ý
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
Connecticut
|
06-1514263
|
(State
or other jurisdiction of incorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
5
Bissell Street, Lakeville, CT
|
06039
|
(Address
of principal executive offices)
|
(Zip
code)
|
(860)
435-9801
|
|
(Registrant's
telephone number, including area
code)
|
Large accelerated
filer o
|
Accelerated filer o
|
Non-accelerated filer o
|
Smaller reporting
company ý
|
Page
|
||
PART
I FINANCIAL INFORMATION
|
||
Item
1.
|
||
3
|
||
4
|
||
5
|
||
6
|
||
8
|
||
Item
2.
|
||
18
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Item
3.
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28
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Item
4T.
|
30
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PART
II Other Information
|
||
Item
1.
|
30
|
|
Item
1A.
|
31
|
|
Item
2.
|
31
|
|
Item
3.
|
31
|
|
Item
4.
|
31
|
|
Item
5.
|
31
|
|
Item
6.
|
31
|
(in thousands, except par value)
unaudited
|
March 31,
2010
|
December 31,
2009 |
||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ | 5,878 | $ | 6,248 | ||||
Interest bearing demand deposits with other
banks
|
13,851 | 37,050 | ||||||
Total
cash and cash equivalents
|
19,729 | 43,298 | ||||||
Interest
bearing time deposits with other banks
|
5,000 | 5,000 | ||||||
Securities
|
||||||||
Available-for-sale
at fair value
|
166,179 | 145,031 | ||||||
Held-to-maturity
at amortized cost (fair value: $62 and $62)
|
60 | 62 | ||||||
Federal
Home Loan Bank of Boston stock at cost
|
6,032 | 6,032 | ||||||
Loans
held-for-sale
|
1,178 | 665 | ||||||
Loans
receivable, net (allowance for loan losses: $3,649 and
$3,473)
|
329,600 | 327,257 | ||||||
Investment
in real estate
|
75 | 75 | ||||||
Other
real estate owned
|
275 | 275 | ||||||
Bank
premises and equipment, net
|
11,398 | 10,434 | ||||||
Goodwill
|
9,829 | 9,829 | ||||||
Intangible
assets (net of accumulated amortization: $1,135 and
$1,079)
|
1,409 | 1,464 | ||||||
Accrued
interest receivable
|
2,093 | 2,177 | ||||||
Cash
surrender value of life insurance policies
|
3,727 | 3,685 | ||||||
Deferred
taxes
|
2,957 | 3,285 | ||||||
Other assets
|
3,577 | 3,778 | ||||||
Total Assets
|
$ | 563,118 | $ | 562,347 | ||||
LIABILITIES
and SHAREHOLDERS' EQUITY
|
||||||||
Deposits
|
||||||||
Demand
(non-interest bearing)
|
$ | 68,852 | $ | 70,026 | ||||
Demand
(interest bearing)
|
50,148 | 43,845 | ||||||
Money
market
|
68,317 | 64,477 | ||||||
Savings
and other
|
88,699 | 86,316 | ||||||
Certificates
of deposit
|
146,473 | 153,539 | ||||||
Total
deposits
|
422,489 | 418,203 | ||||||
Repurchase
agreements
|
7,973 | 11,415 | ||||||
Federal
Home Loan Bank of Boston advances
|
75,356 | 76,364 | ||||||
Accrued interest and other
liabilities
|
4,277 | 4,010 | ||||||
Total Liabilities
|
510,095 | 509,992 | ||||||
Commitments
and contingencies
|
- | - | ||||||
Shareholders'
Equity
|
||||||||
Preferred
stock - $.01 per share par value
|
||||||||
Authorized:
25,000; Shares issued: 8,816;
|
||||||||
Liquidation
preference: $1,000 per share
|
- | - | ||||||
Common
stock - $.10 per share par value
|
||||||||
Authorized:
3,000,000 and 3,000,000;
|
||||||||
Issued:
1,686,701 and 1,685,861
|
168 | 168 | ||||||
Common
stock warrants outstanding
|
112 | 112 | ||||||
Paid-in
capital
|
21,899 | 21,894 | ||||||
Retained
earnings
|
35,266 | 35,259 | ||||||
Accumulated other comprehensive loss,
net
|
(4,422 | ) | (5,078 | ) | ||||
Total Shareholders' Equity
|
53,023 | 52,355 | ||||||
Total Liabilities and Shareholders'
Equity
|
$ | 563,118 | $ | 562,347 |
Three months ended March 31, (in thousands except
per share amounts) unaudited
|
2010
|
2009
|
||||||
Interest
income
|
||||||||
Interest
and fees on loans
|
$ | 4,487 | $ | 4,483 | ||||
Interest
on debt securities
|
||||||||
Taxable
|
926 | 1,331 | ||||||
Tax
exempt
|
560 | 644 | ||||||
Other interest
|
46 | 2 | ||||||
Total interest income
|
6,019 | 6,460 | ||||||
Interest
expense
|
||||||||
Deposits
|
1,198 | 1,483 | ||||||
Repurchase
agreements
|
27 | 39 | ||||||
Federal Home Loan Bank of Boston
advances
|
758 | 762 | ||||||
Total interest expense
|
1,983 | 2,284 | ||||||
Net
interest income
|
4,036 | 4,176 | ||||||
Provision for loan losses
|
180 | 430 | ||||||
Net interest income after provision for loan
losses
|
3,856 | 3,746 | ||||||
Non-interest
income
|
||||||||
Trust
and wealth advisory
|
545 | 540 | ||||||
Service
charges and fees
|
469 | 398 | ||||||
Gains
on securities, net
|
- | 427 | ||||||
Gains
on sales of mortgage loans, net
|
60 | 82 | ||||||
Mortgage
servicing, net
|
