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Salisbury Bancorp, Inc. Reports Results for Third Quarter 2021

·30-min read
  • Third Quarter 2021 Net Income of $1.21 per Basic Common Share

  • Gross Loan Balances Increased $47 Million, or 5%, During Third Quarter 20211

  • Non-performing Assets were 0.34% of Total Assets Compared with 0.44% at December 31, 2020

  • Common Equity Tier 1 and Total Risk-Based Capital Ratios of 12.95% and 14.20%, Respectively

LAKEVILLE, Conn., Oct. 20, 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 third quarter ended September 30, 2021.

Net income available to common shareholders was $3.4 million, or $1.21 per basic common share, for Salisbury’s third quarter ended September 30, 2021 (third quarter 2021), compared with $4.3 million, or $1.53 per basic common share, for the second quarter ended June 30, 2021 (second quarter 2021), and $4.3 million, or $1.53 per basic common share, for the third quarter ended September 30, 2020 (third quarter 2020). Net income for third quarter 2021 included a provision for loan losses of $0.4 million compared with a net release of credit reserves of $1.1 million in second quarter 2021.

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “We reported solid results for the third quarter, which included robust organic growth in both our residential and commercial loan portfolios. Credit quality and capital ratios remained strong and loan payment deferrals declined to only two commercial loans at the end of the third quarter. We are cautiously optimistic that the business environment will remain favorable as we enter the fourth quarter and we are focused on driving disciplined loan growth across our markets. In September, we hired two commercial lenders and one residential lender as an integral part of this strategy. 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 $10.3 million for the third quarter 2021 increased $0.6 million, or 6.2%, versus second quarter 2021, and increased $0.2 million, or 2.4% compared with third quarter 2020. Tax equivalent interest income of $11.2 million for third quarter 2021 increased $0.4 million, or 3.6%, versus second quarter 2021 and was essentially unchanged from third quarter 2020.

The cost of interest-bearing liabilities of $0.8 million for third quarter 2021 decreased $0.2 million, or 20.9%, compared to second quarter 2021 and declined $0.2 million, or 22.4% from third 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 third quarter 2021 increased $32.8 million, or 2.4% from second quarter 2021, and increased $185.6 million, or 15.2%, versus third 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 third quarter 2021 included average PPP loan balances of $51.8 million, net of deferred fees, compared with $80.4 million in second quarter 2021 and $97.0 million in third quarter 2020. Average total interest bearing liabilities of $0.9 billion for third quarter 2021 decreased $9.6 million, or 1.0%, from second quarter 2021 primarily due to lower average subordinated debt and deposit balances. Average total interest bearing liabilities for third quarter 2021 increased $113.9 million, or 13.6%, versus third quarter 2020 primarily due to higher average deposit and subordinated debt balances, which were partially offset by lower average borrowings.

The tax equivalent net interest margin for third quarter 2021 was 2.92% compared with 2.82% for second quarter 2021 and 3.29% for third quarter 2020. Excluding the impact of PPP loans, the tax equivalent net interest margin for third quarter 2021 was 2.78% compared with 2.76% for second quarter 2021 and 3.35% for third quarter 2020. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 on this release for additional details.

Non-Interest Income

Non-interest income of $2.8 million for third quarter 2021 decreased $131 thousand versus second quarter 2021 and decreased $446 thousand versus third quarter 2020.

Trust and Wealth Advisory fees of $1.3 million for third quarter 2021 increased $32 thousand from second quarter 2021 and increased $218 thousand versus third quarter 2020. The increase from second quarter 2021 primarily reflected higher asset-based fees, which were partially offset by lower seasonal tax preparation fees. The increase from third quarter 2020 primarily reflected higher asset-based fees. Assets under administration were $973.2 million at September 30, 2021 compared with $944.3 million at December 31, 2020 and $748.2 million at September 30, 2020. Discretionary assets under administration of $608.2 million in third quarter 2021 increased from $555.0 million in fourth quarter 2020 and $515.0 million in third quarter 2020 primarily due to higher market valuations. Non-discretionary assets under administration of $365.0 million in third quarter 2021 decreased from $389.4 million in fourth quarter 2020 and increased from $233.2 million in third quarter 2020. The decline from fourth quarter 2020 primarily reflected the lower valuation of certain partnership assets under administration whereas the increase from third 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.

