SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2007
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from____________to____________
Commission file number 0-24751
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Salisbury Bancorp, Inc.
--------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Connecticut 06-1514263
------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
5 Bissell Street Lakeville Connecticut 06039
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(Address of principal executive offices) (Zip Code)
Registrants Telephone Number, Including Area Code (860) 435-9801
--------------
(Former Name, Former Address and Former Fiscal Year, if Changed Since
Last Report)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer or a non-accelerated filer. See definition of "accelerated
filer and large accelerated Filer" in Rule 12b-2 of the Exchange Act). (Check
one):
Large Accelerated Filer [ ] Accelerated Filer [ ] Non-Accelerated Filer [X]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act).
Yes [ ] No [X]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
As of August 10, 2007, there were 1,685,021 shares outstanding.
-----------------------------
SALISBURY BANCORP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements: 3
Condensed Consolidated Balance Sheets -June 30, 2007
(unaudited) and December 31, 2006 4
Condensed Consolidated Statements of Income -six and three
months ended June 30, 2007 and 2006 (unaudited) 5
Condensed Consolidated Statements of Cash Flows -six months
ended June 30, 2007 and 2006 (unaudited) 6
Notes to Condensed Consolidated Financial Statements
(unaudited) 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 18
Item 4. Controls and Procedures 19
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 1A. Risk Factors 19
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits 19
Signatures 19
2
Part I -- FINANCIAL INFORMATION
Item 1. Financial Statements
3
SALISBURY BANCORP, INC. AND SUBSIDIARY
--------------------------------------
CONDENSED CONSOLIDATED BALANCE SHEETS
-------------------------------------
(amounts in thousands, except per share data)
June 30, 2007 and December 31, 2006
-----------------------------------
June 30, December 31,
2007 2006
----------- ------------
(unaudited)
ASSETS
------
Cash and due from banks $ 5,925 $ 8,988
Interest-bearing demand deposits with other banks 1,025 569
Money market mutual funds 1,293 1,200
Federal funds sold 200 1,000
-------- --------
Cash and cash equivalents 8,443 11,757
Investments in available-for-sale securities (at fair value) 150,848 156,493
Investments in held-to-maturity securities (fair values of $73 as of
June 30, 2007 and $75 as of December 31, 2006) 73 75
Federal Home Loan Bank stock, at cost 5,083 4,664
Loans held-for-sale 0 304
Loans, less allowance for loan losses of $2,452 as of June 30, 2007
and $2,474 as of December 31, 2006 251,487 252,464
Investment in real estate 75 75
Premises and equipment 6,626 6,135
Goodwill 9,509 9,509
Core deposit intangible 1,411 1,493
Accrued interest receivable 2,505 2,484
Cash surrender value of life insurance policies 3,615 3,555
Other assets 2,778 1,331
-------- --------
Total assets $442,453 $450,339
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Deposits:
Noninterest-bearing $ 66,554 $ 70,502
Interest-bearing 241,999 243,084
-------- --------
Total deposits 308,553 313,586
Federal Home Loan Bank advances 87,217 87,093
Due to broker 0 1,580
Other liabilities 4,072 3,731
-------- --------
Total liabilities 399,842 405,990
-------- --------
Shareholders' equity:
Common stock, par value $.10 per share; authorized 3,000,000 shares; issued
and outstanding, 1,685,021 shares at June 30, 2007 and 1,684,181
shares at December 31, 2006 169 168
Paid-in capital 13,130 13,100
Retained earnings 34,576 33,603
Accumulated other comprehensive loss (5,264) (2,522)
-------- --------
Total shareholders' equity 42,611 44,349
-------- --------
Total liabilities and shareholders' equity $442,453 $450,339
======== ========
The accompanying notes are an integral part of these consolidated
financial statements.
4
SALISBURY BANCORP, INC. AND SUBSIDIARY
--------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
-------------------------------------------
(amounts in thousands, except per share data)
June 30, 2007 and 2006
(unaudited)
Six Months Ended Three Months Ended
June 30, June30,
2007 2006 2007 2006
------- ------- ------ ------
Interest and dividend income:
Interest and fees on loans $ 8,736 $ 7,471 $4,348 $3,843
Interest on debt securities:
Taxable 2,757 2,562 1,326 1,294
Tax-exempt 1,111 1,057 585 562
Dividends on equity securities 159 130 81 70
Other interest 34 29 20 20
------- ------- ------ ------
Total interest and dividend income 12,797 11,249 6,360 5,789
------- ------- ------ ------
Interest expense:
Interest on deposits 4,022 2,957 1,992 1,619
Interest on Federal Home Loan Bank advances 2,046 1,741 1,005 912
------- ------- ------ ------
Total interest expense 6,068 4,698 2,997 2,531
------- ------- ------ ------
Net interest and dividend income 6,729 6,551 3,363 3,258
------- ------- ------ ------
Noninterest income:
Trust and investment services income 1,033 935 503 450
Loan commissions 13 45 9 31
Service charges on deposit accounts 361 359 181 182
Gain (loss) on sales of available-for-sale securities, net 180 61 63 (13)
Gain on sales of loans held-for-sale 167 230 102 168
Other income 485 397 257 183
------- ------- ------ ------
Total noninterest income 2,239 2,027 1,115 1,001
------- ------- ------ ------
Noninterest expense:
Salaries and employee benefits 3,832 3,410 1,880 1,707
Occupancy expense 380 352 189 176
Equipment expense 370 381 179 194
Data processing 638 610 301 327
Insurance 74 63 36 32
Printing and stationery 144 129 80 76
Professional fees 339 180 174 90
Legal expense 126 63 71 38
Amortization of core deposit intangible 82 82 41 41
Other expense 639 559 354 311
------- ------- ------ ------
Total noninterest expense 6,624 5,829 3,305 2,992
------- ------- ------ ------
Income before income taxes 2,344 2,749 1,173 1,267
Income taxes 461 596 224 261
------- ------- ------ ------
Net income $ 1,883 $ 2,153 $ 949 $1,006
======= ======= ====== ======
Earnings per common share $ 1.12 $ 1.28 $ .56 $ .60
======= ======= ====== ======
Dividends per common outstanding $ .54 $ .52 $ .27 $ .26
======= ======= ====== ======
The accompanying notes are an integral part of these consolidated financial
statements.
