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SBT Bancorp, Inc. Reports Second 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 $1.01 million or $0.74 basic and diluted earnings per
share for the quarter ended June 30, 2018, compared to net income of
$568 thousand or $0.42 basic and diluted earnings per share for the
prior year's second quarter.

Net interest and dividend income increased $304 thousand or 8.3% as
compared to the prior year's second quarter primarily driven by
increased interest and fees on loans. The net interest margin for the
quarter ended June 30, 2018 increased 32 basis points to 3.38% when
compared to the three months ended June 30, 2017. Noninterest income
increased $16 thousand due principally to an increase in service charges
on deposit accounts of $42 thousand. Noninterest expenses for the three
months ended June 30, 2018 were $3.4 million, a decrease of $150
thousand compared to the three months ended June 30, 2017. The decrease
was due primarily to a decrease in salaries and benefits of $80
thousand, occupancy expenses of $39 thousand and other noninterest
expenses of $136 thousand. These were offset by an increase in data
processing of $56 thousand, internet banking costs of $26 thousand, and
professional fees of $22 thousand.

"We are very pleased to report the third consecutive quarter of record
earnings," said Simsbury Bank President & CEO Martin J. Geitz. "The
initiatives we have taken in the past year to increase revenues and
manage expenses continue to result in improved earnings. Our strategic
focus on increasing the Bank's commercial banking activities, with
particular focus on family owned businesses, continues to yield
excellent results."

Key highlights for quarter ended June 30, 2018 compared to quarter ended
June 30, 2017 included:

  • Net income increased $445 thousand, or 78.4%.
  • Total revenue, consisting of net interest and dividend income plus
    noninterest income, increased $320 thousand, or 7.3%.
  • Net interest and dividend income increased 8.3% to $3.9 million.
  • Net interest margin increased 32 basis points to 3.38%. The yield on
    interest earning assets increased 26 basis points to 3.78%.
  • Provision for loan losses totaled $30 thousand, a decrease of $55
    thousand compared to the quarter ended June 30, 2017. The allowance
    for loan losses at June 30, 2018 was 1.05% of total gross loans
    compared to 1.03% at June 30, 2017.
  • Service charges on deposit accounts for the three months ended June
    30, 2018 increased $42 thousand, or 46.2%, compared to the three
    months ended June 30, 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 $5.2 million, or 2.7%, to $193.8
    million compared to June 30, 2017.
  • Total deposits increased $21.3 million, or 5.1%, to $439 million,
    driven by increases in savings and NOW deposits of $19.9 million, and
    demand deposits of $9.5 million, partially offset by a decrease in
    time deposits of $8.3 million.
  • Income tax expenses increased $80 thousand related to higher pre-tax
    earnings.

The Company's allowance for loan losses at June 30, 2018 was 1.05% of
total gross loans compared to 1.03% at June 30, 2017. The Company had
non-accrual loans totaling $0.9 million, or 0.24%, of total loans on
June 30, 2018, compared to non-accrual loans totaling $3.5 million, or
0.81%, of total loans a year ago. Total non-accrual and delinquent loans
on June 30, 2018 was 0.92% of loans outstanding compared to 0.91% on
June 30, 2017.

Total deposits on June 30, 2018 were $439 million, an increase of $21.2
million, or 5.1%, over a year ago. At the period end, 32% of total
deposits were in non-interest bearing demand accounts, 54% were in
low-cost savings, money market and NOW accounts and 14% were in time
deposits.

For the three months ended June 30, 2018, total net revenues, consisting
of net interest and dividend income plus noninterest income, were $4.7
million compared to $4.4 million for the same period in 2017, an
increase of $320 thousand, or 7.3%, above the prior year's second
quarter. Net interest and dividend income increased $304 thousand, or
8.4%, primarily driven by a $197 thousand, or 5.2%, increase in interest
and fees on loans and a $94 thousand increase in interest on federal
funds sold and overnight deposits. The increase was also enhanced by
decreased interest expense on borrowing interest of $138 thousand.
Noninterest income increased by $16 thousand, or 2.1%, primarily due to
an increase in service charges on deposit accounts of $42 thousand
offset by a decrease in other income of $41 thousand.

The Company's taxable-equivalent net interest margin for the three
months ended June 30, 2018 (taxable-equivalent net interest and dividend
income divided by average earning assets) was 3.38% compared to 3.06%
for the comparable 2017 period. The Company's yield on earning assets
increased 26 basis points to 3.78% and the cost of funds decreased 5
basis points to 0.58%, primarily driven by decreased borrowings funds
expense.

For the year-to-date ended June 30, 2018, total net revenues, consisting
of net interest and dividend income plus noninterest income, were $9.2
million compared to $8.6 million for the same period in 2017, an
increase of $605 thousand or 7.1% above the prior year-to-date period.
Net interest and dividend income increased $545 thousand or 7.6%,
primarily driven by a $410 thousand, or 5.5%, increase in interest and
fees on loans. The increase was partially offset by decreased interest
income on securities of $121 thousand and increased interest expense on
deposits of $176 thousand. Noninterest income increased by $60 thousand
or 4.3%, primarily due to an increase in service charges on deposits of
$87 thousand, partially offset by a decrease in mortgage banking
activities, net of $22 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 3.26% compared to 3.03% for the comparable 2017
period. The Company's yield on earning assets increased 22 basis points
to 3.67% and the cost of funds was 0.59% for both the six months ended
June 30, 2018 and June 30, 2017.

Total noninterest expense for the year-to-date 2018 was $6.7 million, a
decrease of $174 thousand, or 2.5% compared to the six months ended June
30, 2017.

