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Salisbury Bancorp, Inc. Increases Dividend and Reports Results for Second Quarter 2021

  • Second Quarter 2021 Net Income of $1.53 per Basic Common Share
  • Quarterly Cash Dividend Increases 3.3% to $0.31 Per Common Share for Third Quarter 2021
  • Quarterly Results Reflected a $1.1 Million Net Release of Credit Reserves
  • Non-performing Assets were 0.39% of Total Assets Compared with 0.44% at December 31, 2020
  • Common Equity Tier 1 and Total Risk-Based Capital Ratios of 13.42% and 14.67%, Respectively

LAKEVILLE, Conn., July 21, 2021 (GLOBE NEWSWIRE) — Salisbury Bancorp, Inc. (“Salisbury”), (NASDAQ Capital Market: “SAL”), the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its second quarter ended June 30, 2021.

Net income available to common shareholders was $4.3 million, or $1.53 per basic common share, for Salisbury’s second quarter ended June 30, 2021 (second quarter 2021), compared with $4.5 million, or $1.59 per basic common share, for the first quarter ended March 31, 2021 (first quarter 2021), and $2.7 million, or $0.96 per basic common share, for the second quarter ended June 30, 2020 (second quarter 2020). Net income for second quarter 2021 included a pre-tax release of credit reserves of approximately $1.4 million, or $0.38 per basic common share, due to improved business conditions in Salisbury’s market areas. This reserve release was partially offset by a pre-tax increase in credit reserves of $0.3 million due to loan growth during the quarter.

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “Thanks to the continued dedication and commitment of our employees, we reported solid results for the second quarter. The business environment continues to improve across our markets as COVID-19 restrictions have been lifted, and we are cautiously optimistic that the economic rebound will continue. We have continued to support our customers and local communities this year by processing 472 loan applications for $48 million under the Small Business Administration’s (“SBA”) Paycheck Protection Program (“PPP”), which ended in May. As we move into the second half of the year, residential loan demand remains healthy, commercial activity continues to build, and credit quality is strong. Salisbury Bank is well-positioned to meet the needs of our customers, and our employees remain committed to providing outstanding customer service.”

Net Interest and Dividend Income

Tax equivalent net interest income of $9.7 million for the second quarter 2021 decreased $0.8 million, or 7.4%, versus first quarter 2021, and declined slightly compared with second quarter 2020. Tax equivalent interest income of $10.8 million for second quarter 2021 decreased $470 thousand, or 4.2%, versus first quarter 2021 and decreased $317 thousand, or 2.9%, from second quarter 2020. The reduction in interest income from first quarter 2021 primarily reflected lower PPP fee income.

The cost of interest-bearing liabilities of $1.1 million for second quarter 2021 increased $311 thousand, or 41.7%, compared to first quarter 2021 and declined $270 thousand, or 20.4% from second quarter 2020. Interest expense for second quarter 2021 included approximately $180 thousand for interest and the amortization of issuance costs on subordinated debt, which Salisbury issued in 2015 and fully redeemed on May 28, 2021. Second quarter 2021 also included interest expense and issuance costs of $233 thousand on subordinated debt that Salisbury issued in March 2021.

Average earning assets of $1.4 billion for second quarter 2021 increased $115 million, or 9.1% from first quarter 2021, and increased $194.9 million, or 16.5%, versus second quarter 2020. The growth in average earning assets from comparative periods primarily reflected higher average short-term fund balances due to deposit growth and higher average balances in the available-for-sale portfolio. Average earning assets for second quarter 2021 included average PPP loan balances of $80.4 million, net of deferred fees, compared with $92.8 million in first quarter 2021 and $57.0 million in second quarter 2020. Average total interest bearing liabilities of $1.0 billion for second quarter 2021 increased $91 million, or 10.5% from first quarter 2021 and increased $146.5 million, or 18.0%, versus second quarter 2020 primarily due to higher average deposit balances.

