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Salisbury Bancorp, Inc. Reports Strong Results for Third Quarter 2020; Declares 29 Cent Dividend

Salisbury Bancorp, Inc.
·29 min read
  • Third Quarter 2020 Net Income of $1.53 per Basic Common Share

  • Common Equity Tier 1 and Total Capital Ratios of 12.3% and 13.6%, Respectively

  • Non-Performing Assets were 0.36% of Total Assets Compared with 0.35% at December 31, 2019

  • Book Value and Tangible Book Value Per Common Share Increased 7% and 8%, Respectively in 2020

LAKEVILLE, Conn., Oct. 30, 2020 (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, 2020.

Net income allocated to common shareholders was $4.3 million, or $1.53 per common share, for the quarter ended September 30, 2020 (third quarter 2020), compared with $2.7 million, or $0.96 per common share, for the second quarter ended June 30, 2020 (second quarter 2020), and $2.9 million, or $1.06 per common share, for the third quarter ended September 30, 2019 (third quarter 2019). Results for third quarter 2020 included a loan loss provision of $686 thousand, and a non-recurring non-taxable gain of $601 thousand, or $0.21 per basic common share, related to proceeds received from a bank-owned life insurance policy (“BOLI”) due to the death of a covered former employee.

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “I am extremely proud of our Salisbury Bank team, which has successfully met the challenges of serving our customers and communities during these difficult times. During this pandemic we extended $100 million in PPP loans and worked with numerous commercial and residential customers to accommodate their needs for temporary loan payment deferrals. Our efforts have assisted the economic survival of our customers. We reported strong earnings for the third quarter and we continued to bolster our allowance for loan losses and our capital base. We have also been able to increase book value and tangible book value per common share by 7% and 8%, respectively so far for this year. As we enter the colder months, however, the uncertainty surrounding COVID-19 and its impact on businesses is extremely high. As a result, we continue to closely monitor our loan portfolio and our lenders constantly communicate with our customers. Salisbury remains committed to providing outstanding customer service and supporting our local communities during this crisis.”

Net-Interest and Dividend Income

Tax equivalent net interest income of $10.1 million for the third quarter 2020 increased $313 thousand, or 3.2%, versus second quarter 2020, and increased $1.3 million, or 14.4%, versus third quarter 2019. Interest income was essentially unchanged compared to second quarter 2020 and third quarter 2019. Third quarter 2020 included PPP fees and interest of $651 thousand compared with $561 thousand in second quarter 2020. The cost of interest bearing liabilities declined $0.2 million, or 18.8%, from second quarter 2020 and declined $1.3 million, or 54.3%, from third quarter 2019.

Average earning assets increased $42.1 million, or 3.6%, versus second quarter 2020, and increased $150.9 million, or 14.1%, versus third quarter 2019. Average earning assets for third quarter 2020 included average PPP loan balances of $97.0 million. Average total interest bearing liabilities increased $23.0 million, or 2.8%, versus second quarter 2020 and increased $64.9 million, or 8.4%, versus third quarter 2019. The increase from third quarter 2019 primarily reflected the funding of PPP loans.

The tax equivalent net interest margin for the third quarter 2020 was 3.29% compared with 3.31% for the second quarter 2020 and 3.29% for the third quarter 2019. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on pages 8-9 of this release for additional details.

Non-Interest Income

Non-interest income of $3.3 million for third quarter 2020 increased $1.0 million compared with second quarter 2020 and third quarter 2019. Non-interest income for third quarter 2020 included a non-recurring non-taxable BOLI gain of $601 thousand due to the death of a covered former employee. The increase in non-interest income from the comparative quarters also reflected higher realized gains on the sale of residential mortgages.

