Attached files

file filename
8-K - FORM 8-K - SALISBURY BANCORP, INC.sal72513form8k.htm

 

Exhibit 99.1

Friday, July 26, 2013

 

Company Press Release

 

Source: Salisbury Bancorp, Inc.

 

Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer

860-435-9801 or rcantele@salisburybank.com

 

FOR IMMEDIATE RELEASE

 

SALISBURY BANCORP, INC. REPORTS RESULTS FOR SECOND QUARTER 2013; DECLARES 28 CENT DIVIDEND

 

Lakeville, Conn., July 26, 2013 /GlobeNewswire …..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, 2013.

Selected second quarter 2013 highlights

Net income available to common shareholders was $1,092,000, or $0.65 per common share, for the quarter ended June 30, 2013 (second quarter 2013), versus $890,000, or $0.53 per common share, for the quarter ended March 31, 2013 (first quarter 2013), and $1,069,000, or $0.63 per common share, for the quarter ended June 30, 2012 (second quarter 2012).

  • Earnings per common share of $0.65 increased $0.12, or 22.6%, as compared to $0.53 for the first quarter 2013, and increased $0.02, or 3.2%, as compared to second quarter 2012.
  • Tax equivalent net interest income increased $39,000, or 0.8%, versus first quarter 2013, and decreased $40,000, or 0.8%, versus second quarter 2012.
  • Provision for loan losses for the second quarter was $240,000 versus $396,000 for the first quarter 2013 and $180,000 for second quarter 2012. Net loan charge-offs were $294,000, versus $70,000 for first quarter 2013 and $138,000 for second quarter 2012.
  • Non-interest income increased $25,000, or 1.6%, versus first quarter 2013 and decreased $240,000, or 12.7%, versus second quarter 2012, which included $267,000 in gains on sale of securities.
  • Non-interest expense decreased $95,000, or 2.0%, versus first quarter 2013 and $415,000, or 8.3%, versus second quarter 2012. Second quarter 2012 included non-recurring expenses totaling $591,000 which consisted of $341,000 in pension plan curtailment expense and $250,000 in litigation expense.
  • Preferred stock dividends remained unchanged from the first quarter at $40,000 for second quarter 2013 and declined by $8,000 as compared with the second quarter 2012 dividend of $48,000.
  • Non-performing assets increased $0.3 million, or 4.0%, to $9.6 million, or 1.6% of total assets, at June 30, 2013 versus March 31, 2013 and increased $1.2 million versus June 30, 2012. Accruing loans receivable 30-to-89 days past due decreased $0.5 million to $4.3 million, or 1.02% of gross loans receivable at June 30, 2013, versus March 31, 2013 and increased $1.8 million versus June 30, 2012.

Richard J. Cantele, Jr., President and Chief Executive Officer, stated, “Our second quarter operating results reflect a consistent net interest rate margin and improvement in operating efficiency as compared to first quarter 2013. I’m pleased to report that our second quarter 2013 earnings per share of $0.65 represent a 3.2% increase over second quarter 2012 results.

The current interest rate environment continues to impart pressure on our net interest margin, and competition for quality loans remains vigorous. While the low overall interest rate environment has encouraged mortgage activity, the rise in interest rates late in the quarter has slowed the volume of refinancing activity. Our origination and sale of mortgages during second quarter 2013 totaled $5 million of fixed rate mortgage loans. This volume represented a decrease of $4 million from first quarter 2013, and represented a decrease of approximately $7 million over second quarter 2012.

Past due loans at June 30, 2013 decreased 2.7% from second quarter 2012. We continue to balance the active administration of our past due loans while supporting our small business and retail customers as they navigate through these ongoing challenging economic times. We achieved solid revenue growth of Salisbury’s Trust and Wealth Advisory business for the second quarter 2013, which represented a 12% increase over second quarter 2012. We continue to consider our Trust and Wealth Advisory business to be an area of expertise which distinguishes Salisbury from its competition and we look to the continued growth of this business as a future source of non-interest revenue to enhance and diversify our revenue stream.”

Net Interest Income

Tax equivalent net interest income for second quarter 2013 increased $39,000, or 0.8%, versus first quarter 2013, and decreased $40,000, or 0.8%, versus second quarter 2012. Average total interest bearing deposits increased $4.9 million as compared with first quarter 2013 and increased $10.8 million, or 2.8%, as compared with second quarter 2012. Average earning assets increased $4.7 million as compared with first quarter 2013 and increased $1.5 million, or 0.2%, as compared with second quarter 2012. The net interest margin on a tax equivalent basis remained unchanged from first quarter 2013 at 3.54% and increased 1 basis point versus second quarter 2012 from 3.53%.

