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8-K - FORM 8-K - SALISBURY BANCORP, INC.sal1024form8k.htm

 

Exhibit 99.1

Friday, October 25, 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 THIRD QUARTER 2013; DECLARES 28 CENT DIVIDEND

 

Lakeville, Conn., October 25, 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 third quarter ended September 30, 2013.

Selected third quarter 2013 highlights

Net income available to common shareholders was $976,000, or $0.57 per common share, for the quarter ended September 30, 2013 (third quarter 2013), versus $1,103,000, or $0.65 per common share, for the quarter ended June 30, 2013 (second quarter 2013), and $1,094,000, or $0.65 per common share, for the quarter ended September 30, 2012 (third quarter 2012).

  • Earnings per common share of $0.57 decreased $0.08, or 12.3%, as compared to $0.65 for the second quarter 2013 and third quarter 2012.
  • Tax equivalent net interest income increased $25,000, or 0.5%, versus second quarter 2013, and increased $120,000, or 2.5%, versus third quarter 2012.
  • Net loan charge-offs were $215,000 for third quarter 2013, versus $294,000 for second quarter 2013 and $359,000 for third quarter 2012. Provision for loan losses for the third quarter remained unchanged from the second quarter 2013 at $240,000, versus $330,000 for third quarter 2012.
  • Non-interest income decreased $191,000, or 11.6%, versus second quarter 2013 and decreased $428,000, or 22.7%, versus third quarter 2012; which included $568,000 in gains on sales of mortgage loans.
  • Non-interest expense increased $33,000, or 0.7%, versus second quarter 2013 and decreased $50,000, or 1.1%, versus third quarter 2012.
  • Preferred stock dividends remained unchanged from the second quarter at $40,000 for third quarter 2013, and declined by $8,000 as compared with the third quarter 2012 dividend of $46,000.
  • Non-performing assets increased $0.1 million, or 1.0%, to $9.7 million, or 1.7% of total assets, at September 30, 2013 versus June 30, 2013 and decreased $0.2 million versus September 30, 2012. Accruing loans receivable 30-to-89 days past due increased $0.8 million to $5.1 million, or 1.2% of gross loans receivable at September 30, 2013, versus June 30, 2013 and increased $1.9 million versus September 30, 2012.

Richard J. Cantele, Jr., President and Chief Executive Officer, stated, “The third quarter results reflect the strength of continued loan growth, up over $3.5 million as compared to June, as we continue to redeploy cash flow from the investment portfolio into loans. Loan growth, year–to–date, has increased by over $31.5 million or over 8% since the end of 2012. During the quarter we also saw a decline in the higher yielding Money Market deposit product which helped to facilitate a decrease in the level of low yielding cash assets as well as the overall size of the balance sheet. The net interest margin remained relatively stable at 3.51%. Non-Interest Income reflects the impact of increasing mortgage rates which adversely impacted demand for residential mortgages and resulted in a lower volume of loans sold during the quarter.

Net Interest Income

Tax equivalent net interest income for third quarter 2013 increased $25,000, or 0.5%, versus second quarter 2013, and increased $120,000, or 2.5%, versus third quarter 2012. Average total interest bearing liabilities increased $12.6 million as compared with second quarter 2013 and decreased $2.8 million, or -0.6%, as compared with third quarter 2012. Average earning assets increased $6.7 million as compared with second quarter 2013 and decreased $6.2 million, or -1.1%, as compared with third quarter 2012. The net interest margin on a tax equivalent basis decreased 3 basis points from second quarter 2013 to 3.51% and increased 12 basis points versus third quarter 2012 from 3.39%.

Non-Interest Income

Non-interest income decreased $191,000, or 11.6%, versus second quarter 2013 and decreased $428,000, or 22.7%, versus third quarter 2012. Trust and Wealth Advisory revenues decreased $74,000 versus second quarter 2013 and increased $67,000 versus third quarter 2012. The year-over-year revenue increase results from growth in managed assets, offset by slightly lower estate fees collected in third quarter 2013. Service charges and fees increased $20,000 versus second quarter 2013 and $36,000 versus third quarter 2012. Income from sales and servicing of mortgage loans in the third quarter decreased by $129,000 as compared to the second quarter 2013 and decreased $527,000 as compared to the third 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 $2.2 million for third quarter 2013, $5.1 million for second quarter 2013 and $18.3 million for third quarter 2012. Third quarter 2013, second quarter 2013 and third quarter 2012 included mortgage servicing valuation (impairment) or benefit charges of ($38,000), $1,000 and $12,000, respectively. Other income includes income from bank owned life insurance and rental income.

