Salisbury Bancorp, Inc. Reports Results For Second Quarter 2023
Published
· *Strategic Merger with NBT Bancorp Approved by Regulators; Merger Expected to Close in August 2023*
· *Second Quarter Net Income of $0.59 per Basic Common Share and Return on Average Assets of 0.88% *
· *Deposit Balances, Excluding Brokered Funds, Increased $40.0 million or 3.2% in Second Quarter 2023*
· *Non-performing Assets were 0.08% of Total Assets at June 30, 2023*
· *Common Equity Tier 1 and Tangible Common Equity Ratio of 12.41% and 7.71%, Respectively, at June 30, 2023 *^*1*LAKEVILLE, Conn., July 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 second quarter ended June 30, 2023.
Net income available to common shareholders was $3.4 million, or $0.59 per basic common share, for the second quarter ended June 30, 2023 (second quarter 2023), compared with $3.0 million, or $0.52 per basic common share, for the first quarter ended March 30, 2023 (first quarter 2023), and $3.8 million, or $0.67 per basic common share, for the second quarter ended June 30, 2022 (second quarter 2022). Net income for second quarter 2023 included pre-tax costs of $393 thousand related to Salisbury’s pending merger with NBT Bancorp (“NBT Merger”) and a non-taxable gain of $311 thousand related to proceeds receivable from a bank-owned life insurance policy (“BOLI”) due to the death of a former covered employee.
Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “Our results for the second quarter reflected the challenging macroeconomic and banking environment. While deposit balances increased during the quarter, and the credit quality of our loan portfolio remained strong, higher interest rates compressed net interest margin and earnings. Although the operating environment is likely to remain challenging in the near term, we are excited to have received regulatory approval for our strategic merger into NBT Bancorp. We believe Salisbury shareholders will benefit from the additional scale and expanded suite of products and services offered by NBT. I am extremely proud of the employees of Salisbury Bank who have worked diligently over the years to provide outstanding service to our customers and to give back to our communities. I am also grateful to our many customers for allowing us to partner and grow with them. I am confident that our customers will experience the same level of service from NBT.”
Net Interest and Dividend Income
Tax equivalent net interest income of $9.5 million for the second quarter 2023 decreased $1.8 million, or 16.0%, versus first quarter 2023, and decreased $1.6 million, or 14.0%, versus second quarter 2022. Tax equivalent interest income of $15.6 million for second quarter 2023 increased $436 thousand, or 2.9%, versus first quarter 2023 and increased $3.6 million, or 30.5%, from second quarter 2022. The cost of interest-bearing liabilities of $6.0 million for second quarter 2023 increased $2.2 million, or 59.1%, from first quarter 2023 and increased $5.2 million, or 604.7%, from second quarter 2022.
Average earning assets of $1.50 billion for second quarter 2023 increased $5.1 million, or 0.3%, from first quarter 2023, and increased $106.9 million, or 7.7%, versus second quarter 2022. Average earning assets for second quarter 2023 included average PPP loan balances of $0.2 million, net of deferred fees, compared $8.8 million in second quarter 2022. Average total interest bearing liabilities of $1.05 billion for second quarter 2023 increased $26.3 million, or 2.6%, from first quarter 2023 and increased $111.2 million, or 11.8%, versus second quarter 2022. The increase in average total interest-bearing liabilities from the comparative periods primarily reflected higher customer deposits and brokered deposits, which Salisbury utilized to fund loan growth and to provide liquidity.
The tax equivalent net interest margin for second quarter 2023 was 2.50% compared with 2.99% for first quarter 2023 and 3.15% for second quarter 2022. Excluding PPP loans, the tax equivalent net interest margin for second quarter 2023 was 2.50% compared with 2.99% for first quarter 2023 and 3.10% for second quarter 2022. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 of this release for additional details.
Non-Interest Income
Non-interest income of $2.9 million for second quarter 2023 increased $241 thousand versus first quarter 2023 and decreased $363 thousand versus second quarter 2022. Non-interest income for second quarter 2023 included a pre-tax loss of $209 thousand on the sale of $8.2 million of purchased shared national credit commercial loans and a non-taxable gain of $311 thousand related to proceeds receivable from a BOLI due to the death of a former covered employee. Second quarter 2022 similarly included a non-recurring non-taxable BOLI gain of $89 thousand due to the death of former covered employee.
