SAL Salisbury Bancorp Inc

Salisbury Bancorp, Inc. (“Salisbury”), (NASDAQ Capital Market: “SAL”), the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its fourth quarter and full year ended December 31, 2022.

Net income available to common shareholders was $4.1 million, or $0.71 per basic common share, for the fourth quarter ended December 31, 2022 (fourth quarter 2022), compared with $4.3 million, or $0.75 per basic common share, for the third quarter ended September 30, 2022 (third quarter 2022), and $4.1 million, or $0.72 per basic common share, for the fourth quarter ended December 31, 2021 (fourth quarter 2021). Net income for fourth quarter 2022 included costs of approximately $0.5 million, or $0.07 per basic share, related to Salisbury’s previously announced merger agreement with NBT Bancorp (“NBT merger”).

Salisbury’s President and Chief Executive Officer, Richard J. Cantele, Jr., stated, “Thanks to the dedication and hard work of our employees, we reported strong earnings and robust loan growth in 2022 and our credit quality metrics remain favorable despite a challenging macro-economic environment. We enter 2023 from a position of strength and Salisbury employees remain focused on prudently managing the bank’s capital and providing outstanding service to our customers.”

Net Interest and Dividend Income

Tax equivalent net interest income of $12.2 million for the fourth quarter 2022 increased $167 thousand, or 1.4%, versus third quarter 2022, and increased $1.5 million, or 13.8%, versus fourth quarter 2021. Tax equivalent interest income of $14.4 million for fourth quarter 2022 increased $1.1 million, or 8.6%, versus third quarter 2022 and increased $2.8 million, or 24.4%, from fourth quarter 2021. The cost of interest-bearing liabilities of $2.1 million for fourth quarter 2022 increased $1.0 million, or 83.5%, from third quarter 2022 and increased $1.3 million, or 164.0%, from fourth quarter 2021.

Average earning assets of $1.47 billion for fourth quarter 2022 increased $12.2 million, or 0.8%, from third quarter 2022, and increased $50.4 million, or 3.5%, versus fourth quarter 2021. Average earning assets for fourth quarter 2022 included average PPP loan balances of $0.4 million, net of deferred fees, compared with $1.3 million and $32.0 million in third quarter 2022 and fourth quarter 2021, respectively. Average total interest bearing liabilities of $982 million for fourth quarter 2022 increased $10.5 million, or 1.1%, from third quarter 2022 and increased $29.8 million, or 3.1%, versus fourth quarter 2021.

The tax equivalent net interest margin for fourth quarter 2022 was 3.28% compared with 3.27% for third quarter 2022 and 2.99% for fourth quarter 2021. Excluding PPP loans, the tax equivalent net interest margin for fourth quarter 2022 was 3.28% compared with 3.25% for third quarter 2022 and 2.87% for fourth quarter 2021. See SUPPLEMENTAL INFORMATION – Net Interest and Dividend Income on page 9 of this release for additional details.

Non-Interest Income

Non-interest income of $2.6 million for fourth quarter 2022 decreased $75 thousand versus third quarter 2022 and decreased $229 thousand versus fourth quarter 2021.

Trust and Wealth Advisory fees of $1.1 million for fourth quarter 2022 decreased $103 thousand from third quarter 2022 and decreased $161 thousand from fourth quarter 2021. Assets under administration were $1.3 billion at December 30, 2022 compared with $1.1 billion at December 31, 2021 and $1.2 billion at September 30, 2022. Discretionary assets under administration of $561.0 million at December 31, 2022 compared with $657.8 million at December 31, 2021 and $522.1 million at September 30, 2022. The variance from the comparative quarters primarily reflected changes in market valuations. Non-discretionary assets under administration of $728.9 million at December 31, 2022 increased from $425.4 million at December 31, 2021 and increased from $710.2 million at September 30, 2022. The increase in non-discretionary assets from the comparative quarters primarily reflected a higher valuation of certain partnership assets for an existing client relationship. The trust and wealth business records only a nominal annual fee on this relationship.

Service charges and fees of $1.2 million for fourth quarter 2022 were essentially unchanged from third quarter 2022 and decreased $67 thousand from fourth quarter 2021. Deposit fees for fourth quarter 2022 were essentially unchanged from the comparative quarters. Net fees from mortgage banking activities were below the comparative quarters. Salisbury did not sell any residential loans to FHLBB during fourth quarter and third quarter 2022 compared with sales of $4.2 million in fourth quarter 2021.

