Salisbury Bancorp, Inc. Reports Results for First Quarter 2023; Declares 16 Cent Dividend
04/26/2023 - 11:55 AM
Strategic Merger With NBT Approved by Salisbury Shareholders First Quarter Net Income of $0.52 per Basic Common Share and Return on Average Assets of 0.79% or $0.60 and 0.91% , Respectively, Excluding Non-Recurring Expenses First Quarter 2023 Loan Growth of $22.1 million , or 1.8% Non-performing Assets were 0.14% of Total Assets at March 31, 2023 Common Equity Tier 1 and Tangible Common Equity Ratio of 12.16% and 7.63% , Respectively, at March 31, 2023 1 LAKEVILLE, Conn., April 26, 2023 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc. (“Salisbury”), (NASDAQ Capital Market: “SAL”), the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its first quarter ended March 31, 2023.
Net income available to common shareholders was $3.0 million , or $0.52 per basic common share, for the first quarter ended March 31, 2023 (first quarter 2023), compared with $4.1 million , or $0.71 per basic common share, for the fourth quarter ended December 31, 2022 (fourth quarter 2022), and $3.5 million , or $0.62 per basic common share, for the first quarter ended March 31, 2022 (first quarter 2022). Net income for first quarter 2023 included pre-tax costs of $385 thousand related to Salisbury’s pending merger with NBT Bancorp (“NBT merger”) and $158 thousand to write off fixed assets in the Red Oaks Mill, New York branch, which will close on April 30, 2023. In aggregate, these costs reduced first quarter 2023 earnings per basic share and return on average assets by $0.08 and 0.12% , respectively.
Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “Our financial results for the first quarter were impacted by the challenging banking and macro-economic environment. Despite these headwinds, Salisbury’s business model remains conservative, the Bank is well-capitalized and our deposit base is diversified. Additionally, the unrealized losses in our investment portfolio do not present a material risk to the Bank or to our customers. As we look forward and take a longer term perspective, we are excited that the strategic partnership with NBT has been approved by Salisbury shareholders. The merger is expected to close this quarter, subject to regulatory approval. While we work through the integration of these two high-performing franchises, Salisbury employees will remain focused on prudently managing the Bank’s capital and liquidity and providing outstanding service to our customers.”
Net Interest and Dividend Income
Tax equivalent net interest income of $11.3 million for the first quarter 2023 decreased $903 thousand , or 7.4% , versus fourth quarter 2022, and increased $834 thousand , or 8.0% , versus first quarter 2022. Tax equivalent interest income of $15.1 million for first quarter 2023 increased $755 thousand , or 5.3% , versus fourth quarter 2022 and increased $3.8 million , or 33.8% , from first quarter 2022. The cost of interest-bearing liabilities of $3.8 million for first quarter 2023 increased $1.7 million , or 77.5% , from fourth quarter 2022 and increased $3.0 million , or 367.5% , from first quarter 2022.
Average earning assets of $1.5 billion for first quarter 2023 increased $23.3 million , or 1.6% , from fourth quarter 2022, and increased $82.5 million , or 5.8% , versus first quarter 2022. Average earning assets for first quarter 2023 included average PPP loan balances of $0.2 million , net of deferred fees, compared with $0.4 million in fourth quarter 2022 and $18.7 million in first quarter 2022, respectively. Average total interest bearing liabilities of $1.0 billion for first quarter 2023 increased $45.9 million , or 4.7% , from fourth quarter 2022 and increased $70.6 million , or 7.4% , versus first quarter 2022. The increase in average total interest-bearing liabilities from the comparative periods primarily reflected higher brokered deposits, which Salisbury utilized to fund loan growth and to provide liquidity.
The tax equivalent net interest margin for first quarter 2023 was 2.99% compared with 3.28% for fourth quarter 2022 and 2.95% for first quarter 2022. Excluding PPP loans, the tax equivalent net interest margin for first quarter 2023 was 2.99% compared with 3.28% for fourth quarter 2022 and 2.86% for first quarter 2022. The decline in the tax equivalent net interest margin from the comparative quarters primarily reflected an increase in the cost of interest bearing deposits and borrowed funds as well as an increase in the amount of borrowed funds. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 of this release for additional details.
