Salisbury Bancorp, Inc. Reports Strong Results for Third Quarter 2020; Declares 29 Cent Dividend
10/30/2020 - 01:26 PM
Third Quarter 2020 Net Income of $ 1.5 3 per Basic Common Share Common Equity Tier 1 and Total Capital Ratios of 12. 3 % and 13.6 %, Respectively Non-Performing Assets were 0. 36 % of Total Assets Compared w ith 0.35% at December 31, 2019 Book Value and Tangible Book Value Per Common Share Increased 7 % and 8 %, Respectively in 20 20 LAKEVILLE, Conn., Oct. 30, 2020 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc. (“Salisbury”), (NASDAQ Capital Market: “SAL”), the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its third quarter ended September 30, 2020.
Net income allocated to common shareholders was $4.3 million, or $1.53 per common share, for the quarter ended September 30, 2020 (third quarter 2020), compared with $2.7 million, or $0.96 per common share, for the second quarter ended June 30, 2020 (second quarter 2020), and $2.9 million, or $1.06 per common share, for the third quarter ended September 30, 2019 (third quarter 2019). Results for third quarter 2020 included a loan loss provision of $686 thousand, and a non-recurring non-taxable gain of $601 thousand, or $0.21 per basic common share, related to proceeds received from a bank-owned life insurance policy (“BOLI”) due to the death of a covered former employee.
Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “I am extremely proud of our Salisbury Bank team, which has successfully met the challenges of serving our customers and communities during these difficult times. During this pandemic we extended $100 million in PPP loans and worked with numerous commercial and residential customers to accommodate their needs for temporary loan payment deferrals. Our efforts have assisted the economic survival of our customers. We reported strong earnings for the third quarter and we continued to bolster our allowance for loan losses and our capital base. We have also been able to increase book value and tangible book value per common share by 7% and 8%, respectively so far for this year. As we enter the colder months, however, the uncertainty surrounding COVID-19 and its impact on businesses is extremely high. As a result, we continue to closely monitor our loan portfolio and our lenders constantly communicate with our customers. Salisbury remains committed to providing outstanding customer service and supporting our local communities during this crisis.”
Net-Interest and Dividend Income
Tax equivalent net interest income of $10.1 million for the third quarter 2020 increased $313 thousand, or 3.2%, versus second quarter 2020, and increased $1.3 million, or 14.4%, versus third quarter 2019. Interest income was essentially unchanged compared to second quarter 2020 and third quarter 2019. Third quarter 2020 included PPP fees and interest of $651 thousand compared with $561 thousand in second quarter 2020. The cost of interest bearing liabilities declined $0.2 million, or 18.8%, from second quarter 2020 and declined $1.3 million, or 54.3%, from third quarter 2019.
Average earning assets increased $42.1 million, or 3.6%, versus second quarter 2020, and increased $150.9 million, or 14.1%, versus third quarter 2019. Average earning assets for third quarter 2020 included average PPP loan balances of $97.0 million. Average total interest bearing liabilities increased $23.0 million, or 2.8%, versus second quarter 2020 and increased $64.9 million, or 8.4%, versus third quarter 2019. The increase from third quarter 2019 primarily reflected the funding of PPP loans.
The tax equivalent net interest margin for the third quarter 2020 was 3.29% compared with 3.31% for the second quarter 2020 and 3.29% for the third quarter 2019. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on pages 8-9 of this release for additional details.
Non-Interest Income
Non-interest income of $3.3 million for third quarter 2020 increased $1.0 million compared with second quarter 2020 and third quarter 2019. Non-interest income for third quarter 2020 included a non-recurring non-taxable BOLI gain of $601 thousand due to the death of a covered former employee. The increase in non-interest income from the comparative quarters also reflected higher realized gains on the sale of residential mortgages.
