• First Quarter Net Income of $0.87 per share
  • Return on Average Assets of 0.89%; Efficiency Ratio of 66.15%
  • Non-performing Assets Improved to 0.64% of Total Assets from 0.74% at December 31, 2018
  • Wealth Assets Under Administration of $692 Million

LAKEVILLE, Conn., April 26, 2019 (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, 2019.

Net income available to common shareholders was $2.4 million, or $0.87 per common share, for Salisbury’s first quarter ended March 31, 2019 (first quarter 2019), compared with $2.5 million, or $0.91 per common share, for the fourth quarter ended December 31, 2018 (fourth quarter 2018), and $2.0 million, or $0.72 per common share, for the first quarter ended March 31, 2018 (first quarter 2018).

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “We reported strong earnings for the first quarter despite a sustained competitive landscape and an uncertain interest rate environment. Strength in commercial lending for the quarter was mostly offset by seasonally lower residential lending and the payoff of a $7.5 million residential loan. The ratio of our non-performing assets improved significantly this quarter due to the sale of a $1.0 million OREO property. We remain intently focused on enhancing operating efficiency and profitability while continuing to provide outstanding service to our customers.”

Net Interest Income

Tax equivalent net interest income for the first quarter 2019 decreased $174 thousand, or 2.0%, versus fourth quarter 2018, and increased $450 thousand, or 5.6%, versus first quarter 2018. Average earning assets increased $2.5 million versus fourth quarter 2018, and increased $109.9 million versus first quarter 2018. Average total interest bearing deposits increased $17.8 million versus fourth quarter 2018 and increased $93.3 million versus first quarter 2018. The tax equivalent net interest margin for the first quarter 2019 was 3.28% compared with 3.34% for the fourth quarter 2018 and 3.46% for the first quarter 2018.

Non-Interest Income

Non-interest income for first quarter 2019 decreased $797 thousand versus fourth quarter 2018 and increased $52 thousand versus first quarter 2018. The first quarter 2019 included losses of $9 thousand on the sale of available-for-sale securities compared with gains of $302 thousand in the fourth quarter 2018 and losses of $2 thousand in first quarter 2018. The fourth quarter 2018 also included a non-taxable gain of $341 thousand related to proceeds receivable from a bank-owned life-insurance (“BOLI”) policy due to the death of a covered former employee.

Trust and Wealth Advisory revenues decreased $15 thousand versus fourth quarter 2018 and increased $12 thousand versus first quarter 2018. The decrease from fourth quarter 2018 primarily reflected lower asset management and estate fees whereas the increase from first quarter 2018 primarily reflected higher asset management fees.

Service charges and fees decreased $105 thousand versus fourth quarter 2018, and increased $52 thousand versus first quarter 2018. The decline from fourth quarter 2018 primarily reflected lower interchange fees and lower loan prepayment fees. The increase from first quarter 2018 primarily reflected higher deposit, interchange and prepayment fees.

Income from mortgage sales and servicing decreased $25 thousand versus fourth quarter 2018 and decreased $18 thousand versus first quarter 2018. The decrease from comparative quarters primarily reflected lower gains on the sale of mortgage loans, due to a reduction in volume. The lower gains in first quarter 2019 were partly offset by higher mortgage servicing income.

Non-Interest Expense

Non-interest expense for the first quarter 2019 decreased $698 thousand from fourth quarter 2018 and increased $31 thousand from first quarter 2018.

Compensation expense decreased $49 thousand versus fourth quarter 2018, and increased $173 thousand versus first quarter 2018. The decrease from the fourth quarter 2018 primarily reflected lower salary expense, including lower production and incentive accruals, partly offset by higher benefits expense and a seasonal increase in payroll taxes. The increase from the first quarter 2018 primarily reflected higher salary and benefits expenses.

Premises and equipment costs decreased $402 thousand versus fourth quarter 2018 and decreased $52 thousand versus first quarter 2018. The fourth quarter 2018 included a charge of $171 thousand to write off the lease and fixed assets related to the Bank’s previously occupied Fishkill, New York branch location and a charge of $95 thousand to write-off the remaining term of a third-party software contract. Additionally, the fourth quarter 2018 included higher building maintenance and repair costs. The decline from first quarter 2018 reflected lower software related costs.