Non-Interest Income
Non-interest income of $2.7 million for first quarter 2023 increased $75 thousand versus fourth quarter 2022 and decreased $401 thousand versus first quarter 2022.
Trust and Wealth Advisory fees of $1.2 million for first quarter 2023 increased $28 thousand from fourth quarter 2022 and decreased $88 thousand from first quarter 2022. The change in fee income versus the comparative quarters was primarily driven by asset management fees. Assets under administration were $1.30 billion at March 31, 2023 compared with $1.29 billion at December 31, 2022 and $1.05 billion at March 31, 2022. Discretionary assets under administration of $588.4 million at March 31, 2023 compared with $561.1 million at December 31, 2022 and $625.3 million at March 31, 2022. The variance from the comparative quarters primarily reflected changes in market valuations. Non-discretionary assets under administration of $712.7 million at March 31, 2023 decreased from $728.9 million at December 31, 2022 and increased from $423.9 million at March 31, 2022. The variance from the comparative periods primarily reflected changes in the valuation of certain partnership assets for an existing client relationship. The trust and wealth business records only a nominal annual fee on this relationship.
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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.
Service charges and fees of $1.2 million for first quarter 2023 increased $16 thousand from fourth quarter 2022 and increased $97 thousand from first quarter 2022. The increase from fourth quarter 2022 primarily reflected higher deposit and loan fees, which were partially offset by lower interchange fees. The increase from first quarter 2022 primarily reflected higher deposit and higher interchange fees. Net fees from mortgage banking activities were below the comparative quarters. Salisbury did not sell any residential loans to FHLBB during first quarter 2023 and fourth quarter 2022 compared with sales of $5.5 million in first quarter 2022.
Non-Interest Expense
Non-interest expense of $9.1 million for first quarter 2023 increased $179 thousand from fourth quarter 2022 and increased $473 thousand versus first quarter 2022. Non-interest expense for first quarter 2023 and fourth quarter 2022 included costs of approximately $385 thousand and $497 thousand , respectively, associated with the pending NBT merger. Non-interest expense for first quarter 2023 also included a non-recurring charge of $158 thousand to write off fixed assets in the Red Oaks Mill, New York branch, which will be closed on April 30, 2023. Compensation expense of $5.2 million for first quarter 2023 decreased $143 thousand from fourth quarter 2022 and increased $433 thousand versus first quarter 2022. The increase in compensation expense from first quarter 2022 primarily reflected higher base salary expense and higher incentive accruals as well as lower deferred compensation expense.
Excluding compensation expense, other non-interest expenses for first quarter 2023 increased $322 thousand from fourth quarter 2022 and increased $40 thousand from first quarter 2022. The increase from comparative quarters primarily reflected higher professional fees associated with the NBT merger, and the write-off of fixed assets associated with the pending Red Oaks Mill, New York branch closure. First quarter 2022 included fraud related losses of $251 thousand .
The effective income tax rates for first quarter 2023, fourth quarter 2022 and first quarter 2022 were 20.0% , 20.1% and 18.6% , respectively.