Trust and Wealth Advisory fees of $1.1 million increased slightly compared with both second quarter 2020 and third quarter 2019. Assets under administration were $748.2 million as of September 30, 2020 compared with $704.1 million at June 30, 2020 and $752.5 million as of September 30, 2019. Discretionary assets under administration of $515.0 million in third quarter 2020 increased from $480.5 million in second quarter 2020 and $475.5 million in third quarter 2019. The growth from second quarter 2020 primarily reflected higher market valuations whereas the growth versus third quarter 2019 primarily reflected new business activity. Non-discretionary assets under administration were $233.2 million in third quarter 2020 compared with $223.6 million in second quarter 2020 and $277.0 million in third quarter 2019. The increase from second quarter 2020 primarily reflected higher valuations whereas the decline from third quarter 2019 primarily reflected a lower valuation of shares in a partnership for one significant client relationship for which the trust and wealth business recorded only a nominal annual fee.
Service charges and fees of $711 thousand increased $113 thousand versus second quarter 2020 and decreased $292 thousand versus third quarter 2019. The increase from second quarter 2020 primarily reflected higher interchange fees whereas the decline from third quarter 2019 reflected lower deposit fees. To help support the financial needs of our customers and the communities in our markets, the Bank waived approximately $289 thousand and $558 thousand of deposit and transaction fees in the third quarter and the nine month period ended September 30, 2020, respectively.
Income from sales and servicing of mortgage loans of $736 thousand increased $418 thousand versus second quarter 2020 and increased $618 thousand from third quarter 2019. Mortgage loans of $26.6 million were sold during the third quarter 2020 compared with sales of $14.7 million for second quarter 2020 and $5.6 million in third quarter 2019.
Non-Interest Expense
Non-interest expense of $7.3 million for third quarter 2020 increased $470 thousand versus second quarter 2020 and increased $75 thousand versus third quarter 2019. Compensation expense of $4.2 million for third quarter 2020 increased $727 thousand from second quarter 2020 and decreased $48 thousand versus third quarter 2019. The second quarter 2020 included the deferral of approximately $540 thousand of compensation costs associated with originating PPP loans. These deferred costs will be amortized into income over the term of the PPP loans as an offset to loan interest income, which is a component of net interest margin. Third quarter 2020 also reflected higher salary expense and production accruals, which were driven by increased loan origination volume.
Excluding compensation, other non-interest expenses of $3.1 million for third quarter 2020 decreased $257 thousand from second quarter 2020 and increased $123 thousand from third quarter 2019. The decrease from second quarter 2020 primarily reflected lower consulting and director fees as well as a decline in community support donations, which were accelerated in second quarter 2020. The increase from third quarter 2019 primarily reflected FDIC assessment credits recorded in the prior year third quarter.
The effective income tax rates for third quarter 2020, second quarter 2020 and third quarter 2019 were 17.3%, 18.1% and 18.0%, respectively. The lower tax rate in third quarter 2020 primarily reflected the non-taxable BOLI proceeds received during the quarter.
Loans
Gross loans for third quarter 2020 of $1.0 billion included $99.9 million in PPP loans, which are categorized as commercial & industrial loans in the below table, and net deferred fees of $2.3 million. Excluding PPP loans, gross loans receivable were $947.0 million at September 30, 2020, compared with $955.8 million at June 30, 2020, and $923.9 million at September 30, 2019. Including PPP loans, the ratio of gross loans to deposits for third quarter 2020 was 95.4% compared with 97.0% for second quarter 2020 and 95.6% for third quarter 2019. Balances by loan type for the comparative periods were as follows:
Loan Type Q3 2020 Q2 2020 Q3 2019 Residential Real Estate $ 429,221 $ 436,364 $ 421,843 Commercial Real Estate 333,412 323,634 296,302 Commercial & Industrial 237,448 247,440 164,078 Farm Land 3,295 3,324 3,686 Vacant Land 13,694 13,879 8,111 Municipal 20,797 20,707 22,260 Consumer 7,686 7,886 6,290 Deferred (Fees) Costs (959) (1,339) 1,359 Gross Loans Receivable $ 1,044,594 $ 1,051,895 $ 923,929
Asset Quality
In March 2020, Salisbury implemented a loan payment deferral program which allowed residential, commercial and consumer borrowers, who have been adversely affected by the COVID-19 pandemic, to defer loan payments for up to three months. Customers may also apply for additional deferments. As of September 30, 2020, loan payments were deferred on 21 residential and consumer loans ($7 million loan balance) and 37 commercial loans ($56 million loan balance).
