LAKEVILLE, Conn., April 24, 2015 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc. ("Salisbury"), NASDAQ Capital Market: (Nasdaq:SAL), the holding company for Salisbury Bank and Trust Company (the "Bank"), announced results for its first quarter ended March 31, 2015.
Net income available to common shareholders was $2,194,000, or $0.81 per common share, for the first quarter ended March 31, 2015 (first quarter 2015), compared with $196,000, or $0.10 per common share, for the fourth quarter ended December 31, 2014 (fourth quarter 2014), and $505,000, or $0.29 per common share, for the first quarter ended March 31, 2014 (first quarter 2014).
Selected First Quarter 2015 Financial Highlights
As a result of the acquisition being completed in December 2014, the results of Riverside's 2014 stand-alone operations are not reflected in the Salisbury information presented below.
- Earnings per common share of $0.81 increased $0.71 versus fourth quarter 2014, and increased $0.52, versus first quarter 2014. The fourth quarter 2014 and first quarter 2014 included certain one-time expenses incurred in conjunction with strategic initiatives of $1,100,000 and $287,000 (after taxes), respectively. Excluding one-time expenses for fourth quarter 2014 and first quarter 2014, current earnings per share would have increased $0.13 and $0.35, respectively.
- The net interest margin of 4.11% increased 43 basis points versus 3.68% for the fourth quarter 2014 and increased 39 basis points versus 3.72% for the first quarter 2014. Net loans receivable increased $3.4 million or 0.5% during the first calendar quarter of 2015 to $676.7 million, which reflects an increase of $230.2 million or 51.6%, from the end of the first quarter of 2014. The year-over-year increase includes $196.3 million of loans, recorded at fair value acquired, as a result of Salisbury's acquisition of Riverside Bank, completed in the fourth quarter 2014. The fair value adjustment represents the adjustment of the book value of acquired loans to their estimated fair value based on current interest rates and expected cash flows. These adjustments include an estimate of expected loan loss inherent in the acquired portfolio. Loans that met the criteria and are being accounted for in accordance with ASC 310-30 had an acquisition date book value of $13.7 million. Non-impaired loans not accounted for under ASC 310-30 had an acquisition date book value of $190.7 million.
- Tax equivalent net interest income increased $2.2 million, or 36.4%, versus fourth quarter 2014, and increased $3.1 million, or 61.4%, versus first quarter 2014.
Richard J. Cantele, Jr., President and Chief Executive Officer, stated, "Salisbury Bank posted solid first quarter results, benefited by the fourth quarter merger with Riverside Bank. A stronger balance sheet and synergies achieved as a result of the merger were the primary drivers of those results. First quarter earnings also benefited from the $483,000 recovery of a previously charged off loan.
"Non-performing assets increased primarily as the result of two relationships migrating into the non-performing category during the quarter. Both of these relationships are secured by real estate, and both are continuing to make payments. We are working with the principals to reach resolution.
"Our team has made significant progress in the months following the merger, in terms of integrating staff, customers and systems. I expect our focus to remain on the successful integration of our companies over the next few quarters. We have simultaneously focused on increasing our commercial market presence in the Hudson Valley and delivering our residential mortgage and wealth management services, previously not offered by Riverside, to our customers."
Net-Interest Income
Tax equivalent net interest income for first quarter 2015 increased $2.2 million, or 36.4%, versus fourth quarter 2014, and increased $3.1 million or 61.4%, versus first quarter 2014. Average earning assets increased $149.7 million versus fourth quarter 2014, and increased $253.0 million versus first quarter 2014. Average total interest bearing deposits increased $101.0 million versus fourth quarter 2014 and increased $165.8 million versus first quarter 2014. The net interest margin of 4.11% increased 43 basis points versus 3.68% for the fourth quarter 2014 and increased 39 basis points versus 3.72% for the first quarter 2014.
