SBT Bancorp, Inc. Reports Second Quarter 2009 Results

SIMSBURY, Conn.--(Business Wire)--
SBT Bancorp, Inc., (OTCBB: SBTB), holding company for The Simsbury Bank & Trust
Company, today announced second quarter 2009 net income of $221,000 and net
income available to common shareholders of $157,000 or $0.18 per diluted share.
For the six months ended June 30, 2009, net income amounted to $367,000 and net
income available to common shareholders equaled $300,000 or $0.35 per diluted
share.

Key items for the quarter include:

* Driven by strong deposit growth, total assets grew by $43 million, or 19%,
compared to June 30, 2008 resulting in a 7% increase in net interest income.
* While the Company`s loan portfolio remains relatively low risk with exposure
to commercial real estate loans at a conservative level, the Company`s loan loss
reserve coverage ratio was increased to 1.19% of total loans and 152% of
non-performing loans.
* The Company`s capital position remained very strong, with capital ratios well
in excess of well-capitalized regulatory standards.
* An increase in FDIC insurance premiums negatively impacted operating expenses.

* During the quarter, the Company paid its first preferred stock dividend.

The Company`s previous year`s net income was impacted by non-recurring income of
$328,000 for Bank Owned Life Insurance death benefits. Excluding this item,
second quarter 2008 net income and net income available to common shareholders
would have been $170,000 or $0.20 per diluted share. The following table
compares 2009 to 2008 excluding this non-recurring item:

Excluding 2008 Non-Recurring Item
For the Quarter Ended Year to Date
06/30/09 06/30/08 06/30/09 06/30/08
Net Income (000) $221 $170 $367 $297
Income Available to Common Shareholders (000) $157 $170 $300 $297
Diluted Income Per Share $0.18 $0.20 $0.35 $0.35

On June 30, 2009, loans outstanding were $179 million, an increase of $1
million, over a year ago. Since June 30, 2008, commercial loans increased by 8%
and residential mortgages by 2%. Mortgage loan growth does not reflect the $3.2
million in mortgages originated but sold as part of the Bank`s asset / liability
management strategy. Sale of these mortgages resulted in a $43,000 contribution
to fee income. Asset quality continued to be stable. At June 30, 2009, loans 30
days or more past due, including non-performing loans, totaled $2.6 million, or
1.46% of total loans compared to $2.9 million, or 1.63% at March 31, 2009.
Non-performing loans were $1.4 million, or 0.78% of total loans compared to $911
thousand at March 31, 2009, or 0.50% of loans. Total exposure to builder and
land development loans and non-owner occupied commercial real estate remained
relatively low compared to many peer banks at $13.1 million on June 30, 2009,
equal to 7% of total loans and 62% of total capital. With a loan loss provision
of $78,000 during the quarter, the Company`s allowance for loan losses at June
30, 2009 was $2.132 million or 1.19% of total loans compared to the previous
year`s quarter-end allowance for loan losses of $2.036 million or 1.14% of total
loans and the March 31, 2009 total of $2.061 million or 1.14% of loans.

Core deposits (Demand, Savings, and NOW accounts) grew by $10 million or 7% over
the past twelve months. Total deposits ended the quarter at $243 million, an
increase of $43 million, or 22%, over a year ago. The Bank`s deposit mix
continued to be favorable with 31% checking, 30% savings and 39% certificates of
deposit contributing to a relatively low cost of funds of 1.43%.

The Company's taxable-equivalent net interest margin (taxable-equivalent net
interest and dividend income divided by average earning assets) increased by 8
basis points from 3.49% in the first quarter of 2009 to 3.57% in the second
quarter of 2009. The margin declined by 48 basis points when compared to the
second quarter of 2008.

Total revenues, consisting of net interest and dividend income plus non-interest
income, were $2,559,000 in the second quarter of 2009. Revenues for the second
quarter of 2008 were impacted by non-recurring revenue of $328,000 for Bank
Owned Life Insurance death benefit income. Excluding this item, second quarter
2008 total revenues were $2,366,000. Compared to 2008, second quarter 2009 total
revenues, excluding non-recurring items, increased by $193,000, or 8%. 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 second quarter were $2,175,000, an increase
of $150,000 or 7% over the second quarter of 2008 primarily due to an increase
in FDIC insurance premium and one-time professional fees related to issuing
preferred stock. Salary and benefit expenses increased 1% due to the filling of
open positions. Premises and equipment expenses have declined 5% year to date.

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

Capital Ratios 06/30/09
The Simsbury Bank Regulatory Standard For
& Trust Company Well-Capitalized
Tier 1 Leverage Capital Ratio 7.85% 5.00%
Tier 1 Risk-Based Capital Ratio 12.67% 6.00%
Total Risk-Based Capital Ratio 13.92% 10.00%

"During the past three quarters, we have experienced very strong deposit growth,
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."