_____________________________

1 Excludes loans granted under the Paycheck Protection Program (PPP) by the Small Business Administration (SBA).

Service charges and fees of $1.2 million for third quarter 2021 decreased $163 thousand versus second quarter 2021 and increased $500 thousand versus third quarter 2020. The decrease from second quarter 2021 primarily reflected lower loan prepayment fees whereas the increase from third quarter 2020 primarily reflected higher deposit fees. Salisbury waived approximately $289 thousand in deposit fees in third quarter 2020 due to the COVID-19 pandemic. Income from mortgage sales and servicing decreased $88 thousand versus second quarter 2021 and decreased $628 thousand versus third quarter 2020 due to lower sales volume of residential mortgage loans to Federal Home Loan Bank of Boston (FHLBB).

Non-interest income for the third quarter 2021 included BOLI income of $135 thousand compared with income of $125 thousand in second quarter 2021 and $719 thousand in third quarter 2020, which included a non-recurring non-taxable gain of $601 thousand for proceeds received due to the death of a covered former employee. Non-interest income for third quarter 2021 also included a pre-tax gain of $73 thousand primarily from the sale of Salisbury’s operations center in Canaan, Connecticut.

Non-Interest Expense

Non-interest expense of $8.3 million for third quarter 2021 increased $198 thousand versus second quarter 2021 and increased $1.0 million versus third quarter 2020. Compensation expense of $4.7 million for third quarter 2021 decreased $76 thousand from second quarter 2021 and increased $508 thousand versus third quarter 2020. The decrease from second quarter 2021 primarily reflected lower incentive and production accruals and lower benefits expense, which were partly offset by lower deferred loan origination expenses. The increase from third quarter 2020 primarily reflected higher salary and benefits expense and lower deferred loan origination expenses.

Excluding compensation, other non-interest expenses for third quarter 2021 increased $274 thousand from second quarter 2021 and increased $517 thousand from third quarter 2020. The increase from comparative quarters primarily reflected higher professional fees, higher FDIC insurance and higher marketing expenses. Expenses for third quarter 2021 also included a pre-tax loss of $144 thousand on the pending sale of the building housing the Bank’s branch in Poughkeepsie, New York. Upon completion of the sale, which is expected to occur in fourth quarter 2021, Salisbury will relocate this branch to leased space nearby. The increase in professional fees from second quarter 2021 reflected higher investment management, legal and consulting fees, which were partially offset by lower audit fees. The increase in professional fees from third quarter 2020 primarily reflected higher investment management fees. The increase in marketing costs reflected Salisbury’s ongoing web site redesign and branding initiatives.

The effective income tax rates for third quarter 2021, second quarter 2021 and third quarter 2020 were 20.1%, 21.2% and 17.3%, respectively. The higher tax rate in 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 $1.1 billion at September 30, 2021 increased $25.6 million, or 2.4%, from second quarter 2021 and $26.0 million, or 2.5%, from third quarter 2020. Excluding PPP loans, gross loans receivable increased $46.8 million, or 4.8%, from second quarter 2021 and $85.2 million, or 9.0%, from third quarter 2020 reflecting strong growth in both the residential and commercial portfolios.

The increase in residential real estate balances during third quarter 2021 reflected continued strong origination volume and lower sales to FHLBB. Approximately $1.8 million of residential loans were sold to FHLB Boston in third quarter 2021 compared with $7.1 million during second quarter 2021 and $26.6 million in third quarter 2020. The ratio of gross loans to deposits for third quarter 2021 was 83.0% compared with 84.1% for second quarter 2021 and 95.4% for third quarter 2020. Balances by loan type for the comparative periods were as follows:

Loan Type

Q3 2021

Q2 2021

Q3 2020

Residential Real Estate

$

454,468

$

428,137

$

429,221

Commercial Real Estate

361,965

354,629

333,412

Commercial & Industrial ex PPP Loans

167,528

156,849

137,589

PPP Loans

40,652

61,908

99,859

Commercial & Industrial – Total

208,180

218,757

237,448

Farm Land

3,409

3,529

3,295

Vacant Land

13,698

13,006

13,694

Municipal

18,061

18,341

20,797

Consumer

11,152

9,543

7,686

Deferred (Fees)/Costs

(314)

(889)

(959)

Gross Loans Receivable

$

1,070,619

$

1,045,053

$

1,044,594

Gross Loans Receivable ex PPP

$

1,029,967

$

983,145

$

944,735

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, 2021, loan payments were deferred on 2 commercial loans ($3 million loan balance) compared with 10 commercial loan deferrals ($20 million loan balance) as of June 30, 2021. There were no outstanding residential and consumer loan deferrals as of September 30, 2021.

