- 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
