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
|
(I.R.S.
Employer
|
of
incorporation or organization)
|
Identification
No.)
|
5
Bissell Street, Lakeville, CT
|
06039
|
(Address
of principal executive offices)
|
(Zip
code)
|
Page
|
||
PART I FINANCIAL INFORMATION | ||
Item
1.
|
Financial
Statements:
|
|
Consolidated
Balance Sheets as of June 30, 2010 and December 31, 2009
|
3
|
|
Consolidated
Statements of Income for the three and six month periods ended June 30,
2010 and June 30, 2009
|
4
|
|
Consolidated
Statements of Changes in Shareholders' Equity for the six
month periods ended June 30, 2010 and June 30,
2009
|
5
|
|
Consolidated
Statements of Cash Flows for the six month periods ended June 30, 2010 and
June 30, 2009
|
6
|
|
Notes
to Consolidated Financial Statements
|
8
|
|
Item
2.
|
Management's
Discussion and Analysis of Financial Condition and Results of
Operations
|
18
|
Item
3.
|
Quantitative
and Qualitative Disclosure of Market Risk
|
31
|
Item
4T.
|
Controls
and Procedures
|
33
|
PART II Other Information | ||
Item
1.
|
Legal
Proceedings
|
33
|
Item
1A.
|
Risk
Factors
|
34
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
34
|
Item
3.
|
Defaults
upon Senior Securities
|
34
|
Item
4.
|
Reserved
|
34
|
Item
5.
|
Other
information
|
34
|
Item
6.
|
Exhibits
|
34
|
(in
thousands, except per share amounts) unaudited
|
June
30,
2010
|
December
31,
2009
|
||||||
ASSETS
|
||||||||
Cash
and due from banks
|
$ | 6,241 | $ | 6,248 | ||||
Interest
bearing demand deposits with other banks
|
15,373 | 37,050 | ||||||
Total
cash and cash equivalents
|
21,614 | 43,298 | ||||||
Interest
bearing time deposits with other banks
|
5,000 | 5,000 | ||||||
Securities
|
||||||||
Available-for-sale at fair
value
|
155,423 | 145,031 | ||||||
Held-to-maturity at amortized
cost (fair value: $61 and $62)
|
59 | 62 | ||||||
Federal Home Loan Bank of Boston
stock at cost
|
6,032 | 6,032 | ||||||
Loans
held-for-sale
|
513 | 665 | ||||||
Loans
receivable, net (allowance for loan losses: $3,768 and
$3,473)
|
342,130 | 327,257 | ||||||
Investment
in real estate
|
75 | 75 | ||||||
Other
real estate owned
|
- | 275 | ||||||
Bank
premises and equipment, net
|
11,543 | 10,434 | ||||||
Goodwill
|
9,829 | 9,829 | ||||||
Intangible
assets (net of accumulated amortization: $1,190 and
$1,079)
|
1,353 | 1,464 | ||||||
Accrued
interest receivable
|
2,251 | 2,177 | ||||||
Cash
surrender value of life insurance policies
|
3,769 | 3,685 | ||||||
Deferred
taxes
|
2,432 | 3,285 | ||||||
Other
assets
|
3,499 | 3,778 | ||||||
Total Assets
|
$ | 565,522 | $ | 562,347 | ||||
LIABILITIES
and SHAREHOLDERS' EQUITY
|
||||||||
Deposits
|
||||||||
Demand (non-interest
bearing)
|
$ | 71,255 | $ | 70,026 | ||||
Demand (interest
bearing)
|
57,588 | 43,845 | ||||||
Money market
|
74,942 | 64,477 | ||||||
Savings and
other
|
88,438 | 86,316 | ||||||
Certificates of
deposit
|
131,767 | 153,539 | ||||||
Total deposits
|
423,990 | 418,203 | ||||||
Repurchase
agreements
|
8,120 | 11,415 | ||||||
Federal
Home Loan Bank of Boston advances
|
74,946 | 76,364 | ||||||
Accrued
interest and other liabilities
|
4,077 | 4,010 | ||||||
Total
Liabilities
|
511,133 | 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: 1,687,661 and
1,686,701
|
168 | 168 | ||||||
Common stock warrants
outstanding
|
112 | 112 | ||||||
Paid-in capital
|
21,927 | 21,894 | ||||||
Retained
earnings
|
35,557 | 35,259 | ||||||
Accumulated other comprehensive
loss, net
|
(3,375 | ) | (5,078 | ) | ||||
Total Shareholders'
Equity
|
54,389 | 52,355 | ||||||
Total Liabilities and
Shareholders' Equity
|
$ | 565,522 | $ | 562,347 |
Three
months ended
|
Six
months ended
|
|||||||||||||||
Periods
ended June 30, (in thousands except per share amounts)
unaudited
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Interest
income
|
||||||||||||||||
Interest
and fees on loans
|
$ | 4,601 | $ | 4,480 | $ | 9,088 | $ | 8,962 | ||||||||
Interest
on debt securities
|
||||||||||||||||
Taxable
|
1,033 | 1,264 | 1,959 | 2,596 | ||||||||||||
Tax exempt
|
559 | 633 | 1,119 | 1,277 | ||||||||||||
Other
interest
|
38 | 9 | 84 | 11 | ||||||||||||
Total interest
income
|
6,231 | 6,386 | 12,250 | 12,846 | ||||||||||||
Interest
expense
|
||||||||||||||||
Deposits
|
1,125 | 1,511 | 2,324 | 2,995 | ||||||||||||
Repurchase
agreements
|
19 | 28 | 46 | 67 | ||||||||||||
Federal
Home Loan Bank of Boston advances
|
761 | 769 | 1,518 | 1,530 | ||||||||||||
Total interest
expense
|
1,905 | 2,308 | 3,888 | 4,592 | ||||||||||||
Net
interest income
|
4,326 | 4,078 | 8,362 | 8,254 | ||||||||||||
Provision
for loan losses
|
260 | 315 | 440 | 745 | ||||||||||||
Net interest income after
provision for loan losses
|
4,066 | 3,763 | 7,922 | 7,509 | ||||||||||||
Non-interest
income
|
||||||||||||||||
Trust
and wealth advisory
|
491 | 430 | 1,036 | 970 | ||||||||||||
Service
charges and fees
|
525 | 453 | 994 | 851 | ||||||||||||
Gains
(losses) on securities, net
|
1 | 9 | 1 | 436 | ||||||||||||
Gains
on sales of mortgage loans, net
|
141 | 221 | 201 | 304 | ||||||||||||
Mortgage
servicing, net
|
9 | 30 | 24 | 72 | ||||||||||||
Other
|
89 | 55 | 146 | 192 | ||||||||||||
Total non-interest income,
excluding other-than-temporary impairment losses
|
1,256 | 1,198 | 2,402 | 2,825 | ||||||||||||
Other-than-temporary
impairment losses on
securities
|
- | (2,302 | ) | - | (2,302 | ) | ||||||||||
Portion
of loss recognized in other comprehensive income (before
tax)
|
- | 1,174 | - | 1,174 | ||||||||||||
Net other-than-temporary
impairment losses recognized in earnings
|
- | (1,128 | ) | - | (1,128 | ) | ||||||||||
Total non-interest
income
|