15 | 42 | ||||||
Other
|
57 | 137 | ||||||
Total non-interest income
|
1,146 | 1,626 | ||||||
Non-interest
expense
|
||||||||
Salaries
|
1,746 | 1,753 | ||||||
Employee
benefits
|
471 | 438 | ||||||
Premises
and equipment
|
515 | 484 | ||||||
Data
processing
|
408 | 383 | ||||||
Professional
fees
|
402 | 356 | ||||||
FDIC
insurance
|
171 | 114 | ||||||
Marketing
and community support
|
88 | 76 | ||||||
Amortization
of intangibles
|
56 | 41 | ||||||
Other
|
472 | 383 | ||||||
Total non-interest expense
|
4,329 | 4,028 | ||||||
Income
before income taxes
|
673 | 1,344 | ||||||
Income tax provision
|
79 | 263 | ||||||
Net income
|
$ | 594 | $ | 1,081 | ||||
Net income available to common
shareholders
|
$ | 479 | $ | 1,081 | ||||
Basic
and diluted earnings per share
|
$ | 0.28 | $ | 0.64 | ||||
Common
dividends per share
|
0.28 | 0.28 |
Common Stock
|
Paid-in | Retained |
Accumulated
other
comp-
|
Total
share-
holders' |
||||||||||||||||||||||||||||
(dollars in thousands)
|
Shares
|
Amount
|
Preferred Stock
|
Warrants
|
capital
|
earnings
|
rehensive loss
|
equity
|
||||||||||||||||||||||||
Balances
at December 31, 2009
|
1,686,701 | $ | 168 | $ | - | $ | 112 | $ | 21,894 | $ | 35,259 | $ | (5,078 | ) | $ | 52,355 | ||||||||||||||||
Net
income for period
|
- | - | - | - | - | 594 | - | 594 | ||||||||||||||||||||||||
Other
comprehensive income, net of tax
|
- | - | - | - | - | - | 656 | 656 | ||||||||||||||||||||||||
Total
comprehensive income
|
1,250 | |||||||||||||||||||||||||||||||
Amortization
(accretion) of preferred stock
|
- | - | - | - | 5 | (5 | ) | - | - | |||||||||||||||||||||||
Common
stock dividends paid
|
- | - | - | - | - | (472 | ) | - | (472 | ) | ||||||||||||||||||||||
Preferred stock dividends
paid
|
- | - | - | - | - | (110 | ) | - | (110 | ) | ||||||||||||||||||||||
Balances at March 31, 2010
|
1,686,701 | 168 | - | 112 | 21,899 | 35,266 | (4,422 | ) | 53,023 | |||||||||||||||||||||||
Balances
at December 31, 2008
|
1,685,861 | 168 | - | - | 13,158 | 34,518 | (8,905 | ) | 38,939 | |||||||||||||||||||||||
Net
income for period
|
- | - | - | - | - | 1,081 | - | 1,081 | ||||||||||||||||||||||||
Other
comprehensive loss, net of tax
|
- | - | - | - | - | - | (2,107 | ) | (2,107 | ) | ||||||||||||||||||||||
Total
comprehensive loss
|
(1,026 | ) | ||||||||||||||||||||||||||||||
Issuance
of preferred stock and warrants
|
- | - | - | 112 | 8,704 | - | - | 8,816 | ||||||||||||||||||||||||
Common stock dividends
declared
|
- | - | - | - | - | (472 | ) | - | (472 | ) | ||||||||||||||||||||||
Balances March 31, 2009
|
1,685,861 | $ | 168 | $ | - | $ | 112 | $ | 21,862 | $ | 35,127 | $ | (11,012 | ) | $ | 46,257 |
Three months ended March 31, (in
thousands)
|
2010
|
2009
|
||||||
Operating
Activities
|
||||||||
Net
income
|
$ | 594 | $ | 1,081 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
(Accretion),
amortization and depreciation
|
||||||||
Securities
|
174 | 101 | ||||||
Bank
premises and equipment
|
193 | 174 | ||||||
Core
deposit intangible
|
56 | 41 | ||||||
Mortgage
servicing rights
|
31 | 33 | ||||||
Fair
value adjustment on loans
|
11 | 12 | ||||||
Fair
value adjustment on deposits and borrowings
|
- | (33 | ) | |||||
(Gains)
and losses
|
||||||||
Sales
and calls of securities available-for-sale, net
|
- | (427 | ) | |||||
Provision
for loan losses
|
180 | 430 | ||||||
(Increase)
decrease in loans held-for-sale
|
(513 | ) | 1,507 | |||||
Increase
in deferred loan origination fees and costs, net
|
(41 | ) | (7 | ) | ||||
Mortgage
servicing rights originated
|
(28 | ) | (61 | ) | ||||
Decrease
in mortgage servicing rights impairment reserve
|
(2 | ) | (41 | ) | ||||
Increase
in unearned income on loans
|
- | 6 | ||||||
Decrease
in interest receivable
|
85 | 229 | ||||||
Deferred
tax (benefit)
|
(8 | ) | (1 | ) | ||||
Decrease
(increase) in prepaid expenses
|
68 | (63 | ) | |||||
Increase
in cash surrender value of life insurance policies
|
(42 | ) | (125 | ) | ||||
Increase
in income tax receivable
|
69 | 155 | ||||||
Increase
in other assets
|
(25 | ) | (81 | ) | ||||
Increase
in accrued expenses
|
431 | 377 | ||||||
(Decrease)
increase in interest payable
|
(40 | ) | 21 | |||||
Decrease in other
liabilities
|
(111 | ) | (67 | ) | ||||
Net cash provided by operating
activities
|
1,082 | 3,261 | ||||||
Investing
Activities
|
||||||||
Purchases
of securities available-for-sale
|
(33,985 | ) | (53,864 | ) | ||||
Proceeds
from sales of securities available-for-sale
|
- | 24,956 | ||||||
Proceeds
from calls of securities available-for-sale
|
1,550 | 18,000 | ||||||
Proceeds
