Salisbury Bancorp, Inc. Reports Results for Second Quarter 2022; Declares 16 Cent Dividend
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Salisbury Bancorp, Inc. Reports Results for Second Quarter 2022; Declares 16 Cent Dividend

  • Second Quarter 2022 Net Income of $0.67 per Basic Common Share Adjusted to Reflect Two-For-One Forward Stock Split Effective on June 30, 2022
  • Record Loan Growth of $81 million, or 7.6%, in Second Quarter 2022 1
  • Non-performing Assets were 0.28% of Total Assets at June 30, 2022
  • Common Equity Tier 1 and Total Capital Ratios of 12.1% and 13.3%, Respectively

LAKEVILLE, Conn., July 20, 2022 (GLOBE NEWSWIRE) — Salisbury Bancorp, Inc. (“Salisbury”), (NASDAQ Capital Market: “SAL”), the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its second quarter ended June 30, 2022.

Net income available to common shareholders was $3.8 million, or $0.67 per basic common share, for the second quarter ended June 30, 2022 (second quarter 2022), compared with $3.5 million, or $0.62 per basic common share, for the first quarter ended March 31, 2022 (first quarter 2022), and $4.3 million, or $0.76 per basic common share, for the second quarter ended June 30, 2021 (second quarter 2021). All share and per share data for all periods presented in this release have been adjusted to reflect the two-for-one forward stock split, which was effective on June 30, 2022.

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “In the second quarter we successfully executed certain aspects of our strategic plan. First, we reported strong earnings and record quarterly loan growth while maintaining our rigorous underwriting standards. Second, on June 30, 2022 we effected a two-for-one forward stock split of our common shares, which enhanced the liquidity and marketability of our common shares without diluting the holdings of our existing shareholders. As we head into the second half of 2022, our commercial loan pipeline remains robust and we are cautiously optimistic that the business environment will remain favorable despite the macro-economic headwinds of high inflation and rising interest rates. We remain diligently focused on executing our strategic plan and enhancing the Bank’s profitability while continuing to provide outstanding customer service.”

Net Interest and Dividend Income

Tax equivalent net interest income of $11.1 million for the second quarter 2022 increased $577 thousand, or 5.5%, versus first quarter 2022, and increased $1.3 million, or 13.6%, versus second quarter 2021. Tax equivalent interest income of $11.9 million for second quarter 2022 increased $622 thousand, or 5.5%, versus first quarter 2022 and increased $1.1 million, or 10.4%, from second quarter 2021. The cost of interest-bearing liabilities of $857 thousand for second quarter 2022 increased $45 thousand, or 5.5%, from first quarter 2022 and decreased $200 thousand, or 18.9%, from second quarter 2021. 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.

Average earning assets of $1.4 billion for second quarter 2022 declined $19.3 million, or 1.4%, from first quarter 2022, and increased $20.3 million, or 1.5%, versus second quarter 2021. Average earning assets for second quarter 2022 included average PPP loan balances of $8.8 million, net of deferred fees, compared with $18.7 million and $80.4 million in first quarter 2022 and second quarter 2021, respectively. Average total interest bearing liabilities of $943 million for second quarter 2022 decreased $14.3 million, or 1.5%, from first quarter 2022 and decreased $15.6 million, or 1.6%, versus second quarter 2021.

The tax equivalent net interest margin for second quarter 2022 was 3.15% compared with 2.95% for first quarter 2022 and 2.82% for second quarter 2021. Excluding PPP loans, the tax equivalent net interest margin for second quarter 2022 was 3.10% compared with 2.86% for first quarter 2022 and 2.76% for second quarter 2021. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 of this release for additional details.

Non-Interest Income

Non-interest income of $3.3 million for second quarter 2022 increased $203 thousand versus first quarter 2022 and increased $326 thousand versus second quarter 2021.

