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Press Release

SBT Bancorp, Inc. Reports Third Quarter 2018 Results

Company Release - 10/18/2018 9:07 AM ET

SIMSBURY, Conn.--(BUSINESS WIRE)-- SBT Bancorp, Inc. (the “Company”), (OTC Pink: SBTB), holding company for The Simsbury Bank & Trust Company, Inc. (the “Bank”), today announced net income of $1.04 million or $0.76 basic and diluted earnings per share for the quarter ended September 30, 2018, compared to net income of $602 thousand or $0.44 basic and diluted earnings per share for the prior year’s third quarter.

Net interest and dividend income increased $207 thousand or 5.4% as compared to the prior year’s third quarter primarily driven by increased interest and fees on loans. The net interest margin for the quarter ended September 30, 2018 increased 13 basis points to 3.17% when compared to the three months ended September 30, 2017. Noninterest income increased $168 thousand due principally to an increase in other income of $106 thousand and service charges on deposit accounts of $56 thousand. Noninterest expenses for the three months ended September 30, 2018 were $3.6 million, a decrease of $11 thousand compared to the three months ended September 30, 2017. The decrease was due primarily to a decrease in FDIC expense of $37 thousand, salaries and benefits of $13 thousand, equipment expenses of $22 thousand and other noninterest expenses of $76 thousand. These were offset by an increase in professional fees of $80 thousand, advertising and promotions of $37 thousand and occupancy and expense of $18 thousand.

“We are very pleased to report the fourth 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 September 30, 2018 compared to quarter ended September 30, 2017 included:

  • Net income increased $441 thousand, or 73.3%.
  • Total revenue, consisting of net interest and dividend income plus noninterest income, increased $375 thousand, or 7.9%.
  • Net interest and dividend income increased 5.4% to $4.0 million.
  • Net interest margin increased 13 basis points to 3.17%. The yield on interest earning assets increased 17 basis points to 3.69%.
  • Provision for loan losses totaled $150 thousand, a decrease of $85 thousand compared to the quarter ended September 30, 2017. The allowance for loan losses at September 30, 2018 was 1.10% of total gross loans compared to 1.01% at September 30, 2017.
  • Service charges on deposit accounts for the three months ended September 30, 2018 increased $56 thousand, or 65.1%, compared to the three months ended September 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 $5.4 million, or 2.9%, to $192.9 million compared to September 30, 2017.
  • Total deposits increased $15.6 million, or 3.3%, to $483 million, driven by increases in demand deposits of $7.5 million and time deposits of $7.5 million.
  • Income tax expenses increased $30 thousand related to higher pre-tax earnings.

The Company’s allowance for loan losses at September 30, 2018 was 1.10% of total gross loans compared to 1.01% at September 30, 2017. The Company had non-accrual loans totaling $2.2 million, or 0.57%, of total loans on September 30, 2018, compared to non-accrual loans totaling $1.6 million, or 0.40%, of total loans a year ago. Total non-accrual and delinquent loans on September 30, 2018 was 1.50% of loans outstanding compared to 0.48% on September 30, 2017.

Total deposits on September 30, 2018 were $483 million, an increase of $15.6 million, or 3.3%, over a year ago. At the period end, 28% of total deposits were in non-interest bearing demand accounts, 56% were in low-cost savings, money market and NOW accounts and 16% were in time deposits.

For the three months ended September 30, 2018, total net revenues, consisting of net interest and dividend income plus noninterest income, were $5.1 million compared to $4.7 million for the same period in 2017, an increase of $375 thousand, or 7.9%, above the prior year’s third quarter. Net interest and dividend income increased $207 thousand, or 5.4%, primarily driven by a $133 thousand, or 3.4%, increase in interest and fees on loans and a $192 thousand increase in interest on federal funds sold and overnight deposits. The increase was also partially offset by an interest expense on deposits of $102 thousand. Noninterest income increased by $168 thousand, or 18.3%, primarily due to an increase in service charges on deposit accounts of $56 thousand and an increase in other income of $106 thousand.

The Company’s taxable-equivalent net interest margin for the three months ended September 30, 2018 (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.17% compared to 3.04% for the comparable 2017 period. The Company’s yield on earning assets increased 17 basis points to 3.69% and the cost of funds increased 7 basis points to 0.73%, primarily driven by increased interest expense on deposits.

For the year-to-date ended September 30, 2018, total net revenues, consisting of net interest and dividend income plus noninterest income, were $14.3 million compared to $13.3 million for the same period in 2017, an increase of $1.0 million or 7.4% above the prior year-to-date period. Net interest and dividend income increased $770 thousand or 6.1%, primarily driven by a $543 thousand, or 4.8%, increase in interest and fees on loans. The increase was partially offset by decreased interest income on securities of $190 thousand and increased interest expense on deposits of $277 thousand. Noninterest income increased by $228 thousand or 9.9%, primarily due to an increase in service charges on deposits of $143 thousand, partially offset by a decrease in investment services activities of $16 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 3.30% compared to 3.03% for the comparable 2017 period. The Company’s yield on earning assets increased 29 basis points to 3.76% and the cost of funds was 0.65% for the nine months ended September 30, 2018 and 0.61% ended September 30, 2017.

Total noninterest expense for the year-to-date 2018 was $10.4 million, a decrease of $184 thousand, or 1.8% compared to the nine months ended September 30, 2017.

Capital levels for The Simsbury Bank & Trust Company on September 30, 2018 remain above the regulatory “well-capitalized” designation. Capital ratios are calculated under Basel III rules.

