SBT Bancorp, Inc. Reports Third Quarter 2009 Results

November 6, 2009 2:54 PM EST

SIMSBURY, Conn.--(BUSINESS WIRE)-- SBT Bancorp, Inc. (OTCBB: SBTB), holding company for The Simsbury Bank & Trust Company, today announced third quarter 2009 net income of $160,000 and net income available to common shareholders of $95,000 or $0.11 per diluted share. This compares to a net loss of $1,556,000 or $1.80 per diluted share for the third quarter of 2008. For the nine months ended September 30, 2009, net income amounted to $527,000 and net income available to common shareholders equaled $395,000 or $0.46 per diluted share. This compares to a net loss of $931,000 or $1.09 per diluted share for the nine months ended September 30, 2008.

Key items for the quarter include:

    --  Net income increased substantially compared to the third quarter of 2008
        because of non-recurring items discussed below that impacted 2008
        earnings.
    --  Excluding the non-recurring items, net income for the quarter increased
        by $48,000 or 43% and diluted earnings per share declined by $0.02
        compared to 2008 third quarter. Year to date, excluding non-recurring
        items, net income increased by $118,000 or 29% and diluted earnings per
        share declined by $0.01.
    --  Strong growth in both retail and municipal deposits resulted in a 30%
        increase in total deposits compared to September 30, 2008.
    --  Loans outstanding grew to $195 million, an increase of $16 million, or
        9%, compared to September 30, 2008.
    --  The loan portfolio experienced an increase in delinquencies during the
        quarter, but the overall quality of the loan portfolio remains very
        sound.
    --  The Company's capital position remained very strong, with capital ratios
        well in excess of well-capitalized regulatory standards.

"The very strong deposit growth we have experienced over the past few quarters is a clear indication that Simsbury Bank is a strong and vibrant banking partner during this time of economic uncertainty," said Martin J. Geitz, SBT Bancorp President & CEO. "Very low short-term interest rates, including bank prime lending rates, coupled with increasing loan delinquencies continue to negatively impact earnings at all financial institutions. Though we have seen an increase in loan delinquencies recently, the overall quality of our loan portfolio remains very sound. As we manage through this difficult economic period, we will continue to focus on increasing shareholder value by building profitable banking relationships, diversifying our sources of revenue, and serving our customers' full range of financial services needs."

The Company's previous year's net income was impacted by two major items: (1) non-recurring income of $328,000 for Bank Owned Life Insurance death benefits occurring in the quarter ending June 30, 2008 and (2) an other-than-temporary-impairment ("OTTI") charge on Fannie Mae and Freddie Mac preferred stock of $1,668,000 in the quarter ending September 30, 2008. Excluding these items, third quarter 2008 net income and net income available to common shareholders would have been $112,000 or $0.13 per diluted share, and September 30, 2008 year to date net income and net income available to common shareholders would have been $409,000 or $0.47 per share. The following table compares 2009 to 2008 excluding these non-recurring items:

Excluding 2008 Non-Recurring Items

                            For the Quarter Ended  Year to Date

                            09/30/09  09/30/08     09/30/09  09/30/08

Net Income (000)            $160      $112         $527      $409

Income Available to Common  $95       $112         $395      $409
Shareholders (000)

Diluted Income Per Share    $0.11     $0.13        $0.46     $0.47

On September 30, 2009, loans outstanding were $195 million, an increase of $16 million, over a year ago. Since September 30, 2008, commercial loans increased by 11% and residential mortgages by 12%. Mortgage loan growth does not reflect the $23 million in mortgages originated but sold as part of the Bank's asset/liability management strategy. Sale of these mortgages resulted in a $17,000 contribution to fee income for the quarter and $60,000 year to date. The Company also purchased a $9.9 million pool of high quality, seasoned, short-term residential mortgage loans during the quarter. At September 30, 2009, loans 30 days or more past due, including non-performing loans, totaled $4.4 million, or 2.28% of total loans compared to $2.6 million, or 1.46% at June 30, 2009. Non-performing loans were $2.5 million, or 1.27% of total loans compared to $1.4 million at June 30, 2009, or 0.78% of loans. With a loan loss provision of $192,000 during the quarter, the Company's allowance for loan losses at September 30, 2009 was $2.138 million or 1.10% of total loans compared to the June 30, 2009 total of $2.036 million or 1.14% of total loans. The Company has no foreclosed properties or Other Real Estate Owned (OREO) in its portfolio.