Trust and Wealth Advisory fees of $1.3 million for second quarter 2022 increased slightly from first quarter 2022 and second quarter 2021. Assets under administration were $1.3 billion at June 30, 2022 compared with $1.1 billion at December 31, 2021 and $970.3 million at June 30, 2021. Discretionary assets under administration of $546.5 million at June 30, 2022 compared with $657.8 million at December 31, 2021 and $614.3 million at June 30, 2021. The decline from the comparative quarters primarily reflected lower market valuations. Non-discretionary assets under administration of $714.7 million at June 30, 2022 increased from $425.4 million at December 31, 2021 and increased from $356.0 million at June 30, 2021. The increase in non-discretionary assets from the comparative quarters primarily reflected a higher 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 Excludes loans granted under the Paycheck Protection Program (“PPP”) by the Small Business Administration.

Service charges and fees of $1.7 million for second quarter 2022 increased $585 thousand versus first quarter 2022 and increased $349 thousand versus second quarter 2021. Second quarter 2022 and second quarter 2021 included non-recurring loan pre-payment fees of $425 thousand and $268 thousand, respectively. Deposit fees for second quarter 2022 also increased $126 thousand compared to the prior year second quarter. Net fees from mortgage banking activities decreased $278 thousand compared with first quarter 2022 and decreased $119 thousand from second quarter 2021 primarily due to a lower volume of sales of residential mortgage loans to the FHLB Boston. First quarter 2022 also included a pre-tax gain of $239 thousand on the sale of $3.8 million of commercial and residential loans.

Non-interest income for second quarter 2022 included a non-recurring non-taxable gain of $89 thousand related to proceeds receivable from a bank-owned life insurance policy (“BOLI”) due to the death of a former covered employee. Non-interest income for second quarter 2022 included a pre-tax loss of $45 thousand on the sale of available-for-sale securities (“AFS”) compared with a pre-tax gain of $210 thousand in first quarter 2022.

Non-Interest Expense

Non-interest expense of $8.5 million for second quarter 2022 decreased $121 thousand versus first quarter 2022 and increased $446 thousand versus second quarter 2021. Non-interest expense for first quarter 2022 included two isolated instances of debit card and check cashing fraud-related losses aggregating $251 thousand. During second quarter 2022, Salisbury recovered approximately $50 thousand of this aggregate loss through an insurance claim. Compensation expense of $4.9 million for second quarter 2022 increased $189 thousand from first quarter 2022 and increased $186 thousand versus second quarter 2021. The increase in compensation expense from first quarter 2022 primarily reflected higher salary and benefits expense, partially offset by lower payroll taxes and higher deferred loan origination expense. The increase in compensation expense from second quarter 2021 primarily reflected higher salary expense, partially offset by lower benefits expense.

Excluding compensation, other non-interest expenses for second quarter 2022 decreased $312 thousand from first quarter 2022 and increased $260 thousand from second quarter 2021. The decrease from the prior quarter primarily reflected the fraud losses reported in first quarter 2022 as well as lower utility costs and software maintenance expense in second quarter 2022, which were partially offset by higher Director fees and higher marketing expenses. The increase from second quarter 2021 primarily reflected higher professional fees, marketing expenses and FDIC insurance.

The effective income tax rates for second quarter 2022, first quarter 2022 and second quarter 2021 were 15.3%, 18.6% and 21.2%, respectively. The tax provision for second quarter 2022 included a non-recurring credit of $63 thousand to adjust for an over statement of the Bank’s 2021 tax liability to New York state. The lower tax rate in second quarter 2022 also reflected a higher mix of tax-exempt income from municipal bonds and tax advantaged loans as well as the BOLI proceeds receivable noted above.

