SBT Bancorp, Inc. Reports Fourth Quarter 2018 Results

SIMSBURY, Conn.--()--SBT Bancorp, Inc. (the “Company”), (OTC Pink: SBTB), holding company for The Simsbury Bank & Trust Company, Inc. (the “Bank”), today announced net income of $1.13 million or $0.82 basic and diluted earnings per share for the quarter ended December 31, 2018, compared to net income of $682 thousand or $0.50 basic and diluted earnings per share for the prior year’s fourth quarter. The Company’s net income for the year ended December 31, 2018 was $4.11 million, or $3.01 basic and diluted earnings per share, compared to net income of $2.35 million, or $1.72 basic and $1.71 diluted earnings per share for the year ended December 31, 2017.

“We are very pleased to report record earnings for 2018 and our fifth consecutive quarter of record earnings,” said Simsbury Bank President & CEO Martin J. Geitz. “The initiatives we have taken to increase revenues and manage expenses continue to result in strong earnings growth. Our strategic focus on increasing the Bank’s commercial banking activities, with particular focus on family owned businesses and manufacturing companies continues to yield excellent results.”

Net interest and dividend income increased $212 thousand or 5.6% as compared to the prior year’s fourth quarter primarily driven by increased interest and fees on loans. The net interest margin for the quarter ended December 31, 2018 increased 22 basis points to 3.43% when compared to the three months ended December 31, 2017. Noninterest income increased $116 thousand due principally to an increase in other income of $91 thousand and service charges on deposit accounts of $45 thousand. Noninterest expenses for the three months ended December 31, 2018 were $3.5 million, an increase of $105 thousand compared to the three months ended December 31, 2017. The increase was due primarily to an increase in professional fees expense of $190 thousand and occupancy of $43 thousand. This increase was offset by a decrease in salaries and benefits of $123 thousand, advertising and promotions of $25 thousand and equipment expense of $11 thousand.

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

  • Net income increased $443 thousand, or 64.9%.
  • Total revenue, consisting of net interest and dividend income plus noninterest income, increased $328 thousand, or 7.1%.
  • Net interest and dividend income increased 5.6% to $4.0 million.
  • Net interest margin increased 22 basis points to 3.43%. The yield on interest earning assets increased 25 basis points to 3.89%.
  • Provision for loan losses totaled $75 thousand which was equivalent to the quarter ending December 31, 2017. The allowance for loan losses at December 31, 2018 was 1.13% of total gross loans compared to 1.03% at December 30, 2017.
  • Service charges on deposit accounts for the three months ended December 31, 2018 increased $45 thousand, or 44.1%, compared to the three months ended December 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 $2.1 million, or 1.1%, to $192.5 million compared to December 31, 2017.
  • Total deposits decreased $29.4 million, or 6.4%, to $428 million, driven by decreases in Savings, Now and Time deposits offset by increases in demand deposits of $7.7 million.
  • Income tax expenses decreased $220 thousand related to lower tax rates offset by higher pre-tax earnings.

The Company’s allowance for loan losses at December 31, 2018 was 1.13% of total gross loans compared to 1.03% at December 31, 2017. The Company had non-accrual loans totaling $4.8 million, or 1.23%, of total loans on December 31, 2018, compared to non-accrual loans totaling $1.5 million, or 0.36%, of total loans a year ago. Total non-accrual and delinquent loans on December 31, 2018 was 1.45% of loans outstanding compared to 0.51% on December 31, 2017.

Total deposits on December 31, 2018 were $428 million, a decrease of $29.4 million, or 6.4%, over a year ago. At the period end, 35% of total deposits were in non-interest bearing demand accounts, 51% were in low-cost savings, money market and NOW accounts and 14% were in time deposits.

For the three months ended December 31, 2018, total net revenues, consisting of net interest and dividend income plus noninterest income, were $4.9 million compared to $4.6 million for the same period in 2017, an increase of $328 thousand, or 7.1%, above the prior year’s fourth quarter. Net interest and dividend income increased $240 thousand, or 5.6%, primarily driven by a $155 thousand, or 3.9%, increase in interest and fees on loans and a $138 thousand increase in interest on federal funds sold and overnight deposits. The increase was also partially offset by an interest expense on deposits of $32 thousand. Noninterest income increased by $116 thousand, or 14.1%, primarily due to an increase in service charges on deposit accounts of $45 thousand and an increase in other income of $91 thousand.

