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Salisbury Bancorp, Inc. Increases Dividend and Reports Results for Second Quarter 2021

·29 min read
  • Second Quarter 2021 Net Income of $1.53 per Basic Common Share

  • Quarterly Cash Dividend Increases 3.3% to $0.31 Per Common Share for Third Quarter 2021

  • Quarterly Results Reflected a $1.1 Million Net Release of Credit Reserves

  • Non-performing Assets were 0.39% of Total Assets Compared with 0.44% at December 31, 2020

  • Common Equity Tier 1 and Total Risk-Based Capital Ratios of 13.42% and 14.67%, Respectively

LAKEVILLE, Conn., July 21, 2021 (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, 2021.

Net income available to common shareholders was $4.3 million, or $1.53 per basic common share, for Salisbury’s second quarter ended June 30, 2021 (second quarter 2021), compared with $4.5 million, or $1.59 per basic common share, for the first quarter ended March 31, 2021 (first quarter 2021), and $2.7 million, or $0.96 per basic common share, for the second quarter ended June 30, 2020 (second quarter 2020). Net income for second quarter 2021 included a pre-tax release of credit reserves of approximately $1.4 million, or $0.38 per basic common share, due to improved business conditions in Salisbury’s market areas. This reserve release was partially offset by a pre-tax increase in credit reserves of $0.3 million due to loan growth during the quarter.

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “Thanks to the continued dedication and commitment of our employees, we reported solid results for the second quarter. The business environment continues to improve across our markets as COVID-19 restrictions have been lifted, and we are cautiously optimistic that the economic rebound will continue. We have continued to support our customers and local communities this year by processing 472 loan applications for $48 million under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), which ended in May. As we move into the second half of the year, residential loan demand remains healthy, commercial activity continues to build, and credit quality is strong. Salisbury Bank is well-positioned to meet the needs of our customers, and our employees remain committed to providing outstanding customer service.”

Net Interest and Dividend Income

Tax equivalent net interest income of $9.7 million for the second quarter 2021 decreased $0.8 million, or 7.4%, versus first quarter 2021, and declined slightly compared with second quarter 2020. Tax equivalent interest income of $10.8 million for second quarter 2021 decreased $470 thousand, or 4.2%, versus first quarter 2021 and decreased $317 thousand, or 2.9%, from second quarter 2020. The reduction in interest income from first quarter 2021 primarily reflected lower PPP fee income.

The cost of interest-bearing liabilities of $1.1 million for second quarter 2021 increased $311 thousand, or 41.7%, compared to first quarter 2021 and declined $270 thousand, or 20.4% from second quarter 2020. 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. Second quarter 2021 also included interest expense and issuance costs of $233 thousand on subordinated debt that Salisbury issued in March 2021.

Average earning assets of $1.4 billion for second quarter 2021 increased $115 million, or 9.1% from first quarter 2021, and increased $194.9 million, or 16.5%, versus second quarter 2020. The growth in average earning assets from comparative periods primarily reflected higher average short-term fund balances due to deposit growth and higher average balances in the available-for-sale portfolio. Average earning assets for second quarter 2021 included average PPP loan balances of $80.4 million, net of deferred fees, compared with $92.8 million in first quarter 2021 and $57.0 million in second quarter 2020. Average total interest bearing liabilities of $1.0 billion for second quarter 2021 increased $91 million, or 10.5% from first quarter 2021 and increased $146.5 million, or 18.0%, versus second quarter 2020 primarily due to higher average deposit balances.

The tax equivalent net interest margin for second quarter 2021 was 2.82% compared with 3.34% for first quarter 2021 and 3.31% for second quarter 2020. Excluding the impact of PPP loans, the tax equivalent net interest margin for second quarter 2021 was 2.76% compared with 3.16% for first quarter 2021 and 3.28% for second quarter 2020. The decline in the tax equivalent net interest margin versus comparative quarters primarily reflected a significant increase in average deposit balances during second quarter 2021, which were invested primarily in short-term investments including cash and cash equivalents. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 on this release for additional details.

Non-Interest Income

Non-interest income of $3.0 million for second quarter 2021 increased $130 thousand versus first quarter 2021 and increased $655 thousand versus second quarter 2020.

