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Salisbury Bancorp, Inc. Reports Results for First Quarter 2023; Declares 16 Cent Dividend

  • Strategic Merger With NBT Approved by Salisbury Shareholders
  • First Quarter Net Income of $0.52 per Basic Common Share and Return on Average Assets of 0.79% or $0.60 and 0.91%, Respectively, Excluding Non-Recurring Expenses
  • First Quarter 2023 Loan Growth of $22.1 million, or 1.8%
  • Non-performing Assets were 0.14% of Total Assets at March 31, 2023
  • Common Equity Tier 1 and Tangible Common Equity Ratio of 12.16% and 7.63%, Respectively, at March 31, 2023 1

LAKEVILLE, Conn., April 26, 2023 (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 first quarter ended March 31, 2023.

Net income available to common shareholders was $3.0 million, or $0.52 per basic common share, for the first quarter ended March 31, 2023 (first quarter 2023), compared with $4.1 million, or $0.71 per basic common share, for the fourth quarter ended December 31, 2022 (fourth quarter 2022), and $3.5 million, or $0.62 per basic common share, for the first quarter ended March 31, 2022 (first quarter 2022). Net income for first quarter 2023 included pre-tax costs of $385 thousand related to Salisbury’s pending merger with NBT Bancorp (“NBT merger”) and $158 thousand to write off fixed assets in the Red Oaks Mill, New York branch, which will close on April 30, 2023. In aggregate, these costs reduced first quarter 2023 earnings per basic share and return on average assets by $0.08 and 0.12%, respectively.

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “Our financial results for the first quarter were impacted by the challenging banking and macro-economic environment. Despite these headwinds, Salisbury’s business model remains conservative, the Bank is well-capitalized and our deposit base is diversified. Additionally, the unrealized losses in our investment portfolio do not present a material risk to the Bank or to our customers. As we look forward and take a longer term perspective, we are excited that the strategic partnership with NBT has been approved by Salisbury shareholders. The merger is expected to close this quarter, subject to regulatory approval. While we work through the integration of these two high-performing franchises, Salisbury employees will remain focused on prudently managing the Bank’s capital and liquidity and providing outstanding service to our customers.”

Net Interest and Dividend Income

Tax equivalent net interest income of $11.3 million for the first quarter 2023 decreased $903 thousand, or 7.4%, versus fourth quarter 2022, and increased $834 thousand, or 8.0%, versus first quarter 2022. Tax equivalent interest income of $15.1 million for first quarter 2023 increased $755 thousand, or 5.3%, versus fourth quarter 2022 and increased $3.8 million, or 33.8%, from first quarter 2022. The cost of interest-bearing liabilities of $3.8 million for first quarter 2023 increased $1.7 million, or 77.5%, from fourth quarter 2022 and increased $3.0 million, or 367.5%, from first quarter 2022.

Average earning assets of $1.5 billion for first quarter 2023 increased $23.3 million, or 1.6%, from fourth quarter 2022, and increased $82.5 million, or 5.8%, versus first quarter 2022. Average earning assets for first quarter 2023 included average PPP loan balances of $0.2 million, net of deferred fees, compared with $0.4 million in fourth quarter 2022 and $18.7 million in first quarter 2022, respectively. Average total interest bearing liabilities of $1.0 billion for first quarter 2023 increased $45.9 million, or 4.7%, from fourth quarter 2022 and increased $70.6 million, or 7.4%, versus first quarter 2022. The increase in average total interest-bearing liabilities from the comparative periods primarily reflected higher brokered deposits, which Salisbury utilized to fund loan growth and to provide liquidity.

The tax equivalent net interest margin for first quarter 2023 was 2.99% compared with 3.28% for fourth quarter 2022 and 2.95% for first quarter 2022. Excluding PPP loans, the tax equivalent net interest margin for first quarter 2023 was 2.99% compared with 3.28% for fourth quarter 2022 and 2.86% for first quarter 2022. The decline in the tax equivalent net interest margin from the comparative quarters primarily reflected an increase in the cost of interest bearing deposits and borrowed funds as well as an increase in the amount of borrowed funds. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 of this release for additional details.

