Salisbury Bancorp, Inc. Reports Results For Third Quarter 2022; Declares 16 Cent Dividend
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Salisbury Bancorp, Inc. Reports Results For Third Quarter 2022; Declares 16 Cent Dividend

  • Third Quarter 2022 Net Income of $0.75 per Basic Common Share and Return on Average Assets of 1.13%
  • Third Quarter 2022 Loan Growth of $43.8 million, or 3.8%, Excluding PPP Loans
  • Non-performing Assets were 0.12% of Total Assets at September 30, 2022
  • Common Equity Tier 1 and Total Capital Ratios of 12.1% and 13.2%, Respectively

LAKEVILLE, Conn., Oct. 19, 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 third quarter ended September 30, 2022.

Net income available to common shareholders was $4.3 million, or $0.75 per basic common share, for the third quarter ended September 30, 2022 (third quarter 2022), compared with $3.8 million, or $0.67 per basic common share, for the second quarter ended June 30, 2022 (second quarter 2022), and $3.4 million, or $0.60 per basic common share, for the third quarter ended September 30, 2021 (third quarter 2021).

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “We reported another quarter of strong earnings and loan growth and the credit quality of our loan portfolio continued to improve. As we approach the end of the year, we are cautiously optimistic that the business environment will remain favorable despite rising interest rates, persistent inflation and volatile financial markets. We are focused on prudently extending credit and enhancing the Bank’s profitability while continuing to provide outstanding customer service.”

Net Interest and Dividend Income

Tax equivalent net interest income of $12.1 million for the third quarter 2022 increased $993 thousand, or 9.0%, versus second quarter 2022, and increased $1.7 million, or 16.5%, versus third quarter 2021. Tax equivalent interest income of $13.2 million for third quarter 2022 increased $1.3 million, or 10.9%, versus second quarter 2022 and increased $2.0 million, or 18.2%, from third quarter 2021. The cost of interest-bearing liabilities of $1.2 million for third quarter 2022 increased $308 thousand, or 35.9%, from second quarter 2022 and increased $329 thousand, or 39.4%, from third quarter 2021.

Average earning assets of $1.5 billion for third quarter 2022 increased $66.3 million, or 4.8%, from second quarter 2022, and increased $53.8 million, or 3.8%, versus third quarter 2021. Average earning assets for third quarter 2022 included average PPP loan balances of $1.3 million, net of deferred fees, compared with $8.8 million and $51.8 million in second quarter 2022 and third quarter 2021, respectively. Average total interest bearing liabilities of $972 million for third quarter 2022 increased $28.6 million, or 3.0%, from second quarter 2022 and increased $22.6 million, or 2.4%, versus third quarter 2021.

The tax equivalent net interest margin for third quarter 2022 was 3.27% compared with 3.15% for second quarter 2022 and 2.92% for third quarter 2021. Excluding PPP loans, the tax equivalent net interest margin for third quarter 2022 was 3.25% compared with 3.10% for second quarter 2022 and 2.78% for third quarter 2021. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 8 of this release for additional details.

Non-Interest Income

Non-interest income of $2.7 million for third quarter 2022 decreased $604 thousand versus second quarter 2022 and decreased $147 thousand versus third quarter 2021.

Trust and Wealth Advisory fees of $1.2 million for third quarter 2022 decreased $65 thousand from second quarter 2022 and decreased $58 thousand from third quarter 2021. Assets under administration were $1.2 billion at September 30, 2022 compared with $1.1 billion at December 31, 2021 and $973.2 million at September 30, 2021. Discretionary assets under administration of $522.1 million at September 30, 2022 compared with $657.8 million at December 31, 2021 and $608.2 million at September 30, 2021. The decline from the comparative quarters primarily reflected lower market valuations. Non-discretionary assets under administration of $710.2 million at September 30, 2022 increased from $425.4 million at December 31, 2021 and increased from $365.0 million at September 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.