Trust and Wealth Advisory fees of $1.3 million for second quarter 2021 increased $108 thousand from first quarter 2021 and increased $223 thousand versus second quarter 2020. The increase from first quarter 2021 primarily reflected higher asset-based fees and seasonal tax preparation fees. The increase from second quarter 2020 primarily reflected higher asset-based fees. Assets under administration were $970.3 million at June 30, 2021 compared with $944.3 million at December 31, 2020 and $704.1 million at June 30, 2020. Discretionary assets under administration of $614.3 million in second quarter 2021 increased from $555.0 million in fourth quarter 2020 and $480.5 million in second quarter 2020 primarily due to higher market valuations. Non-discretionary assets under administration of $356.0 million in second quarter 2021 decreased from $389.4 million in fourth quarter 2020 and increased from $223.6 million in second quarter 2020. The decline from fourth quarter 2020 primarily reflected the lower valuation of certain partnership assets under administration whereas the increase from second quarter 2020 reflected the addition of partnership assets under administration for an existing client relationship. The trust and wealth business records only a nominal annual fee on this non-discretionary relationship.

Service charges and fees of $1.4 million for second quarter 2021 increased $424 thousand versus first quarter 2021 and increased $776 thousand versus second quarter 2020. The increase from comparative quarters was primarily driven by non-recurring loan prepayment fees of $286 thousand as well as higher interchange and deposit fees. Salisbury waived approximately $240 thousand in deposit fees in second quarter 2020 due to the COVID-19 pandemic. Income from mortgage sales and servicing decreased $412 thousand versus first quarter 2021 and decreased $123 thousand versus second quarter 2020 on lower sales volume of residential mortgage loans to the FHLB Boston.

Non-interest income for the second quarter 2021 included BOLI income of $125 thousand consistent with first quarter 2021 and slightly below second quarter 2020.

Non-Interest Expense

Non-interest expense of $8.1 million for second quarter 2021 increased $827 thousand versus first quarter 2021 and increased $1.3 million versus second quarter 2020. Compensation expense of $4.8 million for second quarter 2021 increased $546 thousand from first quarter 2021 and increased $1.3 million versus second quarter 2020. The increase from the comparative quarters primarily reflected higher salaries and benefits, production and incentive accruals as well as lower deferred loan origination expenses. Deferred loan origination expenses in second quarter 2021 declined $179 thousand and $464 thousand from first quarter 2021 and second quarter 2020, respectively, primarily due to the processing of PPP loans in the comparative quarters.

Excluding compensation, other non-interest expenses for second quarter 2021 increased $281 thousand from first quarter 2021 and decreased $14 thousand from second quarter 2020. The increase from first quarter 2021 primarily reflected higher premises and equipment, data processing and marketing expenses. The decrease from second quarter 2020 primarily reflected lower professional fees and other expenses partially offset by higher marketing and data processing costs. Marketing expenses for second quarter 2021 included costs associated with an ongoing review of Salisbury’s web site and branding initiatives.

The effective income tax rates for second quarter 2021, first quarter 2021 and second quarter 2020 were 21.2%, 21.6% and 18.1%, respectively. The higher tax rate in first and second quarter 2021 primarily reflected a lower mix of tax-exempt income from municipal bonds, tax advantaged loans and bank-owned life insurance on a comparatively higher level of pre-tax income.

Loans

Gross loans receivable of $1.0 billion at June 30, 2021 decreased $10.0 million from first quarter 2021 and $7.7 million from second quarter 2020 primarily due to the forgiveness of PPP loans by the SBA. PPP loan balances of $61.9 million at June 30, 2021 declined $35.1 million and $37.0 million from March 31, 2021 and June 30, 2020, respectively. The increase in residential real estate balances during second quarter 2021 reflected continued strong origination volume and lower sales to FHLB Boston. Approximately $7.1 million of residential loans were sold to FHLB Boston in second quarter 2021 compared with $21.3 million during first quarter 2021 and $14.7 million in second quarter 2020. The ratio of gross loans to deposits for second quarter 2021 was 84.1% compared with 87.1% for first quarter 2021 and 97.0% for second quarter 2020. Balances by loan type for the comparative periods were as follows:

