Salisbury Bancorp, Inc. Reports Results for Fourth Quarter and Full Year 2022
01/25/2023 - 10:23 AM
Fourth Quarter and Full Year 2022 Net Income of $0.71 and $2.75 per Basic Common Share, Respectively Robust Loan Growth of $174.1 million , or 16.5% for Full Year 2022, Excluding PPP Loans Non-performing Assets were 0.17% of Total Assets at December 31, 2022 Common Equity Tier 1 and Total Capital Ratios of 12.2% and 13.4% , Respectively LAKEVILLE, Conn., Jan. 25, 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 fourth quarter and full year ended December 31, 2022.
Net income available to common shareholders was $4.1 million , or $0.71 per basic common share, for the fourth quarter ended December 31, 2022 (fourth quarter 2022), compared with $4.3 million , or $0.75 per basic common share, for the third quarter ended September 30, 2022 (third quarter 2022), and $4.1 million , or $0.72 per basic common share, for the fourth quarter ended December 31, 2021 (fourth quarter 2021). Net income for fourth quarter 2022 included costs of approximately $0.5 million , or $0.07 per basic share, related to Salisbury’s previously announced merger agreement with NBT Bancorp (“NBT merger”).
Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “Thanks to the dedication and hard work of our employees, we reported strong earnings and robust loan growth in 2022 and our credit quality metrics remain favorable despite a challenging macro-economic environment. We enter 2023 from a position of strength and Salisbury employees remain focused on prudently managing the bank’s capital and providing outstanding service to our customers.”
Net Interest and Dividend Income
Tax equivalent net interest income of $12.2 million for the fourth quarter 2022 increased $167 thousand , or 1.4% , versus third quarter 2022, and increased $1.5 million , or 13.8% , versus fourth quarter 2021. Tax equivalent interest income of $14.4 million for fourth quarter 2022 increased $1.1 million , or 8.6% , versus third quarter 2022 and increased $2.8 million , or 24.4% , from fourth quarter 2021. The cost of interest-bearing liabilities of $2.1 million for fourth quarter 2022 increased $1.0 million , or 83.5% , from third quarter 2022 and increased $1.3 million , or 164.0% , from fourth quarter 2021.
Average earning assets of $1.47 billion for fourth quarter 2022 increased $12.2 million , or 0.8% , from third quarter 2022, and increased $50.4 million , or 3.5% , versus fourth quarter 2021. Average earning assets for fourth quarter 2022 included average PPP loan balances of $0.4 million , net of deferred fees, compared with $1.3 million and $32.0 million in third quarter 2022 and fourth quarter 2021, respectively. Average total interest bearing liabilities of $982 million for fourth quarter 2022 increased $10.5 million , or 1.1% , from third quarter 2022 and increased $29.8 million , or 3.1% , versus fourth quarter 2021.
The tax equivalent net interest margin for fourth quarter 2022 was 3.28% compared with 3.27% for third quarter 2022 and 2.99% for fourth quarter 2021. Excluding PPP loans, the tax equivalent net interest margin for fourth quarter 2022 was 3.28% compared with 3.25% for third quarter 2022 and 2.87% for fourth 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 $2.6 million for fourth quarter 2022 decreased $75 thousand versus third quarter 2022 and decreased $229 thousand versus fourth quarter 2021.
Trust and Wealth Advisory fees of $1.1 million for fourth quarter 2022 decreased $103 thousand from third quarter 2022 and decreased $161 thousand from fourth quarter 2021. Assets under administration were $1.3 billion at December 30, 2022 compared with $1.1 billion at December 31, 2021 and $1.2 billion at September 30, 2022. Discretionary assets under administration of $561.0 million at December 31, 2022 compared with $657.8 million at December 31, 2021 and $522.1 million at September 30, 2022. The variance from the comparative quarters primarily reflected changes in market valuations. Non-discretionary assets under administration of $728.9 million at December 31, 2022 increased from $425.4 million at December 31, 2021 and increased from $710.2 million at September 30, 2022. 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.
Service charges and fees of $1.2 million for fourth quarter 2022 were essentially unchanged from third quarter 2022 and decreased $67 thousand from fourth quarter 2021. Deposit fees for fourth quarter 2022 were essentially unchanged from the comparative quarters. Net fees from mortgage banking activities were below the comparative quarters. Salisbury did not sell any residential loans to FHLBB during fourth quarter and third quarter 2022 compared with sales of $4.2 million in fourth quarter 2021.