Trust and Wealth Advisory fees of $1.3 million for second quarter 2023 increased $177 thousand from first quarter 2023 and increased $37 thousand from second quarter 2022. The change in fee income versus the comparative quarters was primarily driven by estate fees and seasonal tax preparation fees. Assets under administration were $1.35 billion at June 30, 2023 compared with $1.29 billion at December 31, 2022 and $1.26 billion at June 30, 2022. Discretionary assets under administration of $638.1 million at June 30, 2023 compared with $561.1 million at December 31, 2022 and $546.5 million at June 30, 2022. The variance from the comparative quarters primarily reflected changes in market valuations. Non-discretionary assets under administration of $711.7 million at June 30, 2023 decreased from $728.9 million at December 31, 2022 and decreased from $714.7 million at June 30, 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.
Service charges and fees of $1.25 million for second quarter 2023 increased $16 thousand from first quarter 2023 and decreased $472 thousand from second quarter 2022, which included non-recurring loan pre-payment fees of $425 thousand. The increase from first quarter 2023 primarily reflected higher interchange fees, which were partially offset by lower deposit and lending-related fees. The decrease from second quarter 2022 primarily reflected lower lending fees, which were partially offset by higher deposit and other fees.
Non-Interest Expense
Non-interest expense of $8.8 million for second quarter 2023 decreased $350 thousand from first quarter 2023 and increased $244 thousand versus second quarter 2022. Non-interest expense for second quarter 2023 included costs of $393 thousand associated with the pending NBT merger compared with $385 thousand in first quarter 2023. 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 closed on April 30, 2023. Compensation expense of $4.9 million for second quarter 2023 decreased $332 thousand from first quarter 2023 and decreased $88 thousand versus second quarter 2022. The decrease from first quarter 2022 primarily reflected lower benefits expense and payroll taxes. The decrease from second quarter 2022 primarily reflected lower production and incentive accruals as well as lower benefits expense, which were partially offset by higher deferred compensation costs.
Excluding compensation expense, other non-interest expenses for second quarter 2023 decreased $18 thousand from first quarter 2023 and increased $332 thousand from second quarter 2022. The decrease from first quarter 2023 reflected the write-off of fixed assets associated with the Red Oaks Mill, New York branch closure in the prior quarter and lower professional fees, partially offset by higher technology and higher FDIC insurance costs. Similarly, the increase from second quarter 2022 primarily reflected higher technology and facilities related expenses and higher FDIC insurance costs, which were partially offset by lower marketing expenses and lower director fees.
The effective income tax rates for second quarter 2023, first quarter 2023 and second quarter 2022 were 12.7%, 20.0% and 15.3%, respectively. The lower tax rate in second quarter 2023 was primarily attributed to the non-taxable BOLI proceeds noted above and a release of $163 thousand of reserves to reflect Salisbury’s estimated tax liability at June 30, 2023.
Loans
Gross loans receivable of $1.25 billion for second quarter 2023 increased $2.4 million, or 0.2%, from first quarter 2023, and increased $103.7 million, or 9.0%, from second quarter 2022. New loan originations in second quarter 2023 were mostly offset by the sale of $8.2 million of shared national credit loans and the paydown of commercial credit lines. Residential 5+ multifamily gross loans receivable at June 30, 2023 and December 31, 2022 included a loan for approximately $16.0 million. At June 30, 2022 this loan, which had a gross balance of approximately $12.0 million, was reported in the commercial real estate category while the project was under construction. The ratio of gross loans to deposits for second quarter 2023 was 92.1% compared with 96.7% for first quarter 2023 and 87.3% for second quarter 2022. Balances by loan type for the comparative periods were as follows:
Loan Type ($ in thousands) Q2 2023 Q1 2023 Q2 2022
Residential Real Estate (1-4 Family) $ 494,362 $ 483,893 $ 444,698
Residential 5+ Multifamily 95,297 91,772 69,272
Commercial Real Estate 438,949 433,379 387,787 Commercial & Industrial ex PPP Loans 173,457 185,376 189,086
PPP Loans 201 226 2,894
Commercial & Industrial – Total 173,658 185,602 191,980
Farm Land 3,320 3,451 3,668
Vacant Land 15,019 14,601 15,397
Municipal 13,306 17,577 17,486
Consumer 18,178 19,491 18,155
Deferred Costs 980 875 1,018
Gross Loans Receivable $ 1,253,069 $ 1,250,641 $ 1,149,461
Gross Loans Receivable ex PPP $ 1,252,868 $ 1,250,415 $ 1,146,567
Asset Quality
Non-performing assets of $1.3 million, or 0.08% of total assets at June 30, 2023, decreased $1.3 million from $2.7 million, or 0.17% of total assets at December 31, 2022, and decreased $2.9 million from $4.2 million, or 0.28% of total assets, at June 30, 2022.
