LAKEVILLE, Conn., Oct. 26, 2012 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc. ("Salisbury") (NYSE MKT:SAL), the holding company for Salisbury Bank and Trust Company (the "Bank"), announced results for its third quarter ended September 30, 2012.
Selected third quarter 2012 highlights
Net income available to common shareholders was $1,094,000, or $0.65 per common share, for the quarter ended September 30, 2012 (third quarter 2012), versus $1,069,000, or $0.63 per common share, for the quarter ended June 30, 2012 (second quarter 2012), and $865,000, or $0.51 per common share, for the quarter ended September 30, 2011 (third quarter 2011).
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Earnings per common share increased $0.02, or 3.2%, to $0.65 versus second quarter 2012, and increased $0.14, or 27.5%, versus third quarter 2011.
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Tax equivalent net interest income decreased $121,000, or 2.5%, versus second quarter 2012, and decreased $80,000, or 1.64%, versus third quarter 2011.
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Provision for loan losses was $330,000, versus $180,000 second quarter 2012 and third quarter 2011, respectively. Net loan charge-offs were $359,000, versus $138,000 for second quarter 2012 and $132,000 for third quarter 2011.
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Non-interest income decreased $3,000, or 0.2%, versus second quarter 2012 and increased $553,000, or 41.5%, versus third quarter 2011. Second quarter 2012 included a $267,000 securities gain.
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Non-interest expense decreased $333,000, or 6.6%, versus second quarter 2012 and increased $158,000, or 3.5%, versus third quarter 2011. Third quarter 2012 included non-recurring litigation expense of $150,000. Second quarter 2012 included a pension plan curtailment expense of $341,000 and litigation expenses of $294,000, of which $250,000 was non-recurring.
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Preferred stock dividends paid were $46,000, versus $48,000 second quarter 2012 and $228,000 third quarter 2011.
- Non-performing assets increased $1.5 million, or 17.4%, to $9.9 million, or 1.6% of total assets, at September 30, 2012 versus June 30, 2012 and decreased $4.1 million versus September 30, 2011. Accruing loans receivable 30-to-89 days past due increased $0.7 million to $3.2 million, or 0.83% of gross loans receivable, at September 30, 2012 versus June 30, 2012 and increased $0.8 million versus September 30, 2011.
Richard J. Cantele, Jr., President and Chief Executive Officer, stated, "Our third quarter operating results reflect continued year-over-year improvement of our core business lines and record level residential mortgage refinancing activity. Our third quarter 2012 earnings per share of $0.65 represented a 27.5% increase over third quarter 2011 results.
"The Federal Reserve Board's low interest rate policy continues to exert downward pressure on our net interest margin and the sluggishness of the local and regional economy has exacerbated competition for quality business loans. Low interest rates continued to fuel mortgage refinancing activity, and during the quarter we originated and sold $18 million of fixed rate mortgage loans, up from $12 million last quarter.
"Non-performing assets increased $1.5 million reflecting persistent weakness in the local and regional economy. We continue to balance our desire to quickly resolve our past due loans with our community obligation to support our small business and retail customers as they navigate through these ongoing challenging economic times.
"Our trust and wealth advisory business continues to grow, with third quarter revenue up 14% year-over-year."
Net Interest Income
Tax equivalent net interest income decreased $121,000, or 2.5%, versus second quarter 2012, and decreased $80,000, or 1.6%, versus third quarter 2011. Average total interest bearing deposits increased $14.0 million as compared with second quarter 2012 and increased $14.4 million, or 3.7%, as compared with third quarter 2011. Average earning assets increased $14.3 million as compared with second quarter 2012 and increased $4.6 million, or 0.8%, as compared with third quarter 2011. The net interest margin decreased 18 basis points versus second quarter 2012 and decreased 8 basis points versus third quarter 2011 to 3.35% for third quarter 2012.
Non-Interest Income
Non-interest income for third quarter 2012 increased $553,000 versus third quarter 2011. Trust and Wealth Advisory revenues increased $84,000 due primarily from growth in managed assets. Service charges and fees increased $25,000 mainly due to increased debit card interchange fees. Income from sales and servicing of mortgage loans increased $416,000 due to interest rate driven fluctuations in the volume of fixed rate residential mortgage loan sales and mortgage servicing valuations. Mortgage loan sales totaled $18.3 million for third quarter 2012 versus $7.6 million for third quarter 2011. Third quarter 2012 and third quarter 2011 included a mortgage servicing valuation impairment benefit of $12,000 and charge of $65,000, respectively. The increase in other income consisted primarily of bank owned life insurance income.