Non-Interest Income

Non-interest income increased $25,000, or 1.5%, versus first quarter 2013 and decreased $240,000, or 12.7%, versus second quarter 2012. Trust and Wealth Advisory revenues increased $99,000 versus first quarter 2013 and increased $89,000 versus second quarter 2012. The year-over-year revenue increase results from growth in managed assets and higher fees collected in second quarter 2013. Service charges and fees increased $59,000 versus first quarter 2013 and $28,000 versus second quarter 2012. Income from sales and servicing of mortgage loans in the second quarter decreased by $144,000 as compared to the first quarter 2013 and decreased $97,000 as compared to the second quarter 2012 due to interest rate driven fluctuations in the volume of fixed rate residential mortgage loan sales and mortgage servicing valuations. Mortgage loan sales totaled $5.1 million for second quarter 2013, $8.7 million for first quarter 2013 and $12.2 million for second quarter 2012. Second quarter 2013, first quarter 2013 and second quarter 2012 included mortgage servicing valuation benefit (impairment) charges of $1,000, $33,000 and ($10,000), respectively. Non-interest income for the second quarter 2012 included securities gain of $267,000 as a result of the sale of $2.5 million of US Treasury bonds, which partially offset non-recurring pension curtailment and litigation expenses. Other income includes income from bank owned life insurance and rental income.

Non-Interest Expense

Non-interest expense for second quarter 2013 decreased $95,000 versus first quarter 2013 and $415,000 versus second quarter 2012. Compensation and employee benefits increased $163,000 versus first quarter 2013, and decreased $107,000 versus second quarter 2012. Second quarter 2012 included pension plan curtailment expense of $341,000 from retiree lump-sum withdrawals. The current quarter includes benefit accrual adjustments and one-time expenses related to staffing changes. Premises and equipment remained unchanged versus first quarter 2013 and decreased $8,000 versus second quarter 2012. Data processing decreased $52,000 versus first quarter 2013 and $51,000 versus second quarter 2012. Professional fees decreased $71,000 versus first quarter 2013, and increased $6,000 versus second quarter 2012. First quarter 2013 included legal expenses and an executive search. Collections and OREO decreased $80,000 versus first quarter 2013, and decreased $281,000 versus second quarter 2012 due primarily to decreased litigation and OREO expense. Salisbury had $435,000 in foreclosed property at June 30, 2013. FDIC insurance decreased $11,000 versus first quarter 2013 and decreased $5,000 versus second quarter 2012. Remaining operating expenses decreased $44,000 versus first quarter 2013 and increased $36,000 versus second quarter 2012 due primarily to reductions in other administrative and operational expenses.

The effective income tax rates for second quarter 2013, first quarter 2013 and second quarter 2012 were 20%, 17% and 19%, respectively.

Loans

Net loans receivable increased $10.5 million during second quarter 2013 to $416.7 million at June 30, 2013, versus $406.3 million at March 31, 2013, and increased $39.5 million versus $377.2 million at June 30, 2012.

Asset Quality

Non-performing assets increased $0.3 million during second quarter 2013 to $9.6 million, or 1.6% of assets, at June 30, 2013, versus $9.3 million, or 1.5% of assets, at March 31, 2013, and increased $1.2 million versus $8.4 million, or 1.4% of assets, at June 30, 2012.

The $0.3 million increase in non-performing assets in second quarter 2013 resulted primarily from loans aggregating $1.2 million placed on non-accrual status and a $1.1 million increase in accruing loans 90+ days past due, offset in part by $0.2 million of loans returned to accrual status, $1.3 million in loan repayments and payoffs, $0.2 million in loan charge-offs and $0.3 million in OREO was sold.

Total impaired and potential problem loans decreased $1.2 million during second quarter 2013 to $26.2 million, or 6.2% of gross loans receivable, at June 30, 2013, versus $27.4 million, or 6.7% of gross loans receivable, at March 31, 2013, and decreased $1.6 million versus $27.8 million, or 7.3% of gross loans receivable, at June 30, 2012.

Accruing loans past due 30-to-89 days decreased $0.5 million due to resolution of troubled debt loans during second quarter 2013 to $4.3 million, or 1.02% of gross loans receivable, at June 30, 2013, and compares favorably to the prior quarter total of $4.7 million, or 1.15% of gross loans receivable, at March 31, 2013. Accruing loans past due 30-to-89 days increased $1.8 million as compared to June 30, 2012.