Loans

Gross loans receivable of $1.1 billion increased $70.3 million, or 6.5%, from first quarter 2022, and increased $104.4 million, or 10.0%, from second quarter 2021. Loan balances at June 30, 2022 were also reduced by the payoff of two commercial real estate loans during the quarter, which aggregated $11.2 million. Excluding PPP loans, gross loans receivable increased a record $81.1 million, or 7.6%, from first quarter 2022 and $163.4 million, or 16.6%, from second quarter 2021. Residential 5+ multifamily gross loans receivable at June 30, 2022 included a loan for $16.0 million, which was reported in the commercial real estate category in first quarter 2022 and second quarter 2021 while the project was under construction. The gross balance of this loan was $12.0 million at March 31, 2022 and $11.2 million at June 30, 2021, respectively. Approximately $2.0 million of residential loans were sold to FHLB Boston in second quarter 2022 compared with $5.5 million during first quarter 2022 and $7.1 million in second quarter 2021. The ratio of gross loans to deposits for second quarter 2022 was 87.3% compared with 83.6% for first quarter 2022 and 84.1% for second quarter 2021. Balances by loan type for the comparative periods were as follows:

Loan Type   Q2 2022   Q1 2022     Q2 2021  
Residential Real Estate (1-4 Family)   $ 444,698   $ 425,301     $ 391,165  
Residential 5+ Multifamily     69,272     53,376       36,972  
Commercial Real Estate     387,787     376,088       354,629  
Commercial & Industrial ex PPP Loans     189,086     163,832       156,849  
PPP Loans     2,894     13,666       61,908  
Commercial & Industrial – Total     191,980     177,498       218,757  
Farm Land     3,668     2,778       3,529  
Vacant Land     15,397     14,710       13,006  
Municipal     17,486     14,263       18,341  
Consumer     18,155     14,356       9,543  
Deferred Costs/(Fees)     1,018     761       (889)  
Gross Loans Receivable   $ 1,149,461   $ 1,079,131     $ 1,045,053  
Gross Loans Receivable ex PPP   $ 1,146,567   $ 1,065,465     $ 983,145  

Asset Quality

Asset quality remained strong in second quarter 2022. Non-performing assets of $4.2 million, or 0.28% of total assets at June 30, 2022, were essentially unchanged from December 31, 2021, and decreased $1.3 million from $5.5 million, or 0.39% of total assets, at June 30, 2021. Non-performing assets at June 30, 2022 included a residential real estate loan of approximately $1.5 million on a property that has been listed for sale. There is a signed purchase and sale agreement on this property and the sale is expected to close in third quarter 2022.

The amount of total impaired and potential problem loans decreased during the quarter to $13.9 million or 1.21% of gross loans receivable at June 30, 2022 compared to $32.8 million, or 3.04% of gross loans receivable at December 31, 2021 and $47.1 million, or 4.50% of gross loans receivable at June 30, 2021. The decrease in the balance from the comparative quarters 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 have demonstrated a return to pre-pandemic levels of activity and liquidity.

Accruing loans receivable 30-to-89 days past due decreased $0.3 million during second quarter 2022 to $1.0 million, or 0.09% of gross loans receivable, from $1.3 million, or 0.12% of gross loans receivable at December 31, 2021, and decreased $0.4 million from $1.4 million, or 0.13% of gross loans receivable at June 30, 2021.

The allowance for loan losses for second quarter 2022 was $13.7 million compared with $12.9 million for first quarter 2022 and $12.7 million for second quarter 2021. The provision expense was $1.1 million for second quarter 2022 compared with a provision expense of $363 thousand for first quarter 2022 and a net release of credit reserves of $1.1 million for the second quarter 2021. The provision expense for second quarter 2022 reflected the record quarterly loan growth and adjustments to qualitative factors due to the uncertain macro-economic environment. The provision expense for second quarter 2022 also reflected a release of credit reserves due to management’s upgrade of the internal risk rating on certain loans related to the hospitality industry. Net loan charge-offs (recoveries) were $312 thousand for the second quarter 2022 compared with $410 thousand for first quarter 2022 and $103 thousand for the second quarter 2021. Net charge-offs for second quarter 2022 primarily related to a discrete commercial loan.

Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.20% for the second quarter 2022 versus 1.21% for the first quarter 2022 and 1.29% for the second quarter 2021. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 324% for the second quarter 2022 versus 467% for first quarter 2022 and 229% for second quarter 2021.

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 $1.3 billion at June 30, 2022 decreased $19.7 million, or 1.5%, from December 31, 2021 and increased $73.2 million, or 5.9%, from June 30, 2021. At June 30, 2022, Salisbury had outstanding brokered deposits of $35.0 million compared with balances of $7.9 million at December 31, 2021 and June 30, 2021, respectively. Average total deposits for the second quarter 2022 were $1.3 billion compared with $1.3 billion for the first quarter 2022 and $1.3 billion for the second quarter 2021. Average total deposits for the second quarter 2022 included average brokered deposits of $18.0 million compared with $7.5 million for first quarter 2022 and $15.4 million for second quarter 2021.

Salisbury did not have any outstanding advances from FHLBB at June 30, 2022 compared with $7.7 million and $10.2 million at December 31, 2021 and June 30, 2021, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $253 million at June 30, 2022.

Capital

Shareholders’ equity decreased $2.8 million in second quarter to $127.3 million at June 30, 2022 as unrealized losses in the available-for-sale securities (“AFS”) portfolio of $6.1 million and common stock dividends paid of $0.9 million were partially offset by net income of $3.8 million and other activity of $0.4 million. The unrealized losses in the AFS portfolio, which reflected the continued increase in market interest rates during second quarter 2022, reduced both book value and tangible book value at June 30, 2022. Book value per common share of $22.01 at June 30, 2022 decreased $0.55 from first quarter 2022 and decreased $1.00 from second quarter 2021. Tangible book value per common share of $19.57 at June 30, 2022 decreased $0.53 from first quarter 2022 and decreased $0.93 from second quarter 2021.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At June 30, 2022, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 10.04%, 13.28%, and 12.13%, 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 second quarter 2022, Salisbury did not repurchase any of its outstanding common stock pursuant to its stock repurchase program established in March 2021.

Dividend on Common Shares

On July 20, 2022, the Board of Directors of Salisbury approved a quarterly cash dividend of $0.16 per common share that will be paid on August 26, 2022 to shareholders of record as of August 12, 2022.

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 June 30, 2022, 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) June 30, 2022 December 31, 2021
ASSETS    
Cash and due from banks $ 8,611   $ 6,404  
Interest bearing demand deposits with other banks   62,856     168,931  
Total cash and cash equivalents   71,467     175,335  
Interest bearing Time Deposits with Financial Institutions   750     750  
Securities    
Available-for-sale at fair value   203,110     202,396  
Mutual funds at fair value   1,672     901  
Federal Home Loan Bank of Boston stock at cost   945     1,397  
Loans held-for-sale       2,684  
Loans receivable, net (allowance for loan losses: $13,703 and $12,962)   1,135,758     1,066,750  
Bank premises and equipment, net   22,710     22,625  
Goodwill   13,815     13,815  
Intangible assets (net of accumulated amortization: $5,567 and $5,463)   314     418  
Accrued interest receivable   6,123     6,260  
Cash surrender value of life insurance policies   28,063     27,738  
Deferred taxes   6,460     2,588  
Other assets   5,334     5,527  
Total Assets $ 1,496,521   $ 1,529,184  
LIABILITIES and SHAREHOLDERS’ EQUITY    
Deposits    
Demand (non-interest bearing) $ 383,674   $ 416,073  
Demand (interest bearing)   233,947     233,600  
Money market   314,244     330,436  
Savings and other   231,322     237,075  
Certificates of deposit   153,352     119,009  
Total deposits   1,316,539     1,336,193  
Repurchase agreements   16,574     11,430  
Federal Home Loan Bank of Boston advances       7,656  
Subordinated debt   24,502     24,474  
Note payable   149     170  
Finance lease obligations   4,329     4,107  
Accrued interest and other liabilities   7,125     8,554  
Total Liabilities   1,369,218     1,392,584  
Shareholders’ Equity1    
Common stock – $0.10 per share par value    
Authorized: 10,000,000;    
Issued: 5,783,966 and 5,723,394    
Outstanding: 5,783,966 and 5,723,394   289     286  
Unearned compensation – restricted stock awards   (1,512 )   (925 )
Paid-in capital   47,494     46,374  
Retained earnings   95,568     89,995  
Accumulated other comprehensive (loss) income, net   (14,536 )   870  
Total Shareholders’ Equity   127,303     136,600  
Total Liabilities and Shareholders’ Equity $ 1,496,521   $ 1,529,184  