Non-Interest Expense

Non-interest expense of $8.9 million for fourth quarter 2022 increased $435 thousand from third quarter 2022 and increased $476 thousand versus fourth quarter 2021. Non-interest expense for fourth quarter 2022 included costs of approximately $500 thousand primarily for legal and investment banking expenses associated with the pending NBT merger. Compensation expense of $5.3 million for fourth quarter 2022 increased $306 thousand from third quarter 2022 and increased $546 thousand versus fourth quarter 2021. The increase in compensation expense from the comparative periods primarily reflected higher base salary expense and higher incentive accruals as well as higher deferred compensation expense.

Excluding compensation expense, other non-interest expenses for fourth quarter 2022 increased $129 thousand from third quarter 2022 and decreased $70 thousand from fourth quarter 2021. The increase from the prior quarter primarily reflected higher professional fees associated with the NBT merger, which were partially offset by lower facilities, marketing and deposit-related costs. The decrease from fourth quarter 2021 primarily reflected lower marketing costs, appraisal fees and deposit-related costs, which were partially offset by higher professional fees associated with the pending NBT merger.

The effective income tax rates for fourth quarter 2022, third quarter 2022 and fourth quarter 2021 were 20.1%, 18.7% and 19.1%, respectively.

Full Year Results

2022 net income available to common shareholders was $15.6 million, or $2.75 per basic common share, compared with $16.2 million, or $2.88 per basic common share for 2021. Results for 2022 included a provision of $2.7 million compared with a net release of credit reserves of $0.7 million for 2021.

Tax equivalent net interest income of $45.8 million for 2022 increased $4.5 million, or 10.8%, from $41.3 million in 2021. Tax equivalent interest income of $50.8 million for 2022 increased $6.0 million, or 13.4%, from $44.8 million in 2021. In 2022 Salisbury recorded PPP interest income and net fee income of $72 thousand and $751 thousand, respectively, compared with $651 thousand and $2.9 million, respectively, in 2021. This decrease in net PPP fee income was offset by higher interest income on residential and commercial loans due to higher interest rates and record loan growth in 2022.

The cost of interest-bearing liabilities of $5.0 million for 2022 increased $1.5 million, or 44.2%, from $3.4 million in 2021. The increase primarily reflected higher interest expense on deposits, partially offset by lower interest expense on subordinated debt.

Average earning assets of $1.43 billion increased $69.4 million, or 5.1%, from $1.37 billion in 2021 and average total interest-bearing liabilities of $964.0 million increased $31.5 million, or 3.4%, from $932.5 million in 2021. The tax equivalent net interest margin for 2022 was 3.16% compared with 3.01% for 2021. Excluding PPP, the tax equivalent net interest margin for 2022 was 3.12% compared with 2.87% for 2021.

Non-interest income of $11.7 million for 2022 increased $0.2 million from $11.5 million in 2021. The increase primarily reflected higher deposit and lending-related fees, higher BOLI income, partially offset by lower gains on the sale and servicing of mortgage loans. Salisbury sold $7.2 million of mortgage loans in 2022 compared with sales of $34.6 million in 2021.

Non-interest expense of $34.6 million for 2022 increased $2.5 million versus $32.1 million in 2021. The increase primarily reflected higher compensation, technology, and professional fees, which were partially offset by lower marketing costs and lower core deposit intangible amortization expense. Non-interest expenses for 2022 also included costs of approximately $0.5 million related to the NBT merger.

The effective tax rate for 2022 was 18.2% compared with 20.6% for 2021. The higher tax rate in 2021 reflected a lower mix of tax-exempt income from municipal bonds, tax advantaged loans and bank-owned life insurance on a comparatively higher level of pre-tax income.

