• Record Net Income of $1.06 per Share for Third Quarter, Up 26% Versus a Year Ago
  • Non-performing Assets of 0.50% of Total Assets, Down from 0.77% One Year Ago
  • Wealth Assets Under Administration Increased to $752 Million, Up $62 Million from One Year Ago
  • Tangible Book Value of $34.24 per Share, Up 9% from December 2018

LAKEVILLE, Conn., Oct. 25, 2019 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc. (“Salisbury”), (NASDAQ Capital Market: “SAL”), the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its third quarter ended September 30, 2019.

Net income allocated to common shareholders was $2.9 million, or $1.06 per common share, for the quarter ended September 30, 2019 (third quarter 2019), compared with $2.7 million, or $0.96 per common share, for the second quarter ended June 30, 2019 (second quarter 2019), and $2.3 million, or $0.84 per common share, for the third quarter ended September 30, 2018 (third quarter 2018).

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “We reported our second consecutive quarter of record earnings despite a mixed economic environment and persistent competition for loans and deposits. Our asset quality remains strong and we are prudently deploying our capital. We remain focused on effectively managing risk and creating value for our shareholders while providing outstanding service to our customers.”

Net-Interest and Dividend Income

Tax equivalent net interest and dividend income of $8.8 million for third quarter 2019 increased $345 thousand, or 4.1%, versus second quarter 2019, and increased $216 thousand, or 2.5%, versus third quarter 2018. Average earning assets increased $7.7 million versus second quarter 2019, and increased $23.4 million versus third quarter 2018. Average total interest bearing deposits decreased $10.9 million versus second quarter 2019 and increased $42.9 million versus third quarter 2018. The tax equivalent net interest margin for third quarter 2019 was 3.29% compared with 3.19% for second quarter 2019 and 3.29% for third quarter 2018. Net interest and dividend income for second quarter 2019 included a charge of $140 thousand for the write-off of unamortized premiums on purchased loans which paid off during that quarter. The write-off of the unamortized premiums reduced the second quarter tax equivalent net interest margin by approximately 0.05%.

Non-Interest Income

Non-interest income of $2.3 million for third quarter 2019 decreased $292 thousand versus second quarter 2019 and increased $168 thousand versus third quarter 2018. Non-interest income for the third quarter 2019 included realized losses of $9 thousand on the sale of available-for-sale securities compared with realized gains of $281 thousand in the second quarter 2019. There were no realized gains or losses on the sale of available-for-sale securities in third quarter 2018.

Trust and Wealth Advisory fees of $1.0 million for third quarter 2019 decreased $21 thousand versus second quarter 2019 and increased $87 thousand versus third quarter 2018. The decrease from second quarter 2019 primarily reflected seasonal tax preparation fees in the prior quarter, partly offset by higher asset-based fees. The increase from third quarter 2018 primarily reflected higher asset-based fees. Assets under administration were $752 million as of September 30, 2019 compared with $713 million at June 30, 2019 and $690 million as of September 30, 2018. The increase from second quarter 2019 reflected growth in non-discretionary and discretionary assets of $28 million and $11 million, respectively. 

Service charges and fees of $1.0 million for third quarter 2019 decreased $9 thousand versus second quarter 2019 and increased $71 thousand versus third quarter 2018. The decrease from second quarter 2019 primarily reflected loan prepayment penalties recorded in the prior quarter. The increase from third quarter 2018 primarily reflected higher interchange and other fees.

Non-Interest Expense

Non-interest expense of $7.2 million for third quarter 2019 decreased $255 thousand versus second quarter 2019 and decreased $145 thousand versus third quarter 2018. Non-interest expense for third quarter 2019 included a write-down of $84 thousand on an OREO (other real estate owned) property compared with losses of $270 thousand and $38 thousand in second quarter 2019 and third quarter 2018, respectively. Non-interest expense for third quarter 2019 also included an assessment credit of $120 thousand from the FDIC whereas third quarter 2018 included a one-time charge of $95 thousand for the write-down of a mortgage loan previously sold to the FHLB Boston. Employee benefits costs increased $139 thousand from second quarter 2019 and $116 thousand versus third quarter 2018 reflecting higher 401(k), ESOP and deferred compensation accruals as well as higher medical insurance costs. Professional fees decreased $11 thousand from second quarter 2019 and increased $76 thousand versus third quarter 2018. The increase from the prior year third quarter primarily reflected higher investment management and consulting costs, partly offset by lower internal audit accruals.