1 The number of authorized, issued and outstanding shares has been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.

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

  Three months ended Six months ended
Periods ended June 30, (in thousands, except per share amounts) 2022   2021   2022   2021  
Interest and dividend income        
Interest and fees on loans $ 10,576   $ 9,901   $ 20,740   $ 20,377  
Interest on debt securities        
Taxable   859     488     1,583     912  
Tax exempt   187     172     362     334  
Other interest and dividends   107     61     164     95  
Total interest and dividend income   11,729     10,622     22,849     21,718  
Interest expense        
Deposits   577     567     1,055     1,121  
Repurchase agreements   4     4     6     8  
Finance lease   41     36     82     69  
Note payable   2     3     5     6  
Subordinated debt   233     415     466     534  
Federal Home Loan Bank of Boston advances       32     55     65  
Total interest expense   857     1,057     1,669     1,803  
Net interest and dividend income   10,872     9,565     21,180     19,915  
Provision (release) for loan losses   1,100     (1,075 )   1,463     (917 )
Net interest and dividend income after provision (release) for loan losses   9,772     10,640     19,717     20,832  
Non-interest income        
Trust and wealth advisory   1,293     1,254     2,533     2,399  
Service charges and fees   1,723     1,374     2,861     2,325  
Mortgage banking activities, net   77     196     432     804  
(Losses) gains on mutual fund   (30 )   3     (72 )   (14 )
(Losses) gains on securities, net   (45 )   (9 )   165     (9 )
Bank-owned life insurance (“BOLI”) income   252     125     414     251  
Other   27     28     57     57  
Total non-interest income   3,297     2,971     6,390     5,813  
Non-interest expense        
Salaries   3,657     3,403     7,135     6,304  
Employee benefits   1,288     1,356     2,565     2,668  
Premises and equipment   973     1,019     2,086     1,973  
Information processing and services   702     628     1,387     1,193  
Professional fees   821     644     1,609     1,355  
Collections, OREO, and loan related   116     113     232     197  
FDIC insurance   122     80     293     225  
Marketing and community support   262     214     447     296  
Amortization of intangibles   50     65     104     136  
Other   541     564     1,328     1,000  
Total non-interest expense   8,532     8,086     17,186     15,347  
Income before income taxes   4,537     5,525     8,921     11,298  
Income tax provision   692     1,172     1,507     2,419  
Net income $ 3,845   $ 4,353   $ 7,414   $ 8,879  
Net income available to common shareholders $ 3,772   $ 4,287   $ 7,280   $ 8,749  
         
Basic earnings per common share1 $ 0.67   $ 0.76   $ 1.29   $ 1.56  
Diluted earnings per common share1 $ 0.66   $ 0.76   $ 1.28   $ 1.55  
Common dividends per share1 $ 0.16   $ 0.15   $ 0.32   $ 0.30  

