- Second Quarter 2022 Net Income of $0.67 per Basic Common Share Adjusted to Reflect Two-For-One Forward Stock Split Effective on June 30, 2022
- Record Loan Growth of $81 million, or 7.6%, in Second Quarter 2022 1
- Non-performing Assets were 0.28% of Total Assets at June 30, 2022
- Common Equity Tier 1 and Total Capital Ratios of 12.1% and 13.3%, Respectively
LAKEVILLE, Conn., July 20, 2022 (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 second quarter ended June 30, 2022.
Net income available to common shareholders was $3.8 million, or $0.67 per basic common share, for the second quarter ended June 30, 2022 (second quarter 2022), compared with $3.5 million, or $0.62 per basic common share, for the first quarter ended March 31, 2022 (first quarter 2022), and $4.3 million, or $0.76 per basic common share, for the second quarter ended June 30, 2021 (second quarter 2021). All share and per share data for all periods presented in this release have been adjusted to reflect the two-for-one forward stock split, which was effective on June 30, 2022.
Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “In the second quarter we successfully executed certain aspects of our strategic plan. First, we reported strong earnings and record quarterly loan growth while maintaining our rigorous underwriting standards. Second, on June 30, 2022 we effected a two-for-one forward stock split of our common shares, which enhanced the liquidity and marketability of our common shares without diluting the holdings of our existing shareholders. As we head into the second half of 2022, our commercial loan pipeline remains robust and we are cautiously optimistic that the business environment will remain favorable despite the macro-economic headwinds of high inflation and rising interest rates. We remain diligently focused on executing our strategic plan and enhancing the Bank’s profitability while continuing to provide outstanding customer service.”
Net Interest and Dividend Income
Tax equivalent net interest income of $11.1 million for the second quarter 2022 increased $577 thousand, or 5.5%, versus first quarter 2022, and increased $1.3 million, or 13.6%, versus second quarter 2021. Tax equivalent interest income of $11.9 million for second quarter 2022 increased $622 thousand, or 5.5%, versus first quarter 2022 and increased $1.1 million, or 10.4%, from second quarter 2021. The cost of interest-bearing liabilities of $857 thousand for second quarter 2022 increased $45 thousand, or 5.5%, from first quarter 2022 and decreased $200 thousand, or 18.9%, from second quarter 2021. Interest expense for second quarter 2021 included approximately $180 thousand for interest and the amortization of issuance costs on subordinated debt, which Salisbury issued in 2015 and fully redeemed on May 28, 2021.
Average earning assets of $1.4 billion for second quarter 2022 declined $19.3 million, or 1.4%, from first quarter 2022, and increased $20.3 million, or 1.5%, versus second quarter 2021. Average earning assets for second quarter 2022 included average PPP loan balances of $8.8 million, net of deferred fees, compared with $18.7 million and $80.4 million in first quarter 2022 and second quarter 2021, respectively. Average total interest bearing liabilities of $943 million for second quarter 2022 decreased $14.3 million, or 1.5%, from first quarter 2022 and decreased $15.6 million, or 1.6%, versus second quarter 2021.
The tax equivalent net interest margin for second quarter 2022 was 3.15% compared with 2.95% for first quarter 2022 and 2.82% for second quarter 2021. Excluding PPP loans, the tax equivalent net interest margin for second quarter 2022 was 3.10% compared with 2.86% for first quarter 2022 and 2.76% for second quarter 2021. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 of this release for additional details.
Non-Interest Income
Non-interest income of $3.3 million for second quarter 2022 increased $203 thousand versus first quarter 2022 and increased $326 thousand versus second quarter 2021.
Trust and Wealth Advisory fees of $1.3 million for second quarter 2022 increased slightly from first quarter 2022 and second quarter 2021. Assets under administration were $1.3 billion at June 30, 2022 compared with $1.1 billion at December 31, 2021 and $970.3 million at June 30, 2021. Discretionary assets under administration of $546.5 million at June 30, 2022 compared with $657.8 million at December 31, 2021 and $614.3 million at June 30, 2021. The decline from the comparative quarters primarily reflected lower market valuations. Non-discretionary assets under administration of $714.7 million at June 30, 2022 increased from $425.4 million at December 31, 2021 and increased from $356.0 million at June 30, 2021. The increase in non-discretionary assets from the comparative quarters primarily reflected a higher valuation of certain partnership assets for an existing client relationship. The trust and wealth business records only a nominal annual fee on this relationship.
___________________
1 Excludes loans granted under the Paycheck Protection Program (“PPP”) by the Small Business Administration.
Service charges and fees of $1.7 million for second quarter 2022 increased $585 thousand versus first quarter 2022 and increased $349 thousand versus second quarter 2021. Second quarter 2022 and second quarter 2021 included non-recurring loan pre-payment fees of $425 thousand and $268 thousand, respectively. Deposit fees for second quarter 2022 also increased $126 thousand compared to the prior year second quarter. Net fees from mortgage banking activities decreased $278 thousand compared with first quarter 2022 and decreased $119 thousand from second quarter 2021 primarily due to a lower volume of sales of residential mortgage loans to the FHLB Boston. First quarter 2022 also included a pre-tax gain of $239 thousand on the sale of $3.8 million of commercial and residential loans.