Loans

Gross loans receivable of $1.2 billion increased $37.7 million, or 3.2%, from third quarter 2022, and increased $148.8 million, or 13.8%, from fourth quarter 2021. Excluding PPP loans, gross loans receivable increased $37.9 million, or 3.2%, from third quarter 2022 and $174.1 million, or 16.5%, from fourth quarter 2021. Residential 5+ multifamily gross loans receivable at December 31, 2022 and September 30, 2022 included a loan for approximately $16.0 million. At December 31, 2021 this loan, which had a gross balance of approximately $12.0 million, was reported in the commercial real estate category while the project was under construction. The ratio of gross loans to deposits for fourth quarter 2022 was 90.4% compared with 89.9% for third quarter 2022 and 80.8% for fourth quarter 2021. Balances by loan type for the comparative periods were as follows:

Loan Type		Q4 2022			Q3 2022				Q4 2021
Residential Real Estate (1-4 Family)		$	476,719		$	461,379			$	416,139
Residential 5+ Multifamily			80,400			70,459				52,325
Commercial Real Estate			421,147			413,019				369,761
Commercial & Industrial ex PPP Loans			190,191			186,527				169,543
PPP Loans			299			469				25,589
Commercial & Industrial – Total			190,490			186,996				195,132
Farm Land			4,081			4,225				2,807
Vacant Land			14,440			14,796				14,182
Municipal			19,693			18,607				16,534
Consumer			20,546			20,344				12,547
Deferred Costs/(Fees)			1,001			1,002				285
Gross Loans Receivable		$	1,228,517		$	1,190,827			$	1,079,712
Gross Loans Receivable ex PPP		$	1,228,218		$	1,190,358			$	1,054,123

Asset Quality

Non-performing assets of $2.7 million, or 0.17% of total assets at December 31, 2022, decreased $1.5 million from $4.2 million, or 0.27% of total assets at December 31, 2021, and increased $0.8 million from $1.9 million, or 0.12% of total assets, at September 30, 2022.

The amount of total impaired and potential problem loans increased $0.2 million during the quarter to $11.4 million or 0.93% of gross loans receivable at December 31, 2022 compared to $32.8 million, or 3.04% of gross loans receivable at December 31, 2021 and $11.2 million, or 0.94% of gross loans receivable at September 30, 2022. The decrease in the balance from fourth quarter 2021 primarily reflected management’s upgrade of the internal risk rating on certain hospitality related loans, which were previously downgraded due to concerns over COVID-19. These businesses have demonstrated a return to pre-pandemic levels of activity and liquidity, warranting the improvement in risk rating.

Accruing loans receivable 30-to-89 days past due of $1.3 million, or 0.11% of gross loans receivable, were essentially unchanged from December 31, 2021, and increased $0.9 million from $0.4 million, or 0.03% of gross loans receivable at September 30, 2022.

The allowance for loan losses for fourth quarter 2022 was $14.8 million compared with $14.3 million for third quarter 2022 and $13.0 million for fourth quarter 2021.The provision expense was $0.5 million for fourth quarter 2022 compared with a provision expense of $0.7 million for third quarter 2022 and a net reserve release of $0.2 million for fourth quarter 2021. The provision expense for fourth quarter 2022 reflected the strong loan growth in the quarter. Net loan charge-offs were $13 thousand for the fourth quarter 2022 compared with $64 thousand for third quarter 2022 and $3 thousand for the fourth quarter 2021.

Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, excluding PPP loans, was 1.21% for the fourth quarter 2022 versus 1.20% for the third quarter 2022 and 1.23% for the fourth quarter 2021. Similarly, reserve coverage, as measured by the ratio of the allowance for loan losses to non-performing loans was 558% for the fourth quarter 2022 versus 771% for third quarter 2022 and 309% for fourth quarter 2021.

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.

Deposits and Borrowings

Deposits of $1.4 billion at December 31, 2022 increased $22.2 million, or 1.7%, from December 31, 2021 and increased $33.2 million, or 2.5%, from September 30, 2022. At December 31, 2022, Salisbury had outstanding brokered deposits balances of $45.0 million compared with balances of $7.9 million at December 31, 2021. Salisbury did not have any outstanding brokered deposit balances at September 30, 2022. Brokered deposits are included in the certificates of deposit balances on Salisbury’s consolidated balance sheet. Management utilized brokered deposits in fourth quarter 2022 to fund continued loan growth and to offset seasonal deposit outflows. Average total deposits were $1.3 billion for fourth quarter 2022, third quarter 2022 and fourth quarter 2021. Average total deposits for fourth quarter 2022 included average brokered deposits of $25.8 million compared with $17.6 million for third quarter 2022 and $7.9 million for fourth quarter 2021.

Salisbury had $10.0 million of outstanding advances from FHLBB at December 31, 2022 compared with $7.7 million at December 31, 2021 and $20.0 million at September 30, 2021, respectively. Salisbury’s excess borrowing capacity at FHLBB was approximately $241 million at December 31, 2022.

