CBT Passes $100 Million in Assets; Strong Growth in Loans

Business Wire, July 25, 2006

HARTFORD, Conn. -- The Connecticut Bank and Trust Company, (Nasdaq: CTBC), reported total assets reached $112 million at June 30, 2006, an increase of $26 million or 30% compared to $86 million a year ago. Loans outstanding increased $45.2 million or 119% to $83 million at June 30, 2006 compared to $38 million one year ago.

President and CEO David A. Lentini stated "To pass the $100 million mark in assets in just nine quarters of operation is very gratifying and indicates our acceptance into the marketplace. Loan growth remains strong with more and more commercial firms choosing CBT as their financial services partner."

The results for the quarter ended June 30, 2006 improved $213,000 or 19% to a loss of $908,000 or $0.25 per share, compared to a loss of $1,121,000 or $0.59 per share for the same period in 2005. For the six months ended June 30, 2006, the net loss was $1,784,000 or $.50 per share compared to a loss of $2,085,000 or $1.10 per share for same period in 2005. The per-share results for the second quarter of 2006 reflect the issuance of 1.65 million shares of CBT common stock issued in September 2005.

Results of Operations. The results for the second quarter of 2006 were impacted by significant growth in net interest income. Net interest income rose $416,000, or 76%, to $965,000 for the quarter ended June 30, 2006 compared to $549,000 for the quarter ended June 30, 2005. For the six months ended June 30, 2006, net interest income amounted to $1,903,000, an increase of $885,000 or 87% compared to $1,018,000 in the first half of 2005. The growth in loans and an increase in the net interest margin to 3.86% in this quarter from 2.95% in the same period last year, were the main drivers of this performance. The operating results also reflect an increase of $181,000 in noninterest expenses to $1,720,000 for the quarter ended June 30, 2006 compared to $1,539,000 in the second quarter of 2005. For the first half of 2006, noninterest expenses were $3,470,000 compared to $2,863,000 in the first half of 2005. This increase includes costs related to the opening and operation of the new banking centers in Vernon and Newington and staff additions in Lending, Operations and Administration.

Balance Sheet Performance. Loans outstanding increased $26.0 million to $83.0 million at June 30, 2006 in connection with our most successful quarter of loan production to date. Total assets were $112.0 million at the end of the quarter compared to $96.9 million at December 31, 2005. Total deposits were $75.8 million at June 30, 2006, increasing $5.1 million or 7.3% from $70.7 million at December 31, 2005. Stockholders' equity at June 30, 2006 was $23.0 million compared to $25.0 million at December 31, 2005 primarily reflecting the second quarter 2006 operating loss and a decrease in the estimated market value of the Bank's available for sale securities portfolio.

Asset Quality. The allowance for loan losses at June 30, 2006 was $1,136,000 compared to $876,000 at December 31, 2005 and represented 1.37% and 1.53% of loans outstanding for the respective dates. The loans classified as nonaccrual amounted to $9,000 and there were no loans past due 30 days or more at June 30, 2006.

Recent News. Following our successful opening in Vernon at the start of this year, in June work was completed on renovations for CBT's fifth Banking Center. It is located at 66 Cedar Street, in Newington, CT, and opened July 10th. During the quarter, Management began finalizing plans to renovate the space formally occupied by Arthur's Drug in Windsor, CT. This office is expected to open in January 2007.

Also during the quarter, CBT established an office of Raymond James Financial Services, Inc, ("RJFS") in the Glastonbury Banking Center. Through this facility CBT customers have easy access to a full range of non-deposit investments such as bonds, stocks and annuities. CEO Lentini noted, "At CBT we know the importance of providing choices to both our business and personal customers in reaching their financial objectives. Additional RJFS locations are planned in the year ahead."

Selected Performance Data
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                                   Three months ended
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Dollar values in      March    June    Sept.   Dec.   March     June
 thousands              31,     30,     30,     31,     31,      30,
except per share       2005    2005    2005    2005    2006     2006
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Total assets (EOP)   $77,357 $86,132 $99,589 $96,875 $99,016 $112,462

Net operating loss     $(964)$(1,121)  $(861)  $(622)  $(877)   $(908)
Net interest margin     2.62%   2.95%   2.97%   3.69%   4.19%    3.86%
Ratio of total
 stockholders'
 equity to total
 assets (EOP)          16.70%  14.12%  25.84%  25.85%  24.25%   20.47%
Average shares
 outstanding           1,889   1,905   1,968   3,567   3,567    3,567
Loss per share (1)    $(0.51) $(0.59) $(0.44) $(0.17) $(0.25)  $(0.25)
Book value per share
 (EOP)                 $6.84   $6.35   $7.21   $7.02   $6.73    $6.45
Allowance for loan
 losses to
 total loans (EOP)      1.17%   1.33%   1.45%   1.53%   1.36%    1.37%

(1) Issuance of Shares in Sept. 2005.

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                       Selected Performance Data
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                                                       Year ended
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Dollar values in thousands                           June 30, June 30,
except per share                                       2005     2006
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Total assets (EOP)                                   $86,132 $112,462

Net operating loss                                   $(2,085) $(1,784)
Net interest margin                                     2.77%    4.02%
Ratio of total stockholders'
 equity to total assets (EOP)                          14.12%   20.47%
Average shares outstanding                             1,897    3,567
Loss per share (1)                                    $(1.10)  $(0.50)
Book value per share (EOP)                             $6.35    $6.45
Allowance for loan losses to
 total loans (EOP)                                      1.33%    1.37%

(1) Issuance of Shares in Sept. 2005.
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