Loan Type

Q2 2021

Q1 2021

Q2 2020

Residential Real Estate

$

428,137

$

418,991

$

437,198

Commercial Real Estate

354,629

341,142

323,634

Commercial & Industrial ex PPP Loans

156,849

152,388

148,510

PPP Loans

61,908

96,969

98,930

Commercial & Industrial – Total

218,757

249,357

247,440

Farm Land

3,529

3,606

3,324

Vacant Land

13,006

13,228

13,879

Municipal

18,341

21,495

20,707

Consumer

9,543

8,617

7,886

Deferred (Fees)/Costs

(889

)

(1,365

)

(1,339

)

Gross Loans Receivable

$

1,045,053

$

1,055,071

$

1,052,729

Asset Quality

In March 2020, Salisbury implemented a loan payment deferral program which allowed residential, commercial and consumer borrowers, who have been adversely affected by the COVID-19 pandemic, to defer loan payments for up to three months. Customers may also apply for additional deferments. As of June 30, 2021, loan payments were deferred on 10 commercial loans ($20 million loan balance) compared with 14 commercial loan deferrals ($27 million loan balance) as of March 31, 2021. There were no outstanding residential and consumer loan deferrals as of June 30, 2021.

Non-performing assets were $5.5 million, or 0.39% of total assets at June 30, 2021, compared with $5.6 million, or 0.44% of total assets at December 31, 2020, and $4.8 million, or 0.37% of total assets, at June 30, 2020.

The amount of total impaired and potential problem loans was $47.1 million or 4.50% of gross loans receivable at June 30, 2021 compared with $30.1 million, or 2.90% of gross loans receivable at December 31, 2020 and $26.9 million, or 2.55% of gross loans receivable at June 30, 2020. The increase from year-end 2020 primarily reflected the reduction of internal risk ratings on loans to certain borrowers in the hospitality and entertainment and recreation industries due to COVID-19.

Accruing loans receivable 30-to-89 days past due decreased to $1.4 million, or 0.13% of gross loans receivable at June 30, 2021 compared with $6.9 million, or 0.66% of gross loans receivable, at December 31, 2020 and $2.7 million, or 0.25% of gross loans receivable, at June 30, 2020.

The allowance for loan losses for second quarter 2021 was $12.7 million compared with $13.9 million for first quarter 2021 and $13.8 million for fourth quarter 2020.The second quarter 2021 included a net release of credit reserves of approximately $1.1 million compared with charges of $158 thousand in first quarter 2021 and $1.8 million in the second quarter 2020, respectively. The net release of reserves in second quarter 2021 reflected management’s current assessment of the impact of the COVID-19 pandemic on the Bank’s loan portfolio. Net loan charge-offs were $103 thousand for the second quarter 2021, $26 thousand for first quarter 2021 and $87 thousand for the fourth quarter 2020. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.29% for the second quarter 2021, versus 1.45% for first quarter 2021 and 1.44% for fourth quarter 2020. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 229% for the second quarter 2021, versus 243% for first quarter 2021 and 244% for fourth quarter 2020.

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 were $1.2 billion at June 30, 2021 compared with $1.1 billion at December 31, 2020 and $1.1 billion at June 30, 2020. Deposits at June 30, 2021 included brokered deposits, including CDARS one-way buys, of $7.9 compared with $18.0 million at December 31, 2020 and $38.2 million at June 30, 2020. Average total deposits for the second quarter 2021 were $1.2 billion compared with $1.2 billion for the first quarter 2020 and $1.0 billion for the second quarter 2020. Average total deposits for the second quarter 2021 included average brokered deposits of $15.4 million compared with $18.0 million for first quarter 2021 and $44.2 million for second quarter 2020.

Federal Home Loan Bank of Boston (FHLBB) advances were $10.2 million at June 30, 2021 compared with $12.6 million and $55.1 million at December 31, 2020 and June 30, 2020, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $248 million at June 30, 2021.

Capital

Shareholders’ equity increased $4.5 million in the second quarter to $131.7 million at June 30, 2021 as net income of $4.4 million, unrealized gains in the available-for-sale securities portfolio of $0.7 million and restricted stock activity of $0.3 million were partly offset by common stock dividends paid of $0.9 million. Book value per common share increased $1.30 during the second quarter 2021 to $46.02 per share and increased $4.36 from the second quarter 2020. Tangible book value per common share increased $1.36 during second quarter 2021 to $41.01 and increased $4.50 from second quarter 2020.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At June 30, 2021, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.33%, 14.67%, and 13.42%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.