5
SALISBURY BANCORP, INC. AND SUBSIDIARY
--------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(amounts in thousands)
Six months ended June 30, 2007 and 2006
(unaudited)
2007 2006
-------- --------
Cash flows from operating activities:
Net income $ 1,883 $ 2,153
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of securities, net 46 67
Gain on sales of available-for-sale securities, net (180) (61)
Change in loans held-for-sale 304 (117)
Change in deferred loan costs, net (56) 0
Net decrease in mortgage servicing rights 53 16
Depreciation and amortization 250 272
Amortization of core deposit intangible 82 82
Accretion of fair value adjustment on deposits/borrowings (65) (69)
Amortization of fair value adjustment on loans 44 63
Decrease in interest receivable (31) (28)
Deferred tax benefit (433) (187)
Decrease in taxes receivable 317 280
Decrease (increase) in prepaid expenses 42 (344)
Increase in cash surrender value of insurance policies (60) (60)
Increase in income tax payable 157 0
Decrease in other assets (15) 0
Decrease in accrued expenses (178) (682)
Increase in interest payable 109 43
Increase in other liabilities 270 92
Issuance of shares for Directors' fees 30 32
Change in unearned income on loans 4 (54)
-------- --------
Net cash provided by operating activities 2,573 1,498
-------- --------
Cash flows from investing activities:
(Purchase)/Redemption of Federal Home Loan Bank stock (419) 860
Purchases of available-for-sale securities (37,394) (33,644)
Proceeds from sales of available-for-sale securities 37,414 27,163
Proceeds from maturities of available-for-sale securities 0 4,900
Proceeds from maturities of held-to-maturity securities 2 70
Loan originations and principal collections, net 2,831 (12,381)
Purchase of loans (1,886) 0
Recoveries of loans previously charged-off 41 22
Capital expenditures (739) (125)
-------- --------
Net cash used in investing activities (150) (13,135)
-------- --------
6
SALISBURY BANCORP, INC. AND SUBSIDIARY
--------------------------------------
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
-----------------------------------------------
(amounts in thousands)
Six months ended June 30, 2007 and 2006
(unaudited)
(continued)
2007 2006
-------- --------
Cash flows from financing activities:
Net decrease in demand deposits, NOW and
savings accounts (5,073) (7,443)
Net increase in time deposits 40 18,609
Federal Home Loan Bank advances 10,000 10,000
Principal payments on advances from Federal Home Loan Bank (11,208) (9,943)
Net change in short term advances from Federal Home Loan Bank 1,397 (594)
Dividends paid (893) (859)
-------- --------
Net cash (used in) provided by financing activities (5,737) 9,770
-------- --------
Net decrease in cash and cash equivalents (3,314) (1,867)
Cash and cash equivalents at beginning of year 11,757 10,204
-------- --------
Cash and cash equivalents at end of period $ 8,443 $ 8,337
======== ========
Supplemental disclosures:
Interest paid $ 5,798 $ 4,724
Income taxes paid 420 503
The accompanying notes are an integral part of these condensed consolidated
financial statements.
7
SALISBURY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
------------------------------
The accompanying condensed consolidated interim financial statements are
unaudited and include the accounts of Salisbury Bancorp, Inc. (the "Company"),
its wholly owned subsidiary Salisbury Bank and Trust Company (the "Bank"), and
the Bank's subsidiaries, S.B.T. Realty, Inc. and SBT Mortgage Service
Corporation (the "PIC") formed in April 2004. The consolidated financial
statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (GAAP) for interim financial
information and with the instructions to SEC Form 10-Q. Accordingly, they do not
include all the information and footnotes required by GAAP for complete
financial statements. All significant intercompany accounts and transactions
have been eliminated in the consolidation. These financial statements reflect,
in the opinion of Management, all adjustments, consisting of only normal
recurring adjustments, necessary for a fair presentation of the Company's
financial position and the results of its operations and its cash flows for the
periods presented. Operating results for the six months ended June 30, 2007 are
not necessarily indicative of the results that may be expected for the year
ending December 31, 2007. These financial statements should be read in
conjunction with the financial statements and notes thereto included in the
Company's 2006 Annual Report on Form 10-K.
The year-end condensed balance sheet data was derived from audited financial
statements, but does not include all disclosures required by GAAP.
NOTE 2 - COMPREHENSIVE INCOME
-----------------------------
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," establishes standards for disclosure of comprehensive
income which includes net income and any changes in equity from non-owner
sources that are not recorded in the income statement (such as changes in the
net unrealized gains (losses) on securities). The purpose of reporting
comprehensive income is to report a measure of all changes in equity that result
from recognized transactions and other economic events of the period other than
transactions with owners in their capacity as owners. The Company's primary
source of other comprehensive income is the net unrealized holding gain (loss)
on securities.
Comprehensive(loss) income
Six months ended Three months ended
June 30, June 30,
2007 2006 2007 2006
---------- --------- ---------- ---------
(amounts in thousands) (amounts in thousands)
Net income $ 1,883 $ 2,153 $ 949 $ 1,006
Net change in unrealized holding (losses) or
gains on securities and minimum pension
liability adjustment, net of tax during period. (2,742) (1,747) (2,356) (2,060)
------- ------- ------- -------
Comprehensive (loss) income $ (859) $ 406 $(1,407) $(1,054)
======= ======= ======= =======
NOTE 3 - IMPACT OF NEW ACCOUNTING STANDARDS
-------------------------------------------
In February 2006, the Financial Accounting Standards Board (FASB) issued SFAS
No. 155, "Accounting for Certain Hybrid Instruments" (SFAS 155), which permits,
but does not require, fair value accounting for any hybrid financial instrument
that contains an embedded derivative that would otherwise require bifurcation in
accordance with SFAS 133. The statement also subjects beneficial interests
issued by securitization vehicles to the requirements of SFAS No. 133. The
statement is effective as of January 1, 2007. The adoption of SFAS 155 is not
expected to have a material impact on the Company's financial condition and
results of operations.