Trust and Wealth Advisory fees of $1.1 million increased slightly compared with both second quarter 2020 and third quarter 2019. Assets under administration were $748.2 million as of September 30, 2020 compared with $704.1 million at June 30, 2020 and $752.5 million as of September 30, 2019. Discretionary assets under administration of $515.0 million in third quarter 2020 increased from $480.5 million in second quarter 2020 and $475.5 million in third quarter 2019. The growth from second quarter 2020 primarily reflected higher market valuations whereas the growth versus third quarter 2019 primarily reflected new business activity. Non-discretionary assets under administration were $233.2 million in third quarter 2020 compared with $223.6 million in second quarter 2020 and $277.0 million in third quarter 2019. The increase from second quarter 2020 primarily reflected higher valuations whereas the decline from third quarter 2019 primarily reflected a lower valuation of shares in a partnership for one significant client relationship for which the trust and wealth business recorded only a nominal annual fee.

Service charges and fees of $711 thousand increased $113 thousand versus second quarter 2020 and decreased $292 thousand versus third quarter 2019. The increase from second quarter 2020 primarily reflected higher interchange fees whereas the decline from third quarter 2019 reflected lower deposit fees. To help support the financial needs of our customers and the communities in our markets, the Bank waived approximately $289 thousand and $558 thousand of deposit and transaction fees in the third quarter and the nine month period ended September 30, 2020, respectively.

Income from sales and servicing of mortgage loans of $736 thousand increased $418 thousand versus second quarter 2020 and increased $618 thousand from third quarter 2019. Mortgage loans of $26.6 million were sold during the third quarter 2020 compared with sales of $14.7 million for second quarter 2020 and $5.6 million in third quarter 2019.

Non-Interest Expense

Non-interest expense of $7.3 million for third quarter 2020 increased $470 thousand versus second quarter 2020 and increased $75 thousand versus third quarter 2019. Compensation expense of $4.2 million for third quarter 2020 increased $727 thousand from second quarter 2020 and decreased $48 thousand versus third quarter 2019. The second quarter 2020 included the deferral of approximately $540 thousand of compensation costs associated with originating PPP loans. These deferred costs will be amortized into income over the term of the PPP loans as an offset to loan interest income, which is a component of net interest margin. Third quarter 2020 also reflected higher salary expense and production accruals, which were driven by increased loan origination volume.

Excluding compensation, other non-interest expenses of $3.1 million for third quarter 2020 decreased $257 thousand from second quarter 2020 and increased $123 thousand from third quarter 2019. The decrease from second quarter 2020 primarily reflected lower consulting and director fees as well as a decline in community support donations, which were accelerated in second quarter 2020. The increase from third quarter 2019 primarily reflected FDIC assessment credits recorded in the prior year third quarter.

The effective income tax rates for third quarter 2020, second quarter 2020 and third quarter 2019 were 17.3%, 18.1% and 18.0%, respectively. The lower tax rate in third quarter 2020 primarily reflected the non-taxable BOLI proceeds received during the quarter.

Loans

Gross loans for third quarter 2020 of $1.0 billion included $99.9 million in PPP loans, which are categorized as commercial & industrial loans in the below table, and net deferred fees of $2.3 million. Excluding PPP loans, gross loans receivable were $947.0 million at September 30, 2020, compared with $955.8 million at June 30, 2020, and $923.9 million at September 30, 2019. Including PPP loans, the ratio of gross loans to deposits for third quarter 2020 was 95.4% compared with 97.0% for second quarter 2020 and 95.6% for third quarter 2019. Balances by loan type for the comparative periods were as follows:

Loan Type

Q3 2020

Q2 2020

Q3 2019

Residential Real Estate

$

429,221

$

436,364

$

421,843

Commercial Real Estate

333,412

323,634

296,302

Commercial & Industrial

237,448

247,440

164,078

Farm Land

3,295

3,324

3,686

Vacant Land

13,694

13,879

8,111

Municipal

20,797

20,707

22,260

Consumer

7,686

7,886

6,290

Deferred (Fees) Costs

(959)

(1,339)

1,359

Gross Loans Receivable

$

1,044,594

$

1,051,895

$

923,929

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 September 30, 2020, loan payments were deferred on 21 residential and consumer loans ($7 million loan balance) and 37 commercial loans ($56 million loan balance).