Non-Interest Expense
Non-interest expense of $8.9 million for fourth quarter 2022 increased $435 thousand from third quarter 2022 and increased $476 thousand versus fourth quarter 2021. Non-interest expense for fourth quarter 2022 included costs of approximately $500 thousand primarily for legal and investment banking expenses associated with the pending NBT merger. Compensation expense of $5.3 million for fourth quarter 2022 increased $306 thousand from third quarter 2022 and increased $546 thousand versus fourth quarter 2021. The increase in compensation expense from the comparative periods primarily reflected higher base salary expense and higher incentive accruals as well as higher deferred compensation expense.
Excluding compensation expense, other non-interest expenses for fourth quarter 2022 increased $129 thousand from third quarter 2022 and decreased $70 thousand from fourth quarter 2021. The increase from the prior quarter primarily reflected higher professional fees associated with the NBT merger, which were partially offset by lower facilities, marketing and deposit-related costs. The decrease from fourth quarter 2021 primarily reflected lower marketing costs, appraisal fees and deposit-related costs, which were partially offset by higher professional fees associated with the pending NBT merger.
The effective income tax rates for fourth quarter 2022, third quarter 2022 and fourth quarter 2021 were 20.1% , 18.7% and 19.1% , respectively.
Full Year Results
2022 net income available to common shareholders was $15.6 million , or $2.75 per basic common share, compared with $16.2 million , or $2.88 per basic common share for 2021. Results for 2022 included a provision of $2.7 million compared with a net release of credit reserves of $0.7 million for 2021.
Tax equivalent net interest income of $45.8 million for 2022 increased $4.5 million , or 10.8% , from $41.3 million in 2021. Tax equivalent interest income of $50.8 million for 2022 increased $6.0 million , or 13.4% , from $44.8 million in 2021. In 2022 Salisbury recorded PPP interest income and net fee income of $72 thousand and $751 thousand , respectively, compared with $651 thousand and $2.9 million , respectively, in 2021. This decrease in net PPP fee income was offset by higher interest income on residential and commercial loans due to higher interest rates and record loan growth in 2022.
The cost of interest-bearing liabilities of $5.0 million for 2022 increased $1.5 million , or 44.2% , from $3.4 million in 2021. The increase primarily reflected higher interest expense on deposits, partially offset by lower interest expense on subordinated debt.
Average earning assets of $1.43 billion increased $69.4 million , or 5.1% , from $1.37 billion in 2021 and average total interest-bearing liabilities of $964.0 million increased $31.5 million , or 3.4% , from $932.5 million in 2021. The tax equivalent net interest margin for 2022 was 3.16% compared with 3.01% for 2021. Excluding PPP, the tax equivalent net interest margin for 2022 was 3.12% compared with 2.87% for 2021.
Non-interest income of $11.7 million for 2022 increased $0.2 million from $11.5 million in 2021. The increase primarily reflected higher deposit and lending-related fees, higher BOLI income, partially offset by lower gains on the sale and servicing of mortgage loans. Salisbury sold $7.2 million of mortgage loans in 2022 compared with sales of $34.6 million in 2021.
Non-interest expense of $34.6 million for 2022 increased $2.5 million versus $32.1 million in 2021. The increase primarily reflected higher compensation, technology, and professional fees, which were partially offset by lower marketing costs and lower core deposit intangible amortization expense. Non-interest expenses for 2022 also included costs of approximately $0.5 million related to the NBT merger.
The effective tax rate for 2022 was 18.2% compared with 20.6% for 2021. The higher tax rate in 2021 reflected a lower mix of tax-exempt income from municipal bonds, tax advantaged loans and bank-owned life insurance on a comparatively higher level of pre-tax income.
