Salisbury Bancorp, Inc. Reports Results for Fourth Quarter and Full Year 2013; Declares 28 Cent Dividend

Salisbury Bancorp, Inc. Reports Results for Fourth Quarter and Full Year 2013; Declares 28 Cent Dividend  LAKEVILLE, Conn., Jan. 31, 2014 (GLOBE NEWSWIRE) -- Salisbury Bancorp, Inc. ("Salisbury") (Nasdaq:SAL), the holding company for Salisbury Bank and Trust Company (the "Bank"), announced results for its fourth quarter and full year ended December 31, 2013.  Selected fiscal year 2013 highlights  Net income available to common shareholders was $3,922,000, or $2.30 per common share, for 2013, compared with $3,861,000 or $2.28 per common share for 2012.    *Earnings per common share increased $0.02, or 0.9%, to $2.30.   *Earnings per common share excluding one-time fourth quarter expenses     related to strategic initiatives of $202,000 (net of taxes), or $0.12 per     share, would have been $2.42 per share or an increase of $0.14 (+6%)     compared to 2012.   *Tax equivalent net interest income increased $405,000, or 8.6%.   *Non-interest expense decreased $619,000, or 3.2%. Preferred stock     dividends were $161,000, versus $241,000 for 2012.  Fourth quarter 2013 dividend  The Board of Directors of Salisbury Bancorp, Inc. declared a $0.28 per common share quarterly cash dividend at their January 31, 2014 meeting. The dividend will be paid on February 28, 2014 to shareholders of record as of February 14, 2014.  Selected fourth quarter 2013 highlights  Net income available to common shareholders was $940,000, or $0.55 per common share, for its fourth quarter ended December 31, 2013 (fourth quarter 2013), compared with $976,000, or $0.57 per common share, for the third quarter ended September 30, 2013 (third quarter 2013), and $531,000, or $0.31 per common share, for the fourth quarter ended December 31, 2012 (fourth quarter 2012). Fourth quarter 2012 results included a $450,000 non-recurring expense to the FHLBB that was substantially recovered in 2013 through reduced interest expense.    *Earnings per common share increased $0.24, or 77.4%, versus fourth quarter     2012, but decreased $0.02, or 3.5%, to $0.55 versus third quarter 2013.   *Earnings per share excluding one-time expenses related to strategic     initiatives of $202,000 (net of taxes), or $0.12 per share, would have     been $0.67 per share for the quarter, an increase of $0.10 (+17%) as     compared to third quarter 2013.   *Tax equivalent net interest income increased $406,000, or 8.6%, versus     fourth quarter 2012 and increased $148,000, or 3.0%, versus third quarter     2013.   *Provision for loan losses was $190,000, versus $380,000 for fourth quarter     2012 and $240,000 for third quarter 2013.   *Net loan charge-offs were $163,000, versus $199,000 for fourth quarter     2012 and $215,000 for third quarter 2013.   *Non-interest expense decreased $357,000, or 6.7%, versus fourth quarter     2012 but increased $334,000, or 7.2%, versus third quarter 2013.   *Non-performing assets decreased $2.6 million, or 25.3%, versus fourth     quarter 2012 and decreased $2.2 million, or 22.5%, to $7.5 million, or     1.3% of total assets, versus third quarter 2013. Loans receivable 30 days     or more past due decreased $2.6 million versus fourth quarter 2012 and     decreased $410,000 to $11.0 million, or 2.5% of gross loans, versus third     quarter 2013.  Richard J. Cantele, Jr., President and Chief Executive Officer, stated, "While our progress has been restrained by the slow pace of economic growth in the region, we are pleased to report continued progress with respect to key strategic objectives and growth in our year-over-year earnings. Our continuing efforts to control non-interest expenses, maintain and improve asset quality, and grow net interest and dividend income, are enhancing our current results of operation and should continue to contribute to our future progress.Similarly, we are pleased to see continued growth in the assets under management in our Wealth Advisory Department.This continued success of our Wealth Advisory Department both distinguishes Salisbury from its competitors and diversifies our income stream by reducing our dependence on net interest income.We have also made advancements in implementing our strategic objectives of expanding our footprint in the market areas we serve through both de novo expansion and opportunistic acquisitions.In this regard, we recently took steps to establish a new branch in Great Barrington, Massachusetts and we signed an agreement to acquire a branch office and related deposits from another institution in Sharon, Connecticut.We expect to consolidate our existing Sharon office with such new branch following receipt of regulatory approvals and consummation of the transaction later this year.These efforts reflect our continuing interest in seeking opportunities to reach out and serve new customers and communities, while striving to maximize efficiency and maintain our commitment to quality customer service."  