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SBT Bancorp, Inc. Reports First Quarter 2018 Results

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SBT Bancorp, Inc. (the "Company"), (OTC:SBTB), holding company for
The Simsbury Bank & Trust Company, Inc. (the "Bank"), today announced
net income of $934 thousand or $0.69 basic and $0.68 diluted earnings
per share for the quarter ended March 31, 2018, compared to net income
of $502 thousand or $0.37 basic and diluted earnings per share for the
prior year's first quarter.

"Last year, Simsbury Bank identified and began the implementation of a
range of initiatives to increase revenues and manage expenses," said
Simsbury Bank President & CEO Martin J. Geitz. "We are very pleased that
these initiatives have led to a second consecutive quarter of
significantly improved earnings. Our strategic focus on increasing the
Bank's commercial banking activities, with particular focus on family
owned businesses, continues to progress."

Total revenue increased $284 thousand, or 6.8%, in the three months
ended March 31, 2018 as compared to the three months ended March 31,
2017, primarily due to higher rates in the Bank's loan portfolio. Year
over year, noninterest expenses decreased $24 thousand due principally
to a decrease in data processing fees of $37 thousand, occupancy
expenses of $33 thousand and other noninterest expenses of $50 thousand.
These were offset by an increase in advertising and promotions of $86
thousand and equipment expenses of $27 thousand. Deposit balances for
the period ended March 31, 2018 increased 9.3% ($40 million) from the
prior year end of March 31, 2017.

Key highlights for quarter ended March 31, 2018 compared to quarter
ended March 31, 2017 included:

  • Net income increased $432 thousand, or 86.1%.
  • Total revenue, consisting of net interest and dividend income plus
    noninterest income, increased $284 thousand, or 6.8%.
  • Net interest and dividend income increased 6.8% to $3.8 million.
  • Provision for loan losses totaled $25 thousand, a decrease of $200
    thousand compared to the quarter ended March 31, 2017. The allowance
    for loan losses at March 31, 2018 was 1.04% of total gross loans
    compared to 0.95% at March 31, 2017.
  • Service charges on deposit accounts for the three months ended March
    31, 2018 increased $45 thousand, or 48.9%, compared to the three
    months ended March 31, 2017, primarily driven by increases in
    overdraft fees related to the implementation of an overdraft privilege
    program in the fourth quarter of 2017.
  • Commercial loan balances increased $1.3 million, or 0.7%, to $189.1
    million compared to March 31, 2017.
  • Total deposits increased $39.6 million, or 9.3%, to $467 million,
    driven by increases in savings and NOW deposits of $40.0 million, and
    demand deposits of $6.0 million, partially offset by a decrease in
    time deposits of $6.4 million.
  • Income tax expenses increased $101 thousand related to higher pre-tax
    earnings.

The Company's allowance for loan losses at March 31, 2018 was 1.04% of
total gross loans compared to 0.95% at March 31, 2017. The Company had
non-accrual loans totaling $1.4 million, or 0.35%, of total loans on
March 31, 2018, compared to non-accrual loans totaling $3.5 million, or
0.87%, of total loans a year ago. Total non-accrual and delinquent loans
on March 31, 2018 was 1.17% of loans outstanding compared to 0.99% on
March 31, 2017.

Total deposits on March 31, 2018 were $467 million, an increase of $39.6
million, or 9.3%, over a year ago. At the period end, 29% of total
deposits were in non-interest bearing demand accounts, 58% were in
low-cost savings, money market and NOW accounts and 13% were in time
deposits.

For the three months ended March 31, 2018, total net revenues,
consisting of net interest and dividend income plus noninterest income,
were $4.8 million compared to $4.2 million for the same period in 2017,
an increase of $284 thousand, or 6.8%, above the prior year's first
quarter. Net interest and dividend income increased $110 thousand, or
4.1%, primarily driven by a $214 thousand, or 5.9%, increase in interest
and fees on loans and a $130 thousand increase in interest on federal
funds sold and overnight deposits. The increase was partially offset by
increased interest expense on deposits of $119 thousand. Noninterest
income increased by $44 thousand, or 6.9%, primarily due to an increase
in service charges on deposit accounts of $45 thousand and an increase
in other income of $20 thousand.

The Company's year-to-date 2018 taxable-equivalent net interest margin
(taxable-equivalent net interest and dividend income divided by average
earning assets) was 3.14% compared to 2.99% for the comparable 2017
period. The Company's yield on earning assets increased 18 basis points
to 3.56% and the cost of funds increased 5 basis points to 0.60%,
primarily driven by a 10 basis point increase in deposit interest
expense.

Total noninterest expense for the first quarter 2018 was $3.3 million, a
decrease of $24 thousand compared to the first quarter of 2017 primarily
driven by decreases in data processing expenses and occupancy expenses.

Capital levels for The Simsbury Bank & Trust Company on March 31, 2018
remain above the regulatory "well-capitalized" designation. Capital
ratios are calculated under Basel III rules.