The Company’s taxable-equivalent net interest margin for the three months ended December 31, 2018 (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.43% compared to 3.21% for the comparable 2017 period. The Company’s yield on earning assets increased 25 basis points to 3.89% and the cost of funds increased 9 basis points to 0.70%, primarily driven by increased interest expense on deposits.

Key highlights for full year ended December 31, 2018 compared to full year ended December 31, 2017 included:

  • Net income increased $1.76million, or 74.8%.
  • Total revenue, consisting of net interest and dividend income plus noninterest income, increased $1.3 million or 7.3%.
  • Net interest and dividend income increased 6.5% to $15.7 million.
  • Net interest margin increased 19 basis points to 3.27%. The yield on interest earning assets increased 21 basis points to 3.72%.
  • Provision for loan losses totaled for the full year totaled $280 thousand which was $365 thousand lower than the full year 2017. The allowance for loan losses at December 31, 2018 was 1.13% of total gross loans compared to 1.03% at December 31, 2017.
  • Service charges on deposit accounts for the full year 2018 increased $188 thousand, or 50.7%, compared to 2017, primarily driven by increases in overdraft fees related to the implementation of an overdraft privilege program in the fourth quarter of 2017.
  • Total average year deposits increased $18.1 million, or 4.1%, to $457 million, driven by increases in Savings, Now, Time deposits and demand deposits of $7.2 million.
  • Income tax expenses decreased $9 thousand related to lower tax rates offset by higher pre-tax earnings.

For the full year ended December 31, 2018, total net revenues, consisting of net interest and dividend income plus noninterest income, were $19.2 million compared to $17.9 million for the same period in 2017, an increase of $1.3 million or 7.3% above the prior year. Net interest and dividend income increased $1.0 million or 6.0%, primarily driven by a $698 thousand, or 4.6%, increase in interest and fees on loans and $556 thousand in federal funds sold and overnight interest on deposits. The increase was partially offset by decreased interest income on securities of $244 thousand and increased interest expense on deposits of $309 thousand. Noninterest income increased by $344 thousand or 11.0%, primarily due to an increase in service charges on deposits of $188 thousand.

The Company’s 2018 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.27% compared to 3.08% for the 2017. The Company’s yield on earning assets increased 21 basis points to 3.72% and the cost of funds was 0.65% for the year ended December 31, 2018 and 0.61% for the year ended December 31, 2017.

Total noninterest expense for 2018 was $13.8 million, a decrease of $80 thousand, or 0.6% compared to the year ended December 31, 2017.

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

 
Capital Ratios
December 31, 2018 (estimated) and December 31, 2017
     

Simsbury Bank & Trust
Company

   
     

Dec. 31,
2018

 

Dec. 31,
2017

 

Regulatory Standard
For Well-Capitalized

Tier 1 Leverage Capital Ratio     8.61%   7.79%   5.00%
Tier 1 Risk-Based Capital Ratio     12.03%   10.89%   8.00%
Total Risk-Based Capital Ratio     13.28%   12.03%   10.00%

Common Equity Tier 1 Risk-Based Capital Ratio

    12.03%   10.89%   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
December 31, 2018 and December 31, 2017
 
(Dollars in thousands, except for share amounts)
 
      12/31/2018       12/31/2017  
(unaudited)

ASSETS

Cash and due from banks 14,678 13,066

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

16,804 23,853
Money Market Mutual Funds 1,051 388
Federal funds sold   -     185  
Cash and cash equivalents 32,533 37,492
 
Certificates of Deposit 250 1,250
 
Investments in available-for-sale securities (at fair value) 41,255 51,656
Federal Home Loan Bank stock, at cost 903 903
 
Loans held-for-sale 2,154 2,259
 
Loans outstanding 388,359 396,413
Less: Allowance for loan losses   4,387     4,088  
Loans, net   383,972     392,325  
 