On May 28, 2021 Salisbury redeemed in full the $10 million of subordinated debt that was issued in 2015. During second quarter 2021, Salisbury did not repurchase any of its outstanding common stock pursuant to its stock repurchase plan adopted in March 2021, which authorizes Salisbury to repurchase Salisbury’s common stock in amounts up to an aggregate of five percent (5%) of the outstanding shares of Salisbury’s common stock from time to time over a period of twelve (12) months.

Dividend on Common Shares

The Board of Directors of Salisbury approved a $0.01 increase in the quarterly dividend at its July 21, 2021 meeting. The quarterly cash dividend of $0.31 per common share will be paid on August 27, 2021 to shareholders of record as of August 13, 2021.

Background

Salisbury Bancorp, Inc. is the parent company of Salisbury Bank and Trust Company, a Connecticut chartered commercial bank serving the communities of northwestern Connecticut and proximate communities in New York and Massachusetts, since 1848, through full service branches in Canaan, Lakeville, Salisbury and Sharon, Connecticut; Great Barrington, South Egremont and Sheffield, Massachusetts; and Dover Plains, Fishkill, Millerton, Newburgh, New Paltz, Poughkeepsie, and Red Oaks Mill, New York. The Bank offers a broad spectrum of consumer and business banking products and services, as well as trust and wealth advisory services.

Forward-Looking Statements

This news release may contain statements relating to 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, 2021, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under Shareholder Relations/News & Market Information/Presentations.

Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

June 30, 2021
(unaudited)

December 31, 2020

ASSETS

Cash and due from banks

$

8,853

$

10,599

Interest bearing demand deposits with other banks

170,973

82,563

Total cash and cash equivalents

179,826

93,162

Interest bearing Time Deposits with Financial Institutions

750

750

Securities

Available-for-sale at fair value

150,530

98,411

CRA mutual fund at fair value

909

917

Federal Home Loan Bank of Boston stock at cost

1,504

1,713

Loans held-for-sale

415

2,735

Loans receivable, net (allowance for loan losses: $12,708 and $13,754)

1,032,345

1,027,738

Bank premises and equipment, net

21,375

20,355

Goodwill

13,815

13,815

Intangible assets (net of accumulated amortization: $5,343 and $5,207)

538

674

Accrued interest receivable

6,357

6,373

Cash surrender value of life insurance policies

21,433

21,182

Deferred taxes

2,390

2,412

Other assets

4,479

3,423

Total Assets

$

1,436,666

$

1,293,660

LIABILITIES and SHAREHOLDERS' EQUITY

Deposits

Demand (non-interest bearing)

$

359,517

$

310,769

Demand (interest bearing)

224,791

218,869

Money market

315,518

278,146

Savings and other

206,887

189,776

Certificates of deposit

136,656

131,514

Total deposits

1,243,369

1,129,074

Repurchase agreements

17,492

7,116

Federal Home Loan Bank of Boston advances

10,152

12,639

Subordinated debt

24,445

9,883

Note payable

189

208

Finance lease obligations

1,646

1,673

Accrued interest and other liabilities

7,664

8,315

Total Liabilities

1,304,957

1,168,908

Shareholders' Equity

Common stock - $0.10 per share par value

Authorized: 5,000,000;

Issued: 2,861,697 and 2,843,292

Outstanding: 2,861,697 and 2,843,292

286

284

Unearned compensation – restricted stock awards

(1,224

)

(774

)

Paid-in capital

46,217

45,264

Retained earnings

84,174

76,974

Accumulated other comprehensive income, net

2,256

3,004

Total Shareholders' Equity

131,709

124,752

Total Liabilities and Shareholders' Equity

$

1,436,666

$

1,293,660

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)

2021

2020

2021

2020

Interest and dividend income

Interest and fees on loans

$

9,901

$

10,313

$

20,377

$

20,300

Interest on debt securities

Taxable

488

409

912

864

Tax exempt

172

171

334

356

Other interest and dividends

61

51

95

142

Total interest and dividend income

10,622

10,944

21,718

21,662

Interest expense

Deposits

567

988

1,121

2,497

Repurchase agreements

4

4

8

10

Finance lease

36

35

69

71

Note payable

3

4

6

7

Subordinated debt

415

156

534

312

Federal Home Loan Bank of Boston advances

32

140

65

359

Total interest expense

1,057

1,327

1,803

3,256

Net interest and dividend income

9,565

9,617

19,915

18,406

(Release) provision for loan losses

(1,075

)