Non-Interest Expense

Non-interest expense for third quarter 2013 increased $33,000 versus second quarter 2013 and decreased $50,000 versus third quarter 2012. Compensation and employee benefits increased $17,000 versus second quarter 2013, and increased $208,000 versus third quarter 2012. Year-over-year expenses include higher 401(k) expense and new compensation plan expenses implemented to compensate for the hard freeze placed on the defined benefit pension plan as of December 31, 2012. Premises and equipment increased $39,000 versus second quarter 2013 and $19,000 versus third quarter 2012, mainly due to disposed assets related to modifications of the Millerton branch. Data processing decreased $9,000 versus second quarter 2013 and $11,000 versus third quarter 2012. Professional fees decreased $3,000 versus second quarter 2013, and increased $7,000 versus third quarter 2012. Collections and OREO decreased $2,000 versus second quarter 2013, and $227,000 versus third quarter 2012 due primarily to decreased related litigation and OREO expense. Salisbury had $571,000 in foreclosed property at September 30, 2013 compared to $435,000 at June 30, 2013 and $641,000 at September 30, 2012. FDIC insurance premiums decreased $3,000 versus second quarter 2013 and $5,000 versus third quarter 2012. Remaining operating expenses decreased $6,000 versus second quarter 2013 and $41,000 versus third quarter 2012 due primarily to reductions in other administrative and operational expenses.

The effective income tax rates for third quarter 2013, second quarter 2013 and third quarter 2012 were 18%, 20% and 21%, respectively.

Loans

Net loans receivable increased $3.6 million during third quarter 2013 to $420.3 million at September 30, 2013, versus $416.7 million at June 30, 2013, and increased $42.9 million versus $377.4 million at September 30, 2012.

Asset Quality

Non-performing assets increased $0.1 million during third quarter 2013 to $9.7 million, or 1.7% of assets, at September 30, 2013, versus $9.6 million, or 1.6% of assets, at June 30, 2013, and decreased $0.2 million versus $9.9 million, or 1.6% of assets, at September 30, 2012.

The $0.1 million increase in non-performing assets in third quarter 2013 resulted primarily from loans aggregating $1.5 million placed on non-accrual status, which was mostly offset by a $0.3 million decrease in accruing loans 90+ days past due, $0.1 million of loans returned to accrual status, $0.8 million in loan repayments and payoffs and $0.2 million in loan charge-offs.

Total impaired and potential problem loans decreased $1.1 million during third quarter 2013 to $25.1 million, or 5.9% of gross loans receivable, at September 30, 2013, versus $26.2 million, or 6.2% of gross loans receivable, at June 30, 2013, and decreased $3.0 million versus $28.1 million, or 7.4% of gross loans receivable, at September 30, 2012.

Accruing loans past due 30-to-89 days increased $0.8 million to $5.1 million, or 1.2% of gross loans receivable, at September 30, 2013. Over half of this increase is due to one residential mortgage the underlying property of which we expect to be sold in fourth quarter 2013. This compares to the prior quarter total of $4.3 million, or 1.0% of gross loans receivable, at June 30, 2013. Accruing loans past due 30-to-89 days increased $1.9 million as compared to September 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.

The provision for loan losses was $240,000 for both the third and second quarters of 2013 and $330,000 for third quarter 2012. Net loan charge-offs were $215,000, $295,000 and $359,000, for the respective quarters. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, remained unchanged at 1.10% at September 30, 2013, June 30, 2013 and September 30, 2012.

Capital

Both Salisbury and the Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At September 30, 2013 Salisbury’s Tier 1 leverage and total risk-based capital ratios were 10.28% and 16.67%, respectively, and the Bank’s Tier 1 leverage and total risk-based capital ratios were 8.60% and 13.93%, respectively, versus regulatory “well capitalized” minimums of 5.00% and 10.00%, respectively.

At September 30, 2013, Salisbury’s assets totaled $589 million. Book value and tangible book value per common share were $32.28 and $26.17, 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. 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 $27.2 million and to augment its regulatory capital ratios.

Third 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 October 25, 2013 meeting. The dividend will be paid on November 29, 2013 to shareholders of record as of November 8, 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) 

September 30,

2013

 