In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of
Financial Assets- an amendment of FASB Statement No. 140 ("SFAS No. 156"). SFAS
156 requires any entity to recognize a servicing asset or servicing liability
each time it undertakes an obligation to service a financial asset by entering
into a servicing contract in specific situations. Additionally, the servicing
asset or servicing liability shall be initially measured at fair value; however,
an entity may elect the "amortization method" or "fair value method" for
subsequent balance sheet reporting periods. SFAS 156 is effective as of an
entity's first fiscal year beginning after September 15, 2006. Early adoption is
permitted as of the beginning of an entity's fiscal year, provided the entity
has not yet issued financial statements, including
8
interim financial statements, for any period of that fiscal year. The Company
does not expect the adoption of this statement to have a material impact on its
financial condition, results of operations or cash flows.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements" (SFAS
157). SFAS 157 defines fair value, establishes a framework for measuring fair
value under generally accepted accounting principles (GAAP) and enhances
disclosures about fair value measurements. SFAS 157 retains the exchange price
notion and clarifies that the exchange price is the price that would be received
for an asset or paid to transfer a liability (an exit price) in an orderly
transaction between market participants on the measurement date. SFAS 157 is
effective for the Company's consolidated financial statements for the year
beginning on January 1, 2008, with earlier adoption permitted. The Company does
not expect the adoption of this statement to have a material impact on its
financial condition and results of operations.
In September 2006, the FASB issued SFAS No. 158, "Employer's Accounting for
Defined Benefit Pension and other Postretirement Plans - an amendment of FASB
Statements No. 87, 88, 106 and 132 (R)" ("SFAS 158"). SFAS 158 requires 1) the
recognition of an asset or liability for the over-funded or under-funded status
of a defined benefit plan, 2) the recognition of actuarial gains and losses and
prior service costs and credits in other comprehensive income, 3) measurement of
plan assets and benefit obligations as of the employer's balance sheet date,
rather than at interim measurement dates as currently allowed, and 4) disclosure
of additional information concerning actuarial gains and losses and prior
service costs and credits recognized in other comprehensive income. This
statement is effective for financial statements with fiscal years ending after
December 15, 2006. The Company does not believe the adoption of this Statement
will have a material impact on the Company's financial position or result of
operations.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities including an amendment of FASB
Statement No. 115" (SFAS 159). SFAS 159 permits entities to choose to measure
many financial instruments and certain other items at fair value that are not
currently required to be measured at fair value. The objective is to improve
financial reporting by providing entities with the opportunity to mitigate
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. This Statement also establishes presentation and disclosure
requirements designed to facilitate comparisons between entities that choose
different measurement attributes for similar types of assets and liabilities.
The new standard is effective at the beginning of the Company's fiscal year
beginning January 1, 2008, and early application may be elected in certain
circumstances. The Company is currently evaluating the impact the new standard
is expected to have on its financial position.
NOTE 4 - DEFINED BENEFIT PENSION PLAN
-------------------------------------
The following summarizes the net periodic benefit cost for the six and three
months ended June 30:
Six Months Ended Three Months Ended
June 30, June 30,
2007 2006 2007 2006
--------------------- --------------------
Components of net periodic benefit cost:
Service cost $ 218,870 $ 242,865 $ 104,780 $121,432
Interest cost 171,011 163,496 82,034 81,748
Expected return on plan assets (184,471) (142,833) (107,307) (71,416)
Amortization of:
Prior service costs 447 447 224 224
Actuarial loss 34,118 48,263 12,945 24,131
--------- --------- --------- --------
Net periodic benefit cost $ 239,975 $ 312,238 $ 92,676 $156,119
========= ========= ========= ========
The following actuarial weighted average assumptions were used in calculating
net periodic benefit cost:
Discount rate 6.00% 6.00% 6.00% 6.00%
Average wage increase Graded table* Graded table* Graded table* Graded table*
Return on plan assets 7.50% 7.50 7.50% 7.50%
* 5% at age 20 grading down to 3% at age 60 and beyond (roughly 3.25% on
average).
9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Business
--------
The following provides Management's comments on the financial condition and
results of operations of Salisbury Bancorp, Inc. (the "Company"), a Connecticut
corporation that is the holding company for Salisbury Bank and Trust Company
(the "Bank"). The Company's sole subsidiary is the Bank, which has seven (7)
full service offices including a Trust and Investment Services Division. Such
offices are located in the towns of Canaan, Lakeville, Salisbury and Sharon,
Connecticut and Sheffield and South Egremont, Massachusetts. In addition, the
Bank opened a full service branch office in Dover Plains, New York on August 1,
2007. The Company and Bank were formed in 1998 and 1848, respectively. In order
to provide a strong foundation for building shareholder value and servicing
customers, the Company remains committed to investing in the technological and
human resources necessary to developing new personalized financial products and
services to meet the needs of customers. This discussion should be read in
conjunction with Salisbury Bancorp, Inc.'s Annual Report on Form 10-K for the
year ended December 31, 2006.
RESULTS OF OPERATIONS
---------------------
Overview
--------
The Company's net income for the six months ended June 30, 2007 was $1,883,000.
This compares to earnings of $2,153,000 for the same period in 2006. Earnings
per share for the six months ended June 30, 2007 totaled $1.12 per share which
compared to earnings per share of $1.28 for the corresponding period in 2006.