Non-Interest Expense
Non-interest expense for third quarter 2012 increased $158,000 versus third quarter 2011. Compensation and employee benefits decreased $45,000 due to changes in staffing levels and mix. Premises and equipment increased $21,000 due primarily to increased machine and software maintenance, due to replaced and upgraded equipment and software, offset slightly by an expense for disposed assets in third quarter 2011.
Data processing increased $3,000. Higher volume of debit card and ATM transactions was partially offset by lower core processing expenses. Professional fees decreased $8,000. Lower usage of legal and consulting fees was partially offset by higher investment management fees due to increased assets under management in the Trust and Wealth Advisory division. Collections and OREO increased $149,000 versus third quarter 2011 due primarily to increased litigation expenses. FDIC insurance decreased $21,000 due to a decrease in the assessment base. Marketing and other operating expenses increased $59,000 due to higher administrative and operational expenses.
The effective income tax rates for third quarter 2012, second quarter 2012 and third quarter 2011 were 20.63%, 18.54% and 16.43%, respectively.
Loans
Net loans receivable increased $0.2 million during third quarter 2012 to $377.4 million at September 30, 2012, versus $377.2 million at June 30, 2012, and increased $14.5 million versus $362.9 million at September 30, 2011.
Asset Quality
Non-performing assets increased $1.5 million during third quarter 2012 to $9.9 million, or 1.6% of assets, at September 30, 2012, versus $8.4 million, or 1.4% of assets, at June 30, 2012, and decreased $4.1 million versus $14.0 million, or 2.3% of assets, at September 30, 2011. Third Quarter 2012 included $2.0 million of loans placed on non-accrual status, offset in part by $0.1 million in loan payoffs and repayments and $0.4 million in loan charge-offs.
Total impaired and potential problem loans increased $0.3 million during third quarter 2012 to $28.1 million, or 7.4% of gross loans receivable, at September 30, 2012, versus $27.8 million, or 7.3% of gross loans receivable, at June 30, 2012, and decreased $2.4 million versus $30.5 million, or 8.3% of gross loans receivable, at September 30, 2011.
Accruing loans past due 30-to-89 days increased $0.7 million during third quarter 2012 to $3.2 million, or 0.83% of gross loans receivable, at September 30, 2012 due to seasonal factors, versus $2.5 million, or 0.65% of gross loans receivable, at June 30, 2012, and increased $0.8 million versus September 30, 2011.
The provision for loan losses for third and second quarter 2012 was $330,000 and $180,000 respectively versus $180,000 for third quarter 2011. Net loan charge-offs were $359,000, $138,000 and $132,000, 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, 2012, June 30, 2012 and September 30, 2011.
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 September 30, 2012 Salisbury's Tier 1 leverage and total risk-based capital ratios were 9.78% and 17.00%, respectively, and the Bank's Tier 1 leverage and total risk-based capital ratios were 8.07% and 14.05%, respectively, versus regulatory "well capitalized" minimums of 5.00% and 10.00%, respectively.
At September 30, 2012, Salisbury's assets totaled $611 million. Book value and tangible book value per common share were $32.18 and $25.86, respectively, as compared with $30.12 and $23.69 at December 31, 2011, reflecting year-to-date increases of 6.84% and 9.16%. 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 $16.0 million and to augment its regulatory capital ratios.
Third quarter 2012 dividend on Common Shares
The Board of Directors of Salisbury declared a $0.28 per common share quarterly cash dividend at its October 26, 2012 meeting. The dividend will be paid on November 30, 2012 to shareholders of record as of November 9, 2012.