Loans
Gross loans receivable of $1.3 billion for first quarter 2023 increased $22.1 million , or 1.8% , from fourth quarter 2022, and increased $171.5 million , or 15.9% , from first quarter 2022. Residential 5+ multifamily gross loans receivable at March 31, 2023 and December 31, 2022 included a loan for approximately $16.0 million . At March 31, 2022 this loan, which had a gross balance of approximately $12.0 million , was reported in the commercial real estate category while the project was under construction. The ratio of gross loans to deposits for first quarter 2023 was 96.7% compared with 90.4% for fourth quarter 2022 and 83.6% for first quarter 2022. Balances by loan type for the comparative periods were as follows:
Loan Type ($ in thousands) Q1 2023 Q4 2022 Q1 2022 Residential Real Estate (1-4 Family) $ 483,893 $ 476,719 $ 425,301 Residential 5+ Multifamily 91,772 80,400 53,376 Commercial Real Estate 433,379 421,147 376,088 Commercial & Industrial ex PPP Loans 185,376 190,191 163,832 PPP Loans 226 299 13,666 Commercial & Industrial – Total 185,602 190,490 177,498 Farm Land 3,451 4,081 2,778 Vacant Land 14,601 14,440 14,710 Municipal 17,577 19,693 14,263 Consumer 19,491 20,546 14,356 Deferred Costs/(Fees) 875 1,001 761 Gross Loans Receivable $ 1,250,641 $ 1,228,517 $ 1,079,131 Gross Loans Receivable ex PPP $ 1,250,415 $ 1,228,218 $ 1,065,465
Asset Quality
Non-performing assets of $2.2 million , or 0.14% of total assets at March 31, 2023, decreased $0.5 million from $2.7 million , or 0.17% of total assets at December 31, 2022, and decreased $0.6 million from $2.8 million , or 0.19% of total assets, at March 31, 2022.
The amount of total impaired and potential problem loans increased $0.2 million during the quarter to $10.9 million or 0.87% of gross loans receivable at March 31, 2023 compared to $11.4 million , or 0.93% of gross loans receivable at December 31, 2022 and $27.3 million , or 2.53% of gross loans receivable at March 31, 2022. The decrease in the balance from first quarter 2022 primarily reflected management’s upgrade of the internal risk rating on certain hospitality related loans, which were previously downgraded due to concerns over COVID-19. These businesses demonstrated a return to pre-pandemic levels of activity and liquidity, which warranted the improvement in risk rating.
Accruing loans receivable 30-to-89 days past due of $2.2 million , or 0.18% of gross loans receivable, increased $0.9 million from $1.3 million , or 0.11% of gross loans receivable at December 31, 2022, and decreased $0.1 million from $2.3 million , or 0.22% of gross loans receivable at March 31, 2022.
On January 1, 2023, Salisbury adopted the Current Expected Credit Loss (“CECL”) accounting standard to estimate credit losses over the life of a loan. As a result of this implementation, Salisbury recorded a reduction of $0.9 million to retained earnings, an increase of $0.3 million to the allowance for credit (“ACL”) losses, an increase of $0.9 million to other liabilities for unfunded commitments reserves and an increase in deferred tax assets of $0.3 million . The ACL for first quarter 2023 was $16.0 million compared with $14.8 million for fourth quarter 2022 and $12.9 million for first quarter 2022. The provision expense was $0.9 million for first quarter 2022 compared with $0.5 million for fourth quarter 2022 and $0.4 million for first quarter 2022. The provision expense for first quarter 2023 primarily reflected loan growth during the quarter as well as the forecast of certain macro-economic factors, which underpin the Bank’s CECL model. Net loan charge-offs were $32 thousand for the first quarter 2023 compared with $13 thousand for fourth quarter 2022 and $410 thousand for the first quarter 2022.
Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.28% for the first quarter 2023 versus 1.21% for both fourth quarter 2022 and first quarter 2022. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 714% for the first quarter 2023 versus 558% for fourth quarter 2022 and 467% for first quarter 2022.
Salisbury endeavors to work constructively to resolve its non-performing loan issues with customers. Substantially all non-performing loans are collateralized with real estate and the repayment of such loans is largely dependent on the return of such loans to performing status or the liquidation of the underlying real estate collateral.
