COMMITMENTS AND CONTINGENT LIABILITIES

12 Months Ended

Dec. 31, 2017

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENT LIABILITIES

NOTE 19 - COMMITMENTS AND CONTINGENT LIABILITIES

Commitments

On December 31, 2015, the Bank selected a new provider for core account processing services and other miscellaneous services, and has completed its core systems conversion with the new provider in November of 2016. The agreement will continue until the eighth anniversary of the commencement date, which was November 10, 2016. In the event the Bank chooses to cancel the agreement prior to the end of the contract term, a lump sum termination fee will have to be paid. The fee shall consist of the total amount that would have been paid or reimbursed to the service provider during the remainder of the term of the agreement.

In December 2017, the Bank entered into a purchase and assumption agreement with Orange Bank & Trust Company, pursuant to which the Bank will acquire the Fishkill, New York branch of Orange Bank & Trust Company and certain related deposits, loans and other assets. The Bank has received regulatory approval from the CTDOB and the NYDFS and is awaiting approval from the FDIC for the transaction, which is expected to be completed during the second quarter of 2018.

The Bank leases facilities and equipment under operating leases that expire at various dates through 2024. The leases have varying renewal options, generally require a fixed annual rent, and provide that real estate taxes, insurance, and maintenance are to be paid by Salisbury. Rent expense totaled $361,000, $245,000 and $295,000 for 2017, 2016 and 2015, respectively.

Future minimum lease payments at December 31, 2017 are as follows:

Future minimum lease payments  (in thousands)
	2018	$	381
	2019		380
	2020		390
	2021		336
	2022		199
	2023		135
	2024		129
		$	1,950

The leases for two Bank facilities are accounted for as capital leases. These leases expire in 2028 and 2029. The capital lease expiring in 2028 includes an option to terminate the lease in 2018. Salisbury is evaluating its alternatives for the capital lease expiring in 2018.The leases have varying renewal options, require a fixed annual rent, and provide that real estate taxes, insurance, and maintenance are to be paid by the Bank. The following is a schedule by years of future minimum lease payments under the capital leases with the present value of the net minimum lease payments as of December 31, 2017.

Future minimum lease payments  (in thousands)
	2018	$	214
	2019		234
	2020		234
	2021		234
	2022		234
	Thereafter		1,424
	Total minimum lease payments		2,574
	Less amount representing interest		741
		$	1,833

Employment and Change in Control Agreements

Salisbury has entered into severance agreements with certain senior executives, including with one (1) named executive officer, Richard J. Cantele, Jr., which provide payouts ranging from 0.5 to 2.9 times base salary and other benefits. Salisbury has also entered into several change in control agreements including with named executive officers, Peter Albero, and an employment agreement with named executive officer John Davies, all of which provide a severance payment ranging from 0.5 to 2.0 times base salary and other benefits in the event employment is terminated in conjunction with a defined change in control.

Salisbury has entered into severance agreements with certain senior executives, including with one (1) named executive officer, Richard J. Cantele, Jr., which provide payouts ranging from 0.5 to 2.9 times base salary and other benefits. Salisbury has also entered into several change in control agreements including with named executive officers, Peter Albero, and an employment agreement with named executive officer John Davies, all of which provide a severance payment ranging from 0.5 to 2.0 times base salary and other benefits in the event employment is terminated in conjunction with a defined change in control.

Contingent Liabilities

The Bank is involved in various claims and legal proceedings, which are not material, arising in the ordinary course of business.

As previously disclosed, the Bank, individually and in its capacity as a former Co-Trustee of the Erling C. Christophersen Revocable Trust (the “Trust”), was named as a defendant in litigation filed in the Connecticut Complex Litigation Docket in Stamford, captioned John Christophersen v. Erling Christophersen, et al., X08-CV-08-5009597S (the “First Action”). The Bank also was a counterclaim-defendant in related mortgage foreclosure litigation in the Connecticut Complex Litigation Docket in Stamford, captioned Salisbury Bank and Trust Company v. Erling C. Christophersen, et al., X08-CV-10-6005847-S (the “Foreclosure Action,” together with the First Action, the “Actions”). The other parties to the Actions were John R. Christophersen; Erling C. Christophersen, individually and as Co-Trustee of the Trust; Bonnie Christophersen and Elena Dreiske, individually and as Co-Trustees of the Mildred B. Blount Testamentary Trust; People’s United Bank; Law Offices of Gary Oberst, P.C.; Rhoda Rudnick; and Hinckley Allen & Snyder LLP.

The Actions involved a dispute over title to certain real property located in Westport, Connecticut, which was secured by a commercial mortgage in favor of the Bank on the Westport property. This mortgage was the subject of the Foreclosure Action brought by the Bank. The Court, in 2016, ruled in favor of the Bank as to the foreclosure action and as such brings this matter to a close. As a result of the foreclosure the Bank has taken ownership of the property and the carrying value is reflected in the OREO balance as of December 31, 2016. The Bank subsequently sold this property on December 28, 2017.

There are no other material pending legal proceedings, other than ordinary routine litigation incidental to the registrant’s business, to which Salisbury is a party or to which any of its property is subject.