Non-Interest Income

Non-interest income of $2.7 million for first quarter 2023 increased $75 thousand versus fourth quarter 2022 and decreased $401 thousand versus first quarter 2022.

Trust and Wealth Advisory fees of $1.2 million for first quarter 2023 increased $28 thousand from fourth quarter 2022 and decreased $88 thousand from first quarter 2022. The change in fee income versus the comparative quarters was primarily driven by asset management fees. Assets under administration were $1.30 billion at March 31, 2023 compared with $1.29 billion at December 31, 2022 and $1.05 billion at March 31, 2022. Discretionary assets under administration of $588.4 million at March 31, 2023 compared with $561.1 million at December 31, 2022 and $625.3 million at March 31, 2022. The variance from the comparative quarters primarily reflected changes in market valuations. Non-discretionary assets under administration of $712.7 million at March 31, 2023 decreased from $728.9 million at December 31, 2022 and increased from $423.9 million at March 31, 2022. The variance from the comparative periods primarily reflected changes in the valuation of certain partnership assets for an existing client relationship. The trust and wealth business records only a nominal annual fee on this relationship.

_____________________________

1 The tangible common equity ratio is a non-GAAP measure. Management considers this ratio to be an important measure of risk. Refer to page 8 of this document for the reconciliation of the components of this calculation to U.S. GAAP.

Service charges and fees of $1.2 million for first quarter 2023 increased $16 thousand from fourth quarter 2022 and increased $97 thousand from first quarter 2022. The increase from fourth quarter 2022 primarily reflected higher deposit and loan fees, which were partially offset by lower interchange fees. The increase from first quarter 2022 primarily reflected higher deposit and higher interchange fees. Net fees from mortgage banking activities were below the comparative quarters. Salisbury did not sell any residential loans to FHLBB during first quarter 2023 and fourth quarter 2022 compared with sales of $5.5 million in first quarter 2022.

Non-Interest Expense

Non-interest expense of $9.1 million for first quarter 2023 increased $179 thousand from fourth quarter 2022 and increased $473 thousand versus first quarter 2022. Non-interest expense for first quarter 2023 and fourth quarter 2022 included costs of approximately $385 thousand and $497 thousand, respectively, associated with the pending NBT merger. Non-interest expense for first quarter 2023 also included a non-recurring charge of $158 thousand to write off fixed assets in the Red Oaks Mill, New York branch, which will be closed on April 30, 2023. Compensation expense of $5.2 million for first quarter 2023 decreased $143 thousand from fourth quarter 2022 and increased $433 thousand versus first quarter 2022. The increase in compensation expense from first quarter 2022 primarily reflected higher base salary expense and higher incentive accruals as well as lower deferred compensation expense.

Excluding compensation expense, other non-interest expenses for first quarter 2023 increased $322 thousand from fourth quarter 2022 and increased $40 thousand from first quarter 2022. The increase from comparative quarters primarily reflected higher professional fees associated with the NBT merger, and the write-off of fixed assets associated with the pending Red Oaks Mill, New York branch closure. First quarter 2022 included fraud related losses of $251 thousand.

The effective income tax rates for first quarter 2023, fourth quarter 2022 and first quarter 2022 were 20.0%, 20.1% and 18.6%, respectively.

Loans

Gross loans receivable of $1.3 billion for first quarter 2023 increased $22.1 million, or 1.8%, from fourth quarter 2022, and increased $171.5 million, or 15.9%, from first quarter 2022. Residential 5+ multifamily gross loans receivable at March 31, 2023 and December 31, 2022 included a loan for approximately $16.0 million. At March 31, 2022 this loan, which had a gross balance of approximately $12.0 million, was reported in the commercial real estate category while the project was under construction. The ratio of gross loans to deposits for first quarter 2023 was 96.7% compared with 90.4% for fourth quarter 2022 and 83.6% for first quarter 2022. Balances by loan type for the comparative periods were as follows:

