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Press Release

SBT Bancorp, Inc. Reports First Quarter 2019 Results

Company Release - 4/26/2019 9:47 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 $907 thousand or $0.66 basic and $0.65 diluted earnings per share for the quarter ended March 31, 2019, compared to net income of $934 thousand or $0.69 basic and $0.68 diluted earnings per share for the prior year’s first quarter. Total revenue increased $257 thousand, or 5.7%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, primarily due to higher rates in the Bank’s loan portfolio.

On March 21, 2019, Liberty Bank, headquartered in Middletown, CT and the Company jointly announced that they had entered into a definitive agreement for the merger of the Company and the Bank, with and into Liberty Bank. The transaction is subject to approval by the shareholders of the Company, as well as customary regulatory approvals, including the State of Connecticut Department of Banking and the Federal Deposit Insurance Corporation. The transaction is expected to close in October of 2019.

“We are very pleased to report another quarter of improved revenue growth. We are also pleased that our earnings before one-time expenses related to our pending merger with Liberty Bank of $1,142 thousand were 22% higher than 2018’s first quarter earnings. We and our Liberty Bank colleagues are working closely to ensure a seamless merger integration for our many customers early in the fourth quarter of 2019.”

Year over year, noninterest expenses increased $79 thousand due principally to increases in data processing expenses of $78 thousand, and salaries and employee benefits of $64 thousand. These were partially offset by a decrease in advertising and promotions of $17 thousand, equipment expenses of $23 thousand and forms and supplies of $13 thousand. Deposit balances for the period ended March 31, 2019 decreased $15.3 million or 3.3% from the prior year end of March 31, 2018.

Key highlights for quarter ended March 31, 2019 compared to quarter ended March 31, 2018 included:

  • Total revenue, consisting of net interest and dividend income plus noninterest income, increased $257 thousand, or 5.7%.
  • Net interest and dividend income increased 7.5% to $4.6 million.
  • Provision for loan losses totaled $10 thousand, a decrease of $15 thousand compared to the quarter ended March 31, 2018. The allowance for loan losses at March 31, 2019 was 0.97% of total gross loans compared to 1.04% at March 31, 2018.
  • Service charges on deposit accounts for the three months ended March 31, 2019 decreased $21 thousand, or 15.3%, compared to the three months ended March 31, 2018, primarily driven by decreases in overdraft fees.
  • Commercial loan balances increased $2.1 million, or 1.1%, to $191.3 million compared to March 31, 2018.
  • Total deposits decreased $15.3 million, or 3.3%, to $451 million, driven by decreases in savings and NOW deposits of $9.0 million, time deposits of $5.1 million and demand deposits of $1.1 million.

The Company’s allowance for loan losses at March 31, 2019 was 0.97% of total gross loans compared to 1.04% at March 31, 2018. The Company had non-accrual loans totaling $4.1 million, or 1.05%, of total loans on March 31, 2019, compared to non-accrual loans totaling $1.4 million, or 0.35%, of total loans a year ago. Total non-accrual and delinquent loans on March 31, 2019 was 1.35 % of loans outstanding compared to 1.17% on March 31, 2018.

Total deposits on March 31, 2019 were $451 million, a decrease of $15.3 million, or 3.3%, over a year ago. At the period end, 30% of total deposits were in non-interest bearing demand accounts, 58% were in low-cost savings, money market and NOW accounts and 12% were in time deposits.

For the three months ended March 31, 2019, total net revenues, consisting of net interest and dividend income plus noninterest income, were $4.7 million compared to $4.5 million for the same period in 2018, an increase of $257 thousand, or 5.7%, above the prior year’s first quarter. Net interest and dividend income increased $259 thousand, or 6.8%, primarily driven by a $307 thousand, or 7.9%, increase in interest and fees on loans and a $55 thousand increase in interest on federal funds sold and overnight deposits. The increase was partially offset by increased interest expense on deposits of $65 thousand. Noninterest income decreased by $2 thousand, or 0.3%, primarily due to a decrease in service charges on deposit accounts of $21 thousand.

The Company’s year-to-date 2019 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.50% compared to 3.14% for the comparable 2018 period. The Company’s yield on earning assets increased 44 basis points to 4.00% and the cost of funds increased 14 basis points to 0.74%, primarily driven by a 14 basis point increase in deposit interest expense.

Total noninterest expense for the first quarter 2019 was $3.4 million, an increase of $79 thousand compared to the first quarter of 2018 primarily driven by increases in professional fees, data processing expenses and salaries and employee benefits.

Capital levels for The Simsbury Bank & Trust Company on March 31, 2019 remain above the regulatory “well-capitalized” designation. Capital ratios are calculated under Basel III rules.