Deposits, Borrowings and Liquidity
Total deposits of $1.3 billion at March 31, 2023 decreased $65.4 million , or 4.8% , from December 31, 2022 and increased $2.6 million , or 0.2% , from March 31, 2022. Salisbury accumulates deposits from a diverse customer base. At March 31, 2023, the composition of Salisbury’s deposit balances was as follows: retail: 45% ; commercial: 39% ; municipalities: 8% ; brokered funds: 4% ; Wealth Advisory: 3% ; and educational institutions: 1% . At March 31, 2023, the balance of Salisbury’s deposits that were not insured by the FDIC or not collateralized by marketable securities owned by Salisbury was approximately $344 million , or 27% , of total deposits.
At March 31, 2023, Salisbury had outstanding brokered deposits balances of $53.2 million compared with balances of $45.0 million at December 31, 2022. Salisbury did not have any outstanding brokered deposit balances at March 31, 2022. Brokered deposits are included in the certificates of deposit balances on Salisbury’s consolidated balance sheet. Management utilized brokered deposits in first quarter 2023 to fund loan growth and as a source of liquidity. Excluding brokered funds, Salisbury’s deposits declined $73.5 million , or 5.6% , from fourth quarter 2022 and declined $50.6 million , or 3.9% , from first quarter 2022. Average total deposits were $1.3 billion for first quarter 2023, fourth quarter 2022 and first quarter 2022. Average total deposits for first quarter 2023 included average brokered deposits of $47.9 million compared with $25.8 million for fourth quarter 2022 and $7.5 million for first quarter 2022.
Salisbury has access to various sources of liquidity, including the FHLBB and the Federal Reserve Bank. Salisbury had $100.0 million of outstanding advances from FHLBB at March 31, 2023 compared with $10.0 million at December 31, 2022 and $0.4 million at March 31, 2022, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $145 million at March 31, 2023. Additionally, at March 31, 2023, Salisbury had approximately $100 million of eligible collateral that could be posted to the Federal Reserve to secure funds under the Bank Term Funding Program. Salisbury has not borrowed funds under this program.
Capital
Shareholders’ equity increased $4.0 million in first quarter to $132.4 million at March 31, 2023 as net income of $3.0 million , unrealized gains, net of taxes, in the available-for-sale securities (“AFS”) portfolio of $2.7 million and other activity of $0.1 million , were partially offset by common stock dividends paid of $0.9 million and a reduction of $0.9 million to retained earnings for the adoption of CECL. The unrealized losses, net of taxes, in the AFS portfolio were $18.0 million at March 31, 2023. Book value per common share of $22.79 at March 31, 2023 increased $0.66 from fourth quarter 2022 and increased $0.23 from first quarter 2022. Tangible book value per common share of $20.38 at March 31, 2023 increased $0.67 from fourth quarter 2022 and increased $0.28 from first quarter 2022. At March 31, 2023, the Bank’s tangible common equity ratio, which included the unrealized losses in the AFS portfolio noted above, was 7.63% .
The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At March 31, 2023, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.98% , 13.41% , and 12.16% , respectively, compared with regulatory “well capitalized” minimums of 5.00% , 10.00% , and 6.5% , respectively. The unrealized losses in the AFS portfolio noted above do not affect the Bank’s regulatory capital ratios.
During first quarter 2023, Salisbury did not repurchase any of its outstanding common stock pursuant to its stock repurchase program, which was established in March 2021 and renewed in March 2022.
Dividend on Common Shares
On April 26, 2023, the Board of Directors of Salisbury approved a quarterly cash dividend of $0.16 per common share that will be paid on May 26, 2023 to shareholders of record as of May 12, 2023.
Other Matters
In July 2022, Salisbury management discovered that the Bank’s trust department terminated a trust account in May 2020 and distributed approximately $1.0 million that should have been retained in continuance of the trust account. In March 2023, Salisbury filed an amended complaint against the beneficiaries to recover the distributed proceeds and to reinstate the trust account. At this time, management believes that Salisbury’s exposure is not yet known or knowable and could potentially range from zero to approximately $0.8 million depending upon the facts and circumstances.