Non-performing assets decreased $0.1 million during third quarter 2020 to $4.7 million, or 0.36% of total assets at September 30, 2020, from $4.8 million, or 0.37% of total assets at June 30, 2020, and decreased $1.0 million from $5.7 million, or 0.50% of total assets, at September 30, 2019.

The amount of total impaired and potential problem loans decreased $0.1 million during the third quarter 2020 to $26.8 million, or 2.56% of gross loans receivable, at September 30, 2020 compared to $26.9 million, or 2.55% of gross loans receivable, at June 30, 2020, and increased $4.2 million from $22.6 million, or 2.44% of gross loans receivable, at September 30, 2019.

Accruing loans receivable 30-to-89 days past due decreased $1.0 million during third quarter 2020 to $1.6 million, or 0.16% of gross loans receivable, from $2.7 million, or 0.25% of gross loans receivable at June 30, 2020, and decreased $0.2 million from $1.8 million, or 0.19% of gross loans receivable at September 30, 2019.

The allowance for loan losses at September 30, 2020 was $13.0 million compared with $12.4 million at June 30, 2020 and $8.8 million at September 30, 2019. The provision for loan losses expense was $0.7 million for third quarter 2020 versus $1.8 million for second quarter 2020, and $94 thousand for third quarter 2019. The provision for third quarter reflected management’s assessment of the impact of the COVID-19 pandemic on certain qualitative and environmental factors and impaired loans. Net loan charge-offs were $56 thousand for the third quarter 2020, $53 thousand for second quarter 2020 and $135 thousand for the third quarter 2019. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 1.24% for the third quarter 2020, versus 1.18% for second quarter 2020 and 0.96% for third quarter 2019. Excluding PPP loans and deferred net fees, the ratio of the allowance for loan losses to gross loans was 1.37% for third quarter 2020 compared with 1.29% for second 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 of $1.1 billion at September 30, 2020 increased $9.5 million from June 30, 2020 and increased $129.0 million from September 30, 2019. Deposits at September 30, 2020 included brokered deposits, including CDARS one-way buys, of $18.0 million compared with $38.2 million at June 30, 2020 and $32.9 million at September 30, 2019. Average total deposits for third quarter 2020 were $1.1 billion compared with $1.0 billion at June 30, 2020 and $938.5 million at September 30, 2019. Average total deposits for third quarter 2020 included average brokered deposits of $24.9 million compared with $44.2 million for second quarter 2020 and $31.6 million for third quarter 2019.

FHLB advances of $43.9 million at September 30, 2020 decreased $11.2 million from June 30, 2020 and increased $6.1 million from September 30, 2019. Salisbury’s excess borrowing capacity at FHLBB was approximately $234 million at September 30, 2020.

Capital

Book value per common share increased $1.33 during the third quarter 2020 to $42.99 per share and increased $3.47 from the third quarter 2019. Tangible book value per common share increased $1.36 during third quarter 2020 to $37.87 and increased $3.63 from the third quarter 2019.

Shareholders’ equity increased $3.8 million in third quarter 2020 to $122.2 million at September 30, 2020 as net income of $4.4 million and the issuance of restricted stock awards of $0.2 million were partly offset by common stock dividends paid of $0.8 million.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At September 30, 2020, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 8.93%, 13.6%, and 12.3%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.

Dividends on Common Shares

The Board of Directors of Salisbury declared a $0.29 per common share quarterly cash dividend at its October 30, 2020 meeting. The dividend will be paid on November 27, 2020 to shareholders of record as of November 13, 2020.

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 September 30, 2020, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under Shareholder Relations/News & Market Information/Presentations simultaneously with this Release.