Non-performing assets decreased $0.1 million during third quarter 2020 to $4.7 million, or 0.36% of total assets at September 30, 2020, from $4.8 million, or 0.37% of total assets at June 30, 2020, and decreased $1.0 million from $5.7 million, or 0.50% of total assets, at September 30, 2019.
The amount of total impaired and potential problem loans decreased $0.1 million during the third quarter 2020 to $26.8 million, or 2.56% of gross loans receivable, at September 30, 2020 compared to $26.9 million, or 2.55% of gross loans receivable, at June 30, 2020, and increased $4.2 million from $22.6 million, or 2.44% of gross loans receivable, at September 30, 2019.
Accruing loans receivable 30-to-89 days past due decreased $1.0 million during third quarter 2020 to $1.6 million, or 0.16% of gross loans receivable, from $2.7 million, or 0.25% of gross loans receivable at June 30, 2020, and decreased $0.2 million from $1.8 million, or 0.19% of gross loans receivable at September 30, 2019.
The allowance for loan losses at September 30, 2020 was $13.0 million compared with $12.4 million at June 30, 2020 and $8.8 million at September 30, 2019. The provision for loan losses expense was $0.7 million for third quarter 2020 versus $1.8 million for second quarter 2020, and $94 thousand for third quarter 2019. The provision for third quarter reflected management’s assessment of the impact of the COVID-19 pandemic on certain qualitative and environmental factors and impaired loans. Net loan charge-offs were $56 thousand for the third quarter 2020, $53 thousand for second quarter 2020 and $135 thousand for the third quarter 2019. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 1.24% for the third quarter 2020, versus 1.18% for second quarter 2020 and 0.96% for third quarter 2019. Excluding PPP loans and deferred net fees, the ratio of the allowance for loan losses to gross loans was 1.37% for third quarter 2020 compared with 1.29% for second quarter 2020.
Salisbury endeavors to work constructively to resolve its non-performing loan issues with customers. Substantially all non-performing loans are collateralized with real estate and the repayment of such loans is largely dependent on the return of such loans to performing status or the liquidation of the underlying real estate collateral.
Deposits and Borrowings
Deposits of $1.1 billion at September 30, 2020 increased $9.5 million from June 30, 2020 and increased $129.0 million from September 30, 2019. Deposits at September 30, 2020 included brokered deposits, including CDARS one-way buys, of $18.0 million compared with $38.2 million at June 30, 2020 and $32.9 million at September 30, 2019. Average total deposits for third quarter 2020 were $1.1 billion compared with $1.0 billion at June 30, 2020 and $938.5 million at September 30, 2019. Average total deposits for third quarter 2020 included average brokered deposits of $24.9 million compared with $44.2 million for second quarter 2020 and $31.6 million for third quarter 2019.
FHLB advances of $43.9 million at September 30, 2020 decreased $11.2 million from June 30, 2020 and increased $6.1 million from September 30, 2019. Salisbury’s excess borrowing capacity at FHLBB was approximately $234 million at September 30, 2020.
Capital
Book value per common share increased $1.33 during the third quarter 2020 to $42.99 per share and increased $3.47 from the third quarter 2019. Tangible book value per common share increased $1.36 during third quarter 2020 to $37.87 and increased $3.63 from the third quarter 2019.
Shareholders’ equity increased $3.8 million in third quarter 2020 to $122.2 million at September 30, 2020 as net income of $4.4 million and the issuance of restricted stock awards of $0.2 million were partly offset by common stock dividends paid of $0.8 million.