1,806

(917

)

3,512

Net interest and dividend income after (release) provision for loan losses

10,640

7,811

20,832

14,894

Non-interest income

Trust and wealth advisory

1,254

1,031

2,399

2,061

Service charges and fees

1,374

598

2,325

1,503

Mortgage banking activities, net

196

318

804

446

Gains (losses) on CRA mutual fund

3

8

(14

)

22

(Losses) gains on securities, net

(9

)

181

(9

)

182

Bank-owned life insurance (“BOLI”) income

125

133

251

266

Other

28

47

57

80

Total non-interest income

2,971

2,316

5,813

4,560

Non-interest expense

Salaries

3,403

2,411

6,304

5,261

Employee benefits

1,356

1,037

2,668

2,183

Premises and equipment

1,019

981

1,973

1,891

Data processing

628

557

1,193

1,098

Professional fees

644

758

1,355

1,385

Collections, OREO, and loan related

113

79

197

104

FDIC insurance

80

103

225

208

Marketing and community support

214

169

296

293

Amortization of intangibles

65

83

136

170

Other

564

611

1,000

1,133

Total non-interest expense

8,086

6,789

15,347

13,726

Income before income taxes

5,525

3,338

11,298

5,728

Income tax provision

1,172

604

2,419

947

Net income

$

4,353

$

2,734

$

8,879

$

4,781

Net income available to common shareholders

$

4,287

$

2,691

$

8,749

$

4,704

Basic earnings per common share

$

1.53

$

0.96

$

3.12

$

1.68

Diluted earnings per common share

$

1.52

$

0.96

$

3.10

$

1.68

Common dividends per share

$

0.30

$

0.29

$

0.59

$

0.58

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 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Total assets

$

1,436,666

$

1,403,129

$

1,293,660

$

1,292,760

$

1,287,137

Loans receivable, net

1,032,345

1,041,185

1,027,738

1,031,593

1,039,524

Total securities

152,943

129,960

101,041

99,794

93,717

Deposits

1,243,369

1,211,171

1,129,074

1,095,141

1,085,599

FHLBB advances

10,152

11,396

12,639

43,880

55,118

Shareholders’ equity

131,709

127,242

124,752

122,240

118,444

Wealth assets under administration

970,306

902,141

944,349

748,188

704,052

Discretionary wealth assets under administration

614,312

578,199

554,997

514,988

480,456

Non-discretionary wealth assets under administration

355,994

323,942

389,352

233,200

223,596

Non-performing loans

5,539

5,706

5,648

4,681

4,815

Non-performing assets

5,539

5,706

5,648

4,681

4,815

Accruing loans past due 30-89 days

1,400

2,374

6,850

1,638

2,656

Net interest and dividend income

9,565

10,350

9,817

9,925

9,617

Net interest and dividend income, tax equivalent(1)

9,739

10,520

9,993

10,101

9,786

Provision (release) expense for loan losses

(1,075

)

158

840

686

1,806

Non-interest income

2,971

2,841

2,476

3,286

2,316

Non-interest expense

8,086

7,259

8,054

7,259

6,789

Income before income taxes

5,525

5,774

3,399

5,266

3,338

Income tax provision

1,172

1,248

596

910

604

Net income

4,353

4,526

2,803

4,356

2,734

Net income allocated to common shareholders

4,287

4,462

2,764

4,288

2,691

Per share data

Basic earnings per common share

$

1.53

$

1.59

$

0.99

$

1.53

$

0.96

Diluted earnings per common share

1.52

1.59

0.98

1.53

0.96

Dividends per common share

0.30

0.29

0.29

0.29

0.29

Book value per common share

46.02

44.72

43.88

42.99

41.66

Tangible book value per common share - Non-GAAP ⁽2

41.01

39.65

38.78

37.87

36.51

Common shares outstanding at end of period (in thousands)

2,862

2,845

2,843

2,843

2,843

Weighted average common shares outstanding, to calculate basic earnings per share (in thousands)

2,810

2,804

2,803

2,799

2,796

Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands)