1,256 | 70 | 2,402 | 1,697 | ||||||||||||
Non-interest
expense
|
||||||||||||||||
Salaries
|
1,694 | 1,596 | 3,282 | 3,207 | ||||||||||||
Employee
benefits
|
586 | 552 | 1,216 | 1,132 | ||||||||||||
Premises
and equipment
|
495 | 466 | 1,011 | 957 | ||||||||||||
Data
processing
|
363 | 330 | 772 | 714 | ||||||||||||
Professional
fees
|
455 | 376 | 857 | 733 | ||||||||||||
FDIC
insurance
|
182 | 420 | 354 | 533 | ||||||||||||
Marketing
and community support
|
59 | 88 | 121 | 164 | ||||||||||||
Amortization
of intangibles
|
56 | 41 | 111 | 82 | ||||||||||||
Other
|
382 | 495 | 876 | 871 | ||||||||||||
Total non-interest
expense
|
4,272 | 4,364 | 8,600 | 8,393 | ||||||||||||
Income
(loss) before income taxes
|
1,050 | (531 | ) | 1,724 | 813 | |||||||||||
Income
tax provision (benefit)
|
172 | (348 | ) | 251 | (85 | ) | ||||||||||
Net
income (loss)
|
$ | 878 | $ | (183 | ) | $ | 1,473 | $ | 898 | |||||||
Net
income (loss) available to common shareholders
|
$ | 763 | $ | (318 | ) | $ | 1,243 | $ | 764 | |||||||
Basic
and diluted earnings (loss) per share
|
$ | 0.45 | $ | (0.19 | ) | $ | 0.74 | $ | 0.45 | |||||||
Common
dividends per share
|
0.28 | 0.28 | 0.56 | 0.28 |
Common
Stock
|
||||||||||||||||||||||||||||||||
(dollars
in thousands)
|
Shares
|
Amount
|
Preferred
Stock
|
Warrants
|
Paid-in
capital
|
Retained
earnings
|
Accumulated
other
comp-
rehensive
loss
|
Total
share-
holders'
equity
|
||||||||||||||||||||||||
Balances
at December 31, 2009
|
1,686,701 | $ | 168 | $ | - | $ | 112 | $ | 21,894 | $ | 35,259 | $ | (5,078 | ) | $ | 52,355 | ||||||||||||||||
Net
income for year
|
- | - | - | - | - | 1,473 | - | 1,473 | ||||||||||||||||||||||||
Other
comprehensive income, net of tax
|
- | - | - | - | - | - | 1,703 | 1,703 | ||||||||||||||||||||||||
Total comprehensive
income
|
3,176 | |||||||||||||||||||||||||||||||
Issuance
of preferred stock and warrants
|
- | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Amortization
(accretion) of preferred stock
|
- | - | - | - | 10 | (10 | ) | - | - | |||||||||||||||||||||||
Common
stock dividends declared
|
- | - | - | - | - | (945 | ) | - | (945 | ) | ||||||||||||||||||||||
Preferred
stock dividends paid
|
- | - | - | - | - | (220 | ) | - | (220 | ) | ||||||||||||||||||||||
Issuance
of common stock for
|
||||||||||||||||||||||||||||||||
directors fees
|
960 | - | - | - | 23 | - | - | 23 | ||||||||||||||||||||||||
Balances
at June 30, 2010
|
1,687,661 | $ | 168 | $ | - | $ | 112 | $ | 21,927 | $ | 35,557 | $ | (3,375 | ) | $ | 54,389 | ||||||||||||||||
Balances
at December 31, 2008
|
1,685,861 | 168 | - | - | 13,158 | 34,518 | (8,905 | ) | 38,939 | |||||||||||||||||||||||
Net
income for year
|
- | - | - | - | - | 898 | - | 898 | ||||||||||||||||||||||||
Other
comprehensive income, net of tax
|
- | - | - | - | - | - | (129 | ) | (129 | ) | ||||||||||||||||||||||
Total comprehensive
income
|
769 | |||||||||||||||||||||||||||||||
Issuance
of preferred stock and warrants
|
- | - | - | 112 | 8,704 | - | - | 8,816 | ||||||||||||||||||||||||
Amortization
(accretion) of preferred stock
|
- | - | - | - | 3 | (3 | ) | - | - | |||||||||||||||||||||||
Common
stock dividends declared
|
- | - | - | - | - | (472 | ) | - | (472 | ) | ||||||||||||||||||||||
Preferred
stock dividends paid
|
- | - | - | - | - | (76 | ) | - | (76 | ) | ||||||||||||||||||||||
Issuance
of common stock for
|
||||||||||||||||||||||||||||||||
directors fees
|
840 | - | - | - | 19 | - | - | 19 | ||||||||||||||||||||||||
Balances
at June 30, 2009
|
1,686,701 | $ | 168 | $ | - | $ | 112 | $ | 21,884 | $ | 34,865 | $ | (9,034 | ) | $ | 47,995 |
Six
months ended June 30, (in thousands)
|
2010
|
2009
|
||||||
Operating
Activities
|
||||||||
Net
income
|
$ | 1,473 | $ | 898 | ||||
Adjustments
to reconcile net income to net cash provided by operating
activities:
|
||||||||
(Accretion), amortization and
depreciation
|
||||||||
Securities
|
305 | 268 | ||||||
Bank premises and
equipment
|
396 | 351 | ||||||
Core deposit
intangible
|
111 | 82 | ||||||
Mortgage servicing
rights
|
74 | 88 | ||||||
Fair value adjustment on
loans
|
22 | 24 | ||||||
Fair value adjustment on
deposits and borrowings
|
- | (54 | ) | |||||
(Gains) and
losses
|
||||||||
Sales and calls of securities
available-for-sale, net
|
(1 | ) | (436 | ) | ||||
Write
down of available-for-sale securities
|
- | 1,128 | ||||||
Provision for loan
losses
|
440 | 745 | ||||||
Decrease in loans
held-for-sale
|
152 | 2,103 | ||||||
Increase in deferred loan
origination fees and costs, net
|
(44 | ) | (7 | ) | ||||
Mortgage servicing rights
originated
|
(112 | ) | (236 | ) | ||||
Decrease in mortgage servicing
rights impairment reserve
|
(5 | ) | (89 | ) | ||||
Increase in unearned income on
loans
|
- | 6 | ||||||
(Increase) decrease in interest
receivable
|
(74 | ) | 332 | |||||
Deferred tax (benefit)
expense
|
(42 | ) | 105 | |||||
Decrease in prepaid
expenses
|
415 | 65 | ||||||
Increase in cash surrender
value of life insurance policies
|
(84 | ) | (170 | ) | ||||
Increase in income tax
receivable
|
(194 | ) | (373 | ) | ||||
Decrease (increase) in other
assets
|
40 | (59 | ) | |||||
Increase (decrease) in accrued
expenses
|
46 | (326 | ) | |||||
(Decrease) increase in interest
payable
|
(85 | ) | 38 | |||||
Increase in other
liabilities
|
130 | 226 | ||||||
Issuance of shares for
directors’ fee
|
23 | 19 | ||||||
Net cash provided by operating
activities
|
2,986 | 4,728 | ||||||
Investing
Activities
|
||||||||
Purchase
of interest-bearing time deposits with other banks
|
- | (5,000 | ) | |||||
Purchase
of Federal Home Loan Bank stock
|
- | (420 | ) | |||||
Purchases
of securities available-for-sale
