SBT Bancorp, Inc. Reports Second Quarter 2013 Results

SBT Bancorp, Inc. Reports Second Quarter 2013 Results

SIMSBURY, Conn.--(BUSINESS WIRE)-- SBT Bancorp, Inc., (OTCBB: SBTB), holding company for Simsbury Bank & Trust Company, today announced net income of $401,000 or $0.43 per diluted share for the second quarter of 2013, compared to $453,000 or $0.49 per diluted share for the second quarter of 2012.

For the six months ended June 30, 2013, net income amounted to $918,000, or $0.99 per diluted share. This compares to net income of $934,000 or $0.96 per diluted share for the six months ended June 30, 2012. Total assets on June 30, 2013 were $382 million compared to $340 million on June 30, 2012.


Key highlights for the second quarter of 2013 included:

  • Total assets grew $43 million or 13%
  • Total loans increased $32 million or 14% reflecting growth in both commercial loans and residential mortgages
  • Total deposits increased $17 million or 6%
  • Non-interest income increased by $16 thousand or 2% due to an increase in service charge and fee income
  • Year-to-date non-interest income increased by $342 thousand or 21%
  • Net interest and dividend income was flat compared to the second quarter of 2012
  • Second quarter net interest margin of 3.10% was up by 7 basis points compared to the first quarter of 2013
  • Second quarter 2013 net income was $52 thousand or 11% lower than second quarter of 2012 net income
  • Year-to-date 2013 diluted earnings per share increased $0.03 or 3% compared to the same period in 2012
  • A rapid increase in longer-term interest rates during the second quarter of 2013 negatively impacted residential mortgage refinancing activity and gain-on-sale income
  • Total loan delinquency increased to 1.38% of total loans compared to the previous year's 0.45% primarily due to two related business loans totaling $1.1 million that were placed on non-accrual status during the quarter. Both loans are well collateralized, with no loss expected. Overall loan delinquency remains favorable to peers.
  • The allowance for loan losses at June 30, 2013 was 1.04% of total loans.
  • The Bank's Total Risk Based Capital ratio ended the second quarter of 2013 at 14.18%
  • During the month of June, the Company began moving its administrative offices to a larger facility to accommodate growth. The move was completed in July.

"The second quarter featured double-digit growth in our loan portfolio and mortgage originations and continued strong deposit growth. Our earnings performance, however, was disappointing as the sudden and dramatic rise in market interest rates adversely impacted our mortgage gain-on-sale revenue trend and slowed demand for mortgage refinancings. Nevertheless, we are very pleased with progress in our commercial lending operations, with commercial loan balances increasing by $10 million or 17% since yearend 2012," stated SBT Bancorp President and CEO, Martin J. Geitz. "During the quarter, we also began moving the Company's administrative offices to a larger more efficient facility that consolidates all non-branch personnel and provides a very functional working environment that will accommodate our anticipated growth for the next several years."

On June 30, 2013, loans outstanding were $255 million, an increase of $32 million, or 14%, over a year ago. Commercial loans grew by $14 million or 25%, Residential mortgage loans grew by $20 million or 19%, and Consumer loans declined by $2 million or 3%. Mortgage and consumer loan closings combined increased by 7% in the second quarter and 20% during the first six months of the year, respectively, compared to 2012 performance. Mortgage closings were 4% higher for the second quarter and 17% higher for the first half of the year. Consumer loan closings were 26% higher for the second quarter and 37% higher than 2012 for the first half of the year. The Bank was first in mortgage loan volume market share, according to the Warren Group, in its four town branch market as well as its nine town CRA market area. The profile of the Company's loan portfolio remains relatively strong. The Company's allowance for loan losses at June 30, 2013 was 1.04% of total loans. The Company had non-accrual loans totaling $2.7 million equal to 1.07 % of total loans on June 30, 2013 compared to non-accrual loans totaling $847 thousand or 0.38% of total loans a year ago. Total non-accrual and delinquent loans on June 30, 2013 were 1.38% of loans outstanding compared to 0.45% on June 30, 2012. The increase in non-accrual and delinquent loans was primarily due to two loans to related businesses that discontinued operations in June, totaling $1.1 million. Both loans are fully collateralized with no loss expected.

Total deposits on June 30, 2013 were $325 million, an increase of $17 million or 6% over a year ago. This growth was mainly in core demand deposits. At quarter-end, 30% of total deposits were in non-interest bearing demand accounts, 48% were in low-cost savings and NOW accounts, and 22% were in time deposits.

Total revenues, consisting of net interest and dividend income plus noninterest income, were $3,630,000 in the second quarter compared to $3,616,000 a year ago, an increase of less than 1%. Net interest and dividend income decreased by $2,000, primarily due to a decline in loan yields. Noninterest income increased by $16,000 or 2% primarily due to an increase in service charge and fee income. For the six months ended June 30, 2013, total revenues were $7,326,000 compared to $7,012,000 for the six months ended June 30, 2012, an increase of $314,000 or 4%. Over this period, net interest and dividend income declined by $28,000 while noninterest income increased by $342,000 or 21% primarily due to an increase in gains on loans sold.

