SBT Bancorp, Inc. Reports First Quarter 2008 Results

Business Wire, May 7, 2008

SIMSBURY, Conn. -- SBT Bancorp, Inc., (OTCBB: SBTB), holding company for The Simsbury Bank & Trust Company, today announced net income of $127,000 or $0.15 per diluted share for the first quarter of 2008, compared to $182,000 or $0.21 per diluted share for the first quarter of 2007. Total assets were $220 million on March 31, 2008 compared to $214 million on March 31, 2007.

Following five consecutive quarters of increased earnings, the Company's first quarter 2008 earnings were lower compared to the first quarter of 2007. The decrease in earnings was primarily due to an increase in the provision for loan losses, in recognition of the slowing economy's potential impact on the Company's loan portfolio, and a decline in net interest and dividend income brought about by a rapid decrease in interest rates by the Federal Reserve Board.

On March 31, 2008, loans outstanding were $167 million, an increase of $11 million, or 7%, over a year ago. With a loan loss provision of $100,000 during the quarter, the Company's allowance for loan losses at March 31, 2008 was 1.21% of total loans.

Core deposits (Demand, Savings, and NOW accounts) grew by $7 million or 5% over the past twelve months. Total deposits ended the quarter at $200 million, an increase of $5 million, or 3%, over a year ago.

Total revenues, consisting of net interest and dividend income plus non-interest income, were $2,187,000 in the first quarter compared to $2,259,000 a year ago, a decrease of 3%. Net interest and dividend income decreased by $54 thousand, or 3%. Income from fees, services and other sources (non-interest income) decreased by $18 thousand, or 6%.

The Company's taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) decreased by 21 basis points from 4.14% in the fourth quarter of 2007 to 3.93% in the first quarter of 2008. The margin remained flat in relation to the first quarter of 2007 margin of 3.94%.

Total non-interest expenses for the first quarter decreased by $114 thousand, or 6%, compared to a year earlier, primarily due to a decrease in salaries and benefits and professional fees.

"We are very pleased with the steady growth in both loans and core deposits during the first quarter. Many seeking residential mortgages are finding Simsbury Bank to be a convenient and competitive source of financing. Our commercial loan business also continues to grow, though some of our customers are feeling the effects of the slower residential development market," said Martin J. Geitz, The Simsbury Bank & Trust Company President & CEO. "While we have no exposure to sub-prime loans in our loan portfolio, we did add $100,000 to our loan loss reserves, as a prudent measure in a slowing economic environment. Our overall asset quality and our loan loss reserve of 1.21% of loans compares very well to our peer banks. The recent decline by more than 3.00% in short-term interest rates, including bank prime lending rates, has influenced earnings at all financial institutions. In this difficult environment, we will continue to focus on building profitable banking relationships, diversifying our sources of revenue, and serving our customers' full range of financial services needs."

The Simsbury Bank & Trust Company is an independent, locally-controlled, customer-friendly commercial bank for businesses and consumers; the Bank has approximately $220 million in assets. The Bank serves customers through full-service offices in Avon, Bloomfield, Canton, Granby and Simsbury, Connecticut, SBT Online Internet banking at simsburybank.com, free ATM transactions at 2,800 machines throughout the northeastern U.S. via the SUM program in addition to thousands of ATM locations world-wide, and 24 hour telephone banking. The Bank offers investment services through its wholly-owned subsidiary, SBT Investment Services, Inc. The stock of the Bank's parent company, SBT Bancorp, Inc., is traded over-the-counter under the ticker symbol of OTCBB: SBTB. Visit the Bank's website at www.simsburybank.com.

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