Service charges and fees of $1.2 million for third quarter 2022 decreased $504 thousand versus second quarter 2022 and was essentially unchanged from third quarter 2021. The decrease from second quarter 2022 primarily reflected non-recurring loan prepayment fees of $425 thousand, which were recorded in the second quarter. Deposit fees for third quarter 2022 were essentially unchanged from the comparative quarters. Net fees from mortgage banking activities were slightly below the comparative quarters. Salisbury did not sell any residential loans to FHLBB during third quarter 2022 compared with sales of $2.0 million in second quarter 2022 and $1.8 million in third quarter 2021.

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 Expense

Non-interest expense of $8.5 million for third quarter 2022 declined slightly from second quarter 2022 and increased $228 thousand versus third quarter 2021. Compensation expense of $5.0 million for third quarter 2022 increased $81 thousand from second quarter 2022 and increased $343 thousand versus third quarter 2021. The increase in compensation expense from the comparative periods primarily reflected higher salary expense as well as higher production and incentive accruals, partially offset by lower benefits expense.

Excluding compensation expense, other non-interest expenses for third quarter 2022 decreased $101 thousand from second quarter 2022 and decreased $115 thousand from third quarter 2021. The decrease from the prior quarter primarily reflected lower professional fees, lower marketing expense and lower Director fees, partially offset by higher facilities and deposit related costs. The decrease from third quarter 2021 primarily reflected lower facilities related costs as well as lower marketing expenses, partially offset by higher information processing costs.

The effective income tax rates for third quarter 2022, second quarter 2022 and third quarter 2021 were 18.7%, 15.3% and 20.1%, 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 as well as non-recurring BOLI proceeds noted above.

Loans

Gross loans receivable of $1.2 billion increased $41.4 million, or 3.6%, from second quarter 2022, and increased $120.2 million, or 11.2%, from third quarter 2021. Excluding PPP loans, gross loans receivable increased $43.8 million, or 3.8%, from second quarter 2022 and $160.4 million, or 15.6%, from third quarter 2021. Residential 5+ multifamily gross loans receivable at September 30, 2022 and June 30, 2022 included a loan for approximately $16.0 million. At September 30, 2021 this loan, which had a gross balance of $11.7 million, was reported in the commercial real estate category while the project was under construction. The ratio of gross loans to deposits for third quarter 2022 was 89.9% compared with 87.3% for second quarter 2022 and 83.0% for third quarter 2021. Balances by loan type for the comparative periods were as follows:

Loan Type   Q3 2022   Q2 2022     Q3 2021
Residential Real Estate (1-4 Family)   $ 461,379   $ 444,698     $ 408,231  
Residential 5+ Multifamily     70,459     69,272       46,237  
Commercial Real Estate     413,019     387,787       361,965  
Commercial & Industrial ex PPP Loans     186,527     189,086       167,528  
PPP Loans     469     2,894       40,652  
Commercial & Industrial – Total     186,996     191,980       208,180  
Farm Land     4,225     3,668       3,409  
Vacant Land     14,796     15,397       13,698  
Municipal     18,607     17,486       18,061  
Consumer     20,344     18,155       11,152  
Deferred Costs/(Fees)     1,002     1,018       (314 )
Gross Loans Receivable   $ 1,190,827   $ 1,149,461     $ 1,070,619  
Gross Loans Receivable ex PPP   $ 1,190,358   $ 1,146,567     $ 1,029,967  

Asset Quality

Asset quality improved in third quarter 2022. Non-performing assets of $1.9 million, or 0.12% of total assets at September 30, 2022, decreased $2.3 million from $4.2 million, or 0.27% of total assets at December 31, 2021, and decreased $3.1 million from $5.0 million, or 0.34% of total assets, at September 30, 2021.

The amount of total impaired and potential problem loans decreased $2.7 million during the quarter to $11.2 million or 0.94% of gross loans receivable at September 30, 2022 compared to $32.8 million, or 3.04% of gross loans receivable at December 31, 2021 and $45.7 million, or 4.27% of gross loans receivable at September 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, warranting the improvement in risk rating.