Loan Type ($ in thousands)Q1 2023 Q4 2022 Q1 2022
Residential Real Estate (1-4 Family)$483,893 $476,719 $425,301
Residential 5+ Multifamily 91,772  80,400  53,376
Commercial Real Estate 433,379  421,147  376,088
Commercial & Industrial ex PPP Loans 185,376  190,191  163,832
PPP Loans 226  299  13,666
Commercial & Industrial – Total 185,602  190,490  177,498
Farm Land 3,451  4,081  2,778
Vacant Land 14,601  14,440  14,710
Municipal 17,577  19,693  14,263
Consumer 19,491  20,546  14,356
Deferred Costs/(Fees) 875  1,001  761
Gross Loans Receivable$1,250,641 $1,228,517 $1,079,131
Gross Loans Receivable ex PPP$1,250,415 $1,228,218 $1,065,465

Asset Quality

Non-performing assets of $2.2 million, or 0.14% of total assets at March 31, 2023, decreased $0.5 million from $2.7 million, or 0.17% of total assets at December 31, 2022, and decreased $0.6 million from $2.8 million, or 0.19% of total assets, at March 31, 2022.

The amount of total impaired and potential problem loans increased $0.2 million during the quarter to $10.9 million or 0.87% of gross loans receivable at March 31, 2023 compared to $11.4 million, or 0.93% of gross loans receivable at December 31, 2022 and $27.3 million, or 2.53% of gross loans receivable at March 31, 2022. The decrease in the balance from first quarter 2022 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 demonstrated a return to pre-pandemic levels of activity and liquidity, which warranted the improvement in risk rating.

Accruing loans receivable 30-to-89 days past due of $2.2 million, or 0.18% of gross loans receivable, increased $0.9 million from $1.3 million, or 0.11% of gross loans receivable at December 31, 2022, and decreased $0.1 million from $2.3 million, or 0.22% of gross loans receivable at March 31, 2022.

On January 1, 2023, Salisbury adopted the Current Expected Credit Loss (“CECL”) accounting standard to estimate credit losses over the life of a loan. As a result of this implementation, Salisbury recorded a reduction of $0.9 million to retained earnings, an increase of $0.3 million to the allowance for credit (“ACL”) losses, an increase of $0.9 million to other liabilities for unfunded commitments reserves and an increase in deferred tax assets of $0.3 million. The ACL for first quarter 2023 was $16.0 million compared with $14.8 million for fourth quarter 2022 and $12.9 million for first quarter 2022. The provision expense was $0.9 million for first quarter 2022 compared with $0.5 million for fourth quarter 2022 and $0.4 million for first quarter 2022. The provision expense for first quarter 2023 primarily reflected loan growth during the quarter as well as the forecast of certain macro-economic factors, which underpin the Bank’s CECL model. Net loan charge-offs were $32 thousand for the first quarter 2023 compared with $13 thousand for fourth quarter 2022 and $410 thousand for the first quarter 2022.

Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.28% for the first quarter 2023 versus 1.21% for both fourth quarter 2022 and first quarter 2022. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 714% for the first quarter 2023 versus 558% for fourth quarter 2022 and 467% for first quarter 2022.

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, Borrowings and Liquidity

Total deposits of $1.3 billion at March 31, 2023 decreased $65.4 million, or 4.8%, from December 31, 2022 and increased $2.6 million, or 0.2%, from March 31, 2022. Salisbury accumulates deposits from a diverse customer base. At March 31, 2023, the composition of Salisbury’s deposit balances was as follows: retail: 45%; commercial: 39%; municipalities: 8%; brokered funds: 4%; Wealth Advisory: 3%; and educational institutions: 1%. At March 31, 2023, the balance of Salisbury’s deposits that were not insured by the FDIC or not collateralized by marketable securities owned by Salisbury was approximately $344 million, or 27%, of total deposits.

