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SBT Bancorp, Inc. Reports Third Quarter 2017 Results

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SBT Bancorp, Inc. (the "Company"), (OTCQX:SBTB), holding company for
The Simsbury Bank & Trust Company, Inc. (the "Bank"), today announced
net income of $602 thousand or $0.44 basic and $0.44 diluted earnings
per share for the quarter ended September 30, 2017, compared to net
income of $431 thousand or $0.32 basic and $0.32 diluted earnings per
share for the prior year's third quarter.

Net interest and dividend income increased $438 thousand, or 13.0%, as
compared to the prior year's third quarter primarily due to growth in
the Bank's commercial loan portfolio. Noninterest income decreased $296
thousand due principally to a decrease in mortgage banking activities
income of $204 thousand. Noninterest expenses for the three months ended
September 30, 2017 were $3.6 million, a decrease of 2.8% from the prior
year's third quarter.

"We are very pleased to report improved earnings for the third quarter
of 2017 resulting principally from increased commercial loan interest
and strong expense management," said Simsbury Bank President & CEO
Martin J. Geitz. "Our net income for the quarter ended September 30,
2017 increased over 39% ($171 thousand) compared to the prior year
period ended September 30, 2016. Deposit balances for period ended
September 30, 2017 increased 8.1% ($35 million) compared to the period
ended September 30, 2016. Most of this growth can be attributed to the
success of our new West Hartford branch opened in the second quarter of
2016."

Key highlights for quarter ended September 30, 2017 compared to quarter
ended September 30, 2016 included:

  • Net income increased $171 thousand, or 39.7%.
  • Total revenue, consisting of net interest and dividend income plus
    noninterest income, increased $142 thousand, or 3.1%.
  • Net interest and dividend income increased 13.0% to $3.8 million.
  • Provision for loan losses totaled $235 thousand, a decrease of $70
    thousand compared to the quarter ended September 30, 2016. The
    allowance for loan losses at September 30, 2017 was 1.01% of total
    gross loans.
  • Net loans grew $6.2 million, or 1.6%.
  • Commercial loan balances increased $31.8 million, or 20.4%, to $187.4
    million compared to September 30, 2016.
  • Total deposits increased $35.0 million, or 8.1%, to $468 million,
    driven by increases in savings and NOW deposits of $31.8 million, and
    time deposits of $4.0 million.

The Company's allowance for loan losses at September 30, 2017 was 1.01%
of total gross loans. The Company had non-accrual loans totaling $1.6
million, or 0.40%, of total loans on September 30, 2017, compared to
non-accrual loans totaling $3.1 million, or 0.77%, of total loans a year
ago. Total non-accrual and delinquent loans on September 30, 2017 was
0.48% of loans outstanding compared to 0.90% on September 30, 2016.

Total deposits on September 30, 2017 were $468 million, an increase of
$35.0 million, or 8.1%, over a year ago. At quarter end, 27% of total
deposits were in non-interest bearing demand accounts, 58% were in
low-cost savings, money market and NOW accounts and 15% were in time
deposits.

For the quarter ended September 30, 2017, total net revenues, consisting
of net interest and dividend income plus noninterest income, were $4.7
million compared to $4.6 million for the same period in 2016, an
increase of $142 thousand, or 3.1%, above the prior year's third
quarter. Net interest and dividend income increased $438 thousand, or
13.0%, primarily driven by a $516 thousand, or 15%, increase in interest
and fees on loans. The increase was partially offset by decreased
interest income on securities of $29 thousand. Noninterest income
decreased by $296 thousand, or 24.9%, primarily due to a decrease in
income from mortgage banking activities of $204 thousand and a decrease
in other service charges and fees of $78 thousand.

For the year-to-date ended September 30, 2017, total net revenues,
consisting of net interest and dividend income plus noninterest income,
were $13.3 million compared to $12.2 million for the same period in
2016, an increase of $1.1 million, or 8.8%, above the prior year-to-date
period. Net interest and dividend income increased $1.1 million, or
11.5%, primarily driven by a $1.6 million, or 16.4%, increase in
interest and fees on loans. The increase was partially offset by
decreased interest income on securities of $119 thousand and increased
interest expense of $488 thousand. Noninterest income decreased by $52
thousand, or 2.2%, primarily due to a decrease in other service charges
and fees of $97 thousand, and a decrease in gain on sale of
available-for-sale securities, net of writedowns, of $95 thousand.

The Company's year-to-date 2017 taxable-equivalent net interest margin
(taxable-equivalent net interest and dividend income divided by average
earning assets) was 3.03% compared to 2.98% for the comparable 2016
period. The Company's yield on earning assets increased 15 basis points
to 3.47% and the cost of funds increased 13 basis points to 0.61%,
primarily driven by the subordinated debt interest and increased FHLB
borrowings interest.

Total noninterest expense for the third quarter 2017 was $3.6 million, a
decrease of $104 thousand compared to the third quarter of 2016. Total
noninterest expense for the year-to-date ended September 30, 2017 was
$10.5 million, a decrease of $95 thousand compared to the 2016
year-to-date period.

Capital levels for The Simsbury Bank & Trust Company on September 30,
2017 remain above the regulatory "well-capitalized" designation. Capital
ratios are calculated under Basel III rules.