The tax equivalent net interest margin for second quarter 2021 was 2.82% compared with 3.34% for first quarter 2021 and 3.31% for second quarter 2020. Excluding the impact of PPP loans, the tax equivalent net interest margin for second quarter 2021 was 2.76% compared with 3.16% for first quarter 2021 and 3.28% for second quarter 2020. The decline in the tax equivalent net interest margin versus comparative quarters primarily reflected a significant increase in average deposit balances during second quarter 2021, which were invested primarily in short-term investments including cash and cash equivalents. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 on this release for additional details.

Non-Interest Income

Non-interest income of $3.0 million for second quarter 2021 increased $130 thousand versus first quarter 2021 and increased $655 thousand versus second quarter 2020.

Trust and Wealth Advisory fees of $1.3 million for second quarter 2021 increased $108 thousand from first quarter 2021 and increased $223 thousand versus second quarter 2020. The increase from first quarter 2021 primarily reflected higher asset-based fees and seasonal tax preparation fees. The increase from second quarter 2020 primarily reflected higher asset-based fees. Assets under administration were $970.3 million at June 30, 2021 compared with $944.3 million at December 31, 2020 and $704.1 million at June 30, 2020. Discretionary assets under administration of $614.3 million in second quarter 2021 increased from $555.0 million in fourth quarter 2020 and $480.5 million in second quarter 2020 primarily due to higher market valuations. Non-discretionary assets under administration of $356.0 million in second quarter 2021 decreased from $389.4 million in fourth quarter 2020 and increased from $223.6 million in second quarter 2020. The decline from fourth quarter 2020 primarily reflected the lower valuation of certain partnership assets under administration whereas the increase from second quarter 2020 reflected the addition of partnership assets under administration for an existing client relationship. The trust and wealth business records only a nominal annual fee on this non-discretionary relationship.

Service charges and fees of $1.4 million for second quarter 2021 increased $424 thousand versus first quarter 2021 and increased $776 thousand versus second quarter 2020. The increase from comparative quarters was primarily driven by non-recurring loan prepayment fees of $286 thousand as well as higher interchange and deposit fees. Salisbury waived approximately $240 thousand in deposit fees in second quarter 2020 due to the COVID-19 pandemic. Income from mortgage sales and servicing decreased $412 thousand versus first quarter 2021 and decreased $123 thousand versus second quarter 2020 on lower sales volume of residential mortgage loans to the FHLB Boston.

Non-interest income for the second quarter 2021 included BOLI income of $125 thousand consistent with first quarter 2021 and slightly below second quarter 2020.

Non-Interest Expense

Non-interest expense of $8.1 million for second quarter 2021 increased $827 thousand versus first quarter 2021 and increased $1.3 million versus second quarter 2020. Compensation expense of $4.8 million for second quarter 2021 increased $546 thousand from first quarter 2021 and increased $1.3 million versus second quarter 2020. The increase from the comparative quarters primarily reflected higher salaries and benefits, production and incentive accruals as well as lower deferred loan origination expenses. Deferred loan origination expenses in second quarter 2021 declined $179 thousand and $464 thousand from first quarter 2021 and second quarter 2020, respectively, primarily due to the processing of PPP loans in the comparative quarters.

Excluding compensation, other non-interest expenses for second quarter 2021 increased $281 thousand from first quarter 2021 and decreased $14 thousand from second quarter 2020. The increase from first quarter 2021 primarily reflected higher premises and equipment, data processing and marketing expenses. The decrease from second quarter 2020 primarily reflected lower professional fees and other expenses partially offset by higher marketing and data processing costs. Marketing expenses for second quarter 2021 included costs associated with an ongoing review of Salisbury’s web site and branding initiatives.