Accruing loans receivable 30-to-89 days past due decreased $0.6 million during third quarter 2022 to $0.4 million, or 0.03% of gross loans receivable, from $1.3 million, or 0.12% of gross loans receivable at December 31, 2021, and decreased $0.5 million from $0.9 million, or 0.08% of gross loans receivable at September 30, 2021.

The allowance for loan losses for third quarter 2022 was $14.3 million compared with $13.7 million for second quarter 2022 and $13.2 million for third quarter 2021.The provision expense was $0.7 million for third quarter 2022 compared with a provision expense of $1.1 million for second quarter 2022 and a provision expense of $0.4 million for the third quarter 2021. The provision expense for third quarter 2022 reflected the strong quarterly loan growth and adjustments to qualitative factors due to the uncertain macroeconomic environment. Net loan charge-offs (recoveries) were $64 thousand for the third quarter 2022 compared with $312 thousand for second quarter 2022 and ($60) thousand for the third quarter 2021.

Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.20% for the third quarter 2022 versus 1.20% for the second quarter 2022 and 1.28% for the third quarter 2021. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 771% for the third quarter 2022 versus 324% for second quarter 2022 and 263% for third 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 September 30, 2022 decreased $11.0 million, or 0.8%, from December 31, 2021 and increased $35.6 million, or 2.8%, from September 30, 2021. At September 30, 2022, Salisbury did not have any outstanding brokered deposits balances compared with balances of $7.9 million at December 31, 2021 and September 30, 2021, respectively. Average total deposits were $1.3 billion for third quarter 2022, second quarter 2022 and third quarter 2021. Average total deposits for third quarter 2022 included average brokered deposits of $17.6 million compared with $18.0 million for second quarter 2022 and $7.9 million for third quarter 2021.

Salisbury had $20.0 million of outstanding advances from FHLBB at September 30, 2022 compared with $7.7 million and $8.9 million at December 31, 2021 and September 30, 2021, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $227 million at September 30, 2022.

Capital

Shareholders’ equity decreased $4.1 million in third quarter to $123.2 million at September 30, 2022 as unrealized losses in the available-for-sale securities (“AFS”) portfolio increased by $7.8 million and common stock dividends were paid of $0.9 million, which were partially offset by net income of $4.3 million and other activity of $0.2 million. The unrealized losses in the AFS portfolio, which reflected the continued increase in market interest rates during third quarter 2022, reduced both book value and tangible book value at September 30, 2022. Book value per common share of $21.29 at September 30, 2022 decreased $0.72 from second quarter 2022 and decreased $2.04 from third quarter 2021. Tangible book value per common share of $18.86 at September 30, 2022 decreased $0.71 from second quarter 2022 and decreased $1.97 from third quarter 2021.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At September 30, 2022, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.83%, 13.24%, and 12.07%, 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 third 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 October 19, 2022, the Board of Directors of Salisbury approved a quarterly cash dividend of $0.16 per common share that will be paid on November 25, 2022 to shareholders of record as of November 11, 2022.

Other Matters

In July 2022, Salisbury management discovered that the Bank’s trust department terminated a trust account in May 2020 and distributed approximately $1.0 million that should have been retained in continuance of the trust account. Salisbury has engaged legal counsel and is currently evaluating the Company’s potential financial exposure. At this time, management believes that Salisbury’s exposure is not yet known or knowable and could potentially range from zero to approximately $1.0 million depending upon the facts and circumstances and the scope of Salisbury’s insurance coverage.