Provision for loan losses was $240,000 versus $396,000 first quarter 2013 and $180,000 for second quarter 2012. Net loan charge-offs were $294,000, $70,000 and $138,000, for the respective quarters. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, remained stable at 1.10% at June 30, 2013 versus 1.14% at March 31, 2013 and 1.11% at June 30, 2012.

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.

Capital

Both Salisbury and the Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At June 30, 2013 Salisbury’s Tier 1 leverage and total risk-based capital ratios were 10.23% and 16.48%, respectively, and the Bank’s Tier 1 leverage and total risk-based capital ratios were 8.48% and 13.72%, respectively, versus regulatory “well capitalized” minimums of 5.00% and 10.00%, respectively.

At June 30, 2013, Salisbury’s assets totaled $601 million. Book value and tangible book value per common share were $32.45 and $26.30, respectively. Tangible book value excludes goodwill and core deposit intangibles.

In August 2011, Salisbury received $16 million of capital from the U.S. Treasury’s Small Business Lending Fund (the “SBLF”) program and repaid the $8.8 million of capital received in 2009 from the U.S. Treasury’s Capital Purchase Program. The SBLF program was established to encourage lending to small businesses by providing Tier 1 capital to qualified community banks with assets of less than $10 billion. To date Salisbury has used this capital to increase its portfolio of qualified small business loans by $32.2 million and to augment its regulatory capital ratios.

Second quarter 2013 dividend on Common Shares

The Board of Directors of Salisbury, the holding company for Salisbury Bank and Trust Company, declared a $0.28 per common share quarterly cash dividend at their July 26, 2013 meeting. The dividend will be paid on August 30, 2013 to shareholders of record as of August 9, 2013.

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, South Egremont and Sheffield, Massachusetts and Dover Plains and Millerton, New York. The Bank offers a full complement of consumer and business banking products and services as well as trust and wealth advisory services.

Forward-Looking Statements

Statements contained in this news release contain 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 government regulations; changes in accounting principles; and the quality or composition of the loan and investment portfolios and other factors that may be described in Salisbury’s quarterly reports on Form 10-Q and its annual report on Form 10-K, each filed with the Securities and Exchange Commission, which are available at the Securities and Exchange Commission’s internet website (www.sec.gov) and to which reference is hereby made. Therefore, actual future results may differ materially from results discussed in the forward-looking statements.

 
 

 

Salisbury Bancorp, Inc. and Subsidiary

CONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share data)  June 30, 2013  December 31, 2012
ASSETS          
Cash and due from banks  $10,284   $9,545 
Interest bearing demand deposits with other banks   26,909    34,029 
Total cash and cash equivalents   37,193    43,574 
Securities          
   Available-for-sale at fair value   106,610    126,287 
   Federal Home Loan Bank of Boston stock at cost   5,340    5,747 
Loans held-for-sale   864    1,879 
Loans receivable, net (allowance for loan losses: $4,632 and $4,360)   416,729    388,758 
Other real estate owned   435    244 
Bank premises and equipment, net   11,288    11,520 
Goodwill   9,829    9,829 
Intangible assets (net of accumulated amortization: $1,856 and $1,745)   687    798 
Accrued interest receivable   2,002    1,818 
Cash surrender value of life insurance policies   7,416    7,295 
Deferred taxes   285     
Other assets   2,034    3,064 
      Total Assets  $600,712   $600,813 
LIABILITIES and SHAREHOLDERS' EQUITY          
Deposits          
   Demand (non-interest bearing)  $90,203   $98,850 
   Demand (interest bearing)   73,606    65,991 
   Money market   134,052    128,501 
   Savings and other   104,331    103,985 
   Certificates of deposit   89,848    93,888 
      Total deposits   492,040    491,215 
Repurchase agreements   2,980    1,784 
Federal Home Loan Bank of Boston advances   31,187    31,980 
Deferred taxes       590 
Accrued interest and other liabilities   3,016    3,247 
      Total Liabilities   529,223    528,816 
Commitments and contingencies        
Shareholders' Equity          
   Preferred stock - $.01 per share par value          
      Authorized: 25,000; Issued: 16,000 (Series B);          
      Liquidation preference: $1,000 per share   16,000    16,000 
   Common stock - $.10 per share par value          
      Authorized: 3,000,000;          
      Issued: 1,710,121 and 1,689,691   171    169 
   Restricted Common Stock   (415)    
Paid-in capital   13,668    13,158 
Retained earnings   41,279    40,233 
Accumulated other comprehensive income (loss), net   786    2,437 
      Total Shareholders' Equity   71,489    71,997 
      Total Liabilities and Shareholders' Equity  $600,712   $600,813 


