Record Net Income of $1.06 per Share for Third Quarter, Up 26% Versus a Year AgoNon-performing Assets of 0.50% of Total Assets, Down from 0.77% One Year AgoWealth Assets Under Administration Increased to $752 Million, Up $62 Million from One Year AgoTangible Book Value of $34.24 per Share, Up 9% from December 2018LAKEVILLE, Conn., Oct. 25, 2019 (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, 2019.Net income allocated to common shareholders was $2.9 million, or $1.06 per common share, for the quarter ended September 30, 2019 (third quarter 2019), compared with $2.7 million, or $0.96 per common share, for the second quarter ended June 30, 2019 (second quarter 2019), and $2.3 million, or $0.84 per common share, for the third quarter ended September 30, 2018 (third quarter 2018).Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “We reported our second consecutive quarter of record earnings despite a mixed economic environment and persistent competition for loans and deposits. Our asset quality remains strong and we are prudently deploying our capital. We remain focused on effectively managing risk and creating value for our shareholders while providing outstanding service to our customers.”Net-Interest and Dividend IncomeTax equivalent net interest and dividend income of $8.8 million for third quarter 2019 increased $345 thousand, or 4.1%, versus second quarter 2019, and increased $216 thousand, or 2.5%, versus third quarter 2018. Average earning assets increased $7.7 million versus second quarter 2019, and increased $23.4 million versus third quarter 2018. Average total interest bearing deposits decreased $10.9 million versus second quarter 2019 and increased $42.9 million versus third quarter 2018. The tax equivalent net interest margin for third quarter 2019 was 3.29% compared with 3.19% for second quarter 2019 and 3.29% for third quarter 2018. Net interest and dividend income for second quarter 2019 included a charge of $140 thousand for the write-off of unamortized premiums on purchased loans which paid off during that quarter. The write-off of the unamortized premiums reduced the second quarter tax equivalent net interest margin by approximately 0.05%.Non-Interest IncomeNon-interest income of $2.3 million for third quarter 2019 decreased $292 thousand versus second quarter 2019 and increased $168 thousand versus third quarter 2018. Non-interest income for the third quarter 2019 included realized losses of $9 thousand on the sale of available-for-sale securities compared with realized gains of $281 thousand in the second quarter 2019. There were no realized gains or losses on the sale of available-for-sale securities in third quarter 2018.Trust and Wealth Advisory fees of $1.0 million for third quarter 2019 decreased $21 thousand versus second quarter 2019 and increased $87 thousand versus third quarter 2018. The decrease from second quarter 2019 primarily reflected seasonal tax preparation fees in the prior quarter, partly offset by higher asset-based fees. The increase from third quarter 2018 primarily reflected higher asset-based fees. Assets under administration were $752 million as of September 30, 2019 compared with $713 million at June 30, 2019 and $690 million as of September 30, 2018. The increase from second quarter 2019 reflected growth in non-discretionary and discretionary assets of $28 million and $11 million, respectively. Service charges and fees of $1.0 million for third quarter 2019 decreased $9 thousand versus second quarter 2019 and increased $71 thousand versus third quarter 2018. The decrease from second quarter 2019 primarily reflected loan prepayment penalties recorded in the prior quarter. The increase from third quarter 2018 primarily reflected higher interchange and other fees.Non-Interest ExpenseNon-interest expense of $7.2 million for third quarter 2019 decreased $255 thousand versus second quarter 2019 and decreased $145 thousand versus third quarter 2018. Non-interest expense for third quarter 2019 included a write-down of $84 thousand on an OREO (other real estate owned) property compared with losses of $270 thousand and $38 thousand in second quarter 2019 and third quarter 2018, respectively. Non-interest expense for third quarter 2019 also included an assessment credit of $120 thousand from the FDIC whereas third quarter 2018 included a one-time charge of $95 thousand for the write-down of a mortgage loan previously sold to the FHLB Boston. Employee benefits costs increased $139 thousand from second quarter 2019 and $116 thousand versus third quarter 2018 reflecting higher 401(k), ESOP and deferred compensation accruals as well as higher medical insurance costs. Professional fees decreased $11 thousand from second quarter 2019 and increased $76 thousand versus third quarter 2018. The increase from the prior year third quarter primarily reflected higher investment management and consulting costs, partly offset by lower