|
(37,987 | ) | (78,868 | ) | ||||
Proceeds
from sales of securities available-for-sale
|
- | 33,679 | ||||||
Proceeds
from calls of securities available-for-sale
|
12,190 | 27,991 | ||||||
Proceeds
from maturities of securities available-for-sale
|
17,645 | - | ||||||
Proceeds
from maturities of securities held-to-maturity
|
3 | 2 | ||||||
Loan
originations and principle collections, net
|
(15,029 | ) | 2,083 | |||||
Purchases
of loans
|
- | (76 | ) | |||||
Recoveries
of loans previously charged-off
|
14 | 16 | ||||||
Capital
expenditures
|
(1,416 | ) | (1,477 | ) | ||||
Net
cash utilized by investing activities
|
$ | (24,580 | ) | $ | (22,070 | ) |
Six
months ended June 30, (in thousands)
|
2010
|
2009
|
||||||
Financing
Activities
|
||||||||
Increase
in deposit transaction accounts, net
|
$ | 27,560 | $ | 28,693 | ||||
(Decrease)
increase in time deposits, net
|
(21,772 | ) | 28,415 | |||||
Decrease
in securities sold under agreements to repurchase, net
|
(3,295 | ) | (877 | ) | ||||
Federal
Home Loan Bank of Boston advances
|
- | 12,000 | ||||||
Principle
payments on Federal Home Loan Bank of Boston advances
|
(1,418 | ) | (1,807 | ) | ||||
Decrease
in short term Federal Home Loan Bank of Boston advances,
net
|
- | (20,878 | ) | |||||
Proceeds
from issuance of preferred and common stock
|
- | 8,819 | ||||||
Common
stock dividends paid
|
(945 | ) | (944 | ) | ||||
Preferred
stock dividends paid
|
(220 | ) | (79 | ) | ||||
Net cash (utilized) provided
by financing activities
|
(90 | ) | 53,342 | |||||
Net
(decrease) increase in cash and cash equivalents
|
(21,684 | ) | 36,000 | |||||
Cash
and cash equivalents, beginning of period
|
43,298 | 9,659 | ||||||
Cash
and cash equivalents, end of period
|
$ | 21,614 | $ | 45,659 | ||||
Cash
paid during period
|
||||||||
Interest
|
$ | 3,973 | $ | 4,555 | ||||
Income taxes
|
79 | 183 |
Amortized
|
Gross
un-
|
Gross
un-
|
Fair
|
|||||||||||||
(in
thousands)
|
cost
(1)
|
realized
gains
|
realized
losses
|
value
|
||||||||||||
June
30, 2010
|
||||||||||||||||
Available-for-sale
|
||||||||||||||||
U.S.
Treasury notes
|
$ | 4,999 | $ | 180 | $ | - | $ | 5,179 | ||||||||
U.S.
Government Agency notes
|
43,603 | 609 | - | 44,212 | ||||||||||||
Municipal
bonds
|
51,830 | 129 | (4,098 | ) | 47,861 | |||||||||||
Mortgage
backed securities
|
||||||||||||||||
U.S. Government
Agencies
|
24,106 | 693 | (110 | ) | 24,689 | |||||||||||
Collateralized
mortgage obligations
|
||||||||||||||||
U.S. Government
Agencies
|
5,082 | 5 | (13 | ) | 5,074 | |||||||||||
Non-agency
|
22,276 | 812 | (1,585 | ) | 21,503 | |||||||||||
SBA
bonds
|
5,682 | 44 | - | 5,726 | ||||||||||||
Corporate
bonds
|
1,084 | 49 | - | 1,133 | ||||||||||||
Preferred
Stock
|
20 | 26 | - | 46 | ||||||||||||
Total securities
available-for-sale
|
$ | 158,682 | $ | 2,547 | $ | (5,806 | ) | $ | 155,423 | |||||||
Held-to-maturity
|
||||||||||||||||
Mortgage
backed security
|
$ | 59 | $ | 2 | $ | - | $ | 61 | ||||||||
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
|
Six
months
|
|||||||||||||||
Period
ended June 30, (in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Proceeds
|
$ | - | $ | 1,314 | $ | - | $ | 22,233 | ||||||||
Gains
realized
|
- | 1 | - | 416 | ||||||||||||
Losses
realized
|
- | - | - | 8 | ||||||||||||
Net gains
(losses) realized
|
- | (1,119 | ) | 1 | 408 | |||||||||||
Income
tax (benefit) / provision
|
- | (380 | ) | - | 139 |
Less
than 12 Months
|
12
Months or Longer
|
Totals
|
||||||||||||||||||||||
Fair
|
Unrealized
|
Fair
|
Unrealized
|
Fair
|
Unrealized
|
|||||||||||||||||||
(in
thousands)
|
Value
|
losses
|
value
|
losses
|
value
|
losses
|
||||||||||||||||||
June
30, 2010
|
||||||||||||||||||||||||
Available-for-sale
|
||||||||||||||||||||||||
U.S.
Government Agency notes
|
$ | - | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Municipal
Bonds
|
10,357 | 279 | 30,785 | 3,820 | 41,142 | 4,099 | ||||||||||||||||||
Mortgage
backed securities
|
1,314 | 1 | 1,292 | 108 | 2,606 | 109 | ||||||||||||||||||
Collateralized
mortgage obligations
|
||||||||||||||||||||||||
U.S. Government
Agencies
|
2,505 | 13 | - | - | 2,505 | 13 | ||||||||||||||||||
Non-agency
|
1,665 | 26 | 5,442 | 402 | 7,107 | 428 | ||||||||||||||||||
Total
temporarily impaired securities
|
15,841 | 319 | 37,519 | 4,330 | 53,360 | 4,649 | ||||||||||||||||||
Other-than-temporarily
impaired securities
|
||||||||||||||||||||||||
Collateralized mortgage
obligations
|
||||||||||||||||||||||||
Non-agency
|
- | - | 3,940 | 1,157 | 3,940 | 1,157 | ||||||||||||||||||
Total
temporarily impaired and other-than-
|
||||||||||||||||||||||||
temporarily impaired
securities
|
$ | 15,841 | $ | 319 | $ | 41,459 | $ | 5,487 | $ | 57,300 | $ | 5,806 |
(in
thousands)
|
June
30,
2010
|
December
31,
2009
|
||||||
Non-Agency
CMOs
|
||||||||
Total
OTTI losses (unrealized and realized)
|
$ | - | $ | 2,302 | ||||
Less:
unrealized OTTI recognized in other comprehensive loss
|
- | 1,174 | ||||||
Net
impairment losses recognized in earnings
|
$ | - | $ | 1,128 |
Six
months ended June (in thousands)
|
2010
|
2009
|
||||||
Balance,
beginning of period
|
$ | 1,128 | $ | - | ||||
Amounts
related to the credit component on debt securities in which OTTI was not
previously recognized
|
- | 1,128 | ||||||
Balance,
end of period
|
$ | 1,128 | $ | 1,128 |
(in
thousands)
|
June
30, 2010
|
December
31, 2009
|
||||||
Loans
receivable, net
|
||||||||
Real
estate mortgages:
|
||||||||
Residential
|
$ | 169,088 | $ | 163,863 | ||||
Commercial
|
80,347 | 70,066 | ||||||
Construction, land & land
development
|
28,874 | 31,011 | ||||||
Home equity credit
|
33,193 | 33,099 | ||||||