The effective income tax rates for second quarter 2021, first quarter 2021 and second quarter 2020 were 21.2%, 21.6% and 18.1%, respectively. The higher tax rate in first and second quarter 2021 primarily 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 $1.0 billion at June 30, 2021 decreased $10.0 million from first quarter 2021 and $7.7 million from second quarter 2020 primarily due to the forgiveness of PPP loans by the SBA. PPP loan balances of $61.9 million at June 30, 2021 declined $35.1 million and $37.0 million from March 31, 2021 and June 30, 2020, respectively. The increase in residential real estate balances during second quarter 2021 reflected continued strong origination volume and lower sales to FHLB Boston. Approximately $7.1 million of residential loans were sold to FHLB Boston in second quarter 2021 compared with $21.3 million during first quarter 2021 and $14.7 million in second quarter 2020. The ratio of gross loans to deposits for second quarter 2021 was 84.1% compared with 87.1% for first quarter 2021 and 97.0% for second quarter 2020. Balances by loan type for the comparative periods were as follows:

Loan Type Q2 2021   Q1 2021   Q2 2020
Residential Real Estate $ 428,137     $ 418,991     $ 437,198  
Commercial Real Estate   354,629       341,142       323,634  
Commercial & Industrial ex PPP Loans   156,849       152,388       148,510  
PPP Loans   61,908       96,969       98,930  
Commercial & Industrial – Total   218,757       249,357       247,440  
Farm Land   3,529       3,606       3,324  
Vacant Land   13,006       13,228       13,879  
Municipal   18,341       21,495       20,707  
Consumer   9,543       8,617       7,886  
Deferred (Fees)/Costs   (889 )     (1,365 )     (1,339 )
Gross Loans Receivable $ 1,045,053     $ 1,055,071     $ 1,052,729  

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 June 30, 2021, loan payments were deferred on 10 commercial loans ($20 million loan balance) compared with 14 commercial loan deferrals ($27 million loan balance) as of March 31, 2021. There were no outstanding residential and consumer loan deferrals as of June 30, 2021.

Non-performing assets were $5.5 million, or 0.39% of total assets at June 30, 2021, compared with $5.6 million, or 0.44% of total assets at December 31, 2020, and $4.8 million, or 0.37% of total assets, at June 30, 2020.   

The amount of total impaired and potential problem loans was $47.1 million or 4.50% of gross loans receivable at June 30, 2021 compared with $30.1 million, or 2.90% of gross loans receivable at December 31, 2020 and $26.9 million, or 2.55% of gross loans receivable at June 30, 2020. The increase from year-end 2020 primarily reflected the reduction of internal risk ratings on loans to certain borrowers in the hospitality and entertainment and recreation industries due to COVID-19.

Accruing loans receivable 30-to-89 days past due decreased to $1.4 million, or 0.13% of gross loans receivable at June 30, 2021 compared with $6.9 million, or 0.66% of gross loans receivable, at December 31, 2020 and $2.7 million, or 0.25% of gross loans receivable, at June 30, 2020.

The allowance for loan losses for second quarter 2021 was $12.7 million compared with $13.9 million for first quarter 2021 and $13.8 million for fourth quarter 2020.The second quarter 2021 included a net release of credit reserves of approximately $1.1 million compared with charges of $158 thousand in first quarter 2021 and $1.8 million in the second quarter 2020, respectively. The net release of reserves in second quarter 2021 reflected management’s current assessment of the impact of the COVID-19 pandemic on the Bank’s loan portfolio. Net loan charge-offs were $103 thousand for the second quarter 2021, $26 thousand for first quarter 2021 and $87 thousand for the fourth quarter 2020. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.29% for the second quarter 2021, versus 1.45% for first quarter 2021 and 1.44% for fourth quarter 2020. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 229% for the second quarter 2021, versus 243% for first quarter 2021 and 244% for fourth 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 were $1.2 billion at June 30, 2021 compared with $1.1 billion at December 31, 2020 and $1.1 billion at June 30, 2020. Deposits at June 30, 2021 included brokered deposits, including CDARS one-way buys, of $7.9 compared with $18.0 million at December 31, 2020 and $38.2 million at June 30, 2020. Average total deposits for the second quarter 2021 were $1.2 billion compared with $1.2 billion for the first quarter 2020 and $1.0 billion for the second quarter 2020. Average total deposits for the second quarter 2021 included average brokered deposits of $15.4 million compared with $18.0 million for first quarter 2021 and $44.2 million for second quarter 2020.