Non-Interest Income
Non-interest income for first quarter 2015 increased $317,000 versus fourth quarter 2014 and increased $458,000 versus first quarter 2014. Trust and wealth advisory revenues increased $36,000 versus fourth quarter 2014 and increased $43,000 versus first quarter 2014. The increase is the result of higher estate fees collected in first quarter 2015, partially offset by a slight decrease in managed assets. Service charges and fees increased $66,000 versus fourth quarter 2014 and increased $189,000 versus first quarter 2014. The increases were a result of higher fees due to increased transactional volume, mainly attributable to the assumption of Riverside Bank deposits. Income from sales and servicing of mortgage loans increased $73,000 versus fourth quarter 2014 and increased $83,000 versus first quarter 2014 due to an increase in servicing values as a result of a decline in projected prepayment rates. First quarter 2015 mortgage loans sales totaled $2.1 million versus $0.9 million for fourth quarter 2014 and $0.5 million for first quarter 2014. First quarter 2015, fourth quarter 2014, and first quarter 2014 included a mortgage servicing valuation impairment benefit/(charge) of $9,000, ($1,000), and $11,000, respectively. Gain on sale of securities for the quarter totaled $175,000. No gains were recognized in either the fourth or first quarters of 2014. Other income includes bank owned life insurance income and rental income.
Non-Interest Expense
Non-interest expense for first quarter 2015 decreased $17,000 versus fourth quarter 2014 and increased $1.7 million versus first quarter 2014. Total compensation expense increased $53,000 versus fourth quarter 2014 as a result of higher salary and payroll tax expense offset by lower employee benefit costs. The total compensation expenses year-over-year increase of $960,000 is mainly attributable to increased staffing levels primarily as a result of the Riverside acquisition, mix, and annual increases.
Premises and equipment decreased $80,000 versus fourth quarter 2014 and increased $235,000 versus first quarter 2014. The increase in expense was related to the addition of branch facilities acquired as a result of the Riverside Bank acquisition, the Sharon, Connecticut branch acquisition, and the opening of a new branch in 2014 in Great Barrington, Massachusetts, as well as technology upgrades and seasonally influenced fuel and utility costs.
Data processing decreased $90,000 versus fourth quarter 2014 and increased $75,000 versus first quarter 2014 mainly due to core conversion expenses in fourth quarter 2014 related to the Riverside merger and a change in trust account tax preparation accruals for trust accounts in first quarter 2015.
Professional fees, including merger and acquisition related expenses, decreased $225,000 versus fourth quarter 2014, and increased $31,000 versus first quarter 2014. Fourth quarter 2014 expenses included consulting and legal fees related to the Riverside merger.
Loan related expenses increased $84,000 versus fourth quarter 2014 and increased $109,000 versus first quarter 2014. The comparative increase to both quarters was mainly due to the write-down and increased expense for delinquent real estate taxes associated with OREO properties in first quarter 2015.
The effective income tax rates for first quarter 2015, fourth quarter 2014 and first quarter 2014 were 29.90%, 15.41% and 28.07%, respectively.
Loans
Net loans receivable increased $3.4 million during first quarter 2015 to $676.7 million at March 31, 2015, compared with $673.3 million at December 31, 2014, and increased $230.2 million compared with $446.5 million at March 31, 2014. The year-over-year increase includes loans acquired with a fair value of $196.3 million from the Riverside Bank transaction completed in the fourth quarter 2014.
Asset Quality
Non-performing assets increased $4.0 million during first quarter 2015 to $14.9 million, or 1.7% of assets at March 31, 2015, from $10.9 million, or 1.3% of assets at December 31, 2014, and increased $6.3 million from $8.5 million, or 1.5% of assets, at March 31, 2014.
The amount of total impaired and potential problem loans improved to $30.9 million (4.53% of gross loans receivable) during first quarter 2015, compared to $31.7 million, or 4.67% of gross loans receivable at December 31, 2014, and increased $6.3 million from $24.6 million, or 5.46% of gross loans receivable at March 31, 2014.
Accruing loans receivable 30-to-89 days past due increased $1.4 million during first quarter 2015 to $5.6 million, or 0.82% of gross loans receivable, from $4.1 million, or 0.61% of gross loans receivable at December 31, 2014, and increased $1.5 million versus March 31, 2014.