Background
Salisbury Bancorp, Inc. is the parent company of Salisbury Bank and Trust Company, a Connecticut chartered commercial bank serving the communities of northwestern Connecticut and proximate communities in New York and Massachusetts, since 1848, through full service branches in Canaan, Lakeville, Salisbury and Sharon, Connecticut; Great Barrington, South Egremont and Sheffield, Massachusetts; and Dover Plains, Fishkill, Millerton, Newburgh, New Paltz, Poughkeepsie, and Red Oaks Mill, New York. The Bank offers a broad spectrum of consumer and business banking products and services, as well as trust and wealth advisory services. For more information, please visit www.salisburybank.com.
Forward-Looking Statements
This news release may contain statements relating to Salisbury’s and the Bank’s future results that are considered “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and expectations of management as well as the assumptions and estimates made by management using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions, including among others: changes in market interest rates and general and regional economic conditions; changes in laws and regulations; changes in accounting principles; and the quality or composition of the loan and investment portfolios, technological changes and cybersecurity matters, and other factors that may be described in Salisbury’s quarterly reports on Form 10-Q and its annual report on Form 10-K, which are available at the Securities and Exchange Commission’s website (www.sec.gov ) and to which reference is hereby made. Forward-looking statements made by Salisbury in this news release speak only as of the date they are made. Events or other facts that could cause Salisbury’s actual results to differ may arise from time to time and Salisbury cannot predict all such events and factors. Salisbury undertakes no obligation to publicly update any forward-looking statement unless as may be required by law.
Investor presentation slides, which include a review of financial results and trends through the period ended March 31, 2023, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under About Us/Shareholder Relations/News & Market Information/Presentations.
Salisbury Bancorp, Inc. and Subsidiary CONSOLIDATED BALANCE SHEETS (unaudited)
(in thousands, except share data) March 31, 2023 December 31, 2022 ASSETS Cash and due from banks $ 6,231 $ 5,864 Interest bearing demand deposits with other banks 43,613 44,675 Total cash and cash equivalents 49,844 50,539 Securities Available-for-sale at fair value 187,598 187,410 Mutual funds at fair value 2,068 1,933 Federal Home Loan Bank of Boston stock at cost 5,030 1,285 Loans receivable, net (allowance for loan losses: $16,009 and $14,846) 1,234,632 1,213,671 Bank premises and equipment, net 21,597 22,148 Goodwill 13,815 13,815 Intangible assets (net of accumulated amortization: $5,691 and $5,654) 188 227 Accrued interest receivable 6,383 6,797 Cash surrender value of life insurance policies 30,571 30,379 Deferred taxes 8,234 8,492 Other assets 5,374 4,886 Total Assets $ 1,565,334 $ 1,541,582 LIABILITIES and SHAREHOLDERS' EQUITY Deposits Demand (non-interest bearing) $ 370,049 $ 395,994 Demand (interest bearing) 218,902 231,486 Money market 296,974 343,965 Savings and other 236,755 233,578 Certificates of deposit 170,362 153,370 Total deposits 1,293,042 1,358,393 Repurchase agreements 3,230 7,228 Federal Home Loan Bank of Boston advances 100,000 10,000 Subordinated debt 24,545 24,531 Note payable 117 128 Finance lease obligations 4,225 4,262 Accrued interest and other liabilities 7,820 8,685 Total Liabilities 1,432,979 1,413,227 Shareholders' Equity Common stock - $0.10 per share par value Authorized: 10,000,000; Issued: 5,807,719 and 5,798,816 Outstanding: 5,807,719 and 5,798,816 581 580 Unearned compensation – restricted stock awards (961 ) (1,144 ) Paid-in capital 47,396 47,466 Retained earnings 103,371 102,178 Accumulated other comprehensive (loss), net (18,032 ) (20,725 ) Total Shareholders' Equity 132,355 128,355 Total Liabilities and Shareholders' Equity $ 1,565,334 $ 1,541,582