At March 31, 2023, Salisbury had outstanding brokered deposits balances of $53.2 million compared with balances of $45.0 million at December 31, 2022. Salisbury did not have any outstanding brokered deposit balances at March 31, 2022. Brokered deposits are included in the certificates of deposit balances on Salisbury’s consolidated balance sheet. Management utilized brokered deposits in first quarter 2023 to fund loan growth and as a source of liquidity. Excluding brokered funds, Salisbury’s deposits declined $73.5 million, or 5.6%, from fourth quarter 2022 and declined $50.6 million, or 3.9%, from first quarter 2022. Average total deposits were $1.3 billion for first quarter 2023, fourth quarter 2022 and first quarter 2022. Average total deposits for first quarter 2023 included average brokered deposits of $47.9 million compared with $25.8 million for fourth quarter 2022 and $7.5 million for first quarter 2022.

Salisbury has access to various sources of liquidity, including the FHLBB and the Federal Reserve Bank. Salisbury had $100.0 million of outstanding advances from FHLBB at March 31, 2023 compared with $10.0 million at December 31, 2022 and $0.4 million at March 31, 2022, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $145 million at March 31, 2023. Additionally, at March 31, 2023, Salisbury had approximately $100 million of eligible collateral that could be posted to the Federal Reserve to secure funds under the Bank Term Funding Program. Salisbury has not borrowed funds under this program.

Capital

Shareholders’ equity increased $4.0 million in first quarter to $132.4 million at March 31, 2023 as net income of $3.0 million, unrealized gains, net of taxes, in the available-for-sale securities (“AFS”) portfolio of $2.7 million and other activity of $0.1 million, were partially offset by common stock dividends paid of $0.9 million and a reduction of $0.9 million to retained earnings for the adoption of CECL. The unrealized losses, net of taxes, in the AFS portfolio were $18.0 million at March 31, 2023. Book value per common share of $22.79 at March 31, 2023 increased $0.66 from fourth quarter 2022 and increased $0.23 from first quarter 2022. Tangible book value per common share of $20.38 at March 31, 2023 increased $0.67 from fourth quarter 2022 and increased $0.28 from first quarter 2022. At March 31, 2023, the Bank’s tangible common equity ratio, which included the unrealized losses in the AFS portfolio noted above, was 7.63%.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At March 31, 2023, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.98%, 13.41%, and 12.16%, 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 first quarter 2023, Salisbury did not repurchase any of its outstanding common stock pursuant to its stock repurchase program, which was established in March 2021 and renewed in March 2022.

Dividend on Common Shares

On April 26, 2023, the Board of Directors of Salisbury approved a quarterly cash dividend of $0.16 per common share that will be paid on May 26, 2023 to shareholders of record as of May 12, 2023.

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. In March 2023, Salisbury filed an amended complaint against the beneficiaries to recover the distributed proceeds and to reinstate the trust account. At this time, management believes that Salisbury’s exposure is not yet known or knowable and could potentially range from zero to approximately $0.8 million depending upon the facts and circumstances.

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 March 31, 2023, 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)March 31, 2023December 31, 2022
ASSETS  
Cash and due from banks$6,231 $5,864 
Interest bearing demand deposits with other banks 43,613  44,675 
Total cash and cash equivalents 49,844  50,539 
Securities  
Available-for-sale at fair value 187,598  187,410 
Mutual funds at fair value 2,068  1,933 
Federal Home Loan Bank of Boston stock at cost 5,030  1,285 
Loans receivable, net (allowance for loan losses: $16,009 and $14,846) 1,234,632  1,213,671 
Bank premises and equipment, net 21,597  22,148 
Goodwill 13,815  13,815 
Intangible assets (net of accumulated amortization: $5,691 and $5,654) 188  227 
Accrued interest receivable 6,383  6,797 
Cash surrender value of life insurance policies 30,571  30,379 
Deferred taxes 8,234  8,492 
Other assets 5,374  4,886 
Total Assets$1,565,334 $1,541,582 
LIABILITIES and SHAREHOLDERS’ EQUITY  
Deposits  
Demand (non-interest bearing)$370,049 $395,994 
Demand (interest bearing) 218,902  231,486 
Money market 296,974  343,965 
Savings and other 236,755  233,578 
Certificates of deposit 170,362  153,370 
Total deposits 1,293,042  1,358,393 
Repurchase agreements 3,230  7,228 
Federal Home Loan Bank of Boston advances 100,000  10,000 
Subordinated debt 24,545  24,531 
Note payable 117  128 
Finance lease obligations 4,225  4,262 
Accrued interest and other liabilities 7,820  8,685 
Total Liabilities 1,432,979  1,413,227 
Shareholders’ Equity  
Common stock – $0.10 per share par value  
Authorized: 10,000,000;  
Issued: 5,807,719 and 5,798,816  
Outstanding: 5,807,719 and 5,798,816 581  580 
Unearned compensation – restricted stock awards (961) (1,144)
Paid-in capital 47,396  47,466 
Retained earnings 103,371  102,178 
Accumulated other comprehensive (loss), net (18,032) (20,725)
Total Shareholders’ Equity 132,355  128,355 
Total Liabilities and Shareholders’ Equity$1,565,334 $1,541,582 

Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME 
(unaudited)  

Three months ended March 31, (in thousands, except per share amounts) 2023 2022 
Interest and dividend income  
Interest and fees on loans$13,250$10,163 
Interest on debt securities  
Taxable 1,068 724 
Tax exempt 212 174 
Other interest and dividends 393 57 
Total interest and dividend income 14,923 11,118 
Interest expense  
Deposits 2,818 478 
Repurchase agreements 16 3 
Finance lease 40 41 
Note payable 2 2 
Subordinated debt 233 233 
Federal Home Loan Bank of Boston advances 687 55 
Total interest expense 3,796 812 
Net interest and dividend income 11,127 10,306 
Provision for loan losses 924 363 
Net interest and dividend income after provision for loan losses 10,203 9,943 
Non-interest income  
Trust and wealth advisory 1,153 1,241 
Service charges and fees 1,235 1,138 
Mortgage banking activities, net 59 355 
Gains (losses) on CRA mutual fund 20 (42)
Gains on securities, net  210 
Bank-owned life insurance (“BOLI”) income 192 162 
Other 34 30 
Total non-interest income 2,693 3,094 
Non-interest expense  
Salaries 3,721 3,479 
Employee benefits 1,468 1,277 
Premises and equipment 1,105 1,104 
Loss on sale of assets 158 9 
Information processing and services 831 685 
Professional fees 945 787 
Collections, OREO, and loan related 72 117 
FDIC insurance 98 171 
Marketing and community support 127 184 
Amortization of intangibles 39 54 
Other 562 786 
Total non-interest expense 9,126 8,653 
Income before income taxes 3,770 4,384 
Income tax provision 752 816 
Net income$3,018$3,568 
Net income available to common shareholders$2,968$3,508 
   
Basic earnings per common share$0.52$0.62 
Diluted earnings per common share 0.52 0.62 
Common dividends per share 0.16 0.16 

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

At or for the quarters ended                   
(in thousands, except per share amounts and ratios)Q1 2023  Q4 2022  Q3 2022  Q2 2022  Q1 2022 
Total assets$1,565,334  $1,541,582  $1,512,138  $1,496,521  $1,465,082 
Loans receivable, net 1,234,632   1,213,671   1,176,493   1,135,758   1,066,216 
Total securities 194,696   190,628   192,530   205,727   217,591 
Deposits 1,293,042   1,358,393   1,325,204   1,316,539   1,290,474 
FHLBB advances 100,000   10,000   20,000      419 
Shareholders’ equity 132,355   128,355   123,160   127,303   130,066 
Wealth assets under administration 1,301,162   1,289,918   1,232,272   1,261,244   1,049,240 
Discretionary wealth assets under administration 588,414   561,050   522,109   546,506   625,346 
Non-discretionary wealth assets under administration 712,748   728,868   710,163   714,738   423,894 
Non-performing loans 2,241   2,663   1,860   4,229   2,765 
Non-performing assets 2,241   2,663   1,860   4,229   2,765 
Accruing loans past due 30-89 days 2,234   1,309   390   1,001   2,349 
Net interest and dividend income 11,127   12,015   11,844   10,872   10,306 
Net interest and dividend income, tax equivalent(1) 11,318   12,221   12,054   11,061   10,484 
Provision expense for loan losses 924   525   695   1,100   363 
Non-interest income 2,693   2,618   2,693   3,297   3,094 
Non-interest expense 9,126   8,947   8,512   8,532   8,653 
Income before income taxes 3,770   5,161   5,330   4,537   4,384 
Income tax provision 752   1,037   994   692   816 
Net income 3,018   4,124   4,336   3,845   3,568 
Net income allocated to common shareholders 2,968   4,055   4,264   3,772   3,508 
                    