Accruing loans receivable 30-to-89 days past due of $0.7 million, or 0.06% of gross loans receivable, decreased $0.6 million from $1.3 million, or 0.11% of gross loans receivable at December 31, 2022, and decreased $0.3 million from $1.0 million, or 0.09% of gross loans receivable at June 30, 2022.
The allowance for credit losses for second quarter 2023 was $15.6 million compared with $16.0 million for first quarter 2023 and $13.7 million for second quarter 2022. The provision release for second quarter 2023 was $0.4 million compared with provision expenses of $0.9 million for first quarter 2023 and $1.1 million for second quarter 2022. The benefit for second quarter 2023 primarily reflected the release of reserves associated with the shared national credit commercial loans, which Salisbury sold during the quarter, and an improvement in the forecast of certain macro-economic factors, which underpin the Bank’s allowance for credit losses model. Net loan charge-offs were $47 thousand for the second quarter 2023 compared with $32 thousand for first quarter 2023 and $312 thousand for the second quarter 2022.
Reserve coverage, as measured by the ratio of the allowance for credit losses to gross loans, excluding PPP loans, was 1.24% for the second quarter 2023 versus 1.28% for first quarter 2023 and 1.20% for second quarter 2022. Similarly, reserve coverage, as measured by the ratio of the allowance for credit losses to non-performing loans was 1,178% for the second quarter 2023 versus 714% for first quarter 2023 and 324% for second 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 $1.36 billion at June 30, 2023 increased $1.6 million, or 0.1%, from December 31, 2022 and increased $43.4 million, or 3.3%, from June 30, 2022. Salisbury accumulates deposits from a diverse customer base. At June 30, 2023, the composition of Salisbury’s deposit balances was as follows: retail: 42%; commercial: 39%; municipalities: 8%; brokered funds: 6%; Wealth Advisory: 5%; and educational institutions: 1%. At June 30, 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 $340 million, or 25%, of total deposits.
At June 30, 2023, Salisbury had outstanding brokered deposits balances of $80.1 million compared with balances of $45.0 million at December 31, 2022 and $35.0 million at June 30, 2022. Brokered deposits are included in the certificates of deposit balances on Salisbury’s consolidated balance sheet. Management utilizes brokered deposits to fund loan growth and as a source of liquidity. Excluding brokered funds, Salisbury’s deposits increased $40.0 million, or 3.2%, from first quarter 2023. Average total deposits were $1.4 billion for second quarter 2023 and first quarter 2023 compared with $1.3 billion for second quarter 2022. Average total deposits for second quarter 2023 included average brokered deposits of $75.0 million compared with $47.9 million for first quarter 2023 and $18.0 million for second quarter 2022.
Salisbury has access to various sources of liquidity, including the FHLBB and the Federal Reserve Bank. Salisbury had $20.0 million of outstanding advances from FHLBB at June 30, 2023 compared with $10.0 million at December 31, 2022. Salisbury did not have any outstanding advances from FHLBB at June 30, 2022. Salisbury’s excess borrowing capacity at FHLBB was approximately $218 million at June 30, 2023. Additionally, at June 30, 2023, Salisbury had approximately $76 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 $0.7 million in second quarter to $133.1 million at June 30, 2023 as net income of $3.4 million and other activity of $0.2 million, were partially offset by unrealized losses, net of taxes, in the available-for-sale securities (“AFS”) portfolio of $2.0 million, and common stock dividends paid of $0.9 million. The unrealized losses, net of taxes, in the AFS portfolio were $20.0 million at June 30, 2023. Book value per common share of $22.91 at June 30, 2023 increased $0.12 from first quarter 2023 and increased $0.90 from second quarter 2022. Tangible book value per common share of $20.51 at June 30, 2023 increased $0.13 from first quarter 2023 and increased $0.94 from second quarter 2022. At June 30, 2023, the Bank’s tangible common equity ratio, which included the unrealized losses in the AFS portfolio noted above, was 7.71%.