Loans

Gross loans receivable increased $4.5 million during third quarter 2019 to $923.9 million at September 30, 2019, compared with $919.5 million at June 30, 2019, and increased $17.6 million from $906.4 million at September 30, 2018. Balances by loan type for the comparative periods were as follows:

 Loan Type Q3 2019 Q2 2019  Q3 2018 
 Residential Real Estate $421,843 $419,811 $426,921 
 Commercial Real Estate  296,302  298,121  291,325 
 Commercial & Industrial  164,078  163,487  150,715 
 Farm Land  3,686  3,714  4,222 
 Vacant Land  8,111  8,050  8,726 
 Municipal  22,260  19,782  18,388 
 Consumer  6,290  5,166  4,605 
 Deferred Fees  1,359  1,329  1,468 
 Gross Loans Receivable $923,929 $919,460 $906,370 

The ratio of gross loans to deposits for third quarter 2019 was 95.6% compared with 96.7% for second quarter 2019 and 100.5% for third quarter 2018.

Asset Quality

Salisbury’s asset quality remained strong at third quarter 2019. Non-performing assets were $5.7 million, or 0.50% of total assets at September 30, 2019, compared with $5.5 million, or 0.49% of total assets at June 30, 2019, and $8.5 million, or 0.77% of total assets at September 30, 2018.

The amount of total impaired and potential problem loans increased $0.3 million during third quarter 2019 to $22.6 million, or 2.44% of gross loans receivable, compared to $22.2 million, or 2.42% of gross loans receivable at June 30, 2019, and decreased $1.1 million from $24.5 million, or 2.7% of gross loans receivable at September 30, 2018.

Accruing loans receivable 30-to-89 days past due decreased $0.7 million during third quarter 2019 to $1.8 million, or 0.19% of gross loans receivable, from $2.5 million, or 0.27% of gross loans receivable at June 30, 2019, and was unchanged from $1.8 million, or 0.20% of gross loans receivable at September 30, 2018.

The allowance for loan losses at September 30, 2019 was $8.8 million compared with $8.9 million at June 30, 2019 and $7.7 million at September 30, 2018.

The provision for loan losses expense was $94 thousand for third quarter 2019 versus $151 thousand for second quarter 2019, and $378 thousand for third quarter 2018. The decrease in the provision from both comparable periods primarily reflected lower loan growth, partly offset by higher net charge-offs. Net loan charge-offs were $135 thousand for the third quarter 2019, $15 thousand for second quarter 2019 and $14 thousand for the third quarter 2018. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 0.96% for the third quarter 2019, versus 0.97% for second quarter 2019 and 0.85% for third quarter 2018. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans, was 164.73% for third quarter 2019, versus 175.56% for second quarter 2019 and 94.77% for third quarter 2018.

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.

Deposits and Borrowings

Deposits were $966.2 million at September 30, 2019 compared with $950.7 million at June 30, 2019 and $902.2 million at September 30, 2018. Deposits at September 30, 2019 included brokered deposits, including CDARS one-way buys, of $32.9 million compared with $52.7 million at June 30, 2019 and $15.2 million at September 30, 2018. Average total deposits for third quarter 2019 were $938.5 million compared with $947.1 million at June 30, 2019 and $894.6 million at September 30, 2018. Average total deposits for third quarter 2019 included average brokered deposits of $31.6 million compared with $56.4 million for second quarter 2019 and $13.7 million for third quarter 2018.

FHLB advances increased $5.0 million during the quarter to $37.8 million at September 30, 2019 and decreased $29.8 million from September 30, 2018.

Capital

Book value per common share increased $0.93 during the third quarter to $39.52 per share and increased $3.59 from the third quarter 2018. Tangible book value per common share increased $0.96 during third quarter 2019 to $34.24 and increased $3.77 from the third quarter 2018.

Shareholders’ equity increased $2.6 million in third quarter 2019 to $111.6 million at September 30, 2019 as net income of $3.0 million, unrealized gains in the AFS portfolio of $0.3 million and the issuance of restricted stock awards of $0.1 million was partly offset by common stock dividends paid of $0.8 million.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At September 30, 2019, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.27%, 12.58%, and 11.57%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.