Loans
Gross loans receivable of $1.2 billion increased $37.7 million , or 3.2% , from third quarter 2022, and increased $148.8 million , or 13.8% , from fourth quarter 2021. Excluding PPP loans, gross loans receivable increased $37.9 million , or 3.2% , from third quarter 2022 and $174.1 million , or 16.5% , from fourth quarter 2021. Residential 5+ multifamily gross loans receivable at December 31, 2022 and September 30, 2022 included a loan for approximately $16.0 million . At December 31, 2021 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 fourth quarter 2022 was 90.4% compared with 89.9% for third quarter 2022 and 80.8% for fourth quarter 2021. Balances by loan type for the comparative periods were as follows:
Loan Type Q4 2022 Q3 2022 Q4 2021 Residential Real Estate (1-4 Family) $ 476,719 $ 461,379 $ 416,139 Residential 5+ Multifamily 80,400 70,459 52,325 Commercial Real Estate 421,147 413,019 369,761 Commercial & Industrial ex PPP Loans 190,191 186,527 169,543 PPP Loans 299 469 25,589 Commercial & Industrial – Total 190,490 186,996 195,132 Farm Land 4,081 4,225 2,807 Vacant Land 14,440 14,796 14,182 Municipal 19,693 18,607 16,534 Consumer 20,546 20,344 12,547 Deferred Costs/(Fees) 1,001 1,002 285 Gross Loans Receivable $ 1,228,517 $ 1,190,827 $ 1,079,712 Gross Loans Receivable ex PPP $ 1,228,218 $ 1,190,358 $ 1,054,123
Asset Quality
Non-performing assets of $2.7 million , or 0.17% of total assets at December 31, 2022, decreased $1.5 million from $4.2 million , or 0.27% of total assets at December 31, 2021, and increased $0.8 million from $1.9 million , or 0.12% of total assets, at September 30, 2022.
The amount of total impaired and potential problem loans increased $0.2 million during the quarter to $11.4 million or 0.93% of gross loans receivable at December 31, 2022 compared to $32.8 million , or 3.04% of gross loans receivable at December 31, 2021 and $11.2 million , or 0.94% of gross loans receivable at September 30, 2022. The decrease in the balance from fourth quarter 2021 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, warranting the improvement in risk rating.
Accruing loans receivable 30-to-89 days past due of $1.3 million , or 0.11% of gross loans receivable, were essentially unchanged from December 31, 2021, and increased $0.9 million from $0.4 million , or 0.03% of gross loans receivable at September 30, 2022.
The allowance for loan losses for fourth quarter 2022 was $14.8 million compared with $14.3 million for third quarter 2022 and $13.0 million for fourth quarter 2021.The provision expense was $0.5 million for fourth quarter 2022 compared with a provision expense of $0.7 million for third quarter 2022 and a net reserve release of $0.2 million for fourth quarter 2021. The provision expense for fourth quarter 2022 reflected the strong loan growth in the quarter. Net loan charge-offs were $13 thousand for the fourth quarter 2022 compared with $64 thousand for third quarter 2022 and $3 thousand for the fourth quarter 2021.
Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.21% for the fourth quarter 2022 versus 1.20% for the third quarter 2022 and 1.23% for the fourth quarter 2021. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 558% for the fourth quarter 2022 versus 771% for third quarter 2022 and 309% for fourth 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 $1.4 billion at December 31, 2022 increased $22.2 million , or 1.7% , from December 31, 2021 and increased $33.2 million , or 2.5% , from September 30, 2022. At December 31, 2022, Salisbury had outstanding brokered deposits balances of $45.0 million compared with balances of $7.9 million at December 31, 2021. Salisbury did not have any outstanding brokered deposit balances at September 30, 2022. Brokered deposits are included in the certificates of deposit balances on Salisbury’s consolidated balance sheet. Management utilized brokered deposits in fourth quarter 2022 to fund continued loan growth and to offset seasonal deposit outflows. Average total deposits were $1.3 billion for fourth quarter 2022, third quarter 2022 and fourth quarter 2021. Average total deposits for fourth quarter 2022 included average brokered deposits of $25.8 million compared with $17.6 million for third quarter 2022 and $7.9 million for fourth quarter 2021.
Salisbury had $10.0 million of outstanding advances from FHLBB at December 31, 2022 compared with $7.7 million at December 31, 2021 and $20.0 million at September 30, 2021, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $241 million at December 31, 2022.