Per share data                   
Basic earnings per common share$0.52  $0.71  $0.75  $0.67  $0.62 
Diluted earnings per common share 0.52   0.71   0.75   0.66   0.62 
Dividends per common share 0.16   0.16   0.16   0.16   0.16 
Book value per common share 22.79   22.13   21.29   22.01   22.56 
Tangible book value per common share – Non-GAAP2 20.38   19.71   18.86   19.57   20.10 
Common shares outstanding at end of period (in thousands) 5,808   5,799   5,784   5,784   5,765 
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) 5,702   5,688   5,687   5,666   5,636 
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) 5,714   5,710   5,713   5,699   5,694 
                    
Profitability ratios                   
Net interest margin (tax equivalent)(1) 2.99%  3.28%  3.27%  3.15%  2.95%
Efficiency ratio(2) 61.07   56.66   57.38   59.49   63.38 
Effective income tax rate 19.95   20.10   18.65   15.25   18.60 
Return on average assets 0.79   1.07   1.13   1.06   0.97 
Return on average common shareholders’ equity 9.36   13.05   13.23   11.98   10.65 
                    
Credit quality ratios                   
Non-performing loans to loans receivable, gross 0.18%  0.22%  0.16%  0.37%  0.26%
Accruing loans past due 30-89 days to loans receivable, gross 0.18   0.11   0.03   0.09   0.22 
Allowance for loan losses to loans receivable, gross 1.28   1.21   1.20   1.19   1.20 
Allowance for loan losses to non-performing loans 714.4   557.5   770.6   324.0   467.3 
Non-performing assets to total assets 0.14   0.17   0.12   0.28   0.19 
                    
Capital ratios                   
Common shareholders’ equity to assets 8.35%  8.33%  8.14%  8.51%  8.88%
Tangible common shareholders’ equity to tangible assets – Non-GAAP(2) 7.63   7.48   7.28   7.63   7.99 
Tier 1 leverage capital(3) 9.98   9.99   9.83   10.04   9.66 
Total risk-based capital(3) 13.41   13.43   13.24   13.28   13.98 
Common equity tier 1 capital(3) 12.16   12.24   12.07   12.13   12.80 

(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)Q1 2023  Q4 2022  Q3 2022  Q2 2022  Q1 2022 
Common Shareholders’ Equity$132,355  $128,355  $123,160  $127,303  $130,066 
Less: Goodwill (13,815)  (13,815)  (13,815)  (13,815)  (13,815)
Less: Intangible assets (188)  (227)  (269)  (314)  (364)
Tangible Common Shareholders’ Equity$118,352  $114,313  $109,076  $113,174  $115,887 
Total Assets$1,565,334  $1,541,582  $1,512,138  $1,496,521  $1,465,082 
Less: Goodwill (13,815)  (13,815)  (13,815)  (13,815)  (13,815)
Less: Intangible assets (188)  (227)  (269)  (314)  (364)
Tangible Total Assets$1,551,331  $1,527,540  $1,498,054  $1,482,392  $1,450,903 
Common Shares outstanding (in thousands) 5,808   5,799   5,784   5,784   5,765 
      
