February 5, 2010

SBT Bancorp, Inc. (the "Company"), (OTCBB: SBTB), the holding company for The Simsbury Bank & Trust Company, today announced net income of $718,000 for the year ended December 31, 2009 compared to a net loss of $645,000 for the year ended December 31, 2008.  For the quarter ended December 31, 2009, net income amounted to $191,000 compared to net income of $286,000 for the fourth quarter of 2008 which included tax benefits related to Fannie Mae and Freddie Mac preferred stock write-downs. 

Net income available to common shareholders in 2009 was $522,000, or $0.60 per diluted share, compared to a net loss of $0.75 per diluted share in 2008.  Net income available to common shareholders for the fourth quarter of 2009 was $126,000, or $0.15 per diluted share, compared to net income of $0.33 per diluted share in the fourth quarter of 2008. 

The Company’s prior year, 2008, results included the following non-recurring items:  (1) securities impairment charges net of tax benefits of $1,105,000 for holdings of Fannie Mae and Freddie Mac preferred stock; (2) reconfiguration charges of $485,000 for re-aligning the Company’s Albany Turnpike service network; and, (3) Bank Owned Life Insurance (BOLI) death benefit income of $328,000.  

The Company ended the year with $274 million in total assets, an increase of $33 million or 14% compared to December 31, 2008.  Results for the Company in 2009 included loan growth of 7% and deposit growth of 13%. 

“Despite the many challenges 2009 presented for all financial institutions, SBT Bancorp experienced a good year of growth in loans, deposits, revenues, and earnings” said SBT Bancorp President and CEO, Martin J. Geitz.  “As we move into 2010, we will continue to focus on leveraging our low-cost deposit funding and low-risk loan portfolio to maintain SBT Bancorp’s strong capital position and build shareholder value.”

On December 31, 2009 loans outstanding were $194 million, an increase of $14 million or 7% over a year ago.  With a loan loss provision of $225k in the fourth quarter and $547k for the entire year, the Company's allowance for loan losses ended the year at 1.14% of total loans.  The profile of the Company’s loan portfolio remained relatively low-risk throughout 2009.  At year end, 72% of total loans were conventionally underwritten residential mortgages and consumer home equity lines and loans.  Commercial loans represent 26% of the Company’s total loans.  Other consumer loans comprise 2% of total loans.  The Company’s exposure to commercial real estate concentrations is relatively low.  Total exposure to builder and land development loans and non-owner occupied commercial real estate was $13 million at year end, 7% of total loans and 63% of total capital. The Company had non-accrual loans totaling $3 million, 1.6% of total loans, on December 31, 2009.  Loans 30 days or more delinquent totaled $322k, 0.17% of total loans.

Total deposits on December 31, 2009 were $250 million, an increase of $30 million or 13% over a year ago. Core deposits (Demand, Savings and NOW accounts) increased by $32 million or 23% and Time Deposits decreased by $2 million or 3%.  The Company continues to maintain a low-cost mix of deposits.  At year end, 17% of total deposits were in non-interest bearing demand accounts, 50% were in low-cost savings and NOW accounts, and 33% were in time deposits.

Net interest and dividend income for 2009 totaled $8,968,000, an increase of 12% or $946,000 over 2008.  This increase was driven primarily by the 14% growth in assets. The Company’s net interest margin for the entire year of 2009 was 3.55%, a decrease of 40 basis points from 3.95% in 2008.  However, the Company’s 2009 fourth quarter net interest margin at 3.84% was up by 15 basis points over the 3.69% earned in the fourth quarter of 2008.  Non-interest income in 2009 equaled $1,522,000, an increase of $249,000, or 20%, over non-interest income in 2008 adjusted for non-recurring securities impairment charges and bank owned life insurance death benefit income.  Several items contributed to this increase.  Revenue from service charges, gains on sales of securities, gains on loans sold, and investment services fee income all were higher in 2009 compared to 2008.

 Non-interest expense for 2009 totaled $8,997,000, an increase of $166,000, or 2%, over 2008. The primary contributor to the increase in expenses was FDIC Deposit Insurance which was $516,000 in 2009, an increase of $376,000 over 2008.  FDIC expenses included a special assessment charged to all FDIC insured banks which amounted to $123,000 for the Company and an overall increase in deposit insurance premiums, also charged to all FDIC insured banks.  Non-interest expenses in 2008 included a one-time operating lease charge of $299,000.

Capital levels for the Simsbury Bank & Trust Company remain well in excess of those required to meet the regulatory “well-capitalized” designation.

SBT Bancorp Inc.’s wholly owned subsidiary, Simsbury Bank & Trust Company, is an independent, locally-controlled, customer-friendly commercial bank for businesses and consumers.  The Bank has approximately $274 million in assets.  The Bank serves customers through full-service offices in Avon, Bloomfield, Granby and Simsbury, Connecticut; SBT Online internet banking at simsburybank.com; free ATM transactions at 2,800 machines throughout the northeastern via the SUM program; and 24 hour telephone banking.  The Bank’s wholly-owned subsidiary, SBT Investment Services, Inc., offers securities and insurance products through LPL Financial and its affiliates, Member FINRA/SIPC.  SBT Bancorp, Inc. is traded over-the-counter under the ticker symbol of OTCBB: 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.