The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At September 30, 2020, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 8.93%, 13.6%, and 12.3%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.
Dividends on Common Shares
The Board of Directors of Salisbury declared a $0.29 per common share quarterly cash dividend at its October 30, 2020 meeting. The dividend will be paid on November 27, 2020 to shareholders of record as of November 13, 2020.
Background
Salisbury Bancorp, Inc. is the parent company of Salisbury Bank and Trust Company, a Connecticut chartered commercial bank serving the communities of northwestern Connecticut and proximate communities in New York and Massachusetts, since 1848, through full service branches in Canaan, Lakeville, Salisbury and Sharon, Connecticut; Great Barrington, South Egremont and Sheffield, Massachusetts; and Dover Plains, Fishkill, Millerton, Newburgh, New Paltz, Poughkeepsie, and Red Oaks Mill, New York. The Bank offers a broad spectrum of consumer and business banking products and services as well as trust and wealth advisory services.
Forward-Looking Statements
This news release may contain statements relating to Salisbury’s and the Bank’s future results that are considered “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on the beliefs and expectations of management as well as the assumptions and estimates made by management using information currently available to management. Since these statements reflect the views of management concerning future events, these statements involve risks, uncertainties and assumptions, including among others: changes in market interest rates and general and regional economic conditions; changes in laws and regulations; changes in accounting principles; and the quality or composition of the loan and investment portfolios, technological changes and cybersecurity matters, and other factors that may be described in Salisbury’s quarterly reports on Form 10-Q and its annual report on Form 10-K, which are available at the Securities and Exchange Commission’s website (www.sec.gov ) and to which reference is hereby made. Forward-looking statements made by Salisbury in this news release speak only as of the date they are made. Events or other facts that could cause Salisbury’s actual results to differ may arise from time to time and Salisbury cannot predict all such events and factors. Salisbury undertakes no obligation to publicly update any forward-looking statement unless as may be required by law.
Investor presentation slides, which include a review of financial results and trends through the period ended September 30, 2020, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under Shareholder Relations/News & Market Information/Presentations simultaneously with this Release.
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data) September 30, 2020 December 31, 2019 ASSETS (unaudited) Cash and due from banks $ 6,828 $ 7,406 Interest bearing demand deposits with other banks 88,513 19,479 Total cash and cash equivalents 95,341 26,885 Interest bearing Time Deposits with Financial Institutions 750 750 Securities Available-for-sale at fair value 95,720 91,801 CRA mutual fund at fair value 916 882 Federal Home Loan Bank of Boston stock at cost 3,158 3,242 Loans held-for-sale 2,761 332 Loans receivable, net (allowance for loan losses: $13,001 and $8,895) 1,031,593 927,413 Other real estate owned - 314 Bank premises and equipment, net 18,727 17,385 Goodwill 13,815 13,815 Intangible assets (net of accumulated amortization: $5,132 and $4,884) 748 995 Accrued interest receivable 6,055 3,415 Cash surrender value of life insurance policies 17,572 20,580 Deferred taxes 2,252 1,249 Other assets 3,352 3,390 Total Assets $ 1,292,760 $ 1,112,448 LIABILITIES and SHAREHOLDERS' EQUITY Deposits Demand (non-interest bearing) $ 313,742 $ 237,852 Demand (interest bearing) 201,760 153,314 Money market 270,097 239,504 Savings and other 181,691 161,112 Certificates of deposit 127,851 127,724 Total deposits 1,095,141 919,506 Repurchase agreements 10,885 8,530 Federal Home Loan Bank of Boston advances 43,880 50,887 Subordinated debt 9,877 9,859 Note payable 218 246 Finance lease obligations 1,685 1,718 Accrued interest and other liabilities 8,834 8,047 Total Liabilities 1,170,520 998,793 Shareholders' Equity Common stock - $0.10 per share par value Authorized: 5,000,000 Issued: 2,843,292 and 2,825,912 Outstanding: 2,843,292 and 2,825,912 284 283 Unearned compensation - restricted stock awards (906) (795) Paid-in capital 45,171 44,490 Retained earnings 74,995 68,320 Accumulated other comprehensive income, net 2,696 1,357 Total Shareholders' Equity 122,240 113,655 Total Liabilities and Shareholders' Equity $ 1,292,760 $ 1,112,448
Salisbury Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three months ended Nine months ended Periods ended September 30, (in thousands except share data) 2020 2019 2020 2019 Interest and dividend income Interest and fees on loans $ 10,362 $ 10,045 $ 30,662 $ 29,859 Interest on debt securities Taxable 396 530 1,260 1,734 Tax exempt 157 166 513 355 Other interest and dividends 87 282 229 761 Total interest and dividend income 11,002 11,023 32,664 32,709 Interest expense Deposits 764 1,879 3,261 5,674 Repurchase agreements 6 9 16 16 Finance lease 35 43 106 135 Note payable 3 4 11 12 Subordinated debt 156 156 468 468 Federal Home Loan Bank of Boston advances 113 265 472 956 Total interest expense 1,077 2,356 4,334 7,261 Net interest and dividend income 9,925 8,667 28,330 25,448 Provision for loan losses 686 94 4,198 539 Net interest and dividend income after provision for loan losses 9,239 8,573 24,132 24,909 Non-interest income Trust and wealth advisory 1,068 1,023 3,129 2,973 Service charges and fees 711 1,003 2,214 2,935 Gains on sales of mortgage loans, net 707 42 1,020 50 Mortgage servicing, net 29 76 162 232 Gains on CRA mutual fund - 6 22 29 Gains (losses) on available-for-sale securities, net 34 (9) 216 263 BOLI income and gains 719 86 986 252 Other 18 29 97 97 Total non-interest income 3,286 2,256 7,846 6,831 Non-interest expense Salaries 3,114 3,042 8,375 8,994 Employee benefits 1,061 1,181 3,244 3,408 Premises and equipment 1,005 974 2,897 2,950 Data processing 569 534 1,666 1,620 Professional fees 635 572 2,020 1,690 OREO gains, losses and write-downs, net - 84 - 406 Collections and other real estate owned 108 119 212 328 FDIC insurance 123 (9) 331 294 Marketing and community support 126 141 419 448 Amortization of intangibles 78 93 247 297 Other 440 453 1,572 1,398 Total non-interest expense 7,259 7,184 20,983 21,833 Income before income taxes 5,266 3,645 10,995 9,907 Income tax provision 910 657 1,858 1,781 Net income $ 4,356 $ 2,988 $ 9,137 $ 8,126 Net income available to common stock $ 4,288 $ 2,940 $ 9,006 $ 8,016 Basic earnings per common share $ 1.53 $ 1.06 $ 3.22 $ 2.88 Diluted earnings per common share $ 1.53 $ 1.05 $ 3.21 $ 2.87 Common dividends per share $ 0.29 $ 0.28 $ 0.87 $ 0.84
Salisbury Bancorp, Inc. and Subsidiary
SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)