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 September 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) September 30, 2022 December 31, 2021
ASSETS    
Cash and due from banks $ 6,314   $ 6,404  
Interest bearing demand deposits with other banks   49,983     168,931  
Total cash and cash equivalents   56,297     175,335  
Interest bearing Time Deposits with Financial Institutions       750  
Securities    
Available-for-sale at fair value   189,161     202,396  
Mutual funds at fair value   1,882     901  
Federal Home Loan Bank of Boston stock at cost   1,487     1,397  
Loans held-for-sale       2,684  
Loans receivable, net (allowance for loan losses: $14,334 and $12,962)   1,176,493     1,066,750  
Bank premises and equipment, net   22,502     22,625  
Goodwill   13,815     13,815  
Intangible assets (net of accumulated amortization: $5,613 and $5,462)   269     418  
Accrued interest receivable   6,012     6,260  
Cash surrender value of life insurance policies   30,187     27,738  
Deferred taxes   8,882     2,588  
Other assets   5,151     5,527  
Total Assets $ 1,512,138   $ 1,529,184  
LIABILITIES and SHAREHOLDERS’ EQUITY    
Deposits    
Demand (non-interest bearing) $ 413,584   $ 416,073  
Demand (interest bearing)   241,236     233,600  
Money market   313,987     330,436  
Savings and other   246,538     237,075  
Certificates of deposit   109,859     119,009  
Total deposits   1,325,204     1,336,193  
Repurchase agreements   7,109     11,430  
Federal Home Loan Bank of Boston advances   20,000     7,656  
Subordinated debt   24,517     24,474  
Note payable   139     170  
Finance lease obligations   4,296     4,107  
Accrued interest and other liabilities   7,713     8,554  
Total Liabilities   1,388,978     1,392,584  
Shareholders’ Equity    
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   578     286  
Unearned compensation – restricted stock awards   (1,328 )   (925 )
Paid-in capital   46,893     46,374  
Retained earnings   99,338     89,995  
Accumulated other comprehensive (loss) income, net   (22,321 )   870  
Total Shareholders’ Equity   123,160     136,600  
Total Liabilities and Shareholders’ Equity $ 1,512,138   $ 1,529,184  

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)   2022     2021     2022     2021  
Interest and dividend income        
Interest and fees on loans $ 11,541   $ 10,264   $ 32,280   $ 30,642  
Interest on debt securities        
        Taxable   903     486     2,486     1,398  
        Tax exempt   213     172     575     506  
Other interest and dividends   352     79     517     174  
        Total interest and dividend income   13,009     11,001     35,858     32,720  
Interest expense        
Deposits   883     532     1,938     1,652  
Repurchase agreements   4     5     11     13  
Finance lease   41     33     122     102  
Note payable   2     3     7     9  
Subordinated debt   233     233     699     767  
Federal Home Loan Bank of Boston advances   2     30     57     96  
        Total interest expense   1,165     836     2,834     2,639  
Net interest and dividend income   11,844     10,165     33,024     30,081  
Provision (release) for loan losses   695     400     2,158     (517 )
        Net interest and dividend income after provision (release) for loan losses   11,149     9,765     30,866     30,598  
Non-interest income        
Trust and wealth advisory   1,228     1,286     3,762     3,685  
Service charges and fees   1,219     1,211     4,080     3,536  
Mortgage banking activities, net   64     108     497     912  
Losses on mutual fund   (47 )   (4 )   (119 )   (18 )
Gains (losses) gains on securities, net       7     165     (2 )
Bank-owned life insurance (“BOLI”) income   201     135     615     386  
Gain on sale of assets       73         73  
Other   28     24     84     81  
        Total non-interest income   2,693     2,840     9,084     8,653  
Non-interest expense        
Salaries   3,802     3,361     10,938     9,664  
Employee benefits   1,224     1,322     3,789     3,990  
Premises and equipment   1,117     1,060     3,200     3,034  
Write-down of assets       144     3     144  
Information processing and services   711     632     2,098     1,824  
Professional fees   689     735     2,297     2,090  
Collections, OREO, and loan related   67     120     300     317  
FDIC insurance   98     146     391     370  
Marketing and community support   214     256     661     552  
Amortization of intangibles   46     61     150     198  
Other   544     447     1,872     1,448  
        Total non-interest expense   8,512     8,284     25,699     23,631  
Income before income taxes   5,330     4,321     14,251     15,620  
Income tax provision   994     868     2,501     3,288  
Net income $ 4,336   $ 3,453   $ 11,750   $ 12,332  
Net income available to common shareholders $ 4,264   $ 3,400   $     11,543   $ 12,148  
Basic earnings per common share $ 0.75   $ 0.60   $ 2.04   $ 2.16  
Diluted earnings per common share $ 0.75   $ 0.60   $ 2.03   $ 2.15  
Common dividends per share $ 0.16   $ 0.16   $ 0.48   $ 0.45  