 
Capital Ratios

September 30, 2017 (estimated)

     

Simsbury Bank &
Trust Company

 

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio     7.18%   5.00%
Tier 1 Risk-Based Capital Ratio     10.61%   8.00%
Total Risk-Based Capital Ratio     11.74%   10.00%
Common Equity Tier 1 Risk-Based Capital Ratio     10.61%   6.50%
     

Simsbury Bank is an independent, community bank for consumers and
businesses based in Connecticut. Simsbury Bank Home Loans is a division
of Simsbury Bank serving the home financing needs of consumers
throughout Southern New England. Simsbury Bank is wholly-owned by
publicly traded SBT Bancorp, Inc. Its stock is traded on the OTCQX
marketplace under the ticker symbol of 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. and Subsidiary
Consolidated Balance Sheets
September 30, 2017, December 31, 2016 and September 30, 2016
 
(Dollars in thousands, except for share amounts)
   
  9/30/2017     12/31/2016     9/30/2016  
(unaudited) (unaudited)

ASSETS

Cash and due from banks $ 8,209 $ 10,976 $ 12,994
Interest-bearing deposits with Federal Reserve Bank

and Federal Home Loan Bank

27,119 9,786 6,418
Money market mutual funds 24 95 45
Federal funds sold   150     150     100  
Cash and cash equivalents 35,502 21,007 19,557
 
Certificates of deposit 1,250 1,250 1,500
 
Investments in available-for-sale securities at fair value 54,647 58,728 63,611
Federal Home Loan Bank stock, at cost 861 2,896 1,977
 
Loans held-for-sale 4,289 2,801 8,238
 
Loans outstanding 402,893 409,164 396,280
Less allowance for loan losses   4,077     3,753     3,631  
Loans, net   398,816     405,411     392,649  
 
Premises and equipment, net 1,948 1,905 1,988
Accrued interest receivable 1,272 1,301 1,232
Bank owned life insurance 9,310 9,130 9,066
Other assets   6,355     5,570     5,120  
Total other assets   18,885     17,906     17,406  
 
 
TOTAL ASSETS $ 514,250   $ 509,999   $ 504,938  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 127,156 $ 134,341 $ 128,000
Savings and NOW deposits 271,384 212,835 239,557
Time deposits   69,088     66,588     65,108  
Total deposits 467,628 413,764 432,665
 
Securities sold under agreements to repurchase 2,862 2,694 3,193
Federal Home Loan Bank advances 2,318 54,058 29,000
Long-term subordinated debt 7,274 7,252 7,245
Other liabilities   2,292     1,944     1,854  
Total liabilities   482,374     479,712     473,957  
 
Stockholders' equity:
Common stock, no par value; authorized 2,000,000 shares;
issued and outstanding 1,373,532 shares and 1,373,118 shares,
respectively, at
September 30, 2017; 1,372,394 shares and 1,371,980 shares,
respectively, at
December 31, 2016, and 1,361,135 shares and 1,360,721 shares,
respectively, at September 30, 2016
19,168 19,133 18,887
Retained earnings 13,106 12,017 11,609
Treasury stock, 414 shares (7 ) (7 ) (7 )
Unearned compensation- restricted stock awards (192 ) (293 ) (95 )
Accumulated other comprehensive (loss) income   (199 )   (563 )   587  
Total stockholders' equity   31,876     30,287     30,981  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 514,250   $ 509,999   $ 504,938  
 

SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
 
(Dollars in thousands, except for share and per share amounts)
           
For the three months ended For the nine months ended
  9/30/2017     9/30/2016   9/30/2017     9/30/2016
 
Interest and dividend income:
Interest and fees on loans $ 3,949 $ 3,433 $ 11,421 $ 9,814
Investment securities 330 359 1,011 1,130
Federal funds sold and overnight deposits   137     26   196     65
Total interest and dividend income   4,416     3,818   12,628     11,009
 
Interest expense:
Deposits 415 271 954 619
Repurchase agreements 2 2 5 5
Long-term subordinated debt 137 137 406 379
Federal Home Loan Bank advances   52     36   260     134
Total interest expense   606     446   1,625     1,137
 
Net interest and dividend income 3,810 3,372 11,003 9,872
 
Provision for loan losses   235     305   570     606
 
Net interest and dividend income after
provision for loan losses   3,575     3,067   10,433     9,266
 
Noninterest income:
Service charges on deposit accounts 86 98 269 278
(Loss) gain on available-for-sale securities, net of writedowns (1 ) 23 (2 ) 93
Other service charges and fees 215 293 636 733
Increase in cash surrender value
of life insurance policies 60 64 180 177
Mortgage banking activities 444 648 982 898
Investment services fees and commissions 69 53 143 133
Other income   21     11   93     41
Total noninterest income   894     1,190   2,301     2,353
 
Noninterest expense:
Salaries and employee benefits 1,823 1,949 5,263 5,700
Occupancy expense 322 387 1,067 1,147
Equipment expense 145 111 375 317
Advertising and promotions 148 213 453 508
Forms and supplies 27 86 84 160
Professional fees 166 142 564 345
Directors' fees 57 53 168 160
Correspondent charges 74 83 223 228
FDIC assessment 107 70 325 223
Data processing fees 244 219 698 628
Internet banking costs 71 75 161 221
Other expenses   438     338   1,162     1,001
Total noninterest expense   3,622     3,726   10,543     10,638
 
Income before income taxes 847 531 2,191 981
Income tax provision   245     100   519     93
 
Net income $ 602   $ 431 $ 1,672   $ 888
 
Net income available to common stockholders $ 602   $ 431 $ 1,672   $ 888
 
Weighted average shares outstanding, basic 1,359,549 1,352,263 1,358,913 1,350,725
Earnings per common share, basic $ 0.44   $ 0.32 $ 1.23   $ 0.66
 
Weighted average shares outstanding, assuming dilution 1,364,293 1,354,362 1,362,349 1,352,887
Earnings per common share, assuming dilution $ 0.44   $ 0.32 $ 1.23   $ 0.66

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