Federal Home Loan Bank of Boston (FHLBB) advances were $10.2 million at June 30, 2021 compared with $12.6 million and $55.1 million at December 31, 2020 and June 30, 2020, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $248 million at June 30, 2021.

Capital

Shareholders’ equity increased $4.5 million in the second quarter to $131.7 million at June 30, 2021 as net income of $4.4 million, unrealized gains in the available-for-sale securities portfolio of $0.7 million and restricted stock activity of $0.3 million were partly offset by common stock dividends paid of $0.9 million. Book value per common share increased $1.30 during the second quarter 2021 to $46.02 per share and increased $4.36 from the second quarter 2020. Tangible book value per common share increased $1.36 during second quarter 2021 to $41.01 and increased $4.50 from second quarter 2020.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At June 30, 2021, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.33%, 14.67%, and 13.42%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively.

On May 28, 2021 Salisbury redeemed in full the $10 million of subordinated debt that was issued in 2015. During second quarter 2021, Salisbury did not repurchase any of its outstanding common stock pursuant to its stock repurchase plan adopted in March 2021, which authorizes Salisbury to repurchase Salisbury’s common stock in amounts up to an aggregate of five percent (5%) of the outstanding shares of Salisbury’s common stock from time to time over a period of twelve (12) months.

Dividend on Common Shares

The Board of Directors of Salisbury approved a $0.01 increase in the quarterly dividend at its July 21, 2021 meeting. The quarterly cash dividend of $0.31 per common share will be paid on August 27, 2021 to shareholders of record as of August 13, 2021.

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 June 30, 2021, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under Shareholder Relations/News & Market Information/Presentations.

Salisbury Bancorp, Inc. and Subsidiary 
CONSOLIDATED BALANCE SHEETS

(in thousands, except share data) June 30, 2021 
(unaudited)
December 31, 2020
ASSETS    
Cash and due from banks $ 8,853   $ 10,599  
Interest bearing demand deposits with other banks   170,973     82,563  
Total cash and cash equivalents   179,826     93,162  
Interest bearing Time Deposits with Financial Institutions   750     750  
Securities    
Available-for-sale at fair value   150,530     98,411  
CRA mutual fund at fair value   909     917  
Federal Home Loan Bank of Boston stock at cost   1,504     1,713  
Loans held-for-sale   415     2,735  
Loans receivable, net (allowance for loan losses: $12,708 and $13,754)   1,032,345     1,027,738  
Bank premises and equipment, net   21,375     20,355  
Goodwill   13,815     13,815  
Intangible assets (net of accumulated amortization: $5,343 and $5,207)   538     674  
Accrued interest receivable   6,357     6,373  
Cash surrender value of life insurance policies   21,433     21,182  
Deferred taxes   2,390     2,412  
Other assets   4,479     3,423  
Total Assets $ 1,436,666   $ 1,293,660  
LIABILITIES and SHAREHOLDERS’ EQUITY    
Deposits    
Demand (non-interest bearing) $ 359,517   $ 310,769  
Demand (interest bearing)   224,791     218,869  
Money market   315,518     278,146  
Savings and other   206,887     189,776  
Certificates of deposit   136,656     131,514  
Total deposits   1,243,369     1,129,074  
Repurchase agreements   17,492     7,116  
Federal Home Loan Bank of Boston advances   10,152     12,639  
Subordinated debt   24,445     9,883  
Note payable   189     208  
Finance lease obligations   1,646     1,673  
Accrued interest and other liabilities   7,664     8,315  
Total Liabilities   1,304,957     1,168,908  
Shareholders’ Equity    
Common stock – $0.10 per share par value    
Authorized: 5,000,000;    
Issued: 2,861,697 and 2,843,292    
Outstanding: 2,861,697 and 2,843,292   286     284  
Unearned compensation – restricted stock awards   (1,224 )   (774 )
Paid-in capital   46,217     45,264  
Retained earnings   84,174     76,974  
Accumulated other comprehensive income, net   2,256     3,004  
Total Shareholders’ Equity   131,709     124,752  
Total Liabilities and Shareholders’ Equity $ 1,436,666   $ 1,293,660  