Non-interest income for second quarter 2022 included a non-recurring non-taxable gain of $89 thousand related to proceeds receivable from a bank-owned life insurance policy (“BOLI”) due to the death of a former covered employee. Non-interest income for second quarter 2022 included a pre-tax loss of $45 thousand on the sale of available-for-sale securities (“AFS”) compared with a pre-tax gain of $210 thousand in first quarter 2022.
Non-Interest Expense
Non-interest expense of $8.5 million for second quarter 2022 decreased $121 thousand versus first quarter 2022 and increased $446 thousand versus second quarter 2021. Non-interest expense for first quarter 2022 included two isolated instances of debit card and check cashing fraud-related losses aggregating $251 thousand. During second quarter 2022, Salisbury recovered approximately $50 thousand of this aggregate loss through an insurance claim. Compensation expense of $4.9 million for second quarter 2022 increased $189 thousand from first quarter 2022 and increased $186 thousand versus second quarter 2021. The increase in compensation expense from first quarter 2022 primarily reflected higher salary and benefits expense, partially offset by lower payroll taxes and higher deferred loan origination expense. The increase in compensation expense from second quarter 2021 primarily reflected higher salary expense, partially offset by lower benefits expense.
Excluding compensation, other non-interest expenses for second quarter 2022 decreased $312 thousand from first quarter 2022 and increased $260 thousand from second quarter 2021. The decrease from the prior quarter primarily reflected the fraud losses reported in first quarter 2022 as well as lower utility costs and software maintenance expense in second quarter 2022, which were partially offset by higher Director fees and higher marketing expenses. The increase from second quarter 2021 primarily reflected higher professional fees, marketing expenses and FDIC insurance.
The effective income tax rates for second quarter 2022, first quarter 2022 and second quarter 2021 were 15.3%, 18.6% and 21.2%, respectively. The tax provision for second quarter 2022 included a non-recurring credit of $63 thousand to adjust for an over statement of the Bank’s 2021 tax liability to New York state. The lower tax rate in second quarter 2022 also reflected a higher mix of tax-exempt income from municipal bonds and tax advantaged loans as well as the BOLI proceeds receivable noted above.
Loans
Gross loans receivable of $1.1 billion increased $70.3 million, or 6.5%, from first quarter 2022, and increased $104.4 million, or 10.0%, from second quarter 2021. Loan balances at June 30, 2022 were also reduced by the payoff of two commercial real estate loans during the quarter, which aggregated $11.2 million. Excluding PPP loans, gross loans receivable increased a record $81.1 million, or 7.6%, from first quarter 2022 and $163.4 million, or 16.6%, from second quarter 2021. Residential 5+ multifamily gross loans receivable at June 30, 2022 included a loan for $16.0 million, which was reported in the commercial real estate category in first quarter 2022 and second quarter 2021 while the project was under construction. The gross balance of this loan was $12.0 million at March 31, 2022 and $11.2 million at June 30, 2021, respectively. Approximately $2.0 million of residential loans were sold to FHLB Boston in second quarter 2022 compared with $5.5 million during first quarter 2022 and $7.1 million in second quarter 2021. The ratio of gross loans to deposits for second quarter 2022 was 87.3% compared with 83.6% for first quarter 2022 and 84.1% for second quarter 2021. Balances by loan type for the comparative periods were as follows:
| Loan Type | Q2 2022 | Q1 2022 | Q2 2021 | ||||||||
| Residential Real Estate (1-4 Family) | $ | 444,698 | $ | 425,301 | $ | 391,165 | |||||
| Residential 5+ Multifamily | 69,272 | 53,376 | 36,972 | ||||||||
| Commercial Real Estate | 387,787 | 376,088 | 354,629 | ||||||||
| Commercial & Industrial ex PPP Loans | 189,086 | 163,832 | 156,849 | ||||||||
| PPP Loans | 2,894 | 13,666 | 61,908 | ||||||||
| Commercial & Industrial – Total | 191,980 | 177,498 | 218,757 | ||||||||
| Farm Land | 3,668 | 2,778 | 3,529 | ||||||||
| Vacant Land | 15,397 | 14,710 | 13,006 | ||||||||
| Municipal | 17,486 | 14,263 | 18,341 | ||||||||
| Consumer | 18,155 | 14,356 | 9,543 | ||||||||
| Deferred Costs/(Fees) | 1,018 | 761 | (889) | ||||||||
| Gross Loans Receivable | $ | 1,149,461 | $ | 1,079,131 | $ | 1,045,053 | |||||
| Gross Loans Receivable ex PPP | $ | 1,146,567 | $ | 1,065,465 | $ | 983,145 | |||||
Asset Quality
Asset quality remained strong in second quarter 2022. Non-performing assets of $4.2 million, or 0.28% of total assets at June 30, 2022, were essentially unchanged from December 31, 2021, and decreased $1.3 million from $5.5 million, or 0.39% of total assets, at June 30, 2021. Non-performing assets at June 30, 2022 included a residential real estate loan of approximately $1.5 million on a property that has been listed for sale. There is a signed purchase and sale agreement on this property and the sale is expected to close in third quarter 2022.