2,829

2,815

2,811

2,807

2,803

Profitability ratios

Net interest margin (tax equivalent) (1)

2.82

%

3.34

%

3.17

%

3.29

%

3.31

%

Efficiency ratio (3)

63.07

53.75

63.88

56.33

56.23

Effective income tax rate

21.21

21.61

17.52

17.28

18.11

Return on average assets

1.21

1.38

0.85

1.34

0.89

Return on average common shareholders’ equity

13.51

14.53

8.97

14.31

9.36

Credit quality ratios

Non-performing loans to loans receivable, gross

0.53

%

0.54

%

0.54

%

0.45

%

0.46

%

Accruing loans past due 30-89 days to loans receivable, gross

0.13

0.23

0.66

0.16

0.25

Allowance for loan losses to loans receivable, gross

1.22

1.32

1.32

1.24

1.18

Allowance for loan losses to non-performing loans

229.4

243.4

243.5

277.8

256.9

Non-performing assets to total assets

0.39

0.41

0.44

0.36

0.37

Capital ratios

Common shareholders' equity to assets

9.17

%

9.07

%

9.64

%

9.46

%

9.20

%

Tangible common shareholders' equity to tangible assets - Non-GAAP(2)

8.25

8.12

8.62

8.42

8.16

Tier 1 leverage capital (4)

9.33

9.83

8.90

8.93

8.95

Total risk-based capital (4)

14.67

14.58

13.57

13.60

13.15

Common equity tier 1 capital (4)

13.42

13.33

12.31

12.35

11.90

(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) Calculated as follows: Noninterest expense before OREO expense, amortization of intangibles, and goodwill impairments as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains from securities transactions and litigation expenses.
(4) 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 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Common Shareholders' Equity

$

131,709

$

127,242

$

124,752

$

122,240

$

118,444

Less: Goodwill

(13,815

)

(13,815

)

(13,815

)

(13,815

)

(13,815

)

Less: Intangible assets

(538

)

(603

)

(674

)

(748

)

(825

)

Tangible Common Shareholders' Equity

$

117,356

$

112,824

$

110,263

$

107,677

$

103,804

Total Assets

$

1,436,666

$

1,403,129

$

1,293,660

$

1,292,760

$

1,287,137

Less: Goodwill

(13,815

)

(13,815

)

(13,815

)

(13,815

)

(13,815

)

Less: Intangible assets

(538

)

(603

)

(674

)

(748

)

(825

)

Tangible Total Assets

$

1,422,313

$

1,388,711

$

1,279,171

$

1,278,197

$

1,272,497

Common Shares outstanding

2,862

2,845

2,843

2,843

2,843

Book value per Common Share – GAAP

$

46.02

$

44.72

$

43.88

$

42.99

$

41.66

Tangible book value per Common Share - Non-GAAP

41.01

39.65

38.78

37.87

36.51

Tangible common shareholders’ equity to tangible total assets - Non-GAAP

8.25

%

8.12

%

8.62

%

8.42

%

8.16

%

Consolidated:

Non-interest expense

$

8,086

$

7,259

$

8,054

$

7,259

$

6,789

Less: Amortization of core deposit intangibles

(65

)

(71

)

(74

)

(78

)

(83

)

Less: Foreclosed property expense including OREO gains, losses and Write downs

-

-

-

2

(7

)

Adjusted non-interest expense

$

8,021

$

7,188

$

7,980

$

7,183

$

6,699

Net interest and dividend income, tax equivalent

$

9,739

$

10,520

$

9,993

$

10,101

$

9,786

Non-interest income

2,971

2,841

2,476

3,286

2,316

Losses (gains) on securities

6

16

24

(34

)

(189

)

BOLI proceeds

-

-

-

(601

)

-

Adjusted revenue

$

12,716

$

13,377

$

12,493

$

12,752

$

11,914

Efficiency Ratio – Non-GAAP 1

63.07

%

53.75

%

63.88

%

56.33

%

56.23

%

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q2 2021: 61.59%; Q1 2021: 51.97%; Q4 2020: 62.62%; Q3 2020: 54.76%; Q2 2020: 54.29%.