Third Quarter 2019 Dividends on Common Shares

The Board of Directors of Salisbury declared a $0.28 per common share quarterly cash dividend at its October 25, 2019 meeting. The dividend will be paid on November 29, 2019 to shareholders of record as of November 15, 2019.

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, New Paltz, Poughkeepsie and Red Oaks Mill, New York. The Bank offers a broad spectrum of consumer and business banking products and services as well as trust and wealth advisory services.

Forward-Looking Statements

This news release may contain statements relating to future results of Salisbury’s and the Bank’s future results that are considered “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 laws and regulations; changes in accounting principles; and the quality or composition of the loan and investment portfolios, technological changes and cybersecurity matters, and other factors that may be described in Salisbury’s quarterly reports on Form 10-Q and its annual report on Form 10-K, which are available at the Securities and Exchange Commission’s website (www.sec.gov) and to which reference is hereby made. Forward-looking statements made by Salisbury in this news release speak only as of the date they are made. Events or other facts that could cause Salisbury’s actual results to differ may arise from time to time and Salisbury cannot predict all such events and factors. Salisbury undertakes no obligation to publicly update any forward-looking statement unless as may be required by law.

Investor presentation slides, which include a review of financial results and trends through the period ended September 30, 2019, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under Shareholder Relations/News & Market Information/Presentations simultaneously with this Release. 

       
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
      
       
(dollars in thousands, except share data) September 30, 2019  December 31, 2018 
ASSETS (unaudited)    
Cash and due from banks$7,670 $7,238 
Interest bearing demand deposits with other banks 45,878  51,207 
Total cash and cash equivalents 53,548  58,445 
Interest Bearing Time Deposits with Financial Institutions 786  - 
Securities  
Available-for-sale at fair value 94,814  91,818 
CRA mutual fund 881  836 
Federal Home Loan Bank of Boston stock at cost 2,575  4,496 
Loans held-for-sale 506  - 
Loans receivable, net (allowance for loan losses: $8,846 and $7,831) 915,083  909,279 
Other real estate owned 317  1,810 
Bank premises and equipment, net 17,567  18,175 
Goodwill 13,815  13,815 
Intangible assets (net of accumulated amortization: $4,795 and $4,498) 1,086  1,383 
Accrued interest receivable 3,425  3,148 
Cash surrender value of life insurance policies 20,441  14,438 
Deferred taxes 941  1,276 
Other assets 18,455  2,635 
Total Assets$1,144,240 $1,121,554 
LIABILITIES and SHAREHOLDERS' EQUITY  
Deposits  
Demand (non-interest bearing)$247,771 $228,448 
Demand (interest bearing) 160,139  153,586 
Money market 238,494  204,219 
Savings and other 166,298  178,807 
Certificates of deposit 153,476  161,679 
Total deposits 966,178  926,739 
Repurchase agreements 8,588  4,104 
Federal Home Loan Bank of Boston advances 37,828  67,154 
Subordinated debt 9,853  9,835 
Note payable 255  280 
Finance lease obligations 1,729  3,081 
Accrued interest and other liabilities 8,229  6,902 
Total Liabilities 1,032,660  1,018,095 
Shareholders' Equity  
Common stock - $0.10 per share par value  
Authorized: 5,000,000;  
Issued: 2,899,408 and 2,884,988  
Outstanding: 2,823,212 and 2,806,781 282  281 
Unearned compensation - restricted stock awards (887) (711)
Paid-in capital 44,372  43,770 
Retained earnings 66,104  60,339 
Accumulated other comprehensive income (loss), net 1,709  (220)
Total Shareholders' Equity 111,580  103,459 
Total Liabilities and Shareholders' Equity$1,144,240 $1,121,554 