Total mortgage
loans
|
311,502 | 298,039 | ||||||
Commercial
and industrial
|
28,255 | 26,400 | ||||||
Consumer
|
5,078 | 5,436 | ||||||
Other
|
370 | 269 | ||||||
Total loans, gross
|
345,205 | 330,144 | ||||||
Deferred
loan origination fees and costs, net
|
693 | 586 | ||||||
Allowance
for loan losses
|
(3,768 | ) | (3,473 | ) | ||||
Total loans, net
|
$ | 342,130 | $ | 327,257 | ||||
Loans
held-for-sale
|
||||||||
Residential
mortgages
|
$ | 513 | $ | 665 |
Three
months
|
Six
months
|
|||||||||||||||
Periods
ended June 30, (in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Balance,
beginning of period
|
$ | 3,649 | $ | 3,005 | $ | 3,473 | $ | 2,724 | ||||||||
Provision
for losses
|
260 | 315 | 440 | 745 | ||||||||||||
Charge-offs
|
(149 | ) | (16 | ) | (159 | ) | (176 | ) | ||||||||
Recoveries
|
8 | 5 | 14 | 16 | ||||||||||||
Balance,
end of period
|
$ | 3,768 | $ | 3,309 | $ | 3,768 | $ | 3,309 |
(in
thousands)
|
June
30, 2010
|
December
31, 2009
|
||||||
Residential
mortgage loans serviced for others
|
$ | 78,119 | $ | 72,962 | ||||
Fair
value of mortgage servicing rights
|
517 | 473 |
Three
months
|
Six
months
|
|||||||||||||||
Periods
ended June 30, (in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Loan
Servicing Rights
|
||||||||||||||||
Balance,
beginning of period
|
$ | 424 | $ | 255 | $ | 427 | $ | 227 | ||||||||
Originated
|
84 | 175 | 112 | 236 | ||||||||||||
Amortization
(1)
|
(43 | ) | (55 | ) | (74 | ) | (88 | ) | ||||||||
Balance,
end of period
|
465 | 375 | 465 | 375 | ||||||||||||
Valuation
Allowance
|
||||||||||||||||
Balance,
beginning of period
|
(28 | ) | (77 | ) | (30 | ) | (118 | ) | ||||||||
Decrease
(increase) in impairment reserve (1)
|
4 | 48 | 6 | 89 | ||||||||||||
Balance,
end of period
|
(24 | ) | (29 | ) | (24 | ) | (29 | ) | ||||||||
Loan
servicing rights, net
|
$ | 441 | $ | 346 | $ | 441 | $ | 346 |
(1)
|
Amortization
expense and changes in the impairment reserve are recorded in loan
servicing fee income.
|
(in
thousands)
|
June
30, 2010
|
December
31, 2009
|
||||||
Non-accrual
loans, excluding troubled debt restructured loans
|
$ | 5,326 | $ | 5,098 | ||||
Non-accrual
troubled debt restructured loans
|
5,868 | 2,341 | ||||||
Accruing
troubled debt restructured loans
|
5,514 | 4,566 | ||||||
Total
impaired loans
|
$ | 16,708 | $ | 12,005 | ||||
Requiring valuation
allowance
|
$ | 5,050 | $ | 3,388 | ||||
Not requiring valuation
allowance
|
11,658 | 8,617 | ||||||
Total
impaired loans
|
$ | 16,708 | $ | 12,005 | ||||
Valuation
allowance
|
$ | 527 | $ | 388 | ||||
Commitments
to lend additional amounts to impaired borrowers
|
- | - |
(in
thousands)
|
June
30, 2010
|
December
31, 2009
|
||||||
Securities
available-for-sale (at fair value)
|
$ | 56,162 | $ | 63,097 | ||||
Loans
receivable
|
109,960 | 104,960 | ||||||
Total
pledged assets
|
$ | 166,122 | $ | 168,057 |
Three
months
|
Six
months
|
|||||||||||||||
Periods
ended June 30, (in thousands, except per share amounts)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Net
income (loss)
|
$ | 878 | $ | (183 | ) | $ | 1,473 | $ | 898 | |||||||
Preferred
stock net accretion
|
5 | - | 10 | 3 | ||||||||||||
Preferred
stock dividends paid
|
110 | 135 | 220 | 131 | ||||||||||||
Net
income (loss) available to common shareholders
|
$ | 763 | $ | (318 | ) | $ | 1,243 | $ | 764 | |||||||
Weighted
average common stock outstanding - basic
|
1,687 | 1,686 | 1,687 | 1,686 | ||||||||||||
Weighted
average common and common equivalent stock outstanding-
diluted
|
1,687 | 1,686 | 1,687 | 1,686 | ||||||||||||
Earnings
(loss) per common and common equivalent share
|
||||||||||||||||
Basic
|
$ | 0.43 | $ | (0.19 | ) | $ | 0.74 | $ | 0.45 | |||||||
Diluted
|
0.43 | (0.19 | ) | 0.74 | 0.45 |
Actual
|
For
Capital Adequacy
Purposes
|
To
be Well Capitalized
Under
Prompt
Corrective
Action
Provisions
|
||||||||||||||||||||||
(dollars
in thousands)
|
Amount
|
Ratio
|
Amount
|
Ratio
|
Amount
|
Ratio
|
||||||||||||||||||
June
30, 2010
|
||||||||||||||||||||||||
Total
Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
$ | 50,393 | 13.39 | % | $ | 30,108 | 8.0 | % | n/a | - | ||||||||||||||
Bank
|
40,817 | 10.88 | 30,042 | 8.0 | $ | 37,553 | 10.0 | % | ||||||||||||||||
Tier
1 Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
46,582 | 12.38 | 15,054 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
36,712 | 9.86 | 15,613 | 4.0 | 23,420 | 6.0 | ||||||||||||||||||
Tier
1 Capital (to average assets)
|
||||||||||||||||||||||||
Salisbury
|
46,582 | 8.35 | 22,318 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
37,006 | 6.63 | 22,318 | 4.0 | 27,898 | 5.0 | ||||||||||||||||||
June
30, 2009
|
||||||||||||||||||||||||
Total
Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
49,467 | 14.27 | 27,733 | 8.0 | n/a | - | ||||||||||||||||||
Bank
|
39,776 | 10.92 | 26,150 | 8.0 | 36,437 | 10.0 | ||||||||||||||||||
Tier
1 Capital (to risk-weighted assets)
|
||||||||||||||||||||||||
Salisbury
|
46,118 | 13.30 | 13,867 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
36,427 | 10.00 | 14,575 | 4.0 | 21,862 | 6.0 | ||||||||||||||||||
Tier
1 Capital (to average assets)
|
||||||||||||||||||||||||
Salisbury
|
46,118 | 9.02 | 20,452 | 4.0 | n/a | - | ||||||||||||||||||
Bank
|
36,427 | 7.12 | 20,452 | 4.0 | 25,565 | 5.0 |
Three
months
|
Six
months
|
|||||||||||||||
Periods
ended June 30, (in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Service
cost
|
$ | 74 | $ | 107 | $ | 174 | $ | 214 | ||||||||
Interest
cost on benefit obligation
|
89 | 101 | 180 | 202 | ||||||||||||
Expected
return on plan assets
|
(98 | ) | (90 | ) | (198 | ) | (180 | ) | ||||||||