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

June 30, 2018

     

Simsbury Bank &
Trust Company

   

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio     8.19%     5.00%
Tier 1 Risk-Based Capital Ratio     11.04%     8.00%
Total Risk-Based Capital Ratio     12.18%     10.00%
Common Equity Tier 1 Risk-Based Capital Ratio     11.04%     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
 

June 30, 2018, December 31, 2017 and June 30, 2017

           
(Dollars in thousands, except for share amounts)
 
6/30/2018 12/31/2017 6/30/2017
(unaudited) (unaudited)

ASSETS

Cash and due from banks 9,870 13,066 11,404
Interest-bearing deposits with Federal Reserve Bank of Boston
and Federal Home Loan Bank 15,258 23,853 19,782
Money Market Mutual Funds 18 388 682
Federal funds sold   531     185     103  
Cash and cash equivalents 25,677 37,492 31,971
 
Certificates of Deposit 1,250 1,250 1,250
 
Investments in available-for-sale securities (at fair value) 45,957 51,656 58,069
Federal Home Loan Bank stock, at cost 903 903 3,663
 
Loans held-for-sale 5,056 2,259 6,473
 
Loans outstanding 395,814 396,413 410,275
Less: Allowance for loan losses   4,167     4,088     3,924  
Loans, net   391,647     392,325     406,351  
 
Premises and equipment, net 1,675 1,863 2,032
Accrued interest receivable 1,274 1,402 1,291
Other real estate owned - 192 -
Bank owned life insurance 9,485 9,370 9,250
Other assets   5,475     5,313     5,379  
Total other assets   17,909     18,140     17,952  
 
 
TOTAL ASSETS $ 488,399   $ 504,025   $ 525,729  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 142,560 $ 143,635 $ 133,044
Savings and NOW deposits 237,170 247,251 217,216
Time deposits   59,686     66,514     67,992  
Total deposits 439,416 457,400 418,252
 
Securities sold under agreements to repurchase 2,861 2,449 2,651
Federal Home Loan Bank advances 3,747 2,318 64,318
Long-term subordinated debt 7,295 7,281 7,266
Other liabilities   2,106     2,358     1,869  
Total liabilities   455,425     471,806     494,356  
 
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
June 30, 2018; 1,373,532 shares and 1,373,118 shares,
respectively, at
December 31, 2017, and 1,373,176 shares and 1,372,762 shares,
respectively, at June 30, 2017
19,435 19,442 19,156
Retained earnings 15,188 13,648 12,708
Treasury stock, 414 shares (7 ) (7 ) (7 )
Unearned compensation- restricted stock awards (327 ) (420 ) (225 )
Accumulated other comprehensive loss   (1,315 )   (444 )   (259 )
Total stockholders' equity   32,974     32,219     31,373  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 488,399   $ 504,025   $ 525,729  
 
 
SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
                 
(Dollars in thousands, except for share and per share amounts)
 
For the quarter ended For the six months ended
6/30/2018 6/30/2017 6/30/2018 6/30/2017
 
Interest and dividend income:
Interest and fees on loans $ 4,011 $ 3,814 $ 7,882 $ 7,472
Investment securities 275 343 560 681
Federal funds sold and overnight deposits   123     29     284     58  
Total interest and dividend income   4,409     4,186     8,726     8,211  
 
Interest expense:
Deposits 330 273 714 538
Repurchase agreements 2 2 4 3
Long-term subordinated debt 135 135 269 269
Federal Home Loan Bank advances   1     139     1     208  
Total interest expense   468     549     988     1,018  
 
Net interest and dividend income 3,941 3,637 7,738 7,193
 
Provision for loan losses   30     85     55     335  
 
Net interest and dividend income after
provision for loan losses   3,911     3,552     7,683     6,858  
 
Noninterest income:
Service charges on deposit accounts 133 91 270 183
(Loss) gain on available-for-sale securities (1 ) (1 ) (2 ) (2 )
Other service charges and fees 190 172 373 361
Increase in cash surrender value
of life insurance policies 57 59 114 120
Mortgage banking activities, net 291 302 522 544
Investment services fees and commissions 55 45 84 74
Other income   41     82     84     105  
Total noninterest income   766     750     1,445     1,385  
 
Noninterest expense:
Salaries and employee benefits 1,667 1,747 3,352 3,440
Occupancy expense 323 362 673 745
Equipment expense 129 121 265 230
Advertising and promotions 207 204 394 305
Forms and supplies 24 30 54 56
Professional fees 220 198 402 398
Directors' fees 76 52 146 111
Correspondent charges 78 82 153 148
FDIC Assessment 83 107 176 218
Data Processing Fees 281 225 473 454
Internet banking costs 73 47 120 91
Other expenses   255     391     517     703  
Total noninterest expense   3,416     3,566     6,725     6,899  
 
Income before income taxes 1,261 736 2,403 1,344
Income tax provision   248     168     455     274  
 
Net income $ 1,013   $ 568   $ 1,948   $ 1,070  
 
Net income available to common stockholders $ 1,013   $ 568   $ 1,948   $ 1,070  
 
Average shares outstanding, basic 1,365,898 1,359,033 1,364,856 1,358,590
Earnings per common share, basic $ 0.74   $ 0.42   $ 1.43   $ 0.79  
 
Average shares outstanding, assuming dilution 1,372,127 1,362,532 1,369,449 1,361,701
Earnings per common share, assuming dilution $ 0.74   $ 0.42   $ 1.42   $ 0.79  
 

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