The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At June 30, 2023, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 10.15%, 13.66%, and 12.41%, 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.
Dividend on Common Shares
Presuming the NBT Merger is consummated by such time, Salisbury shareholders will receive a quarterly cash dividend, which will be paid by NBT, on September 15, 2023 to shareholders of record as of September 1, 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. Management believes that Salisbury’s exposure could possibly range from approximately $0.0 million to $0.4 million depending upon the amount the beneficiaries contribute toward the reinstatement of the trust and potential insurance coverage.
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, and Poughkeepsie, 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, 2023, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under About Us/Shareholder Relations/News & Market Information/Presentations.
Source: Salisbury Bancorp, Inc.
Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer
860-435-9801 or rcantele@salisburybank.com*Salisbury Bancorp, Inc. and Subsidiary*
*CONSOLIDATED BALANCE SHEETS (unaudited)*
(in thousands, except share data) *June 30, 2023* *December 31, 2022*
*ASSETS*
Cash and due from banks $ 7,855 $ 5,864
Interest bearing demand deposits with other banks 46,202 44,675
Total cash and cash equivalents 54,057 50,539
Securities
Available-for-sale at fair value 177,477 187,410
Mutual funds at fair value 2,020 1,933
Federal Home Loan Bank of Boston stock at cost 1,488 1,285
Loans receivable, net (allowance for credit losses: $15,558 and $14,846) 1,237,511 1,213,671
Bank premises and equipment, net 21,268 22,148
Goodwill 13,815 13,815
Intangible assets (net of accumulated amortization: $5,727 and $5,654) 154 227
Accrued interest receivable 6,546 6,797
Cash surrender value of life insurance policies 30,248 30,379
Deferred taxes 8,631 8,492
Other assets 5,121 4,886
*Total Assets* $ 1,558,336 $ 1,541,582
*LIABILITIES and SHAREHOLDERS' EQUITY*
Deposits
Demand (non-interest bearing) $ 353,794 $ 395,994
Demand (interest bearing) 219,483 231,486
Money market 361,004 343,965
Savings and other 218,339 233,578
Certificates of deposit 207,330 153,370
Total deposits 1,359,950 1,358,393
Repurchase agreements 7,492 7,228
Federal Home Loan Bank of Boston advances 20,000 10,000
Subordinated debt 24,559 24,531
Note payable 106 128
Finance lease obligations 4,189 4,262
Accrued interest and other liabilities 8,975 8,685
*Total Liabilities* 1,425,271 1,413,227
Shareholders' Equity
Common stock - $0.10 per share par value
Authorized: 10,000,000;
Issued: 5,807,119 and 5,798,816
Outstanding: 5,807,119 and 5,798,816 581 580
Unearned compensation – restricted stock awards (779 ) (1,144 )
Paid-in capital 47,443 47,466
Retained earnings 105,846 102,178
Accumulated other comprehensive loss, net (20,026 ) (20,725 )
*Total Shareholders' Equity* 133,065 128,355
*Total Liabilities and Shareholders' Equity* $ 1,558,336 $ 1,541,582
*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) 2023 2022 2023 2022
*Interest and dividend income*
Interest and fees on loans $ 13,604 $ 10,576 $ 26,853 $ 20,740
Interest on debt securities Taxable 1,033 859 2,102 1,583 Tax exempt 183 187 396 362
Other interest and dividends 561 107 954 164 Total interest and dividend income 15,381 11,729 30,305 22,849
*Interest expense*