internal audit accruals.LoansGross loans receivable increased $4.5 million during third quarter 2019 to $923.9 million at September 30, 2019, compared with $919.5 million at June 30, 2019, and increased $17.6 million from $906.4 million at September 30, 2018. Balances by loan type for the comparative periods were as follows:The ratio of gross loans to deposits for third quarter 2019 was 95.6% compared with 96.7% for second quarter 2019 and 100.5% for third quarter 2018.Asset QualitySalisbury’s asset quality remained strong at third quarter 2019. Non-performing assets were $5.7 million, or 0.50% of total assets at September 30, 2019, compared with $5.5 million, or 0.49% of total assets at June 30, 2019, and $8.5 million, or 0.77% of total assets at September 30, 2018.The amount of total impaired and potential problem loans increased $0.3 million during third quarter 2019 to $22.6 million, or 2.44% of gross loans receivable, compared to $22.2 million, or 2.42% of gross loans receivable at June 30, 2019, and decreased $1.1 million from $24.5 million, or 2.7% of gross loans receivable at September 30, 2018.Accruing loans receivable 30-to-89 days past due decreased $0.7 million during third quarter 2019 to $1.8 million, or 0.19% of gross loans receivable, from $2.5 million, or 0.27% of gross loans receivable at June 30, 2019, and was unchanged from $1.8 million, or 0.20% of gross loans receivable at September 30, 2018.The allowance for loan losses at September 30, 2019 was $8.8 million compared with $8.9 million at June 30, 2019 and $7.7 million at September 30, 2018.The provision for loan losses expense was $94 thousand for third quarter 2019 versus $151 thousand for second quarter 2019, and $378 thousand for third quarter 2018. The decrease in the provision from both comparable periods primarily reflected lower loan growth, partly offset by higher net charge-offs. Net loan charge-offs were $135 thousand for the third quarter 2019, $15 thousand for second quarter 2019 and $14 thousand for the third quarter 2018. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 0.96% for the third quarter 2019, versus 0.97% for second quarter 2019 and 0.85% for third quarter 2018. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans, was 164.73% for third quarter 2019, versus 175.56% for second quarter 2019 and 94.77% for third quarter 2018.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 BorrowingsDeposits were $966.2 million at September 30, 2019 compared with $950.7 million at June 30, 2019 and $902.2 million at September 30, 2018. Deposits at September 30, 2019 included brokered deposits, including CDARS one-way buys, of $32.9 million compared with $52.7 million at June 30, 2019 and $15.2 million at September 30, 2018. Average total deposits for third quarter 2019 were $938.5 million compared with $947.1 million at June 30, 2019 and $894.6 million at September 30, 2018. Average total deposits for third quarter 2019 included average brokered deposits of $31.6 million compared with $56.4 million for second quarter 2019 and $13.7 million for third quarter 2018.FHLB advances increased $5.0 million during the quarter to $37.8 million at September 30, 2019 and decreased $29.8 million from September 30, 2018.CapitalBook value per common share increased $0.93 during the third quarter to $39.52 per share and increased $3.59 from the third quarter 2018. Tangible book value per common share increased $0.96 during third quarter 2019 to $34.24 and increased $3.77 from the third quarter 2018.Shareholders’ equity increased $2.6 million in third quarter 2019 to $111.6 million at September 30, 2019 as net income of $3.0 million, unrealized gains in the AFS portfolio of $0.3 million and the issuance of restricted stock awards of $0.1 million was 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, 2019, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.27%, 12.58%, and 11.57%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.Third Quarter 2019 Dividends on Common SharesThe Board of Directors of Salisbury declared a $0.28 per common share quarterly cash dividend at its October 25, 2019 meeting. The dividend will be paid on November 29, 2019 to shareholders of record as of November 15, 2019.BackgroundSalisbury 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 StatementsThis news release may contain statements relating to future results of 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, 2019, 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.
1 Adjusted to reflect the U.S. federal statutory tax 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.1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q3 2019: 61.13%; Q2 2019: 64.09%; Q1 2019: 64.51%; Q4 2018: 67.17%; Q3 2018: 65.65%.Source: Salisbury Bancorp, Inc.Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer
860-435-9801 or rcantele@salisburybank.com
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