Core deposits (Demand, Savings, and NOW accounts) grew by $33 million or 24% over the past twelve months. Total deposits ended the quarter at $264 million, an increase of $61 million, or 30%, over a year ago. The Bank's deposit mix continued to be favorable with 27% checking (Demand and Now accounts), 37% savings and 36% certificates of deposit contributing to a relatively low cost of funds of 1.19%. A seasonal inflow of municipal tax deposits contributed to the deposit increase.

The Company's taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) decreased by 15 basis points from 3.57% in the second quarter of 2009 to 3.42% in the third quarter of 2009. The margin declined by 70 basis points when compared to the third quarter of 2008.

Total revenues, consisting of net interest and dividend income plus non-interest income, were $2,752,000 in the third quarter of 2009. Revenues for the third quarter of 2008 were impacted by a non-recurring "OTTI" charge on Fannie Mae and Freddie Mac preferred stock of $1,668,000. Excluding this item, third quarter 2008 total revenues were $2,446,000. Compared to 2008, third quarter 2009 total revenues, excluding non-recurring items, increased by $306,000, or 13%. The primary contributor to revenue enhancement over this period was an increase in net interest income resulting from deposit, loan, and investment portfolio growth.

Total non-interest expenses for the third quarter were $2,367,000, an increase of $125,000 or 5% over the third quarter of 2008 primarily due to an increase in FDIC insurance premiums. Salary and benefit expenses decreased by $139,000 or 13% compared to the third quarter of 2008. Premises and equipment expenses declined $143,000 or 28% compared to the third quarter of 2008.

Capital levels for The Simsbury Bank & Trust Company remain well in excess of those required to meet the regulatory "well-capitalized" designation.

Capital Ratios 09/30/09

                                 The Simsbury Bank  Regulatory Standard For
                                 & Trust Company    Well-Capitalized

Tier 1 Leverage Capital Ratio    7.01%              5.00%

Tier 1 Risk-Based Capital Ratio  12.10%             6.00%

Total Risk-Based Capital Ratio   13.35%             10.00%

SBT Bancorp Inc.'s wholly owned subsidiary, Simsbury Bank & Trust Company, is an independent, locally-controlled, customer-friendly commercial bank for businesses and consumers. The Bank has approximately $287 million in assets. The Bank serves customers through full-service offices in Avon, Bloomfield, Granby and Simsbury, Connecticut; SBT Online internet banking at simsburybank.com; free ATM transactions at 2,800 machines throughout the northeastern U.S. via the SUM program; and 24 hour telephone banking. The Bank's wholly-owned subsidiary, SBT Investment Services, Inc., offers securities and insurance products through LPL Financial and its affiliates, Member FINRA/SIPC. SBT Bancorp, Inc. is traded over-the-counter under the ticker symbol of OTCBB: SBTB. For more information, visit www.simsburybank.com.

Certain statements in this press release, including statements regarding the intent, belief or current expectations of SBT Bancorp, Inc., The Simsbury Bank & Trust Company, or their directors or officers, are "forward-looking" statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

SBT BANCORP INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in thousands, except per share amounts)

                                           9/30/2009    12/31/2008   9/30/2008

                                           (Unaudited)               (Unaudited)

ASSETS

 Cash and due from banks                   $ 10,272     $ 11,392     $ 11,319

 Interest-bearing deposits with Federal      89           116          2,949
 Home Loan Bank

 Federal funds sold                          10,213       1,800        8,985

 Money market mutual funds                   3,329        3,027        27

  Cash and cash equivalents                  23,903       16,335       23,280

 Interest-bearing time deposits with         5,443        7,320        -
 other bank

 Investments in available-for-sale           54,656       32,997       16,829
 securities (at fair value)

