SBT Bancorp, Inc. Reports First Quarter 2011 Results.(Financial report)

SIMSBURY, Conn. -- SBT Bancorp, Inc., (OTCBB: SBTB), holding company for Simsbury Bank & Trust Company (the Bank), today announced net income of $87,000 or $0.03 per common diluted share for the first quarter of 2011. Net income for the quarter was impacted by a one-time charge related to the Bank's formation of a Passive Investment Company (PIC). Excluding this one-time charge, net of a favorable income tax adjustment, net income would have been $259,000 or $0.23 per common diluted share. This compares to $243,000 or $0.21 per common diluted share for the first quarter of 2010. Total assets were $325 million on March 31, 2011 compared to $283 million on March 31, 2010, an increase of $42 million or 15%.

Total deposits on March 31, 2011 were $299 million, an increase of $45 million or 18% over a year ago. Core deposits (Demand, Savings and NOW accounts) increased by $44 million or 25% while Time Deposits increased by $1 million or 1%. An increase in deposits from municipalities was a significant contributor to the growth in total deposits. At quarter-end, 19% of total deposits were in non-interest bearing demand accounts, 55% were in low-cost savings and NOW accounts, and 26% were in time deposits.

On March 31, 2011, loans outstanding were $205 million, an increase of $9 million, or 5%, over a year ago. The profile of the Company's loan portfolio remains relatively low-risk. The Company's allowance for loan losses as a percent of total loans was 1.13% at March 31, 2011 and March 31, 2010. The Company had non-accrual loans totaling $2.5 million equal to 1.24% of total loans on March 31, 2011 compared to non-accrual loans of $3.1 million or 1.59% of total loans a year ago. Total non-accrual loans and loans 30 or more days past due decreased from 1.66% of loans outstanding on March 31, 2010 to 1.30% of loans outstanding on March 31, 2011.

Total revenues, consisting of net interest and dividend income plus noninterest income, were $2,968,000 in the first quarter compared to $2,856,000 a year ago, an increase of 4%. Noninterest income increased by $141,000, or 39%. This was driven by an increase of $107,000 in gains on sales of securities, a $47,000 increase in gains on loans sold, and a $42,000 increase in investment services income.

The Company's taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.32% for the first quarter of 2011, compared to 3.88% for the first quarter of 2010. While funding costs declined by 18 basis points, yield on earning assets also declined due to lower yields on loans and investments.

Total non-interest expenses for the first quarter were $2,652,000, an increase of $331,000 or 14% over the first quarter of 2010. The majority of this increase was in salaries and employee benefits due to the Company's strategic investment in mortgage lending staffing. Professional fees, data processing fees, and premises and equipment expenses all declined in the first quarter of 2011 compared to the first quarter of 2010.

In January of 2011, Simsbury Bank & Trust Company formed a subsidiary Passive Investment Company (PIC). Under State of Connecticut statutes, such a company is not subject to Connecticut corporation business tax. Provided that statutory requirements and certain other conditions are met, the current annual benefit to net income of establishing the PIC should exceed $100,000. This benefit may adjust upward or downward as the Bank's net income changes over time. First quarter 2011 net income was negatively impacted by certain non-recurring tax charges incurred in establishing the PIC, net of a favorable federal tax adjustment, resulting in a $172,000 one-time net charge reflected in the Company's income tax provision.

"We will continue to focus on serving our current and new customers very well and thereby earning more of their business," said SBT Bancorp President and CEO, Martin J. Geitz. "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."

Capital levels for the Simsbury Bank & Trust Company on March 31, 2011 were above those required to meet the regulatory "well-capitalized" designation.

Simsbury Bank is an independent, local bank for consumers and businesses. The Bank has approximately $325 million in assets. The Bank serves customers through full-service offices in Avon, Bloomfield, Granby and Simsbury, Connecticut; loan originators throughout central 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 U.S. 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. Simsbury Bank is wholly- owned by publicly traded SBT Bancorp, Inc. Its stock 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.