Capital

Shareholders’ equity increased $5.2 million in fourth quarter to $128.4 million at December 31, 2022 as net income of $4.1 million, unrealized gains, net of taxes, in the available-for-sale securities (“AFS”) portfolio of $1.6 million and other activity of $0.4 million, were partially offset by common stock dividends paid of $0.9 million. The unrealized losses, net of taxes, in the AFS portfolio were $20.7 million at December 31, 2022. These losses, which reflected the sharp increase in market interest rates during 2022, reduced both book value and tangible book value at December 31, 2022 compared with year end 2021. Book value per common share of $22.13 at December 31, 2022 increased $0.84 from third quarter 2022 and decreased $1.74 from fourth quarter 2021. Tangible book value per common share of $19.71 at December 31, 2022 increased $0.85 from third quarter 2022 and decreased $1.67 from fourth quarter 2021.

The Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At December 31, 2022, the Bank’s Tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.99%, 13.43%, and 12.24%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively. The unrealized losses in the AFS portfolio noted above do not affect the Bank’s regulatory capital ratios.

During fourth quarter 2022, Salisbury did not repurchase any of its outstanding common stock pursuant to its stock repurchase program established in March 2021.

Dividend on Common Shares

On January 25, 2023, the Board of Directors of Salisbury approved a quarterly cash dividend of $0.16 per common share that will be paid on February 24, 2023 to shareholders of record as of February 10, 2023.

Other Matters

In July 2022, Salisbury management discovered that the Bank’s trust department terminated a trust account in May 2020 and distributed approximately $1.0 million that should have been retained in continuance of the trust account. In December 2022, Salisbury filed a complaint against the beneficiaries to recover the distributed proceeds and to reinstate the trust account. At this time, management believes that Salisbury’s exposure is not yet known or knowable and could potentially range from zero to approximately $0.8 million depending upon the facts and circumstances.

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; Great Barrington, South Egremont and Sheffield, Massachusetts; and Dover Plains, Fishkill, Millerton, Newburgh, New Paltz, Poughkeepsie, and Red Oaks Mill, New York. The Bank offers a broad spectrum of consumer and business banking products and services, as well as trust and wealth advisory services. For more information, please visit www.salisburybank.com. 

Forward-Looking Statements

This news release may contain statements relating to Salisbury’s and the Bank’s future results that are considered “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 laws and regulations; changes in accounting principles; and the quality or composition of the loan and investment portfolios, technological changes and cybersecurity matters, and other factors that may be described in Salisbury’s quarterly reports on Form 10-Q and its annual report on Form 10-K, which are available at the Securities and Exchange Commission’s website (www.sec.gov) and to which reference is hereby made. Forward-looking statements made by Salisbury in this news release speak only as of the date they are made. Events or other facts that could cause Salisbury’s actual results to differ may arise from time to time and Salisbury cannot predict all such events and factors. Salisbury undertakes no obligation to publicly update any forward-looking statement unless as may be required by law.

Investor presentation slides, which include a review of financial results and trends through the period ended December 31, 2022, are available in the Shareholder Relations section of Salisbury’s website at salisburybank.com under About Us/Shareholder Relations/News & Market Information/Presentations.

Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer860-435-9801 or rcantele@salisburybank.com

Salisbury Bancorp, Inc. and SubsidiaryCONSOLIDATED BALANCE SHEETS (unaudited)