Amortization
of prior service cost
|
- | - | - | - | ||||||||||||
Amortization
of net loss
|
16 | 33 | 34 | 65 | ||||||||||||
Net
periodic benefit cost
|
$ | 81 | $ | 151 | $ | 190 | $ | 301 |
Three
months
|
Six
months
|
|||||||||||||||
Periods
ended June 30, (in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Net
income (loss)
|
$ | 878 | $ | (183 | ) | $ | 1,473 | $ | 898 | |||||||
Other
comprehensive income (loss)
|
||||||||||||||||
Net unrealized gains (losses) on
securities available-for-sale
|
1,570 | 2,538 | 2,545 | 701 | ||||||||||||
Reclassification of net realized
gains in net income
|
1 | 427 | 1 | (961 | ) | |||||||||||
Unrealized gains (losses) on
securities available-for-sale
|
1,571 | 2,965 | 2,546 | (260 | ) | |||||||||||
Income tax (expense)
benefit
|
(534 | ) | (1,008 | ) | (866 | ) | 88 | |||||||||
Unrealized gains (losses) on
securities available-for-sale, net of tax
|
1,037 | 1,957 | 1,680 | (172 | ) | |||||||||||
Pension plan
income
|
17 | 32 | 35 | 65 | ||||||||||||
Income tax
expense
|
(6 | ) | (11 | ) | (12 | ) | (22 | ) | ||||||||
Pension plan income, net of
tax
|
11 | 21 | 23 | 43 | ||||||||||||
Other
comprehensive income (loss), net of tax
|
1,048 | 1,978 | 1,703 | (129 | ) | |||||||||||
Comprehensive
income (loss)
|
$ | 1,926 | $ | (1,795 | ) | $ | 3,176 | $ | 769 |
(in
thousands)
|
June
30, 2010
|
December
31, 2009
|
||||||
Unrealized
losses on securities available-for-sale, net of tax
|
$ | (2,151 | ) | $ | (3,831 | ) | ||
Unrecognized
pension plan expense, net of tax
|
(1,224 | ) | (1,247 | ) | ||||
Accumulated
other comprehensive loss, net
|
$ | (3,375 | ) | $ | (5,078 | ) |
Fair
Value Measurements at Reporting Date Using
|
||||||||||||||||
(in
thousands)
|
Quoted
prices in
Active
markets for
Identical
assets
|
Significant
other
observable
inputs
|
Significant
unobservable
inputs
|
|||||||||||||
June
30, 2010
|
Level
1
|
Level
2
|
Level
3
|
|||||||||||||
Items
Measured at Fair Value
|
||||||||||||||||
Recurring basis
|
||||||||||||||||
Securities
available-for-sale
|
$ | 155,423 | $ | 46 | $ | 155,377 | $ | - | ||||||||
Non-recurring
basis
|
||||||||||||||||
Impaired loans
|
4,523 | - | 4,523 | - |
Fair
Value Measurements using significant
unobservable
inputs
|
||||||||||||
Level
3
|
||||||||||||
Three
months ended June 30, 2010 (in thousands)
|
Securities
available-for-sale
|
Impaired
Loans
|
Total
|
|||||||||
Balance,
beginning of period
|
$ | - | $ | 51 | $ | 51 | ||||||
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
|
- | (51 | ) | (51 | ) | |||||||
Balance,
end of period
|
$ | - | $ | - | $ | - | ||||||
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
|
$ | - | $ | - | $ | - |
June
30, 2010
|
December
31, 2009
|
|||||||||||||||
Carrying
|
Estimated
|
Carrying
|
Estimated
|
|||||||||||||
(in
thousands)
|
value
|
fair
value
|
value
|
fair
value
|
||||||||||||
Financial
Assets
|
||||||||||||||||
Cash
and due from banks
|
$ | 21,614 | $ | 21,614 | $ | 43,298 | $ | 43,298 | ||||||||
Interest
bearing time deposits with other banks
|
5,000 | 5,000 | 5,000 | 5,000 | ||||||||||||
Securities
available-for-sale
|
155,423 | 155,423 | 145,031 | 145,031 | ||||||||||||
Security
held-to-maturity
|
59 | 62 | 62 | 62 | ||||||||||||
Federal
Home Loan Bank stock
|
6,032 | 6,032 | 6,032 | 6,032 | ||||||||||||
Loans
held-for-sale
|
513 | 517 | 665 | 670 | ||||||||||||
Loans
receivable net
|
342,130 | 335,025 | 327,257 | 321,882 | ||||||||||||
Accrued
interest receivable
|
2,251 | 2,251 | 2,177 | 2,177 | ||||||||||||
Financial
Liabilities
|
||||||||||||||||
Demand
(non-interest-bearing)
|
$ | 71,255 | $ | 71,255 | $ | 70,026 | $ | 70,026 | ||||||||
Demand
(interest-bearing)
|
57,588 | 57,588 | 43,845 | 43,845 | ||||||||||||
Money
market
|
74,942 | 74,942 | 64,477 | 64,477 | ||||||||||||
Savings
and other
|
88,438 | 88,438 | 86,316 | 86,316 | ||||||||||||
Certificates
of deposit
|
131,767 | 132,434 | 153,539 | 155,441 | ||||||||||||
Total deposits
|
$ | 423,990 | $ | 424,657 | $ | 418,203 | $ | 420,105 | ||||||||
FHLBB
advances
|
74,946 | 80,061 | 76,364 | 80,830 | ||||||||||||
Repurchase
agreements
|
8,120 | 8,120 | 11,415 | 11,415 | ||||||||||||
Accrued
interest payable
|
438 | 438 | 523 | 523 |
Item
2.
|
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
|
·
|
Net
interest income increased $290,000, or 7%, versus first quarter 2010, and
$248,000, or 6%, versus second quarter 2009, reflecting improvement in the
net interest margin versus first quarter 2010 and growth in earning assets
versus second quarter 2009.
|
|
·
|
Non-interest
income increased $110,000, or 10%, versus first quarter 2010 and
$1,186,000 versus second quarter 2009. Included in second quarter 2009
were impairment losses on securities of
$1,128,000.
|
|
·
|
Provision
for loan losses increased $80,000 versus first quarter 2010 and decreased
$55,000 versus second quarter 2009.
|
|
·
|
Gross
loans receivable increased $12.6 million, or 4%, versus first quarter 2010
and $48.2 million, or 16%, versus second quarter
2009.
|
|
·
|
Deposits
increased $1.5 million, or 0.3%, versus first quarter 2010 and $22.0
million, or 5%, versus second quarter 2009. In December 2009, Salisbury
assumed $11 million in deposits with the purchase of Webster Bank’s Canaan
branch.
|
|
·
|
Non-performing
assets were $11.5 million, or 2.03% of total assets, at June 30, 2010,
down $0.8 million from March 31, 2010 and up $3.8 million from December
31, 2009. Loans receivable 30 days or more past due were $8.1 million, or
2.33% of gross loans, at June 30, 2010, down $3.8 million from March 31,
2010 and down $0.4 million from December 31,
2009.