Salisbury Bancorp, Inc. and Subsidiary

CONSOLIDATED BALANCE SHEETS

(dollars in thousands, except share data)

September 30, 2020

December 31, 2019

ASSETS

(unaudited)

Cash and due from banks

$

6,828

$

7,406

Interest bearing demand deposits with other banks

88,513

19,479

Total cash and cash equivalents

95,341

26,885

Interest bearing Time Deposits with Financial Institutions

750

750

Securities

Available-for-sale at fair value

95,720

91,801

CRA mutual fund at fair value

916

882

Federal Home Loan Bank of Boston stock at cost

3,158

3,242

Loans held-for-sale

2,761

332

Loans receivable, net (allowance for loan losses: $13,001 and $8,895)

1,031,593

927,413

Other real estate owned

-

314

Bank premises and equipment, net

18,727

17,385

Goodwill

13,815

13,815

Intangible assets (net of accumulated amortization: $5,132 and $4,884)

748

995

Accrued interest receivable

6,055

3,415

Cash surrender value of life insurance policies

17,572

20,580

Deferred taxes

2,252

1,249

Other assets

3,352

3,390

Total Assets

$

1,292,760

$

1,112,448

LIABILITIES and SHAREHOLDERS' EQUITY

Deposits

Demand (non-interest bearing)

$

313,742

$

237,852

Demand (interest bearing)

201,760

153,314

Money market

270,097

239,504

Savings and other

181,691

161,112

Certificates of deposit

127,851

127,724

Total deposits

1,095,141

919,506

Repurchase agreements

10,885

8,530

Federal Home Loan Bank of Boston advances

43,880

50,887

Subordinated debt

9,877

9,859

Note payable

218

246

Finance lease obligations

1,685

1,718

Accrued interest and other liabilities

8,834

8,047

Total Liabilities

1,170,520

998,793

Shareholders' Equity

Common stock - $0.10 per share par value

Authorized: 5,000,000

Issued: 2,843,292 and 2,825,912

Outstanding: 2,843,292 and 2,825,912

284

283

Unearned compensation - restricted stock awards

(906)

(795)

Paid-in capital

45,171

44,490

Retained earnings

74,995

68,320

Accumulated other comprehensive income, net

2,696

1,357

Total Shareholders' Equity

122,240

113,655

Total Liabilities and Shareholders' Equity

$

1,292,760

$

1,112,448


Salisbury Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Three months ended

Nine months ended

Periods ended September 30, (in thousands except share data)

2020

2019

2020

2019

Interest and dividend income

Interest and fees on loans

$

10,362

$

10,045

$

30,662

$

29,859

Interest on debt securities

Taxable

396

530

1,260

1,734

Tax exempt

157

166

513

355

Other interest and dividends

87

282

229

761

Total interest and dividend income

11,002

11,023

32,664

32,709

Interest expense

Deposits

764

1,879

3,261

5,674

Repurchase agreements

6

9

16

16

Finance lease

35

43

106

135

Note payable

3

4

11

12

Subordinated debt

156

156

468

468

Federal Home Loan Bank of Boston advances

113

265

472

956

Total interest expense

1,077

2,356

4,334

7,261

Net interest and dividend income

9,925

8,667

28,330

25,448

Provision for loan losses

686

94

4,198

539

Net interest and dividend income after provision for loan losses

9,239

8,573

24,132

24,909

Non-interest income

Trust and wealth advisory

1,068

1,023

3,129

2,973

Service charges and fees

711

1,003

2,214

2,935

Gains on sales of mortgage loans, net

707

42

1,020

50

Mortgage servicing, net

29

76

162

232

Gains on CRA mutual fund

-

6

22

29

Gains (losses) on available-for-sale securities, net

34

(9)

216

263

BOLI income and gains

719

86

986

252

Other

18

29

97

97

Total non-interest income

3,286

2,256

7,846

6,831

Non-interest expense

Salaries

3,114

3,042

8,375

8,994

Employee benefits

1,061

1,181

3,244

3,408

Premises and equipment

1,005

974

2,897

2,950

Data processing

569

534

1,666

1,620

Professional fees

635

572

2,020

1,690

OREO gains, losses and write-downs, net

-

84

-

406

Collections and other real estate owned

108

119

212

328

FDIC insurance

123

(9)