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 $260 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)

6/30/2009 12/31/2008 6/30/2008
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 13,011 $ 11,392 $ 18,992
Interest-bearing deposits with Federal Home Loan Bank 55 116 65
Federal funds sold 7,870 1,800 2,000
Money market mutual funds 8,882 3,027 287
Cash and cash equivalents 29,818 16,335 21,344

Interest-bearing time deposits with other bank 5,398 7,320 -
Investments in available-for-sale securities (at fair value) 45,507 32,997 20,241
Federal Home Loan Bank Stock, at cost 631 631 631

Loans outstanding 178,559 180,091 178,079
Less allowance for loan losses 2,132 2,017 2,036
Loans, net 176,427 178,074 176,043

Premises and equipment 747 846 1,083
Accrued interest receivable 921 836 766
Bank owned life insurance 3,759 1,204 1,181
Other assets 2,639 2,513 1,784
Total other assets 8,066 5,399 4,814

TOTAL ASSETS $ 265,847 $ 240,756 $ 223,073

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $ 40,513 $ 38,288 $ 41,707
Savings and NOW deposits 108,505 98,264 97,266
Time deposits 93,898 84,327 60,616
Total deposits 242,916 220,879 199,589

Federal Home Loan Bank advance - 1,000 500
Securities sold under agreements to repurchase 757 577 4,553
Other liabilities 1,096 1,454 899
Total liabilities 244,769 223,910 205,541

Stockholder's equity:
Preferred Stock - Class A 3,781 - -
Preferred Stock - Class B 228 - -
Common stock, no par value; authorized 2,000,000 shares;
issued and outstanding 864,976 shares on 6/30/2009, 12/31/2008 and 6/30/2008 9,358 9,328 9,263
Retained earnings 7,766 7,543 8,812
Accumulated other comprehensive loss (55 ) (25 ) (543 )
Total shareholders' equity 21,078 16,846 17,532

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 265,847 $ 240,756 $ 223,073

SBT BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except for per share amounts)

For the quarter ended Year to Date
6/30/2009 6/30/2008 6/30/2009 6/30/2008
Interest and dividend income
Interest and fees on loans $ 2,399 $ 2,414 $ 4,807 $ 4,808
Investment securities 478 269 900 585
Federal funds sold and overnight deposits 4 44 9 85
Total interest and dividend income 2,881 2,727 5,716 5,478

Interest expense
Deposits 729 696 1,544 1,544
Repurchase agreements 1 22 4 33
Federal Home Loan Bank advances - - 7 2
Total interest expense 730 718 1,555 1,579

Net interest and dividend income 2,151 2,009 4,161 3,899

Provision for loan losses 78 100 130 200

Net interest and dividend income after provision for loan losses 2,073 1,909 4,031 3,699

Noninterest income
Service charges on deposit accounts 134 121 236 234
Gain on sale of available for sale securities - 10 - 10
Other service charges and fees 148 152 268 282

Increase in cash surrender value of life insurance policies 42 14 55 38
BOLI death benefit income - 328 - 328
Gain on loans sold 40 - 43 -
Investment services fees and commissions 17 30 47 46
Other income 27 30 46 44
Total noninterest income 408 685 695 982

Noninterest expense
Salaries and employee benefits 1,022 1,010 2,069 2,041
Premises and equipment 363 368 736 777
Advertising and promotions 99 106 179 170
Forms and supplies 48 45 88 83
Professional fees 162 72 270 100
Directors fees 33 34 66 67
Correspondent charges 73 59 139 112
Postage 24 30 49 58
Other expenses 351 301 618 507
Total noninterest expense 2,175 2,025 4,214 3,915

Income before taxes 306 569 512 766
Income tax provision 85 71 145 141

Net income $ 221 $ 498 $ 367 $ 625

Less: Preferred stock dividend and accretion $ 64 $ - $ 67 $ -

Net income available to common shareholders $ 157 $ 498 $ 300 $ 625

Average shares outstanding, basic 864,976 859,031 864,976 855,029
Net income per share, basic $ 0.18 $ 0.58 $ 0.35 $ 0.73

Average shares outstanding, assuming dilution 864,976 862,729 864,976 860,791
Net income per share, assuming dilution $ 0.18 $ 0.58 $ 0.35 $ 0.73

The Simsbury Bank & Trust Company
Anthony F. Bisceglio, 860-408-5493
EVP & CFO
Fax: 860-408-4679
abisceglio@simsburybank.com

Copyright Business Wire 2009

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