(in thousands, except share data)	December 31, 2022			December 31, 2021
ASSETS
Cash and due from banks	$	5,864		$	6,404
Interest bearing demand deposits with other banks		44,675			168,931
Total cash and cash equivalents		50,539			175,335
Interest bearing Time Deposits with Financial Institutions		-			750
Securities
Available-for-sale at fair value		187,410			202,396
Mutual funds at fair value		1,933			901
Federal Home Loan Bank of Boston stock at cost		1,285			1,397
Loans held-for-sale		-			2,684
Loans receivable, net (allowance for loan losses: $14,846 and $12,962)		1,213,671			1,066,750
Bank premises and equipment, net		22,148			22,625
Goodwill		13,815			13,815
Intangible assets (net of accumulated amortization: $5,653 and $5,462)		227			418
Accrued interest receivable		6,797			6,260
Cash surrender value of life insurance policies		30,379			27,738
Deferred taxes		8,492			2,588
Other assets		4,886			5,527
Total Assets	$	1,541,582		$	1,529,184
LIABILITIES and SHAREHOLDERS' EQUITY
Deposits
Demand (non-interest bearing)	$	395,994		$	416,073
Demand (interest bearing)		231,486			233,600
Money market		343,965			330,436
Savings and other		233,578			237,075
Certificates of deposit		153,370			119,009
Total deposits		1,358,393			1,336,193
Repurchase agreements		7,228			11,430
Federal Home Loan Bank of Boston advances		10,000			7,656
Subordinated debt		24,531			24,474
Note payable		128			170
Finance lease obligations		4,262			4,107
Accrued interest and other liabilities		8,685			8,554
Total Liabilities		1,413,227			1,392,584
Shareholders' Equity
Common stock - $0.10 per share par value
Authorized: 10,000,000;
Issued: 5,798,816 and 5,723,394
Outstanding: 5,798,816 and 5,723,394		580			286
Unearned compensation – restricted stock awards		(1,144	)		(925	)
Paid-in capital		47,466			46,374
Retained earnings		102,178			89,995
Accumulated other comprehensive (loss) income, net		(20,725	)		870
Total Shareholders' Equity		128,355			136,600
Total Liabilities and Shareholders' Equity	$	1,541,582		$	1,529,184

Salisbury Bancorp, Inc. and SubsidiaryCONSOLIDATED STATEMENTS OF INCOME (unaudited)

	Three months ended						Twelve months ended
Periods ended December 31, (in thousands, except per share amounts)		2022			2021			2022				2021
Interest and dividend income
Interest and fees on loans	$	12,595		$	10,438		$	44,874			$	41,080
Interest on debt securities
Taxable		992			651			3,479				2,048
Tax exempt		212			191			787				697
Other interest and dividends		354			73			871				247
Total interest and dividend income		14,153			11,353			50,011				44,072
Interest expense
Deposits		1,786			509			3,724				2,160
Repurchase agreements		20			3			30				16
Finance lease		40			34			163				136
Note payable		2			3			9				11
Subordinated debt		233			233			932				1,000
Federal Home Loan Bank of Boston advances		57			28			114				125
Total interest expense		2,138			810			4,972				3,448
Net interest and dividend income		12,015			10,543			45,039				40,624
Provision expense (release) for loan losses		525			(202	)		2,683				(720	)
Net interest and dividend income after provision (release) for loan losses		11,490			10,745			42,356				41,344
Non-interest income
Trust and wealth advisory		1,125			1,286			4,887				4,970
Service charges and fees		1,219			1,286			5,299				4,822
Mortgage banking activities, net		59			88			556				1,000
Losses on CRA mutual fund		(1	)		(9	)		(120		)		(26	)
Gains (losses) on securities, net		-			-			165				(2	)
Bank-owned life insurance (“BOLI”) income		191			170			806				556
Gain on sale of assets		-			-			-				73
Other		25			26			109				107
Total non-interest income		2,618			2,847			11,702				11,500
Non-interest expense
Salaries		3,995			3,753			14,932				13,417
Employee benefits		1,337			1,033			5,125				5,023
Premises and equipment		1,081			1,080			4,281				4,114
Write-down of assets		-			-			3				144
Information processing and services		697			617			2,795				2,441
Professional fees		921			688			3,218				2,779
Collections, OREO, and loan related		76			138			376				455
FDIC insurance		135			171			526				541
Marketing and community support		161			328			822				881
Amortization of intangibles		42			57			191				256
Other		502			606			2,376				2,053
Total non-interest expense		8,947			8,471			34,645				32,104
Income before income taxes		5,161			5,121			19,413				20,740
Income tax provision		1,037			980			3,539				4,267
Net income	$	4,124		$	4,141		$	15,874			$	16,473
Net income available to common shareholders	$	4,055		$	4,076		$	15,598			$	16,225
Basic earnings per common share	$	0.71		$	0.72		$	2.75			$	2.88
Diluted earnings per common share	$	0.71		$	0.72		$	2.74			$	2.86
Common dividends per share	$	0.16		$	0.16		$	0.64			$	0.61

Salisbury Bancorp, Inc. and SubsidiarySELECTED CONSOLIDATED FINANCIAL DATA (unaudited)