The decrease in earnings is primarily attributable to an increase in noninterest
expense, specifically, additional staff to support new marketing strategies,
growth and our branch expansion into New York State. The Company's assets at
June 30, 2007 totaled $442,453,000 compared to total assets of $450,339,000 at
December 31, 2006. Non-performing loans totaled $894,000 at June 30, 2007 or
..35% of total loans outstanding. This compares to non-performing loans totaling
$886,000 at December 31, 2006. The Bank continues to monitor the quality of the
loan portfolio to ensure that loan quality will not be sacrificed for growth or
otherwise compromise the Company's objectives. The portfolio does not include
any sub-prime loans. The Bank's investment portfolio is of high quality and has
no sub-prime mortgage collateral in any securities owned. Deposits at June 30,
2007 totaled $308,553,000 as compared to total deposits of $313,586,000 at
December 31, 2006. The decrease is primarily the result of a $5,000,000 Brokered
CD that matured in March 2007 and was not replaced. The Bank and the Company are
"well capitalized". The Company's total risk based capital ratio was 15.67%; the
Tier 1 capital ratio was 14.69% and the leverage ratio was 8.51%. The Board of
Directors declared a second quarter cash dividend of $.27 per common share,
which was paid on July 31, 2007 to shareholders of record as of June 30, 2007.
This compared to a cash dividend of $.26 per common share that was paid for the
second quarter of 2006. Year-to-date dividends total $.54 per common share
outstanding for this year. This compares to total year-to-date dividends of $.52
per common share one year ago.
Critical Accounting Estimates
-----------------------------
In preparing the Company's financial statements, management selects and applies
numerous accounting policies. In applying these policies, management must make
estimates and assumptions. The accounting policy that is most susceptible to
critical estimates and assumptions is the allowance for loan losses. The
determination of an appropriate provision is based on an estimation of the
probable amount of credit losses in the loan portfolio. Many factors influence
the amount of estimated loan losses, relating to both the specific
characteristics of the loan portfolio and general economic conditions nationally
and locally. While management carefully considers these factors in determining
the amount of the allowance for loan losses, future adjustments may be necessary
due to changed conditions, which could have an adverse impact on reported
earnings in the future. See "Provisions and Allowance for Loan Losses."
Net Interest and Dividend Income
--------------------------------
The Company's earnings are primarily dependent upon net interest and dividend
income, and to a lesser extent non-interest income. Net interest and dividend
income is the difference between interest and dividends earned on the
10
loan and securities portfolio and interest paid on deposits and advances from
the Federal Home Loan Bank. Non-interest income is primarily derived from the
trust and investment services division, service charges and other fees related
to deposit and loan accounts and income from gains in securities transactions.
For the following discussion, net interest and dividend income is presented on a
fully taxable-equivalent ("FTE") basis. FTE interest income restates reported
interest income on tax exempt securities as if such interest were taxed at the
Company's federal tax rate of 34% for all periods presented.
(amounts in thousands)
Six Months Ended June 30, 2007 2006
------- -------
Total Interest and Dividend Income
(financial statements) $12,797 $11,249
Tax Equivalent Adjustment 572 545
------- -------
Total Interest and Dividend Income
(on an FTE basis) 13,369 11,794
Total Interest Expense 6,068 4,698
------- -------
Net Interest and Dividend Income-FTE $ 7,301 $ 7,096
======= =======
Total interest and dividend income on a FTE basis for the six months ended June
30, 2007, when compared to the same period in 2006, increased $1,575,000 or
13.35%. The increase was primarily attributable to an economic environment
experiencing an increase in interest rates when comparing the two periods.
Interest expense on deposits for the first six months of 2007 totaled
$4,022,000, an increase of $1,065,000 or 36.02% which compared to $2,957,000 for
the same period in 2006. This increase reflects an economic environment of
generally higher interest rates. Although the Bank's volume of Federal Home Loan
Bank advances outstanding at June 30, 2007 remained comparable to the level
outstanding at December 31, 2006, during the six month period ended June 30,
2007, interest expense on these advances increased 17.52% to $2,046,000. This
increase in interest expense is attributable to the increased monthly average
balance of overnight borrowings throughout the first six months of 2007. Total
interest expense for the six months ended June 30, 2007 was $6,068,000, an
increase of $1,370,000 or 29.16% when compared to the same period in 2006.
Overall, net interest and dividend income (on an FTE basis) increased $205,000
or 2.88% to $7,301,000 for the period ended June 30, 2007 when compared to the
same period in 2006.
Noninterest Income
------------------
Noninterest income totaled $2,239,000 for the six months ended June 30, 2007.
This is an increase of $212,000 or 10.46% compared to noninterest income of
$2,027,000 for the six months ended June 30, 2006. Gains on sales of
available-for-sale securities increased 195.08% to $180,000 for the first six
months of 2007 compared to the corresponding period in 2006. This increase is
primarily the result of the movement of market rates during the quarter.
Continuing growth of the trust and investment services division has resulted in
an increase in trust income of $98,000 or 10.48% to $1,033,000 for the first six
months of 2007, which compares to $935,000 for the same period in 2006. Other
income has remained consistent when comparing the first six months of 2007 to
the same period in 2006. This category of income primarily consists of fees
associated with transaction accounts and in addition, fees related to the
origination and servicing of mortgage loans and gains related to the sale of
mortgage loans.
11
Noninterest Expense
-------------------
Noninterest expense increased 13.64% for the first six months of 2007 as
compared to the same period in 2006. Although there are some increases in
noninterest expenses that are attributable to normal volumes of business, much
of the overall increases in the noninterest expenses listed in the table below
are primarily attributable to additional staffing, and expenses related to the
establishment of a new branch in New York state, which commenced operations on
August 1, 2007. The components of noninterest expense and the changes in the
period were as follows (amounts in thousands):
2007 2006 Change % Change
-----------------------------------------------------------------------------
Salaries and employee benefits $3,832 $3,410 $422 12.38
Occupancy expense 380 352 28 7.95
Equipment expense 370 381 (11) (2.89)
Data processing 638 610 28 4.59
Insurance 74 63 11 17.46
Printing and stationery 144 129 15 11.63
Professional fees 339 180 159 88.33
Legal expense 126 63 63 100.00
Amortization of core deposit intangible 82 82 0 0
Other expense 639 559 80 14.31
------ ------ ---- ------
Total noninterest expense $6,624 $5,829 $795 13.64
====== ====== ====
Income Taxes
------------
The income tax provision for the first six months of 2007 totaled $461,000 in
comparison to $596,000 for the same six month period in 2006. Pretax income in
2007 was $2,344,000 and included tax exempt income totaling $1,111,000. Pretax
income in 2006 was $2,749,000 and included tax exempt income totaling
$1,057,000. The decrease in the income tax provision is primarily attributable
to a decrease in taxable income.
