• First Quarter Net Income of $0.72 per Share
  • Total Assets Top $1.0 Billion on Strong Loan Growth
  • Non-performing Assets Improved to 0.57% of Total Assets from 0.74% at December 31, 2017
  • Wealth Assets Under Administration of $600 Million

LAKEVILLE, Conn., April 27, 2018 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc. (“Salisbury”), (NASDAQ:SAL), the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its first quarter ended March 31, 2018.

Net income available to common shareholders was $2.0 million, or $0.72 per common share, for Salisbury’s first quarter ended March 31, 2018 (first quarter 2018), compared with $1.1 million, or $0.39 per common share, for the fourth quarter ended December 31, 2017 (fourth quarter 2017), and $1.6 million, or $0.58 per common share, for the first quarter ended March 31, 2017 (first quarter 2017).

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “We posted strong results for the quarter, which included solid loan growth and continued improvements in credit quality. During the quarter we also relocated our Newburgh branch to an improved location that will allow us to better serve our existing and new clients. Additionally, in April 2018, we completed the acquisition of the Fishkill, New York branch of Orange Bank & Trust Company and we consolidated our existing Fishkill branch into this new location. We continue to remain focused on enhancing shareholder value and providing outstanding service to our customers.”

Net Interest Income

Tax equivalent net interest income for the first quarter 2018 decreased $119 thousand, or 1.4%, versus fourth quarter 2017, and increased $19 thousand, or 0.2%, versus first quarter 2017. Average earning assets increased $20.6 million versus fourth quarter 2017, and increased $59.6 million versus first quarter 2017. Average total interest bearing deposits increased $1.7 million versus fourth quarter 2017 and increased $37.0 million versus first quarter 2017. The increase in average interest bearing deposits from the prior year first quarter reflected the acquisition of the New Paltz branch in June 2017, which increased deposits by approximately $31 million. The tax equivalent net interest margin for the first quarter 2018 was 3.51% compared with 3.58% for the fourth quarter 2017 and 3.69% for the first quarter 2017.

Non-Interest Income

Non-interest income for first quarter 2018 decreased $207 thousand versus fourth quarter 2017 and decreased $49 thousand versus first quarter 2017. The fourth quarter 2017 included gains of $193 thousand on the sale of available-for-sale securities compared with losses of $15 thousand in the first quarter 2018.

Trust and Wealth Advisory revenues increased $37 thousand versus fourth quarter 2017 and increased $40 thousand versus first quarter 2017. The increases primarily reflected higher asset management fees.

Service charges and fees decreased $51 thousand versus fourth quarter 2017, and decreased $94 thousand versus first quarter 2017. The declines from both comparative periods primarily reflected lower ATM, deposit and loan related fees.

Income from mortgage sales and servicing increased $5 thousand versus fourth quarter 2017 and increased $7 thousand versus first quarter 2017. The increase from the fourth quarter 2017 primarily reflected lower amortization expense on mortgage servicing rights. The increase from the first quarter 2017 reflected lower amortization expense on mortgage servicing rights which was mostly offset by lower gains on the sale of mortgages, due to a reduction in volume, and lower mortgage servicing income.

Non-Interest Expense

Non-interest expense for the first quarter 2018 included OREO charges of $52 thousand compared with $1.4 million in the fourth quarter 2017 and $144 thousand in the first quarter 2017. Excluding OREO charges, non-interest expense for first quarter 2018 increased $433 thousand versus fourth quarter 2017 and decreased $32 thousand versus first quarter 2017. Compensation expense increased $292 thousand versus fourth quarter 2017, and increased $148 thousand versus first quarter 2017. The increase from the fourth quarter 2017 primarily reflected higher benefits expense and payroll taxes partly offset by lower salary expense. The increase from the first quarter 2017 reflected higher salary, benefits and payroll tax expenses.

Premises and equipment costs decreased $10 thousand versus fourth quarter 2017 and increased $129 thousand versus first quarter 2017.  The decrease from the fourth quarter 2017 reflected lower software and depreciation expense, partly offset by higher real estate taxes. The increase from the first quarter 2017 reflected higher lease expense, resulting from the acquisition of the New Paltz branch, higher software maintenance expense, and higher real estate taxes. Data processing expenses, which also include data communications related expenses, decreased $50 thousand versus fourth quarter 2017 and increased $14 thousand versus first quarter 2017. The decrease from the fourth quarter 2017 reflected lower Trust department data processing expenses and lower ATM and debit card network expenses.