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

  Three months ended   Six months ended
Periods ended June 30, (in thousands, except per share amounts)  2021   2020    2021   2020
Interest and dividend income                
Interest and fees on loans $ 9,901   $ 10,313     $ 20,377   $ 20,300  
Interest on debt securities                    
        Taxable   488     409       912     864  
        Tax exempt   172     171       334     356  
Other interest and dividends   61     51       95     142  
        Total interest and dividend income   10,622     10,944       21,718     21,662  
Interest expense                    
Deposits   567     988       1,121     2,497  
Repurchase agreements   4     4       8     10  
Finance lease   36     35       69     71  
Note payable   3     4       6     7  
Subordinated debt   415     156       534     312  
Federal Home Loan Bank of Boston advances   32     140       65     359  
        Total interest expense   1,057     1,327       1,803     3,256  
Net interest and dividend income   9,565     9,617       19,915     18,406  
(Release) provision for loan losses   (1,075 )   1,806       (917 )   3,512  
        Net interest and dividend income after (release) provision for loan losses   10,640     7,811       20,832     14,894  
Non-interest income                    
Trust and wealth advisory   1,254     1,031       2,399     2,061  
Service charges and fees   1,374     598       2,325     1,503  
Mortgage banking activities, net   196     318       804     446  
Gains (losses) on CRA mutual fund   3     8       (14 )   22  
(Losses) gains on securities, net   (9 )   181       (9 )   182  
Bank-owned life insurance (“BOLI”) income   125     133       251     266  
Other   28     47       57     80  
        Total non-interest income   2,971     2,316       5,813     4,560  
Non-interest expense                    
Salaries   3,403     2,411       6,304     5,261  
Employee benefits   1,356     1,037       2,668     2,183  
Premises and equipment   1,019     981       1,973     1,891  
Data processing   628     557       1,193     1,098  
Professional fees   644     758       1,355     1,385  
Collections, OREO, and loan related   113     79       197     104  
FDIC insurance   80     103       225     208  
Marketing and community support   214     169       296     293  
Amortization of intangibles   65     83       136     170  
Other   564     611                        1,000     1,133  
        Total non-interest expense   8,086     6,789       15,347     13,726  
Income before income taxes   5,525     3,338       11,298     5,728  
Income tax provision   1,172     604       2,419     947  
Net income $ 4,353   $ 2,734     $ 8,879   $ 4,781  
Net income available to common shareholders $ 4,287   $ 2,691     $ 8,749   $ 4,704  
         
Basic earnings per common share $ 1.53   $ 0.96     $ 3.12   $ 1.68  
Diluted earnings per common share $ 1.52   $ 0.96     $                        3.10   $ 1.68  
Common dividends per share $ 0.30   $ 0.29     $ 0.59   $ 0.58  