Provision for loan loss expense for the quarter was negative and reflects recoveries of $460,000 for first quarter 2015 versus provision expense of $165,000 for fourth quarter 2014 and $337,000 for first quarter 2014. Excluding these recoveries, provision expense would have been approximately $260,000 for the first quarter 2015. Net loan recoveries were $24,000 for the first quarter 2015, while there were net charge-offs of $190,000 and $127,000 for fourth quarter 2014 and first quarter 2014, respectively. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 0.76% for the first quarter 2015, versus 0.79% for fourth quarter 2014 and 1.09% for first quarter 2014.
Salisbury endeavors to work constructively to resolve its non-performing loan issues with customers. Substantially all non-performing loans are collateralized with real estate and the repayment of such loans is largely dependent on the return of such loans to performing status or the liquidation of the underlying real estate collateral.
Capital
Both Salisbury and the Bank's regulatory capital ratios remain in compliance with regulatory "well capitalized" requirements. At March 31, 2015, Salisbury's Tier 1 leverage and total risk-based capital ratios were 10.14% and 14.09%, respectively. The Bank's Tier 1 leverage and total risk-based capital ratios were 9.13% and 12.98%, respectively, compared with regulatory "well capitalized" minimums of 5.00% and 10.00%, respectively. March 31, 2015 risk based capital information is presented on estimated data and incorporates the implementation of Basel III.
At March 31, 2015, Salisbury's assets totaled $865 million. Book value and tangible book value per common share were $31.96 and $26.33, respectively. Tangible book value excludes goodwill and core deposit intangibles.
In August 2011, Salisbury received $16 million of capital from the U.S. Treasury's Small Business Lending Fund (the "SBLF") program. The SBLF program was established to encourage lending to small businesses by providing Tier 1 capital to qualified community banks with assets of less than $10 billion. To date, Salisbury has used this capital to increase its portfolio of qualified small business loans by $42.6 million and to augment its regulatory capital ratios.
First Quarter 2015 Dividends on Common Shares
The Board of Directors of Salisbury declared a $0.28 per common share quarterly cash dividend at their April 24, 2015 meeting. The dividend will be paid on May 29, 2015 to shareholders of record as of May 15, 2015.
Background
Salisbury Bancorp, Inc. is the parent company of Salisbury Bank and Trust Company, a Connecticut chartered commercial bank serving the communities of northwestern Connecticut and proximate communities in New York and Massachusetts, since 1848, through full service branches in Canaan, Lakeville, Salisbury and Sharon, Connecticut; Great Barrington, South Egremont and Sheffield, Massachusetts; and Dover Plains, Fishkill, Millerton, Newburgh, Poughkeepsie, and Red Oaks Mill, New York. The Bank offers a full complement of consumer and business banking products and services as well as trust and wealth advisory services.
Forward-Looking Statements
Statements contained in this news release contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and expectations of management as well as the assumptions and estimates made by management using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions, including among others: changes in market interest rates and general and regional economic conditions; changes in government regulations; changes in accounting principles; and the quality or composition of the loan and investment portfolios and other factors that may be described in Salisbury's quarterly reports on Form 10-Q and its annual report on Form 10-K, each filed with the Securities and Exchange Commission, which are available at the Securities and Exchange Commission's internet website (www.sec.gov) and to which reference is hereby made. Therefore, actual future results may differ materially from results discussed in the forward-looking statements.