Professional fees increased $82 thousand versus fourth quarter 2017 and decreased $98 thousand versus first quarter 2017. The increase from the fourth quarter 2017 was attributed to higher consultation, investment management and legal fees, which were partly offset by a reduction in internal audit expense. The decrease from the prior year first quarter primarily reflected lower internal audit and legal expenses partly offset by higher external audit and exam expenses.

Loan related expenses increased $133 thousand versus the fourth quarter 2017 and decreased $75 thousand compared with the first quarter 2017. The fourth quarter 2017 included a reversal of accruals for OREO carrying costs and the delinquent real estate taxes on OREO properties. The decrease from the first quarter 2017 reflected lower OREO carrying costs.

The effective income tax rates for first quarter 2018, fourth quarter 2017 and first quarter 2017 were 18.1%, 48.4% and 27.0%, respectively. The lower tax rate for first quarter 2018 reflected the reduction in the federal statutory rate from 34% to 21% as a result of the Federal Tax Cuts and Jobs Act enacted in December 2017. Excluding the discrete charge in the fourth quarter 2017 related to the remeasurement of net deferred tax assets as a result of this tax law change, the effective tax rate for the fourth quarter was 27.12%.

Loans

Net loans receivable increased $66 million, or 9% from $765 million as of the first quarter 2017 to $830 million at March 31, 2018, and increased $29 million, or 4% from $802 million at December 31, 2017.

Asset Quality

Non-performing assets decreased $1.6 million during the first quarter 2018 to $5.8 million, or 0.57% of assets at March 31, 2018, from $7.4 million, or 0.74% of assets at December 31, 2017, and decreased $5.1 million from $10.9 million, or 1.16% of assets, at March 31, 2017. The decrease in non-performing assets from the fourth quarter of 2017 reflected the payoff of certain non-performing loans.    

The amount of total impaired and potential problem loans were $23.0 million or 2.75% of gross loans receivable at March 31, 2018 compared to $23.9 million, or 2.97% of gross loans receivable at December 31, 2017 and $21.5 million, or 2.79% of gross loans receivable at March 31, 2017.

Accruing loans receivable 30-to-89 days past due were $3.4 million or 0.40% of gross loans receivable at March 31, 2018 compared to $3.5 million, or 0.44% of gross loans receivable at December 31 2017, and $11.9 million, or 1.55% of gross loans receivable at March 31, 2017.

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.

The provision for loan loss expense was $326 thousand for first quarter 2018 compared with $67 thousand for fourth quarter 2017 and $352 thousand for the first quarter 2017. The increase from the prior year fourth quarter primarily reflected higher recoveries received in the fourth quarter of 2017, which reduced the need for additional provision expense in that quarter. Net loan charge-offs (recoveries) were $43 thousand for the first quarter 2018, $(214) thousand for fourth quarter 2017 and $194 thousand for the first quarter 2017. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 0.84% for the first quarter 2018, versus 0.84% for the fourth quarter 2017 and 0.82% for the first quarter 2017. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 139% for the first quarter of 2018, versus 102% for the fourth quarter of 2017 and 89% for the first quarter of 2017.

Capital

Shareholders’ equity was $98.1 million at March 31, 2018 and book value and tangible book value were $35.20 and $29.63, respectively. Tangible book value excludes goodwill and core deposit intangibles.

The regulatory capital ratios of the Company and the Bank remain in compliance with regulatory “well capitalized” requirements. At March 31, 2018, Salisbury’s tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 8.56%, 12.70%, and 10.54%, respectively. The Bank’s tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.27%, 12.32%, and 11.42%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.

Dividends on Common Shares

The Board of Directors of Salisbury declared a $0.28 per common share quarterly cash dividend at their April 27, 2018 meeting. Such dividend will be paid on May 25, 2018 to shareholders of record as of May 11, 2018.

Background

Salisbury Bancorp, Inc. is the parent company of Salisbury Bank and Trust Company (the “Bank”), 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.

 
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS (unaudited)
 
