SBT Bancorp, Inc. Reports Second Quarter 2019 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 $618 thousand or $0.45 basic and $0.45 diluted earnings per share for the quarter ended June 30, 2019, compared to net income of $1.01 million or $0.73 basic and $0.73 diluted earnings per share for the prior year’s second quarter. Net income for the three months was impacted by one-time merger related expenses and a write-down on an asset held for sale. Excluding one-time merger related expenses and the write-down, net income would have been $1.08 million or $0.78 basic and $0.78 diluted earnings per share for the quarter ended June 30, 2019. There was minimal change in total revenue in the three months ended June 30, 2019 as compared to the three months ended June 30, 2018, with increases in mortgage banking activities of $31 thousand and gain on sale of investments of $89 thousand offset by a decrease in net interest income of $141 thousand.

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 was approved by the shareholders of the Company and received customary regulatory approvals, including approvals from the State of Connecticut Department of Banking and the Federal Deposit Insurance Corporation. The transaction is expected to be consummated in October of 2019.

“We are pleased with our earnings before one-time expenses for the quarter as 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” said Simsbury Bank President and CEO Martin J. Geitz.

Year over year, noninterest expenses increased $540 thousand due primarily to a write-down of an asset of $298 thousand as well as merger related professional services of $200 thousand, and other merger related expenses of $23 thousand. These items were partially offset by a decrease in salaries and benefits of $27 thousand and equipment expenses of $33 thousand.

Key highlights for quarter ended June 30, 2019 compared to quarter ended June 30, 2018 included:

  • Book value increased $2.98 or 12.5% as compared to June 30, 2018.
  • Net interest margin increased to 3.41% due to increased yields on loans and fed funds, slightly offset by an increase in the cost of deposits.
  • Total revenue, consisting of net interest and dividend income plus noninterest income, increased by $27 thousand, or 0.6%.
  • Gain on Sale of Investments increased by $89 thousand.
  • Provision for loan losses totaled $25 thousand, a decrease of $5 thousand compared to the quarter ended June 30, 2018.
  • Total deposits decreased $14.3 million, or 3.3%, to $425 million, due primarily to a decrease in Savings and NOW deposits of $11.1 million.
  • As of June 30, 2019, 44% of total deposits were in non-interest bearing demand accounts, 43% were in low-cost savings, money market and NOW accounts and 14% were in time deposits.
  • The allowance for loan losses at June 30, 2019 was 1.00% of total gross loans compared to 1.13% at June 30, 2018.

The Company’s allowance for loan losses at June 30, 2019 was 1.00% of total gross loans compared to 1.13% at June 30, 2018. The Company had non-accrual loans totaling $4.2 million, or 1.11%, of total loans on June 30, 2019, compared to non-accrual loans totaling $0.9 million, or 0.24%, of total loans a year ago. Total non-accrual and delinquent loans on June 30, 2019 was 1.19% of loans outstanding compared to 0.92% on June 30, 2018.

Total deposits on June 30, 2019 were $425 million, a decrease of $14.3 million, or 3.3%, below a year ago due primarily to a decrease in savings and NOW deposits. At the period end, 44% of total deposits were in non-interest bearing demand accounts, 43% were in low-cost savings, money market and NOW accounts and 14% were in time deposits.

For the three months ended June 30, 2019, total net revenues, consisting of net interest and dividend income plus noninterest income, were $4.7 million compared to $4.7 million for the same period in 2018. Net interest and dividend income decreased $141 thousand, primarily driven by a $65 thousand decrease in interest income on investments offset by a $24 thousand increase in interest and fees on loans and a $22 thousand increase on funds sold and overnight deposits. The decrease was also impacted by increased interest expense on deposits of $123 thousand. Noninterest income increased by $114 thousand, primarily due to a gain on sale of securities of $88 thousand, mortgage banking activities of $31 thousand and other service charges and fees 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 3.41% compared to 3.38% for the comparable 2018 period. The Company’s yield on earning assets increased 15 basis points to 3.93% and the cost of funds increased 21 basis points to 0.79%, primarily driven by a 20 basis point increase in deposit interest expense.

Capital levels for The Simsbury Bank & Trust Company on June 30, 2019 remain above the regulatory “well-capitalized” designation. Capital ratios are calculated under Basel III rules.

Capital Ratios

June 30, 2019

 

 

Simsbury Bank &
Trust Company

 

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio

 

9.14%

 

5.00%

Tier 1 Risk-Based Capital Ratio

 

12.36%

 

8.00%

Total Risk-Based Capital Ratio

 

13.43%

 

10.00%

Common Equity Tier 1 Risk-
Based Capital Ratio

 

12.36%

 

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, 2019, December 31, 2018 and June 30, 2018

(Dollars in thousands, except for share amounts)
 
6/30/2019 12/31/2018 6/30/2018
(unaudited) (unaudited)
ASSETS
Cash and due from banks

 

14,885

 

14,678

 

9,870

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

 

38,843

 

16,804

 

15,258

Money Market Mutual Funds

 

61

 

1,051

 

18

Federal funds sold

 

-

 

-

 

531

Cash and cash equivalents

 

53,789

 

32,533

 

25,677

 
Certificates of Deposit

 

-

 

250

 

1,250

 
Investments in available-for-sale securities (at fair value)

 

27,681

 

41,255

 

45,957

Federal Home Loan Bank stock, at cost

 

575

 

903

 

903

 
Loans held-for-sale

 

4,060

 