Data processing expenses, which also include data communications related expenses, decreased $49 thousand versus fourth quarter 2018 and increased $23 thousand versus first quarter 2018. The decrease from the fourth quarter 2018 primarily reflected lower trust & wealth and core system data processing charges whereas the increase from first quarter 2018 reflected higher core system data processing costs.

Professional fees increased $25 thousand versus fourth quarter 2018 and decreased $84 thousand versus first quarter 2018. The increase from the fourth quarter 2018 was attributed to higher audit and exam fees, partly offset by lower investment management and internal audit fees. The decrease from the prior year first quarter primarily reflected lower consultation and investment management fees, partly offset by higher audit and exam fees and internal audit expenses.

Loan related expenses decreased $147 thousand versus the fourth quarter 2018 and increased $48 thousand compared with the first quarter 2018. The decrease from fourth quarter 2018 primarily reflected lower OREO losses and lower OREO carrying costs, partly offset by higher loan-related legal expenses. The increase from first quarter 2018 primarily reflected higher OREO carrying costs. OREO losses were $52 thousand in first quarter 2019 compared with $184 thousand in fourth quarter 2018 and $52 thousand in first quarter 2018.

The effective income tax rates for first quarter 2019, fourth quarter 2018 and first quarter 2018 were 17.8%, 13.7% and 18.1%, respectively. The lower tax rate for fourth quarter 2018 was primarily attributed to a higher amount of net interest income, on qualifying loans, that was deductible from New York state taxable income as well as tax credits for New York state mortgage recording taxes paid. The tax rate for the fourth quarter 2018 also reflected the non-taxable BOLI proceeds receivable recorded in that quarter.

Loans

Gross loans receivable increased $2.8 million during the quarter to $919.9 million at March 31, 2019, compared with $917.1 million at December 31, 2018, and increased $82.5 million from $837.4 million at March 31, 2018. Residential real estate loans decreased $10.8 million during first quarter 2019 to $418.1 million, and increased $26.5 million from first quarter 2018. The decline in residential loans from fourth quarter 2018 reflected the pay-off of a $7.5 million loan. Commercial real estate loans increased $8.1 million during first quarter 2019 to $300.6 million, and increased $28.3 million from first quarter 2018. Commercial and Industrial loans increased $4.6 million during the first quarter 2019 to $167.5 million, and increased $30.3 million from first quarter 2018.

The ratio of gross loans to deposits for first quarter 2019 was 97.7% compared with 99.0% for fourth quarter 2018 and 100.7% for first quarter 2018.

Asset Quality

Non-performing assets decreased $1.2 million during the first quarter 2019 to $7.1 million, or 0.64% of assets at March 31, 2019, from $8.3 million, or 0.74% of assets at December 31, 2018, and increased $1.4 million from $5.8 million, or 0.57% of assets, at March 31, 2018. The decrease in non-performing assets from the fourth quarter of 2018 primarily reflected the sale of an OREO property.    

The amount of total impaired and potential problem loans was $22.9 million or 2.49% of gross loans receivable at March 31, 2019 compared to $20.2 million, or 2.20% of gross loans receivable at December 31, 2018 and $23.0 million, or 2.75% of gross loans receivable at March 31, 2018.

Accruing loans receivable 30-to-89 days past due were $2.2 million or 0.24% of gross loans receivable at March 31, 2019 compared to $2.2 million, or 0.24% of gross loans receivable at December 31, 2018, and $3.4 million, or 0.40% of gross loans receivable at March 31, 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.

During the first quarter 2019, the allowance for loan losses activity included reduced charge-offs, quarterly provisions, and the transfer of the remaining unearned credit-related discount on the loans acquired in the 2014 Riverside Bank acquisition. The transfer of the unearned credit-related discount increased gross loans receivable and the allowance for loan losses by $664 thousand without changing net loans receivable. The allowance for loan losses was further increased by the provision for loan loss expense of $294 thousand for first quarter 2019 compared with $558 thousand for fourth quarter 2018 and $325 thousand for the first quarter 2018. Net loan charge-offs were $38 thousand for the first quarter 2019, $471 thousand for fourth quarter 2018 and $43 thousand for the first quarter 2018.