The amount of total impaired and potential problem loans decreased during the quarter to $13.9 million or 1.21% of gross loans receivable at June 30, 2022 compared to $32.8 million, or 3.04% of gross loans receivable at December 31, 2021 and $47.1 million, or 4.50% of gross loans receivable at June 30, 2021. The decrease in the balance from the comparative quarters primarily reflected management’s upgrade of the internal risk rating on certain hospitality related loans, which were previously downgraded due to concerns over COVID-19. These businesses have demonstrated a return to pre-pandemic levels of activity and liquidity.
Accruing loans receivable 30-to-89 days past due decreased $0.3 million during second quarter 2022 to $1.0 million, or 0.09% of gross loans receivable, from $1.3 million, or 0.12% of gross loans receivable at December 31, 2021, and decreased $0.4 million from $1.4 million, or 0.13% of gross loans receivable at June 30, 2021.
The allowance for loan losses for second quarter 2022 was $13.7 million compared with $12.9 million for first quarter 2022 and $12.7 million for second quarter 2021. The provision expense was $1.1 million for second quarter 2022 compared with a provision expense of $363 thousand for first quarter 2022 and a net release of credit reserves of $1.1 million for the second quarter 2021. The provision expense for second quarter 2022 reflected the record quarterly loan growth and adjustments to qualitative factors due to the uncertain macro-economic environment. The provision expense for second quarter 2022 also reflected a release of credit reserves due to management’s upgrade of the internal risk rating on certain loans related to the hospitality industry. Net loan charge-offs (recoveries) were $312 thousand for the second quarter 2022 compared with $410 thousand for first quarter 2022 and $103 thousand for the second quarter 2021. Net charge-offs for second quarter 2022 primarily related to a discrete commercial loan.
Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.20% for the second quarter 2022 versus 1.21% for the first quarter 2022 and 1.29% for the second quarter 2021. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 324% for the second quarter 2022 versus 467% for first quarter 2022 and 229% for second quarter 2021.
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 of $1.3 billion at June 30, 2022 decreased $19.7 million, or 1.5%, from December 31, 2021 and increased $73.2 million, or 5.9%, from June 30, 2021. At June 30, 2022, Salisbury had outstanding brokered deposits of $35.0 million compared with balances of $7.9 million at December 31, 2021 and June 30, 2021, respectively. Average total deposits for the second quarter 2022 were $1.3 billion compared with $1.3 billion for the first quarter 2022 and $1.3 billion for the second quarter 2021. Average total deposits for the second quarter 2022 included average brokered deposits of $18.0 million compared with $7.5 million for first quarter 2022 and $15.4 million for second quarter 2021.
Salisbury did not have any outstanding advances from FHLBB at June 30, 2022 compared with $7.7 million and $10.2 million at December 31, 2021 and June 30, 2021, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $253 million at June 30, 2022.
Capital
Shareholders’ equity decreased $2.8 million in second quarter to $127.3 million at June 30, 2022 as unrealized losses in the available-for-sale securities (“AFS”) portfolio of $6.1 million and common stock dividends paid of $0.9 million were partially offset by net income of $3.8 million and other activity of $0.4 million. The unrealized losses in the AFS portfolio, which reflected the continued increase in market interest rates during second quarter 2022, reduced both book value and tangible book value at June 30, 2022. Book value per common share of $22.01 at June 30, 2022 decreased $0.55 from first quarter 2022 and decreased $1.00 from second quarter 2021. Tangible book value per common share of $19.57 at June 30, 2022 decreased $0.53 from first quarter 2022 and decreased $0.93 from second quarter 2021.
The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At June 30, 2022, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 10.04%, 13.28%, and 12.13%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively. The unrealized losses in the AFS portfolio noted above do not affect the Bank’s regulatory capital ratios.
During second quarter 2022, Salisbury did not repurchase any of its outstanding common stock pursuant to its stock repurchase program established in March 2021.
Dividend on Common Shares
On July 20, 2022, the Board of Directors of Salisbury approved a quarterly cash dividend of $0.16 per common share that will be paid on August 26, 2022 to shareholders of record as of August 12, 2022.
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. For more information, please visit www.salisburybank.com.
Forward-Looking Statements
This news release may contain statements relating to 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 June 30, 2022, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under About Us/Shareholder Relations/News & Market Information/Presentations.