SBT Bancorp, Inc
Condensed Consolidated Balance Sheets
(Dollars in thousands, except for per share amounts)
			3/31/2011		12/31/2010		3/31/2010
			(unaudited)			(unaudited)
ASSETS
	Cash and due from banks			$6,456			$7,164			$6,355
	Interest-bearing deposits with Federal Reserve Bank			37,682			12,574			4,692
	Interest bearing deposits with the Federal Home Loan Bank			-			3			446
	Federal funds sold			1,794			2,787			2,543
	Money market mutual funds			8,344			8,343			9,606
	Cash and cash equivalents			54,276			30,871			23,642
	Interest-bearing time deposits with other bank			4,885			5,963			5,533
	Investments in available-for-sale securities (at fair value)			53,812			46,289			50,308
	Federal Home Loan Bank stock, at cost			660			660			631
	Loans outstanding			204,750			205,118			195,553
	Less allowance for loan losses			2,322			2,326			2,207
	Loans, net			202,428			202,792			193,346
	Premises and equipment			535			562			641
	Other real estate owned			350			350			-
	Accrued interest receivable			929			905			958
	Bank owned life insurance			4,053			4,013			3,888
	Other assets			3,195			3,162			3,650
	Total other assets			9,062			8,992			9,137
	TOTAL ASSETS			$325,123			$295,567			$282,597
LIABILITIES AND STOCKHOLDERS' EQUITY
	Deposits:
	Demand deposits			$58,277			$55,339			$43,812
	Savings and NOW deposits			164,223			136,208			134,770
	Time deposits			76,749			77,732			75,826
	Total deposits			299,249			269,279			254,408
	Securities sold under agreements to repurchase			2,935			3,235			4,494
	Due to broker			-			-			1,013
	Other liabilities			1,012			1,086			1,038
	Total liabilities			303,196			273,600			260,953
	Stockholders' equity:
	Preferred Stock - Series A			3,862			3,851			3,816
	Preferred Stock - Series B			218			219			224
	Common Stock, no par value; authorized 2,000,000 shares;
	issued and outstanding 864,976 shares on 3/31/11,
	12/31/10, and 3/31/10			9,382			9,381			9,379
	Retained earnings			8,174			8,255			7,856
	Accumulated other comprehensive income			291			261			369
	Total stockholders' equity			21,927			21,967			21,644
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$325,123			$295,567			$282,597

SBT Bancorp, Inc
Condensed Consolidated Statements of Income
(Unaudited)
(Dollars in thousands, except for per share amounts)
			For the Quarter Ended
			3/31/2011		12/31/2010		3/31/2010
Interest and dividend income:
	Interest and fees on loans			$2,475			$2,573			$2,501
	Investment securities			398			392			470
	Federal funds sold and overnight deposits			17			11			5
	Total interest and dividend income			2,890			2,976			2,976
Interest expense:
	Deposits			418			428			473
	Repurchase agreements			8			9			10
	Federal Home Loan Bank advances			-			-			-
	Total interest expense			426			437			483
	Net interest and dividend income			2,464			2,539			2,493
Provision for loan losses			-			150			225
	Net interest and dividend income after
	provision for loan losses			2,464			2,389			2,268
Noninterest income:
	Service charges on deposit accounts			113			138			131
	Gain on sales of available-for-sale securities			107			-			-
	Other service charges and fees			131			161			154
	Increase in cash surrender value
	of life insurance policies			40			42			42
	Gain on loans sold			47			126			-
	Investment services fees and commissions			66			33			24
	Other income			-			26			12
	Total noninterest income			504			526			363
Noninterest expense:
	Salaries and employee benefits			1,413			1,312			1,085
	Premises and equipment			362			352			369
	Advertising and promotions			100			119			95
	Forms and supplies			52			47			34
	Professional fees			158			182			203
	Directors fees			39			32			48
	Correspondent charges			76			74			64
	Postage			21			27			24
	FDIC assessment			129			106			97
	Data processing			109			42			118
	Other expenses			193			194			184
	Total noninterest expense			2,652			2,487			2,321
Income before income taxes			316			428			310
Income tax provision			229			111			67
Net income			$87			$317			$243
Net income available to common shareholders			$23			$252			$178
Average shares outstanding, basic			864,976			864,976			864,796
Net income available per common share, basic			$0.03			$0.29			$0.21
Average shares outstanding, assuming dilution			865,256			865,434			865,181
Net income available per common share, assuming dilution			$0.03			$0.29			$0.21