 
Capital Ratios

March 31, 2018

        Simsbury Bank & Trust Company       Regulatory Standard For Well-Capitalized
Tier 1 Leverage Capital Ratio       7.76%       5.00%
Tier 1 Risk-Based Capital Ratio       11.16%       8.00%
Total Risk-Based Capital Ratio       12.31%       10.00%
Common Equity Tier 1 Risk-Based Capital Ratio       11.16%       6.50%

Simsbury Bank is a Central Connecticut based independent, community bank
for businesses and consumers. Simsbury Bank Home Loans is a division of
Simsbury Bank serving the home financing needs of consumers. The Bank's
wholly-owned subsidiary, SBT Investment Services, Inc., offers
securities and insurance products through LPL Financial and its
affiliates, Member FINRA/SIPC. Simsbury Bank is wholly-owned by publicly
traded SBT Bancorp, Inc., whose stock is traded on the OTC Pink
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
March 31, 2018, December 31, 2017 and March 31, 2017
 
(Dollars in thousands, except for share amounts)
                 
3/31/2018 12/31/2017 3/31/2017
(unaudited) (unaudited)

ASSETS

Cash and due from banks 12,816 13,066 8,251

Interest-bearing deposits with Federal Reserve Bank of Boston
and Federal Home Loan Bank

42,056 23,853 11,586
Money Market Mutual Funds 44 388 634
Federal funds sold   500     185     157  
Cash and cash equivalents 55,416 37,492 20,628
 
Certificates of Deposit 1,250 1,250 1,250
 
Investments in available-for-sale securities (at fair value) 47,730 51,656 59,665
Federal Home Loan Bank stock, at cost 903 903 2,187
 
Loans held-for-sale 1,211 2,259 747
 
Loans outstanding 393,354 396,413 407,095
Less: Allowance for loan losses   4,099     4,088     3,869  
Loans, net   389,255     392,325     403,226  
 
Premises and equipment, net 1,782 1,863 1,841
Accrued interest receivable 1,221 1,402 1,222
Other real estate owned 192 192 570
Bank owned life insurance 9,428 9,370 9,191
Other assets   5,528     5,313     5,208  
Total other assets   18,151     18,140     18,032  
 
 
TOTAL ASSETS $ 513,916   $ 504,025   $ 505,735  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 136,988 $ 143,635 $ 130,982
Savings and NOW deposits 268,493 247,251 228,491
Time deposits   61,119     66,514     67,568  
Total deposits 466,600 457,400 427,041
 
Securities sold under agreements to repurchase 3,120 2,449 2,425
Federal Home Loan Bank advances 2,318 2,318 36,318
Long-term subordinated debt 7,288 7,281 7,259
Other liabilities   2,345     2,358     1,924  
Total liabilities   481,671     471,806     474,967  
 
Stockholders' equity:
Common stock, no par value; authorized 2,000,000 shares;
issued and outstanding, 1,381,840 shares and 1,381,426 shares,
respectively, at
March 31, 2018; 1,373,532 shares and 1,373,118 shares,
respectively, at
December 31, 2017, and 1,372,823 shares and 1,372,409 shares,
respectively, at March 31, 2017
19,434 19,442 19,146
Retained earnings 14,380 13,648 12,330
Treasury stock, 414 shares (7 ) (7 ) (7 )
Unearned compensation- restricted stock awards (369 ) (420 ) (258 )
Accumulated other comprehensive loss   (1,193 )   (444 )   (443 )
Total stockholders' equity   32,245     32,219     30,768  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 513,916   $ 504,025   $ 505,735  
 
 
SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
             
(Dollars in thousands, except for share and per share amounts)
 
For the quarter ended
3/31/2018 3/31/2017
 
Interest and dividend income:
Interest and fees on loans $ 3,872 $ 3,658
Investment securities 284 338
Federal funds sold and overnight deposits   160     30  
Total interest and dividend income   4,316     4,026  
 
Interest expense:
Deposits 384 265
Repurchase agreements 2 2
Long-term subordinated debt 134 134
Federal Home Loan Bank advances   -     69  
Total interest expense   520     470  
 
Net interest and dividend income 3,796 3,556
 
Provision for loan losses   25     250  
 
Net interest and dividend income after
provision for loan losses   3,771     3,306  
 
Noninterest income:
Service charges on deposit accounts 137 92
(Loss) gain on available-for-sale securities (1 ) (1 )
Other service charges and fees 183 189
Increase in cash surrender value of life insurance policies
58 61
Mortgage banking activities, net 230 242
Investment services fees and commissions 29 29
Other income   43     23  
Total noninterest income   679     635  
 
Noninterest expense:
Salaries and employee benefits 1,685 1,693
Occupancy expense 350 383
Equipment expense 136 109
Advertising and promotions 187 101
Forms and supplies 30 26
Professional fees 182 200
Directors' fees 70 58
Correspondent charges 74 66
FDIC Assessment 93 111
Data Processing Fees 192 229
Internet banking costs 47 44
Other expenses   263     313  
Total noninterest expense   3,309     3,333  
 
Income before income taxes 1,141 608
Income tax provision   207     106  
 
Net income $ 934   $ 502  
 
Net income available to common stockholders $ 934   $ 502  
 
Average shares outstanding, basic 1,363,802 1,358,142
Earnings per common share, basic $ 0.69   $ 0.37  
 
Average shares outstanding, assuming dilution 1,366,589 1,360,776
Earnings per common share, assuming dilution $ 0.68   $ 0.37  

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