331

294

Marketing and community support

126

141

419

448

Amortization of intangibles

78

93

247

297

Other

440

453

1,572

1,398

Total non-interest expense

7,259

7,184

20,983

21,833

Income before income taxes

5,266

3,645

10,995

9,907

Income tax provision

910

657

1,858

1,781

Net income

$

4,356

$

2,988

$

9,137

$

8,126

Net income available to common stock

$

4,288

$

2,940

$

9,006

$

8,016

Basic earnings per common share

$

1.53

$

1.06

$

3.22

$

2.88

Diluted earnings per common share

$

1.53

$

1.05

$

3.21

$

2.87

Common dividends per share

$

0.29

$

0.28

$

0.87

$

0.84


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 2020

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Total assets

$1,292,760

$1,287,137

$1,145,751

$1,112,448

$1,144,240

Loans receivable, net

1,031,593

1,039,524

949,142

927,413

915,083

Total securities

99,794

93,717

94,966

95,925

98,270

Deposits

1,095,141

1,085,599

965,620

919,506

966,178

FHLBB advances

43,880

55,118

40,932

50,887

37,828

Shareholders’ equity

122,240

118,444

116,143

113,655

111,580

Wealth assets under administration

748,188

704,052

639,457

777,503

752,467

Discretionary wealth assets under administration

514,988

480,456

425,359

498,737

475,482

Non-discretionary wealth assets under administration

233,200

223,596

214,098

278,766

276,985

Non-performing loans

4,681

4,815

3,188

3,621

5,370

Non-performing assets

4,681

4,815

3,188

3,935

5,687

Accruing loans past due 30-89 days

1,638

2,656

6,109

2,077

1,784

Net interest and dividend income

9,925

9,617

8,787

8,665

8,667

Net interest and dividend income, tax equivalent(1)

10,101

9,786

8,954

8,839

8,830

Provision for loan losses

686

1,806

1,706

417

94

Non-interest income

3,286

2,316

2,245

2,419

2,256

Non-interest expense

7,259

6,789

6,936

7,080

7,184

Income before income taxes

5,266

3,338

2,390

3,587

3,645

Income tax provision

910

604

343

578

657

Net income

4,356

2,734

2,047

3,009

2,988

Net income allocated to common shareholders

4,288

2,691

2,013

2,960

2,940

Per share data

Basic earnings per common share

$1.53

$0.96

$0.72

$1.06

$1.06

Diluted earnings per common share

1.53

0.96

0.72

1.06

1.05

Dividends per common share

0.29

0.29

0.29

0.28

0.28

Book value per common share

42.99

41.66

41.05

40.22

39.52

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

37.87

36.51

35.85

34.98

34.24

Common shares outstanding at end of period (in thousands)

2,843

2,843

2,829

2,826

2,823

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

2,799

2,796

2,788

2,781

2,783

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

2,807

2,803

2,797

2,794

2,795

Profitability ratios

Net interest margin (tax equivalent) (1)

3.29%

3.31%

3.35%

3.34%

3.29%

Efficiency ratio (3)

56.33

56.23

61.36

61.81

62.90

Effective income tax rate

17.28

18.11

14.35

16.11

18.02

Return on average assets

1.34

0.89

0.73

1.07

1.05

Return on average common shareholders’ equity

14.14

9.36

7.07

10.56

10.73

Credit quality ratios

Non-performing loans to loans receivable, gross

0.45

0.46

0.33

0.39

0.58

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

0.16

0.25

0.64

0.22

0.19

Allowance for loan losses to loans receivable, gross

1.24

1.18

1.11

0.95

0.96

Allowance for loan losses to non-performing loans

277.8

256.9

333.0

245.64

164.73

Non-performing assets to total assets

0.36

0.37

0.28

0.35

0.50

Capital ratios

Common shareholders' equity to assets

9.46%

9.20%

10.14%

10.22%

9.75%

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

8.42

8.16

8.97

9.01

8.56

Tier 1 leverage capital (4)