 Federal Home Loan Bank Stock, at cost       631          631          631

 Loans outstanding                           195,349      180,091      179,608

  Less allowance for loan losses             2,138        2,017        1,822

    Loans, net                               193,211      178,074      177,786

 Premises and equipment                      705          846          910

 Accrued interest receivable                 1,032        836          745

 Bank owned life insurance                   3,803        1,204        1,192

 Due from broker                             1,195        -            -

 Other assets                                2,230        2,513        1,760

  Total other assets                         8,965        5,399        4,607

    TOTAL ASSETS                           $ 286,809    $ 240,756    $ 223,133

LIABILITIES AND STOCKHOLDERS' EQUITY

 Deposits

  Demand deposits                          $ 40,011     $ 38,288     $ 37,418

  Savings and NOW deposits                   131,049      98,264       100,880

  Time deposits                              92,454       84,327       63,696

   Total deposits                            263,514      220,879      201,994

 Federal Home Loan Bank advance              -            1,000        3,000

 Securities sold under agreements to         741          577          900
 repurchase

 Other liabilities                           1,025        1,454        1,012

   Total liabilities                         265,280      223,910      206,906

Stockholder's equity:

 Preferred Stock - Class A                   3,793        -            -

 Preferred Stock - Class B                   227          -            -

 Common stock, no par value; authorized
 2,000,000 shares; issued and outstanding    9,365        9,328        9,292
 864,976 shares on 9/30/09, 12/31/2008
 and 9/30/2008

 Retained earnings                           7,759        7,543        7,256

 Accumulated other comprehensive loss        385          (25     )    (321    )

   Total shareholders' equity                21,529       16,846       16,227

    TOTAL LIABILITIES AND STOCKHOLDERS'    $ 286,809    $ 240,756    $ 223,133
    EQUITY

SBT BANCORP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

(Dollars in thousands, except for per share amounts)

                               For the quarter ended   For the nine months ended

                               9/30/2009  9/30/2008    9/30/2009  9/30/2008

Interest and dividend income

 Interest and fees on loans    $ 2,447    $ 2,522      $ 7,254    $ 7,330

 Investment securities           528        228          1,428      813

 Federal funds sold and          12         41           21         126
 overnight deposits

  Total interest and dividend    2,987      2,791        8,703      8,269
  income

Interest expense

 Deposits                        680        658          2,224      2,202

 Repurchase agreements           3          11           7          44

 Federal Home Loan Bank          -          2            7          4
 advances

  Total interest expense         683        671          2,238      2,250

  Net interest and dividend      2,304      2,120        6,465      6,019
  income

Provision for loan losses        192        50           322        250

 Net interest and dividend
 income after provision for      2,112      2,070        6,143      5,769
 loan losses

Noninterest income (charge)

 Service charges on deposit      159        129          395        363
 accounts

 Gain on sales of available      40         -            40         10
 for sale securities

 Write-downs of available for    -          (1,668  )    -          (1,668  )
 sale securities

 Other service charges and       145        154          413        436
 fees

 Increase in cash surrender
 value of life insurance         45         11           100        49
 policies

 BOLI death benefit income       -          -            -          328

 Gain on loans sold              17         -            60         -

 Investment services fees and    27         20           74         66
 commissions

 Other income                    15         12           61         56

  Total noninterest income       448        (1,342  )    1,143      (360    )
  (charge)

Noninterest expense

 Salaries and employee           964        1,103        3,033      3,144
 benefits

 Premises and equipment          373        516          1,109      1,293

 Advertising and promotions      128        109          307        279

 Forms and supplies              50         35           138        118

 Professional fees               125        97           395        197

 Directors fees                  33         34           99         101

 Correspondent charges           67         61           206        173

 Postage                         28         20           77         78

 Other expenses                  599        267          1,217      774

  Total noninterest expense      2,367      2,242        6,581      6,157

 Income (loss) before taxes      193        (1,514  )    705        (748    )

Income tax provision             33         42           178        183

Net income (loss)              $ 160      $ (1,556  )  $ 527      $ (931    )

Less: Preferred stock          $ 65       $ -          $ 132      $ -
dividend and accretion

Net income (loss) available    $ 95       $ (1,556  )  $ 395      $ (931    )
to common shareholders

Average shares outstanding,      864,976    864,976      864,976    858,369
basic

Net income (loss) available    $ 0.11     $ (1.80   )  $ 0.46     $ (1.09   )
per common share, basic

Average shares outstanding,      864,976    864,976      864,976    858,369
assuming dilution

Net income (loss) available
per common share, assuming     $ 0.11     $ (1.80   )  $ 0.46     $ (1.09   )
dilution

    Source: SBT Bancorp, Inc.

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