Capital
Shareholders’ equity increased $5.2 million in fourth quarter to $128.4 million at December 31, 2022 as net income of $4.1 million , unrealized gains, net of taxes, in the available-for-sale securities (“AFS”) portfolio of $1.6 million and other activity of $0.4 million , were partially offset by common stock dividends paid of $0.9 million . The unrealized losses, net of taxes, in the AFS portfolio were $20.7 million at December 31, 2022. These losses, which reflected the sharp increase in market interest rates during 2022, reduced both book value and tangible book value at December 31, 2022 compared with year end 2021. Book value per common share of $22.13 at December 31, 2022 increased $0.84 from third quarter 2022 and decreased $1.74 from fourth quarter 2021. Tangible book value per common share of $19.71 at December 31, 2022 increased $0.85 from third quarter 2022 and decreased $1.67 from fourth quarter 2021.
The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At December 31, 2022, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.99% , 13.43% , and 12.24% , 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 fourth 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 January 25, 2023, the Board of Directors of Salisbury approved a quarterly cash dividend of $0.16 per common share that will be paid on February 24, 2023 to shareholders of record as of February 10, 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 December 2022, Salisbury filed a 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 December 31, 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 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) December 31, 2022 December 31, 2021 ASSETS Cash and due from banks $ 5,864 $ 6,404 Interest bearing demand deposits with other banks 44,675 168,931 Total cash and cash equivalents 50,539 175,335 Interest bearing Time Deposits with Financial Institutions - 750 Securities Available-for-sale at fair value 187,410 202,396 Mutual funds at fair value 1,933 901 Federal Home Loan Bank of Boston stock at cost 1,285 1,397 Loans held-for-sale - 2,684 Loans receivable, net (allowance for loan losses: $14,846 and $12,962) 1,213,671 1,066,750 Bank premises and equipment, net 22,148 22,625 Goodwill 13,815 13,815 Intangible assets (net of accumulated amortization: $5,653 and $5,462) 227 418 Accrued interest receivable 6,797 6,260 Cash surrender value of life insurance policies 30,379 27,738 Deferred taxes 8,492 2,588 Other assets 4,886 5,527 Total Assets $ 1,541,582 $ 1,529,184 LIABILITIES and SHAREHOLDERS' EQUITY Deposits Demand (non-interest bearing) $ 395,994 $ 416,073 Demand (interest bearing) 231,486 233,600 Money market 343,965 330,436 Savings and other 233,578 237,075 Certificates of deposit 153,370 119,009 Total deposits 1,358,393 1,336,193 Repurchase agreements 7,228 11,430 Federal Home Loan Bank of Boston advances 10,000 7,656 Subordinated debt 24,531 24,474 Note payable 128 170 Finance lease obligations 4,262 4,107 Accrued interest and other liabilities 8,685 8,554 Total Liabilities 1,413,227 1,392,584 Shareholders' Equity Common stock - $0.10 per share par value Authorized: 10,000,000; Issued: 5,798,816 and 5,723,394 Outstanding: 5,798,816 and 5,723,394 580 286 Unearned compensation – restricted stock awards (1,144 ) (925 ) Paid-in capital 47,466 46,374 Retained earnings 102,178 89,995 Accumulated other comprehensive (loss) income, net (20,725 ) 870 Total Shareholders' Equity 128,355 136,600 Total Liabilities and Shareholders' Equity $ 1,541,582 $ 1,529,184