from maturities of securities available-for-sale
|
12,089 | - | ||||||
Proceeds
from maturities of securities held-to-maturity
|
1 | 1 | ||||||
Loan
originations and principle collections, net
|
(2,499 | ) | (1,554 | ) | ||||
Purchases
of loans
|
- | (76 | ) | |||||
Recoveries
of loans previously charged-off
|
6 | 10 | ||||||
Capital expenditures
|
(1,068 | ) | (1,303 | ) | ||||
Net cash utilized by investing
activities
|
$ | (23,906 | ) | $ | (13,830 | ) |
Three
months ended March 31, (in thousands)
|
2010
|
2009
|
||||||
Financing
Activities
|
||||||||
Increase
in deposit transaction accounts, net
|
$ | 11,352 | $ | 7,986 | ||||
(Decrease)
increase in time deposits, net
|
(7,065 | ) | 13,852 | |||||
Decrease
in securities sold under agreements to repurchase, net
|
(3,442 | ) | (2,122 | ) | ||||
Federal
Home Loan Bank of Boston advances
|
- | 12,000 | ||||||
Principle
payments on Federal Home Loan Bank of Boston advances
|
(1,008 | ) | (405 | ) | ||||
Decrease
in short term Federal Home Loan Bank of Boston advances,
net
|
- | (20,878 | ) | |||||
Proceeds
from issuance of preferred stock
|
- | 8,816 | ||||||
Common
stock dividends paid
|
(472 | ) | (472 | ) | ||||
Preferred
stock dividends paid
|
(110 | ) | - | |||||
Net
cash (utilized) provided by financing activities
|
(745 | ) | 18,777 | |||||
Net
(decrease) increase in cash and cash equivalents
|
(23,569 | ) | 8,208 | |||||
Cash
and cash equivalents, beginning of period
|
43,298 | 9,660 | ||||||
Cash
and cash equivalents, end of period
|
$ | 19,729 | $ | 17,868 | ||||
Cash
paid during period
|
||||||||
Interest
|
$ | 2,023 | $ | 2,295 | ||||
Income
taxes
|
139 | 110 |
Amortized
|
Gross
un-
|
Gross
un-
|
Fair
|
|||||||||||||
(in thousands)
|
cost (1)
|
realized gains
|
realized losses
|
value
|
||||||||||||
March
31, 2010
|
||||||||||||||||
Available-for-sale
|
||||||||||||||||
U.S.
Treasury notes
|
$ | 4,999 | $ | - | $ | (17 | ) | $ | 4,982 | |||||||
U.S.
Government Agency notes
|
50,253 | 197 | (18 | ) | 50,432 | |||||||||||
Municipal
bonds
|
51,803 | 125 | (4,374 | ) | 47,553 | |||||||||||
Mortgage
backed securities
|
||||||||||||||||
U.S.
Government Agencies
|
27,641 | 593 | (125 | ) | 28,109 | |||||||||||
Collateralized
mortgage obligations
|
||||||||||||||||
U.S.
Government Agencies
|
5,324 | 3 | (31 | ) | 5,296 | |||||||||||
Non-agency
|
23,690 | 717 | (2,066 | ) | 22,341 | |||||||||||
SBA
bonds
|
6,196 | 57 | - | 6,253 | ||||||||||||
Corporate
bonds
|
1,082 | 48 | - | 1,130 | ||||||||||||
Preferred Stock
|
20 | 62 | - | 82 | ||||||||||||
Total securities
available-for-sale
|
$ | 171,008 | $ | 1,802 | $ | (6,631 | ) | $ | 166,179 | |||||||
Held-to-maturity
|
||||||||||||||||
Mortgage backed security
|
$ | 60 | $ | 2 | $ | - | $ | 62 | ||||||||
Non-marketable
securities
|
||||||||||||||||
Federal Home Loan Bank of Boston
stock
|
$ | 6,032 | $ | - | $ | - | $ | 6,032 | ||||||||
December
31, 2009
|
||||||||||||||||
Available-for-sale
|
||||||||||||||||
U.S.
Treasury bills
|
$ | 1,999 | $ | 1 | $ | - | $ | 2,000 | ||||||||
U.S.
Government Agency notes
|
24,833 | 125 | (126 | ) | 24,832 | |||||||||||
Municipal
bonds
|
51,775 | 113 | (4,735 | ) | 47,153 | |||||||||||
Mortgage
backed securities
|
||||||||||||||||
U.S.
Government Agencies
|
33,535 | 535 | (143 | ) | 33,927 | |||||||||||
Collateralized
mortgage obligations
|
||||||||||||||||
U.S.
Government Agencies
|
5,696 | - | (58 | ) | 5,638 | |||||||||||
Non-agency
|
25,317 | 433 | (2,121 | ) | 23,629 | |||||||||||
SBA
bonds
|
6,581 | 59 | - | 6,640 | ||||||||||||
Corporate
bonds
|
1,079 | 49 | - | 1,128 | ||||||||||||
Preferred Stock
|
20 | 64 | - | 84 | ||||||||||||
Total securities
available-for-sale
|
$ | 150,835 | $ | 1,379 | $ | (7,183 | ) | $ | 145,031 | |||||||
Held-to-maturity
|
||||||||||||||||
Mortgage backed security
|
$ | 62 | $ | - | $ | - | $ | 62 | ||||||||
Non-marketable
securities
|
||||||||||||||||
Federal Home Loan Bank of Boston
stock
|
$ | 6,032 | $ | - | $ | - | $ | 6,032 |
(1)
|
Net
of other-than-temporary impairment write-down recognized in
earnings.
|
Three months ended March 31, (in
thousands)
|
2010
|
2009
|
||||||
Proceeds
|
$ | - | $ | 21,347 | ||||
Gains
realized
|
- | 435 | ||||||
Losses realized
|
- | 8 | ||||||
Net
gains realized
|
- | 427 | ||||||
Income
tax provision
|
- | 145 |
Less than 12 Months
|
12 Months or Longer
|
Total
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
(in thousands)
|
Value
|
losses
|
value
|
losses
|
value
|
losses
|
||||||||||||||||||
March
31, 2010
|
||||||||||||||||||||||||
Available-for-sale
|
||||||||||||||||||||||||
U.S.