Non-performing assets were $5.0 million, or 0.34% of total assets at September 30, 2021, compared with $5.6 million, or 0.44% of total assets at December 31, 2020, and $4.7 million, or 0.36% of total assets, at September 30, 2020.

The amount of total impaired and potential problem loans was $45.7 million, or 4.27% of gross loans receivable, at September 30, 2021 compared with $30.1 million, or 2.90% of gross loans receivable, at December 31, 2020 and $26.8 million, or 2.56% of gross loans receivable, at September 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 $909 thousand, or 0.08% of gross loans receivable, at September 30, 2021 compared with $6.9 million, or 0.66% of gross loans receivable, at December 31, 2020 and $1.6 million, or 0.16% of gross loans receivable, at September 30, 2020.

The allowance for loan losses for third quarter 2021 was $13.2 million compared with $12.7 million for second quarter 2021 and $13.8 million for fourth quarter 2020. The third quarter 2021 included a provision expense of $0.4 million compared with a net reserve release of $1.1 million in first quarter 2021 and a charge of $0.7 million in the third quarter 2020. The provision expense for third quarter 2021 was primarily driven by loan growth and changes to certain qualitative factors reflecting the continued increase in residential housing prices in the Bank’s market area and an increase in commercial construction loan exposure. Net loan (recoveries) charge-offs were ($60) thousand for the third quarter 2021, $103 thousand for second 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 1.28% for the third quarter 2021, versus 1.29% for second 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 263% for the third quarter 2021, versus 229% for second 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 $1.3 billion at September 30, 2021 compared with $1.1 billion at December 31, 2020 and $1.1 billion at September 30, 2020. Deposits at September 30, 2021 included brokered deposits, including CDARS one-way buys, of $7.9 compared with $18.0 million at December 31, 2020 and $18.0 million at September 30, 2020. Average total deposits for the third quarter 2021 were $1.3 billion compared with $1.3 billion for the second quarter 2021 and $1.1 billion for the third quarter 2020. Average total deposits for the third quarter 2021 included average brokered deposits of $7.8 million compared with $15.4 million for second quarter 2021 and $24.9 million for third quarter 2020.

Advances from FHLBB were $8.9 million at September 30, 2021 compared with $12.6 million and $43.9 million at December 31, 2020 and September 30, 2020, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $252 million at September 30, 2021.

Capital

Shareholders’ equity increased $1.8 million in the third quarter to $133.5 million at September 30, 2021 as net income of $3.5 million and restricted stock activity of $0.2 million were partly offset by common stock dividends paid of $0.9 million and unrealized losses in the available-for-sale securities portfolio of $1.0 million. Book value per common share increased $0.64 during the third quarter 2021 to $46.66 per share and increased $3.67 from the third quarter 2020. Tangible book value per common share increased $0.66 during third quarter 2021 to $41.67 and increased $3.80 from third quarter 2020.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At September 30, 2021, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.31%, 14.20%, and 12.95%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.

During third 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 quarterly cash dividend of $0.31 per common share that will be paid on November 26, 2021 to shareholders of record as of November 12, 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 September 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)

September 30, 2021
(unaudited)

December 31, 2020

ASSETS

Cash and due from banks

$

7,874

$

10,599

Interest bearing demand deposits with other banks

158,421

82,563

Total cash and cash equivalents

166,295

93,162

Interest bearing Time Deposits with Financial Institutions

750

750

Securities

Available-for-sale at fair value

175,568

98,411

CRA mutual fund at fair value

907

917

Federal Home Loan Bank of Boston stock at cost

1,504

1,713

Loans held-for-sale

639

2,735

Loans receivable, net (allowance for loan losses: $13,168 and $13,754)

1,057,451

1,027,738

Bank premises and equipment, net

20,056

20,355

Goodwill

13,815

13,815

Intangible assets (net of accumulated amortization: $5,405 and $5,207)

476

674

Accrued interest receivable

5,932

6,373

Cash surrender value of life insurance policies

25,067

21,182

Deferred taxes

2,776

2,412

Other assets

5,613

3,423

Total Assets

$

1,476,849

$

1,293,660

LIABILITIES and SHAREHOLDERS' EQUITY

Deposits

Demand (non-interest bearing)

$

392,322

$

310,769

Demand (interest bearing)