|
Three
months ended June 30,
|
Average
Balance
|
Income
/ Expense
|
Average
Yield / Rate
|
|||||||||||||||||||||
(dollars
in thousands)
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||
Loans
(a)
|
$ | 338,175 | $ | 299,292 | $ | 4,601 | $ | 4,480 | 5.44 | % | 5.99 | % | ||||||||||||
Securities
(c)(d)
|
166,413 | 167,541 | 1,852 | 2,191 | 4.45 | 5.23 | ||||||||||||||||||
FHLBB
stock
|
6,032 | 5,483 | - | - | - | - | ||||||||||||||||||
Short
term funds (b)
|
27,339 | 36,171 | 38 | 9 | 0.56 | 0.10 | ||||||||||||||||||
Total
earning assets
|
537,959 | 508,487 | 6,491 | 6,680 | 4.83 | 5.25 | ||||||||||||||||||
Other
assets
|
32,319 | 23,593 | ||||||||||||||||||||||
Total
assets
|
$ | 570,278 | $ | 532,080 | ||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 54,397 | $ | 29,531 | 153 | 50 | 1.13 | 0.68 | ||||||||||||||||
Money
market accounts
|
75,002 | 67,070 | 105 | 162 | 0.56 | 0.97 | ||||||||||||||||||
Savings
and other
|
89,168 | 80,371 | 142 | 180 | 0.64 | 0.90 | ||||||||||||||||||
Certificates
of deposit
|
140,311 | 148,643 | 726 | 1,119 | 2.07 | 3.01 | ||||||||||||||||||
Total
interest-bearing deposits
|
358,878 | 325,615 | 1,126 | 1,511 | 1.26 | 1.86 | ||||||||||||||||||
Repurchase
agreements
|
9,730 | 9,538 | 19 | 28 | 0.78 | 1.17 | ||||||||||||||||||
FHLBB
advances
|
75,087 | 77,604 | 761 | 769 | 4.05 | 3.96 | ||||||||||||||||||
Total
interest-bearing liabilities
|
443,695 | 412,757 | 1,906 | 2,308 | 1.72 | 2.24 | ||||||||||||||||||
Demand
deposits
|
68,907 | 65,712 | ||||||||||||||||||||||
Other
liabilities
|
3,662 | 4,909 | ||||||||||||||||||||||
Shareholders’
equity
|
54,014 | 48,702 | ||||||||||||||||||||||
Total
liabilities & shareholders’ equity
|
$ | 570,278 | $ | 532,080 | ||||||||||||||||||||
Net
interest income
|
$ | 4,585 | $ | 4,372 | ||||||||||||||||||||
Spread
on interest-bearing funds
|
3.11 | 3.02 | ||||||||||||||||||||||
Net
interest margin (e)
|
3.41 | 3.44 |
(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 $260,000 and $294,000, 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
|
||||||||||||
Periods
ended June 30, (in thousands)
|
2010
versus 2009
|
|||||||||||
Change
in interest due to
|
Volume
|
Rate
|
Net
|
|||||||||
Interest-earning
assets
|
||||||||||||
Loans
|
$ | 556 | $ | (435 | ) | $ | 121 | |||||
Securities
|
(14 | ) | (325 | ) | (339 | ) | ||||||
Short term funds
|
(7 | ) | 36 | 29 | ||||||||
Total
|
535 | (724 | ) | (189 | ) | |||||||
Interest-bearing
liabilities
|
||||||||||||
Deposits
|
35 | (421 | ) | (386 | ) | |||||||
Repurchase
agreements
|
- | (9 | ) | (9 | ) | |||||||
FHLBB advances
|
(25 | ) | 17 | (8 | ) | |||||||
Total
|
10 | (413 | ) | (403 | ) | |||||||
Net
change in net interest income
|
$ | 525 | $ | (311 | ) | $ | 214 |
Three
months
|
Six
months
|
|||||||||||||||
Periods
ended June 30, (dollars in thousands)
|
2010
|
2009
|
2010
|
2009
|
||||||||||||
Balance,
beginning of period
|
$ | 3,649 | $ | 3,006 | $ | 3,473 | $ | 2,724 | ||||||||
Provision
(benefit) or loan losses
|
260 | 315 | 440 | 745 | ||||||||||||
Charge-offs
|
||||||||||||||||
Real estate
mortgages
|
(135 | ) | - | (135 | ) | (50 | ) | |||||||||
Commercial &
industrial
|
- | - | - | (75 | ) | |||||||||||
Consumer
|
(14 | ) | (17 | ) | (24 | ) | (51 | ) | ||||||||
Total
charge-offs
|
(149 | ) | (17 | ) | (159 | ) | (176 | ) | ||||||||
Recoveries
|
||||||||||||||||
Real estate
mortgages
|
- | - | - | - | ||||||||||||
Commercial &
industrial
|
- | - | - | 4 | ||||||||||||
Consumer
|
8 | 5 | 14 | 12 | ||||||||||||
Total
recoveries
|
8 | 5 | 14 | 16 | ||||||||||||
Net
(charge-offs) recoveries
|
(141 | ) | (12 | ) | (145 | ) | ( 160 | ) | ||||||||
Balance,
end of period
|
$ | 3,768 | $ | 3,309 | $ | 3,768 | $ | 3,309 | ||||||||
Loans
receivable, gross
|
$ | 345,898 | $ | 297,673 | ||||||||||||
Non-performing
loans
|
11,520 | 6,707 | ||||||||||||||
Accruing
loans past due 30-89 days
|
830 | 4,024 | ||||||||||||||
Ratio
of allowance for loan losses:
|
||||||||||||||||
to loans receivable,
gross
|
1.09 | % | 1.11 | % | ||||||||||||
to non-performing
loans
|
32.71 | 49.34 | ||||||||||||||
Ratio
of non-performing loans to loans receivable, gross
|
3.33 | 2.25 | ||||||||||||||
Ratio
of accruing loans past due 30-89 days to loans receivable,
gross
|
0.24 | 1.35 |
Three
months ended June 30, (dollars in thousands)
|
2010
|
2009
|
2010
vs. 2009
|
|||||||||||||
Gains
on securities, net
|
$ | 1 | $ | 9 | $ | (8 | ) | (88.89 | )% | |||||||
Trust
and wealth advisory fees
|
491 | 430 | 61 | 14.19 | ||||||||||||
Service
charges and fees
|
525 | 453 | 72 | 15.89 | ||||||||||||
Gains
on sales of mortgage loans, net
|
141 | 221 | (80 | ) | (36.20 | ) | ||||||||||
Mortgage
servicing, net
|
9 | 30 | (21 | ) | (70.00 | ) | ||||||||||
Other
|
89 | 55 | 34 | 61.82 | ||||||||||||
Total
non-interest income, excluding other-than-temporary impairment
losses
|
1,256 | 1,198 | 58 | 4.84 | ||||||||||||
Net
other-than-temporary impairment losses recognized in
earnings
|
- | (1,128 | ) | 1,128 | 100.00 | |||||||||||
Total
non-interest income
|
$ | 1,256 | $ | 70 | $ | 1,186 | 1,694.29 |
Three
months ended June 30, (dollars in thousands)
|
2010
|
2009
|
2010
vs. 2009
|
|||||||||||||
Salaries
|
$ | 1,694 | $ | 1,596 | $ | 98 | 6.14 | % | ||||||||
Employee
benefits
|
586 | 552 | 34 | 6.16 | ||||||||||||
Premises
and equipment
|
495 | 466 | 29 | 6.22 | ||||||||||||
Data
processing
|
363 | 330 | 33 | 10.00 | ||||||||||||
Professional
fees
|