Net Income
----------
Overall, net income totaled $1,883,000 for the six months ended June 30, 2007
and represents earnings of $1.12 per average share outstanding. This compares to
net income of $2,153,000 or $1.28 per average share outstanding for the same
period in 2006.
THREE MONTHS ENDED JUNE 30, 2007
AS COMPARED TO THREE MONTHS ENDED JUNE 30, 2006
Net Interest and Dividend Income
--------------------------------
For the following discussion, net interest and dividend income is presented on a
fully taxable-equivalent ("FTE") basis. FTE interest income restates reported
interest income on tax exempt loans and securities as if such interest were
taxed at the Company's federal tax rate of 34% for all periods presented.
(amounts in thousands)
Three Months Ended June 30 2007 2006
------ ------
Total Interest and Dividend Income
(financial statements) $ 6,360 $ 5,789
Tax Equivalent Adjustment 301 290
------- -------
Total Interest and Dividend Income (on an FTE basis) 6,661 6,079
Total Interest (Expense) (2,997) (2,531)
------- -------
Net Interest and Dividend Income-FTE $ 3,664 $ 3,548
======= =======
Total interest and dividend income on an FTE basis for the three months ended
June 30, 2007 increased $582,000 or 9.57% compared to the same period in 2006.
The increase was primarily attributable to an economic environment with
generally higher interest rates. Interest expense on deposits increased $373,000
or 23.04% for the quarter to $1,992,000 compared to $1,619,000 for the same
quarter in 2006. This increase is primarily the result of an economic
environment of increasing interest rates coupled with an increased deposit base.
The Bank's volume of
12
Federal Home Loan Bank advances has increased during the three month period
ended June 30, 2007 when compared to the corresponding period in 2006. Interest
expense on these advances has increased $93,000 or 10.20% and totaled $1,005,000
for the three months ended June 30, 2007 compared to $912,000 for the
corresponding period in 2006. Total interest expense for the three months ending
June 30, 2007 was $2,997,000 compared to total interest expense for the same
period in 2006 of $2,531,000, an increase of $466,000 or 18.41%. This increase
is a reflection of an economic environment of rising interest rates and the
result of generally higher interest rates on Federal Home Loan Bank advances.
Overall, net interest and dividend income (on a FTE basis) increased $116,000 or
3.27% to $3,664,000 for the three month period ended June 30, 2007 when compared
to the corresponding period in 2006.
Noninterest Income
------------------
Noninterest income totaled $1,115,000 for the three months ended June 30, 2007
as compared to $1,001,000 for the three months ended June 30, 2006. This
increase of $114,000 or 11.39% is primarily attributable to increased income
generated by an increase from gains in securities transactions and an increase
in other income. Income from the trust and investment services division
increased $53,000 or 11.78% to $503,000 for the second quarter of 2007 compared
to the same period in 2006. This is primarily the result of continued growth in
assets under management. Gains on sales of available-for-sale securities totaled
$63,000 for the second quarter of 2007. This compares to losses on sales of
available-for-sale securities of $13,000 for the corresponding period in 2006.
This increase is primarily the result of the movement of market rates during the
quarter. Other noninterest income is primarily related to fees associated with
transaction accounts and fees related to the origination and servicing of
mortgage loans and gains related to the sale of mortgage loans. The volumes of
these transactions are driven primarily by consumer demand which results in
variances from quarter to quarter. Year-to-date volumes however, are consistent
when comparing 2007 to 2006.
Noninterest Expense
-------------------
Noninterest expense totaled $3,305,000 for the three month period ended June 30,
2007 as compared to $2,992,000 for the same period in 2006, an increase of
$313,000 or 10.46%. Although there are some increases in non-interest expenses
that are attributable to normal volumes of business, much of the overall
increases in the non-interest expenses listed in the table below are primarily
attributable to additional staffing, and expenses related to the establishment
of a new branch in New York state, which commenced operations on August 1,
2007.The components of noninterest expense and the changes in the period were as
follows (amounts in thousands):
2007 2006 Change % Change
-----------------------------------------------------------------------------------------------------------------
Salaries and employee benefits $1,880 $1,707 $173 10.13
Occupancy expense 189 176 13 7.39
Equipment expense 179 194 (15) (7.73)
Data processing 301 327 (26) (7.95)
Insurance 36 32 4 12.50
Printing and stationery 80 76 4 5.26
Professional fees 174 90 84 93.33
Legal expense 71 38 33 86.84
Amortization of core deposit intangible 41 41 0 0
Other expense 354 311 43 13.83
------ ------ ----
Total non-interest expense $3,305 $2,992 $313 10.46
====== ====== ====
Income Taxes
------------
The income tax provision for the three month period ended June 30, 2007 totaled
$224,000 in comparison to $261,000 for the same three month period in 2006. The
decrease in the income tax provision is attributable to a decrease in taxable
income.
Net Income
----------
Overall, net income totaled $949,000 for the three months ended June 30, 2007
and represents earnings of $.56 per average share outstanding share. This
compares to net income of $1,006,000 for the same period in 2006, a decrease of
$57,000 or 5.67% and compares to earnings per share of $.60 for the 2006 period.
13
FINANCIAL CONDITION
-------------------
Total assets at June 30, 2007 were $442,453,000, compared to $450,339,000 at
December 31, 2006, a decrease of 1.75%. The decrease is primarily the result of
a decrease in earning assets during the period.
