SIMSBURY, CT. – April 26, 2019 – SBT Bancorp, Inc. (the “Company”), (OTC Pink: SBTB), holding company for The Simsbury Bank & Trust Company, Inc. (the “Bank”), today announced net income of $907 thousand or $0.66 basic and $0.65 diluted earnings per share for the quarter ended March 31, 2019, compared to net income of $934 thousand or $0.69 basic and $0.68 diluted earnings per share for the prior year’s first quarter. Total revenue increased $257 thousand, or 5.7%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, primarily due to higher rates in the Bank’s loan portfolio.
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 is subject to approval by the shareholders of the Company, as well as customary regulatory approvals, including the State of Connecticut Department of Banking and the Federal Deposit Insurance Corporation. The transaction is expected to close in October of 2019.
“We are very pleased to report another quarter of improved revenue growth. We are also pleased that our earnings before one-time expenses related to our pending merger with Liberty Bank of $1,142 thousand were 22% higher than 2018’s first quarter earnings. 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.”
Year over year, noninterest expenses increased $79 thousand due principally to increases in data processing expenses of $78 thousand, and salaries and employee benefits of $64 thousand. These were partially offset by a decrease in advertising and promotions of $17 thousand, equipment expenses of $23 thousand and forms and supplies of $13 thousand. Deposit balances for the period ended March 31, 2019 decreased $15.3 million or 3.3% from the prior year end of March 31, 2018.
Key highlights for quarter ended March 31, 2019 compared to quarter ended March 31, 2018 included:
- Total revenue, consisting of net interest and dividend income plus noninterest income, increased $257 thousand, or 5.7%.
- Net interest and dividend income increased 7.5% to $4.6 million.
- Provision for loan losses totaled $10 thousand, a decrease of $15 thousand compared to the quarter ended March 31, 2018. The allowance for loan losses at March 31, 2019 was 0.97% of total gross loans compared to 1.04% at March 31, 2018.
- Service charges on deposit accounts for the three months ended March 31, 2019 decreased $21 thousand, or 15.3%, compared to the three months ended March 31, 2018, primarily driven by decreases in overdraft fees.
- Commercial loan balances increased $2.1 million, or 1.1%, to $191.3 million compared to March 31, 2018.
- Total deposits decreased $15.3 million, or 3.3%, to $451 million, driven by decreases in savings and NOW deposits of $9.0 million, time deposits of $5.1 million and demand deposits of $1.1 million.
The Company’s allowance for loan losses at March 31, 2019 was 0.97% of total gross loans compared to 1.04% at March 31, 2018. The Company had non-accrual loans totaling $4.1 million, or 1.05%, of total loans on March 31, 2019, compared to non-accrual loans totaling $1.4 million, or 0.35%, of total loans a year ago. Total non-accrual and delinquent loans on March 31, 2019 was 1.35 % of loans outstanding compared to 1.17% on March 31, 2018.
Total deposits on March 31, 2019 were $451 million, a decrease of $15.3 million, or 3.3%, over a year ago. At the period end, 30% of total deposits were in non-interest bearing demand accounts, 58% were in low-cost savings, money market and NOW accounts and 12% were in time deposits.
For the three months ended March 31, 2019, total net revenues, consisting of net interest and dividend income plus noninterest income, were $4.7 million compared to $4.5 million for the same period in 2018, an increase of $257 thousand, or 5.7%, above the prior year’s first quarter. Net interest and dividend income increased $259 thousand, or 6.8%, primarily driven by a $307 thousand, or 7.9%, increase in interest and fees on loans and a $55 thousand increase in interest on federal funds sold and overnight deposits. The increase was partially offset by increased interest expense on deposits of $65 thousand. Noninterest income decreased by $2 thousand, or 0.3%, primarily due to a decrease in service charges on deposit accounts 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 3.50% compared to 3.14% for the comparable 2018 period. The Company’s yield on earning assets increased 44 basis points to 4.00% and the cost of funds increased 14 basis points to 0.74%, primarily driven by a 14 basis point increase in deposit interest expense.
Total noninterest expense for the first quarter 2019 was $3.4 million, an increase of $79 thousand compared to the first quarter of 2018 primarily driven by increases in professional fees, data processing expenses and salaries and employee benefits.
Capital levels for The Simsbury Bank & Trust Company on March 31, 2019 remain above the regulatory “well-capitalized” designation. Capital ratios are calculated under Basel III rules.
March 31, 2019
|Simsbury Bank & Trust Company||Regulatory Standard For Well-Capitalized|
|Tier 1 Leverage Capital Ratio||8.82%||5.00%|
|Tier 1 Risk-Based Capital Ratio||12.15%||8.00%|
|Total Risk-Based Capital Ratio||13.20%||10.00%|
|Common Equity Tier 1 Risk-Based Capital Ratio||12.15%||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.
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