At or for the quarters ended (in thousands, except per share amounts and ratios) Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Total assets $1,292,760 $1,287,137 $1,145,751 $1,112,448 $1,144,240 Loans receivable, net 1,031,593 1,039,524 949,142 927,413 915,083 Total securities 99,794 93,717 94,966 95,925 98,270 Deposits 1,095,141 1,085,599 965,620 919,506 966,178 FHLBB advances 43,880 55,118 40,932 50,887 37,828 Shareholders’ equity 122,240 118,444 116,143 113,655 111,580 Wealth assets under administration 748,188 704,052 639,457 777,503 752,467 Discretionary wealth assets under administration 514,988 480,456 425,359 498,737 475,482 Non-discretionary wealth assets under administration 233,200 223,596 214,098 278,766 276,985 Non-performing loans 4,681 4,815 3,188 3,621 5,370 Non-performing assets 4,681 4,815 3,188 3,935 5,687 Accruing loans past due 30-89 days 1,638 2,656 6,109 2,077 1,784 Net interest and dividend income 9,925 9,617 8,787 8,665 8,667 Net interest and dividend income, tax equivalent( 1) 10,101 9,786 8,954 8,839 8,830 Provision for loan losses 686 1,806 1,706 417 94 Non-interest income 3,286 2,316 2,245 2,419 2,256 Non-interest expense 7,259 6,789 6,936 7,080 7,184 Income before income taxes 5,266 3,338 2,390 3,587 3,645 Income tax provision 910 604 343 578 657 Net income 4,356 2,734 2,047 3,009 2,988 Net income allocated to common shareholders 4,288 2,691 2,013 2,960 2,940 Per share data Basic earnings per common share $1.53 $0.96 $0.72 $1.06 $1.06 Diluted earnings per common share 1.53 0.96 0.72 1.06 1.05 Dividends per common share 0.29 0.29 0.29 0.28 0.28 Book value per common share 42.99 41.66 41.05 40.22 39.52 Tangible book value per common share - Non-GAAP ( 2) 37.87 36.51 35.85 34.98 34.24 Common shares outstanding at end of period (in thousands) 2,843 2,843 2,829 2,826 2,823 Weighted average common shares outstanding, to calculate basic earnings per share (in thousands) 2,799 2,796 2,788 2,781 2,783 Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands) 2,807 2,803 2,797 2,794 2,795 Profitability ratios Net interest margin (tax equivalent) (1) 3.29% 3.31% 3.35% 3.34% 3.29% Efficiency ratio (3) 56.33 56.23 61.36 61.81 62.90 Effective income tax rate 17.28 18.11 14.35 16.11 18.02 Return on average assets 1.34 0.89 0.73 1.07 1.05 Return on average common shareholders’ equity 14.14 9.36 7.07 10.56 10.73 Credit quality ratios Non-performing loans to loans receivable, gross 0.45 0.46 0.33 0.39 0.58 Accruing loans past due 30-89 days to loans receivable, gross 0.16 0.25 0.64 0.22 0.19 Allowance for loan losses to loans receivable, gross 1.24 1.18 1.11 0.95 0.96 Allowance for loan losses to non-performing loans 277.8 256.9 333.0 245.64 164.73 Non-performing assets to total assets 0.36 0.37 0.28 0.35 0.50 Capital ratios Common shareholders' equity to assets 9.46% 9.20% 10.14% 10.22% 9.75% Tangible common shareholders' equity to tangible assets - Non-GAAP( 2) 8.42 8.16 8.97 9.01 8.56 Tier 1 leverage capital (4) 8.93 8.95 9.65 9.60 9.27 Total risk-based capital (4) 13.60 13.15 12.97 12.84 12.58 Common equity tier 1 capital (4) 12.35 11.90 11.79 11.83 11.57
(1) Adjusted to reflect the U.S. federal statutory benefit on income derived from tax-exempt securities and loans. (2) Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.(3) Calculated as follows: Noninterest expense before OREO expense, amortization of intangibles, and goodwill impairments as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains from securities transactions and litigation expenses. (4) Represents the capital ratios of the Bank.