8.93

8.95

9.65

9.60

9.27

Total risk-based capital (4)

13.60

13.15

12.97

12.84

12.58

Common equity tier 1 capital (4)

12.35

11.90

11.79

11.83

11.57

(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)

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Common Shareholders' Equity

$

122,240

$

118,444

$

116,143

$

113,655

$

111,580

Less: Goodwill

(13,815

)

(13,815

)

(13,815

)

(13,815

)

(13,815

)

Less: Intangible assets

(748

)

(825

)

(908

)

(995

)

(1,086

)

Tangible Common Shareholders' Equity

$

107,677

$

103,804

$

101,420

$

98,845

$

96,679

Total Assets

$

1,292,760

$

1,287,137

$

1,145,751

$

1,112,448

$

1,144,240

Less: Goodwill

(13,815

)

(13,815

)

(13,815

)

(13,815

)

(13,815

)

Less: Intangible assets

(748

)

(825

)

(908

)

(995

)

(1,086

)

Tangible Total Assets

$

1,278,197

$

1,272,497

$

1,131,028

$

1,097,638

$

1,129,339

Common Shares outstanding

2,843

2,843

2,829

2,826

2,823

Book value per Common Share – GAAP

$

42.99

$

41.66

$

41.05

$

40.22

$

39.52

Tangible book value per Common Share - Non-GAAP

37.87

36.51

35.85

34.98

34.24

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

8.42

%

8.16

%

8.97

%

9.01

%

8.56

%

Consolidated:

Non-interest expense

$

7,259

$

6,789

$

6,936

$

7,080

$

7,184

Less: Amortization of core deposit intangibles

(78

)

(83

)

(87

)

(91

)

(93

)

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

2

(7

)

13

(27

)

(115

)

Adjusted non-interest expense

$

7,183

$

6,699

$

6,862

$

6,962

$

6,976

Net interest and dividend income, tax equivalent

$

10,101

$

9,786

$

8,955

$

8,839

$

8,831

Non-interest income

3,286

2,316

2,245

2,419

2,256

(Gains) losses on securities

(34

)

(188

)

(15

)

4

3

BOLI proceeds

(601

)

-

-

-

-

Adjusted revenue

$

12,752

$

11,914

$

11,185

$

11,262

$

11,090

Efficiency Ratio – Non-GAAP 1

56.33

%

56.23

%

61.36

%

61.81

%

62.90

%

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q3 2020: 54.76%; Q2 2020: 54.29%; Q1 2020: 59.83%; Q4 2019: 60.19%; Q3 2019: 61.13%. If Q3 2020 results were normalized to exclude the impact of the COVID-19 pandemic, non-interest expense would increase by $48 thousand for deferred compensation costs and revenue would be adjusted to include waived deposit fees of $289 thousand and exclude PPP loan interest and fee income of $251 thousand and $400 thousand, respectively. The resulting normalized efficiency ratio for Q3 2020 would have been 58.37% or 56.94%, excluding trust & wealth advisory.

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 2020

Q2 2020


Q3 2019


Q3 2020


Q2 2020

Q3 2019

Q3 2020

Q2 2020

Q3 2019

Loans (a)(d)

$

1,049,313

$

1,038,551

$

920,946

$

10,485

$

10,428

$

10,158

3.97%

4.02%

4.41%

Securities (c)(d)

89,220

86,987

96,317

606

634

747

2.72

2.92

3.10

FHLBB stock

3,440

3,580

3,024

34

39

46

3.96

4.36

6.08

Short term funds (b)