455 | 376 | 79 | 21.01 | ||||||||||||
FDIC
insurance
|
182 | 420 | (238 | ) | (56.67 | ) | ||||||||||
Marketing
and community contributions
|
59 | 88 | (29 | ) | (32.95 | ) | ||||||||||
Amortization
of intangible assets
|
56 | 41 | 15 | 36.59 | ||||||||||||
Other
|
382 | 495 | (113 | ) | (22.83 | ) | ||||||||||
Non-interest
expense
|
$ | 4,272 | $ | 4,364 | $ | (92 | ) | (2.11 | ) |
Six
months ended June 30,
|
Average
Balance
|
Income
/ Expense
|
Average
Yield / Rate
|
|||||||||||||||||||||
(dollars
in thousands)
|
2010
|
2009
|
2010
|
2009
|
2010
|
2009
|
||||||||||||||||||
Loans
(a)
|
$ | 335,774 | $ | 300,242 | $ | 9,088 | $ | 8,962 | 5.41 | % | 5.97 | % | ||||||||||||
Securities
(c)(d)
|
158,444 | 164,004 | 3,597 | 4,465 | 4.54 | 5.44 | ||||||||||||||||||
FHLBB
stock
|
6,032 | 5,404 | - | - | - | - | ||||||||||||||||||
Short
term funds (b)
|
34,006 | 22,298 | 84 | 11 | 0.49 | 0.10 | ||||||||||||||||||
Total
earning assets
|
534,256 | 491,948 | 12,769 | 13,438 | 4.78 | 5.46 | ||||||||||||||||||
Other
assets
|
32,590 | 23,848 | ||||||||||||||||||||||
Total
assets
|
$ | 566,846 | $ | 515,796 | ||||||||||||||||||||
Interest-bearing
demand deposits
|
$ | 51,792 | $ | 27,000 | 301 | 64 | 1.16 | 0.47 | ||||||||||||||||
Money
market accounts
|
70,731 | 65,812 | 201 | 367 | 0.57 | 1.12 | ||||||||||||||||||
Savings
and other
|
88,410 | 77,029 | 285 | 394 | 0.64 | 1.02 | ||||||||||||||||||
Certificates
of deposit
|
144,602 | 140,387 | 1,538 | 2,170 | 2.13 | 3.09 | ||||||||||||||||||
Total
interest-bearing deposits
|
355,535 | 310,228 | 2,325 | 2,995 | 1.31 | 1.93 | ||||||||||||||||||
Repurchase
agreements
|
11,158 | 9,533 | 46 | 67 | 0.82 | 1.41 | ||||||||||||||||||
FHLBB
advances
|
75,418 | 79,445 | 1,518 | 1,530 | 4.03 | 3.85 | ||||||||||||||||||
Total
interest-bearing liabilities
|
442,111 | 399,206 | 3,889 | 4,592 | 1.76 | 2.30 | ||||||||||||||||||
Demand
deposits
|
67,522 | 65,147 | ||||||||||||||||||||||
Other
liabilities
|
3,726 | 6,021 | ||||||||||||||||||||||
Shareholders’
equity
|
53,487 | 45,422 | ||||||||||||||||||||||
Total
liabilities & shareholders’ equity
|
$ | 566,846 | $ | 515,796 | ||||||||||||||||||||
Net
interest income
|
$ | 8,880 | $ | 8,846 | ||||||||||||||||||||
Spread
on interest-bearing funds
|
3.02 | 3.16 | ||||||||||||||||||||||
Net
interest margin (e)
|
3.33 | 3.60 |
(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 $519,000 and $592,000, 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.
|
Six
months
|
||||||||||||
Periods
ended June 30, (in thousands)
|
2010
versus 2009
|
|||||||||||
Change
in interest due to
|
Volume
|
Rate
|
Net
|
|||||||||
Interest-earning
assets
|
||||||||||||
Loans
|
$ | 1,011 | $ | (885 | ) | $ | 126 | |||||
Securities
|
(139 | ) | (729 | ) | (868 | ) | ||||||
Short term funds
|
17 | 56 | 73 | |||||||||
Total
|
889 | (1,558 | ) | (669 | ) | |||||||
Interest-bearing
liabilities
|
||||||||||||
Deposits
|
224 | (894 | ) | (670 | ) | |||||||
Repurchase
agreements
|
9 | (30 | ) | (21 | ) | |||||||
FHLBB advances
|
(79 | ) | 67 | (12 | ) | |||||||
Total
|
154 | (857 | ) | (703 | ) | |||||||
Net
change in net interest income
|
$ | 735 | $ | (701 | ) | $ | 34 |
Six
months ended June 30, (dollars in thousands)
|
2010
|
2009
|
2010
vs. 2009
|
|||||||||||||
Gains
on securities, net
|
$ | 1 | $ | 436 | $ | (435 | ) | (99.77 | )% | |||||||
Trust
and wealth advisory fees
|
1,036 | 970 | 66 | 6.80 | ||||||||||||
Service
charges and fees
|
994 | 851 | 143 | 16.80 | ||||||||||||
Gains
on sales of mortgage loans, net
|
201 | 304 | (103 | ) | (33.88 | ) | ||||||||||
Mortgage
servicing, net
|
24 | 72 | (48 | ) | (66.66 | ) | ||||||||||
Other
|
146 | 192 | (46 | ) | (23.96 | ) | ||||||||||
Total
non-interest income, excluding other-than-temporary impairment
losses
|
2,402 | 2,825 | (423 | ) | (14.97 | ) | ||||||||||
Net
other-than-temporary impairment losses recognized in
earnings
|
- | (1,128 | ) | 1,128 | 100.00 | |||||||||||
Total
non-interest income
|
$ | 2,402 | $ | 1,697 | $ | 705 | 41.54 |
Six
months ended June 30, (dollars in thousands)
|
2010
|
2009
|
2010
vs. 2009
|
|||||||||||||
Salaries
|
$ | 3,282 | $ | 3,207 | $ | 75 | 2.33 | % | ||||||||
Employee
benefits
|
1,216 | 1,132 | 84 | 7.42 | ||||||||||||
Premises
and equipment
|
1,011 | 957 | 54 | 5.64 | ||||||||||||
Data
processing
|
772 | 714 | 58 | 8.12 | ||||||||||||
Professional
fees
|
857 | 733 | 124 | 16.92 | ||||||||||||
FDIC
insurance
|
354 | 533 | (179 | ) | (33.58 | ) | ||||||||||
Marketing
and community contributions
|
121 | 164 | (43 | ) | (26.22 | ) | ||||||||||
Amortization
of intangible assets
|
111 | 82 | 29 | 35.37 | ||||||||||||
Other
|
876 | 871 | 5 | 0.57 | ||||||||||||
Non-interest
expense
|
$ | 8,600 | $ | 8,393 | $ | 207 | 2.47 |
(in
thousands)
|
June
30, 2010
|
March
31, 2010
|
December
31, 2009
|
|||||||||
Loans
receivable
|
||||||||||||
Real
Estate Mortgages
|
||||||||||||
Residential
|
$ | 169,088 | $ | 164,119 | $ | 163,863 | ||||||
Commercial
|
80,347 | 77,210 | 70,066 | |||||||||
Construction, land & land
development
|
28,874 | 23,801 | 31,011 | |||||||||
Home equity credit
|
33,193 | 32,830 | 33,099 | |||||||||
Total mortgage
loans
|
311,502 | 297,960 | 298,039 | |||||||||
Commercial
and Industrial
|
28,255 | 29,162 | 26,400 | |||||||||
Consumer
|
5,078 | 5,224 | 5,436 | |||||||||
Other
|
370 | 276 | 269 | |||||||||
Total
loans, gross
|
345,205 | 332,622 | 330,144 | |||||||||
Deferred
loan origination costs, net
|
693 | 627 | 586 | |||||||||