1 Per share amounts for all periods have been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.

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

At or for the quarters ended
(in thousands, except per share amounts and ratios) Q2 2022 Q1 2022 Q4 2021 Q3 2021 Q2 2021
Total assets $1,496,521   $1,465,082   $1,529,184   $1,476,849   $1,436,666  
Loans receivable, net   1,135,758     1,066,216     1,066,750     1,057,451     1,032,345  
Total securities   205,727     217,591     204,694     177,979     152,943  
Deposits   1,316,539     1,290,474     1,336,193     1,289,628     1,243,369  
FHLBB advances       419     7,656     8,905     10,152  
Shareholders’ equity   127,303     130,066     136,600     133,533     131,709  
Wealth assets under administration   1,261,244     1,049,240     1,083,152     973,198     970,306  
Discretionary wealth assets under administration   546,506     625,346     657,789     608,228     614,312  
Non-discretionary wealth assets under administration   714,738     423,894     425,363     364,970     355,994  
Non-performing loans   4,229     2,765     4,199     5,001     5,539  
Non-performing assets   4,229     2,765     4,199     5,001     5,539  
Accruing loans past due 30-89 days   1,001     2,349     1,342     909     1,400  
Net interest and dividend income   10,872     10,306     10,543     10,165     9,565  
Net interest and dividend income, tax equivalent(1)   11,061     10,484     10,735     10,345     9,739  
Provision (release) expense for loan losses   1,100     363     (202)     400     (1,075)  
Non-interest income   3,297     3,094     2,847     2,840     2,971  
Non-interest expense   8,532     8,653     8,471     8,284     8,086  
Income before income taxes   4,537     4,384     5,121     4,321     5,525  
Income tax provision   692     816     980     868     1,172  
Net income   3,845     3,568     4,141     3,453     4,353  
Net income allocated to common shareholders   3,772     3,508     4,076     3,400     4,287  
           
Per share data (Data for all periods have been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.)
Basic earnings per common share $0.67   $0.62   $0.72   $0.60   $0.76  
Diluted earnings per common share   0.66     0.62     0.72     0.60     0.76  
Dividends per common share   0.16     0.16     0.16     0.16     0.15  
Book value per common share   22.01     22.56     23.87     23.33     23.01  
Tangible book value per common share – Non-GAAP ⁽2   19.57     20.10     21.38     20.83     20.50  
Common shares outstanding at end of period (in thousands)   5,784     5,765     5,723     5.723     5,723  
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands)   5,666     5,636     5,635     5,635     5,620  
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands)   5,699     5,694     5,670     5,686     5,657  
           
Profitability ratios          
Net interest margin (tax equivalent)(1)   3.15%     2.95%     2.99%     2.92%     2.82%  
Efficiency ratio(2)   59.49     63.38     61.91     61.63     63.07  
Effective income tax rate   15.25     18.60     19.13     20.09     21.21  
Return on average assets   1.06     0.97     1.10     0.93     1.21  
Return on average common shareholders’ equity   11.98     10.65     12.14     10.27     13.51  
           
Credit quality ratios          
Non-performing loans to loans receivable, gross   0.37%     0.26%     0.39%     0.47%     0.53%  
Accruing loans past due 30-89 days to loans receivable, gross   0.09     0.22     0.12     0.08     0.13  
Allowance for loan losses to loans receivable, gross   1.19     1.20     1.20     1.23     1.22  
Allowance for loan losses to non-performing loans   324.0     467.3     308.7     263.3     229.4  
Non-performing assets to total assets   0.28     0.19     0.27     0.34     0.39  
           
Capital ratios          
Common shareholders’ equity to assets   8.51%     8.88%     8.93%     9.04%     9.17%  
Tangible common shareholders’ equity to tangible assets – Non-GAAP(2)   7.63     7.99     8.08     8.15     8.25  
Tier 1 leverage capital(3)   10.04     9.66     9.42     9.31     9.33  
Total risk-based capital(3)   13.28     13.98     14.08     14.20     14.67  
Common equity tier 1 capital(3)   12.13     12.80     12.87     12.95     13.42  

