Salisbury Bancorp, Inc. Reports Results for Third Quarter 2013; Declares 28 Cent Dividend

Salisbury Bancorp, Inc. Reports Results for Third Quarter 2013; Declares 28
Cent Dividend

LAKEVILLE, Conn., Oct. 25, 2013 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc.
("Salisbury") (Nasdaq: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).

  oEarnings 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.
  oTax 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.
  oNet 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.
  oNon-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.
  oNon-interest expense increased $33,000, or 0.7%, versus second quarter
    2013 and decreased $50,000, or 1.1%, versus third quarter 2012.
  oPreferred 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.
  oNon-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, December 31,
                                               2013         2012
ASSETS                                                       
Cash and due from banks                         $7,679        $9,545
Interest bearing demand deposits with other     16,040        34,029
banks
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       420,306       388,758
losses: $4,656 and $4,360)
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           631           798
amortization: $1,912 and $1,745)
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,  (32)          2,437
net
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   2013      2012     2013     2012
amounts)
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       5,431     5,607    16,273   17,231
income
Interest expense                                           
Deposits                          459       580      1,437    1,870
Repurchase agreements             2         3        4        21
Federal Home Loan Bank of Boston  311       452      935      1,398
advances
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  4,419     4,242    13,021   13,252
after provision for loan losses
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, 69        568      501      1,203
net
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    $976      $1,094   $2,982   $3,328
shareholders
                                                          
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   Q3 2013  Q2 2013  Q1 2013  Q4 2012  Q3 2012
ratios)
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     408,448  402,897  404,211  388,113  388,807
management
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 5,093    4,271    4,718    5,629    3,152
30-89 days
Net interest and        4,659    4,634    4,603    4,434    4,572
dividend income
Net interest and
dividend income, tax    4,967    4,942    4,903    4,709    4,847
equivalent
Provision for loan      240      240      396      380      330
losses
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    1,235    1,433    1,127    597      1,436
taxes
Income tax provision    219      289      187      26       296
Net income              1,016    1,143    940      571      1,140
Net income available to 976      1,103    899      531      1,094
common shareholders
                                                       
Per share data                                          
Basic earnings per      $0.57    $0.65    $0.53    $0.31    $0.65
common share
Diluted earnings per    0.57     0.65     0.53     0.31     0.65
common share
Dividends per common    0.28     0.28     0.28     0.28     0.28
share
Book value per common   32.28    32.45    32.88    33.14    32.18
share
Tangible book value per
common share -          26.17    26.30    26.70    26.85    25.86
Non-GAAP⁽¹⁾
                                                       
Common shares
outstanding at end of   1,710    1,710    1,709    1,690    1,690
period
Weighted average common
shares outstanding,
basic and diluted, for  1,691    1,691    1,690    1,690    1,690
purposes of calculating
EPS
                                                       
Profitability ratios                                    
Net interest margin     3.51%    3.54%    3.54%    3.32%    3.39%
(tax equivalent)
Efficiency ratio⁽²⁾     71.22    68.88    70.93    71.41    66.06
Non-interest income to  23.85    26.26    26.08    29.74    29.21
operating revenue
Effective income tax    17.73    20.19    16.59    4.32     20.63
rate
Return on average       0.64     0.74     0.61     0.35     0.71
assets
Return on average
common shareholders'    7.05     7.81     6.45     3.85     8.05
equity
                                                       
Credit quality ratios                                   
Net charge-offs to
average loans           0.20%    0.29%    0.07%    0.21%    0.38%
receivable, gross
Non-performing loans to 2.16     2.19     2.09     2.51     2.43
loans receivable, gross
Accruing loans past due
30-89 days to loans     1.20     1.02     1.15     1.44     0.83
receivable, gross
Allowance for loan
losses to loans         1.10     1.10     1.14     1.11     1.10
receivable, gross
Allowance for loan
losses to               50.80    50.32    54.59    44.22    45.28
non-performing loans
Non-performing assets   1.65     1.60     1.56     1.68     1.62
to total assets
                                                       
Capital ratios                                          
Common shareholders'    9.37%    9.24%    9.41%    9.32%    8.90%
equity to assets
Tangible common
shareholders' equity to 7.73     7.62     7.78     7.69     7.28
assets - Non-GAAP⁽¹⁾
Tier 1 leverage capital 10.28    10.23    10.17    9.87     9.78
Total risk-based        16.67    16.48    16.47    16.63    17.00
capital

⁽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 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   Q3 2013  Q2 2013  Q1 2013  Q4 2012  Q3 2012
ratios)
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'    55,211   55,489   56,206   55,997   54,374
Equity
Less: Goodwill          (9,829)  (9,829)  (9,829)  (9,829)  (9,829)
Less: Intangible assets (631)    (687)    (742)    (798)    (853)
Tangible Common         $44,751  $44,973  $45,635  $45,370  $43,692
Shareholders' Equity
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           1,710    1,710    1,709    1,690    1,690
outstanding
                                                       
Book value per Common   $32.28   $32.45   $32.88   $33.14   $32.18
Share – GAAP
Tangible book value per 26.17    26.30    26.70    26.85    25.86
Common Share - Non-GAAP
                                                       
Common Equity to Assets 9.37%    9.24%    9.41%    9.32%    8.90%
– GAAP
Tangible Common Equity  7.73     7.62     7.78     7.69     7.28
to Assets – Non-GAAP
                                                       
Non-interest expense    $4,643   $4,610   $4,705   $5,334   $4,693
Less: Amortization of
core deposit            (56)     (56)     (56)     (56)     (56)
intangibles
Less: Foreclosed        (10)     (14)     (20)     (125)    (39)
property expense
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    $4,967   $4,942   $4,903   $4,709   $4,847
equivalent
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%
                                                       

CONTACT: Salisbury Contact:
         Richard J. Cantele, Jr.,
         President and Chief Executive Officer
         860-435-9801 or rcantele@salisburybank.com
 
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