At or for the quarters ended
(in thousands, except per share amounts and ratios)	Q4 2022					Q3 2022		Q2 2022			Q1 2022			Q4 2021
Total assets	$	1,541,582		$	1,512,138			$	1,496,521		$	1,465,082		$	1,529,184
Loans receivable, net		1,213,671			1,176,493				1,135,758			1,066,216			1,066,750
Total securities		190,628			192,530				205,727			217,591			204,694
Deposits		1,358,393			1,325,204				1,316,539			1,290,474			1,336,193
FHLBB advances		10,000			20,000				-			419			7,656
Shareholders’ equity		128,355			123,160				127,303			130,066			136,600
Wealth assets under administration		1,289,918			1,232,272				1,261,244			1,049,240			1,083,152
Discretionary wealth assets under administration		561,050			522,109				546,506			625,346			657,789
Non-discretionary wealth assets under administration		728,868			710,163				714,738			423,894			425,363
Non-performing loans		2,663			1,860				4,229			2,765			4,199
Non-performing assets		2,663			1,860				4,229			2,765			4,199
Accruing loans past due 30-89 days		1,309			390				1,001			2,349			1,342
Net interest and dividend income		12,015			11,844				10,872			10,306			10,543
Net interest and dividend income, tax equivalent (1)		12,221			12,054				11,061			10,484			10,735
Provision expense (release) for loan losses		525			695				1,100			363			(202	)
Non-interest income		2,618			2,693				3,297			3,094			2,847
Non-interest expense		8,947			8,512				8,532			8,653			8,471
Income before income taxes		5,161			5,330				4,537			4,384			5,121
Income tax provision		1,037			994				692			816			980
Net income		4,124			4,336				3,845			3,568			4,141
Net income allocated to common shareholders		4,055			4,264				3,772			3,508			4,076
Per share data
Basic earnings per common share	$	0.71		$	0.75			$	0.67		$	0.62		$	0.72
Diluted earnings per common share		0.71			0.75				0.66			0.62			0.72
Dividends per common share		0.16			0.16				0.16			0.16			0.16
Book value per common share		22.13			21.29				22.01			22.56			23.87
Tangible book value per common share - Non-GAAP ⁽2⁾		19.71			18.86				19.57			20.10			21.38
Common shares outstanding at end of period (in thousands)		5,799			5,784				5,784			5,765			5,723
Weighted average common shares outstanding, to calculate basic earnings per share (in thousands)		5,688			5,687				5,666			5,636			5,635
Weighted average common shares outstanding, to calculate diluted earnings per share (in thousands)		5,710			5,713				5,699			5,694			5,670
Profitability ratios
Net interest margin (tax equivalent) (1)		3.28	%		3.27		%		3.15	%		2.95	%		2.99	%
Efficiency ratio (2)		56.66			57.38				59.49			63.38			61.91
Effective income tax rate		20.10			18.65				15.25			18.60			19.13
Return on average assets		1.07			1.13				1.06			0.97			1.10
Return on average common shareholders’ equity		13.05			13.23				11.98			10.65			12.14
Credit quality ratios
Non-performing loans to loans receivable, gross		0.22	%		0.16		%		0.37	%		0.26	%		0.39	%
Accruing loans past due 30-89 days to loans receivable, gross		0.11			0.03				0.09			0.22			0.12
Allowance for loan losses to loans receivable, gross		1.21			1.20				1.19			1.20			1.20
Allowance for loan losses to non-performing loans		557.5			770.6				324.0			467.3			308.7
Non-performing assets to total assets		0.17			0.12				0.28			0.19			0.27
Capital ratios
Common shareholders' equity to assets		8.33	%		8.14		%		8.51	%		8.88	%		8.93	%
Tangible common shareholders' equity to tangible assets - Non-GAAP (2)		7.48			7.28				7.63			7.99			8.08
Tier 1 leverage capital (3)		9.99			9.83				10.04			9.66			9.42
Total risk-based capital (3)		13.43			13.24				13.28			13.98			14.08
Common equity tier 1 capital (3)		12.24			12.07				12.13			12.80			12.87

(1) Adjusted to reflect the U.S. federal statutory benefit on income derived from tax-exempt securities and loans. (2) Refer to schedule labeled “Supplemental Information – Non-GAAP Financial Measures”.(3) Represents the capital ratios of the Bank.