Government Agency notes
|
$ | 4,472 | $ | 35 | $ | - | $ | - | $ | 4,472 | $ | 35 | ||||||||||||
Municipal
Bonds
|
11,100 | 377 | 30,579 | 3,997 | 41,679 | 4,374 | ||||||||||||||||||
Mortgage
backed securities
|
2,937 | 14 | 1,652 | 111 | 4,589 | 125 | ||||||||||||||||||
Collateralized
mortgage obligations
|
||||||||||||||||||||||||
U.S.
Government Agencies
|
2,621 | 31 | - | - | 2,621 | 31 | ||||||||||||||||||
Non-agency
|
3,180 | 60 | 7,464 | 591 | 10,644 | 651 | ||||||||||||||||||
Total temporarily impaired
securities
|
24,310 | 517 | 39,695 | 4,699 | 64,005 | 5,216 | ||||||||||||||||||
Other-than-temporarily
impaired securities
|
||||||||||||||||||||||||
Collateralized
mortgage obligations
|
||||||||||||||||||||||||
Non-agency
|
584 | 57 | 3,229 | 1,358 | 3,813 | 1,415 | ||||||||||||||||||
Total
temporarily impaired and other-than-
|
||||||||||||||||||||||||
temporarily impaired
securities
|
$ | 24,894 | $ | 574 | $ | 42,924 | $ | 6,057 | $ | 67,818 | $ | 6,631 |
(in thousands)
|
March 31, 2010
|
December 31, 2009
|
||||||
Loans
receivable, net
|
||||||||
Real
estate mortgages:
|
||||||||
Residential
|
$ | 164,119 | $ | 163,863 | ||||
Commercial
|
77,210 | 70,066 | ||||||
Construction,
land & land development
|
23,801 | 31,011 | ||||||
Home equity credit
|
32,830 | 33,099 | ||||||
Total
mortgage loans
|
297,960 | 298,039 | ||||||
Commercial
and industrial
|
29,162 | 26,400 | ||||||
Consumer
|
5,224 | 5,436 | ||||||
Other
|
276 | 269 | ||||||
Total
loans, gross
|
332,622 | 330,144 | ||||||
Deferred
loan origination fees and costs, net
|
627 | 586 | ||||||
Allowance for loan losses
|
(3,649 | ) | (3,473 | ) | ||||
Total loans, net
|
$ | 329,600 | $ | 327,257 | ||||
Loans
held-for-sale
|
||||||||
Residential mortgages
|
$ | 1,178 | $ | 665 |
Three
months ended March 31, (in thousands)
|
2010
|
2009
|
||||||
Balance,
beginning of period
|
$ | 3,473 | $ | 2,724 | ||||
Provision
for losses
|
180 | 430 | ||||||
Charge-offs
|
(10 | ) | (160 | ) | ||||
Recoveries
|
6 | 11 | ||||||
Balance,
end of period
|
$ | 3,649 | $ | 3,005 |
Three months ended March 31, (in
thousands)
|
2010
|
2009
|
||||||
Residential
mortgage loans serviced for others
|
$ | 75,414 | $ | 55,652 | ||||
Fair value of mortgage servicing
rights
|
493 | 227 |
Three months ended March 31, (in
thousands)
|
2010
|
2009
|
||||||
Loan
Servicing Rights
|
||||||||
Balance,
beginning of period
|
$ | 427 | $ | 227 | ||||
Originated
|
28 | 61 | ||||||
Amortization (1)
|
(31 | ) | (33 | ) | ||||
Balance, end of period
|
424 | 255 | ||||||
Valuation
Allowance
|
||||||||
Balance,
beginning of period
|
(30 | ) | (118 | ) | ||||
Decrease (increase) in impairment reserve
(1)
|
2 | 41 | ||||||
Balance, end of period
|
(28 | ) | (77 | ) | ||||
Loan servicing rights, net
|
$ | 396 | $ | 178 |
(1)
|
Amortization
expense and changes in the impairment reserve are recorded in loan
servicing fee income.
|
(in
thousands)
|
March
31, 2010
|
December
31, 2009
|
||||||
Non-accrual
loans, excluding troubled debt restructured loans
|
$ | 5,798 | $ | 5,098 | ||||
Non-accrual
troubled debt restructured loans
|
6,263 | 2,341 | ||||||
Accruing troubled debt restructured
loans
|
5,046 | 4,566 | ||||||
Total impaired loans
|
$ | 17,107 | $ | 12,004 | ||||
Requiring
valuation allowance
|
$ | 4,551 | $ | 3,388 | ||||
Not requiring valuation
allowance
|
12,556 | 9,379 | ||||||
Total impaired loans
|
$ | 17,107 | $ | 12,004 | ||||
Valuation
allowance
|
$ | 517 | $ | 388 | ||||
Average
impaired loans
|
13,791 | 9,443 | ||||||
Commitments
to lend additional amounts to impaired borrowers
|
- | - |
(in
thousands)
|
March
31, 2010
|
December
31, 2009
|
||||||
Securities
available-for-sale (at fair value)
|
$ | 60,081 | $ | 63,097 | ||||
Loans
receivable
|
108,246 | 104,960 | ||||||
Total
pledged assets
|
$ | 168,327 | $ | 168,057 |
Three
months ended March 31, (in thousands, except per share
amounts)
|
2010
|
2009
|
||||||
Net
income
|
$ | 594 | $ | 1,081 | ||||
Preferred
stock net accretion
|
5 | - | ||||||
Preferred
stock dividends paid
|
110 | - | ||||||
Net
income available to common shareholders
|
$ | 479 | $ | 1,081 | ||||
Weighted
average common stock outstanding - basic
|
1,687 | 1,686 | ||||||
Weighted
average common and common equivalent stock outstanding-
diluted
|
1,687 | 1,686 | ||||||
Earnings
per common and common equivalent share
|
||||||||
Basic
|
$ | 0.28 | $ | 0.64 | ||||
Diluted
|
0.28 | 0.64 |
Actual
|
For Capital Adequacy
Purposes
|
To be Well Capitalized Under Prompt Corrective
Action Provisions
|
||||||||||||||||||||||
(dollars in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
March 31,
2010
|
||||||||||||||||||||||||
Total
Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
$ | 49,916 | 12.75 | % | $ | 31,311 | 8.0 | % | n/a | - | ||||||||||||||
Bank
|
40,420 | 10.36 | 31,227 | 8.0 | $ | 38,034 | 10.0 | % | ||||||||||||||||
Tier
1 Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
46,207 | 11.81 | 15,656 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
36,712 | 9.41 | 15,613 | 4.0 | 23,420 | 6.0 | ||||||||||||||||||
Tier
1 Capital (to average assets)
|
||||||||||||||||||||||||
Salisbury
|
46,207 | 8.40 | 22,387 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