 
 

Salisbury Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Periods ended June 30,  Three months ended  Six months ended
(in thousands, except per share amounts)  2013  2012  2013  2012
Interest and dividend income                    
Interest and fees on loans  $4,470   $4,582   $8,899   $9,178 
Interest on debt securities                    
   Taxable   468    659    941    1,375 
   Tax exempt   478    510    966    1,044 
Other interest and dividends   18    15    36    27 
   Total interest and dividend income   5,434    5,766    10,842    11,624 
Interest expense                    
Deposits   488    623    978    1,290 
Repurchase agreements   1    6    2    19 
Federal Home Loan Bank of Boston advances   312    451    624    946 
   Total interest expense   801    1,080    1,604    2,255 
Net interest income   4,633    4,686    9,238    9,369 
Provision for loan losses   240    180    636    360 
   Net interest and dividend income after provision for loan losses4,393    4,506    8,602    9,009 
Non-interest income                    
Trust and wealth advisory   824    735    1,549    1,490 
Service charges and fees   575    547    1,092    1,068 
Gains on sales of mortgage loans, net   153    263    432    635 
Mortgage servicing, net   8    (5)   34    (89)
Gains on securities, net       267        279 
Other   90    83    169    166 
   Total non-interest income   1,650    1,890    3,276    3,549 
Non-interest expense                    
Salaries   1,835    1,748    3,585    3,458 
Employee benefits (1)   763    957    1,448    1,647 
Premises and equipment   583    591    1,166    1,196 
Data processing   367    418    787    821 
Professional fees   309    303    689    616 
Collections and OREO (2)   75    356    230    467 
FDIC insurance   114    119    239    247 
Marketing and community support   105    87    228    175 
Amortization of intangibles   56    56    111    111 
Other   403    390    832    788 
   Total non-interest expense   4,610    5,025    9,315    9,526 
Income before income taxes   1,433    1,371    2,563    3,032 
Income tax provision   289    254    476    666 
Net income  $1,144   $1,117   $2,087   $2,366 
Net income available to common shareholders  $1,092   $1,069   $1,985   $2,234 
                     
Basic earnings per common share  $0.65   $0.63   $1.18   $1.32 
Diluted earnings per common share   0.65    0.63    1.18    1.32 
Common dividends per share   0.28    0.28    0.56    0.56 

 

(1) Included pension plan curtailment expense of $341,000 for the three and six month periods ended June 30, 2012.

(2) Included litigation expense of $294,000 and $340,000, respectively, for the three and six month periods ended June 30, 2012.

 
 

 Salisbury Bancorp, Inc. and Subsidiary

SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)

At or for the three month periods ended               
(in thousands, except per share amounts and ratios)  Q2 2013  Q1 2013  Q4 2012  Q3 2012  Q2 2012
Total assets  $600,712   $597,343   $600,813   $611,037   $600,857 
Loans receivable, net   416,729    406,258    388,758    377,377    377,212 
Total securities   111,950    124,004    132,034    131,412    141,409 
Deposits   492,040    487,773    491,215    490,206    477,910 
FHLBB advances   31,187    31,574    31,980    42,392    42,801 
Shareholders’ equity   71,489    72,206    71,997    70,374    69,126 
Wealth assets under management   402,897    404,211    388,113    388,807    372,506 
Non-performing loans   9,204    8,585    9,860    9,229    8,409 
Non-performing assets   9,639    9,297    10,104    9,870    8,409 
Accruing loans past due 30-89 days   4,271    4,718    5,629    3,152    2,459 
Net interest and dividend income   4,634    4,603    4,434    4,572    4,686 
Net interest and dividend income, tax equivalent   4,942    4,903    4,709    4,847    4,982 
Provision for loan losses   240    396    380    330    180 
Non-interest income   1,650    1,625    1,877    1,887    1,890 
Non-interest expense   4,610    4,705    5,334    4,693    5,025 
Income before income taxes   1,433    1,127    597    1,436    1,371 
Income tax provision   289    187    26    296    254 
Net income   1,144    940    571    1,140    1,117 
Net income available to common shareholders   1,092    890    531    1,094    1,069 
                          