 

Capital Ratios

September 30, 2018 (estimated)

     

Simsbury Bank &
Trust Company

   

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio     7.72%     5.00%
Tier 1 Risk-Based Capital Ratio     11.47%     8.00%
Total Risk-Based Capital Ratio     12.67%     10.00%
Common Equity Tier 1 Risk-Based Capital Ratio     11.47%     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
September 30, 2018, December 31, 2017 and September 30, 2017
     
(Dollars in thousands, except for share amounts)
 
  9/30/2018     12/31/2017     9/30/2017  
(unaudited) (unaudited)

ASSETS

Cash and due from banks 8,429 13,066 8,209

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

70,835 23,853 27,119
Money Market Mutual Funds 48 388 24
Federal funds sold   5     185     150  
Cash and cash equivalents 79,317 37,492 35,502
 
Interest-bearing time deposits with other bank - - -
Certificates of Deposit 1,250 1,250 1,250
 
Investments in available-for-sale securities (at fair value) 42,709 51,656 54,647
Federal Home Loan Bank stock, at cost 903 903 861
 
Loans held-for-sale 904 2,259 4,289
 
Loans outstanding 393,729 396,413 402,893
Less: Allowance for loan losses   4,315     4,088     4,077  
Loans, net   389,414     392,325     398,816  
 
Premises and equipment, net 1,595 1,863 1,948
Accrued interest receivable 1,267 1,402 1,272
Other real estate owned - 192 -
Bank owned life insurance 9,543 9,370 9,310
Other assets   5,218     5,313     6,355  
Total other assets   17,623     18,140     18,885  
 
 
TOTAL ASSETS $ 532,120   $ 504,025   $ 514,250  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 134,638 $ 143,635 $ 127,156
Savings and NOW deposits 271,972 247,251 271,384
Time deposits   76,569     66,514     69,088  
Total deposits 483,179 457,400 467,628
 
Federal Home Loan Bank advance
Securities sold under agreements to repurchase 1,906 2,449 2,862
Federal Home Loan Bank advances 3,748 2,318 2,318
Long-term subordinated debt 7,302 7,281 7,274
Other liabilities   2,338     2,358     2,292  
Total liabilities   498,473     471,806     482,374  
 
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 September 30, 2018; 1,373,532 shares and 1,373,118 shares, respectively, at December 31, 2017, and 1,373,532 shares and 1,373,118 shares, respectively, at September 30, 2017

19,437 19,442 19,168
Retained earnings 16,027 13,648 13,106
Treasury stock, 414 shares (7 ) (7 ) (7 )
Unearned compensation- restricted stock awards (286 ) (420 ) (192 )
Accumulated other comprehensive loss   (1,524 )   (444 )   (199 )
Total stockholders' equity   33,647     32,219     31,876  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 532,120   $ 504,025   $ 514,250  
 
 
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 nine months ended
  9/30/2018     9/30/2017     9/30/2018     9/30/2017  
 
Interest and dividend income:
Interest and fees on loans $ 4,082 $ 3,949 $ 11,964 $ 11,421
Investment securities 261 330 821 1,011
Federal funds sold and overnight deposits   329     137     613     196  
Total interest and dividend income   4,672     4,416     13,398     12,628  
 
Interest expense:
Deposits 517 415 1,231 954
Repurchase agreements 2 2 6 5
Long-term subordinated debt 136 137 405 406
Federal Home Loan Bank advances   -     52     1     260  
Total interest expense   655     606     1,643     1,625  
 
Net interest and dividend income 4,017 3,810 11,755 11,003
 
Provision for loan losses   150     235     205     570  
 

Net interest and dividend income after provision for loan losses

  3,867     3,575     11,550     10,433  
 
Noninterest income:
Service charges on deposit accounts 142 86 412 269
(Loss) gain on available-for-sale securities (2 ) (1 ) (4 ) (2 )
Other service charges and fees 170 185 543 546

Increase in cash surrender value of life insurance policies

58 60 174 180
Mortgage banking activities, net 521 471 1,042 1,015
Investment services fees and commissions 43 69 127 143
Other income   152     46     235     150  
Total noninterest income   1,084     916     2,529     2,301  
 
Noninterest expense:
Salaries and employee benefits 1,810 1,823 5,162 5,263
Occupancy expense 340 322 1,012 1,067
Equipment expense 123 145 388 375
Advertising and promotions 185 148 579 453
Forms and supplies 33 27 87 84
Professional fees 246 166 648 564
Directors' fees 79 57 225 168
Correspondent charges 74 74 227 222
FDIC Assessment 70 107 246 325
Data Processing Fees 238 244 711 698
Internet banking costs 51 71 171 161
Other expenses   384     460     903     1,163  
Total noninterest expense   3,633     3,644     10,359     10,543  
 
Income before income taxes 1,318 847 3,720 2,191
Income tax provision   275     245     729     519  
 
Net income $ 1,043   $ 602   $ 2,991   $ 1,672  
 
Net income available to common stockholders $ 1,043   $ 602   $ 2,991   $ 1,672  
 
Average shares outstanding, basic 1,365,635 1,359,033 1,365,207 1,358,950
Earnings per common share, basic $ 0.76   $ 0.44   $ 2.19   $ 1.23  
 
Average shares outstanding, assuming dilution 1,376,971 1,362,532 1,371,706 1,361,701
Earnings per common share, assuming dilution $ 0.76   $ 0.44   $ 2.18   $ 1.23  

Simsbury Bank
Richard J. Sudol, 860-651-2057
SVP & CFO
860-408-4679 (fax)
rsudol@simsburybank.com

Source: SBT Bancorp, Inc.

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