Salisbury Bancorp, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three months ended March 31, (in thousands, except per share amounts) 2023 2022 Interest and dividend income Interest and fees on loans $ 13,250 $ 10,163 Interest on debt securities Taxable 1,068 724 Tax exempt 212 174 Other interest and dividends 393 57 Total interest and dividend income 14,923 11,118 Interest expense Deposits 2,818 478 Repurchase agreements 16 3 Finance lease 40 41 Note payable 2 2 Subordinated debt 233 233 Federal Home Loan Bank of Boston advances 687 55 Total interest expense 3,796 812 Net interest and dividend income 11,127 10,306 Provision for loan losses 924 363 Net interest and dividend income after provision for loan losses 10,203 9,943 Non-interest income Trust and wealth advisory 1,153 1,241 Service charges and fees 1,235 1,138 Mortgage banking activities, net 59 355 Gains (losses) on CRA mutual fund 20 (42 ) Gains on securities, net - 210 Bank-owned life insurance (“BOLI”) income 192 162 Other 34 30 Total non-interest income 2,693 3,094 Non-interest expense Salaries 3,721 3,479 Employee benefits 1,468 1,277 Premises and equipment 1,105 1,104 Loss on sale of assets 158 9 Information processing and services 831 685 Professional fees 945 787 Collections, OREO, and loan related 72 117 FDIC insurance 98 171 Marketing and community support 127 184 Amortization of intangibles 39 54 Other 562 786 Total non-interest expense 9,126 8,653 Income before income taxes 3,770 4,384 Income tax provision 752 816 Net income $ 3,018 $ 3,568 Net income available to common shareholders $ 2,968 $ 3,508 Basic earnings per common share $ 0.52 $ 0.62 Diluted earnings per common share 0.52 0.62 Common dividends per share 0.16 0.16
Salisbury Bancorp, Inc. and Subsidiary SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)
At or for the quarters ended (in thousands, except per share amounts and ratios) Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Total assets $ 1,565,334 $ 1,541,582 $ 1,512,138 $ 1,496,521 $ 1,465,082 Loans receivable, net 1,234,632 1,213,671 1,176,493 1,135,758 1,066,216 Total securities 194,696 190,628 192,530 205,727 217,591 Deposits 1,293,042 1,358,393 1,325,204 1,316,539 1,290,474 FHLBB advances 100,000 10,000 20,000 - 419 Shareholders’ equity 132,355 128,355 123,160 127,303 130,066 Wealth assets under administration 1,301,162 1,289,918 1,232,272 1,261,244 1,049,240 Discretionary wealth assets under administration 588,414 561,050 522,109 546,506 625,346 Non-discretionary wealth assets under administration 712,748 728,868 710,163 714,738 423,894 Non-performing loans 2,241 2,663 1,860 4,229 2,765 Non-performing assets 2,241 2,663 1,860 4,229 2,765 Accruing loans past due 30-89 days 2,234 1,309 390 1,001 2,349 Net interest and dividend income 11,127 12,015 11,844 10,872 10,306 Net interest and dividend income, tax equivalent(1) 11,318 12,221 12,054 11,061 10,484 Provision expense for loan losses 924 525 695 1,100 363 Non-interest income 2,693 2,618 2,693 3,297 3,094 Non-interest expense 9,126 8,947 8,512 8,532 8,653 Income before income taxes 3,770 5,161 5,330 4,537 4,384 Income tax provision 752 1,037 994 692 816 Net income 3,018 4,124 4,336 3,845 3,568 Net income allocated to common shareholders 2,968 4,055 4,264 3,772 3,508 Per share data Basic earnings per common share $ 0.52 $ 0.71 $ 0.75 $ 0.67 $ 0.62 Diluted earnings per common share 0.52 0.71 0.75 0.66 0.62 Dividends per common