 
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
   
                    Three months ended                  Nine months ended
Periods ended September 30, (in thousands, except per share amounts) 2019  2018  2019  2018 
Interest and dividend income    
Interest and fees on loans$10,045 $9,570 $29,859 $27,226 
Interest on debt securities:    
Taxable 530  596  1,734  1,588 
Tax exempt 166  28  355  89 
Other interest and dividends 282  322  761  662 
Total interest and dividend income 11,023  10,516  32,709  29,565 
Interest expense    
Deposits 1,879  1,323  5,674  3,098 
Repurchase agreements 9  4  16  6 
Finance lease 43  48  135  130 
Note payable 4  4  12  14 
Subordinated debt 156  156  468  468 
Federal Home Loan Bank of Boston advances 265  481  956  1,314 
Total interest expense 2,356  2,016  7,261  5,030 
Net interest and dividend income 8,667  8,500  25,448  24,535 
Provision for loan losses 94  378  539  1,171 
Net interest and dividend income after provision for loan losses 8,573  8,122  24,909  23,364 
Non-interest income    
Trust and wealth advisory 1,023  936  2,973  2,779 
Service charges and fees 1,003  932  2,935  2,693 
Gains on sales of mortgage loans, net 42  21  50  38 
Mortgage servicing, net 76  84  232  251 
Gains (losses) on CRA mutual fund 6  (6) 29  (26)
(Losses) gains on available-for-sale securities, net (9) -  263  16 
Other 115  121  349  370 
Total non-interest income 2,256  2,088  6,831  6,121 
Non-interest expense    
Salaries 3,042  3,078  8,994  8,864 
Employee benefits 1,181  1,065  3,408  3,192 
Premises and equipment 974  1,036  2,950  3,161 
Data processing 534  519  1,620  1,561 
Professional fees 572  496  1,690  1,725 
OREO losses and write-downs 84  38  406  91 
Collections and other real estate owned 119  116  328  432 
FDIC insurance (9) 141  294  394 
Marketing and community support 141  167  448  630 
Amortization of core deposit intangibles 93  111  297  347 
Other 453  562  1,398  1,528 
Total non-interest expense 7,184  7,329  21,833  21,925 
Income before income taxes 3,645  2,881  9,907  7,560 
Income tax provision 657  537  1,781  1,301 
Net income$2,988 $2,344 $8,126 $6,259 
Net income allocated to common stock $2,940 $2,311 $8,016 $6,185 
Basic earnings per common share$1.06 $0.84 $2.88 $2.24 
Weighted average common shares outstanding, to calculate basic earnings per share 2,783  2,764  2,781  2,762 
Diluted earnings per common share$1.05 $0.83 $2.87 $2.23 
Weighted average common shares outstanding, to calculate diluted earnings per share 2,795  2,779  2,793  2,780 
Common dividends per share$0.28 $0.28 $0.84 $0.84 


      
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) Q3 2019 Q2 2019 Q1 2019 Q4 2018 Q3 2018
Total assets$1,144,240 $1,119,212 $1,118,925 $1,121,554 $1,098,715 
Loans receivable, net 915,083  910,573  911,188  909,279  898,625 
Total securities 98,270  103,857  102,479  97,150  101,591 
Deposits 966,178  950,723  941,969  926,739  902,161 
FHLBank Boston advances 37,828  32,769  47,712  67,154  67,596 
Shareholders’ equity 111,580  108,948  106,109  103,459  100,767 
Wealth assets under administration 752,467  713,319  691,731  648,027  690,448 
Discretionary wealth assets under administration 475,482  464,537  444,110  398,287  435,357 
Non-Discretionary wealth assets under administration 276,985  248,782  247,621  249,740  255,091 
Non-performing loans 5,370  5,062  6,389  6,514  8,173 
Non-performing assets 5,687  5,463  7,130  8,324  8,513 
Accruing loans past due 30-89 days 1,784  2,473  2,228  2,165  1,784 
Net interest and dividend income 8,667  8,344  8,437  8,615  8,500 
Net interest and dividend income, tax equivalent (1) 8,831  8,486  8,562  8,736  8,615 
Provision for loan losses 94  151  294  558  378 
Non-interest income 2,256  2,548  2,027  2,824  2,088 
Non-interest expense 7,184  7,439  7,211  7,909  7,329 
Income before income taxes 3,645  3,302  2,959  2,972  2,881 
Income tax provision 657  599  525  408  537 
Net income 2,988  2,703  2,434  2,564  2,344 
Net income applicable to common shareholders 2,940  2,671  2,408  2,528  2,311 
Per share data     
Basic earnings per common share$1.06 $0.96 $0.87 $0.91 $0.84 
Diluted earnings per common share 1.05  0.95  0.86  0.91  0.83 
Dividends per common share 0.28  0.28  0.28  0.28  0.28 
Book value per common share 39.52  38.59  37.81  36.86  35.93 
Tangible book value per common share - Non-GAAP⁽2 34.24  33.28  32.43  31.45  30.47 
      