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS (unaudited)
| (in thousands, except share data) | June 30, 2022 | December 31, 2021 | ||||
| ASSETS | ||||||
| Cash and due from banks | $ | 8,611 | $ | 6,404 | ||
| Interest bearing demand deposits with other banks | 62,856 | 168,931 | ||||
| Total cash and cash equivalents | 71,467 | 175,335 | ||||
| Interest bearing Time Deposits with Financial Institutions | 750 | 750 | ||||
| Securities | ||||||
| Available-for-sale at fair value | 203,110 | 202,396 | ||||
| Mutual funds at fair value | 1,672 | 901 | ||||
| Federal Home Loan Bank of Boston stock at cost | 945 | 1,397 | ||||
| Loans held-for-sale | – | 2,684 | ||||
| Loans receivable, net (allowance for loan losses: $13,703 and $12,962) | 1,135,758 | 1,066,750 | ||||
| Bank premises and equipment, net | 22,710 | 22,625 | ||||
| Goodwill | 13,815 | 13,815 | ||||
| Intangible assets (net of accumulated amortization: $5,567 and $5,463) | 314 | 418 | ||||
| Accrued interest receivable | 6,123 | 6,260 | ||||
| Cash surrender value of life insurance policies | 28,063 | 27,738 | ||||
| Deferred taxes | 6,460 | 2,588 | ||||
| Other assets | 5,334 | 5,527 | ||||
| Total Assets | $ | 1,496,521 | $ | 1,529,184 | ||
| LIABILITIES and SHAREHOLDERS’ EQUITY | ||||||
| Deposits | ||||||
| Demand (non-interest bearing) | $ | 383,674 | $ | 416,073 | ||
| Demand (interest bearing) | 233,947 | 233,600 | ||||
| Money market | 314,244 | 330,436 | ||||
| Savings and other | 231,322 | 237,075 | ||||
| Certificates of deposit | 153,352 | 119,009 | ||||
| Total deposits | 1,316,539 | 1,336,193 | ||||
| Repurchase agreements | 16,574 | 11,430 | ||||
| Federal Home Loan Bank of Boston advances | – | 7,656 | ||||
| Subordinated debt | 24,502 | 24,474 | ||||
| Note payable | 149 | 170 | ||||
| Finance lease obligations | 4,329 | 4,107 | ||||
| Accrued interest and other liabilities | 7,125 | 8,554 | ||||
| Total Liabilities | 1,369,218 | 1,392,584 | ||||
| Shareholders’ Equity1 | ||||||
| Common stock – $0.10 per share par value | ||||||
| Authorized: 10,000,000; | ||||||
| Issued: 5,783,966 and 5,723,394 | ||||||
| Outstanding: 5,783,966 and 5,723,394 | 289 | 286 | ||||
| Unearned compensation – restricted stock awards | (1,512 | ) | (925 | ) | ||
| Paid-in capital | 47,494 | 46,374 | ||||
| Retained earnings | 95,568 | 89,995 | ||||
| Accumulated other comprehensive (loss) income, net | (14,536 | ) | 870 | |||
| Total Shareholders’ Equity | 127,303 | 136,600 | ||||
| Total Liabilities and Shareholders’ Equity | $ | 1,496,521 | $ | 1,529,184 | ||
1 The number of authorized, issued and outstanding shares has been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
| Three months ended | Six months ended | |||||||||||
| Periods ended June 30, (in thousands, except per share amounts) | 2022 | 2021 | 2022 | 2021 | ||||||||
| Interest and dividend income | ||||||||||||
| Interest and fees on loans | $ | 10,576 | $ | 9,901 | $ | 20,740 | $ | 20,377 | ||||
| Interest on debt securities | ||||||||||||
| Taxable | 859 | 488 | 1,583 | 912 | ||||||||
| Tax exempt | 187 | 172 | 362 | 334 | ||||||||
| Other interest and dividends | 107 | 61 | 164 | 95 | ||||||||
| Total interest and dividend income | 11,729 | 10,622 | 22,849 | 21,718 | ||||||||
| Interest expense | ||||||||||||
| Deposits | 577 | 567 | 1,055 | 1,121 | ||||||||
| Repurchase agreements | 4 | 4 | 6 | 8 | ||||||||
| Finance lease | 41 | 36 | 82 | 69 | ||||||||
| Note payable | 2 | 3 | 5 | 6 | ||||||||
| Subordinated debt | 233 | 415 | 466 | 534 | ||||||||
| Federal Home Loan Bank of Boston advances | – | 32 | 55 | 65 | ||||||||
| Total interest expense | 857 | 1,057 | 1,669 | 1,803 | ||||||||
| Net interest and dividend income | 10,872 | 9,565 | 21,180 | 19,915 | ||||||||
| Provision (release) for loan losses | 1,100 | (1,075 | ) | 1,463 | (917 | ) | ||||||
| Net interest and dividend income after provision (release) for loan losses | 9,772 | 10,640 | 19,717 | 20,832 | ||||||||
| Non-interest income | ||||||||||||