share 0.16 0.16 0.16 0.16 0.16 Book value per common share 22.79 22.13 21.29 22.01 22.56 Tangible book value per common share - Non-GAAP⁽ 2 ⁾ 20.38 19.71 18.86 19.57 20.10 Common shares outstanding at end of period (in thousands) 5,808 5,799 5,784 5,784 5,765 Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) 5,702 5,688 5,687 5,666 5,636 Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) 5,714 5,710 5,713 5,699 5,694 Profitability ratios Net interest margin (tax equivalent)(1) 2.99 % 3.28 % 3.27 % 3.15 % 2.95 % Efficiency ratio( 2 ) 61.07 56.66 57.38 59.49 63.38 Effective income tax rate 19.95 20.10 18.65 15.25 18.60 Return on average assets 0.79 1.07 1.13 1.06 0.97 Return on average common shareholders’ equity 9.36 13.05 13.23 11.98 10.65 Credit quality ratios Non-performing loans to loans receivable, gross 0.18 % 0.22 % 0.16 % 0.37 % 0.26 % Accruing loans past due 30-89 days to loans receivable, gross 0.18 0.11 0.03 0.09 0.22 Allowance for loan losses to loans receivable, gross 1.28 1.21 1.20 1.19 1.20 Allowance for loan losses to non-performing loans 714.4 557.5 770.6 324.0 467.3 Non-performing assets to total assets 0.14 0.17 0.12 0.28 0.19 Capital ratios Common shareholders' equity to assets 8.35 % 8.33 % 8.14 % 8.51 % 8.88 % Tangible common shareholders' equity to tangible assets - Non-GAAP(2) 7.63 7.48 7.28 7.63 7.99 Tier 1 leverage capital( 3 ) 9.98 9.99 9.83 10.04 9.66 Total risk-based capital( 3 ) 13.41 13.43 13.24 13.28 13.98 Common equity tier 1 capital( 3 ) 12.16 12.24 12.07 12.13 12.80
(1) Adjusted to reflect the U.S. federal statutory benefit on income derived from tax-exempt securities and loans. (2) Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.( 3 ) Represents the capital ratios of the Bank.
Salisbury Bancorp, Inc. and Subsidiary SUPPLEMENTAL INFORMATION – Non-GAAP Financial Measures (unaudited)
At or for the quarters ended (in thousands, except per share amounts and ratios) Q1 2023 Q4 2022 Q3 2022 Q2 2022 Q1 2022 Common Shareholders' Equity $ 132,355 $ 128,355 $ 123,160 $ 127,303 $ 130,066 Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 ) Less: Intangible assets (188 ) (227 ) (269 ) (314 ) (364 ) Tangible Common Shareholders' Equity $ 118,352 $ 114,313 $ 109,076 $ 113,174 $ 115,887 Total Assets $ 1,565,334 $ 1,541,582 $ 1,512,138 $ 1,496,521 $ 1,465,082 Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 ) Less: Intangible assets (188 ) (227 ) (269 ) (314 ) (364 ) Tangible Total Assets $ 1,551,331 $ 1,527,540 $ 1,498,054 $ 1,482,392 $ 1,450,903 Common Shares outstanding (in thousands) 5,808 5,799 5,784 5,784 5,765 Book value per Common Share – GAAP $ 22.79 $ 22.13 $ 21.29 $ 22.01 $ 22.56 Tangible book value per Common Share - Non-GAAP 20.38 19.71 18.86 19.57 20.10 Tangible common shareholders’ equity to tangible total assets - Non-GAAP 7.63 % 7.48 % 7.28 % 7.63 % 7.99 % Consolidated: Non-interest expense $ 9,126 $ 8,947 $ 8,512 $ 8,532 $ 8,653 Amortization of core deposit intangibles (39 ) (42 ) (46 ) (50 ) (54 ) OREO recovery - - 15 - - Merger-related costs (385 ) (497 ) - - - Fixed asset write-off (158 ) - - - - Fraud-related recovery (losses) - - - 50 (251 ) Adjusted non-interest expense $ 8,544 $ 8,408 $ 8,481 $ 8,532 $ 8,348 Net interest and dividend income, tax equivalent $ 11,318 $ 12,221 $ 12,054 $ 11,061 $ 10,484 Non-interest income 2,693 2,618 2,693 3,297 3,094 (Gains) losses on securities (20 ) 1 47 75 (168 ) BOLI proceeds receivable - - - (89 ) - Gains on sale of loans - - (15 ) - (239 ) Adjusted revenue $ 13,991 $ 14,840 $ 14,779 $ 14,344 $ 13,171 Efficiency Ratio – Non-GAAP ( 1 ) 61.07 % 56.66 % 57.38 % 59.49 % 63.38 %
( 1 ) Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q1 2023: 59.08% ; Q4 2022: 54.64% ; Q3 2022: 55.28% ; Q2 2022: 57.21% ; Q1 2022: 61.83% .