Net Interest Income  Tax equivalent net interest income for fourth quarter 2013 decreased $148,000, or 3.0%, versus third quarter 2013, and $406,000, or 8.6%, versus fourth quarter 2012. Average total interest bearing deposits decreased $19.3 million versus third quarter 2013 and decreased $1.1 million, or 2.86%, versus fourth quarter 2012. Average earning assets decreased $15.8 million versus third quarter 2013 and decreased $16.7 million, or 3.0%, versus fourth quarter 2012. The net interest margin increased 20 basis points versus third quarter 2013 and increased 39 basis points versus fourth quarter 2012 to 3.71% for fourth quarter 2013.  Non-Interest Income  Non-interest income for fourth quarter 2013 increased $110,000 versus third quarter 2013 and decreased $307,000 versus fourth quarter 2012. Trust and Wealth Advisory revenues increased $25,000 versus third quarter 2013 and increased $3,000 versus fourth quarter 2012. The quarter-over-quarter revenue increase resulted from growth in managed assets which were partially offset by decreased estate fees. Service charges and fees increased $17,000 versus third quarter 2013, and increased $51,000 versus fourth quarter 2012 due to restructuring of deposit fees and increased volume of debit card interchange fees in 2013. Income from sales and servicing of mortgage loans increased $84,000 versus third quarter 2013 due to higher sales volume and a decrease in the MSR impairment reserve. Income from sales and servicing of mortgage loans decreased $354,000 versus fourth quarter 2012 due primarily to fewer loans sold in 2013 than in 2012. Mortgage loan sales totaled $2.4 million for fourth quarter 2013, $2.2 million for third quarter 2013 and $13.4 million for fourth quarter 2012. Fourth quarter 2013, third quarter 2013 and fourth quarter 2012 included mortgage servicing valuation impairment benefit (expense) of $27,000, ($38,000) and $73,000, respectively.  Non-Interest Expense  Non-interest expense for fourth quarter 2013 increased $334,000 versus third quarter 2013 and decreased $357,000 versus fourth quarter 2012. Net compensation increased $9,000 versus third quarter 2013 and increased $76,000 versus fourth quarter 2012 due to changes in staffing levels, merit increases and increased employee benefits costs. Premises and equipment costs increased $13,000 versus third quarter 2013 and remained level versus fourth quarter 2012. The third quarter increase was due primarily to the Millerton drive-up renovations. Data processing increased $12,000 versus third quarter 2013 and decreased $10,000 versus fourth quarter 2012. Professional fees increased $223,000 versus third quarter 2013 and increased $232,000 versus fourth quarter 2012 due to consulting, legal and other professional services associated with efforts to implement strategic and capital planning by taking advantage of prudent opportunities to expand our franchise through de novo branching and acquisition opportunities, including our plans to establish a full-service branch in Great Barrington, Massachusetts and our agreement to acquire a branch office and related deposits from another institution in Sharon, Connecticut.Each of these is expected to commence operations in the second quarter of this year. Collections and OREO increased $141,000 versus third quarter 2013 due primarily to write-down of OREO properties, and decreased $127,000 versus fourth quarter 2012 due to a change in the accounting for delinquent property taxes and fewer OREO properties to maintain. FDIC insurance increased $9,000 versus third quarter 2013 and decreased $2,000 versus fourth quarter 2012. A fourth quarter 2012 FHLBB advance prepayment fee of $450,000 resulted from the early prepayment of a $10 million advance due 12/16/2013 with a 4.88% coupon.   The effective income tax rates for fourth quarter 2013, third quarter 2013 and fourth quarter 2012 were 17.92%, 17.70% and 4.36%, respectively.  Loans  Net loans receivable increased $17.9 million during fourth quarter 2013 to $438.2 million at December 31, 2013, compared with $420.0 million at September 30, 2013, and increased $49.4 million for full year 2013, compared with $388.8 million at December 31, 2012.  Asset Quality  Non-performing assets decreased $2.2 million during fourth quarter 2013 to $7.5 million, or 1.29% of assets at December 31, 2013, from $9.7 million, or 1.65% of assets at September 30, 2013, and decreased $2.6 million in 2013 from $10.1 million, or 1.68% of assets at December 31, 2012.  Fourth quarter 2013 non-performing assets activity included: $263,000 of loans placed on non-accrual status; $276,000 of loan charge-offs; $65,000 of loan repayments; $695,000 of loans paid off; $1.4 million reinstated to accrual; and, $69,000 in proceeds from OREO sales.  At December 31, 2013, 17.8% of non-accrual loans were current with respect to loan payments, compared with 16.7% at September 30, 2013 and 18.2% at December 31, 2012.  Non-performing assets include OREO of $377,000 at December 31, 2013, compared with $571,000 at September 30, 2013, and $244,000 at December 31, 2012.  Total impaired and potential problem loans decreased $307,000, or 1.2%, during fourth quarter 2013 to $24.8 million, or 5.6% of gross loans receivable at December 31, 2013, from $25.1 million, or 5.9% of gross loans receivable at September 30, 2013, and decreased $2.6 million for year-to-date 2013 from $27.4 million, or 7.0% of gross loans receivable at December 31, 2012.  