Deposits 5,296 577 8,114 1,055
Repurchase agreements 25 4 41 6
Finance lease 40 41 79 82
Note payable 2 2 4 5
Subordinated debt 233 233 466 466
Federal Home Loan Bank of Boston advances 444 - 1,131 55 Total interest expense 6,040 857 9,835 1,669
Net interest and dividend income 9,341 10,872 20,470 21,180
*(Release) provision for credit losses* (403 ) 1,100 521 1,463 Net interest and dividend income after provision (release) for credit losses 9,744 9,772 19,949 19,717
*Non-interest income*
Trust and wealth advisory 1,330 1,293 2,483 2,533
Service charges and fees 1,251 1,723 2,485 2,861
Mortgage banking activities, net (151 ) 77 (92 ) 432
(Losses) gains on mutual fund (14 ) (30 ) 5 (72 )
(Losses) gains on securities, net (15 ) (45 ) (15 ) 165
Bank-owned life insurance (“BOLI”) income 196 163 388 325
Gain on bank-owned life insurance 311 89 311 89
Other 26 27 60 57 Total non-interest income 2,934 3,297 5,625 6,390
*Non-interest expense*
Salaries 3,625 3,657 7,346 7,135
Employee benefits 1,232 1,288 2,700 2,565
Premises and equipment 1,078 973 2,183 2,086
Loss on write-down and sale of assets - - 158 -
Information processing and services 949 702 1,781 1,387
Professional fees 850 821 1,795 1,609
Collections, OREO, and loan related 29 116 100 232
FDIC insurance 248 122 346 293
Marketing and community support 187 262 314 447
Amortization of intangibles 34 50 73 104
Other 544 541 1,106 1,328 Total non-interest expense 8,776 8,532 17,902 17,186
Income before income taxes 3,902 4,537 7,672 8,921
*Income tax provision* 497 692 1,249 1,507
*Net income* $ 3,405 $ 3,845 $ 6,423 $ 7,414
*Net income available to common shareholders* $ 3,354 $ 3,772 $ 6.322 $ 7,280
Basic earnings per common share $ 0.59 $ 0.67 $ 1.11 $ 1.29
Diluted earnings per common share $ 0.59 $ 0.66 $ 1.10 $ 1.28
Common dividends per share $ 0.16 $ 0.16 $ 0.32 $ 0.32
*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 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022
Total assets $ 1,558,336 $ 1,565,334 $ 1,541,582 $ 1,512,138 $ 1,496,521
Loans receivable, net 1,237,511 1,234,632 1,213,671 1,176,493 1,135,758
Total securities 180,985 194,696 190,628 192,530 205,727
Deposits 1,359,950 1,293,042 1,358,393 1,325,204 1,316,539
FHLBB advances 20,000 100,000 10,000 20,000 -
Shareholders’ equity 133,065 132,355 128,355 123,160 127,303
Wealth assets under administration 1,349,827 1,301,162 1,289,918 1,232,272 1,261,244
Discretionary wealth assets under administration 638,103 588,414 561,050 522,109 546,506
Non-discretionary wealth assets under administration 711,724 712,748 728,868 710,163 714,738
Non-performing loans 1,321 2,241 2,663 1,860 4,229
Non-performing assets 1,321 2,241 2,663 1,860 4,229
Accruing loans past due 30-89 days 690 2,234 1,309 390 1,001
Net interest and dividend income 9,341 11,127 12,015 11,844 10,872
Net interest and dividend income, tax equivalent ^(1) 9,510 11,318 12,221 12,054 11,061
(Release) provision for credit losses (403 ) 924 525 695 1,100
Non-interest income 2,934 2,693 2,618 2,693 3,297
Non-interest expense 8,776 9,126 8,947 8,512 8,532
Income before income taxes 3,902 3,770 5,161 5,330 4,537
Income tax provision 497 752 1,037 994 692
Net income 3,405 3,018 4,124 4,336 3,845
Net income allocated to common shareholders 3,354 2,968 4,055 4,264 3,772
*Per share data *
Basic earnings per common share $ 0.59 $ 0.52 $ 0.71 $ 0.75 $ 0.67
Diluted earnings per common share 0.59 0.52 0.71 0.75 0.66