Salisbury Bancorp, Inc. and Subsidiary CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three months ended Twelve months ended Periods ended December 31, (in thousands, except per share amounts) 2022 2021 2022 2021 Interest and dividend income Interest and fees on loans $ 12,595 $ 10,438 $ 44,874 $ 41,080 Interest on debt securities Taxable 992 651 3,479 2,048 Tax exempt 212 191 787 697 Other interest and dividends 354 73 871 247 Total interest and dividend income 14,153 11,353 50,011 44,072 Interest expense Deposits 1,786 509 3,724 2,160 Repurchase agreements 20 3 30 16 Finance lease 40 34 163 136 Note payable 2 3 9 11 Subordinated debt 233 233 932 1,000 Federal Home Loan Bank of Boston advances 57 28 114 125 Total interest expense 2,138 810 4,972 3,448 Net interest and dividend income 12,015 10,543 45,039 40,624 Provision expense (release) for loan losses 525 (202 ) 2,683 (720 ) Net interest and dividend income after provision (release) for loan losses 11,490 10,745 42,356 41,344 Non-interest income Trust and wealth advisory 1,125 1,286 4,887 4,970 Service charges and fees 1,219 1,286 5,299 4,822 Mortgage banking activities, net 59 88 556 1,000 Losses on CRA mutual fund (1 ) (9 ) (120 ) (26 ) Gains (losses) on securities, net - - 165 (2 ) Bank-owned life insurance (“BOLI”) income 191 170 806 556 Gain on sale of assets - - - 73 Other 25 26 109 107 Total non-interest income 2,618 2,847 11,702 11,500 Non-interest expense Salaries 3,995 3,753 14,932 13,417 Employee benefits 1,337 1,033 5,125 5,023 Premises and equipment 1,081 1,080 4,281 4,114 Write-down of assets - - 3 144 Information processing and services 697 617 2,795 2,441 Professional fees 921 688 3,218 2,779 Collections, OREO, and loan related 76 138 376 455 FDIC insurance 135 171 526 541 Marketing and community support 161 328 822 881 Amortization of intangibles 42 57 191 256 Other 502 606 2,376 2,053 Total non-interest expense 8,947 8,471 34,645 32,104 Income before income taxes 5,161 5,121 19,413 20,740 Income tax provision 1,037 980 3,539 4,267 Net income $ 4,124 $ 4,141 $ 15,874 $ 16,473 Net income available to common shareholders $ 4,055 $ 4,076 $ 15,598 $ 16,225 Basic earnings per common share $ 0.71 $ 0.72 $ 2.75 $ 2.88 Diluted earnings per common share $ 0.71 $ 0.72 $ 2.74 $ 2.86 Common dividends per share $ 0.16 $ 0.16 $ 0.64 $ 0.61
Salisbury Bancorp, Inc. and Subsidiary SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)
At or for the quarters ended (in thousands, except per share amounts and ratios) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Total assets $ 1,541,582 $ 1,512,138 $ 1,496,521 $ 1,465,082 $ 1,529,184 Loans receivable, net 1,213,671 1,176,493 1,135,758 1,066,216 1,066,750 Total securities 190,628 192,530 205,727 217,591 204,694 Deposits 1,358,393 1,325,204 1,316,539 1,290,474 1,336,193 FHLBB advances 10,000 20,000 - 419 7,656 Shareholders’ equity 128,355 123,160 127,303 130,066 136,600 Wealth assets under administration 1,289,918 1,232,272 1,261,244 1,049,240 1,083,152 Discretionary wealth assets under administration 561,050 522,109 546,506 625,346 657,789 Non-discretionary wealth assets under administration 728,868 710,163 714,738 423,894 425,363 Non-performing loans 2,663 1,860 4,229 2,765 4,199 Non-performing assets 2,663 1,860 4,229 2,765 4,199 Accruing loans past due 30-89 days 1,309 390 1,001 2,349 1,342 Net interest and dividend income 12,015 11,844 10,872 10,306 10,543 Net interest and dividend income, tax equivalent (1) 12,221 12,054 11,061 10,484 10,735 Provision expense (release) for loan losses 525 695 1,100 363 (202 ) Non-interest income 2,618 2,693 3,297 3,094 2,847 Non-interest expense 8,947 8,512 8,532 8,653 8,471 Income before income taxes 5,161 5,330 4,537 4,384 5,121 Income tax provision 1,037 994 692 816 980 Net income 4,124 4,336 