Salisbury Bancorp, Inc. and SubsidiarySUPPLEMENTAL INFORMATION – Non-GAAP Financial Measures (unaudited)

At or for the quarters ended
(in thousands, except per share amounts and ratios)	Q4 2022			Q3 2022				Q2 2022							Q1 2022			Q4 2021
Common Shareholders' Equity	$	128,355		$	123,160			$	127,303			$	130,066				$	136,600
Less: Goodwill		(13,815	)		(13,815		)		(13,815		)		(13,815			)		(13,815		)
Less: Intangible assets		(227	)		(269		)		(314		)		(364			)		(418		)
Tangible Common Shareholders' Equity	$	114,313		$	109,076			$	113,174			$	115,887				$	122,367
Total Assets	$	1,541,582		$	1,512,138			$	1,496,521			$	1,465,082				$	1,529,184
Less: Goodwill		(13,815	)		(13,815		)		(13,815		)		(13,815			)		(13,815		)
Less: Intangible assets		(227	)		(269		)		(314		)		(364			)		(418		)
Tangible Total Assets	$	1,527,540		$	1,498,054			$	1,482,392			$	1,450,903				$	1,514,951
Common Shares outstanding (in thousands)		5,799			5,784				5,784				5,765					5,723
Book value per Common Share – GAAP	$	22.13		$	21.29			$	22.01			$	22.56				$	23.87
Tangible book value per Common Share - Non-GAAP		19.71			18.86				19.57				20.10					21.38
Tangible common shareholders’ equity to tangible total assets - Non-GAAP		7.48	%		7.28		%		7.63		%		7.99			%		8.08		%
Consolidated:
Non-interest expense	$	8,947		$	8,512			$	8,532			$	8,653				$	8,471
Amortization of core deposit intangibles		(42	)		(46		)		(50		)		(54			)		(57		)
OREO recovery		-			15				-				-					-
Merger-related costs		(497	)		-				-				-					-
Fraud-related recovery (losses)		-			-				50				(251			)		-
Adjusted non-interest expense	$	8,408		$	8,481			$	8,532			$	8,348				$	8,414
Net interest and dividend income, tax equivalent	$	12,221		$	12,054			$	11,061			$	10,484				$	10,735
Non-interest income		2,618			2,693				3,297				3,094					2,847
Losses (gains) on securities		1			47				75				(168			)		9
Gains on sale of fixed assets		-			-				-				-					-
BOLI proceeds receivable		-			-				(89		)		-					-
Gains on sale of loans		-			(15		)		-				(239			)		-
Adjusted revenue	$	14,840		$	14,779			$	14,344			$	13,171				$	13,591
Efficiency Ratio – Non-GAAP 1		56.66	%		57.38		%		59.49		%		63.38			%		61.91		%

1 Excluding revenue and expenses associated with trust & wealth advisory, the efficiency ratios would be: Q4 2022: 54.64%; Q3 2022: 55.28%; Q2 2022: 57.21%; Q1 2022: 61.83%; Q4 2021: 60.62%.

Salisbury Bancorp, Inc. and SubsidiarySUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)

At or for the quarters ended	Average Balance						Income / Expense						Average Yield / Rate
(dollars in thousands)	Q4 2022		Q3 2022		Q4 2021		Q4 2022		Q3 2022		Q4 2021		Q4 2022		Q3 2022		Q4 2021
Loans (a)(d)	$	1,209,184	$	1,168,037	$	1,078,097	$	12,726	$	11,675	$	10,560	4.16	%	3.95	%	3.89	%
Securities (c)(d)		217,963		221,620		186,284		1,279		1,192		911	2.35		2.15		1.96
FHLBB stock		1,416		1,191		1,641		15		8		11	4.29		2.92		2.68
Short term funds (b)		43,328		68,818		155,502		339		344		62	3.10		1.98		0.16
Total interest-earning assets		1,471,891		1,459,666		1,421,524		14,359		13,219		11,544	3.86		3.58		3.22
Other assets		52,855		60,283		76,059
Total assets	$	1,524,746	$	1,519,949	$	1,497,583
Interest-bearing demand deposits	$	232,228	$	233,547	$	225,607		115		106		104	0.20		0.18		0.18
Money market accounts		331,451		320,552		329,005		915		356		139	1.10		0.44		0.17
Savings and other		246,650		246,101		233,463		291		179		66	0.47		0.29		0.11
Certificates of deposit		128,787		131,918		121,192		465		242		200	1.43		0.73		0.65
Total interest-bearing deposits		939,116		932,118		909,267		1,786		883		509	0.75		0.38		0.21
Repurchase agreements		6,615		9,684		7,923		20		4		3	1.18		0.18		0.16
Finance lease		5,475		5,318		2,696		40		41		34	2.94		3.05		5.10
Note payable		132		142		173		2		2		3	6.16		6.15		6.49
Subordinated debt (f)		24,523		24,508		24,467		233		233		233	3.80		3.80		3.82
FHLBB advances		6,576		217		8,071		57		2		28	3.37		3.15		1.38
Total interest-bearing liabilities		982,437		971,987		952,597		2,138		1,165		810	0.86		0.48		0.34
Demand deposits		408,672		410,861		401,294
Other liabilities		8,233		7,065		8,410
Shareholders’ equity		125,404		130,036		135,282
Total liabilities & shareholders’ equity	$	1,524,746	$	1,519,949	$	1,497,583
Net interest income							$	12,221	$	12,054	$	10,735
Spread on interest-bearing funds													3.00		3.11		2.88
Net interest margin (e)													3.28		3.27		2.99