36,712 | 6.68 | 21,996 | 4.0 | 27,494 | 5.0 | ||||||||||||||||||
March
31, 2009
|
||||||||||||||||||||||||
Total
Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
49,354 | 14.55 | 27,130 | 8.0 | n/a | - | ||||||||||||||||||
Bank
|
39,556 | 11.74 | 26,965 | 8.0 | 33,707 | 10.0 | ||||||||||||||||||
Tier
1 Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
46,317 | 13.66 | 13,565 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
36,516 | 10.83 | 13,483 | 4.0 | 20,224 | 6.0 | ||||||||||||||||||
Tier
1 Capital (to average assets)
|
||||||||||||||||||||||||
Salisbury
|
46,317 | 9.48 | 19,535 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
36,519 | 7.52 | 19,426 | 4.0 | 24,282 | 5.0 |
Three months ended March 31, (in
thousands)
|
2010
|
2009
|
||||||
Service
cost
|
$ | 100 | $ | 107 | ||||
Interest
cost on benefit obligation
|
91 | 101 | ||||||
Expected
return on plan assets
|
(100 | ) | (90 | ) | ||||
Amortization
of prior service cost
|
- | - | ||||||
Amortization of net loss
|
18 | 33 | ||||||
Net periodic benefit cost
|
$ | 109 | $ | 151 |
Three months ended March 31, (in
thousands)
|
2010
|
2009
|
||||||
Net
income
|
$ | 594 | $ | 1,081 | ||||
Other
comprehensive income (loss)
|
||||||||
Net
unrealized gains (losses) on securities available-for-sale
|
975 | (3,225 | ) | |||||
Reclassification of net realized gains in net
income
|
- | 427 | ||||||
Unrealized
gains (losses) on securities available-for-sale
|
975 | (2,798 | ) | |||||
Income tax (expense)
benefit
|
(331 | ) | 670 | |||||
Unrealized gains (losses) on securities
available-for-sale, net of tax
|
644 | (2,128 | ) | |||||
Pension
plan income
|
18 | 32 | ||||||
Income tax expense
|
(6 | ) | (11 | ) | ||||
Pension plan income, net of
tax
|
12 | 21 | ||||||
Other comprehensive income (loss), net of
tax
|
656 | (2,107 | ) | |||||
Comprehensive income (loss)
|
$ | 1,250 | $ | (1,026 | ) |
Three months ended March 31, (in
thousands)
|
2010
|
2009
|
||||||
Unrealized
losses on securities available-for-sale, net of tax
|
$ | (3,186 | ) | $ | (9,096 | ) | ||
Unrecognized pension plan expense, net of
tax
|
(1,236 | ) | (1,916 | ) | ||||
Accumulated other comprehensive loss,
net
|
$ | (4,422 | ) | $ | (11,012 | ) |
Fair Value Measurements at Reporting Date
Using
|
||||||||||||||||
(in
thousands)
|
March 31, |
Quoted
prices in Active markets for Identical assets
|
Significant
other observable inputs
|
Significant
unobservable inputs
|
||||||||||||
2010
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||
Items
Measured at Fair Value
|
||||||||||||||||
Recurring
basis
|
||||||||||||||||
Securities
available-for-sale
|
$ | 166,179 | $ | 82 | $ | 166,097 | $ | - | ||||||||
Non-recurring
basis
|
||||||||||||||||
Impaired
loans
|
12,064 | 9,014 | 2,999 | 51 |
Fair
Value Measurements using significant
unobservable
inputs
|
||||||||||||
Level
3
|
||||||||||||
Three
months ended March 31, 2010 (in thousands)
|
Securities
available-for-sale
|
Impaired
Loans
|
Total
|
|||||||||
Balance,
beginning of period
|
$ | - | $ | 116 | $ | 116 | ||||||
Total
gains or losses (realized/unrealized)
|
||||||||||||
Included
in earnings
|
- | - | - | |||||||||
Included
in other comprehensive income
|
- | - | - | |||||||||
Principal
paydowns of securities, net of accretion
|
- | - | - | |||||||||
Transfers
in and/or out of Level 3
|
- | (65 | ) | (65 | ) | |||||||
Balance,
end of period
|
$ | - | $ | 51 | $ | 51 | ||||||
Amount
of total gains or losses for the period
|
||||||||||||
included
in earnings attributable to the change
|
||||||||||||
in
unrealized gains or losses relating to assets
|
||||||||||||
still
held at the reporting date
|
$ | - | $ | - | $ | - |
March
31, 2010
|
December
31, 2009
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
(in
thousands)
|
value
|
fair
value
|
value
|
fair
value
|
||||||||||||
Financial
Assets
|
||||||||||||||||
Cash
and due from banks
|
$ | 19,729 | $ | 19,729 | $ | 43,298 | $ | 43,298 | ||||||||
Interest
bearing time deposits with other banks
|
5,000 | 5,000 | 5,000 | 5,000 | ||||||||||||
Securities
available-for-sale
|
166,179 | 166,179 | 145,031 | 145,031 | ||||||||||||
Security
held-to-maturity
|
60 | 62 | 62 | 62 | ||||||||||||
Federal
Home Loan Bank stock
|
6,032 | 6,032 | 6,032 | 6,032 | ||||||||||||
Loans
held-for-sale
|
1,178 | 1,187 | 665 | 670 | ||||||||||||
Loans
receivable net
|
329,600 | 323,567 | 327,257 | 321,882 | ||||||||||||
Accrued
interest receivable
|
2,093 | 2,093 | 2,177 | 2,177 | ||||||||||||
Financial
Liabilities
|
||||||||||||||||
Demand
(non-interest-bearing)
|
$ | 68,852 | $ | 68,852 | $ | 70,026 | $ | 70,026 | ||||||||
Demand
(interest-bearing)
|
50,148 | 50,148 | 43,845 | 43,845 | ||||||||||||
Money
market
|
68,317 | 68,317 | 64,477 | 64,477 | ||||||||||||
Savings
and other
|
88,699 | 88,699 | 86,316 | 86,316 | ||||||||||||
Certificates
of deposit
|
146,473 | 146,956 | 153,539 | 155,441 | ||||||||||||
Total
deposits
|
422,489 | 422,972 | 418,203 | 420,105 | ||||||||||||
FHLBB
advances
|
75,356 | 79,092 | 76,364 | 80,830 | ||||||||||||
Repurchase
agreements
|
7,973 | 7,973 | 11,415 | 11,415 | ||||||||||||
Accrued
interest payable
|
484 | 484 | 523 | 523 |
Item 2.
