Salisbury Bancorp (SAL) 8-K Salisbury Bancorp, Inc. Reports Results for Second Quarter 2015; Declares 28 Cent Dividend

Exhibit 99.1

Friday, July 31, 2015

Company Press Release

Source: Salisbury Bancorp, Inc.

Salisbury Contact: Richard J. Cantele, Jr., President and Chief Executive Officer

860-435-9801 or rcantele@salisburybank.com

FOR IMMEDIATE RELEASE

SALISBURY BANCORP, INC. REPORTS RESULTS FOR SECOND QUARTER 2015; DECLARES 28 CENT DIVIDEND

Lakeville, Connecticut, July 31, 2015 /GlobeNewswire…..Salisbury Bancorp, Inc. (“Salisbury”), NASDAQ Capital Market: “SAL”, the holding company for Salisbury Bank and Trust Company (the “Bank”), announced results for its second quarter ended June 30, 2015.

Net income available to common shareholders was $2,032,000, or $0.74 per common share, for the second quarter ended June 30, 2015 (second quarter 2015), compared with $2,194,000, or $0.81 per common share, for the first quarter ended March 31, 2015 (first quarter 2015), and $926,000, or $0.54 per common share, for the second quarter ended June 30, 2014 (second quarter 2014).

Selected Second Quarter 2015 Financial Highlights

As a result of Salisbury’s acquisition of Riverside Bank being completed in December 2014, the results of Riverside Bank’s 2014 stand-alone operations are not included in the presentation below of any Salisbury information prior to December 2014.

• Salisbury’s earnings per common share for the three (3) and six (6) month periods ended June 30, 2015 increased to $0.74 and $1.55, respectively, per common share as compared with $0.54 and $0.83 per common share for the same periods in 2014.

• During the six (6) month period ended June 30, 2015, total shareholders’ equity increased to $104.1 million from $101.8 million at December 31, 2014.

• Salisbury’s efficiency ratio improved to 62.91% for the quarter ended June 30, 2015 as compared with 65.45% from the prior quarter and 72.35% for the second quarter in 2014.

• Annualized return on average assets for the quarter ended June 30, 2015 amounted to 0.94% as compared with 1.03% for the prior quarter and 0.62% for the second quarter of 2014.

• Annualized return on average common equity amounted to 9.26% for the quarter ended June 30, 2015 as compared with 10.22% for the prior quarter and 6.32% for the second quarter of 2014.

Richard J. Cantele, President and Chief Executive Officer stated, “We have made significant progress with respect to integrating the acquisitions we completed during 2014. We are achieving the desired benefits of our Riverside Bank acquisition and are combining the strengths of that organization with the core strengths of Salisbury. While it has been less than one year since the consummation of this acquisition, we are achieving positive results in terms of improved earnings, returns on equity and assets, capital growth and improved efficiency. We are pleased with our progress to date, and we remain committed to achieving greater benefits for our shareholders and customers.”

Net-Interest Income

Tax equivalent net interest income decreased $154,000, or 1.9%, versus first quarter 2015, and increased $2.9 million, or 54.7%, versus second quarter 2014. Interest income for the second quarter reflects net accretion related to the fair value adjustments of loans acquired in the Riverside Bank acquisition in the amount of $654,000. The first quarter of 2015 included similar adjustments totaling $650,000. Average earning assets increased $3.1 million versus first quarter 2015, and increased $247.0 million versus second quarter 2014. Average total interest bearing deposits decreased $2.0 million versus first quarter 2015 and increased $160.2 million versus second quarter 2014 primarily as a result of the Riverside Bank acquisition. The net interest margin of 4.01% decreased 10 basis points versus 4.11% for the first quarter 2015 and increased 27 basis points versus 3.74% for the second quarter 2014.