Salisbury Bancorp, Inc. and Subsidiary | ||
CONSOLIDATED BALANCE SHEETS | ||
(in thousands, except share data) |
March 31, 2015 (unaudited) |
December 31, 2014 |
ASSETS | ||
Cash and due from banks | $ 15,094 | $ 13,280 |
Interest bearing demand deposits with other banks | 37,806 | 22,825 |
Total cash and cash equivalents | 52,900 | 36,105 |
Securities | ||
Available-for-sale at fair value | 81,179 | 91,312 |
Federal Home Loan Bank of Boston stock at cost | 3,515 | 3,515 |
Loans held-for-sale | 328 | 568 |
Loans receivable, net (allowance for loan losses: $5,182 and $5,358) | 676,734 | 673,330 |
Other real estate owned | 875 | 1,002 |
Bank premises and equipment, net | 14,261 | 14,431 |
Goodwill | 12,552 | 12,552 |
Intangible assets (net of accumulated amortization: $2,427 and $2,258) | 2,821 | 2,990 |
Accrued interest receivable | 2,356 | 2,334 |
Cash surrender value of life insurance policies | 13,406 | 13,314 |
Deferred taxes | 2,569 | 2,428 |
Other assets | 1,541 | 1,546 |
Total Assets | $ 865,037 | $ 855,427 |
LIABILITIES and SHAREHOLDERS' EQUITY | ||
Deposits | ||
Demand (non-interest bearing) | $ 163,387 | $ 161,386 |
Demand (interest bearing) | 115,099 | 117,169 |
Money market | 173,492 | 174,274 |
Savings and other | 131,794 | 121,387 |
Certificates of deposit | 141,138 | 141,210 |
Total deposits | 724,910 | 715,426 |
Repurchase agreements | 3,278 | 4,163 |
Federal Home Loan Bank of Boston advances | 28,403 | 28,813 |
Capital lease liability | 423 | 424 |
Accrued interest and other liabilities | 4,812 | 4,780 |
Total Liabilities | 761,826 | 753,606 |
Shareholders' Equity | ||
Preferred stock -- $.01 per share par value | ||
Authorized: 25,000; Issued: 16,000 (Series B); | ||
Liquidation preference: $1,000 per share | 16,000 | 16,000 |
Common stock -- $.10 per share par value | ||
Authorized: 5,000,000 and 3,000,000; | ||
Issued: 2,728,516 and 2,720,766 | 273 | 272 |
Paid-in capital | 41,231 | 41,077 |
Retained earnings | 44,110 | 42,677 |
Unearned compensation - restricted stock awards | (271) | (313) |
Accumulated other comprehensive income | 1,868 | 2,108 |
Total Shareholders' Equity | 103,211 | 101,821 |
Total Liabilities and Shareholders' Equity | $ 865,037 | $ 855,427 |
Salisbury Bancorp, Inc. and Subsidiary | ||
CONSOLIDATED STATEMENTS OF INCOME (unaudited) | ||
Periods ended March 31, | Three months ended | |
(in thousands, except per share amounts) | 2015 | 2014 |
Interest and dividend income | ||
Interest and fees on loans | $7,922 | $4,596 |
Interest on debt securities | ||
Taxable | 326 | 381 |
Tax exempt | 390 | 445 |
Other interest and dividends | 33 | 21 |
Total interest and dividend income | 8,671 | 5,443 |
Interest expense | ||
Deposits | 444 | 351 |
Repurchase agreements | 1 | 1 |
Capital lease | 18 | 18 |
Federal Home Loan Bank of Boston advances | 282 | 298 |
Total interest expense | 745 | 668 |
Net interest and dividend income | 7,926 | 4,775 |
(Benefit) provision for loan losses | (200) | 337 |
Net interest and dividend income after (benefit) provision for loan losses | 8,126 | 4,438 |
Non-interest income | ||
Gains on sales of available-for-sale securities, net | 175 | -- |
Trust and wealth advisory | 822 | 779 |
Service charges and fees | 731 | 542 |
Gains on sales of mortgage loans, net | 94 | 11 |
Mortgage servicing, net | (40) | 28 |
Other | 114 | 78 |
Total non-interest income | 1,896 | 1,438 |
Non-interest expense | ||
Salaries | 2,540 | 1,844 |
Employee benefits | 1,005 | 741 |
Premises and equipment | 908 | 673 |