|
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Three
months ended March 31,
|
Average Balance
|
Income / Expense
|
Average Yield / Rate
|
|||||||||||||||||||||
(dollars in thousands)
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||
Loans
(a)
|
$ | 333,347 | $ | 301,202 | $ | 4,487 | $ | 4,509 | 5.40 | % | 5.99 | % | ||||||||||||
Securities
(c)(d)
|
150,385 | 160,428 | 1,745 | 2,274 | 4.64 | 5.67 | ||||||||||||||||||
FHLBB
stock
|
6,032 | 5,323 | - | - | - | - | ||||||||||||||||||
Short term funds (b)
|
40,746 | 8,272 | 46 | 2 | 0.45 | 0.09 | ||||||||||||||||||
Total
earning assets
|
530,510 | 475,225 | 6,278 | 6,785 | 4.74 | 5.72 | ||||||||||||||||||
Other assets
|
32,884 | 24,106 | ||||||||||||||||||||||
Total assets
|
$ | 563,394 | $ | 499,331 | ||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 49,158 | $ | 24,442 | 147 | 13 | 1.20 | 0.21 | ||||||||||||||||
Money
market accounts
|
66,413 | 64,539 | 95 | 205 | 0.58 | 1.27 | ||||||||||||||||||
Savings
and other
|
87,644 | 73,650 | 143 | 214 | 0.65 | 1.16 | ||||||||||||||||||
Certificates of deposit
|
148,941 | 132,038 | 813 | 1,051 | 0.55 | 0.80 | ||||||||||||||||||
Total
interest-bearing deposits
|
352,156 | 294,669 | 1,198 | 1,483 | 1.36 | 2.01 | ||||||||||||||||||
Repurchase
agreements
|
12,601 | 9,529 | 27 | 39 | 0.86 | 1.67 | ||||||||||||||||||
FHLBB advances
|
75,752 | 81,307 | 758 | 762 | 4.00 | 3.75 | ||||||||||||||||||
Total
interest-bearing liabilities
|
440,509 | 385,505 | 1,983 | 2,284 | 1.80 | 2.37 | ||||||||||||||||||
Demand
deposits
|
66,122 | 64,575 | ||||||||||||||||||||||
Other
liabilities
|
3,809 | 7,145 | ||||||||||||||||||||||
Shareholders’ equity
|
52,954 | 42,106 | ||||||||||||||||||||||
Total liabilities & shareholders’
equity
|
$ | 563,394 | $ | 499,331 | ||||||||||||||||||||
Net
interest income
|
$ | 4,295 | $ | 4,501 | ||||||||||||||||||||
Spread
on interest-bearing funds
|
2.93 | 3.33 | ||||||||||||||||||||||
Net
interest margin (e)
|
3.25 | 3.80 |
(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 of $259,000 and $325,000, respectively for 2010 and 2009
on tax-exempt securities whose income and yields are calculated on a
tax-equivalent basis.
|
(e)
|
Net
interest income divided by average interest-earning
assets.