The Company's taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.10% for the second quarter of 2013, compared to 3.34% for the second quarter of 2012 and 3.03% for the first quarter of 2013. The Company's cost of funds declined 7 basis points while the yield on interest earning assets decreased 30 basis points during the second quarter of 2013, compared to the second quarter of 2012.

Total noninterest expenses for the second quarter of 2013 were $3,050,000, an increase of $104,000 or 3.5% above the second quarter of 2012. Second quarter 2013 expense increases included occupancy costs related to relocating the Company's administrative offices to a larger facility. The move was completed during the month of July. Salary and employee benefits increased by $111,000 or 6.9%. Professional fees declined by $51,000 or 29%. For the six months ended June 30, 2013, total noninterest expenses were $6,040,000 compared to $5,592,000 for the six months ended June 30, 2012, an increase of $448,000 or 8%. Over this period, the increase in expenses was primarily in salary and employee benefits.

Capital levels for the Simsbury Bank & Trust Company on June 30, 2013 were above those required to meet the regulatory "well-capitalized" designation.

 

Capital Ratios
June 30, 2013

    

Simsbury Bank &
Trust Company

   

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio   7.47%   5.00%
Tier 1 Risk-Based Capital Ratio   12.98%   6.00%
Total Risk-Based Capital Ratio   14.18%   10.00%
      

Simsbury Bank is an independent, local bank for consumers and businesses. The Bank has approximately $382 million in assets. The Bank serves customers through full-service offices in Avon, Bloomfield, Granby and Simsbury, Connecticut; loan originators active throughout Southern New England and a mortgage production office 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 and Subsidiary
Condensed Consolidated Balance Sheets
June 30, 2013 and 2012
      

(In Thousands, Except Share Data)

 
6/30/201312/31/20126/30/2012
(unaudited)(unaudited)

ASSETS

Cash and due from banks$8,019$12,372$8,101

Interest-bearing deposits with Federal Reserve Bank of Boston

and Federal Home Loan Bank4,75419,27617,739
Money market mutual funds474358348
Federal funds sold 40  2,094  2,314 
Cash and cash equivalents13,28734,10028,502
 
Interest-bearing time deposits with other bank2,7813,7893,715
Investments in available-for-sale securities (at fair value)99,74391,82075,709
Federal Home Loan Bank stock, at cost1,646589589
 
Loans outstanding254,522235,884222,632
Less allowance for loan losses 2,643  2,594  2,439 
Loans, net 251,879  233,290  220,193 
 
Premises and equipment783824840
Accrued interest receivable1,0711,019977
Other real estate owned178213372
Bank owned life insurance6,6286,5206,268
Other assets 4,452  2,855  2,652 
Total other assets 13,112  11,431  11,109 
 
 
TOTAL ASSETS$382,448 $375,019 $339,817 
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits$96,698$92,670$72,906
Savings and NOW deposits155,099175,268159,887
Time deposits 72,791  72,471  74,757 
Total deposits324,588340,409307,550
 
Securities sold under agreements to repurchase2,4223,5692,673
FHLBB Advances

26,000

-

-
Other liabilities 1,483  1,604  1,186 
Total liabilities 354,493  345,582  311,409 
 
Stockholders' equity:
Preferred Stock, senior non-cumulative perpetual, Series C, no par; 9,000
shares issued and outstanding at June 30, 2013 and 2012;
liquidation value of $1,000 per share8,9708,9648,958
Common Stock, no par value; authorized 2,000,000 shares;
issued and outstanding 889,029 shares and 888,310 shares, respectively,
at 6/30/13 and 888,724 shares and 888,310 shares, respectively, at 12/31/129,9209,9019,631
Retained earnings10,4389,8198,991
Treasury Stock, 414 shares(7)(7)(7)
Unearned compensation restricted stock awards(290)(368)(163)
Accumulated other comprehensive income (1,076) 1,128  998 
Total stockholders' equity 27,955  29,437  28,408 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$382,448 $375,019 $339,817 
 

SBT Bancorp, Inc
Condensed Consolidated Statements of Income
(Unaudited)
        
(Dollars in thousands, except for per share amounts)
 
For the quarter endedFor the six months ended
6/30/20136/30/20126/30/20136/30/2012
 
Interest and dividend income:
Interest and fees on loans$2,320$2,433$4,654$4,935
Investment securities5564691,090883
Federal funds sold and overnight deposits 9   20 21  58
Total interest and dividend income 2,885   2,922 5,765  5,876
 
Interest expense:
Deposits216253436521
Repurchase agreements 3   1   4  2
Total interest expense 219   254   440  523
 
Net interest and dividend income2,6662,6685,3255,353
 
Provision for loan losses 80 60 110  150
 
Net interest and dividend income after
provision for loan losses 2,586 2,608 
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