Salisbury Bancorp, Inc. and Subsidiary
SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)

At or for the quarters ended
(in thousands, except per share amounts and ratios) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021
Total assets $ 1,512,138   $ 1,496,521   $ 1,465,082   $ 1,529,184   $ 1,476,849  
Loans receivable, net   1,176,493     1,135,758     1,066,216     1,066,750     1,057,451  
Total securities   192,530     205,727     217,591     204,694     177,979  
Deposits   1,325,204     1,316,539     1,290,474     1,336,193     1,289,628  
FHLBB advances   20,000         419     7,656     8,905  
Shareholders’ equity   123,160     127,303     130,066     136,600     133,533  
Wealth assets under administration   1,232,272     1,261,244     1,049,240     1,083,152     973,198  
Discretionary wealth assets under administration   522,109     546,506     625,346     657,789     608,228  
Non-discretionary wealth assets under administration   710,163     714,738     423,894     425,363     364,970  
Non-performing loans   1,860     4,229     2,765     4,199     5,001  
Non-performing assets   1,860     4,229     2,765     4,199     5,001  
Accruing loans past due 30-89 days   390     1,001     2,349     1,342     909  
Net interest and dividend income   11,844     10,872     10,306     10,543     10,165  
Net interest and dividend income, tax equivalent (1)   12,054     11,061     10,484     10,735     10,345  
Provision (release) expense for loan losses   695     1,100     363     (202 )   400  
Non-interest income   2,693     3,297     3,094     2,847     2,840  
Non-interest expense   8,512     8,532     8,653     8,471     8,284  
Income before income taxes   5,330     4,537     4,384     5,121     4,321  
Income tax provision   994     692     816     980     868  
Net income   4,336     3,845     3,568     4,141     3,453  
Net income allocated to common shareholders   4,264     3,772     3,508     4,076     3,400  
           
Per share data
Basic earnings per common share $ 0.75   $ 0.67   $ 0.62   $ 0.72   $ 0.60  
Diluted earnings per common share   0.75     0.66     0.62     0.72     0.60  
Dividends per common share   0.16     0.16     0.16     0.16     0.16  
Book value per common share   21.29     22.01     22.56     23.87     23.33  
Tangible book value per common share – Non-GAAP ⁽2   18.86     19.57     20.10     21.38     20.83  
Common shares outstanding at end of period (in thousands)   5,784     5,784     5,765     5,723     5.723  
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands)   5,687     5,666     5,636     5,635     5,635  
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands)   5,713     5,699     5,694     5,670     5,686  
           
Profitability ratios          
Net interest margin (tax equivalent) (1)   3.27 %   3.15 %   2.95 %   2.99 %   2.92 %
Efficiency ratio (2)   57.38     59.49     63.38     61.91     61.63  
Effective income tax rate   18.65     15.25     18.60     19.13     20.09  
Return on average assets   1.13     1.06     0.97     1.10     0.93  
Return on average common shareholders’ equity   13.23     11.98     10.65     12.14     10.27  
           
Credit quality ratios          
Non-performing loans to loans receivable, gross   0.16 %   0.37 %   0.26 %   0.39 %   0.47 %
Accruing loans past due 30-89 days to loans receivable, gross   0.03     0.09     0.22     0.12     0.08  
Allowance for loan losses to loans receivable, gross   1.20     1.19     1.20     1.20     1.23  
Allowance for loan losses to non-performing loans   770.6     324.0     467.3     308.7     263.3  
Non-performing assets to total assets   0.12     0.28     0.19     0.27     0.34  
           