Loans past due 30 days or more decreased $410,000 during fourth quarter 2013 to $11.0 million, or 2.5% of gross loans receivable at December 31, 2013, from $11.4 million, or 2.7% of gross loans receivable at September 30, 2013, and decreased $2.6 million in 2013 from $13.6 million, or 3.47% of gross loans receivable at December 31, 2012.  The provision for loan losses for fourth quarter 2013 was $190,000 versus $240,000 for third quarter 2013 and $380,000 for fourth quarter 2012. Net loan charge-offs were $163,000, $215,000 and $199,000, for the respective periods. Loan charge-offs for fourth quarter 2013 related to the aforementioned residential property and other non-performing loans. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, remained relatively unchanged at 1.06%, versus 1.10% for third quarter 2013 and 1.11% for fourth quarter 2012.  Salisbury has cooperative relationships with the vast majority of its non-performing loan 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  Book value and tangible book value per common share increased $0.92 and $0.95, respectively, during fourth quarter, to $33.21 and $27.12, respectively. Tangible book value excludes goodwill and core deposit intangibles.  Shareholders' equity increased $1.6 million in fourth quarter 2013 to $72.8 million at December 31, 2013. Contributing to the increase in shareholders' equity for fourth quarter 2013 was net income of $1.0 million and other comprehensive income of $1.1 million, less common and preferred stock dividends of $0.5 million.  Both Salisbury and the Bank's regulatory capital ratios remain in compliance with regulatory "well capitalized" requirements. At December 31, 2013 the Bank's Tier 1 leverage and total risk-based capital ratios were 8.96% and 13.93%, respectively, compared with regulatory "well capitalized" minimums of 5.00% and 10.00%, respectively. Salisbury's Tier 1 leverage and total risk-based capital ratios were 10.65% and 16.46%, respectively.  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 $36.9 million and to augment its regulatory capital ratios.  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)                    December 31, December 31,                                                     2013         2012 ASSETS                                                            Cash and due from banks                              $5,926      $9,545 Interest bearing demand deposits with other banks    6,785        34,029 Total cash and cash equivalents                      12,711       43,574 Interest bearing time deposits with other banks      738          -- Securities                                                        Available-for-sale at fair value                     94,491       126,287 Federal Home Loan Bank of Boston stock at cost       5,340        5,747 Loans held-for-sale                                  173          1,879 Loans receivable, net (allowance for loan losses:    438,178      388,758 $4,683 and $4,360) Other real estate owned                              377          244 Bank premises and equipment, net                     11,611       11,520 Goodwill                                             9,829        9,829 Intangible assets (net of accumulated amortization:  576          798 $1,968 and $1,745) Accrued interest receivable                          1,760        1,818 Cash surrender value of life insurance policies      7,529        7,295 Deferred taxes                                       260          -- Other assets                                         3,536       3,064 Total Assets                                         $587,109    $600,813 LIABILITIES and SHAREHOLDERS' EQUITY                              Deposits                                                          Demand (non-interest bearing)                        $84,677     $98,850 Demand (interest bearing)                            81,932       65,991 Money market                                         120,550      128,501 Savings and other                                    107,171      103,985 Certificates of deposit                              83,039       93,888 Total deposits                                       477,369      491,215 Repurchase agreements                                2,554        1,784 Federal Home Loan Bank of Boston advances            30,411       31,980 Capital lease liability                              425          -- Accrued interest and other liabilities               3,560        3,837 Total Liabilities                                    514,319      528,816 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 Paid-in capital                                      13,668       13,158 Retained earnings                                    42,240       40,233 Unearned compensation - restricted stock awards      (335)        -- Accumulated other comprehensive income, net          1,046       2,437 Total Shareholders' Equity                           72,790       71,997 Total Liabilities and Shareholders' Equity           $587,109    $600,813                                                                                                                      Salisbury Bancorp, Inc. and Subsidiary                     CONSOLIDATED STATEMENTS OF INCOME                          (unaudited)  Periods ended December 31,              Three months