(in thousands, except share data)March 31, 2018December 31, 2017
ASSETS  
Cash and due from banks$  5,781 $  9,357 
Interest bearing demand deposits with other banks 39,198  39,129 
Total cash and cash equivalents 44,979  48,486 
Securities  
  Available-for-sale at fair value 80,732  79,047 
  Federal Home Loan Bank of Boston stock at cost 4,146  3,813 
Loans held-for-sale -  669 
Loans receivable, net (allowance for loan losses: $7,058 and $6,776) 830,370  801,703 
Other real estate owned 667  719 
Bank premises and equipment, net 18,197  16,401 
Goodwill 13,815  13,815 
Intangible assets (net of accumulated amortization: $4,164 and $4,043) 1,716  1,837 
Accrued interest receivable 2,704  2,665 
Cash surrender value of life insurance policies 14,462  14,381 
Deferred taxes 905  677 
Other assets 2,241  2,771 
  Total Assets$1,014,934 $986,984 
LIABILITIES and SHAREHOLDERS' EQUITY  
Deposits  
  Demand (non-interest bearing)$  220,796 $  220,536 
  Demand (interest bearing) 146,312  142,575 
  Money market 185,955  190,953 
  Savings and other 155,630  144,600 
  Certificates of deposit 123,144  116,831 
  Total deposits 831,837  815,495 
Repurchase agreements 3,962  1,668 
Federal Home Loan Bank of Boston advances 62,480  54,422 
Subordinated Debt 9,817  9,811 
Note payable 305  313 
Capital lease liability 3,179  1,835 
Accrued interest and other liabilities 5,257  5,926 
  Total Liabilities 916,837  889,470 
Shareholders' Equity  
  Common stock - $.10 per share par value  
  Authorized: 5,000,000;  
  Issued: 2,872,578 and 2,872,578  
  Outstanding: 2,786,566 and 2,785,216 279  279 
Unearned compensation - restricted stock awards (493) (606)
  Paid-in capital 43,040  42,998 
  Retained earnings 55,883  54,664 
  Accumulated other comprehensive (loss) income, net (612) 179 
  Total Shareholders' Equity 98,097  97,514 
  Total Liabilities and Shareholders' Equity$  1,014,934 $  986,984 


 
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME (unaudited) 
  
Periods ended March 31,Three months ended
(in thousands, except per share amounts) 2018  2017
Interest and dividend income  
Interest and fees on loans$  8,649 $8,221
Interest on debt securities  
  Taxable   460    317
  Tax exempt   32    164
Other interest and dividends   159    83
  Total interest and dividend income   9,300    8,785
Interest expense  
Deposits    777    515
Repurchase agreements   1    1
Capital lease   35    17
Note payable   5    2
Subordinated Debt   156    156
Federal Home Loan Bank of Boston advances   332    262
  Total interest expense   1,306    953
Net interest and dividend income   7,994    7,832
Provision for loan losses   326    352
  Net interest and dividend income after provision for loan losses   7,668    7,480
Non-interest income  
Trust and wealth advisory   894    854
Service charges and fees   868    962
Gains on sales of mortgage loans, net   18    49
Mortgage servicing, net   83    45
Loss on sales of available -for-sale- securities, net   (15)   - 
Other    126    113
  Total non-interest income   1,974    2,023
Non-interest expense  
Salaries   2,846    2,769
Employee benefits   1,159    1,088
Premises and equipment   1,024    895
Data processing   486    472
Professional fees   619    717
OREO gains, losses and write-downs   52  144
Collections, OREO carrying costs, and loan related 82    157
FDIC insurance   130    149
Marketing and community support   242    251
Amortization of intangibles   120    126
Other   422    538
  Total non-interest expense   7,182    7,306
Income before income taxes   2,460    2,197
Income tax provision   445    593
Net income$  2,015 $1,604
Net income applicable to common shareholders$  1,995 $1,594
   
Basic earnings per common share$  0.72 $  0.58
Diluted earnings per common share   0.72  0.58
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 2018Q4 2017Q3 2017Q2 2017Q1 2017
Total assets$1,014,934 $986,984 $979,469 $974,806 $939,549 
Loans receivable, net 830,370  801,703  784,136  771,850  764,665 
Total securities 84,878  82,860  88,546  84,468  80,359 
Deposits 831,837  815,495  831,989  811,341  772,416 
FHLBB advances 62,480  54,422  27,364  47,302  52,745 
Shareholders’ equity 98,097  97,514  97,526  96,545  95,221 
Wealth assets under administration 600,256  610,218  594,510  585,759  524,459 
  Discretionary wealth assets under administration 390,248  394,673  374,357  374,271  365,086 
  Non-Discretionary wealth assets under administration 210,008  215,545  220,153  211,488  159,373 
Non-performing loans 5,094  6,635  8,313  7,835  7,057 
Non-performing assets 5,761  7,354  12,257  11,690  10,890 
Accruing loans past due 30-89 days 3,362  3,536  3,449  2,961  11,689 
Net interest and dividend income 7,994  8,025  7,766  7,661  7,832 
Net interest and dividend income, tax equivalent 8,112  8,231  7,983  7,894  8,093 
Provision (benefit) for loan losses 326  67  237  364  352 
Non-interest income 1,974  2,182  2,080  1,951  2,023 
Non-interest expense 7,182  8,052  7,220  6,751  7,306 
Income before income taxes 2,460  2,088  2,389  2,497  2,197 
Income tax provision 445  1,011  695  615  593 
Net income 2,015  1,077  1,694  1,882  1,604 
Net income applicable to common shareholders 1,995  1,065  1,678  1,867  1,594 
Per share data     
Basic earnings per common share$0.72 $0.39 $0.61 $0. 68 $0.58 
Diluted earnings per common share 0.72  0.38  0.60  0.67  0.58 
Dividends per common share 0.28  0.28  0.28  0.28  0.28 
Book value per common share 35.20  35.01  35.01  34.66  34.38 
Tangible book value per common share - Non-GAAP⁽¹⁾ 29.63  29.39  29.34  28.94  29.26 
      