Salisbury Bancorp, Inc. and Subsidiary SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)
At or for the quarters ended Average Balance Income / Expense Average Yield / Rate (dollars in thousands) Q1 2023 Q4 2022 Q1 2022 Q1 2023 Q4 2022 Q1 2022 Q1 2023 Q4 2022 Q1 2022 Loans (a)(d) $ 1,236,778 $ 1,209,184 $ 1,079,610 $ 13,367 $ 12,726 $ 10,277 4.29 % 4.16 % 3.79 % Securities (c)(d) 214,246 217,963 208,140 1,353 1,279 962 2.53 2.35 1.85 FHLBB stock 3,436 1,416 1,434 19 15 7 2.29 4.29 2.05 Short term funds (b) 40,689 43,328 123,454 375 339 50 3.72 3.10 0.16 Total interest-earning assets 1,495,149 1,471,891 1,412,638 15,114 14,359 11,296 4.02 3.86 3.19 Other assets 55,022 52,855 74,795 Total assets $ 1,550,171 $ 1,524,746 $ 1,487,433 Interest-bearing demand deposits $ 223,742 $ 232,228 $ 232,464 119 115 99 0.22 0.20 0.17 Money market accounts 320,015 331,451 321,198 1,270 915 126 1.61 1.10 0.16 Savings and other 232,162 246,650 233,092 402 291 64 0.70 0.47 0.11 Certificates of deposit 161,300 128,787 131,059 1,027 465 189 2.58 1.43 0.59 Total interest-bearing deposits 937,219 939,116 917,813 2,818 1,786 478 1.22 0.75 0.21 Repurchase agreements 3,961 6,615 7,146 16 20 3 1.65 1.18 0.14 Finance lease 5,397 5,475 5,097 40 40 41 2.96 2.94 3.23 Note payable 121 132 163 2 2 2 6.17 6.16 6.12 Subordinated debt (f) 24,536 24,523 24,480 233 233 233 3.80 3.80 3.81 FHLBB advances 57,056 6,576 2,974 687 57 55 4.82 3.37 7.46 Total interest-bearing liabilities 1,028,290 982,437 957,673 3,796 2,138 812 1.49 0.86 0.34 Demand deposits 382,601 408,672 386,884 Other liabilities 8,427 8,233 7,036 Shareholders’ equity 130,853 125,404 135,840 Total liabilities & shareholders’ equity $ 1,550,171 $ 1,524,746 $ 1,487,433 Net interest income $ 11,318 $ 12,221 $ 10,484 Spread on interest-bearing funds 2.54 3.00 2.84 Net interest margin (e) 2.99 3.28 2.95
(a) Includes non-accrual loans. (b) Includes interest-bearing deposits in other banks and federal funds sold. (c) Average balances of securities are based on amortized cost. (d) Includes tax exempt income benefit of $0.2 million , $0.2 million and $0.2 million , respectively, for Q1 2023, Q4 2022 and Q1 2022 on tax-exempt securities and loans whose income and yields are calculated on a tax-equivalent basis. The income benefit reflected the U.S. federal statutory tax rate of 21.0% for 2023 and 2022. (e) Net interest income divided by average interest-earning assets. (f) Net of issuance costs.
Source: Salisbury Bancorp, Inc.
Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer 860-435-9801 or rcantele@salisburybank.com