ended Twelve months ended (in thousands, except per share         2013      2012     2013      2012 amounts) Interest and dividend income                                       Interest and fees on loans              $4,563   $4,376  $17,978  $18,054 Interest on debt securities                                        Taxable                                 398       515      1,757     2,454 Tax exempt                              507       491      1,948     2,030 Other interest and dividends            9        44      67       120 Total interest and dividend income      5,477     5,426    21,750    22,658 Interest expense                                                   Deposits                               376       543      1,813     2,414 Repurchase agreements                   2         2        6         23 Federal Home Loan Bank of Boston        308       447      1,243     1,845 advances Total interest expense                  686       992      3,062     4,282 Net interest income                     4,791     4,434    18,688    18,376 Provision for loan losses               190       380      1,066     1,070 Net interest and dividend income after 4,601     4,054    17,622    17,306 provision for loan losses Non-interest income                                                Trust and wealth advisory               775       772      3,074     2,945 Service charges and fees                612       561      2,298     2,189 Gains on sales of mortgage loans, net   78        394      579       1,596 Mortgage servicing, net                 38        76       35        (21) Gains on securities, net                --        --       --        279 Other                                  67        74       319       326 Total non-interest income               1,570     1,877    6,305     7,314 Non-interest expense                                               Salaries                                1,960     1,880    7,467     7,149 Employee benefits^(1)                   664       668      2,804    2,912 Premises and equipment                  609       609      2,398     2,408 Data processing                         370       379      1,514     1,569 Professional fees                       529       297      1,524     1,212 Collections and OREO                    215       342      519       709 Litigation settlement                   --        --       --        400 FDIC insurance                          120       123      470       486 Marketing and community support         67        89       393       356 Amortization of intangibles             56        56       222       222 FHLBB advance prepayment fee            --        450      --        450 Other                                   387       441      1,624     1,681 Total non-interest expense              4,977     5,334    18,935    19,554 Income before income taxes              1,194     597      4,992     5,066 Income tax provision                    214       26       909       989 Net income                              $980     $571    $4,083   $4,077 Net income available to common          $940     $531    $3,922   $3,861 shareholders                                                                   Basic earnings per common share         $0.55    $0.31   $2.30    $2.28 Diluted earnings per common share       0.55      0.31     2.30      2.28 Common dividends per share              0.28      0.28     1.12      1.12                                                                   ^(1)Included pension plan curtailment expense of $341,000 for the twelve month period ended December 31, 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   Q4 2013    Q3 2013    Q2 2013    Q1 2013    Q4 2012 ratios) Total assets            $ 587,109  $ 589,481  $ 600,712  $ 597,343  $ 600,813 Loans receivable, net   438,178    420,306    416,729    406,258    388,758 Total securities        99,831     105,156    111,950    124,004    132,034 Deposits                477,369    479,869    492,040    487,773    491,215 FHLBB advances          30,411     30,801     31,187     31,574     31,980 Shareholders' equity    72,790     71,211     71,489     72,206     71,997 Wealth assets under     431,793    408,448    402,897    404,211    388,113 management Non-performing loans    7,172      9,166      9,204      8,585      9,860 Non-performing assets   7,549      9,737      9,639      9,297      10,104 Accruing loans past due 5,374      5,093      4,271      4,718      5,629 30-89 days Net interest and        4,791      4,659      4,634      4,603      4,434 dividend income Net interest and dividend income, tax    5,115      4,967      4,942      4,903      4,709 equivalent Provision for loan      190        240        240        396        380 losses Non-interest income     1,570      1,460      1,650      1,625      1,877 Non-interest expense    4,977      4,643      4,610      4,705      5,334 Income before income    1,194      1,237      1,433      1,127      597 taxes Income tax provision    214        219        289        187        26 Net income              980        1,016      1,143      940        571 Net income available to 940        976        1,103      899        531 common shareholders                                                                 