| Trust and wealth advisory | 1,293 | 1,254 | 2,533 | 2,399 | ||||||||
| Service charges and fees | 1,723 | 1,374 | 2,861 | 2,325 | ||||||||
| Mortgage banking activities, net | 77 | 196 | 432 | 804 | ||||||||
| (Losses) gains on mutual fund | (30 | ) | 3 | (72 | ) | (14 | ) | |||||
| (Losses) gains on securities, net | (45 | ) | (9 | ) | 165 | (9 | ) | |||||
| Bank-owned life insurance (“BOLI”) income | 252 | 125 | 414 | 251 | ||||||||
| Other | 27 | 28 | 57 | 57 | ||||||||
| Total non-interest income | 3,297 | 2,971 | 6,390 | 5,813 | ||||||||
| Non-interest expense | ||||||||||||
| Salaries | 3,657 | 3,403 | 7,135 | 6,304 | ||||||||
| Employee benefits | 1,288 | 1,356 | 2,565 | 2,668 | ||||||||
| Premises and equipment | 973 | 1,019 | 2,086 | 1,973 | ||||||||
| Information processing and services | 702 | 628 | 1,387 | 1,193 | ||||||||
| Professional fees | 821 | 644 | 1,609 | 1,355 | ||||||||
| Collections, OREO, and loan related | 116 | 113 | 232 | 197 | ||||||||
| FDIC insurance | 122 | 80 | 293 | 225 | ||||||||
| Marketing and community support | 262 | 214 | 447 | 296 | ||||||||
| Amortization of intangibles | 50 | 65 | 104 | 136 | ||||||||
| Other | 541 | 564 | 1,328 | 1,000 | ||||||||
| Total non-interest expense | 8,532 | 8,086 | 17,186 | 15,347 | ||||||||
| Income before income taxes | 4,537 | 5,525 | 8,921 | 11,298 | ||||||||
| Income tax provision | 692 | 1,172 | 1,507 | 2,419 | ||||||||
| Net income | $ | 3,845 | $ | 4,353 | $ | 7,414 | $ | 8,879 | ||||
| Net income available to common shareholders | $ | 3,772 | $ | 4,287 | $ | 7,280 | $ | 8,749 | ||||
| Basic earnings per common share1 | $ | 0.67 | $ | 0.76 | $ | 1.29 | $ | 1.56 | ||||
| Diluted earnings per common share1 | $ | 0.66 | $ | 0.76 | $ | 1.28 | $ | 1.55 | ||||
| Common dividends per share1 | $ | 0.16 | $ | 0.15 | $ | 0.32 | $ | 0.30 | ||||
1 Per share amounts for all periods have been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.
Salisbury Bancorp, Inc. and Subsidiary
SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)
| At or for the quarters ended | ||||||||||||||||
| (in thousands, except per share amounts and ratios) | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | |||||||||||
| Total assets | $1,496,521 | $1,465,082 | $1,529,184 | $1,476,849 | $1,436,666 | |||||||||||
| Loans receivable, net | 1,135,758 | 1,066,216 | 1,066,750 | 1,057,451 | 1,032,345 | |||||||||||
| Total securities | 205,727 | 217,591 | 204,694 | 177,979 | 152,943 | |||||||||||
| Deposits | 1,316,539 | 1,290,474 | 1,336,193 | 1,289,628 | 1,243,369 | |||||||||||
| FHLBB advances | – | 419 | 7,656 | 8,905 | 10,152 | |||||||||||
| Shareholders’ equity | 127,303 | 130,066 | 136,600 | 133,533 | 131,709 | |||||||||||
| Wealth assets under administration | 1,261,244 | 1,049,240 | 1,083,152 | 973,198 | 970,306 | |||||||||||
| Discretionary wealth assets under administration | 546,506 | 625,346 | 657,789 | 608,228 | 614,312 | |||||||||||
| Non-discretionary wealth assets under administration | 714,738 | 423,894 | 425,363 | 364,970 | 355,994 | |||||||||||
| Non-performing loans | 4,229 | 2,765 | 4,199 | 5,001 | 5,539 | |||||||||||
| Non-performing assets | 4,229 | 2,765 | 4,199 | 5,001 | 5,539 | |||||||||||
| Accruing loans past due 30-89 days | 1,001 | 2,349 | 1,342 | 909 | 1,400 | |||||||||||
| Net interest and dividend income | 10,872 | 10,306 | 10,543 | 10,165 | 9,565 | |||||||||||
| Net interest and dividend income, tax equivalent(1) | 11,061 | 10,484 | 10,735 | 10,345 | 9,739 | |||||||||||
| Provision (release) expense for loan losses | 1,100 | 363 | (202) | 400 | (1,075) | |||||||||||
| Non-interest income | 3,297 | 3,094 | 2,847 | 2,840 | 2,971 | |||||||||||
| Non-interest expense | 8,532 | 8,653 | 8,471 | 8,284 | 8,086 | |||||||||||
| Income before income taxes | 4,537 | 4,384 | 5,121 | 4,321 | 5,525 | |||||||||||
| Income tax provision | 692 | 816 | 980 | 868 | 1,172 | |||||||||||
| Net income | 3,845 | 3,568 | 4,141 | 3,453 | 4,353 | |||||||||||
| Net income allocated to common shareholders | 3,772 | 3,508 | 4,076 | 3,400 | 4,287 | |||||||||||