Securities
----------
The make up of the securities portfolio is diversified among U.S. Government
sponsored agencies, mortgage-backed securities and securities issued by states
of the United States and political subdivisions of the states. The portfolio has
no sub-prime mortgage collateral in any of its owned securities. During the six
months ended June 30, 2007, the securities portfolio, including Federal Home
Loan Bank stock, decreased $5,228,000 or 3.24% to $156,004,000 from $161,232,000
at December 31, 2006.
Securities are classified in the portfolio as either securities
available-for-sale or securities held-to-maturity. Almost all securities are
classified as available-for-sale. The securities reported as available-for-sale
are stated at fair value in the financial statements of the Company. Unrealized
holding gains and losses on available-for-sale securities (accumulated other
comprehensive income/loss) are not included in earnings, but are reported as a
net amount (less expected tax) in a separate component of capital until
realized. At June 30, 2007, the unrealized loss net of tax was $3,955,000. This
compares to an unrealized loss net of tax of $1,190,000 at December 31, 2006.
The unrealized losses in these securities are attributable to changes in market
interest rates. Management deems the securities that are currently in an
unrealized loss position as not other than temporarily impaired. The securities
reported as securities held-to-maturity are stated at amortized cost.
The decrease in the portfolio is also a reflection of securities being sold and
called during the period with the proceeds being used to fund loan demand and
seasonal cash flow of transaction accounts.
Lending
-------
Total loans outstanding of $253,714,000 at June 30, 2007 compares to total loans
outstanding of $254,773,000 at December 31, 2006. This decrease of $1,059,000 or
..42% includes a January 2007 maturity of $12,000,000 in Term Federal Funds,
excluding this maturity, there is an increase in loans of $10,941,000 or 4.29%.
Competition for loans remains aggressive in the Bank's market area, however new
business development coupled with an increase in loan demand resulted in the
increase.
The following table represents the composition of the loan portfolio comparing
June 30, 2007 to December 31, 2006:
June 30, 2007 December 31, 2006
------------- -----------------
(amounts in thousands)
Commercial, financial and agricultural $ 17,740 $ 16,465
Real estate-construction and land
development 22,650 21,169
Real estate-residential 153,152 145,395
Real estate-commercial 50,968 50,859
Consumer 8,095 8,816
Term federal funds 0 12,000
Other 1,109 69
-------- --------
253,714 254,773
Deferred costs, net 225 168
Unearned income (1) (3)
Allowance for loan losses (2,452) (2,474)
-------- --------
Net Loans $251,486 $252,464
======== ========
Provisions and Allowance for Loan Losses
----------------------------------------
Credit risk is inherent in the business of extending loans. The Bank monitors
the quality of the portfolio to ensure that loan quality will not be sacrificed
for growth or otherwise compromise the Bank's objectives. Because of this risk
associated with extending loans, the Bank maintains an allowance or reserve for
loan and lease losses through
14
charges to earnings. There was no provision expense for loan losses for the
first six month period of 2007 or the comparable period in 2006.
The Bank evaluates the adequacy of the allowance no less frequently than on a
quarterly basis. No material changes have been made in the estimation methods or
assumptions that the Bank uses in making this determination during the period
ended June 30, 2007. Such evaluations are based on assessments of credit quality
and "risk rating" of loans by senior management, which is reviewed by the Bank's
Loan Committee on a regular basis. Loans are initially risk rated when
originated. If there is deterioration in the credit, the risk rating is adjusted
accordingly.
The allowance also includes a component resulting from the application of the
measurement criteria of Statements of Financial Accounting Standards No. 114,
Accounting by Creditors for Impairment of a Loan ("SFAS 114"). Impaired loans
receive individual evaluation of the allowance necessary on a monthly basis.
Loans to be considered for impairment are defined in the Bank's Loan Policy as
commercial loans with balances outstanding of $100,000 or more and residential
real estate mortgages with balances of $300,000 or more. Such loans are
considered impaired when it is probable that the Bank will not be able to
collect all principal and interest due according to the terms of the note.
Any such commercial loan and/or residential mortgage will be considered impaired
under any of the following circumstances:
1. Non-accrual status;
2. Loans over 90 days delinquent;
3. Troubled debt restructures consummated after December 31, 1994;
4. Loans classified as "doubtful", meaning that they have weaknesses,
which make collection or liquidation in full, on the basis of
currently existing facts, conditions, and values, highly
questionable and improbable.
The individual allowance for any impaired loan is based upon the present value
of expected future cash flows discounted at the loan's effective interest rate
or the fair value of the collateral if the loan is collateral dependent.
Specifically identifiable and quantifiable losses are immediately charged off
against the allowance.
In addition, a risk of loss factor is applied in evaluating categories of loans
generally as part of the periodic analysis of the Allowance for Loan Losses.
This analysis reviews the allocations of the different categories of loans
within the portfolio and it considers historical loan losses and delinquency
figures as well as any recent delinquency trends.
Credit card loans are separately evaluated and given a special loan loss factor
because management recognizes the higher risk involved in such loans.
Concentrations of credit and local economic factors are also evaluated on a
periodic basis. Historical average net losses by loan type are examined as well
as trends by type. The Bank's loan mix over the same period of time is also
analyzed. A loan loss allocation is made for each type of loan multiplied by the
loan mix percentage for each loan type to produce a weighted average factor.
Nonperforming loans, which include all loans that are on a non-accrual status
along with loans that are 90 days or more past due and still accruing, are
closely monitored by management. At June 30, 2007, nonperforming loans totaled
$894,000 or 0.35% of total loans outstanding of $253,714,000. The allowance for
loan losses totaled $2,452,000 representing 274.27% of nonperforming loans.
Nonperforming loans totaled $964,000 or 0.38% of total loans outstanding of
$254,773,000 at December 31, 2006. The allowance for loan losses totaled
$2,474,000 at December 31, 2006 and represented 256.64% of nonperforming loans.