Non-Interest Income

Non-interest income for second quarter 2015 increased $4,000 versus first quarter 2015 and increased $218,000 versus second quarter 2014. Trust and wealth advisory revenues increased $68,000 versus first quarter 2015 and decreased $49,000 versus second quarter 2014. Such decrease is the result of a decrease in managed assets. Service charges and fees increased $47,000 versus first quarter 2015 and increased $152,000 versus second quarter 2014. The increases were a result of higher fees due to increased transactional volume, mainly attributable to the contribution from the deposits assumed in the Riverside Bank acquisition. Income from sales and servicing of mortgage loans increased $53,000 versus first quarter 2015 and increased $64,000 versus second quarter 2014 due to a decrease in amortization as a result of a decline in projected prepayment rates. Second quarter 2015 mortgage loans sales totaled $3.0 million versus $2.1 million for first quarter 2015 and $1.6 million for second quarter 2014. Second quarter 2015, first quarter 2015, and second quarter 2014 included a mortgage servicing valuation impairment benefit / (charge) of $6,000, ($9,000), and $2,000, respectively. Gain on sale of securities for second quarter 2015 totaled $11,000, compared to $175,000 in the first quarter 2015 and no gains were recognized in the second quarter of 2014. Other income includes bank owned life insurance income and rental income.

Non-Interest Expense

Non-interest expense for second quarter 2015 decreased $264,000 versus first quarter 2015 and increased $1.5 million versus second quarter 2014. Total compensation expense decreased $136,000 versus first quarter 2015 as a result of lower salary and payroll tax expense partially offset by higher employee benefit costs. The total compensation expense year-over-year increase of $719,000 (second quarter 2015 versus second quarter 2014) reflects increased staffing levels primarily as a result of the Riverside Bank acquisition.

Premises and equipment increased $5,000 versus first quarter 2015 and increased $212,000 versus second quarter 2014. The quarterly increase was related to seasonal building maintenance. The year-over-year increase is mainly due to the addition of branch facilities acquired as a result of the Riverside Bank acquisition in December 2014, and the Sharon, Connecticut branch acquisition, as well as the opening of a new branch in Great Barrington, Massachusetts in June 2014.

Data processing decreased $76,000 versus first quarter 2015 and decreased $35,000 versus second quarter 2014 mainly attributable to a reclassification of trust tax filing fees from data processing to consulting fees in first quarter 2015.

Professional fees decreased $57,000 versus first quarter 2015, and increased $249,000 versus second quarter 2014. First quarter 2015 included additional audit expenses related to the Riverside Bank merger. In second quarter 2015, trust tax filing fees were reclassified from data processing to consulting fees.

Collections and OREO related expenses decreased $16,000 versus first quarter 2015 and increased $147,000 versus second quarter 2014. The year-over-year increase is mainly due to the write-down associated with OREO properties in second quarter 2015.

The effective income tax rates for second quarter 2015, first quarter 2015 and second quarter 2014 were 29.96%, 29.90% and 19.85%, respectively.

Loans

Net loans receivable increased $1.0 million during second quarter 2015 to $677.7 million at June 30, 2015, compared with $676.7 million at March 31, 2015, and increased $221.1 million compared with $456.6 million at June 30, 2014. The year-over-year increase includes loans acquired with a fair value of $196.3 million from the Riverside Bank transaction completed in the fourth quarter 2014.

Asset Quality

Non-performing assets increased $0.1 million during second quarter 2015 to $15.0 million, or 1.7% of assets at June 30, 2015, from $14.9 million, or 1.7% of assets at March 31, 2015, and increased $6.2 million from $8.8 million, or 1.4% of assets, at June 30, 2014.

The amount of total impaired and potential problem loans improved to $30.3 million (4.44% of gross loans receivable) during second quarter 2015, compared to $30.9 million, or 4.53% of gross loans receivable at March 31, 2015. While the aggregate of such loans increased $5.3 million from $25.0 million at June 30, 2014, the percentage of such loans improved from 5.43% of gross loans receivable at June 30, 2014.

Accruing loans receivable 30-to-89 days past due decreased $2.8 million during second quarter 2015 to $2.8 million, or 0.41% of gross loans receivable, from $5.6 million, or 0.82% of gross loans receivable at March 31, 2015, and increased $0.5 million versus June 30, 2014.

Provision for loan loss expense was $165,000 for second quarter 2015 versus a benefit of $200,000 in first quarter 2015 and an expense for second quarter 2014 of $314,000. Excluding recoveries of $460,000, provision expense would have been approximately $260,000 for the first quarter 2015. Net loan charge-offs (recoveries) were $320,000 for the second quarter 2015, ($24,000) for first quarter 2015 and $106,000 for second quarter 2014, respectively. Reserve coverage, as measured by the ratio of the allowance for loan losses to gross loans, was 0.74% for the second quarter 2015, versus 0.76% for first quarter 2015 and 1.11% for second quarter 2014. When expressed as a percentage of gross loans, the allowance for loan losses declined significantly from June 30, 2014 to June 30, 2015 due to the increase in the balance of gross loans that resulted from the addition of the loans purchased from Riverside Bank. 