Dividends per common share 0.16 0.16 0.16 0.16 0.16
Book value per common share 22.91 22.79 22.13 21.29 22.01
Tangible book value per common share - Non-GAAP ^⁽^2^⁾ 20.51 20.38 19.71 18.86 19.57
*Common shares outstanding at end of period (in thousands)* 5,807 5,808 5,799 5,784 5,784
*Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) * 5,721 5,702 5,688 5,687 5,666
*Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) * 5,733 5,714 5,710 5,713 5,699
*Profitability ratios*
Net interest margin (tax equivalent) ^(1) 2.50 % 2.99 % 3.28 % 3.27 % 3.15 %
Efficiency ratio ^(^2^) 67.48 61.07 56.66 57.38 59.49
Effective income tax rate 12.73 19.95 20.10 18.65 15.25
Return on average assets 0.88 0.79 1.07 1.13 1.06
Return on average common shareholders’ equity 10.24 9.36 13.05 13.23 11.98
*Credit quality ratios*
Non-performing loans to loans receivable, gross 0.11 % 0.18 % 0.22 % 0.16 % 0.37 %
Accruing loans past due 30-89 days to loans receivable, gross 0.06 0.18 0.11 0.03 0.09
Allowance for credit losses to loans receivable, gross 1.24 1.28 1.21 1.20 1.19
Allowance for credit losses to non-performing loans 1,177.8 714.4 557.5 770.6 324.0
Non-performing assets to total assets 0.08 0.14 0.17 0.12 0.28
*Capital ratios*
Common shareholders' equity to assets 8.54 % 8.35 % 8.33 % 8.14 % 8.51 %
Tangible common shareholders' equity to tangible assets - Non-GAAP ^(2) 7.71 7.63 7.48 7.28 7.63
Tier 1 leverage capital ^(^3^) 10.15 9.98 9.99 9.83 10.04
Total risk-based capital ^(^3^) 13.66 13.41 13.43 13.24 13.28
Common equity tier 1 capital ^(^3^) 12.41 12.16 12.24 12.07 12.13
^(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 2023 Q1 2023 Q4 2022 Q3 2022 Q2 2022
*Common Shareholders' Equity* $ 133,065 $ 132,355 $ 128,355 $ 123,160 $ 127,303
Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 )
Less: Intangible assets (154 ) (188 ) (227 ) (269 ) (314 )
*Tangible Common Shareholders' Equity* $ 119,096 $ 118,352 $ 114,313 $ 109,076 $ 113,174
Total Assets $ 1,558,336 $ 1,565,334 $ 1,541,582 $ 1,512,138 $ 1,496,521
Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 )
Less: Intangible assets (154 ) (188 ) (227 ) (269 ) (314 )
*Tangible Total Assets* $ 1,544,367 $ 1,551,330 $ 1,527,540 $ 1,498,054 $ 1,482,392
Common Shares outstanding (in thousands) 5,807 5,808 5,799 5,784 5,784
Book value per Common Share – GAAP $ 22.91 $ 22.79 $ 22.13 $ 21.29 $ 22.01
Tangible book value per Common Share - Non-GAAP 20.51 20.38 19.71 18.86 19.57
Tangible common shareholders’ equity to tangible total assets - Non-GAAP 7.71 % 7.63 % 7.48 % 7.28 % 7.63 %
*Consolidated:*
Non-interest expense $ 8,776 $ 9,126 $ 8,947 $ 8,512 $ 8,532
Amortization of core deposit intangibles (34 ) (39 ) (42 ) (46 ) (50 )
OREO recovery - - - 15 -
Merger-related costs (393 ) (385 ) (497 ) - -
Fixed asset write-off - (158 ) - - -
Fraud-related recovery - - - - 50
Adjusted non-interest expense $ 8,349 $ 8,544 $ 8,408 $ 8,481 $ 8,532
Net interest and dividend income, tax equivalent $ 9,511 $ 11,318 $ 12,221 $ 12,054 $ 11,061
Non-interest income 2,934 2,693 2,618 2,693 3,297
Losses (gains) on securities 29 (20 ) 1 47 75
BOLI proceeds receivable (311 ) - - - (89 )
Loss (gains) on sale of loans 209 - - (15 ) -
Adjusted revenue $ 12,372 $ 13,991 $ 14,840 $ 14,779 $ 14,344
*Efficiency Ratio – Non-GAAP *^*(*^*1)* 67.48 % 61.07 % 56.66 % 57.38 % 59.49 %