December 31,

2012

ASSETS          
Cash and due from banks  $7,679   $9,545 
Interest bearing demand deposits with other banks   16,040    34,029 
Total cash and cash equivalents   23,719    43,574 
Interest bearing time deposits   5,220     
Securities          
Available-for-sale at fair value   99,816    126,287 
Federal Home Loan Bank of Boston stock at cost   5,340    5,747 
Loans held-for-sale   708    1,879 
Loans receivable, net (allowance for loan losses: $4,656 and $4,360)   420,306    388,758 
Other real estate owned   571    244 
Bank premises and equipment, net   11,253    11,520 
Goodwill   9,829    9,829 
Intangible assets (net of accumulated amortization: $1,912 and $1,745)   631    798 
Accrued interest receivable   1,823    1,818 
Cash surrender value of life insurance policies   7,480    7,295 
Deferred taxes   719     
Other assets   2,066    3,064 
Total Assets  $589,481   $600,813 
LIABILITIES and SHAREHOLDERS' EQUITY          
Deposits          
Demand (non-interest bearing)  $83,892   $98,850 
Demand (interest bearing)   79,232    65,991 
Money market   125,070    128,501 
Savings and other   107,380    103,985 
Certificates of deposit   84,295    93,888 
Total deposits   479,869    491,215 
Repurchase agreements   3,870    1,784 
Federal Home Loan Bank of Boston advances   30,801    31,980 
Deferred taxes       590 
Accrued interest and other liabilities   3,730    3,247 
Total Liabilities   518,270    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   (375)    
Paid-in capital   13,668    13,158 
Retained earnings   41,779    40,233 
Accumulated other comprehensive (loss) income, net   (32)   2,437 
Total Shareholders' Equity   71,211    71,997 
Total Liabilities and Shareholders' Equity  $589,481   $600,813 

 

 
 

Salisbury Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Periods ended September 30,  Three months ended       Nine months ended       
(in thousands, except per share amounts)  2013    2012    2013    2012  
Interest and dividend income                    
Interest and fees on loans  $4,516   $4,500   $13,415   $13,678 
Interest on debt securities                    
Taxable   418    579    1,359    1,939 
Tax exempt   475    495    1,441    1,539 
Other interest and dividends   22    33    58    75 
Total interest and dividend income   5,431    5,607    16,273    17,231 
Interest expense                    
Deposits   459    580    1,437    1,870 
Repurchase agreements   2    3    4    21 
Federal Home Loan Bank of Boston advances   311    452    935    1,398 
Total interest expense   772    1,035    2,376    3,289 
Net interest income   4,659    4,572    13,897    13,942 
Provision for loan losses   240    330    876    690 
Net interest and dividend income after provision for loan losses   4,419    4,242    13,021    13,252 
Non-interest income                    
Trust and wealth advisory   750    683    2,299    2,173 
Service charges and fees   595    559    1,687    1,628 
Gains on sales of mortgage loans, net   69    568    501    1,203 
Mortgage servicing, net   (37)   (9)   (3)   (98)
Gains on securities, net               279 
Other   82    86    251    252 
Total non-interest income   1,459    1,887    4,735    5,437 
Non-interest expense                    
Salaries   1,922    1,810    5,508    5,268 
Employee benefits (1)   693    597    2,140    2,244 
Premises and equipment   622    603    1,789    1,799 
Data processing   358    369    1,145    1,190 
Professional fees   306    299    996    915 
Collections and OREO (2)   74    301    305    767 
FDIC insurance   111    116    350    363 
Marketing and community support   99    92    326    267 
Amortization of intangibles   56    56    167    167 
Other   402    450    1,232    1,240 
Total non-interest expense   4,643    4,693    13,958    14,220 
Income before income taxes   1,235    1,436    3,798    4,469 
Income tax provision   219    296    695    963 
Net income  $1,016   $1,140   $3,103   $3,506 
Net income available to common shareholders  $976   $1,094   $2,982   $3,328 
                     
Basic earnings per common share  $0.57   $0.65   $1.75   $1.97 
Diluted earnings per common share   0.57    0.65    1.75    1.97 
Common dividends per share   0.28    0.28    0.84    0.84 

 

 (1) Included pension plan curtailment expense of $341,000 for the nine month period ended September 30, 2012.

(2) Included litigation expense of $193,000 and $533,000, respectively, for the three and nine month periods ended September 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)  Q3 2013     Q2 2013     Q1 2013     Q4 2012     Q3 2012   
Total assets  $589,481   $600,712   $597,343   $600,813   $611,037 
Loans receivable, net   420,306    416,729    406,258    388,758    377,377 
Total securities   105,156    111,950    124,004    132,034    131,412 
Deposits   479,869    492,040    487,773    491,215    490,206 
FHLBB advances   30,801    31,187    31,574    31,980    42,392 
Shareholders’ equity   71,211    71,489    72,206    71,997    70,374 
Wealth assets under management   408,448    402,897    404,211    388,113    388,807 
Non-performing loans   9,166    9,204    8,585    9,860    9,229 
Non-performing assets   9,737    9,639    9,297    10,104    9,870 
Accruing loans past due 30-89 days   5,093    4,271    4,718    5,629    3,152 
Net interest and dividend income   4,659    4,634    4,603    4,434    4,572 
Net interest and dividend income, tax equivalent   4,967    4,942    4,903    4,709    4,847 
Provision for loan losses   240    240    396    380    330 
Non-interest income   1,459    1,650    1,625    1,877    1,887 
Non-interest expense   4,643    4,610    4,705    5,334    4,693 
Income before income taxes   1,235    1,433    1,127    597    1,436 
Income tax provision   219    289    187    26    296 
Net income   1,016    1,143    940    571    1,140 
Net income available to common shareholders   976    1,103    899    531    1,094 
                          