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, 2012 | December 31, 2011 |
| ASSETS | ||
| Cash and due from banks | $ 6,061 | $ 4,829 |
| Interest bearing demand deposits with other banks | 59,355 | 32,057 |
| Total cash and cash equivalents | 65,416 | 36,886 |
| Securities | ||
| Available-for-sale at fair value | 125,665 | 155,794 |
| Held-to-maturity at amortized cost (fair value: $- and $52) | -- | 50 |
| Federal Home Loan Bank of Boston stock at cost | 5,747 | 6,032 |
| Loans held-for-sale | 1,595 | 948 |
| Loans receivable, net (allowance for loan losses: $4,179 and $4,076) | 377,377 | 370,766 |
| Other real estate owned | 641 | 2,744 |
| Bank premises and equipment, net | 11,619 | 12,023 |
| Goodwill | 9,829 | 9,829 |
| Intangible assets (net of accumulated amortization: $1,690 and $1,523) | 853 | 1,020 |
| Accrued interest receivable | 1,966 | 2,126 |
| Cash surrender value of life insurance policies | 7,239 | 7,037 |
| Deferred taxes | 57 | 829 |
| Other assets | 3,033 | 3,200 |
| Total Assets | $ 611,037 | $ 609,284 |
| LIABILITIES and SHAREHOLDERS' EQUITY | ||
| Deposits | ||
| Demand (non-interest bearing) | $ 90,064 | $ 82,202 |
| Demand (interest bearing) | 66,535 | 66,332 |
| Money market | 136,512 | 124,566 |
| Savings and other | 100,462 | 94,503 |
| Certificates of deposit | 96,633 | 103,703 |
| Total deposits | 490,206 | 471,306 |
| Repurchase agreements | 2,941 | 12,148 |
| Federal Home Loan Bank of Boston advances | 42,392 | 54,615 |
| Accrued interest and other liabilities | 5,124 | 4,353 |
| Total Liabilities | 540,663 | 542,422 |
| 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: 1,689,691 and 1,688,731 | 169 | 169 |
| Paid-in capital | 13,158 | 13,134 |
| Retained earnings | 40,175 | 38,264 |
| Accumulated other comprehensive income (loss), net | 872 | (705) |
| Total Shareholders' Equity | 70,374 | 66,862 |
| Total Liabilities and Shareholders' Equity | $ 611,037 | $ 609,284 |
| 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) | 2012 | 2011 | 2012 | 2011 |
| Interest and dividend income | ||||
| Interest and fees on loans | $ 4,500 | $ 4,630 | $ 13,678 | $ 13,989 |
| Interest on debt securities | ||||
| Taxable | 579 | 739 | 1,939 | 2,255 |
| Tax exempt | 495 | 553 | 1,539 | 1,661 |
| Other interest and dividends | 33 | 34 | 75 | 109 |
| Total interest and dividend income | 5,607 | 5,956 | 17,231 | 18,014 |
| Interest expense | ||||
| Deposits | 580 | 748 | 1,870 | 2,449 |
| Repurchase agreements | 3 | 19 | 21 | 46 |
| Federal Home Loan Bank of Boston advances | 452 | 565 | 1,398 | 1,772 |
| Total interest expense | 1,035 | 1,332 | 3,289 | 4,267 |
| Net interest income | 4,572 | 4,624 | 13,942 | 13,747 |
| Provision for loan losses | 330 | 180 | 690 | 860 |
| Net interest and dividend income after provision for loan losses | 4,242 | 4,444 | 13,252 | 12,887 |
| Non-interest income | ||||
| Trust and wealth advisory | 683 | 599 | 2,173 | 1,861 |
| Service charges and fees | 559 | 534 | 1,628 | 1,555 |
| Gains on sales of mortgage loans, net | 568 | 178 | 1,203 | 370 |
| Mortgage servicing, net | (9) | (35) | (98) | (8) |
| Gains on securities, net | -- | -- | 279 | 11 |
| Other | 86 | 58 | 252 | 176 |