As a result of these factors, reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 0.95% for the first quarter 2019, versus 0.85% for the fourth quarter 2018 and 0.84% for the first quarter 2018. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 137% for the first quarter of 2019, versus 120% for the fourth quarter of 2018 and 139% for the first quarter of 2018.

Deposits and Borrowings

Deposits were $942.0 million at March 31, 2019 compared with $926.7 million at December 31, 2018 and $831.8 million at March 31, 2018. Deposits at March 31, 2019 included brokered deposits, including CDARS one-way buys, of $49.7 million compared with $39.4 million at December 31, 2018 and $7.8 million at March 31, 2018. Average total deposits for the first quarter 2019 were $918.8 million compared with $905.7 million at December 31, 2018 and $823.6 million at March 31, 2018. Average total deposits for the first quarter 2019 included average brokered deposits of $42.2 million compared with $29.0 million for fourth quarter 2018 and $6.5 million for first quarter 2018.

FHLB advances decreased $19.4 million during the quarter to $47.7 million at March 31, 2019 and decreased $14.8 million from March 31, 2018.

Capital

Shareholders’ equity, which included after-tax net unrealized gains on available-for-sale securities of $680 thousand, was $106.1 million at March 31, 2019. Book value and tangible book value, which excludes goodwill and core deposit intangibles, were $37.81 and $32.43, respectively at March 31, 2019.

The regulatory capital ratios of the Company and the Bank remain in compliance with regulatory “well capitalized” requirements. At March 31, 2019, Salisbury’s tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 8.32%,12.68%, and 10.50%, respectively. The Bank’s tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 8.97%, 12.35%, and 11.33%, 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 26, 2019 meeting. Such dividend will be paid on May 31, 2019 to shareholders of record as of May 17, 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.

Salisbury Bancorp, Inc. and Subsidiary 
CONSOLIDATED BALANCE SHEETS (unaudited)

(dollars in thousands, except share data)March 31, 2019December 31, 2018
ASSETS(unaudited) 
Cash and due from banks$6,944 $7,238 
Interest bearing demand deposits with other banks 41,685  51,207 
Total cash and cash equivalents 48,629  58,445 
Securities  
Available-for-sale at fair value 98,255  91,818 
CRA mutual fund, at fair value 852  836 
Federal Home Loan Bank of Boston stock at cost 3,372  4,496 
Loans receivable, net (allowance for loan losses: $8,750 and $7,831) 911,188  909,279 
Other real estate owned 741  1,810 
Bank premises and equipment, net 17,812  18,175 
Goodwill 13,815  13,815 
Intangible assets (net of accumulated amortization: $4,601 and $4,497) 1,279  1,383 
Accrued interest receivable 3,411  3,148 
Cash surrender value of life insurance policies 15,267  14,438 
Deferred taxes 766  1,276 
Other assets 3,538  2,635 
Total Assets$1,118,925 $1,121,554 
LIABILITIES and SHAREHOLDERS' EQUITY  
Deposits  
Demand (non-interest bearing)$219,168 $228,448 
Demand (interest bearing) 157,123  153,586 
Money market 203,309  204,219 
Savings and other 190,011  178,807 
Certificates of deposit 172,358  161,679 
Total deposits 941,969  926,739 
Repurchase agreements 2,951  4,104 
Federal Home Loan Bank of Boston advances 47,712  67,154 
Subordinated debt 9,841  9,835 
Note payable 272  280 
Finance lease 3,046  3,081 
Accrued interest and other liabilities 7,025  6,902 
Total Liabilities 1,012,816  1,018,095 
Shareholders' Equity  
Common stock - $0.10 per share par value  
Authorized: 5,000,000;  
Issued: 2,884,888 and 2,884,988  
Outstanding: 2,806,681 and 2,806,781 281  281 
Unearned compensation - restricted stock awards (606)  (711) 
Paid-in capital 43,765  43,770 
Retained earnings 61,989  60,339 
Accumulated other comprehensive income (loss), net 680  (220) 
Total Shareholders' Equity 106,109  103,459 
Total Liabilities and Shareholders' Equity$1,118,925 $1,121,554 
       