Per share data                         
Basic earnings per common share  $0.57   $0.65   $0.53   $0.31   $0.65 
Diluted earnings per common share   0.57    0.65    0.53    0.31    0.65 
Dividends per common share   0.28    0.28    0.28    0.28    0.28 
Book value per common share   32.28    32.45    32.88    33.14    32.18 
Tangible book value per common share - Non-GAAP (1)   26.17    26.30    26.70    26.85    25.86 
                          
                          
Common shares outstanding at end of period   1,710    1,710    1,709    1,690    1,690 
                          

Weighted average equivalent common shares outstanding, basic and diluted,

for purposes of calculating EPS

   1,691    1,691    1,690    1,690    1,690 
                          
Profitability ratios                         
Net interest margin (tax equivalent)   3.51%   3.54%   3.54%   3.32%   3.39%
Efficiency ratio (2)   71.22    68.88    70.93    71.41    66.06 
Non-interest income to operating revenue   23.85    26.26    26.08    29.74    29.21 

Effective income tax rate

   17.73    20.19    16.59    4.32    20.63 
Return on average assets   0.64    0.74    0.61    0.35    0.71 
Return on average common shareholders’ equity   7.05    7.81    6.45    3.85    8.05 
                          
Credit quality ratios                         
Net charge-offs to average loans receivable, gross   0.20%   0.29%   0.07%   0.21%   0.38%
Non-performing loans to loans receivable, gross   2.16    2.19    2.09    2.51    2.43 
Accruing loans past due 30-89 days to loans receivable, gross   1.20    1.02    1.15    1.44    0.83 
Allowance for loan losses to loans receivable, gross   1.10    1.10    1.14    1.11    1.10 
Allowance for loan losses to non-performing loans   50.80    50.32    54.59    44.22    45.28 
Non-performing assets to total assets   1.65    1.60    1.56    1.68    1.62 
                          
Capital ratios                         
Common shareholders' equity to assets   9.37%   9.24%   9.41%   9.32%   8.90%
Tangible common shareholders' equity to assets - Non-GAAP (1)   7.73    7.62    7.78    7.69    7.28 
Tier 1 leverage capital   10.28    10.23    10.17    9.87    9.78 
Total risk-based capital   16.67    16.48    16.47    16.63    17.00 

 

(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 FHLBB prepayment fees and litigations 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)  Q3 2013     Q2 2013     Q1 2013     Q4 2012     Q3 2012   
Shareholders' Equity  $71,211   $71,489   $72,206   $71,997   $70,374 
Less: Preferred Stock   (16,000)   (16,000)   (16,000)   (16,000)   (16,000)
Common Shareholders' Equity   55,211    55,489    56,206    55,997    54,374 
Less: Goodwill   (9,829)   (9,829)   (9,829)   (9,829)   (9,829)
Less: Intangible assets   (631)   (687)   (742)   (798)   (853)
Tangible Common Shareholders' Equity  $44,751   $44,973   $45,635   $45,370   $43,692 
Total Assets  $589,481   $600,712   $597,343   $600,813   $611,037 
Less: Goodwill   (9,829)   (9,829)   (9,829)   (9,829)   (9,829)
Less: Intangible assets   (631)   (687)   (742)   (798)   (853)
Tangible Total Assets  $579,021   $590,196   $586,772   $590,186   $600,355 
Common Shares outstanding   1,710    1,710    1,709    1,690    1,690 
                          
Book value per Common Share – GAAP  $32.28   $32.45   $32.88   $33.14   $32.18 
Tangible book value per Common Share - Non-GAAP   26.17    26.30    26.70    26.85    25.86 
                          
Common Equity to Assets – GAAP   9.37%   9.24%   9.41%   9.32%   8.90%
Tangible Common Equity to Assets – Non-GAAP   7.73    7.62    7.78    7.69    7.28 
                          
Non-interest expense  $4,643   $4,610   $4,705   $5,334   $4,693 
Less: Amortization of core deposit intangibles   (56)   (56)   (56)   (56)   (56)
Less: Foreclosed property expense   (10)   (14)   (20)   (125)   (39)
Less: Nonrecurring expenses                         
FHLBB prepayment fee               (450)    
Litigation                   (150)
Operating Expenses  $4,577   $4,540   $4,629   $4,703   $4,448 
Net interest and dividend income, tax equivalent  $4,967   $4,942   $4,903   $4,709   $4,847 
Non-interest income   1,459    1,650    1,625    1,877    1,887 
Less: Gains on securities, net                    
Operating Revenue  $6,426   $6,592   $6,528   $6,586   $6,734 
Efficiency Ratio   71.22%   68.88%   70.93%   71.41%   66.06%