|
Three
months ended March 31, (in thousands)
|
2010 versus 2009
|
|||||||||||
Change in interest due to
|
Volume
|
Rate
|
Net
|
|||||||||
Interest-earning
assets
|
||||||||||||
Loans
|
$ | 457 | $ | (479 | ) | $ | (22 | ) | ||||
Securities
|
(129 | ) | (400 | ) | (529 | ) | ||||||
Short term funds
|
22 | 22 | 44 | |||||||||
Total
|
350 | (857 | ) | (507 | ) | |||||||
Interest-bearing
liabilities
|
||||||||||||
Deposits
|
193 | (478 | ) | (285 | ) | |||||||
Repurchase
agreements
|
10 | (23 | ) | (13 | ) | |||||||
FHLBB advances
|
(54 | ) | 50 | (4 | ) | |||||||
Total
|
149 | (451 | ) | (302 | ) | |||||||
Net change in net interest
income
|
$ | 201 | $ | (406 | ) | $ | (205 | ) |
As of or for the three months ended (dollars in
thousands)
|
March 31,
2010
|
December 31,
2009
|
March 31,
2009
|
|||||||||
Balance,
beginning of period
|
$ | 3,473 | $ | 3,430 | $ | 2,724 | ||||||
Provision
(benefit) or loan losses
|
180 | 60 | 430 | |||||||||
Charge-offs
|
||||||||||||
Real
estate mortgages
|
- | - | (50 | ) | ||||||||
Commercial
& industrial
|
- | (7 | ) | (76 | ) | |||||||
Consumer
|
(10 | ) | (15 | ) | (34 | ) | ||||||
Total charge-offs
|
(10 | ) | (22 | ) | (160 | ) | ||||||
Recoveries
|
||||||||||||
Real
estate mortgages
|
- | - | - | |||||||||
Commercial
& industrial
|
- | - | 4 | |||||||||
Consumer
|
6 | 5 | 7 | |||||||||
Total recoveries
|
6 | 5 | 11 | |||||||||
Net (charge-offs)
recoveries
|
(4 | ) | (17 | ) | ( 149 | ) | ||||||
Balance, end of period
|
$ | 3,649 | $ | 3,473 | $ | 3,005 | ||||||
Loans
receivable, gross
|
$ | 332,622 | $ | 330,144 | $ | 300,938 | ||||||
Non-performing
loans
|
12,064 | 7,445 | 6,275 | |||||||||
Accruing
loans past due 30-89 days
|
5,385 | 4,098 | 6,458 | |||||||||
Ratio
of allowance for loan losses:
|
||||||||||||
to
loans receivable, gross
|
1.10 | % | 1.05 | % | 1.00 | % | ||||||
to
non-performing loans
|
30.25 | 46.65 | 47.90 | |||||||||
Ratio
of non-performing loans
|
||||||||||||
to
loans receivable, gross
|
3.62 | 2.25 | 2.09 | |||||||||
Ratio
of accruing loans past due 30-89 days
|
||||||||||||
to loans receivable, gross
|
1.62 | 1.24 | 2.15 |
Three months ended March 31, (dollars in
thousands)
|
2010
|
2009
|
2010 vs. 2009
|
|||||||||||||
Gains
on securities, net
|
$ | - | $ | 427 | $ | (427 | ) | (100.00 | )% | |||||||
Trust
and wealth advisory fees
|
545 | 540 | 5 | 0.93 | ||||||||||||
Service
charges and fees
|
469 | 398 | 71 | 17.84 | ||||||||||||
Gains
on sales of mortgage loans, net
|
60 | 82 | (22 | ) | (26.83 | ) | ||||||||||
Mortgage
servicing, net
|
15 | 42 | (27 | ) | (64.28 | ) | ||||||||||
Other
|
57 | 137 | (80 | ) | (58.39 | ) | ||||||||||
Total non-interest income
|
$ | 1,146 | $ | 1,626 | $ | (480 | ) | (29.52 | ) |
Three months ended March 31, (dollars in
thousands)
|
2010
|
2009
|
2010 vs. 2009
|
|||||||||||||
Salaries
|
$ | 1,746 | $ | 1,753 | $ | (7 | ) | (0.40 | )% | |||||||
Employee
benefits
|
471 | 438 | 33 | 7.53 | ||||||||||||
Premises
and equipment
|
515 | 484 | 31 | 6.40 | ||||||||||||
Data
processing
|
408 | 383 | 25 | 6.53 | ||||||||||||
Professional
fees
|
402 | 356 | 46 | 12.92 | ||||||||||||
FDIC
insurance
|
171 | 114 | 57 | 0.50 | ||||||||||||
Marketing
and community contributions
|
88 | 76 | 12 | 15.79 | ||||||||||||
Amortization
of intangible assets
|
56 | 41 | 15 | 36.59 | ||||||||||||
Other
|
472 | 383 | 89 | 23.23 | ||||||||||||
Non-interest expense
|
$ | 4,329 | $ | 4,028 | $ | 301 | 7.47 |
(in
thousands)
|
March
31, 2010
|
December
31, 2009
|
||||||
Loans
receivable
|
||||||||
Real
Estate Mortgages
|
||||||||
Residential
|
$ | 164,119 | $ | 163,863 | ||||
Commercial
|
77,210 | 70,066 | ||||||
Construction,
land & land development
|
23,801 | 31,011 | ||||||
Home
equity credit
|
32,830 | 33,099 | ||||||
Total
mortgage loans
|
297,960 | 298,039 | ||||||
Commercial
and Industrial
|
29,162 | 26,400 | ||||||
Consumer
|
5,224 | 5,436 | ||||||
Other
|
276 | 269 | ||||||
Total
loans, gross
|
333,622 | 330,144 | ||||||
Deferred
loan origination costs, net
|
627 | 586 | ||||||
Allowance
for loan losses
|
(3,649 | ) | (3,473 | ) | ||||
Loans
receivable, net
|
$ | 329,600 | $ | 327,257 | ||||
Loans
held-for-sale
|
||||||||
Residential
mortgages
|
$ | 1,178 | $ | 665 |
(in thousands)
|
March 31, 2010
|
December 31, 2009
|
||||||
Real
Estate Mortgages
|
||||||||
Residential
|
$ | 3,332 | $ | 765 | ||||
Commercial
|
4,196 | 2,226 | ||||||
Construction,
land & land development
|
3,603 | 3,535 | ||||||
Home equity credit
|
366 | 367 | ||||||
Total
mortgage loans
|
11,497 | 6,893 | ||||||
Commercial and Industrial
|
564 | 546 | ||||||
Non-accruing
loans
|
$ | 12,061 | $ | 7,439 | ||||
Accruing loans past due 90 days or
more
|
3 | 6 | ||||||
Total
non-performing loans
|
12,064 | 7,445 | ||||||
