May 5, 2010

SBT Bancorp, Inc., (OTCBB: SBTB), holding company for The Simsbury Bank & Trust Company, today announced net income of $243,000 or $0.21 per diluted share for the first quarter of 2010, compared to $146,000 or $0.17 per diluted share for the first quarter of 2009, an increase in net income of 67% and earnings per diluted share of 24%.  Total assets were $283 million on March 31, 2010 compared to $260 million on March 31, 2009, an increase of $23 million or 9%.  

 Total revenues, consisting of net interest and dividend income plus noninterest income, were $2,856,000 in the first quarter compared to $2,297,000 a year ago, an increase of 24%.  Net interest and dividend income increased by $483,000, or 24%.  This increase was driven by a 9% growth in the balance sheet and a 43 basis point increase in the Company's taxable equivalent net interest margin.  Income from fees, services, and other sources (noninterest income) increased by $75,000, or 26% primarily due to an increase in service charge and fee income.  

 The Company's taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.88% for the first quarter of 2010, compared to 3.45% for the first quarter of 2009.  The primary cause of this increase was a much lower cost of funds.  Core deposits grew rapidly during this period, replacing higher-cost time deposits.  

 Total non-interest expenses for the first quarter were $2,321,000, an increase of $282,000 or 14% over the first quarter of 2009.  The majority of this increase was in FDIC insurance premiums, professional fees and data processing.  Premises and equipment expenses as well as forms and supplies expenses declined in the first quarter of 2010 compared to the first quarter of 2009.  Salaries and employee benefit expenses during this period increased by the moderate amount of 3.6%.  

 On March 31, 2010, loans outstanding were $196 million, an increase of $14 million, or 8%, over a year ago.  With a loan loss provision of $225,000 during the quarter, the Company’s allowance for loan losses at March 31, 2010 was 1.13% of total loans.  The profile of the Company's loan portfolio remains relatively low-risk.  On March 31, 2010, 71% of total loans were conventionally underwritten residential mortgages and consumer home equity lines and loans.  The Company had non-accrual loans totaling $3.1 million equal to 1.59% of total loans, on March 31, 2010.  Loans 30 days or more delinquent, excluding non-accrual loans, totaled $140,000, or 0.07% of total loans. The Company’s exposure to commercial real estate loans is relatively conservative.  Total exposure to builder and land development loans and non-owner occupied commercial real estate was $12.2 million on March 31, 2010, equal to 6% of total loans and 56% of total capital.      

 Total deposits on March 31, 2010 were $254 million, an increase of $17 million or 7% over a year ago.  Core deposits (Demand, Savings and NOW accounts) increased by $31 million or 18% while Time Deposits decreased by $14 million or 16%.  At quarter-end, 17% of total deposits were in non-interest bearing demand accounts, 53% were in low-cost savings and NOW accounts, and 30% were in time deposits.  

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

"SBT Bancorp experienced a good quarter of growth in loans, deposits, revenues and earnings" said SBT Bancorp President and CEO, Martin J. Geitz.  "We will continue to focus on serving our current and new customers very well and thereby earning more of their business.  Our customer focus remains the foundation of our success as it enables us to build shareholder value with an attractive, low-cost, relationship based deposit mix; a relatively low-risk mortgage, consumer and commercial loan portfolio; and a strong capital position." 

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 $280 million in assets.  The Bank serves customers through full-service offices in Avon, Bloomfield, Granby and Simsbury, Connecticut; a loan production office and ATM in Canton, Connecticut; SBT Online internet banking at simsburybank.com; free ATM transactions at hundreds of 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.