2,154

 

5,056

 
Loans outstanding

 

376,574

 

388,359

 

395,814

Less: Allowance for loan losses

 

3,752

 

4,387

 

4,167

Loans, net

 

372,822

 

383,972

 

391,647

 
Premises and equipment, net

 

1,265

 

1,450

 

1,675

Accrued interest receivable

 

1,124

 

1,232

 

1,274

Other real estate owned

 

-

 

-

 

-

Bank owned life insurance

 

9,714

 

9,602

 

9,485

Other assets

 

9,887

 

5,325

 

5,475

Total other assets

 

21,990

 

17,609

 

17,909

 
 
TOTAL ASSETS

$

480,917

$

478,676

$

488,399

 
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand deposits

$

141,304

$

151,292

$

142,560

Savings and NOW deposits

 

226,026

 

219,448

 

237,170

Time deposits

 

57,796

 

57,305

 

59,686

Total deposits

 

425,126

 

428,045

 

439,416

 
 
Securities sold under agreements to repurchase

 

1,391

 

1,681

 

2,861

Federal Home Loan Bank advances

 

3,748

 

4,191

 

3,747

Long-term subordinated debt

 

7,324

 

7,310

 

7,295

Other liabilities

 

6,207

 

2,320

 

2,106

Total liabilities

 

443,796

 

443,547

 

455,425

 
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
June 30, 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 June 30, 2018

 

19,462

 

19,437

 

19,434

Retained earnings

 

18,054

 

16,941

 

15,188

Treasury stock, 414 shares

 

(7)

 

(7)

 

(7)

Unearned compensation- restricted stock awards

 

(166)

 

(244)

 

(327)

Accumulated other comprehensive loss

 

(222)

 

(998)

 

(1,315)

Total stockholders' equity

 

37,121

 

35,129

 

32,974

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

480,917

$

478,676

$

488,399

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 six months ended
  6/30/2019 6/30/2018 6/30/2019 6/30/2018
  (unaudited) (unaudited)
Interest and dividend income:  
Interest and fees on loans  

$

4,035

$

4,011

$

8,214

$

7,882

Investment securities  

 

210

 

275

 

454

 

560

Federal funds sold and overnight deposits  

 

145

 

123

 

360

 

284

Total interest and dividend income  

 

4,390

 

4,409

 

9,028

 

8,726

   
Interest expense:  
Deposits  

 

453

 

330

 

901

 

714

Repurchase agreements  

 

1

 

2

 

2

 

4

Long-term subordinated debt  

 

135

 

135

 

269

 

269

Federal Home Loan Bank advances  

 

1

 

1

 

1

 

1

Total interest expense  

 

590

 

468

 

1,173

 

988

   
Net interest and dividend income  

 

3,800

 

3,941

 

7,855

 

7,738

   
Provision for loan losses  

 

25

 

30

 

35

 

55

   
Net interest and dividend income after  
provision for loan losses  

 

3,775

 

3,911

 

7,820

 

7,683

   
Noninterest income:  
Service charges on deposit accounts  

 

128

 

133

 

244

 

270

(Loss) gain on available-for-sale securities  

 

88

 

(1)

 

87

 

(2)

Other service charges and fees  

 

211

 

190

 

385

 

373

Increase in cash surrender value  
of life insurance policies  

 

58

 

57

 

112

 

114

Mortgage banking activities, net  

 

322

 

291

 

572

 

522

Investment services fees and commissions  

 

40

 

55

 

85

 

84

Other income  

 

35

 

41

 

74

 

84

Total noninterest income  

 

882

 

768

 

1,559

 

1,445

   
Noninterest expense:  
Salaries and employee benefits  

 

1,640

 

1,667

 

3,389

 

3,352

Occupancy expense  

 

315

 

323

 

664

 

673

Equipment expense  

 

96

 

129

 

209

 

265

Advertising and promotions  

 

232

 

207

 

402

 

394

Forms and supplies  

 

18

 

24

 

35

 

54

Professional fees  

 

85

 

220

 

200

 

402

Directors' fees  

 

78

 

76

 

157

 

146

Correspondent charges  

 

90

 

78

 

164

 

153

FDIC Assessment  

 

75

 

83

 

160

 

176

Data Processing Fees  

 

301

 

281

 

570

 

473

Internet banking costs  

 

71

 

73

 

121

 

120

Other expenses  

 

433

 

255

 

757

 

517

Total noninterest expense  

 

3,434

 

3,416

 

6,828

 

6,725

   
Income before income taxes  

 

1,223

 

1,261

 

2,551

 

2,403

Income tax provision  

 

146

 

248

 

310

 

455

   
Net income from continuing operations  

 

1,077

 

1,013

$

2,241

$

1,948

   
Less: One-time merger-related costs & write-down (net of tax)  

 

459

 

-

 

716

 

-

   
Net income available to common shareholders  

$

618

$

1,013

$

1,525

$

1,948

   
Average shares outstanding, basic  

 

1,372,910

 

1,365,898

 

1,372,900

 

1,364,856

Earnings per common share, basic  

$

0.45

$

0.73

$

1.10

$

1.41

   
Average shares outstanding, assuming dilution  

 

1,376,032

 

1,367,201

 

1,376,022

 

1,365,619

Earnings per common share, assuming dilution  

$

0.45

$

0.73

$

1.11

$

1.41

 

Contacts

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

Release Summary

SBT Bancorp, Inc. Reports Second Quarter 2019 Results

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Contacts

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