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

At or for the quarters ended          
(in thousands, except per share amounts and ratios) Q2 2021 Q1 2021 Q4 2020 Q3 2020 Q2 2020
Total assets $ 1,436,666   $ 1,403,129   $ 1,293,660   $ 1,292,760   $ 1,287,137  
Loans receivable, net   1,032,345     1,041,185     1,027,738     1,031,593     1,039,524  
Total securities   152,943     129,960     101,041     99,794     93,717  
Deposits   1,243,369     1,211,171     1,129,074     1,095,141     1,085,599  
FHLBB advances   10,152     11,396     12,639     43,880     55,118  
Shareholders’ equity   131,709     127,242     124,752     122,240     118,444  
Wealth assets under administration   970,306     902,141     944,349     748,188     704,052  
Discretionary wealth assets under administration   614,312     578,199     554,997     514,988     480,456  
Non-discretionary wealth assets under administration   355,994     323,942     389,352     233,200     223,596  
Non-performing loans   5,539     5,706     5,648     4,681     4,815  
Non-performing assets   5,539     5,706     5,648     4,681     4,815  
Accruing loans past due 30-89 days   1,400     2,374     6,850     1,638     2,656  
Net interest and dividend income   9,565     10,350     9,817     9,925     9,617  
Net interest and dividend income, tax equivalent(1)   9,739     10,520     9,993     10,101     9,786  
Provision (release) expense for loan losses   (1,075 )   158     840     686     1,806  
Non-interest income   2,971     2,841     2,476     3,286     2,316  
Non-interest expense   8,086     7,259     8,054     7,259     6,789  
Income before income taxes   5,525     5,774     3,399     5,266     3,338  
Income tax provision   1,172     1,248     596     910     604  
Net income   4,353     4,526     2,803     4,356     2,734  
Net income allocated to common shareholders   4,287     4,462     2,764     4,288     2,691  
           
Per share data          
Basic earnings per common share $ 1.53   $ 1.59   $ 0.99   $ 1.53   $ 0.96  
Diluted earnings per common share   1.52     1.59     0.98     1.53     0.96  
Dividends per common share   0.30     0.29     0.29     0.29     0.29  
Book value per common share   46.02     44.72     43.88     42.99     41.66  
Tangible book value per common share – Non-GAAP ⁽2   41.01     39.65     38.78     37.87     36.51  
Common shares outstanding at end of period (in thousands)   2,862     2,845     2,843     2,843     2,843  
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands)   2,810     2,804     2,803     2,799     2,796  
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands)   2,829     2,815     2,811     2,807     2,803  
           
Profitability ratios          
Net interest margin (tax equivalent) (1)   2.82 %   3.34 %   3.17 %   3.29 %   3.31 %
Efficiency ratio (3)   63.07     53.75     63.88     56.33     56.23  
Effective income tax rate   21.21     21.61     17.52     17.28     18.11  
Return on average assets   1.21     1.38     0.85     1.34     0.89  
Return on average common shareholders’ equity   13.51     14.53     8.97     14.31     9.36  
           
Credit quality ratios          
Non-performing loans to loans receivable, gross   0.53 %   0.54 %   0.54 %   0.45 %   0.46 %
Accruing loans past due 30-89 days to loans receivable, gross   0.13     0.23     0.66     0.16     0.25  
Allowance for loan losses to loans receivable, gross   1.22     1.32     1.32     1.24     1.18  
Allowance for loan losses to non-performing loans   229.4     243.4     243.5     277.8     256.9  
Non-performing assets to total assets   0.39     0.41     0.44     0.36     0.37  
           
Capital ratios          
Common shareholders’ equity to assets   9.17 %   9.07 %   9.64 %   9.46 %   9.20 %
Tangible common shareholders’ equity to tangible assets – Non-GAAP(2)   8.25     8.12     8.62     8.42     8.16  
Tier 1 leverage capital (4)   9.33     9.83     8.90     8.93     8.95  
Total risk-based capital (4)   14.67     14.58     13.57     13.60     13.15  
Common equity tier 1 capital (4)   13.42     13.33     12.31     12.35     11.90  

(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.
(4Represents the capital ratios of the Bank.