(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) Q2 2022   Q1 2022   Q4 2021   Q3 2021   Q2 2021  
Common Shareholders’ Equity $ 127,303   $ 130,066   $ 136,600   $ 133,533   $ 131,709  
Less: Goodwill   (13,815)     (13,815)     (13,815)     (13,815)     (13,815)  
Less: Intangible assets   (314)     (364)     (418)     (476)     (538)  
Tangible Common Shareholders’ Equity $ 113,174   $ 115,887   $ 122,367   $ 119,242   $ 117,356  
Total Assets $ 1,496,521   $ 1,465,082   $ 1,529,184   $ 1,476,849   $ 1,436,666  
Less: Goodwill   (13,815)     (13,815)     (13,815)     (13,815)     (13,815)  
Less: Intangible assets   (314)     (364)     (418)     (476)     (538)  
Tangible Total Assets $ 1,482,392   $ 1,450,903   $ 1,514,951   $ 1,462,558     1,422,313  
Common Shares outstanding (in thousands)1   5,784     5,765     5,723     5,723     5,723  
           
Book value per Common Share – GAAP1 $ 22.01   $ 22.56   $ 23.87   $ 23.33   $ 23.01  
Tangible book value per Common Share – Non-GAAP1   19.57     20.10     21.38     20.83     20.50  
Tangible common shareholders’ equity to tangible total assets – Non-GAAP   7.63%     7.99%     8.08%     8.15%     8.25%  
Consolidated:          
Non-interest expense $ 8,532   $ 8,653   $ 8,471   $ 8,284   $ 8,086  
Less: Amortization of core deposit intangibles   (50)     (54)     (57)     (61)     (65)  
Less: Write-down of fixed assets               (144)      
Less: Fraud-related recovery (losses)   50     (251)              
Adjusted non-interest expense $ 8,532   $ 8,348   $ 8,414   $ 8,079   $ 8,021  
Net interest and dividend income, tax equivalent $ 11,061   $ 10,484   $ 10,735   $ 10,345   $ 9,739  
Non-interest income   3,297     3,094     2,847     2,840     2,971  
Losses (gains) on securities   75     (168)     9     (3)     6  
Gains on sale of fixed assets               (73)      
BOLI proceeds receivable   (89)                  
Gains on sale of loans       (239)              
Adjusted revenue $ 14,344   $ 13,171   $ 13,591   $ 13,109   $ 12,716  
Efficiency Ratio – Non-GAAP2   59.49%     63.38%     61.91%     61.63%     63.07%  
             

1 Data for all periods have been adjusted to reflect the two-for-one forward stock split effective on June 30, 2022.
2 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q2 2022: 57.21%; Q1 2022: 61.83%; Q4 2021: 60.62%; Q3 2021: 60.70%; Q2 2021: 61.59%.