| Per share data (Data for all periods have been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.) | ||||||||||||||||
| Basic earnings per common share | $0.67 | $0.62 | $0.72 | $0.60 | $0.76 | |||||||||||
| Diluted earnings per common share | 0.66 | 0.62 | 0.72 | 0.60 | 0.76 | |||||||||||
| Dividends per common share | 0.16 | 0.16 | 0.16 | 0.16 | 0.15 | |||||||||||
| Book value per common share | 22.01 | 22.56 | 23.87 | 23.33 | 23.01 | |||||||||||
| Tangible book value per common share – Non-GAAP ⁽2⁾ | 19.57 | 20.10 | 21.38 | 20.83 | 20.50 | |||||||||||
| Common shares outstanding at end of period (in thousands) | 5,784 | 5,765 | 5,723 | 5.723 | 5,723 | |||||||||||
| Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) | 5,666 | 5,636 | 5,635 | 5,635 | 5,620 | |||||||||||
| Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) | 5,699 | 5,694 | 5,670 | 5,686 | 5,657 | |||||||||||
| Profitability ratios | ||||||||||||||||
| Net interest margin (tax equivalent)(1) | 3.15% | 2.95% | 2.99% | 2.92% | 2.82% | |||||||||||
| Efficiency ratio(2) | 59.49 | 63.38 | 61.91 | 61.63 | 63.07 | |||||||||||
| Effective income tax rate | 15.25 | 18.60 | 19.13 | 20.09 | 21.21 | |||||||||||
| Return on average assets | 1.06 | 0.97 | 1.10 | 0.93 | 1.21 | |||||||||||
| Return on average common shareholders’ equity | 11.98 | 10.65 | 12.14 | 10.27 | 13.51 | |||||||||||
| Credit quality ratios | ||||||||||||||||
| Non-performing loans to loans receivable, gross | 0.37% | 0.26% | 0.39% | 0.47% | 0.53% | |||||||||||
| Accruing loans past due 30-89 days to loans receivable, gross | 0.09 | 0.22 | 0.12 | 0.08 | 0.13 | |||||||||||
| Allowance for loan losses to loans receivable, gross | 1.19 | 1.20 | 1.20 | 1.23 | 1.22 | |||||||||||
| Allowance for loan losses to non-performing loans | 324.0 | 467.3 | 308.7 | 263.3 | 229.4 | |||||||||||
| Non-performing assets to total assets | 0.28 | 0.19 | 0.27 | 0.34 | 0.39 | |||||||||||
| Capital ratios | ||||||||||||||||
| Common shareholders’ equity to assets | 8.51% | 8.88% | 8.93% | 9.04% | 9.17% | |||||||||||
| Tangible common shareholders’ equity to tangible assets – Non-GAAP(2) | 7.63 | 7.99 | 8.08 | 8.15 | 8.25 | |||||||||||
| Tier 1 leverage capital(3) | 10.04 | 9.66 | 9.42 | 9.31 | 9.33 | |||||||||||
| Total risk-based capital(3) | 13.28 | 13.98 | 14.08 | 14.20 | 14.67 | |||||||||||
| Common equity tier 1 capital(3) | 12.13 | 12.80 | 12.87 | 12.95 | 13.42 | |||||||||||
(1) Adjusted to reflect the U.S. federal statutory benefit on income derived from tax-exempt securities and loans.
(2) Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.
(3) 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) | Q2 2022 | Q1 2022 | Q4 2021 | Q3 2021 | Q2 2021 | |||||||||||||||
| Common Shareholders’ Equity | $ | 127,303 | $ | 130,066 | $ | 136,600 | $ | 133,533 | $ | 131,709 | ||||||||||
| Less: Goodwill | (13,815) | (13,815) | (13,815) | (13,815) | (13,815) | |||||||||||||||
| Less: Intangible assets | (314) | (364) | (418) | (476) | (538) | |||||||||||||||
| Tangible Common Shareholders’ Equity | $ | 113,174 | $ | 115,887 | $ | 122,367 | $ | 119,242 | $ | 117,356 | ||||||||||
| Total Assets | $ | 1,496,521 | $ | 1,465,082 | $ | 1,529,184 | $ | 1,476,849 | $ | 1,436,666 | ||||||||||
| Less: Goodwill | (13,815) | (13,815) | (13,815) | (13,815) | (13,815) | |||||||||||||||
| Less: Intangible assets | (314) | (364) | (418) | (476) | (538) | |||||||||||||||
| Tangible Total Assets | $ | 1,482,392 | $ | 1,450,903 | $ | 1,514,951 | $ | 1,462,558 | 1,422,313 | |||||||||||
| Common Shares outstanding (in thousands)1 | 5,784 | 5,765 | 5,723 | 5,723 | 5,723 | |||||||||||||||
| Book value per Common Share – GAAP1 | $ | 22.01 | $ | 22.56 | $ | 23.87 | $ | 23.33 | $ | 23.01 | ||||||||||
| Tangible book value per Common Share – Non-GAAP1 | 19.57 | 20.10 | 21.38 | 20.83 | 20.50 | |||||||||||||||
| Tangible common shareholders’ equity to tangible total assets – Non-GAAP | 7.63% | 7.99% | 8.08% | 8.15% | 8.25% | |||||||||||||||
| Consolidated: | ||||||||||||||||||||