78,306

49,105

49,057

53

12

236

0.27

0.10

1.92

Total earning assets

1,220,279

1,178,223

1,069,344

11,178

11,113

11,187

3.64

3.77

4.18

Other assets

64,943

60,288

57,196

Total assets

$

1,285,222

$

1,238,511

$

1,126,540

Interest-bearing demand deposits

$

195,253

$

172,811

$

156,803

110

103

160

0.22

0.24

0.41

Money market accounts

258,257

237,667

242,310

195

239

700

0.30

0.40

1.16

Savings and other

176,963

171,436

165,297

69

102

323

0.15

0.24

0.78

Certificates of deposit

135,238

157,288

152,475

390

544

697

1.15

1.38

1.83

Total interest-bearing deposits

765,711

739,202

716,885

764

988

1,880

0.40

0.53

1.05

Repurchase agreements

12,218

4,773

7,266

6

4

9

0.20

0.34

0.50

Capital lease

2,928

2,987

4,356

35

35

42

4.80

4.69

3.86

Note payable

221

231

258

3

4

4

6.08

6.93

6.20

Subordinated debt (net of issuance costs)

9,872

9,866

9,849

156

156

156

6.32

6.32

6.34

FHLBB advances

44,522

55,374

31,983

113

140

266

0.99

1.01

3.33

Total interest-bearing liabilities

835,472

812,433

770,597

1,077

1,327

2,357

0.51

0.65

1.22

Demand deposits

321,392

302,965

238,689

Other liabilities

7,592

6,029

6,669

Shareholders’ equity

120,766

117,084

110,585

Total liabilities & shareholders’ equity

$

1,285,222

$

1,238,511

$

1,126,540

Net interest income

$

10,101

$

9,786

$

8,830

Spread on interest-bearing funds

3.13

3.12

2.96

Net interest margin (e)

3.29

3.31

3.29

(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 $176,000, $170,000 and $164,000, respectively, for Q3 2020, Q2 2020 and Q3 2019 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 2020 and 2019.
(e) Net interest income divided by average interest-earning assets.

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)

2020

2019

2020

2019

2020

2019

Loans (a)(d)

$

1,012,070

$

920,925

$

31,010

$

30,179

4.07%

4.36%

Securities (c)(d)

88,603

97,337

1,939

2,201

2.92

3.02

FHLBB stock

3,354

3,487

106

183

4.24

7.03

Short term funds (b)

50,312

38,682

123

577

0.33

2.00

Total earning assets

1,154,339

1,060,431

33,178

33,140

3.83

4.18

Other assets

63,265

56,769

Total assets

$

1,217,604

$

1,117,200

Interest-bearing demand deposits

$

174,299

$

154,885

331

458

0.25

0.40

Money market accounts

245,581

217,290

994

1,732

0.54

1.07

Savings and other

170,880

177,873

405

1,229

0.32

0.92

Certificates of deposit

149,080

164,979

1,531

2,255

1.37

1.83

Total interest-bearing deposits

739,840

715,027

3,261

5,674

0.59

1.06

Repurchase agreements

7,572

4,463

16

16

0.29

0.48

Capital lease

2,988

4,314

106

135

4.74

4.16

Note payable

231

266

11

12

6.08

6.06

Subordinated debt (net of issuance costs)

9,867

9,844

468

468

6.32

6.34

FHLBB advances

45,667

42,938

472

957

1.36

2.94

Total interest-bearing liabilities

806,165

776,852

4,334

7,262

0.72

1.25

Demand deposits

286,608

226,182

Other liabilities

6,847

6,560

Shareholders’ equity

117,984

107,606

Total liabilities & shareholders’ equity

$

1,217,604

$

1,117,200

Net interest income

$

28,844

$

25,878

Spread on interest-bearing funds

3.11

2.93

Net interest margin (e)

3.32

3.24

(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 $514,000 and $432,000, respectively for 2020 and 2019 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 2020 and 2019.
(e) Net interest income divided by average interest-earning assets.

Source: Salisbury Bancorp, Inc.

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