Salisbury Bancorp, Inc. and Subsidiary
SUPPLEMENTAL INFORMATION – Non-GAAP Financial Measures (unaudited)

At or for the quarters ended          
(in thousands, except per share amounts and ratios) Q2 2021   Q1 2021   Q4 2020   Q3 2020   Q2 2020  
Common Shareholders’ Equity $ 131,709   $ 127,242   $ 124,752   $ 122,240   $ 118,444  
Less: Goodwill   (13,815 )   (13,815 )   (13,815 )   (13,815 )   (13,815 )
Less: Intangible assets   (538 )   (603 )   (674 )   (748 )   (825 )
Tangible Common Shareholders’ Equity $ 117,356   $ 112,824   $ 110,263   $ 107,677   $ 103,804  
Total Assets $ 1,436,666   $ 1,403,129   $ 1,293,660   $ 1,292,760   $ 1,287,137  
Less: Goodwill   (13,815 )   (13,815 )   (13,815 )   (13,815 )   (13,815 )
Less: Intangible assets   (538 )   (603 )   (674 )   (748 )   (825 )
Tangible Total Assets $ 1,422,313   $ 1,388,711   $ 1,279,171   $ 1,278,197   $ 1,272,497  
Common Shares outstanding   2,862     2,845     2,843     2,843     2,843  
           
Book value per Common Share – GAAP $ 46.02   $ 44.72   $ 43.88   $ 42.99   $ 41.66  
Tangible book value per Common Share – Non-GAAP   41.01     39.65     38.78     37.87     36.51  
Tangible common shareholders’ equity to tangible total assets – Non-GAAP   8.25 %   8.12 %   8.62 %   8.42 %   8.16 %
Consolidated:          
Non-interest expense $ 8,086   $ 7,259   $ 8,054   $ 7,259   $ 6,789  
Less: Amortization of core deposit intangibles   (65 )   (71 )   (74 )   (78 )   (83 )
Less: Foreclosed property expense including OREO gains, losses and Write downs               2     (7 )
Adjusted non-interest expense $ 8,021   $ 7,188   $ 7,980   $ 7,183   $ 6,699  
Net interest and dividend income, tax equivalent $ 9,739   $ 10,520   $ 9,993   $ 10,101   $ 9,786  
Non-interest income   2,971     2,841     2,476     3,286     2,316  
Losses (gains) on securities   6     16     24     (34 )   (189 )
BOLI proceeds               (601 )    
Adjusted revenue $ 12,716   $ 13,377   $ 12,493   $ 12,752   $ 11,914  
Efficiency Ratio – Non-GAAP 1   63.07 %   53.75 %   63.88 %   56.33 %   56.23 %
             

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q2 2021: 61.59%; Q1 2021: 51.97%; Q4 2020: 62.62%; Q3 2020: 54.76%; Q2 2020: 54.29%.