Salisbury endeavors to work constructively to resolve its non-performing loan issues with customers. Substantially all non-performing loans are collateralized with real estate and the repayment of such loans is largely dependent on the return of such loans to performing status or the liquidation of the underlying real estate collateral.

Capital

Both Salisbury and the Bank’s regulatory capital ratios remain in compliance with regulatory “well capitalized” requirements. At June 30, 2015, Salisbury’s tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 10.42%, 14.22%, and 11.01%, respectively. The Bank’s tier 1 leverage, total risk-based capital, and common equity tier 1 capital ratios were 9.40%, 12.91%, and 12.12%, respectively, compared with regulatory “well capitalized” minimums of 5.00%, 10.00%, and 6.5%, respectively. Risk based capital information for 2015 incorporates the implementation of Basel III.

At June 30, 2015, Salisbury’s assets totaled $861 million. Book value and tangible book value per common share were $32.26 and $26.69, 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 $48.3 million and to augment its regulatory capital ratios.

Second Quarter 2015 Dividends on Common Shares

The Board of Directors of Salisbury declared a $0.28 per common share quarterly cash dividend at their July 31, 2015 meeting. The dividend will be paid on August 28, 2015 to shareholders of record as of August 14, 2015.

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, Poughkeepsie, and Red Oaks Mill, 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

(in thousands, except share data)		June 30, 2015 (unaudited)			December 31, 2014
ASSETS
Cash and due from banks	$	13,203		$	13,280
Interest bearing demand deposits with other banks		37,217			22,825
Total cash and cash equivalents		50,420			36,105
Securities
Available-for-sale at fair value		79,417			91,312
Federal Home Loan Bank of Boston stock at cost		3,515			3,515
Loans held-for-sale		300			568
Loans receivable, net (allowance for loan losses: $5,059 and $5,358)		677,726			673,330
Other real estate owned		268			1,002
Bank premises and equipment, net		14,020			14,431
Goodwill		12,552			12,552
Intangible assets (net of accumulated amortization: $2,591 and $2,258)		2,657			2,990
Accrued interest receivable		2,292			2,334
Cash surrender value of life insurance policies		13,499			13,314
Deferred taxes		2,834			2,428
Other assets		1,294			1,546
Total Assets	$	860,794		$	855,427
LIABILITIES and SHAREHOLDERS' EQUITY
Deposits
Demand (non-interest bearing)	$	171,022		$	161,386
Demand (interest bearing)		118,293			117,169
Money market		173,488			174,274
Savings and other		123,697			121,387
Certificates of deposit		134,234			141,210
Total deposits		720,734			715,426
Repurchase agreements		2,771			4,163
Federal Home Loan Bank of Boston advances		28,033			28,813
Capital lease liability		423			424
Accrued interest and other liabilities		4,729			4,780
Total Liabilities		756,690			753,606
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: 5,000,000 and 3,000,000;
Issued: 2,731,176 and 2,720,766		273			272
Paid-in capital		41,312			41,077
Retained earnings		45,378			42,677
Unearned compensation - restricted stock awards		(229	)		(313	)
Accumulated other comprehensive income		1,370			2,108
Total Shareholders' Equity		104,104			101,821
Total Liabilities and Shareholders' Equity	$	860,794		$	855,427

Salisbury Bancorp, Inc. and Subsidiary

CONSOLIDATED STATEMENTS OF INCOME (unaudited)