^(^1^) Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q2: 2023: 66.19%; Q1 2023: 59.08%; Q4 2022: 54.64%; Q3 2022: 55.28%; Q2 2022: 57.21%.*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 2023 Q1 2023 Q2 2022 Q2 2023 Q1 2023 Q2 2022 Q2 2023 Q1 2023 Q2 2022
Loans (a)(d) $ 1,241,813 $ 1,236,778 $ 1,112,120 $ 13,709 $ 13,367 $ 10,693 4.38 % 4.29 % 3.81 %
Securities (c)(d) 207,885 214,246 225,458 1,279 1,353 1,117 2.46 2.53 1.98
FHLBB stock 2,771 3,436 1,221 64 19 10 9.21 2.29 3.20
Short term funds (b) 47,733 40,689 54,553 498 375 98 4.18 3.72 0.73
Total interest-earning assets 1,500,202 1,495,149 1,393,352 15,550 15,114 11,918 4.12 4.02 3.40
Other assets 53,758 55,022 61,790
Total assets $ 1,553,960 $ 1,550,171 $ 1,455,142
Interest-bearing demand deposits $ 215,746 $ 223,742 $ 229,625 158 119 108 0.29 0.22 0.19
Money market accounts 342,555 320,015 299,870 2,786 1,270 156 3.26 1.61 0.21
Savings and other 228,031 232,162 236,728 727 402 97 1.28 0.70 0.16
Certificates of deposit 196,416 161,300 137,034 1,625 1,027 216 3.32 2.58 0.63
Total interest-bearing deposits 982,748 937,219 903,257 5,296 2,818 577 2.16 1.22 0.26
Repurchase agreements 5,101 3,961 10,216 25 16 4 1.98 1.65 0.15
Finance lease 5,354 5,397 5,283 40 40 41 2.96 2.96 3.09
Note payable 110 121 153 2 2 2 6.19 6.17 6.13
Subordinated debt (f) 24,551 24,536 24,494 233 233 233 3.80 3.80 3.80
FHLBB advances 36,758 57,056 - 444 687 - 4.78 4.82 -
Total interest-bearing liabilities 1,054,622 1,028,290 943,403 6,040 3,796 857 2.29 1.49 0.36
Demand deposits 357,690 382,601 376,694
Other liabilities 8,268 8,427 6,258
Shareholders’ equity 133,380 130,853 128,787
Total liabilities & shareholders’ equity $ 1,553,960 $ 1,550,171 $ 1,455,142
Net interest income $ 9,510 $ 11,318 $ 11,061
Spread on interest-bearing funds 1.85 2.54 3.03
Net interest margin (e) 2.50 2.99 3.15
(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 2023, Q1 2023 and Q2 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.
*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) 2023 2022 2023 2022 2023 2022
Loans (a)(d) $ 1,239,309 $ 1,095,955 $ 27,075 $ 20,971 4.34 % 3.80 %
Securities (c)(d) 211,048 216,847 2,632 2,079 2.49 1.92
FHLBB stock 3,101 1,327 83 17 5.40 2.58
Short term funds (b) 44,231 88,813 872 146 3.97 0.33
Total earning assets 1,497,689 1,402,942 30,662 23,213 4.07 3.29
Other assets 54,386 68,256
Total assets $ 1,552,075 $ 1,471,198
Interest-bearing demand deposits $ 219,722 $ 231,037 277 207 0.25 0.18
Money market accounts 331,348 310,475 4,056 283 2.47 0.18
Savings and other 230,085 234,920 1,129 160 0.99 0.14
Certificates of deposit 178,954 134,063 2,652 405 2.99 0.61
Total interest-bearing deposits 960,109 910,495 8,114 1,055 1.70 0.23
Repurchase agreements 4,533 8,689 41 6 1.84 0.15
Finance lease 5,376 5,190 79 82 2.96 3.16
Note payable 115 158 4 5 6.19 6.13
Subordinated Debt (f) 24,545 24,488 466 466 3.80 3.81
FHLBB advances 46,851 1,479 1,131 55 4.80 7.46
Total interest-bearing liabilities 1,041,529 950,499 9,835 1,669 1.90 0.35
Demand deposits 370,057 381,731
Other liabilities 8,366 6,675
Shareholders’ equity 132,123 132,293
Total liabilities & shareholders’ equity $ 1,552,075 $ 1,471,198
Net interest income $ 20,827 $ 21,544
Spread on interest-bearing funds 2.20 2.94
Net interest margin (e) 2.75 3.05
(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 $0.4 million, respectively for 2023 and 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.
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^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.