Data processing | 474 | 399 |
Professional fees | 650 | 358 |
Collections and OREO | 244 | 135 |
FDIC insurance | 198 | 98 |
Marketing and community support | 110 | 113 |
Amortization of core deposit intangibles | 169 | 56 |
Merger and acquisition related expenses | -- | 261 |
Other | 537 | 432 |
Total non-interest expense | 6,835 | 5,110 |
Income before income taxes | 3,187 | 766 |
Income tax provision | 953 | 215 |
Net income | $2,234 | $551 |
Net income available to common shareholders | $2,194 | $505 |
Basic earnings per common share | $0.81 | $0.29 |
Diluted earnings per common share | 0.80 | 0.29 |
Common dividends per share | 0.28 | 0.28 |
Salisbury Bancorp, Inc. and Subsidiary | |||||
SELECTED CONSOLIDATED FINANCIAL DATA (unaudited) | |||||
At or for the three month periods ended | |||||
(in thousands, except per share amounts and ratios) | Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 |
Total assets | $865,037 | $855,427 | $638,089 | $621,476 | $589,771 |
Loans receivable, net | 676,734 | 673,330 | 461,913 | 456,627 | 446,518 |
Total securities | 84,694 | 94,827 | 88,960 | 92,884 | 98,015 |
Deposits | 724,910 | 715,426 | 522,294 | 507,361 | 477,512 |
FHLBB advances | 28,403 | 28,813 | 29,218 | 29,619 | 30,017 |
Shareholders' equity | 103,211 | 101,821 | 75,516 | 75,000 | 74,001 |
Wealth assets under management | 384,574 | 385,316 | 416,510 | 429,093 | 439,951 |
Non-performing loans | 14,000 | 9,890 | 8,611 | 8,379 | 8,149 |
Non-performing assets | 14,875 | 10,892 | 8,945 | 8,757 | 8,527 |
Accruing loans past due 30-89 days | 5,564 | 4,128 | 1,294 | 2,306 | 4,021 |
Net interest and dividend income | 7,926 | 5,717 | 4,754 | 4,905 | 4,775 |
Net interest and dividend income, tax equivalent | 8,238 | 6,038 | 5,075 | 5,227 | 5,104 |
(Benefit) provision for loan losses | (200) | 165 | 318 | 314 | 337 |
Non-interest income | 1,896 | 1,579 | 1,553 | 1,682 | 1,438 |
Non-interest expense | 6,835 | 6,852 | 5,108 | 5,068 | 5,110 |
Income before income taxes | 3,187 | 279 | 881 | 1,205 | 766 |
Income tax provision | 953 | 43 | 113 | 239 | 215 |
Net income | 2,234 | 236 | 768 | 966 | 551 |
Net income available to common shareholders | 2,194 | 196 | 728 | 926 | 505 |
Per share data | |||||
Basic earnings per common share | $0.81 | $0.10 | $0.43 | $0.54 | $0.29 |
Diluted earnings per common share | 0.80 | 0.10 | 0.43 | 0.54 | 0.29 |
Dividends per common share | 0.28 | 0.28 | 0.28 | 0.28 | 0.28 |
Book value per common share | 31.96 | 31.54 | 34.74 | 34.44 | 33.90 |
Tangible book value per common share - Non-GAAP(1) | 26.33 | 25.84 | 28.50 | 28.15 | 27.85 |
Common shares outstanding at end of period | 2,729 | 2,721 | 1,713 | 1,713 | 1,711 |
Weighted average common shares outstanding, to calculate basic earnings per share | 2,699 | 1,977 | 1,693 | 1,691 | 1,691 |
Weighted average common shares outstanding, to calculate diluted earnings per share | 2,716 | 1,981 | 1,693 | 1,691 | 1,691 |
Profitability ratios | |||||
Net interest margin (tax equivalent) | 4.11% | 3.68% | 3.39% | 3.74% | 3.72% |
Efficiency ratio(2) | 65.45 | 77.84 | 75.92 | 72.35 | 77.11 |
Non-interest income to operating revenue | 17.84 | 21.65 | 24.62 | 25.54 | 23.14 |
Effective income tax rate | 29.9 | 15.41 | 12.82 | 19.85 | 28.07 |
Return on average assets | 1.03 | 0.11 | 0.45 | 0.62 | 0.35 |
Return on average common shareholders' equity | 10.22 | 1.18 | 4.85 | 6.32 | 3.53 |
Credit quality ratios | |||||
Net charge-offs to average loans receivable, gross | -0.01% | 0.14% | 0.03% | 0.09% | 0.12% |