Periods ended June 30,		Three months ended				Six months ended
(in thousands, except per share amounts)		2015		2014		2015			2014
Interest and dividend income
Interest and fees on loans	$	7,850	$	4,731	$	15,772		$	9,327
Interest on debt securities
Taxable		298		365		624			745
Tax exempt		357		432		747			878
Other interest and dividends		40		24		73			45
Total interest and dividend income		8,545		5,552		17,216			10,995
Interest expense
Deposits		453		349		897			700
Repurchase agreements		2		1		3			2
Capital lease		17		—		35			18
Federal Home Loan Bank of Boston advances		280		297		562			595
Total interest expense		752		647		1,497			1,315
Net interest and dividend income		7,793		4,905		15,719			9,680
Provision (benefit) for loan losses		165		314		(35	)		651
Net interest and dividend income after provision (benefit) for loan losses		7,628		4,591		15,754			9,029
Non-interest income
Gains on sales of available-for-sale securities, net		11		—		186			—
Trust and wealth advisory		890		939		1,712			1,718
Service charges and fees		778		626		1,509			1,168
Gains on sales of mortgage loans, net		87		32		181			43
Mortgage servicing, net		20		11		(20	)		39
Other		114		74		228			152
Total non-interest income		1,900		1,682		3,796			3,120
Non-interest expense
Salaries		2,449		1,951		4,989			3,795
Employee benefits		960		739		1,965			1,480
Premises and equipment		913		701		1,821			1,374
Data processing		398		433		872			788
Professional fees		593		344		1,243			706
Collections and OREO		228		85		472			221
FDIC insurance		133		124		331			221
Marketing and community support		180		127		290			240
Amortization of core deposit intangibles		164		63		333			118
Merger and acquisition related expenses		—		90		—			391
Other		553		411		1,090			844
Total non-interest expense		6,571		5,068		13,406			10,178
Income before income taxes		2,957		1,205		6,144			1,971
Income tax provision		885		239		1,838			454
Net income	$	2,072	$	966	$	4,306		$	1,517
Net income available to common shareholders	$	2,032	$	926	$	4,226		$	1,431
Basic earnings per common share	$	0.74	$	0.54	$	1.55		$	0.83
Diluted earnings per common share		0.74		0.54		1.54			0.83
Common dividends per share		0.28		0.28		0.56			0.56

Salisbury Bancorp, Inc. and Subsidiary

SELECTED CONSOLIDATED FINANCIAL DATA (unaudited)

At or for the three month periods ended
(in thousands, except per share amounts and ratios)		Q2 2015			Q1 2015			Q4 2014			Q3 2014			Q2 2014
Total assets	$	860,794		$	865,037		$	855,427		$	638,089		$	621,476
Loans receivable, net		677,726			676,734			673,330			461,913			456,627
Total securities		82,932			84,694			94,827			88,960			92,884
Deposits		720,734			724,910			715,426			522,294			507,361
FHLBB advances		28,033			28,403			28,813			29,218			29,619
Shareholders’ equity		104,104			103,211			101,821			75,516			75,000
Wealth assets under management		374,141			384,574			385,316			416,510			429,093
Non-performing loans		14,728			14,000			9,890			8,611			8,379
Non-performing assets		14,995			14,875			10,892			8,945			8,757
Accruing loans past due 30-89 days		2,799			5,564			4,128			1,294			2,306
Net interest and dividend income		7,793			7,926			5,717			4,754			4,905
Net interest and dividend income, tax equivalent		8,084			8,238			6,038			5,075			5,227
Provision (benefit)  for loan losses		165			(200	)		165			318			314
Non-interest income		1,900			1,896			1,579			1,553			1,682
Non-interest expense		6,571			6,835			6,852			5,108			5,068
Income before income taxes		2,957			3,187			279			881			1,205
Income tax provision		885			953			43			113			239
Net income		2,072			2,234			236			768			966
Net income available to common shareholders		2,032			2,194			196			728			926
Per share data
Basic earnings per common share	$	0.74		$	0.81		$	0.10		$	0.43		$	0.54
Diluted earnings per common share		0.74			0.80			0.10			0.43			0.54
Dividends per common share		0.28			0.28			0.28			0.28			0.28
Book value per common share		32.26			31.96			31.54			34.74			34.44
Tangible book value per common share - Non-GAAP⁽¹⁾		26.69			26.33			25.84			28.50			28.15
Common shares outstanding at end of period		2,731			2,729			2,721			1,713			1,713
Weighted average common shares outstanding,  to calculate basic earnings per share		2,706			2,699			1,977			1,693			1,691
Weighted average common shares outstanding, to calculate diluted earnings per share		2,724			2,716			1,981			1,693			1,691
Profitability ratios
Net interest margin (tax equivalent)		4.01	%		4.11	%		3.68	%		3.39	%		3.74	%
Efficiency ratio(2)		62.91			65.45			77.84			75.92			72.35
Non-interest income to operating revenue		19.51			17.84			21.65			24.62			25.54
Effective income tax rate		29.96			29.90			15.41			12.82			19.85
Return on average assets		0.94			1.03			0.11			0.45			0.62
Return on average common shareholders’ equity		9.26			10.22			1.18			4.85			6.32
Credit quality ratios
Net charge-offs to average loans receivable, gross		0.19	%		-0.01	%		0.14	%		0.03	%		0.09	%
Non-performing loans to loans receivable, gross		2.16			2.05			1.46			1.84			1.82
Accruing loans past due 30-89 days to loans receivable, gross		0.41			0.82			0.61			0.28			0.50
Allowance for loan losses to loans receivable, gross		0.74			0.76			0.79			1.15			1.11
Allowance for loan losses to non-performing loans		34.35			37.02			54.18			62.52			60.89
Non-performing assets to total assets		1.74			1.72			1.27			1.40			1.41
Capital ratios
Common shareholders' equity to assets		10.24	%		10.08	%		10.03	%		9.33	%		9.49	%
Tangible common shareholders' equity to tangible assets - Non-GAAP⁽¹⁾		8.62			8.45			8.37			7.78			7.90
Tier 1 leverage capital		10.42			10.29			12.31			9.85			10.50
Total risk-based capital		14.22			13.65			14.29			16.27			16.11
Common equity tier 1 capital		11.01			10.50			N/A			N/A			N/A