Capital ratios          
Common shareholders’ equity to assets   8.14 %   8.51 %   8.88 %   8.93 %   9.04 %
Tangible common shareholders’ equity to tangible assets – Non-GAAP (2)   7.28     7.63     7.99     8.08     8.15  
Tier 1 leverage capital (3)   9.83     10.04     9.66     9.42     9.31  
Total risk-based capital (3)   13.24     13.28     13.98     14.08     14.20  
Common equity tier 1 capital (3)   12.07     12.13     12.80     12.87     12.95  

(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) Q3 2022 Q2 2022 Q1 2022 Q4 2021 Q3 2021
Common Shareholders’ Equity $ 123,160   $ 127,303   $ 130,066   $ 136,600   $ 133,533  
Less: Goodwill   (13,815 )   (13,815 )   (13,815 )   (13,815 )   (13,815 )
Less: Intangible assets   (269 )   (314 )   (364 )   (418 )   (476 )
Tangible Common Shareholders’ Equity $ 109,076   $ 113,174   $ 115,887   $ 122,367   $ 119,242  
Total Assets $ 1,512,138   $ 1,496,521   $ 1,465,082   $ 1,529,184   $ 1,476,849  
Less: Goodwill   (13,815 )   (13,815 )   (13,815 )   (13,815 )   (13,815 )
Less: Intangible assets   (269 )   (314 )   (364 )   (418 )   (476 )
Tangible Total Assets $ 1,498,054   $ 1,482,392   $ 1,450,903   $ 1,514,951   $ 1,462,558  
Common Shares outstanding (in thousands)   5,784     5,784     5,765     5,723     5,723  
           
Book value per Common Share – GAAP $ 21.29   $ 22.01   $ 22.56   $ 23.87   $ 23.33  
Tangible book value per Common Share – Non-GAAP   18.86     19.57     20.10     21.38     20.83  
Tangible common shareholders’ equity to tangible total assets – Non-GAAP   7.28 %   7.63 %   7.99 %   8.08 %   8.15 %
Consolidated:          
Non-interest expense $ 8,512   $ 8,532   $ 8,653   $ 8,471   $ 8,284  
    Amortization of core deposit intangibles   (46 )   (50 )   (54 )   (57 )   (61 )
    OREO recovery   15                  
    Write-down of fixed assets                   (144 )
    Fraud-related recovery (losses)       50     (251 )        
Adjusted non-interest expense $ 8,481   $ 8,532   $ 8,348   $ 8,414   $ 8,079  
Net interest and dividend income, tax equivalent $ 12,054   $ 11,061   $ 10,484   $ 10,735   $ 10,345  
Non-interest income   2,693     3,297     3,094     2,847     2,840  
    Losses (gains) on securities   47     75     (168 )   9     (3 )
    Gains on sale of fixed assets                   (73 )
    BOLI proceeds receivable       (89 )            
    Gains on sale of loans   (15 )       (239 )        
Adjusted revenue $ 14,779   $ 14,344   $ 13,171   $ 13,591   $ 13,109  
Efficiency Ratio – Non-GAAP 1   57.38 %   59.49 %   63.38 %   61.91 %   61.63 %
             

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q3 2022: 55.28%; Q2 2022: 57.21%; Q1 2022: 61.83%; Q4 2021: 60.62%; Q3 2021: 60.70%.