| Total non-interest income | 1,887 | 1,334 | 5,437 | 3,965 |
| Non-interest expense | ||||
| Salaries | 1,810 | 1,816 | 5,268 | 5,202 |
| Employee benefits⁽¹⁾ | 597 | 636 | 2,244 | 1,919 |
| Premises and equipment | 603 | 582 | 1,799 | 1,733 |
| Data processing | 369 | 366 | 1,190 | 1,028 |
| Professional fees | 299 | 307 | 915 | 887 |
| Collections and OREO⁽²⁾ | 301 | 152 | 767 | 519 |
| FDIC insurance | 116 | 137 | 363 | 541 |
| Marketing and community support | 92 | 85 | 267 | 245 |
| Amortization of intangibles | 56 | 56 | 167 | 167 |
| Other | 450 | 398 | 1,240 | 1,149 |
| Total non-interest expense | 4,693 | 4,535 | 14,220 | 13,390 |
| Income before income taxes | 1,436 | 1,243 | 4,469 | 3,462 |
| Income tax provision | 296 | 204 | 963 | 598 |
| Net income | $ 1,140 | $ 1,039 | $ 3,506 | $ 2,864 |
| Net income available to common shareholders | $ 1,094 | $ 865 | $ 3,328 | $ 2,459 |
| Basic and diluted earnings per common share | $ 0.65 | $ 0.51 | $ 1.97 | $ 1.46 |
| 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 2012 | Q2 2012 | Q1 2012 | Q4 2011 | Q3 2011 |
| Total assets | $ 611,037 | $ 600,857 | $ 598,950 | $ 609,284 | $ 618,958 |
| Loans receivable, net | 377,377 | 377,212 | 371,709 | 370,766 | 362,879 |
| Total securities | 131,412 | 141,409 | 151,666 | 161,876 | 157,162 |
| Deposits | 490,206 | 477,910 | 472,686 | 471,306 | 478,591 |
| FHLBB advances | 42,392 | 42,801 | 43,207 | 54,615 | 55,033 |
| Shareholders' equity | 70,374 | 69,126 | 68,067 | 66,862 | 67,387 |
| Wealth assets under management | 388,807 | 372,506 | 377,259 | 360,700 | 332,400 |
| Non-performing loans | 9,229 | 8,409 | 7,606 | 8,076 | 13,911 |
| Non-performing assets | 9,870 | 8,409 | 7,606 | 10,820 | 13,948 |
| Accruing loans past due 30-89 days | 3,152 | 2,459 | 4,180 | 2,460 | 2,398 |
| Net interest and dividend income | 4,572 | 4,687 | 4,683 | 4,738 | 4,623 |
| Net interest and dividend income, tax equivalent | 4,802 | 4,923 | 4,933 | 4,993 | 4,882 |
| Provision for loan losses | 330 | 180 | 180 | 580 | 180 |
| Non-interest income | 1,887 | 1,890 | 1,659 | 1,691 | 1,334 |
| Non-interest expense | 4,693 | 5,026 | 4,500 | 4,249 | 4,535 |
| Income before income taxes | 1,436 | 1,370 | 1,661 | 1,600 | 1,243 |
| Income tax provision | 296 | 254 | 412 | 352 | 204 |
| Net income | 1,140 | 1,116 | 1,250 | 1,248 | 1,039 |
| Net income available to common shareholders | 1,094 | 1,069 | 1,167 | 1,184 | 865 |
| Per share data | |||||
| Basic and diluted earnings per common share | $ 0.65 | $ 0.63 | $ 0.69 | $ 0.70 | $ 0.51 |
| Dividends per common share | 0.28 | 0.28 | 0.28 | 0.28 | 0.28 |
| Book value per common share | 32.18 | 31.44 | 30.83 | 30.12 | 30.43 |
| Tangible book value per common share - Non-GAAP⁽¹⁾ | 25.86 | 25.09 | 24.44 | 23.69 | 23.97 |
| Weighted average equivalent common shares outstanding, diluted | 1,690 | 1,689 | 1,689 | 1,689 | 1,689 |
| Common shares outstanding at end of period | 1,690 | 1,690 | 1,689 | 1,689 | 1,689 |
| Profitability ratios | |||||
| Net interest margin (tax equivalent) | 3.35% | 3.53% | 3.52% | 3.49% | 3.43% |
| Efficiency ratio⁽²⁾ | 66.51 | 66.99 | 67.17 | 62.83 | 70.93 |
| Non-interest income to operating revenue | 29.21 | 25.73 | 26.02 | 26.30 | 22.39 |