A total of $63,000 of loans were charged off by the Bank during the six months
ended June 30, 2007. These charged-off loans consisted primarily of consumer
loans. This compares to loans charged off during the six month period ended June
30, 2006 which totaled $68,000. A total of $41,000 of previously charged-off
loans was recovered during the six month period ended June 30, 2007. Recoveries
for the same period in 2006 totaled $22,000. While management estimates loan
losses using the best available information, no assurances can be given that
future additions to the allowance will not be necessary based on changes in
economic and real estate market conditions, further information obtained
regarding problem loans, identification of additional problem loans or other
factors. Additionally, future additions to the allowance may be necessary to
maintain adequate coverage ratios.
15
Deposits
--------
The Company offers a variety of deposit accounts with a range of interest rates
and terms. The following table illustrates the composition of the Company's
deposits at June 30, 2007 and December 31, 2006:
June 30, 2007 December 31, 2006
--------------- ------------------
(amounts in thousands)
Demand $ 66,554 $ 70,502
NOW 26,764 21,461
Money Market 51,763 57,015
Savings 43,071 44,246
Time 120,401 120,362
-------- --------
Total Deposits $308,553 $313,586
======== ========
Deposits constitute the principal funding source of the Company's assets.
Borrowings
----------
The Company utilizes advances from the Federal Home Loan Bank as part of its
operating strategy to supplement deposit growth and fund its asset growth, a
strategy that is designed to increase interest income. These advances are made
pursuant to various credit programs, each of which has its own interest rate and
range of maturities. At June 30, 2007, the Company had $87,217,000 in
outstanding advances from the Federal Home Loan Bank compared to $87,093,000 at
December 31, 2006. Management expects that it will continue this strategy of
supplementing deposit growth with advances from the Federal Home Loan Bank.
Off-Balance Sheet Arrangements
In the normal course of business the Company enters into certain relationships
characterized as lending related off-balance sheet arrangements. These lending
commitments have various terms and are designed to accommodate the financial
needs of consumers, businesses and other entities. Many of these loan
commitments have fixed expiration dates or other termination clauses and may
require payment of a fee. Since many of these commitments are expected to expire
without being funded, the total commitment amounts do not necessarily represent
future liquidity requirements.
Loan commitments have credit risk essentially the same as that involved in
extending loans to customers. They are subject to normal credit approval
procedures and policies. Collateral is obtained based on management's assessment
of the customer's credit. The accompanying table summarizes the Company's off
balance sheet lending-related financial instruments by remaining maturity at
June 30, 2007:
June 30, 2007
(amounts in thousands)
By remaining maturity Less than 1 year 1-3 years 4-5 years After 5 years Total
-----------------------------------------------------------------------------------------------------------------------------------
Off balance sheet lending-related
Financial Instruments
Residential real estate related $ 6,704 $ 24 $48 $24,772 $31,548
Commercial related 7,203 1,373 7,635 16,211
Consumer related 7,865 7,865
Standby letters of credit 13 13
-----------------------------------------------------------------------------------------------------------------------------------
Total $13,907 $1,410 $48 $40,272 $55,637
-----------------------------------------------------------------------------------------------------------------------------------
Interest Rate Risk
------------------
Interest rate risk is the most significant market risk affecting the Company.
Interest rate risk is defined as an exposure to a movement in interest rates
that could have an adverse effect on net interest income. Net interest income is
sensitive to interest rate risk to the degree that interest bearing liabilities
mature or reprice on a different basis than earning assets. In an attempt to
manage its exposure to changes in interest rates, the Bank's assets and
liabilities are managed in accordance with policies established and reviewed by
the Bank's Board of Directors. The Bank's Asset/Liability Management Committee
monitors asset and deposit levels, developments and trends in
16
interest rates, liquidity and capital. One of the primary financial objectives
is to manage interest rate risk and control the sensitivity of earnings to
changes in interest rates in order to prudently improve net interest income and
manage the maturities and interest rate sensitivities of assets and liabilities.
To quantify the extent of these risks, both in its current position and in
actions it might take in the future, interest rate risk is monitored using gap
analysis which identifies the differences between assets and liabilities which
mature or reprice during specific time frames and model simulation which is used
to "rate shock" the Company's assets and liability balances to measure how much
of the Company's net interest income is "at risk" from sudden rate changes.
An interest rate sensitivity gap is defined as the difference between the amount
of interest-earning assets maturing or repricing within a specific time period
and the amount of interest-bearing liabilities maturing or repricing within that
same period. A gap is considered positive when the amount of interest rate
sensitive assets exceeds the amount of interest rate sensitive liabilities. A
gap is considered negative when the amount of interest rate sensitive
liabilities exceeds the amount of interest rate sensitive assets. At June 30,
2007, the Company maintains a liability sensitive (negative gap) position. This
would suggest that during a period of declining interest rates, the Company
would be in a better position to increase net interest income. To the contrary,
during a period of rising interest rates, a negative gap would result in a
decrease in interest income. The level of interest rate risk at June 30, 2007 is
within the limits approved by the Board of Directors.
Liquidity
---------
Liquidity is the ability to raise funds on a timely basis at an acceptable cost
in order to meet cash needs. Adequate liquidity is necessary to handle
fluctuations in deposit levels, to provide for customers' credit needs, and to
take advantage of investment opportunities as they are presented. The Company
manages liquidity primarily with readily marketable investment securities,
deposits and loan repayments. The Company's subsidiary, the Bank, is a member of
the Federal Home Loan Bank of Boston. This enhances the liquidity position by
providing a source of available borrowings. At June 30, 2007 the Company had
approximately $55,637,000 in loan commitments outstanding. Management believes
that the current level of liquidity is ample to meet the Company's needs for
both the present and foreseeable future.