Premises and equipment, net 1,450 1,863
Accrued interest receivable 1,232 1,402
Other real estate owned - 192
Bank owned life insurance 9,602 9,370
Other assets   5,325     5,313  
Total other assets   17,609     18,140  
 
 
TOTAL ASSETS $ 478,676   $ 504,025  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 151,292 $ 143,635
Savings and NOW deposits 219,448 247,251
Time deposits   57,305     66,514  
Total deposits 428,045 457,400
 
Federal Home Loan Bank advance
Securities sold under agreements to repurchase 1,681 2,449
Federal Home Loan Bank advances 4,191 2,318
Long-term subordinated debt 7,310 7,281
Other liabilities   2,320     2,358  
Total liabilities   443,547     471,806  
 
 
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 December 31, 2018; 1,373,532 shares and 1,373,118 shares, respectively, at December 31, 2017

19,437 19,433
Retained earnings 16,941 13,657
Treasury stock, 414 shares (7 ) (7 )
Unearned compensation- restricted stock awards (244 ) (420 )
Accumulated other comprehensive loss   (998 )   (444 )
Total stockholders' equity   35,129     32,219  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 478,676   $ 504,025  
 
 
SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
 
(Dollars in thousands, except for share and per share amounts)
 
    For the quarter ended   For the twelve months ended
  12/31/2018       12/31/2017     12/31/2018       12/31/2017  
(unaudited) (unaudited)
Interest and dividend income:
Interest and fees on loans $ 4,075 $ 3,920 $ 16,039 $ 15,341
Investment securities 255 308 1,076 1,320
Federal funds sold and overnight deposits   193     55     806     250  
Total interest and dividend income   4,523     4,283     17,921     16,911  
 
Interest expense:
Deposits 404 372 1,635 1,326
Repurchase agreements 1 2 7 7
Long-term subordinated debt 137 137 542 542
Federal Home Loan Bank advances   -     3     1     263  
Total interest expense   542     514     2,185     2,138  
 
Net interest and dividend income 3,981 3,769 15,736 14,773
 
Provision for loan losses   75     75     280     645  
 

Net interest and dividend income after provision for loan losses

  3,906     3,694     15,456     14,128  
 
Noninterest income:
Service charges on deposit accounts 147 102 559 371
(Loss) gain on available-for-sale securities (3 ) (2 ) (6 ) (4 )
Other service charges and fees 219 189 762 735

Increase in cash surrender value of life insurance policies

59 60 232 240
Mortgage banking activities, net 375 430 1,417 1,445
Investment services fees and commissions 40 33 167 176
Other income   101     10     336     160  
Total noninterest income   938     822     3,467     3,123  
 
Noninterest expense:
Salaries and employee benefits 1,631 1,754 6,793 7,017
Occupancy expense 376 333 1,389 1,400
Equipment expense 128 139 517 514
Advertising and promotions 132 157 710 610
Forms and supplies 27 26 114 110
Professional fees 342 152 990 716
Directors' fees 75 69 300 236
Correspondent charges 70 93 296 316
FDIC Assessment 76 96 322 421
Data Processing Fees 228 205 938 903
Internet banking costs 59 45 230 207
Other expenses   310     280     1,214     1,443  
Total noninterest expense   3,454     3,349     13,813     13,893  
 
Income before income taxes 1,390 1,167 5,110 3,358
Income tax provision   265     485     995     1,004  
 
Net income $ 1,125   $ 682   $ 4,115   $ 2,354  
 
Net income available to common stockholders $ 1,125   $ 682   $ 4,115   $ 2,354  
 
Average shares outstanding, basic 1,367,854 1,360,136 1,365,330 1,359,222
Earnings per common share, basic $ 0.82   $ 0.50   $ 3.01   $ 1.73  
 
Average shares outstanding, assuming dilution 1,374,102 1,370,224 1,366,305 1,368,238
Earnings per common share, assuming dilution $ 0.82   $ 0.50   $ 3.01   $ 1.72  
 

Contacts

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

Contacts

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