Common shares outstanding at end of period (in thousands) 2,787  2,785  2,786  2,785  2,770 
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) 2,759  2,757  2,757  2,757  2,749 
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) 2,780  2,778  2,777  2,775  2,768 
      
Profitability ratios     
Net interest margin (tax equivalent) 3.51% 3.58% 3.50%  3.58% 3.69%
Efficiency ratio⁽²⁾ 69.35  64.90  67.18  66.56  68.68 
Effective income tax rate (3) 18.09  48.42  29.09  24.62  27.00 
Return on average assets 0.81  0.43  0.69  0.77  0.70 
Return on average common shareholders’ equity 8.33  4.38  6.89   7.82  6.83 
      
Credit quality ratios     
Non-performing loans to loans receivable, gross 0.61  0.82  1.05  1.01  0.92 
Accruing loans past due 30-89 days to loans receivable, gross 0.40  0.44  0.44  0.38  1.53 
Allowance for loan losses to loans receivable, gross 0.84  0.84  0.82  0.83  0.82 
Allowance for loan losses to non-performing loans 138.56  102.12  79.30  82.87  89.05 
Non-performing assets to total assets 0.57  0.74  1.25  1.20  1.16 
      
Capital ratios     
Common shareholders' equity to assets 9.67% 9.88% 9.96% 9.90% 10.13%
Tangible common shareholders' equity to tangible assets - Non-GAAP⁽¹⁾ 8.26  8.43  8.48  8.41  8.76 
Tier 1 leverage capital 8.56  8.53  8.49  8.77  8.83 
Total risk-based capital 12.70  12.94  13.20  13.12  13.34 
Common equity tier 1 capital    10.54  10.73  10.96  10.88  11.10 


   
(1)  Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.
(2)  Calculated using S&P Global’s (publicly recognized resource of bank data) methodology, 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. 
(3) The effective tax rate for 4Q 2017 included the discrete charge related to the remeasurement of net deferred tax assets. Excluding this charge, the effective tax rate for the quarter was 27.12%.

 

 
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 2018Q4 2017Q3 2017Q2 2017Q1 2017
      
      
Common Shareholders' Equity$98,097 $97,514 $97,526 $96,545 $95,221 
Less: Goodwill (13,815) (13,815) (13,815) (13,827) (12,552)
Less: Intangible assets (1,716) (1,837) (1,974) (2,116) (1,611)
Tangible Common Shareholders' Equity$82,566 $81,862 $81,737 $  80,602 $  81,058 
Total Assets$1,014,934 $986,984 $979,469 $  974,806 $  939,549 
Less: Goodwill (13,815) (13,815) (13,815) (13,827) (12,552)
Less: Intangible assets (1,716) (1,837) (1,974) (2,116) (1,611)
Tangible Total Assets$999,403 $971,332 $963,680 $  958,863 $  925,386 
Common Shares outstanding 2,787  2,785  2,786  2,785  2,770 
      
Book value per Common Share – GAAP$35.20 $35.01 $35.01 $34.66 $34.38 
Tangible book value per Common Share - Non-GAAP 29.63  29.39  29.34  28.94  29.26 
      
      
Non-interest expense$7,182 $8,052 $7,220 $  6,751 $  7,306 
Less: Amortization of core deposit intangibles (120) (138) (142) (126) (126)
Less: Foreclosed property expense including OREO gains, losses and write downs (56) (1,281) (318) (63) (232)
Operating Expenses$7,006 $6,633 $6,760 $  6,562 $  6,948 
Net interest and dividend income, tax equivalent$8,112 $8,231 $7,983 $  7,894 $  8,093 
Non-interest income 1,974  2,182  2,080  1,951  2,023 
Losses (gains) on securities 15  (193) -  14  - 
Operating Revenue$10,101 $10,220 $10,063 $  9,859 $  10,116 
Efficiency Ratio - Non-GAAP 69.35% 64.90% 67.18% 66.56% 68.68%
      

Source: Salisbury Bancorp, Inc.  

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