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

At or for the three months ended Average Balance Income / Expense Average Yield / Rate
(dollars in thousands) Q2 2021 Q1 2021 Q2 2020 Q2 2021 Q1 2021 Q2 2020 Q2 2021 Q1 2021 Q2 2020
Loans (a)(d) $ 1,052,381 $ 1,051,658 $ 1,038,551 $ 10,015 $ 10,592 $ 10,428 3.78% 4.02% 4.02%
Securities (c)(d)   138,164   103,062   86,987   720   640   634 2.08 2.48 2.92
FHLBB stock   1,830   1,948   3,580   11   9   39 2.41 1.85 4.36
Short term funds (b)   180,716   101,401   49,105   50   25   12 0.11 0.10 0.10
Total interest-earning assets   1,373,091   1,258,069   1,178,223   10,796   11,266   11,113 3.13 3.57 3.77
Other assets   70,447   71,252   60,288            
Total assets $ 1,443,538 $ 1,329,321 $ 1,238,511            
Interest-bearing demand deposits $ 227,623 $ 218,425 $ 172,811   117   106   103 0.21 0.20 0.24
Money market accounts   315,665   288,767   237,667   138   129   239 0.18 0.18 0.40
Savings and other   212,253   197,526   171,436   59   56   102 0.11 0.11 0.24
Certificates of deposit   147,103   129,603   157,288   252   264   544 0.69 0.83 1.38
Total interest-bearing deposits   902,644   834,321   739,202   566   555   988 0.25 0.27 0.53
Repurchase agreements   12,010   8,453   4,773   4   3   4 0.15 0.15 0.34
Finance lease   2,751   2,824   2,987   36   32   35 5.26 4.60 4.69
Note payable   192   200   231   3   3   4 6.09 6.18 6.93
Subordinated debt (f)   30,789   10,156   9,866   415   119   156 5.39 4.68 6.32
FHLBB advances   10,576   11,825   55,374   33   34   140 1.21 1.14 1.01
Total interest-bearing liabilities   958,962   867,779   812,433   1,057   746   1,327 0.44 0.35 0.65
Demand deposits   348,561   328,372   302,965            
Other liabilities   6,786   6,839   6,029            
Shareholders’ equity   129,229   126,331   117,084            
Total liabilities & shareholders’ equity $ 1,443,538 $ 1,329,321 $ 1,238,511            
Net interest income       $ 9,739 $ 10,520 $ 9,786      
Spread on interest-bearing funds             2.69 3.22 3.12
Net interest margin (e)             2.82 3.34 3.31

(a)  Includes non-accrual loans.
(b)  Includes interest-bearing deposits in other banks and federal funds sold.
(c)  Average balances of securities are based on amortized cost.
(d)  Includes tax exempt income benefit of $0.2 million, $0.2 million and $0.2 million, respectively, for Q2 2021, Q1 2021 and Q2 2020 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 2021 and 2020.
(e)  Net interest income divided by average interest-earning assets.
(f)   Net of issuance costs.

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

Six months ended June 30, Average Balance Income / Expense Average Yield / Rate
(dollars in thousands) 2021 2020 2021 2020 2021 2020
Loans (a)(d) $ 1,052,020 $ 993,293 $ 20,605 $ 20,524 3.90% 4.13%
Securities (c)(d)   120,710   88,292   1,360   1,332 2.25 3.02
FHLBB stock   1,889   3,310   20   72 2.13 4.35
Short term funds (b)   141,278   36,161   76   70 0.11 0.39
Total earning assets   1,315,897   1,121,056   22,061   21,998 3.34 3.92
Other assets   70,848   62,365        
Total assets $ 1,386,745 $ 1,183,421        
Interest-bearing demand deposits $ 223,049 $ 163,707   223   222 0.20 0.27
Money market accounts   302,290   239,173   267   799 0.18 0.67
Savings and other   204,930   167,805   115   336 0.11 0.40
Certificates of deposit   138,402   156,078   516   1,140 0.75 1.46
Total interest-bearing deposits   868,671   726,763   1,121   2,497 0.26 0.69
Repurchase agreements   10,241   5,223   8   10 0.15 0.38
Finance lease   2,787   3,019   69   71 4.93 4.70
Note payable   196   235   6   7 6.14 5.96
Subordinated Debt (f)   20,529   9,864   534   312 5.20 6.33
FHLBB advances   11,197   46,247   65   359 1.17 1.55
Total interest-bearing liabilities   913,621   791,351   1,803   3,256 0.40 0.82
Demand deposits   338,486   269,031        
Other liabilities   6,851   6,460        
Shareholders’ equity   127,787   116,579        
Total liabilities & shareholders’ equity $ 1,386,745 $ 1,183,421        
Net interest income     $ 20,258 $ 18,742    
Spread on interest-bearing funds         2.95 3.10
Net interest margin (e)         3.06 3.33

(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 $0.3 million and $0.3 million, respectively for 2021 and 2020 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 2021 and 2020.
(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

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