Salisbury Bancorp, Inc. and Subsidiary 
CONSOLIDATED STATEMENTS OF INCOME (unaudited)                                                         

Three months ended March 31, (in thousands except per share amounts) 2019  2018 
Interest and dividend income  
Interest and fees on loans$  9,934 $  8,649 
Interest on debt securities  
Taxable   621    460 
Tax exempt   72    32 
Other interest and dividends   227    159 
Total interest and dividend income   10,854    9,300 
Interest expense  
Deposits   1,796    777 
Repurchase agreements   3    1 
Finance lease   46    35 
Note payable   4    5 
Subordinated debt   156    156 
Federal Home Loan Bank of Boston advances   412    332 
Total interest expense   2,417    1,306 
Net interest and dividend income   8,437    7,994 
Provision for loan losses   294    326 
Net interest and dividend income after provision for loan losses   8,143    7,668 
Non-interest income  
Trust and wealth advisory   906    894 
Service charges and fees   920    868 
Gains on sales of mortgage loans, net   7    18 
Mortgage servicing, net   76    83 
Gains (losses) on CRA mutual fund   11  (13) 
Losses on available-for-sale securities, net   (9)    (2) 
Other    116    126 
Total non-interest income   2,027    1,974 
Non-interest expense  
Salaries   2,993    2,846 
Employee benefits   1,185    1,159 
Premises and equipment   972    1,024 
Data processing   509    486 
Professional fees   535    619 
OREO gains, losses and write-downs   52    52 
Collections and other real estate owned   130  82 
FDIC insurance   163    130 
Marketing and community support   156    242 
Amortization of core deposit intangibles   104    120 
Other   412    422 
Total non-interest expense   7,211    7,182 
Income before income taxes   2,959    2,460 
Income tax provision   525    445 
Net income$  2,434 $  2,015 
Net income allocated to common stock$  2,408 $  1,995 
   
Basic earnings per common share$  0.87 $  0.72 
Weighted average common shares outstanding,  to calculate basic earnings per share   2,777    2,759 
Diluted earnings per common share$  0.86 $  0.72 
Weighted average common shares outstanding, to calculate diluted earnings per share   2,789    2,780 
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 2019Q4 2018Q3 2018Q2 2018Q1 2018
Total assets$1,118,925 $1,121,554 $1,098,715 $1,096,780 $1,014,934 
Loans receivable, net 911,188  909,279  898,625  872,796  830,370 
Total securities 102,479  97,150  101,591  90,870  84,878 
Deposits 941,969  926,739  902,161  897,481  831,837 
FHLBB advances 47,712  67,154  67,596  79,538  62,480 
Shareholders’ equity 106,109  103,459  100,767  99,180  98,097 
Wealth assets under administration 691,731  648,027  690,448  667,933  600,256 
Discretionary wealth assets under administration 444,110  398,287  435,357  397,637  390,248 
Non-Discretionary wealth assets under administration 247,621  249,740  255,091  270,296  210,008 
Non-performing loans 6,389  6,514  8,173  5,881  5,094 
Non-performing assets 7,130  8,324  8,513  6,359  5,761 
Accruing loans past due 30-89 days 2,228  2,165  1,784  1,507  3,362 
Net interest and dividend income 8,437  8,615  8,500  8,043  7,994 
Net interest and dividend income, tax equivalent 8,562  8,736  8,615  8,155  8,112 
Provision for loan losses 294  558  378  467  326 
Non-interest income 2,027  2,824  2,088  2,058  1,974 
Non-interest expense 7,211  7,909  7,329  7,417  7,182 
Income before income taxes 2,959  2,972  2,881  2,217  2,460 
Income tax provision 525  408  537  318  445 
Net income 2,434  2,564  2,344  1,899  2,015 
Net income applicable to common shareholders 2,408  2,528  2,311  1,877  1,995 
Per share data     
Basic earnings per common share$0.87 $0.91 $0.84 $0.68 $0.72 
Diluted earnings per common share 0.86  0.91  0.83  0.68  0.72 
Dividends per common share 0.28  0.28  0.28  0.28  0.28 
Book value per common share 37.81  36.86  35.93  35.38  35.20 
Tangible book value per common share - Non-GAAP⁽¹⁾ 32.43  31.45  30.47  29.88  29.63 
Common shares outstanding at end of period (in thousands) 2,807  2,807  2,805  2,803  2,787 
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) 2,777  2,766  2,764  2,761  2,759 
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) 2,789  2,779  2,779  2,779  2,780 
      