⁽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 goodwillimpairments as a percent of net interest income (fully taxable equivalent) and noninterest revenues, excluding gains fromsecurities 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 ratios)		Q2 2015			Q1 2015			Q4 2014			Q3 2014			Q2 2014
Shareholders' Equity	$	104,104		$	103,211		$	101,821		$	75,516		$	75,000
Less: Preferred Stock		(16,000	)		(16,000	)		(16,000	)		(16,000	)		(16,000	)
Common Shareholders' Equity		88,104			87,211			85,821			59,516			59,000
Less: Goodwill		(12,552	)		(12,552	)		(12,552	)		(9,829	)		(9,829	)
Less: Intangible assets		(2,657	)		(2,821	)		(2,990	)		(872	)		(946	)
Tangible Common Shareholders' Equity	$	72,895		$	71,838		$	70,279		$	48,815		$	48,225
Total Assets	$	860,794		$	865,037		$	855,427		$	638,089		$	621,476
Less: Goodwill		(12,552	)		(12,552	)		(12,552	)		(9,829	)		(9,829	)
Less: Intangible assets		(2,657	)		(2,821	)		(2,990	)		(872	)		(946	)
Tangible Total Assets	$	845,585		$	849,664		$	839,885		$	627,388		$	610,701
Common Shares outstanding		2,731			2,729			2,721			1,713			1,713
Book value per Common Share – GAAP	$	32.26		$	31.96		$	31.54		$	34.74		$	34.44
Tangible book value per Common Share - Non-GAAP		26.69			26.33			25.84			28.50			28.15
Common Shareholders’ Equity to Assets – GAAP		10.24	%		10.08	%		10.03	%		9.33	%		9.49	%
Tangible Common Shareholders’ Equity to Tangible Assets – Non-GAAP		8.62			8.45			8.37			7.78			7.90
Non-interest expense	$	6,571		$	6,835		$	6,852		$	5,108		$	5,068
Less: Amortization of core deposit intangibles		(164	)		(169	)		(97	)		(75	)		(63	)
Less: Foreclosed property expense		(131	)		(148	)		(114	)		(1	)		(5	)
Less: Strategic initiatives		—			—			(1,596	)		(197	)		(90	)
Operating expenses	$	6,276		$	6,518		$	5,045		$	4,835		$	4,910
Net interest and dividend income, tax equivalent	$	8,084		$	8,238		$	6,038		$	5,075		$	5,227
Non-interest income		1,900			1,896			1,579			1,553			1,682
Gains on securities, net		(11	)		(175	)		—			—			—
Operating revenue	$	9,973		$	9,959		$	7,617		$	6,628		$	6,909
Efficiency Ratio less strategic initiatives		62.91	%		65.45	%		66.19	%		72.94	%		71.07	%