3,845 3,568 4,141 Net income allocated to common shareholders 4,055 4,264 3,772 3,508 4,076 Per share data Basic earnings per common share $ 0.71 $ 0.75 $ 0.67 $ 0.62 $ 0.72 Diluted earnings per common share 0.71 0.75 0.66 0.62 0.72 Dividends per common share 0.16 0.16 0.16 0.16 0.16 Book value per common share 22.13 21.29 22.01 22.56 23.87 Tangible book value per common share - Non-GAAP ⁽2 ⁾ 19.71 18.86 19.57 20.10 21.38 Common shares outstanding at end of period (in thousands) 5,799 5,784 5,784 5,765 5,723 Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) 5,688 5,687 5,666 5,636 5,635 Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) 5,710 5,713 5,699 5,694 5,670 Profitability ratios Net interest margin (tax equivalent) (1) 3.28 % 3.27 % 3.15 % 2.95 % 2.99 % Efficiency ratio ( 2 ) 56.66 57.38 59.49 63.38 61.91 Effective income tax rate 20.10 18.65 15.25 18.60 19.13 Return on average assets 1.07 1.13 1.06 0.97 1.10 Return on average common shareholders’ equity 13.05 13.23 11.98 10.65 12.14 Credit quality ratios Non-performing loans to loans receivable, gross 0.22 % 0.16 % 0.37 % 0.26 % 0.39 % Accruing loans past due 30-89 days to loans receivable, gross 0.11 0.03 0.09 0.22 0.12 Allowance for loan losses to loans receivable, gross 1.21 1.20 1.19 1.20 1.20 Allowance for loan losses to non-performing loans 557.5 770.6 324.0 467.3 308.7 Non-performing assets to total assets 0.17 0.12 0.28 0.19 0.27 Capital ratios Common shareholders' equity to assets 8.33 % 8.14 % 8.51 % 8.88 % 8.93 % Tangible common shareholders' equity to tangible assets - Non-GAAP (2) 7.48 7.28 7.63 7.99 8.08 Tier 1 leverage capital ( 3 ) 9.99 9.83 10.04 9.66 9.42 Total risk-based capital ( 3 ) 13.43 13.24 13.28 13.98 14.08 Common equity tier 1 capital ( 3 ) 12.24 12.07 12.13 12.80 12.87
(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) Q4 2022 Q3 2022 Q2 2022 Q1 2022 Q4 2021 Common Shareholders' Equity $ 128,355 $ 123,160 $ 127,303 $ 130,066 $ 136,600 Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 ) Less: Intangible assets (227 ) (269 ) (314 ) (364 ) (418 ) Tangible Common Shareholders' Equity $ 114,313 $ 109,076 $ 113,174 $ 115,887 $ 122,367 Total Assets $ 1,541,582 $ 1,512,138 $ 1,496,521 $ 1,465,082 $ 1,529,184 Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 ) Less: Intangible assets (227 ) (269 ) (314 ) (364 ) (418 ) Tangible Total Assets $ 1,527,540 $ 1,498,054 $ 1,482,392 $ 1,450,903 $ 1,514,951 Common Shares outstanding (in thousands) 5,799 5,784 5,784 5,765 5,723 Book value per Common Share – GAAP $ 22.13 $ 21.29 $ 22.01 $ 22.56 $ 23.87 Tangible book value per Common Share - Non-GAAP 19.71 18.86 19.57 20.10 21.38 Tangible common shareholders’ equity to tangible total assets - Non-GAAP 7.48 % 7.28 % 7.63 % 7.99 % 8.08 % Consolidated: Non-interest expense $ 8,947 $ 8,512 $ 8,532 $ 8,653 $ 8,471 Amortization of core deposit intangibles (42 ) (46 ) (50 ) (54 ) (57 ) OREO recovery - 15 - - - Merger-related costs (497 ) - - - - Fraud-related recovery (losses) - - 50 (251 ) - Adjusted non-interest expense $ 8,408 $ 8,481 $ 8,532 $ 8,348 $ 8,414 Net interest and dividend income, tax equivalent $ 12,221 $ 12,054 $ 11,061 $ 10,484 $ 10,735 Non-interest income 2,618 2,693 3,297 3,094 2,847 Losses (gains) on securities 1 47 75 (168 ) 9 Gains on sale of fixed assets - - - - - BOLI proceeds receivable - - (89 ) - - Gains on sale of loans - (15 ) - (239 ) - Adjusted revenue $ 14,840 $ 14,779 $ 14,344 $ 13,171 $ 13,591 Efficiency Ratio – Non-GAAP 1 56.66 % 57.38 % 59.49 % 63.38 % 61.91 %
1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q4 2022: 54.64% ; Q3 2022: 55.28% ; Q2 2022: 57.21% ; Q1 2022: 61.83% ; Q4 2021: 60.62% .