Allowance
for loan losses
|
(3,768 | ) | (3,649 | ) | (3,473 | ) | ||||||
Loans receivable,
net
|
$ | 342,130 | $ | 329,600 | $ | 327,257 | ||||||
Loans
held-for-sale
|
||||||||||||
Residential
mortgages
|
$ | 513 | $ | 1,176 | $ | 665 |
(in
thousands)
|
June
30, 2010
|
March
31, 2010
|
December
31, 2009
|
|||||||||
Real
Estate Mortgages
|
||||||||||||
Residential
|
$ | 2,516 | $ | 3,332 | $ | 765 | ||||||
Commercial
|
4,036 | 4,196 | 2,226 | |||||||||
Construction, land & land
development
|
3,756 | 3,603 | 3,535 | |||||||||
Home equity credit
|
365 | 366 | 367 | |||||||||
Total mortgage
loans
|
10,673 | 11,497 | 6,893 | |||||||||
Commercial
and Industrial
|
521 | 564 | 546 | |||||||||
Non-accruing
loans
|
11,194 | 12,061 | 7,439 | |||||||||
Accruing
loans past due 90 days or more
|
326 | 3 | 6 | |||||||||
Total
non-performing loans
|
11,520 | 12,064 | 7,445 | |||||||||
Real
estate acquired in settlement of loans
|
- | 275 | 275 | |||||||||
Total
non-performing assets
|
$ | 11,520 | $ | 12,339 | $ | 7,720 |
(in
thousands)
|
June
30, 2010
|
March
31, 2010
|
December
31, 2009
|
|||||||||
Current
|
$ | 3,546 | $ | 5,248 | $ | 3,105 | ||||||
Past
due 001-029 days
|
728 | 315 | - | |||||||||
Past
due 030-059 days
|
- | 802 | 349 | |||||||||
Past
due 060-089 days
|
1,012 | 1,321 | 405 | |||||||||
Past
due 090-179 days
|
2,515 | 1,113 | 321 | |||||||||
Past
due 180 days and over
|
3,719 | 3,265 | 3,265 | |||||||||
Total
non-performing loans
|
$ | 11,520 | $ | 12,064 | $ | 7,445 |
(in
thousands)
|
June
30, 2010
|
March
31, 2010
|
December
31, 2009
|
|||||||||
Real
Estate Mortgages
|
||||||||||||
Residential
|
$ | 673 | $ | 662 | $ | 2,708 | ||||||
Commercial
|
1,881 | 4,384 | 1,857 | |||||||||
Construction, land & land
development
|
2,960 | - | - | |||||||||
Accruing
troubled debt restructured loans
|
5,514 | 5,046 | 4,565 | |||||||||
Real
Estate Mortgages
|
||||||||||||
Residential
|
1,347 | 2,213 | 176 | |||||||||
Commercial
|
4,037 | 3,866 | 2,008 | |||||||||
Construction, land & land
development
|
26 | 26 | - | |||||||||
Commercial
and Industrial
|
458 | 158 | 158 | |||||||||
Non-accrual
troubled debt restructured loans
|
5,868 | 6,263 | 2,342 | |||||||||
Total
troubled debt restructured loans
|
$ | 11,382 | $ | 11,309 | $ | 6,907 |
(in
thousands)
|
June
30, 2010
|
March
31, 2010
|
December
31, 2009
|
|||||||||
Current
|
$ | 5,058 | $ | 4,799 | $ | 4,565 | ||||||
Past due 001-029
days
|
456 | 247 | - | |||||||||
Accruing
troubled debt restructured loans
|
5,514 | 5,046 | 4,565 | |||||||||
Current
|
3,244 | 4,001 | 1,992 | |||||||||
Past due 001-029
days
|
402 | - | - | |||||||||
Past due 030-059
days
|
- | 729 | - | |||||||||
Past due 060-089
days
|
729 | 1,183 | 350 | |||||||||
Past due 090-179
days
|
1,108 | 350 | - | |||||||||
Past due 180 days and
over
|
385 | - | - | |||||||||
Non-accrual
troubled debt restructured loans
|
5,868 | 6,263 | 2,342 | |||||||||
Total
troubled debt restructured loans
|
$ | 11,382 | $ | 11,309 | $ | 6,907 |
(in
thousands)
|
June
30, 2010
|
March
31, 2010
|
December
31, 2009
|
|||||||||
Past due 030-059
days
|
$ | 686 | $ | 4,543 | $ | 2,821 | ||||||
Past due 060-089
days
|
144 | 840 | 1,272 | |||||||||
Past due 090-179
days
|
326 | 3 | 5 | |||||||||
Accruing
loans
|
1,156 | 5,386 | 4,098 | |||||||||
Past due 030-059
days
|
- | 801 | 349 | |||||||||
Past due 060-089
days
|
1,012 | 1,321 | 405 | |||||||||
Past due 090-179
days
|
2,189 | 1,110 | 315 | |||||||||
Past due 180 days and
over
|
3,719 | 3,265 | 3,265 | |||||||||
Non-accrual
loans
|
6,920 | 6,497 | 4,334 | |||||||||
Total
loans past due 30 days or greater
|
$ | 8,076 | $ | 11,883 | $ | 8,432 |
Well
|
June
30, 2010
|
December
31, 2009
|
||||||||||||||||||
capitalized
|
Salisbury
|
Bank
|
Salisbury
|
Bank
|
||||||||||||||||
Total
Capital (to risk-weighted assets)
|
10.00 | % | 13.39 | % | 10.88 | % | 12.86 | % | 10.40 | % | ||||||||||
Tier
1 Capital (to risk-weighted assets)
|
6.00 | 12.38 | 9.86 | 11.95 | 9.48 | |||||||||||||||
Tier
1 Capital (to average assets)
|
5.00 | 8.35 | 6.63 | 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 June 30, 2010
|
Months
1-12
|
Months
13-24
|
||||||
Immediately
rising interest rates
|
(9.07 | )% | (12.88 | )% | ||||
Immediately
falling interest rates
|
0.18 | (1.44 | ) | |||||
Gradually
rising interest rates
|
0.54 | (2.49 | ) |
As
of June 30, 2010 (in thousands)
|
Rates
up 100bp
|
Rates
up 200bp
|
||||||
U.S.
Treasury notes
|
$ | (288 | ) | $ | (557 | ) | ||
U.S.
Government agency notes
|
(1,298 | ) | (3,046 | ) | ||||
Municipal
bonds
|
(4,184 | ) | (8,022 | ) | ||||
Mortgage
backed securities
|
(468 | ) | (1,293 | ) | ||||
Collateralized
mortgage obligations
|
(879 | ) | (1,738 | ) | ||||
SBA
pools
|
(23 | ) | (40 | ) | ||||
Total
available-for-sale debt securities
|
$ | (7,140 | ) | $ | (14,696 | ) |
Item
4T.
|
CONTROLS AND
PROCEDURES
|
PART
II.
|
OTHER
INFORMATION
|
Item
1.
|
LEGAL
PROCEEDINGS
|
Item
2.
|
UNREGISTERED SALES OF EQUITY
SECURITIES AND USE OF
PROCEEDS
|
Item
3.
|
DEFAULTS UPON SENIOR
SECURITIES
|
Item
5.
|
OTHER
INFORMATION
|
Item
6.
|
EXHIBITS
|
31.1
|
Rule
13a-14(a)/15d-14(a) Certification.
|
31.2
|
Rule
13a-14(a)/15d-14(a) Certification.
|
32
|
Section
1350 Certifications
|
SALISBURY
BANCORP, INC.
|
|
August
9, 2010
|
by /s/ Richard J. Cantele,
Jr.
|
Richard
J. Cantele, Jr.,
|
|
Chief
Executive Officer
|
|
August
9, 2010
|
by /s/ B. Ian McMahon
|
B.
Ian McMahon,
|
|
Chief
Financial Officer
|