| Non-interest expense | $ | 8,532 | $ | 8,653 | $ | 8,471 | $ | 8,284 | $ | 8,086 | ||||||||||
| Less: Amortization of core deposit intangibles | (50) | (54) | (57) | (61) | (65) | |||||||||||||||
| Less: Write-down of fixed assets | – | – | – | (144) | – | |||||||||||||||
| Less: Fraud-related recovery (losses) | 50 | (251) | – | – | – | |||||||||||||||
| Adjusted non-interest expense | $ | 8,532 | $ | 8,348 | $ | 8,414 | $ | 8,079 | $ | 8,021 | ||||||||||
| Net interest and dividend income, tax equivalent | $ | 11,061 | $ | 10,484 | $ | 10,735 | $ | 10,345 | $ | 9,739 | ||||||||||
| Non-interest income | 3,297 | 3,094 | 2,847 | 2,840 | 2,971 | |||||||||||||||
| Losses (gains) on securities | 75 | (168) | 9 | (3) | 6 | |||||||||||||||
| Gains on sale of fixed assets | – | – | – | (73) | – | |||||||||||||||
| BOLI proceeds receivable | (89) | – | – | – | – | |||||||||||||||
| Gains on sale of loans | – | (239) | – | – | – | |||||||||||||||
| Adjusted revenue | $ | 14,344 | $ | 13,171 | $ | 13,591 | $ | 13,109 | $ | 12,716 | ||||||||||
| Efficiency Ratio – Non-GAAP2 | 59.49% | 63.38% | 61.91% | 61.63% | 63.07% | |||||||||||||||
1 Data for all periods have been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.
2 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q2 2022: 57.21%; Q1 2022: 61.83%; Q4 2021: 60.62%; Q3 2021: 60.70%; Q2 2021: 61.59%.
Salisbury Bancorp, Inc. and Subsidiary
SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)
| At or for the quarters ended | Average Balance | Income / Expense | Average Yield / Rate | |||||||||||||||
| (dollars in thousands) | Q2 2022 | Q1 2022 | Q2 2021 | Q2 2022 | Q1 2022 | Q2 2021 | Q2 2022 | Q1 2022 | Q2 2021 | |||||||||
| Loans (a)(d) | $ | 1,112,120 | $ | 1,079,610 | $ | 1,052,381 | $ | 10,693 | $ | 10,277 | $ | 10,015 | 3.81% | 3.79% | 3.78% | |||
| Securities (c)(d) | 225,458 | 208,140 | 138,164 | 1,117 | 962 | 720 | 1.98 | 1.85 | 2.08 | |||||||||
| FHLBB stock | 1,221 | 1,434 | 1,830 | 10 | 7 | 11 | 3.20 | 2.05 | 2.41 | |||||||||
| Short term funds (b) | 54,553 | 123,454 | 180,716 | 98 | 50 | 50 | 0.73 | 0.16 | 0.11 | |||||||||
| Total interest-earning assets | 1,393,352 | 1,412,638 | 1,373,091 | 11,918 | 11,296 | 10,796 | 3.40 | 3.19 | 3.13 | |||||||||
| Other assets | 61,790 | 74,795 | 70,447 | |||||||||||||||
| Total assets | $ | 1,455,142 | $ | 1,487,433 | $ | 1,443,538 | ||||||||||||
| Interest-bearing demand deposits | $ | 229,625 | $ | 232,464 | $ | 227,623 | 108 | 99 | 117 | 0.19 | 0.17 | 0.21 | ||||||
| Money market accounts | 299,870 | 321,198 | 315,665 | 156 | 126 | 138 | 0.21 | 0.16 | 0.18 | |||||||||
| Savings and other | 236,728 | 233,092 | 212,253 | 97 | 64 | 59 | 0.16 | 0.11 | 0.11 | |||||||||
| Certificates of deposit | 137,034 | 131,059 | 147,103 | 216 | 189 | 252 | 0.63 | 0.59 | 0.69 | |||||||||
| Total interest-bearing deposits | 903,257 | 917,813 | 902,644 | 577 | 478 | 566 | 0.26 | 0.21 | 0.25 | |||||||||
| Repurchase agreements | 10,216 | 7,146 | 12,010 | 4 | 3 | 4 | 0.15 | 0.14 | 0.15 | |||||||||
| Finance lease | 5,283 | 5,097 | 2,751 | 41 | 41 | 36 | 3.09 | 3.23 | 5.26 | |||||||||
| Note payable | 153 | 163 | 192 | 2 | 2 | 3 | 6.13 | 6.12 | 6.09 | |||||||||
| Subordinated debt (f) | 24,494 | 24,480 | 30,789 | 233 | 233 | 415 | 3.80 | 3.81 | 5.39 | |||||||||
| FHLBB advances | – | 2,974 | 10,576 | – | 55 | 33 | – | 7.46 | 1.21 | |||||||||
| Total interest-bearing liabilities | 943,403 | 957,673 | 958,962 | 857 | 812 | 1,057 | 0.36 | 0.34 | 0.44 | |||||||||
| Demand deposits | 376,694 | 386,884 | 348,561 | |||||||||||||||
| Other liabilities | 6,258 | 7,036 | 6,786 | |||||||||||||||
| Shareholders’ equity | 128,787 | 135,840 | 129,229 | |||||||||||||||
| Total liabilities & shareholders’ equity | $ | 1,455,142 | $ | 1,487,433 | $ | 1,443,538 | ||||||||||||
| Net interest income | $ | 11,061 | $ | 10,484 | $ | 9,739 | ||||||||||||
| Spread on interest-bearing funds | 3.03 | 2.84 | 2.69 | |||||||||||||||
| Net interest margin (e) | 3.15 | 2.95 | 2.82 | |||||||||||||||
(a) Includes non-accrual loans.