220,533

218,869

Money market

328,392

278,146

Savings and other

224,286

189,776

Certificates of deposit

124,095

131,514

Total deposits

1,289,628

1,129,074

Repurchase agreements

10,450

7,116

Federal Home Loan Bank of Boston advances

8,905

12,639

Subordinated debt

24,460

9,883

Note payable

180

208

Finance lease obligations

1,631

1,673

Accrued interest and other liabilities

8,062

8,315

Total Liabilities

1,343,316

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

(1,075

)

(774

)

Paid-in capital

46,278

45,264

Retained earnings

86,740

76,974

Accumulated other comprehensive income, net

1,304

3,004

Total Shareholders' Equity

133,533

124,752

Total Liabilities and Shareholders' Equity

$

1,476,849

$

1,293,660

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

Three months ended

Nine months ended

Periods ended September 30, (in thousands, except per share amounts)

2021

2020

2021

2020

Interest and dividend income

Interest and fees on loans

$

10,264

$

10,362

$

30,642

$

30,662

Interest on debt securities

Taxable

486

396

1,398

1,260

Tax exempt

172

157

506

513

Other interest and dividends

79

87

174

229

Total interest and dividend income

11,001

11,002

32,720

32,664

Interest expense

Deposits

532

764

1,652

3,261

Repurchase agreements

5

6

13

16

Finance lease

33

35

102

106

Note payable

3

3

9

11

Subordinated debt

233

156

767

468

Federal Home Loan Bank of Boston advances

30

113

96

472

Total interest expense

836

1,077

2,639

4,334

Net interest and dividend income

10,165

9,925

30,081

28,330

Provision (release) for loan losses

400

686

(517)

4,198

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

9,765

9,239

30,598

24,132

Non-interest income

Trust and wealth advisory

1,286

1,068

3,685

3,129

Service charges and fees

1,211

711

3,536

2,214

Mortgage banking activities, net

108

736

912

1,182

(Losses) gains on CRA mutual fund

(4)

-

(18)

22

Gains (losses) on securities, net

7

34

(2)

216

Bank-owned life insurance (“BOLI”) income

135

719

386

986

Gain on sale of assets

73

-

73

-

Other

24

18

81

97

Total non-interest income

2,840

3,286

8,653

7,846

Non-interest expense

Salaries

3,361

3,114

9,664

8,375

Employee benefits

1,322

1,061

3,990

3,244

Premises and equipment

1,060

1,005

3,034

2,897

Write-down of assets

144

-

144

-

Data processing

632

569

1,824

1,666

Professional fees

735

635

2,090

2,020

Collections, OREO, and loan related

120

108

317

212

FDIC insurance

146

123

370

331

Marketing and community support

256

126

552

419

Amortization of intangibles

61

78

198

247

Other

447

440

1,448

1,572

Total non-interest expense

8,284

7,259

23,631

20,983

Income before income taxes

4,321

5,266

15,620

10,995

Income tax provision

868

910

3,288

1,858

Net income

$

3,453

$

4,356

$

12,332

$

9,137

Net income available to common shareholders

$

3,400

$

4,288

$

12,148

$

9,006

Basic earnings per common share

$

1.21

$

1.53

$

4.32

$

3.22

Diluted earnings per common share

$

1.20

$

1.53

$

4.30

$

3.21

Common dividends per share

$

0.31

$

0.29

$

0.90

$

0.87

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 2021

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Total assets

$1,476,849

$1,436,666

$1,403,129

$1,293,660

$1,292,760

Loans receivable, net

1,057,451

1,032,345

1,041,185

1,027,738

1,031,593

Total securities

177,979

152,943

129,960

101,041

99,794

Deposits

1,289,628

1,243,369

1,211,171

1,129,074

1,095,141

FHLBB advances

8,905

10,152

11,396

12,639

43,880

Shareholders’ equity

133,533

131,709

127,242

124,752

122,240

Wealth assets under administration

973,198

970,306

902,141

944,349

748,188

Discretionary wealth assets under administration

608,228

614,312

578,199

554,997

514,988

Non-discretionary wealth assets under administration

364,970

355,994

323,942

389,352

233,200

Non-performing loans

5,001

5,539

5,706

5,648

4,681

Non-performing assets

5,001

5,539

5,706

5,648

4,681

Accruing loans past due 30-89 days

909

1,400

2,374

6,850

1,638

Net interest and dividend income

10,165

9,565

10,350

9,817

9,925

Net interest and dividend income, tax equivalent(1)

10,345

9,739

10,520

9,993

10,101

Provision (release) expense for loan losses

400

(1,075)