Common shares outstanding at end of period (in thousands) 2,823  2,823  2,807  2,807  2,805 
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) 2,783  2,780  2,777  2,766  2,764 
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) 2,795  2,793  2,789  2,779  2,779 
      
Profitability ratios     
Net interest margin (tax equivalent) (1) 3.29% 3.19% 3.28% 3.34% 3.29%
Efficiency ratio (3) 62.90  65.81  66.15  69.13  66.91 
Effective income tax rate 18.02  18.14  17.75  13.74  18.65 
Return on average assets 1.05  0.97  0.89  0.92  0.85 
Return on average common shareholders’ equity 10.73  10.07  9.45  9.99  9.26 
      
Credit quality ratios     
Non-performing loans to loans receivable, gross 0.58  0.55  0.69  0.71  0.90 
Accruing loans past due 30-89 days to loans receivable, gross 0.19  0.27  0.24  0.24  0.20 
Allowance for loan losses to loans receivable, gross 0.96  0.97  0.95  0.85  0.85 
Allowance for loan losses to non-performing loans 164.73  175.56  136.96  120.21  94.77 
Non-performing assets to total assets 0.50  0.49  0.64  0.74  0.77 
      
Capital ratios     
Common shareholders' equity to assets 9.75% 9.73% 9.48% 9.22% 9.17%
Tangible common shareholders' equity to tangible assets - Non-GAAP (2) 8.56  8.51  8.25  7.98  7.89 
Tier 1 leverage capital (4) 9.27  9.10  8.98  8.83  8.66 
Total risk-based capital (4) 12.58  12.57  12.38  12.09  11.91 
Common equity tier 1 capital (4) 11.57  11.54  11.35  11.17  10.99 

1 Adjusted to reflect the U.S. federal statutory tax benefit on income derived from tax-exempt securities and loans.
Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.
3 Calculated as follows: 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 litigation expenses.
4 Represents the capital ratios of the Bank.

 
 
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)Q3 2019Q2 2019Q1 2019Q4 2018Q3 2018
      
Common Shareholders' Equity$111,580 $108,948 $106,108 $103,459 $100,767 
Less: Goodwill (13,815) (13,815) (13,815) (13,815) (13,815)
Less: Intangible assets (1,086) (1,180) (1,279) (1,383) (1,490)
Tangible Common Shareholders' Equity$96,679 $93,953 $91,014 $88,261 $85,462 
Total Assets$1,144,240 $1,119,212 $1,118,925 $1,121,554 $1,098,715 
Less: Goodwill (13,815) (13,815) (13,815) (13,815) (13,815)
Less: Intangible assets (1,086) (1,180) (1,279) (1,383) (1,490)
Tangible Total Assets$1,129,339 $1,104,217 $1,103,831 $1,106,356 $1,083,410 
Common Shares outstanding 2,823  2,823  2,807  2,807  2,805 
      
Book value per Common Share – GAAP$39.52 $38.59 $37.81 $36.86 $35.93 
Tangible book value per Common Share - Non-GAAP 34.24  33.28  32.43  31.45  30.47 
      
Consolidated:     
Non-interest expense$7,184 $7,438 $7,211 $7,909 $7,329 
Less: Amortization of core deposit intangibles (93) (99) (104) (107) (111)
Less: Foreclosed property expense including OREO gains, losses and Write downs (115) (271) (103) (260) (52)
Adjusted non-interest expense$6,976 $7,068 $7,004 $7,542 $7,166 
Net interest and dividend income, tax equivalent$8,831 $8,486 $8,562 $8,736 $8,615 
Non-interest income 2,256  2,548  2,027  2,824  2,088 
Losses (gains) on securities 3  (294) (2) (300) 6 
BOLI proceeds receivable -  -  -  (341) - 
Adjusted revenue$11,090 $10,740 $10,588 $10,909 $10,709 
Efficiency Ratio – Non-GAAP 1 62.90% 65.81% 66.15% 69.13% 66.91%

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q3 2019: 61.13%; Q2 2019: 64.09%; Q1 2019: 64.51%; Q4 2018: 67.17%; Q3 2018: 65.65%.

Source: Salisbury Bancorp, Inc.

Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer
860-435-9801 or rcantele@salisburybank.com