(b) Includes interest-bearing deposits in other banks and federal funds sold.
(c) Average balances of securities are based on amortized cost.
(d) Includes tax exempt income benefit of $0.2 million, $0.2 million and $0.2 million, respectively, for Q2 2022, Q1 2022 and Q1 2021 on tax-exempt securities and loans whose income and yields are calculated on a tax-equivalent basis. The income benefit reflected the U.S. federal statutory tax rate of 21.0% for 2022 and 2021.
(e) Net interest income divided by average interest-earning assets.
(f) Net of issuance costs.
Salisbury Bancorp, Inc. and Subsidiary
SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)
| Six months ended June 30, | Average Balance | Income / Expense | Average Yield / Rate | |||||||
| (dollars in thousands) | 2022 | 2021 | 2022 | 2021 | 2022 | 2021 | ||||
| Loans (a)(d) | $ | 1,095,955 | $ | 1,052,020 | $ | 20,971 | $ | 20,605 | 3.80% | 3.90% |
| Securities (c)(d) | 216,847 | 120,710 | 2,079 | 1,360 | 1.92 | 2.25 | ||||
| FHLBB stock | 1,327 | 1,889 | 17 | 20 | 2.58 | 2.13 | ||||
| Short term funds (b) | 88,813 | 141,278 | 146 | 76 | 0.33 | 0.11 | ||||
| Total earning assets | 1,402,942 | 1,315,897 | 23,213 | 22,061 | 3.29 | 3.34 | ||||
| Other assets | 68,256 | 70,848 | ||||||||
| Total assets | $ | 1,471,198 | $ | 1,386,745 | ||||||
| Interest-bearing demand deposits | $ | 231,037 | $ | 223,049 | 207 | 223 | 0.18 | 0.20 | ||
| Money market accounts | 310,475 | 302,290 | 283 | 267 | 0.18 | 0.18 | ||||
| Savings and other | 234,920 | 204,930 | 160 | 115 | 0.14 | 0.11 | ||||
| Certificates of deposit | 134,063 | 138,402 | 405 | 516 | 0.61 | 0.75 | ||||
| Total interest-bearing deposits | 910,495 | 868,671 | 1,055 | 1,121 | 0.23 | 0.26 | ||||
| Repurchase agreements | 8,689 | 10,241 | 6 | 8 | 0.15 | 0.15 | ||||
| Finance lease | 5,190 | 2,787 | 82 | 69 | 3.16 | 4.93 | ||||
| Note payable | 158 | 196 | 5 | 6 | 6.13 | 6.14 | ||||
| Subordinated Debt (f) | 24,488 | 20,529 | 466 | 534 | 3.81 | 5.20 | ||||
| FHLBB advances | 1,479 | 11,197 | 55 | 65 | 7.46 | 1.17 | ||||
| Total interest-bearing liabilities | 950,499 | 913,621 | 1,669 | 1,803 | 0.35 | 0.40 | ||||
| Demand deposits | 381,731 | 338,486 | ||||||||
| Other liabilities | 6,675 | 6,851 | ||||||||
| Shareholders’ equity | 132,293 | 127,787 | ||||||||
| Total liabilities & shareholders’ equity | $ | 1,471,198 | $ | 1,386,745 | ||||||
| Net interest income | $ | 21,544 | $ | 20,258 | ||||||
| Spread on interest-bearing funds | 2.94 | 2.95 | ||||||||
| Net interest margin (e) | 3.05 | 3.06 | ||||||||
(a) Includes non-accrual loans.
(b) Includes interest-bearing deposits in other banks and federal funds sold.
(c) Average balances of securities are based on historical cost.
(d) Includes tax exempt income benefit of $0.4 million and $0.2 million, respectively for 2022 and 2021 on tax-exempt securities and loans whose income and yields are calculated on a tax-equivalent basis. The income benefit reflected the U.S. federal statutory tax rate of 21.0% for 2022 and 2021.
(e) Net interest income divided by average interest-earning assets.
(f) Net of issuance costs.
Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer
860-435-9801 or rcantele@salisburybank.com