158

840

686

Non-interest income

2,840

2,971

2,841

2,476

3,286

Non-interest expense

8,284

8,086

7,259

8,054

7,259

Income before income taxes

4,321

5,525

5,774

3,399

5,266

Income tax provision

868

1,172

1,248

596

910

Net income

3,453

4,353

4,526

2,803

4,356

Net income allocated to common shareholders

3,400

4,287

4,462

2,764

4,288

Per share data

Basic earnings per common share

$1.21

$1.53

$1.59

$0.99

$1.53

Diluted earnings per common share

1.20

1.52

1.59

0.98

1.53

Dividends per common share

0.31

0.30

0.29

0.29

0.29

Book value per common share

46.66

46.02

44.72

43.88

42.99

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

41.67

41.01

39.65

38.78

37.87

Common shares outstanding at end of period (in thousands)

2,862

2,862

2,845

2,843

2,843

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

2,817

2,810

2,804

2,803

2,799

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

2,843

2,829

2,815

2,811

2,807

Profitability ratios

Net interest margin (tax equivalent) (1)

2.92%

2.82%

3.34%

3.17%

3.29%

Efficiency ratio (3)

61.63

63.07

53.75

63.88

56.33

Effective income tax rate

20.09

21.21

21.61

17.52

17.28

Return on average assets

0.93

1.21

1.38

0.85

1.34

Return on average common shareholders’ equity

10.27

13.51

14.53

8.97

14.31

Credit quality ratios

Non-performing loans to loans receivable, gross

0.47%

0.53%

0.54%

0.54%

0.45%

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

0.08

0.13

0.23

0.66

0.16

Allowance for loan losses to loans receivable, gross

1.23

1.22

1.32

1.32

1.24

Allowance for loan losses to non-performing loans

263.3

229.4

243.4

243.5

277.8

Non-performing assets to total assets

0.34

0.39

0.41

0.44

0.36

Capital ratios

Common shareholders' equity to assets

9.04%

9.17%

9.07%

9.64%

9.46%

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

8.15

8.25

8.12

8.62

8.42

Tier 1 leverage capital (4)

9.31

9.33

9.83

8.90

8.93

Total risk-based capital (4)

14.20

14.67

14.58

13.57

13.60

Common equity tier 1 capital (4)

12.95

13.42

13.33

12.31

12.35

(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 2021

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Common Shareholders' Equity

$

133,533

$

131,709

$

127,242

$

124,752

$

122,240

Less: Goodwill

(13,815)

(13,815)

(13,815)

(13,815)

(13,815)

Less: Intangible assets

(476)

(538)

(603)

(674)

(748)

Tangible Common Shareholders' Equity

$

119,242

$

117,356

$

112,824

$

110,263

$

107,677

Total Assets

$

1,476,849

$

1,436,666

$

1,403,129

$

1,293,660

$

1,292,760

Less: Goodwill

(13,815)

(13,815)

(13,815)

(13,815)

(13,815)

Less: Intangible assets

(476)

(538)

(603)

(674)

(748)

Tangible Total Assets

$

1,462,558

$

1,422,313

$

1,388,711

$

1,279,171

$

1,278,197

Common Shares outstanding

2,862

2,862

2,845

2,843

2,843

Book value per Common Share - GAAP

$

46.66

$

46.02

$

44.72

$

43.88

$

42.99

Tangible book value per Common Share - Non-GAAP

41.67

41.01

39.65

38.78

37.87

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

8.15%

8.25%

8.12%

8.62%

8.42%

Consolidated:

Non-interest expense

$

8,284

$

8,086

$

7,259

$

8,054

$

7,259

Less: Amortization of core deposit intangibles

(61)

(65)

(71)

(74)

(78)

Less: Write-down of fixed assets

(144)

-

-

-

-

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

-

-

-

-

2

Adjusted non-interest expense

$

8,079

$

8,021

$

7,188

$

7,980

$

7,183

Net interest and dividend income, tax equivalent

$

10,345

$

9,739

$

10,520

$

9,993

$

10,101

Non-interest income

2,840

2,971

2,841

2,476

3,286

(Gains) losses on securities

(3)

6

16

24

(34)

Gains on sale of fixed assets

(73)

-

-

-

-

BOLI proceeds

-

-

-

-

(601)

Adjusted revenue

$

13,109

$

12,716

$

13,377

$

12,493

$

12,752

Efficiency Ratio – Non-GAAP 1

61.63%

63.07%

53.75%

63.88%

56.33%

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q3 2021: 60.70%; Q2 2021: 61.59%; Q1 2021: 51.97%; Q4 2020: 62.62%; Q3 2020: 54.76%.