Per share data                         
Basic and diluted earnings per common share  $0.65   $0.53   $0.31   $0.65   $0.63 
Dividends per common share   0.28    0.28    0.28    0.28    0.28 
Book value per common share   32.45    32.88    33.14    32.18    31.44 
Tangible book value per common share - Non-GAAP (1)   26.30    26.70    26.85    25.86    25.09 
                          
Weighted average equivalent common shares outstanding, diluted   1,710    1,701    1,690    1,690    1,689 
Common shares outstanding at end of period   1,710    1,709    1,690    1,690    1,690 
                          
Profitability ratios                         
Net interest margin (tax equivalent)   3.54%   3.54%   3.32%   3.39%   3.53%
Efficiency ratio (2)   68.88    70.91    71.41    66.05    66.39 
Non-interest income to operating revenue   25.03    26.08    29.74    29.21    25.73 
Effective income tax rate   20.17    16.59    4.32    20.63    18.54 
Return on average assets   0.74    0.61    0.35    0.71    0.72 
Return on average common shareholders’ equity   7.81    6.46    3.85    8.05    8.10 
                          
Credit quality ratios                         
Net charge-offs to average loans receivable, gross   0.29%   0.07%   0.21%   0.38%   0.15%
Non-performing loans to loans receivable, gross   2.19    2.09    2.51    2.43    2.21 
Accruing loans past due 30-89 days to loans receivable, gross   1.02    1.15    1.44    0.83    0.65 
Allowance for loan losses to loans receivable, gross   1.10    1.14    1.11    1.10    1.11 
Allowance for loan losses to non-performing loans   50.32    54.59    44.22    45.28    50.04 
Non-performing assets to total assets   1.60    1.56    1.68    1.62    1.40 
                          
Capital ratios                         
Common shareholders' equity to assets   9.24%   9.41%   9.32%   8.90%   8.84%

Tangible common shareholders' equity to assets - Non-GAAP (1)

   7.62    7.78    7.69    7.28    7.18 
Tier 1 leverage capital   10.23    10.17    9.87    9.78    9.92 
Total risk-based capital   16.48    16.47    16.63    17.00    16.65 

 

(1) Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.

(2) Calculated using SNL’s methodology: 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 nonrecurring pension plan curtailment and litigation expenses.

 
 

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 2013  Q1 2013  Q4 2012  Q3 2012  Q2 2012
Shareholders' Equity  $71,489   $72,206   $71,997   $70,374   $69,126 
Less: Preferred Stock   (16,000)   (16,000)   (16,000)   (16,000)   (16,000)
Common Shareholders' Equity   55,489    56,206    55,997    54,374    53,126 
Less: Goodwill   (9,829)   (9,829)   (9,829)   (9,829)   (9,829)
Less: Intangible assets   (687)   (742)   (798)   (853)   (909)
Tangible Common Shareholders' Equity  $44,973   $45,635   $45,370   $43,692   $42,388 
Total Assets  $600,712   $597,343   $600,813   $611,037   $600,857 
Less: Goodwill   (9,829)   (9,829)   (9,829)   (9,829)   (9,829)
Less: Intangible assets   (687)   (742)   (798)   (853)   (909)
Tangible Total Assets  $590,196   $586,772   $590,186   $600,355   $590,119 
Common Shares outstanding   1,710    1,709    1,690    1,690    1,690 
                          
Book value per Common Share – GAAP  $32.45   $32.88   $33.14   $32.18   $31.44 
Tangible book value per Common Share - Non-GAAP   26.30    26.70    26.85    25.86    25.09 
                          
Common Equity to Assets – GAAP   9.24%   9.41%   9.32%   8.90%   8.84%
Tangible Common Equity to Assets – Non-GAAP   7.62    7.78    7.69    7.28    7.18 
                          
Non-interest expense  $4,610   $4,705   $5,334   $4,693   $5,025 
Less: Amortization of core deposit intangibles   (56)   (56)   (56)   (56)   (56)
Less: Foreclosed property expense   (14)   (20)   (125)   (39)   7 
Less: Nonrecurring expenses                         
   Pension plan curtailment                   (341)
 FHLBB prepayment fee           (450)        
   Litigation               (150)   (250)
Operating Expenses  $4,540   $4,629   $4,703   $4,448   $4,385 
Net interest and dividend income, tax equivalent  $4,942   $4,903   $4,709   $4,847   $4,983 
Non-interest income   1,650    1,625    1,877    1,887    1,890 
Less: Gains on securities, net                   (267)
Operating Revenue  $6,592   $6,528   $6,586   $6,734   $6,606 
Efficiency Ratio   68.88%   70.91%   71.41%   66.05%   66.39%