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) Q3 2022 Q2 2022 Q3 2021 Q3 2022 Q2 2022 Q3 2021 Q3 2022 Q2 2022 Q3 2021
Loans (a)(d) $ 1,168,037 $ 1,112,120 $ 1,056,266 $ 11,675 $ 10,693 $ 10,382 3.95 % 3.81 % 3.90 %
Securities (c)(d)   221,620   225,458   150,841   1,192   1,117   720 2.15   1.98   1.91  
FHLBB stock   1,191   1,221   1,743   8   10   6 2.92   3.20   1.38  
Short term funds (b)   68,818   54,553   196,997   344   98   73 1.98   0.73   0.15  
Total interest-earning assets   1,459,666   1,393,352   1,405,847   13,219   11,918   11,181 3.58   3.40   3.15  
Other assets   60,283   61,790   72,547            
Total assets $ 1,519,949 $ 1,455,142 $ 1,478,394            
Interest-bearing demand deposits $ 233,547 $ 229,625 $     227,291   106   108   111 0.18   0.19   0.19  
Money market accounts   320,552   299,870   327,861   356   156   140 0.44   0.21   0.17  
Savings and other   246,101   236,728   217,541   179   97   58 0.29   0.16   0.11  
Certificates of deposit   131,918   137,034   125,768   242   216   223 0.73   0.63   0.70  
Total interest-bearing deposits   932,118   903,257   898,461   883   577   532 0.38   0.26   0.23  
Repurchase agreements   9,684   10,216   14,296   4   4   5 0.18   0.15   0.15  
Finance lease   5,318   5,283   2,685   41   41   33 3.05   3.09   4.98  
Note payable   142   153   183   2   2   3 6.15   6.13   6.11  
Subordinated debt (f)   24,508   24,494   24,452   233   233   233 3.80   3.80   3.82  
FHLBB advances   217     9,329   2     30 3.15     1.28  
Total interest-bearing liabilities   971,987   943,403   949,406   1,165   857   836 0.48   0.36   0.35  
Demand deposits   410,861   376,694   388,557            
Other liabilities   7,065   6,258   6,965            
Shareholders’ equity   130,036   128,787   133,466            
Total liabilities & shareholders’ equity $ 1,519,949 $ 1,455,142 $ 1,478,394            
Net interest income       $ 12,054 $ 11,061 $ 10,345      
Spread on interest-bearing funds             3.11   3.03   2.80  
Net interest margin (e)             3.27   3.15   2.92

 

(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 Q3 2022, Q2 2022 and Q3 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)

Nine months ended September 30, Average Balance Income / Expense Average Yield / Rate
(dollars in thousands)   2022   2021   2022   2021 2022 2021
Loans (a)(d) $ 1,120,246 $ 1,053,451 $ 32,646 $ 30,989 3.85 % 3.90 %
Securities (c)(d)   218,455   130,864   3,270   2,080 2.00   2.12  
FHLBB stock   1,281   1,840   26   26 2.69   1.89  
Short term funds (b)   82,075   160,055   491   148 0.80   0.12  
Total earning assets   1,422,057   1,346,210   36,433   33,243 3.39   3.27  
Other assets   65,570   71,421        
Total assets $ 1,487,627 $ 1,417,631        
Interest-bearing demand deposits $ 231,883 $ 224,479   313   332 0.18   0.20  
Money market accounts   313,871   310,908   639   408 0.27   0.18  
Savings and other   238,688   209,180   339   173 0.19   0.11  
Certificates of deposit   133,339   134,143   647   739 0.65   0.74  
Total interest-bearing deposits   917,781   878,710   1,938   1,652 0.28   0.25  
Repurchase agreements   9,024   11,608                11              13 0.16   0.15  
Finance lease   5,233   2,753   122   102 3.12   4.95  
Note payable   153   192   7   9 6.14   6.13  
Subordinated Debt (f)   24,495   21,851   699   767 3.80   4.68  
FHLBB advances   1,054   10,567   57   96 7.16   1.20  
Total interest-bearing liabilities   957,740   925,681   2,834   2,639 0.40   0.38  
Demand deposits   391,537   355,352        
Other liabilities   6,818   6,897        
Shareholders’ equity   131,532   129,701        
Total liabilities & shareholders’ equity $ 1,487,627 $ 1,417,631        
Net interest income     $ 33,599 $ 30,604    
Spread on interest-bearing funds         3.00   2.89  
Net interest margin (e)         3.12   3.01  

(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 $0.6 million and $0.5 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.

Source: Salisbury Bancorp, Inc.

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

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