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 2021

Q2 2021

Q3 2020

Q3 2021

Q2 2021

Q3 2020

Q3 2021

Q2 2021

Q3 2020

Loans (a)(d)

$1,056,266

$1,052,381

$1,049,313

$10,382

$10,015

$10,485

3.90%

3.78%

3.97%

Securities (c)(d)

150,841

138,164

89,220

720

720

606

1.91

2.08

2.72

FHLBB stock

1,743

1,830

3,440

6

11

34

1.38

2.41

3.96

Short term funds (b)

196,997

180,716

78,306

73

50

52

0.15

0.11

0.27

Total interest-earning assets

1,405,847

1,373,091

1,220,279

11,181

10,796

11,177

3.15

3.13

3.64

Other assets

72,547

70,447

64,943

Total assets

$1,478,394

$1,443,538

$1,285,222

Interest-bearing demand deposits

$ 227,291

$ 227,623

$ 195,253

111

117

110

0.19

0.21

0.22

Money market accounts

327,861

315,665

258,257

140

138

195

0.17

0.18

0.30

Savings and other

217,541

212,253

176,963

58

59

69

0.11

0.11

0.15

Certificates of deposit

125,768

147,103

135,238

223

252

391

0.70

0.69

1.15

Total interest-bearing deposits

898,461

902,644

765,711

532

566

765

0.23

0.25

0.40

Repurchase agreements

14,296

12,010

12,218

5

4

6

0.15

0.15

0.20

Finance lease

2,685

2,751

2,928

33

36

35

4.98

5.26

4.80

Note payable

183

192

221

3

3

3

6.11

6.09

6.08

Subordinated debt (f)

24,452

30,789

9,872

233

415

156

3.82

5.39

6.32

FHLBB advances

9,329

10,576

44,522

30

33

113

1.28

1.21

0.99

Total interest-bearing liabilities

949,406

958,962

835,472

836

1,057

1,078

0.35

0.44

0.51

Demand deposits

388,557

348,561

321,392

Other liabilities

6,965

6,786

7,592

Shareholders’ equity

133,466

129,229

120,766

Total liabilities & shareholders’ equity

$1,478,394

$1,443,538

$1,285,222

Net interest income

$10,345

$9,739

$10,099

Spread on interest-bearing funds

2.80

2.69

3.13

Net interest margin (e)

2.92

2.82

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 amortized cost.
(d) Includes tax exempt income benefit of $0.2 million, $0.2 million and $0.2 million, respectively, for Q3 2021, Q2 2021 and Q3 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)

Nine months ended September 30,

Average Balance

Income / Expense

Average Yield / Rate

(dollars in thousands)

2021

2020

2021

2020

2021

2020

Loans (a)(d)

$

1,053,451

$

1,012,070

$

30,989

$

31,010

3.90%

4.07%

Securities (c)(d)

130,864

88,603

2,080

1,939

2.12

2.92

FHLBB stock

1,840

3,354

26

106

1.89

4.24

Short term funds (b)

160,055

50,312

148

123

0.12

0.33

Total earning assets

1,346,210

1,154,339

33,243

33,178

3.27

3.82

Other assets

71,421

63,265

Total assets

$

1,417,631

$

1,217,604

Interest-bearing demand deposits

$

224,479

$

174,299

332

331

0.20

0.25

Money market accounts

310,908

245,581

408

994

0.18

0.54

Savings and other

209,180

170,880

173

405

0.11

0.32

Certificates of deposit

134,143

149,080

739

1,530

0.74

1.37

Total interest-bearing deposits

878,710

739,840

1,652

3,260

0.25

0.59

Repurchase agreements

11,608

7,572

13

16

0.15

0.29

Finance lease

2,753

2,988

102

106

4.95

4.74

Note payable

192

231

9

11

6.13

6.08

Subordinated Debt (f)

21,851

9,867

767

468

4.68

6.32

FHLBB advances

10,567

45,667

96

473

1.20

1.36

Total interest-bearing liabilities

925,681

806,165

2,639

4,334

0.38

0.72

Demand deposits

355,352

286,608

Other liabilities

6,897

6,847

Shareholders’ equity

129,701

117,984

Total liabilities & shareholders’ equity

$

1,417,631

$

1,217,604

Net interest income

$

30,604

$

28,844

Spread on interest-bearing funds

2.89

3.11

Net interest margin (e)

3.01

3.32

(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 $0.5 million and $0.5 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