Book value per Common Share – GAAP$22.79  $22.13  $21.29  $22.01  $22.56 
Tangible book value per Common Share – Non-GAAP 20.38   19.71   18.86   19.57   20.10 
Tangible common shareholders’ equity to tangible total assets – Non-GAAP 7.63%  7.48%  7.28%  7.63%  7.99%
Consolidated:     
Non-interest expense$9,126  $8,947  $8,512  $8,532  $8,653 
Amortization of core deposit intangibles (39)  (42)  (46)  (50)  (54)
OREO recovery       15       
Merger-related costs (385)  (497)         
Fixed asset write-off (158)            
Fraud-related recovery (losses)          50   (251)
Adjusted non-interest expense$8,544  $8,408  $8,481  $8,532  $8,348 
Net interest and dividend income, tax equivalent$11,318  $12,221  $12,054  $11,061  $10,484 
Non-interest income 2,693   2,618   2,693   3,297   3,094 
(Gains) losses on securities (20)  1   47   75   (168)
BOLI proceeds receivable          (89)   
Gains on sale of loans       (15)     (239)
Adjusted revenue$13,991  $14,840  $14,779  $14,344  $13,171 
Efficiency Ratio – Non-GAAP(1) 61.07%  56.66%  57.38%  59.49%  63.38%

(1) Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q1 2023: 59.08%; Q4 2022: 54.64%; Q3 2022: 55.28%; Q2 2022: 57.21%; Q1 2022: 61.83%.

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

At or for the quarters endedAverage BalanceIncome / ExpenseAverage Yield / Rate
(dollars in thousands)Q1 2023 Q4 2022 Q1 2022 Q1 2023 Q4 2022 Q1 2022 Q1 2023  Q4 2022  Q1 2022 
Loans (a)(d)$1,236,778 $1,209,184 $1,079,610 $13,367 $12,726 $10,277 4.29% 4.16% 3.79%
Securities (c)(d) 214,246  217,963  208,140  1,353  1,279  962 2.53  2.35  1.85 
FHLBB stock 3,436  1,416  1,434  19  15  7 2.29  4.29  2.05 
Short term funds (b) 40,689  43,328  123,454  375  339  50 3.72  3.10  0.16 
Total interest-earning assets 1,495,149  1,471,891  1,412,638  15,114  14,359  11,296 4.02  3.86  3.19 
Other assets 55,022  52,855  74,795      
Total assets$1,550,171 $1,524,746 $1,487,433      
Interest-bearing demand deposits$223,742 $232,228 $232,464  119  115  99 0.22  0.20  0.17 
Money market accounts 320,015  331,451  321,198  1,270  915  126 1.61  1.10  0.16 
Savings and other 232,162  246,650  233,092  402  291  64 0.70  0.47  0.11 
Certificates of deposit 161,300  128,787  131,059  1,027  465  189 2.58  1.43  0.59 
Total interest-bearing deposits 937,219  939,116  917,813  2,818  1,786  478 1.22  0.75  0.21 
Repurchase agreements 3,961  6,615  7,146  16  20  3 1.65  1.18  0.14 
Finance lease 5,397  5,475  5,097  40  40  41 2.96  2.94  3.23 
Note payable 121  132  163  2  2  2 6.17  6.16  6.12 
Subordinated debt (f) 24,536  24,523  24,480  233  233  233 3.80  3.80  3.81 
FHLBB advances 57,056  6,576  2,974  687  57  55 4.82  3.37  7.46 
Total interest-bearing liabilities 1,028,290  982,437  957,673  3,796  2,138  812 1.49  0.86  0.34 
Demand deposits 382,601  408,672  386,884      
Other liabilities 8,427  8,233  7,036      
Shareholders’ equity 130,853  125,404  135,840      
Total liabilities & shareholders’ equity$1,550,171 $1,524,746 $1,487,433      
Net interest income    $11,318 $12,221 $10,484   
Spread on interest-bearing funds       2.54  3.00  2.84 
Net interest margin (e)       2.99  3.28  2.95 

 

(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 Q1 2023, Q4 2022 and Q1 2022 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 2023 and 2022.
(e)Net interest income divided by average interest-earning assets.
(f)Net of issuance costs.

Source: Salisbury Bancorp, Inc.

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

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