Salisbury Bancorp, Inc. and Subsidiary
SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)

At or for the three months ended

Average Balance

Income / Expense

Average Yield / Rate

(dollars in thousands)

Q2 2021

Q1 2021

Q2 2020

Q2 2021

Q1 2021

Q2 2020

Q2 2021

Q1 2021

Q2 2020

Loans (a)(d)

$

1,052,381

$

1,051,658

$

1,038,551

$

10,015

$

10,592

$

10,428

3.78%

4.02%

4.02%

Securities (c)(d)

138,164

103,062

86,987

720

640

634

2.08

2.48

2.92

FHLBB stock

1,830

1,948

3,580

11

9

39

2.41

1.85

4.36

Short term funds (b)

180,716

101,401

49,105

50

25

12

0.11

0.10

0.10

Total interest-earning assets

1,373,091

1,258,069

1,178,223

10,796

11,266

11,113

3.13

3.57

3.77

Other assets

70,447

71,252

60,288

Total assets

$

1,443,538

$

1,329,321

$

1,238,511

Interest-bearing demand deposits

$

227,623

$

218,425

$

172,811

117

106

103

0.21

0.20

0.24

Money market accounts

315,665

288,767

237,667

138

129

239

0.18

0.18

0.40

Savings and other

212,253

197,526

171,436

59

56

102

0.11

0.11

0.24

Certificates of deposit

147,103

129,603

157,288

252

264

544

0.69

0.83

1.38

Total interest-bearing deposits

902,644

834,321

739,202

566

555

988

0.25

0.27

0.53

Repurchase agreements

12,010

8,453

4,773

4

3

4

0.15

0.15

0.34

Finance lease

2,751

2,824

2,987

36

32

35

5.26

4.60

4.69

Note payable

192

200

231

3

3

4

6.09

6.18

6.93

Subordinated debt (f)

30,789

10,156

9,866

415

119

156

5.39

4.68

6.32

FHLBB advances

10,576

11,825

55,374

33

34

140

1.21

1.14

1.01

Total interest-bearing liabilities

958,962

867,779

812,433

1,057

746

1,327

0.44

0.35

0.65

Demand deposits

348,561

328,372

302,965

Other liabilities

6,786

6,839

6,029

Shareholders’ equity

129,229

126,331

117,084

Total liabilities & shareholders’ equity

$

1,443,538

$

1,329,321

$

1,238,511

Net interest income

$

9,739

$

10,520

$

9,786

Spread on interest-bearing funds

2.69

3.22

3.12

Net interest margin (e)

2.82

3.34

3.31

(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 2021, Q1 2021 and Q2 2020 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 2021 and 2020.
(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)

2021

2020

2021

2020

2021

2020

Loans (a)(d)

$

1,052,020

$

993,293

$

20,605

$

20,524

3.90%

4.13%

Securities (c)(d)

120,710

88,292

1,360

1,332

2.25

3.02

FHLBB stock

1,889

3,310

20

72

2.13

4.35

Short term funds (b)

141,278

36,161

76

70

0.11

0.39

Total earning assets

1,315,897

1,121,056

22,061

21,998

3.34

3.92

Other assets

70,848

62,365

Total assets

$

1,386,745

$

1,183,421

Interest-bearing demand deposits

$

223,049

$

163,707

223

222

0.20

0.27

Money market accounts

302,290

239,173

267

799

0.18

0.67

Savings and other

204,930

167,805

115

336

0.11

0.40

Certificates of deposit

138,402

156,078

516

1,140

0.75

1.46

Total interest-bearing deposits

868,671

726,763

1,121

2,497

0.26

0.69

Repurchase agreements

10,241

5,223

8

10

0.15

0.38

Finance lease

2,787

3,019

69

71

4.93

4.70

Note payable

196

235

6

7

6.14

5.96

Subordinated Debt (f)

20,529

9,864

534

312

5.20

6.33

FHLBB advances

11,197

46,247

65

359

1.17

1.55

Total interest-bearing liabilities

913,621

791,351

1,803

3,256

0.40

0.82

Demand deposits

338,486

269,031

Other liabilities

6,851

6,460

Shareholders’ equity

127,787

116,579

Total liabilities & shareholders’ equity

$

1,386,745

$

1,183,421

Net interest income

$

20,258

$

18,742

Spread on interest-bearing funds

2.95

3.10

Net interest margin (e)

3.06

3.33

(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 $0.3 million and $0.3 million, respectively for 2021 and 2020 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 2021 and 2020.
(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