Real estate acquired in settlement of
loans
|
275 | 275 | ||||||
Total non-performing assets
|
$ | 12,339 | $ | 7,720 |
(in thousands)
|
March 31, 2010
|
December 31, 2009
|
||||||
Current
|
$ | 5,248 | $ | 3,105 | ||||
Past
due 001-029 days
|
315 | - | ||||||
Past
due 030-059 days
|
802 | 349 | ||||||
Past
due 060-089 days
|
1,321 | 405 | ||||||
Past
due 090-179 days
|
1,113 | 321 | ||||||
Past due 180 days and over
|
3,265 | 3,265 | ||||||
Total non-performing loans
|
$ | 12,064 | $ | 7,445 |
(in thousands)
|
March 31, 2010
|
December 31, 2009
|
||||||
Real
Estate Mortgages
|
||||||||
Residential
|
$ | 662 | $ | 2,708 | ||||
Commercial
|
4,384 | 1,857 | ||||||
Accruing
troubled debt restructured loans
|
5,046 | 4,565 | ||||||
Real
Estate Mortgages
|
||||||||
Residential
|
2,213 | 176 | ||||||
Commercial
|
3,866 | 2,008 | ||||||
Construction,
land & land development
|
26 | - | ||||||
Commercial
and Industrial
|
158 | 158 | ||||||
Non-accrual
troubled debt restructured loans
|
6,263 | 2,342 | ||||||
Total
troubled debt restructured loans
|
$ | 11,309 | $ | 6,907 |
(in thousands)
|
March 31, 2010
|
December 31, 2009
|
||||||
Current
|
$ | 4,799 | $ | 4,566 | ||||
Past due 001-029 days
|
247 | - | ||||||
Accruing troubled debt restructured
loans
|
5,046 | 4,566 | ||||||
Current
|
4,001 | 1,991 | ||||||
Past
due 030-059 days
|
729 | - | ||||||
Past
due 060-089 days
|
1,183 | 350 | ||||||
Past due 090-179 days
|
350 | - | ||||||
Non-accrual troubled debt restructured
loans
|
6,263 | 2,341 | ||||||
Total troubled debt restructured
loans
|
$ | 11,309 | $ | 6,907 |
(in thousands)
|
March 31, 2010
|
December 31, 2009
|
||||||
Past
due 030-059 days
|
$ | 4,543 | $ | 2,821 | ||||
Past
due 060-089 days
|
840 | 1,272 | ||||||
Past due 090-179 days
|
3 | 5 | ||||||
Accruing loans
|
5,386 | 4,098 | ||||||
Past
due 030-059 days
|
801 | 349 | ||||||
Past
due 060-089 days
|
1,321 | 405 | ||||||
Past
due 090-179 days
|
1,110 | 315 | ||||||
Past due 180 days and over
|
3,265 | 3,265 | ||||||
Non-accrual loans
|
6,497 | 4,334 | ||||||
Total loans past due 30 days or
greater
|
$ | 11,883 | $ | 8,432 |
Well
|
March
31, 2010
|
December
31, 2009
|
||||||||||||||||||
capitalized
|
Salisbury
|
Bank
|
Salisbury
|
Bank
|
||||||||||||||||
Total
Capital (to risk-weighted assets)
|
10.00 | % | 12.75 | % | 10.36 | % | 12.86 | % | 10.40 | % | ||||||||||
Tier
1 Capital (to risk-weighted assets)
|
6.00 | 11.81 | 9.41 | 11.95 | 9.48 | |||||||||||||||
Tier
1 Capital (to average assets)
|
5.00 | 8.40 | 6.68 | 8.39 | 6.70 |
(a)
|
assumptions
concerning future economic and business conditions and their effect on the
economy in general and on the markets in which Salisbury and the Bank do
business; and
|
(b)
|
expectations
for revenues and earnings for Salisbury and
Bank.
|
(a)
|
the
risk of adverse changes in business conditions in the banking industry
generally and in the specific markets in which the Bank
operates;
|
(b)
|
changes
in the legislative and regulatory environment that negatively impacts
Salisbury and Bank through increased operating
expenses;
|
(c)
|
increased
competition from other financial and non-financial
institutions;
|
(d)
|
the
impact of technological advances;
and
|
(e)
|
other
risks detailed from time to time in Salisbury’s filings with the
Securities and Exchange Commission.
|
Item 3.
|
QUANTITATIVE AND QUALITATIVE
DISCLOSURE OF MARKET RISK
|
As
of March 31, 2010
|
Months
1-12
|
Months
13-24
|
||||||
Immediately
rising interest rates
|
(9.70 | )% | (13.46 | )% | ||||
Immediately
falling interest rates
|
0.17 | (1.48 | ) | |||||
Gradually
rising interest rates
|
(0.81 | ) | (10.39 | ) |
As
of March 31, 2010 (in thousands)
|
Rates
up 100bp
|
Rates
up 200bp
|
||||||
U.S.
Treasury notes
|
$ | (143 | ) | $ | (276 | ) | ||
U.S.
Government agency notes
|
(2,118 | ) | (4,455 | ) | ||||
Municipal
bonds
|
(4,125 | ) | (7,883 | ) | ||||
Mortgage
backed securities
|
(744 | ) | (1,802 | ) | ||||
Collateralized
mortgage obligations
|
(1,789 | ) | (3,287 | ) | ||||
SBA
pools
|
(27 | ) | (46 | ) | ||||
Total
available-for-sale debt securities
|
$ | (8,946 | ) | $ | (17,749 | ) |
Item 4T.
|
CONTROLS AND
PROCEDURES
|
PART II.
|
OTHER
INFORMATION
|
Item
1.
|
LEGAL
PROCEEDINGS
|
RISK
FACTORS
|
|
Not
applicable.
|
Item 2.
|
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF
PROCEEDS
|
|
None
|
Item 3.
|
DEFAULTS UPON SENIOR
SECURITIES
|
|
None
|
Item 4.
|
RESERVED
|
OTHER
INFORMATION
|
|
None
|
Item 6.
|
EXHIBITS
|
Rule
13a-14(a)/15d-14(a) Certification.
|
Rule
13a-14(a)/15d-14(a) Certification.
|
Section
1350 Certifications
|
May
17, 2010
|
by /s/ Richard J.
Cantele, Jr.
|
Richard
J. Cantele, Jr.,
|
|
Chief
Executive Officer
|
|
May
17, 2010
|
by /s/ B. Ian
McMahon
|
B.
Ian McMahon,
|
|
Chief
Financial Officer
|