Capital
-------
At June 30, 2007, the Company had $42,611,000 in shareholders' equity, a
decrease of 3.92% when compared to December 31, 2006 shareholders' equity
totaling $44,349,000. Several components contributed to the change since
December 31, 2006. Earnings for the six-month period ended June 30, 2007 totaled
$1,883,000. Securities in the portfolio that are classified as
available-for-sale are adjusted to fair value monthly and the unrealized losses
or gains are not included in earnings, but are reported as a net amount (less
expected tax) as a separate component of capital until realized. Market
fluctuations of fair value of the securities portfolio for the period ending
June 30, 2007 resulted in other comprehensive loss net of tax totaling
$2,765,000. The application of SFAS No. 158, as defined in Note 3 resulted in
comprehensive income net of tax of $23,000 for the six month period ended June
30, 2007.
A review and analysis of securities has determined that there has been no credit
deterioration and that the unrealized loss on securities available-for-sale is
due to the current interest rate environment and management deems the securities
to be not other than temporarily impaired. The Company has declared two
quarterly dividends resulting in a decrease in capital of $910,000. The Company
issued 840 new shares of common stock under the terms of the Director Stock
Retainer Plan that resulted in an increase in capital of $31,000. Under current
regulatory definitions, the Company and the Bank are considered to be "well
capitalized" for capital adequacy purposes. As a result, the Bank pays the
lowest federal deposit insurance premiums possible. One primary measure of
capital adequacy for regulatory purposes is based on the ratio of risk-based
capital to risk-weighted assets. This method of measuring capital adequacy helps
to establish capital requirements that are more sensitive to the differences in
risk associated with various assets. It takes into account off-balance sheet
exposure in assessing capital adequacy and it minimizes disincentives to holding
liquid, low-risk assets. At June 30, 2007, the Company had a total risk based
capital ratio of 15.67% compared to 15.28% at December 31, 2006. Maintaining
strong capital is essential to bank safety and soundness. However, the effective
management of capital resources requires generating attractive returns on equity
to build value for shareholders while maintaining appropriate levels of capital
to fund growth, meet regulatory requirements and be consistent with prudent
industry practices. Management believes that the capital levels of the Company
and Bank are adequate to continue to meet the foreseeable capital needs of the
institutions.
17
Impact of Inflation and Changing Prices
---------------------------------------
The Company's consolidated financial statements are prepared in conformity with
generally accepted accounting principles which require the measurement of
financial condition and operating results in terms of historical dollars without
considering changes in the relative purchasing power of money, over time, due to
inflation. Unlike most industrial companies, virtually all of the assets and
liabilities of the Company are monetary and as a result, interest rates have a
greater impact on the Company's performance than do the effects of general
levels of inflation, although interest rates do not necessarily move in the same
direction or with the same magnitude as the prices of goods and services.
Although not a material factor in recent years, inflation could impact earnings
in future periods.
Forward Looking Statements
--------------------------
This Form 10-Q and future filings made by the Company with the Securities and
Exchange Commission, as well as other filings, reports and press releases made
or issued by the Company and the Bank, and oral statements made by executive
officers of the Company and the Bank, may include forward-looking statements
relating to such matters as:
(a) assumptions concerning future economic and business conditions and their
effect on the economy in general and on the markets in which the Company
and the Bank do business; and
(b) expectations for revenues and earnings for the Company and Bank.
Such forward-looking statements are based on assumptions rather than historical
or current facts and, therefore, are inherently uncertain and subject to risk.
For those statements, the Company claims the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Act of
1995.
The Company notes that a variety of factors could cause the actual results or
experience to differ materially from the anticipated results or other
expectations described or implied by such forward-looking statements. The risks
and uncertainties that may effect the operation, performance, development and
results of the Company's and Bank's business include the following:
(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
impact the Company 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 the Company's filings with the
Securities and Exchange Commission.
Such developments could have an adverse impact on the Company's and the Bank's
financial position and results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
The main components of market risk for the Company are interest rate risk and
liquidity risk. The Company manages interest rate risk and liquidity risk
through an ALCO Committee comprised of outside Directors and senior management.
The committee monitors compliance with the Bank's Asset/Liability Policy which
provides guidelines to analyze and manage the interest rate sensitivity gap,
which is the difference between the amount of assets and the amounts of
liabilities which mature or reprice during specific time frames. Model
simulation is used to measure earnings volatility under both rising and falling
rate scenarios. Please refer to Interest Rate Risk and Liquidity under Item 2.
The Company's interest rate risk and liquidity position has not significantly
changed from year end 2006.
18
Item 4. Controls and Procedures.
The Company's Chief Executive Officer and Chief Financial Officer concluded
that, based upon an evaluation as of June 30, 2007, the Company's disclosure
controls and procedures are effective to ensure that information required to be
disclosed by the Company in reports that it files or submits under the
Securities Exchange Act of 1934 is recorded, processed, summarized and reported
within the time periods specified in the SEC rules and forms. During the six
month period ended June 30, 2007 there were no changes in the Company's internal
control over financial reporting that materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting.
Part II - OTHER INFORMATION
Item 1. - Legal Proceedings. Not applicable
Item 1A. Risk Factors. Not applicable
Item 2. - Unregistered Sales of Equity Securities and Use of Proceeds.
Unregistered Sales of Equity Securities and Use of Proceeds. On May 10, 2007,
the Company issued 840 shares of common stock to members of its Board of
Directors under the terms of the Director Stock Retainer Plan. The shares were
issued in a private transaction in reliance upon the exemption from registration
provided by Section 4(2) of the Securities Act of 1933, as amended. No cash
consideration was received upon issuance of the shares.
Item 3. - Defaults Upon Senior Securities. Not applicable
Item 4. - Submission of Matters to a Vote of Security Holders. Incorporated by
reference from Form 8-K filed May 12, 2007.
Item 5. - Other Information. Not applicable
Item 6. - Exhibits
11 Computation of Earnings per Share.
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.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Salisbury Bancorp, Inc.
Date: August 14, 2007 by: /s/ John F. Perotti
---------------- -------------------
John F. Perotti
Chief Executive Officer
Date: August 14, 2007 by: /s/ John F. Foley
---------------- -----------------
John F. Foley
Chief Financial Officer
19