Salisbury Bancorp, Inc. and Subsidiary SUPPLEMENTAL INFORMATION – Non-GAAP Financial Measures (unaudited)
At or for the quarters ended (in thousands, except per share amounts and ratios) Q3 2020 Q2 2020 Q1 2020 Q4 2019 Q3 2019 Common Shareholders' Equity $ 122,240 $ 118,444 $ 116,143 $ 113,655 $ 111,580 Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 ) Less: Intangible assets (748 ) (825 ) (908 ) (995 ) (1,086 ) Tangible Common Shareholders' Equity $ 107,677 $ 103,804 $ 101,420 $ 98,845 $ 96,679 Total Assets $ 1,292,760 $ 1,287,137 $ 1,145,751 $ 1,112,448 $ 1,144,240 Less: Goodwill (13,815 ) (13,815 ) (13,815 ) (13,815 ) (13,815 ) Less: Intangible assets (748 ) (825 ) (908 ) (995 ) (1,086 ) Tangible Total Assets $ 1,278,197 $ 1,272,497 $ 1,131,028 $ 1,097,638 $ 1,129,339 Common Shares outstanding 2,843 2,843 2,829 2,826 2,823 Book value per Common Share – GAAP $ 42.99 $ 41.66 $ 41.05 $ 40.22 $ 39.52 Tangible book value per Common Share - Non-GAAP 37.87 36.51 35.85 34.98 34.24 Tangible common shareholders’ equity to tangible total assets - Non-GAAP 8.42 % 8.16 % 8.97 % 9.01 % 8.56 % Consolidated: Non-interest expense $ 7,259 $ 6,789 $ 6,936 $ 7,080 $ 7,184 Less: Amortization of core deposit intangibles (78 ) (83 ) (87 ) (91 ) (93 ) Less: Foreclosed property expense including OREO gains, losses and Write downs 2 (7 ) 13 (27 ) (115 ) Adjusted non-interest expense $ 7,183 $ 6,699 $ 6,862 $ 6,962 $ 6,976 Net interest and dividend income, tax equivalent $ 10,101 $ 9,786 $ 8,955 $ 8,839 $ 8,831 Non-interest income 3,286 2,316 2,245 2,419 2,256 (Gains) losses on securities (34 ) (188 ) (15 ) 4 3 BOLI proceeds (601 ) - - - - Adjusted revenue $ 12,752 $ 11,914 $ 11,185 $ 11,262 $ 11,090 Efficiency Ratio – Non-GAAP 1 56.33 % 56.23 % 61.36 % 61.81 % 62.90 %
1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q3 2020: 54.76%; Q2 2020: 54.29%; Q1 2020: 59.83%; Q4 2019: 60.19%; Q3 2019: 61.13%. If Q3 2020 results were normalized to exclude the impact of the COVID-19 pandemic, non-interest expense would increase by $48 thousand for deferred compensation costs and revenue would be adjusted to include waived deposit fees of $289 thousand and exclude PPP loan interest and fee income of $251 thousand and $400 thousand, respectively. The resulting normalized efficiency ratio for Q3 2020 would have been 58.37% or 56.94%, excluding trust & wealth advisory.
Salisbury Bancorp, Inc. and Subsidiary SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)
At or for the quarters ended Average Balance Income / Expense Average Yield / Rate (dollars in thousands) Q3 2020 Q2 2020 Q3 2019 Q3 2020 Q2 2020 Q3 2019 Q3 2020 Q2 2020 Q3 2019 Loans (a)(d) $ 1,049,313 $ 1,038,551 $ 920,946 $ 10,485 $ 10,428 $ 10,158 3.97% 4.02% 4.41% Securities (c)(d) 89,220 86,987 96,317 606 634 747 2.72 2.92 3.10 FHLBB stock 3,440 3,580 3,024 34 39 46 3.96 4.36 6.08 Short term funds (b) 78,306 49,105 49,057 53 12 236 0.27 0.10 1.92 Total earning assets 1,220,279 1,178,223 1,069,344 11,178 11,113 11,187 3.64 3.77 4.18 Other assets 64,943 60,288 57,196 Total assets $ 1,285,222 $ 1,238,511 $ 1,126,540 Interest-bearing demand deposits $ 195,253 $ 172,811 $ 156,803 110 103 160 0.22 0.24 0.41 Money market accounts 258,257 237,667 242,310 195 239 700 0.30 0.40 1.16 