") heretofore adopted the Chittenden Corporation Incentive Savings and Profit Sharing Plan (the "Plan"); and
WHEREAS, Article XIII permits the Employer to amend the Plan from time to time; and
WHEREAS, the Employer will acquire the Bank of Western Massachusetts (such date to be known as the "Acquisition Date"); and
WHEREAS, the Employer intends to maintain the qualified retirement plans of the Bank of Western Massachusetts on and after the Acquisition Date;
NOW THEREFORE, the Plan is hereby amended effective as of the Acquisition Date, as follows:
Section 2.1, "ELIGIBILITY TO PARTICIPATE" shall be amended by adding the following paragraph immediately after paragraph (e) thereof:
"Notwithstanding the foregoing, each Employee who is employed by the Bank of Western Massachusetts shall not be considered an Eligible Employee hereunder."
IN WITNESS WHEREOF, Chittenden Corporation has caused this amendment to be executed by its officer thereunto duly authorized and its corporate seal to be hereunto affixed as of the 15th day of March, 1995.
CHITTENDEN CORPORATION
BY: /s/ F. Sheldon Prentice, Esq. Secretary
CORPORATE SEAL
EXHIBIT 13 CHITTENDEN'S 1995 ANNUAL REPORT HAS BEEN FILED AS AN EXHIBIT ATTACHED HERETO
EXHIBIT 21 LIST OF SUBSIDIARIES OF CHITTENDEN CORPORATION
Chittenden Trust Company, Vermont, d/b/a Chittenden Bank
The Bank of Western Massachusetts, Massachusetts
Chittenden Acquisition Bank, Massachusetts d/b/a Flagship Bank and Trust Company, is a Bank in formation to effectuate the acquisition of Flagship Bank and Trust Company.
EXHIBIT 23 CONSENT LETTER ARTHUR ANDERSEN LLP
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation of our report dated January 16, 1996, included in Chittenden Corporation's Form 10-K for the year ended December 31, 1995, into the Company's previously filed Registration Statement File No. 33-1229.
s/ARTHUR ANDERSEN LLP Boston, Massachusetts March 25, 1996