 
Capital Ratios

March 31, 2019

    Simsbury Bank & Trust Company   Regulatory Standard For Well-Capitalized
Tier 1 Leverage Capital Ratio   8.82%   5.00%
Tier 1 Risk-Based Capital Ratio   12.15%   8.00%
Total Risk-Based Capital Ratio   13.20%   10.00%
Common Equity Tier 1 Risk-Based Capital Ratio   12.15%   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, 2019, December 31, 2018 and March 31, 2018
       
(Dollars in thousands, except for share amounts)
 
  3/31/2019     12/31/2018     3/31/2018  
(unaudited) (unaudited)

ASSETS

Cash and due from banks 12,170 14,678 12,816
Interest-bearing deposits with Federal Reserve Bank of Boston
and Federal Home Loan Bank 48,414 16,804 42,056
Money Market Mutual Funds - 1,051 44
Federal funds sold   -     -     500  
Cash and cash equivalents 61,612 32,533 55,416
 
Certificates of Deposit - 250 1,250
 
Investments in available-for-sale securities (at fair value) 39,652 41,255 47,730
Federal Home Loan Bank stock, at cost 575 903 903
 
Loans held-for-sale 3,303 2,154 1,211
 
Loans outstanding 383,926 388,359 393,354
Less: Allowance for loan losses   3,727     4,387     4,099  
Loans, net   380,199     383,972     389,255  
 
Premises and equipment, net 1,353 1,450 1,782
Accrued interest receivable 1,249 1,232 1,221
Other real estate owned - - 192
Bank owned life insurance 9,656 9,602 9,428
Other assets   9,521     5,325     5,528  
Total other assets   21,779     17,609     18,151  
 
 
TOTAL ASSETS $ 507,120   $ 478,676   $ 513,916  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 135,830 $ 151,292 $ 136,988
Savings and NOW deposits 259,444 219,448 268,493
Time deposits   56,031     57,305     61,119  
Total deposits 451,305 428,045 466,600
 
Federal Home Loan Bank advance
Securities sold under agreements to repurchase 1,841 1,681 3,120
Federal Home Loan Bank advances 3,748 4,191 2,318
Long-term subordinated debt 7,317 7,310 7,288
Other liabilities   6,494     2,320     2,345  
Total liabilities   470,705     443,547     481,671  
 
Stockholders' equity:
Common stock, no par value; authorized 2,000,000 shares;
issued and outstanding, 1,382,754 shares and 1,382,340 shares, respectively, at
March 31, 2019; 1,382,754 shares and 1,382,340 shares, respectively, at
December 31, 2018, and 1,381,840 shares and 1,381,426 shares, respectively, at March 31, 2018 19,462 19,437 19,434
Retained earnings 17,642 16,941 14,380
Treasury stock, 414 shares (7 ) (7 ) (7 )
Unearned compensation- restricted stock awards (208 ) (244 ) (369 )
Accumulated other comprehensive loss   (474 )   (998 )   (1,193 )
Total stockholders' equity   36,415     35,129     32,245  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 507,120   $ 478,676   $ 513,916  
 
   
SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
 
(Dollars in thousands, except for share and per share amounts)
 
For the quarter ended
  3/31/2019   3/31/2018  
(unaudited)
Interest and dividend income:
Interest and fees on loans $ 4,179 $ 3,872
Investment securities 245 284
Federal funds sold and overnight deposits   215   160  
Total interest and dividend income   4,639   4,316  
 
Interest expense:
Deposits 449 384
Repurchase agreements 1 2
Long-term subordinated debt 134 134
Federal Home Loan Bank advances   -   -  
Total interest expense   584   520  
 
Net interest and dividend income 4,055 3,796
 
Provision for loan losses   10   25  
 
Net interest and dividend income after
provision for loan losses   4,045   3,771  
 
Noninterest income:
Service charges on deposit accounts 116 137
(Loss) gain on available-for-sale securities - (1 )
Other service charges and fees 174 183
Increase in cash surrender value
of life insurance policies 54 58
Mortgage banking activities, net 250 230
Investment services fees and commissions 45 29
Other income   38   43  
Total noninterest income   677   679  
 
Noninterest expense:
Salaries and employee benefits 1,749 1,685
Occupancy expense 348 350
Equipment expense 113 136
Advertising and promotions 170 187
Forms and supplies 17 30
Professional fees 110 182
Directors' fees 79 70
Correspondent charges 74 74
FDIC Assessment 85 93
Data Processing Fees 270 192
Internet banking costs 49 47
Other expenses   324   263  
Total noninterest expense   3,388   3,309  
 
Income before income taxes 1,334 1,141
Income tax provision   192   207  
 
Net income from continuing operations   1,142   934  
 
Less: One-time merger-related costs (net of tax)   235   -  
 
Net income available to common shareholders $ 907 $ 934  
 
Average shares outstanding, basic 1,372,890 1,363,802
Earnings per common share, basic $ 0.66 $ 0.69  
 
Average shares outstanding, assuming dilution 1,376,012 1,366,588
Earnings per common share, assuming dilution $ 0.65 $ 0.68  

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

Source: SBT Bancorp, Inc.

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