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) Q2 2022 Q1 2022 Q2 2021 Q2 2022 Q1 2022 Q2 2021 Q2 2022   Q1 2022   Q2 2021  
Loans (a)(d) $ 1,112,120 $ 1,079,610 $ 1,052,381 $ 10,693 $ 10,277 $ 10,015 3.81%   3.79%   3.78%  
Securities (c)(d)   225,458   208,140   138,164   1,117   962   720 1.98   1.85   2.08  
FHLBB stock   1,221   1,434   1,830   10   7   11 3.20   2.05   2.41  
Short term funds (b)   54,553   123,454   180,716   98   50   50 0.73   0.16   0.11  
Total interest-earning assets   1,393,352   1,412,638   1,373,091   11,918   11,296   10,796 3.40   3.19   3.13  
Other assets   61,790   74,795   70,447            
Total assets $ 1,455,142 $ 1,487,433 $ 1,443,538            
Interest-bearing demand deposits $ 229,625 $ 232,464 $ 227,623   108   99   117 0.19   0.17   0.21  
Money market accounts   299,870   321,198   315,665   156   126   138 0.21   0.16   0.18  
Savings and other   236,728   233,092   212,253   97   64   59 0.16   0.11   0.11  
Certificates of deposit   137,034   131,059   147,103   216   189   252 0.63   0.59   0.69  
Total interest-bearing deposits   903,257   917,813   902,644   577   478   566 0.26   0.21   0.25  
Repurchase agreements   10,216   7,146   12,010   4   3   4 0.15   0.14   0.15  
Finance lease   5,283   5,097   2,751   41   41   36 3.09   3.23   5.26  
Note payable   153   163   192   2   2   3 6.13   6.12   6.09  
Subordinated debt (f)   24,494   24,480   30,789   233   233   415 3.80   3.81   5.39  
FHLBB advances     2,974   10,576     55   33   7.46   1.21  
Total interest-bearing liabilities   943,403   957,673   958,962   857   812   1,057 0.36   0.34   0.44  
Demand deposits   376,694   386,884   348,561            
Other liabilities   6,258   7,036   6,786            
Shareholders’ equity   128,787   135,840   129,229            
Total liabilities & shareholders’ equity $ 1,455,142 $ 1,487,433 $ 1,443,538            
Net interest income       $ 11,061 $ 10,484 $ 9,739      
Spread on interest-bearing funds             3.03   2.84   2.69  
Net interest margin (e)             3.15   2.95   2.82

 

(a) Includes non-accrual loans.
(b) Includes interest-bearing deposits in other banks and federal funds sold.
(c) Average balances of securities are based on amortized cost.
(d) Includes tax exempt income benefit of $0.2 million, $0.2 million and $0.2 million, respectively, for Q2 2022, Q1 2022 and Q1 2021 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 2022 and 2021.
(e) Net interest income divided by average interest-earning assets.
(f) Net of issuance costs.


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

Six months ended June 30, Average Balance Income / Expense Average Yield / Rate
(dollars in thousands) 2022 2021 2022 2021 2022 2021
Loans (a)(d) $ 1,095,955 $ 1,052,020 $ 20,971 $ 20,605 3.80% 3.90%
Securities (c)(d)   216,847   120,710   2,079   1,360 1.92 2.25
FHLBB stock   1,327   1,889   17   20 2.58 2.13
Short term funds (b)   88,813   141,278   146   76 0.33 0.11
Total earning assets   1,402,942   1,315,897   23,213   22,061 3.29 3.34
Other assets   68,256   70,848        
Total assets $ 1,471,198 $ 1,386,745        
Interest-bearing demand deposits $ 231,037 $ 223,049   207   223 0.18 0.20
Money market accounts   310,475   302,290   283   267 0.18 0.18
Savings and other   234,920   204,930   160   115 0.14 0.11
Certificates of deposit   134,063   138,402   405   516 0.61 0.75
Total interest-bearing deposits   910,495   868,671   1,055   1,121 0.23 0.26
Repurchase agreements   8,689   10,241   6   8 0.15 0.15
Finance lease   5,190   2,787   82   69 3.16 4.93
Note payable   158   196   5   6 6.13 6.14
Subordinated Debt (f)   24,488   20,529   466   534 3.81 5.20
FHLBB advances   1,479   11,197   55   65 7.46 1.17
Total interest-bearing liabilities   950,499   913,621   1,669   1,803 0.35 0.40
Demand deposits   381,731   338,486        
Other liabilities   6,675   6,851        
Shareholders’ equity   132,293   127,787        
Total liabilities & shareholders’ equity $ 1,471,198 $ 1,386,745        
Net interest income     $ 21,544 $ 20,258    
Spread on interest-bearing funds         2.94 2.95
Net interest margin (e)         3.05 3.06

(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 $0.4 million and $0.2 million, respectively for 2022 and 2021 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 2022 and 2021.
(e) Net interest income divided by average interest-earning assets.
(f) Net of issuance costs.

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

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