Profitability ratios     
Net interest margin (tax equivalent) 3.28%  3.34%  3.29%  3.31%  3.46% 
Efficiency ratio 1 66.15  69.13  66.91  70.87  69.35 
Effective income tax rate 17.75  13.74  18.65  14.35  18.09 
Return on average assets 0.89  0.92  0.85  0.69  0.81 
Return on average common shareholders’ equity 9.45  9.99  9.26  7.68  8.33 
Credit quality ratios     
Non-performing loans to loans receivable, gross 0.69  0.71  0.90  0.67  0.61 
Accruing loans past due 30-89 days to loans receivable, gross 0.24  0.24  0.20  0.17  0.40 
Allowance for loan losses to loans receivable, gross 0.95  0.85  0.85  0.84  0.84 
Allowance for loan losses to non-performing loans 136.96  120.21  94.77  125.51  138.56 
Non-performing assets to total assets 0.64  0.74  0.77  0.58  0.57 
      
Capital ratios     
Common shareholders' equity to assets 9.48%  9.22%  9.17%  9.04%  9.67% 
Tangible common shareholders' equity to tangible assets - Non-GAAP 2 8.25  7.98  7.89  7.75  8.26 
Tier 1 leverage capital 8.32  8.25  8.02  8.30  8.56 
Total risk-based capital 12.68  12.51  12.26  12.27  12.70 
Common equity tier 1 capital 10.50  10.43  10.17  10.18  10.54 

1 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.
Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.


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 2019Q4 2018Q3 2018Q2 2018Q1 2018
      
Common Shareholders' Equity$106,108 $103,459 $100,767 $99,180 $98,097 
Less: Goodwill (13,815)  (13,815)  (13,815)  (13,815)  (13,815) 
Less: Intangible assets (1,279)  (1,383)  (1,490)  (1,601)  (1,716) 
Tangible Common Shareholders' Equity$91,014 $88,261 $85,462 $83,764 $82,566 
Total Assets$1,118,925 $1,121,554 $1,098,715 $1,096,780 $1,014,934 
Less: Goodwill (13,815)  (13,815)  (13,815)  (13,815)  (13,815) 
Less: Intangible assets (1,279)  (1,383)  (1,490)  (1,601)  (1,716) 
Tangible Total Assets$1,103,831 $1,106,356 $1,083,410 $1, 081,364 $999,403 
Common Shares outstanding 2,807  2,807  2,805  2,803  2,787 
      
Book value per Common Share – GAAP$37.81 $36.86 $35.93 $35.38 $35.20 
Tangible book value per Common Share - Non-GAAP 32.43  31.45  30.47  29.88  29.63 
      
Consolidated:     
Non-interest expense$7,211 $7,909 $7,329 $7,417 $7,182 
Less: Amortization of core deposit intangibles (104)  (107)  (111)  (116)  (120) 
Less: Foreclosed property expense including OREO gains, losses and
Write downs
 (103)  (260)  (52)  (71)  (56) 
Adjusted non-interest expense$7,004 $7,542 $7,166 $7,230 $7,006 
Net interest and dividend income, tax equivalent$8,562 $8,736 $8,615 $8,155 $8,112 
Non-interest income 2,027  2,824  2,088  2,058  1,974 
(Gains) losses on securities (2)  (300)  6  (11)  15 
BOLI proceeds receivable -  (341)  -  -  - 
Adjusted revenue$10,588 $10,909 $10,709 $10,202 $10,101 
Efficiency Ratio – Non-GAAP 1 66.15%  69.13%  66.91%  70.87%  69.35% 

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q1 2019: 64.51%; Q4 2018: 67.17%; Q3 2018: 65.65%; Q2 2018: 69.47%; Q1 2018: 67.67%.

Source: Salisbury Bancorp, Inc.

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