Non-performing loans to loans receivable, gross | 2.05 | 1.46 | 1.84 | 1.82 | 1.81 |
Accruing loans past due 30-89 days to loans receivable, gross | 0.82 | 0.61 | 0.28 | 0.50 | 0.89 |
Allowance for loan losses to loans receivable, gross | 0.76 | 0.79 | 1.15 | 1.11 | 1.09 |
Allowance for loan losses to non-performing loans | 37.02 | 54.18 | 62.52 | 60.89 | 60.05 |
Non-performing assets to total assets | 1.72 | 1.27 | 1.40 | 1.41 | 1.45 |
Capital ratios | |||||
Common shareholders' equity to assets | 10.08% | 10.03% | 9.33% | 9.49% | 9.83% |
Tangible common shareholders' equity to tangible assets - Non-GAAP(1) | 8.45 | 8.37 | 7.78 | 7.90 | 8.22 |
Tier 1 leverage capital | 10.14 | 12.31 | 9.85 | 10.50 | 10.65 |
Total risk-based capital(3) | 14.09 | 14.29 | 16.27 | 16.11 | 16.42 |
(1) Refer to schedule labeled "Supplemental Information – Non-GAAP Financial Measures." | |||||
(2) Calculated using SNL's methodology: Noninterest expense before OREO expense, amortization of intangibles, and goodwill impairments as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains from securities transactions and nonrecurring FHLBB prepayment fees and litigation expenses. | |||||
(3) The ratios presented are estimated for March 31, 2015 and actual for the remaining periods presented. |
Salisbury Bancorp, Inc. and Subsidiary | |||||
SUPPLEMENTAL INFORMATION – Non-GAAP Financial Measures (unaudited) | |||||
At or for the quarters ended | |||||
(in thousands, except per share amounts and ratios) | Q1 2015 | Q4 2014 | Q3 2014 | Q2 2014 | Q1 2014 |
Shareholders' Equity | $ 103,211 | $ 101,821 | $ 75,516 | $ 75,000 | $ 74,001 |
Less: Preferred Stock | (16,000) | (16,000) | (16,000) | (16,000) | (16,000) |
Common Shareholders' Equity | 87,211 | 85,821 | 59,516 | 59,000 | 58,001 |
Less: Goodwill | (12,552) | (12,552) | (9,829) | (9,829) | (9,829) |
Less: Intangible assets | (2,821) | (2,990) | (872) | (946) | (520) |
Tangible Common Shareholders' Equity | $ 71,838 | $ 70,279 | $ 48,815 | $ 48,225 | $ 47,652 |
Total Assets | $ 865,037 | $ 855,427 | $ 638,089 | $ 621,476 | $ 589,771 |
Less: Goodwill | (12,552) | (12,552) | (9,829) | (9,829) | (9,829) |
Less: Intangible assets | (2,821) | (2,990) | (872) | (946) | (520) |
Tangible Total Assets | $ 849,664 | $839,885 | $ 627,388 | $ 610,701 | $ 579,422 |
Common Shares outstanding | 2,729 | 2,721 | 1,713 | 1,713 | 1,711 |
Book value per Common Share – GAAP | $ 31.96 | $ 31.54 | $ 34.74 | $ 34.44 | $ 33.90 |
Tangible book value per Common Share - Non-GAAP | 26.33 | 25.84 | 28.50 | 28.15 | 27.85 |
Common Shareholders' Equity to Assets – GAAP | 10.08% | 10.03% | 9.33% | 9.49% | 9.83% |
Tangible Common Shareholders' Equity to Tangible Assets – Non-GAAP | 8.45 | 8.37 | 7.78 | 7.90 | 8.22 |
Non-interest expense | $ 6,835 | $ 6,852 | $ 5,108 | $ 5,068 | $ 5,110 |
Less: Amortization of core deposit intangibles | (169) | (97) | (75) | (63) | (56) |
Less: Foreclosed property expense | (148) | (114) | (1) | (5) | (10) |
Less: Strategic initiatives | -- | (1,596) | (197) | (90) | (301) |
Operating expenses | $ 6,518 | $ 5,045 | $ 4,835 | $ 4,910 | $ 4,743 |
Net interest and dividend income, tax equivalent | $ 8,238 | $ 6,038 | $ 5,075 | $ 5,227 | $ 5,104 |
Non-interest income | 1,896 | 1,579 | 1,553 | 1,682 | 1,438 |
Gains on securities, net | (175) | -- | -- | -- | -- |
Operating revenue | $ 9,959 | $ 7,617 | $ 6,628 | $ 6,909 | $ 6,542 |
Efficiency Ratio less strategic initiatives | 65.45% | 66.19% | 72.94% | 71.07% | 72.49% |