Per share data                                                   Basic and diluted earnings per common     $0.55     $0.57     $0.65     $0.53     $0.31 share Diluted earnings per    0.55       0.57       0.65       0.53       0.31 common share Dividends per common    0.28       0.28       0.28       0.28       0.28 share Book value per common   33.21      32.28      32.45      32.88      33.14 share Tangible book value per common share -          27.12      26.17      26.30      26.70      26.85 Non-GAAP^(1)                                                                 Common shares outstanding at end of   1,710      1,710      1,710      1,709      1,690 period Weighted average common shares outstanding,                                              basic and diluted, for  1,691      1,691      1,691      1,690      1,690 purposes of calculating EPS                                                                 Profitability ratios                                             Net interest margin     3.71%      3.51%      3.54%      3.54%      3.32% (tax equivalent) Efficiency ratio^(2)    71.77      71.22      68.88      70.93      71.41 Non-interest income to  24.68      23.85      26.26      26.08      29.74 operating revenue Effective income tax    17.92      17.70      20.19      16.59      4.36 rate Return on average       0.64       0.64       0.74       0.61       0.35 assets Return on average common shareholders'    6.69       7.05       7.81       6.45       3.85 equity                                                                 Credit quality ratios                                            Net charge-offs to average loans           0.15%      0.20%      0.29%      0.07%      0.21% receivable, gross Non-performing loans to 1.62       2.16       2.19       2.09       2.51 loans receivable, gross Accruing loans past due 30-89 days to loans     1.22       1.20       1.02       1.15       1.44 receivable, gross Allowance for loan losses to loans         1.06       1.10       1.10       1.14       1.11 receivable, gross Allowance for loan losses to               65.30      50.80      50.32      54.59      44.22 non-performing loans Non-performing assets   1.29       1.65       1.60       1.56       1.68 to total assets                                                                 Capital ratios                                                   Common shareholders'    9.67%      9.37%      9.24%      9.41%      9.32% equity to assets Tangible common shareholders' equity to 8.04       7.73       7.62       7.78       7.69 assets - Non-GAAP^(1) Tier 1 leverage capital 10.65      10.28      10.23      10.17      9.87 Total risk-based        16.46      16.67      16.48      16.47      16.63 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    Q4 2013   Q3 2013   Q2 2013   Q1 2013   Q4 2012 share amounts and ratios) Shareholders' Equity         $72,790  $71,211  $71,489  $72,206  $71,997 Less: Preferred Stock        (16,000)  (16,000)  (16,000)  (16,000)  (16,000) Common Shareholders' Equity  56,790    55,211    55,489    56,206    55,997 Less: Goodwill               (9,829)   (9,829)   (9,829)   (9,829)   (9,829) Less: Intangible assets      (576)     (631)     (687)     (742)     (798) Tangible Common              $46,385  $44,751  $44,973  $45,635  $45,370 Shareholders' Equity Total Assets                 $ 587,109 $ 589,481 $ 600,712 $ 597,343 $ 600,813 Less: Goodwill               (9,829)   (9,829)   (9,829)   (9,829)   (9,829) Less: Intangible assets      (576)     (631)     (687)     (742)     (798) Tangible Total Assets        $ 576,704 $ 579,021 $ 590,196 $ 586,772 $ 590,186 Common Shares outstanding    1,710     1,710     1,710     1,709     1,690                                                                  Book value per Common Share  $33.21   $32.28   $32.45   $32.88   $33.14 – GAAP Tangible book value per      27.12     26.17     26.30     26.70     26.85 Common Share - Non-GAAP                                                                  Common Equity to Assets –    9.67%     9.37%     9.24%     9.41%     9.32% GAAP Tangible Common Equity to    8.04      7.73      7.62      7.78      7.69 Assets – Non-GAAP                                                                  Non-interest expense         $4,977   $4,643   $4,610   $4,705   $5,334 Less: Amortization of core   (56)      (56)      (56)      (56)      (56) deposit intangibles Less: Foreclosed property    (123)     (10)      (14)      (20)      (125) expense Less: Nonrecurring expenses                                       FHLBB prepayment fee         --        --        --        --        (450) Operating Expenses           $4,798   $4,577   $4,540   $4,629   $4,703 Net interest and dividend    $5,115   $4,967   $4,942   $4,903   $4,709 income, tax equivalent Non-interest income          1,570     1,459     1,650     1,625     1,877 Operating Revenue            $6,685   $6,426   $6,592   $6,528   $6,586 Efficiency Ratio             71.77%    71.22%    68.88%    70.93%    71.41%                                                                   CONTACT: Salisbury Contact:          Richard J. Cantele, Jr.,          President and Chief Executive Officer          860-435-9801 or rcantele@salisburybank.com