(a)  Includes non-accrual loans.(b)  Includes interest-bearing deposits in other banks and federal funds sold.(c)  Average balances of securities are based on amortized cost.(d)  Includes tax exempt income benefit of $0.2 million, $0.2 million and $0.2 million, respectively, for Q4 2022, Q3 2022 and Q4 2021 on tax-exempt securities and loans whose income and yields are calculated on a tax-equivalent basis. The income benefit reflected the U.S. federal statutory tax rate of 21.0% for 2022 and 2021.(e)  Net interest income divided by average interest-earning assets.(f)  Net of issuance costs.

Salisbury Bancorp, Inc. and SubsidiarySUPPLEMENTAL INFORMATION – Net Interest and Dividend Income (unaudited)

Twelve months ended December 31,	Average Balance				Income / Expense				Average Yield / Rate
(dollars in thousands)		2022		2021		2022		2021	2022		2021
Loans (a)(d)	$	1,142,663	$	1,059,663	$	45,373	$	41,549	3.93	%	3.89	%
Securities (c)(d)		218,331		144,833		4,549		2,991	2.08		2.06
FHLBB stock		1,315		1,790		41		37	3.12		2.09
Short term funds (b)		72,309		158,907		830		210	1.15		0.13
Total earning assets		1,434,618		1,365,193		50,793		44,787	3.51		3.26
Other assets		62,365		72,590
Total assets	$	1,496,983	$	1,437,783
Interest-bearing demand deposits	$	231,970	$	224,763		429		435	0.18		0.19
Money market accounts		318,302		315,469		1,554		547	0.49		0.17
Savings and other		240,695		215,300		630		239	0.26		0.11
Certificates of deposit		132,192		130,879		1,111		939	0.84		0.72
Total interest-bearing deposits		923,159		886,411		3,724		2,160	0.40		0.24
Repurchase agreements		8,417		10,679		30		16	0.36		0.15
Finance lease		5,294		2,739		163		136	3.07		4.96
Note payable		147		187		9		11	6.14		6.13
Subordinated Debt (f)		24,502		22,511		932		1,000	3.80		4.44
FHLBB advances		2,446		9,938		114		125	4.59		1.24
Total interest-bearing liabilities		963,965		932,465		4,972		3,448	0.52		0.37
Demand deposits		395,848		366,926
Other liabilities		7,183		7,285
Shareholders’ equity		129,987		131,107
Total liabilities & shareholders’ equity	$	1,496,983	$	1,437,783
Net interest income					$	45,821	$	41,339
Spread on interest-bearing funds									3.00		2.89
Net interest margin (e)									3.16		3.01

(a)  Includes non-accrual loans.(b)  Includes interest-bearing deposits in other banks and federal funds sold.(c)  Average balances of securities are based on historical cost.(d)  Includes tax exempt income benefit of $0.7 million and $0.5 million, respectively for 2022 and 2021 on tax-exempt securities and loans whose income and yields are calculated on a tax-equivalent basis. The income benefit reflected the U.S. federal statutory tax rate of 21.0% for 2022 and 2021.(e)  Net interest income divided by average interest-earning assets.(f)  Net of issuance costs.