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) Q4 2022 Q3 2022 Q4 2021 Q4 2022 Q3 2022 Q4 2021 Q4 2022 Q3 2022 Q4 2021 Loans (a)(d) $ 1,209,184 $ 1,168,037 $ 1,078,097 $ 12,726 $ 11,675 $ 10,560 4.16 % 3.95 % 3.89 % Securities (c)(d) 217,963 221,620 186,284 1,279 1,192 911 2.35 2.15 1.96 FHLBB stock 1,416 1,191 1,641 15 8 11 4.29 2.92 2.68 Short term funds (b) 43,328 68,818 155,502 339 344 62 3.10 1.98 0.16 Total interest-earning assets 1,471,891 1,459,666 1,421,524 14,359 13,219 11,544 3.86 3.58 3.22 Other assets 52,855 60,283 76,059 Total assets $ 1,524,746 $ 1,519,949 $ 1,497,583 Interest-bearing demand deposits $ 232,228 $ 233,547 $ 225,607 115 106 104 0.20 0.18 0.18 Money market accounts 331,451 320,552 329,005 915 356 139 1.10 0.44 0.17 Savings and other 246,650 246,101 233,463 291 179 66 0.47 0.29 0.11 Certificates of deposit 128,787 131,918 121,192 465 242 200 1.43 0.73 0.65 Total interest-bearing deposits 939,116 932,118 909,267 1,786 883 509 0.75 0.38 0.21 Repurchase agreements 6,615 9,684 7,923 20 4 3 1.18 0.18 0.16 Finance lease 5,475 5,318 2,696 40 41 34 2.94 3.05 5.10 Note payable 132 142 173 2 2 3 6.16 6.15 6.49 Subordinated debt (f) 24,523 24,508 24,467 233 233 233 3.80 3.80 3.82 FHLBB advances 6,576 217 8,071 57 2 28 3.37 3.15 1.38 Total interest-bearing liabilities 982,437 971,987 952,597 2,138 1,165 810 0.86 0.48 0.34 Demand deposits 408,672 410,861 401,294 Other liabilities 8,233 7,065 8,410 Shareholders’ equity 125,404 130,036 135,282 Total liabilities & shareholders’ equity $ 1,524,746 $ 1,519,949 $ 1,497,583 Net interest income $ 12,221 $ 12,054 $ 10,735 Spread on interest-bearing funds 3.00 3.11 2.88 Net interest margin (e) 3.28 3.27 2.99
(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 Q4 2022, Q3 2022 and Q4 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)
Twelve months ended December 31, Average Balance Income / Expense Average Yield / Rate (dollars in thousands) 2022 2021 2022 2021 2022 2021 Loans (a)(d) $ 1,142,663 $ 1,059,663 $ 45,373 $ 41,549 3.93 % 3.89 % Securities (c)(d) 218,331 144,833 4,549 2,991 2.08 2.06 FHLBB stock 1,315 1,790 41 37 3.12 2.09 Short term funds (b) 72,309 158,907 830 210 1.15 0.13 Total earning assets 1,434,618 1,365,193 50,793 44,787 3.51 3.26 Other assets 62,365 72,590 Total assets $ 1,496,983 $ 1,437,783 Interest-bearing demand deposits $ 231,970 $ 224,763 429 435 0.18 0.19 Money market accounts 318,302 315,469 1,554 547 0.49 0.17 Savings and other 240,695 215,300 630 239 0.26 0.11 Certificates of deposit 132,192 130,879 1,111 939 0.84 0.72 Total interest-bearing deposits 923,159 886,411 3,724 2,160 0.40 0.24 Repurchase agreements 8,417 10,679 30 16 0.36 0.15 Finance lease 5,294 2,739 163 136 3.07 4.96 Note payable 147 187 9 11 6.14 6.13 Subordinated Debt (f) 24,502 22,511 932 1,000 3.80 4.44 FHLBB advances 2,446 9,938 114 125 4.59 1.24 Total interest-bearing liabilities 963,965 932,465 4,972 3,448 0.52 0.37 Demand deposits 395,848 366,926 Other liabilities 7,183 7,285 Shareholders’ equity 129,987 131,107 Total liabilities & shareholders’ equity $ 1,496,983 $ 1,437,783 Net interest income $ 45,821 $ 41,339 Spread on interest-bearing funds 3.00 2.89 Net interest margin (e) 3.16 3.01
(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 $0.7 million and $0.5 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.