Savings and other 176,963 171,436 165,297 69 102 323 0.15 0.24 0.78 Certificates of deposit 135,238 157,288 152,475 390 544 697 1.15 1.38 1.83 Total interest-bearing deposits 765,711 739,202 716,885 764 988 1,880 0.40 0.53 1.05 Repurchase agreements 12,218 4,773 7,266 6 4 9 0.20 0.34 0.50 Capital lease 2,928 2,987 4,356 35 35 42 4.80 4.69 3.86 Note payable 221 231 258 3 4 4 6.08 6.93 6.20 Subordinated debt (net of issuance costs) 9,872 9,866 9,849 156 156 156 6.32 6.32 6.34 FHLBB advances 44,522 55,374 31,983 113 140 266 0.99 1.01 3.33 Total interest-bearing liabilities 835,472 812,433 770,597 1,077 1,327 2,357 0.51 0.65 1.22 Demand deposits 321,392 302,965 238,689 Other liabilities 7,592 6,029 6,669 Shareholders’ equity 120,766 117,084 110,585 Total liabilities & shareholders’ equity $ 1,285,222 $ 1,238,511 $ 1,126,540 Net interest income $ 10,101 $ 9,786 $ 8,830 Spread on interest-bearing funds 3.13 3.12 2.96 Net interest margin (e) 3.29 3.31 3.29
(a) Includes non-accrual loans. (b) Includes interest-bearing deposits in other banks and federal funds sold. (c) Average balances of securities are based on historical cost. (d) Includes tax exempt income benefit of $1 76 ,000, $1 70 ,000 and $164,000, respectively, for Q3 2020 , Q2 2020 and Q3 2019 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 2020 and 2019. (e) Net interest income divided by average interest-earning assets.
Salisbury Bancorp, Inc. and Subsidiary SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)
Nine months ended September 30, Average Balance Income / Expense Average Yield / Rate (dollars in thousands) 2020 2019 2020 2019 2020 2019 Loans (a)(d) $ 1,012,070 $ 920,925 $ 31,010 $ 30,179 4.07% 4.36% Securities (c)(d) 88,603 97,337 1,939 2,201 2.92 3.02 FHLBB stock 3,354 3,487 106 183 4.24 7.03 Short term funds (b) 50,312 38,682 123 577 0.33 2.00 Total earning assets 1,154,339 1,060,431 33,178 33,140 3.83 4.18 Other assets 63,265 56,769 Total assets $ 1,217,604 $ 1,117,200 Interest-bearing demand deposits $ 174,299 $ 154,885 331 458 0.25 0.40 Money market accounts 245,581 217,290 994 1,732 0.54 1.07 Savings and other 170,880 177,873 405 1,229 0.32 0.92 Certificates of deposit 149,080 164,979 1,531 2,255 1.37 1.83 Total interest-bearing deposits 739,840 715,027 3,261 5,674 0.59 1.06 Repurchase agreements 7,572 4,463 16 16 0.29 0.48 Capital lease 2,988 4,314 106 135 4.74 4.16 Note payable 231 266 11 12 6.08 6.06 Subordinated debt (net of issuance costs) 9,867 9,844 468 468 6.32 6.34 FHLBB advances 45,667 42,938 472 957 1.36 2.94 Total interest-bearing liabilities 806,165 776,852 4,334 7,262 0.72 1.25 Demand deposits 286,608 226,182 Other liabilities 6,847 6,560 Shareholders’ equity 117,984 107,606 Total liabilities & shareholders’ equity $ 1,217,604 $ 1,117,200 Net interest income $ 28,844 $ 25,878 Spread on interest-bearing funds 3.11 2.93 Net interest margin (e) 3.32 3.24
(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 $ 514 ,000 and $432,000, respectively for 2020 and 2019 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 2020 and 2019. (e) Net interest income divided by average interest-earning assets.
Source: Salisbury Bancorp, Inc.
Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer 860-435-9801 or rcantele@salisburybank.com