| Effective income tax rate | 20.63 | 18.54 | 24.82 | 21.99 | 16.43 |
| Return on average assets | 0.71 | 0.72 | 0.78 | 0.77 | 0.57 |
| Return on average common shareholders' equity | 8.05 | 8.10 | 9.05 | 9.20 | 6.88 |
| Credit quality ratios | |||||
| Net charge-offs to average loans receivable, gross | 0.38% | 0.15% | 0.10% | 0.57% | 0.14% |
| Non-performing loans to loans receivable, gross | 2.43 | 2.21 | 2.03 | 2.16 | 3.80 |
| Accruing loans past due 30-89 days to loans receivable, gross | 0.83 | 0.65 | 1.12 | 0.66 | 0.66 |
| Allowance for loan losses to loans receivable, gross | 1.10 | 1.10 | 1.11 | 1.09 | 1.10 |
| Allowance for loan losses to non-performing loans | 45.28 | 50.04 | 54.77 | 50.47 | 28.95 |
| Non-performing assets to total assets | 1.62 | 1.40 | 1.27 | 1.78 | 2.25 |
| Capital ratios | |||||
| Common shareholders' equity to assets | 8.90% | 8.84% | 8.69% | 8.35% | 8.30% |
| Tangible common shareholders' equity to assets - Non-GAAP⁽¹⁾ | 7.28 | 7.18 | 7.02 | 6.69 | 6.66 |
| Tier 1 leverage capital | 9.78 | 9.92 | 9.69 | 9.45 | 9.49 |
| Total risk-based capital | 17.00 | 16.65 | 16.34 | 15.97 | 15.98 |
| (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) | Q3 2012 | Q2 2012 | Q1 2012 | Q4 2011 | Q3 2011 |
| Shareholders' Equity | $ 70,374 | $ 69,126 | $ 68,067 | $ 66,862 | $ 67,387 |
| Less: Preferred Stock | (16,000) | (16,000) | (16,000) | (16,000) | (16,000) |
| Common Shareholders' Equity | 54,374 | 53,126 | 52,067 | 50,862 | 51,387 |
| Less: Goodwill | (9,829) | (9,829) | (9,829) | (9,829) | (9,829) |
| Less: Intangible assets | (853) | (909) | (964) | (1,020) | (1,075) |
| Tangible Common Shareholders' Equity | $ 43,692 | $ 42,388 | $ 41,274 | $ 40,013 | $ 40,483 |
| Total Assets | $ 611,037 | $ 600,857 | $ 598,950 | $ 609,284 | $ 618,958 |
| Less: Goodwill | (9,829) | (9,829) | (9,829) | (9,829) | (9,829) |
| Less: Intangible assets | (853) | (909) | (964) | (1,020) | (1,075) |
| Tangible Total Assets | $ 600,355 | $ 590,119 | $ 588,157 | $ 598,435 | $ 608,054 |
| Common Shares outstanding | 1,690 | 1,690 | 1,689 | 1,689 | 1,689 |
| Book value per Common Share – GAAP | $ 32.18 | $ 31.44 | $ 30.83 | $ 30.12 | $ 30.43 |
| Tangible book value per Common Share - Non-GAAP | 25.86 | 25.09 | 24.44 | 23.69 | 23.97 |
| Common Equity to Assets – GAAP | 8.90% | 8.84% | 8.69% | 8.35% | 8.30% |
| Tangible Common Equity to Assets – Non-GAAP | 7.28 | 7.18 | 7.02 | 6.69 | 6.66 |
| Non-interest expense | $ 4,693 | $ 5,026 | $ 4,500 | $ 4,249 | $ 4,534 |
| Less: Amortization of core deposit intangibles | (56) | (56) | (56) | (56) | (56) |
| Less: Foreclosed property expense | (39) | 7 | (24) | 7 | (70) |
| Less: Nonrecurring expenses | |||||
| Pension plan curtailment | -- | (341) | -- | -- | -- |
| Litigation | (150) | (250) | -- | -- | -- |
| Operating Expenses | $ 4,448 | $ 4,386 | $ 4,420 | $ 4,200 | $ 4,408 |
| Net interest and dividend income, tax equivalent | $ 4,802 | $ 4,923 | $ 4,933 | $ 4,993 | $ 4,882 |
| Non-interest income | 1,887 | 1,890 | 1,659 | 1,691 | 1,334 |
| Less: Gains on securities, net | -- | (267) | (12) | -- | -- |
| Operating Revenue | $ 6,689 | $ 6,546 | $ 6,580 | $ 6,684 | $ 6,216 |
| Efficiency Ratio | 66.51% | 66.99% | 67.17% | 62.83% | 70.93% |