SBT Bancorp (SBTB) 8-K SBT Bancorp, Inc. Reports 2007 Results

Exhibit 99.1

SBT Bancorp, Inc. Reports 2007 Results

SIMSBURY, Conn.--(BUSINESS WIRE)--SBT Bancorp, Inc. (the “Company”), (OTCBB: SBTB), the holding company for The Simsbury Bank & Trust Company, today announced net income of $1,139,711, or $1.33 per diluted share, for the year ended December 31, 2007 compared to $716,933, or $0.84 per diluted share, for the year ended December 31, 2006. Net income for the fourth quarter of 2007 totaled $485,201 or $0.56 per diluted share compared to $119,016 or $0.14 per diluted share for the fourth quarter of 2006.

Earnings for the fourth quarter were impacted by non-recurring revenue and expense items. Fourth quarter earnings were also impacted by an additional provision to the allowance for loan losses. Excluding these items, which included revenue from Bank Owned Life Insurance (BOLI) death benefit proceeds and investment portfolio restructuring charges, as well as the additional loan loss provision, net income for the fourth quarter would have been $247,000 or $0.29 per diluted share and net income for the year would have been $902,000 or $1.05 per diluted share.

On December 31, 2007 loans outstanding were $166 million, an increase of $8 million or 5% over a year ago. With a loan loss provision of $250k in the fourth quarter and for the entire year, the Company’s allowance for loan losses ended the year at 1.16% of total loans.

Core deposits (Demand, Savings and NOW accounts) remained constant at $124 million over the past twelve months, while total deposits ended the year at $187 million, $12 million below their December 31, 2006 level. The decrease in total deposits was primarily attributable to the Company’s strategy of paying premium interest rates on certificate of deposits only to relationship customers, which produced the favorable results of lowering the Company’s cost of funds and increasing its net interest margin.

Net interest and dividend income for 2007 totaled $7,871,782, an increase of 4% or $330,049 over 2006. The Company’s net interest margin (net interest and dividend income divided by average earning assets) was 4.04% in 2007, an increase of 27 basis points over 3.77% in 2006.

Non-interest income in 2007 equaled $1,593,477, an increase of 38% or $437,238 over 2006. Several items contributed to this increase: the Company recorded income of $605k from Bank Owned Life Insurance Policy death benefit proceeds during the fourth quarter; revenue from service charges increased by $116k or 14%; and revenue from SBT Investment Services, Inc., a wholly owned subsidiary of the Bank, increased by $45k or 27%. Offsetting these increases in revenue were fourth quarter charges related to restructuring the Bank’s investment portfolio which included $86k in losses on securities sold and a $228k impairment charge on a FNMA preferred stock security that no longer meets the Company’s investment criteria and has been designated other-than-temporarily-impaired in accordance with generally accepted accounting principles (GAAP).

Non-interest expense for 2007 totaled $7,901,090, an increase of 3% or $221,138 over 2006. 2007 was the first full year the Company has operated with its new full-service branches in Canton and Bloomfield. The new premises, equipment, and staffing expenses associated with expanding the Company’s delivery network into these two new markets was the primary contributor to the non-interest expense increase.

The Company’s 2007 fourth quarter net interest margin increased to 4.09% from 3.68% in the fourth quarter of 2006.

“Our focus in 2007 has been on growing earnings through disciplined loan and deposit pricing and diversifying our sources of revenue to become less reliant on spread income. We were pleased to see these efforts produce an increase in our net interest margin and increases in fee income. Our wholly-owned subsidiary, SBT Investment Services, Inc. increased assets under management by nearly 50%, generating a 27% growth in revenues. We took action in the fourth quarter to restructure our investment portfolio and add to our loan loss reserves which should position us well for the expected upcoming economic downturn and a resulting lower interest rate environment. As we move into 2008, we will continue to focus on revenue diversification and serving our customers’ full range of financial services needs,” said Martin J. Geitz, SBT Bancorp, Inc. President & CEO.

The Simsbury Bank & Trust Company is a locally-controlled, customer-friendly commercial bank for businesses and consumers; the Bank has approximately $210 million in assets. The Bank serves customers through full-service offices in Simsbury, Avon, Bloomfield, Canton and Granby, Connecticut, SBT Online Internet banking at simsburybank.com, free ATM transactions at 2,800 machines throughout the northeastern U.S. via the SUM program in addition to thousands of ATM locations world-wide, and 24 hour telephone banking. The Bank offers investment services through its wholly-owned subsidiary, SBT Investment Services, Inc. The Company’s stock is traded over-the-counter under the ticker symbol OTCBB: SBTB. Visit the Bank’s website at 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.
CONSOLIDATED BALANCE SHEETS
December 31, 2007 and 2006
ASSETS						2007			2006
Cash and due from banks					$	13,423,626		$	10,861,262
Interest-bearing deposits with the Federal
	Home Loan Bank					25,982			17,807
Money market mutual funds						4,205			51,717
Federal funds sold						2,300,000			4,875,000
		Cash and cash equivalents				15,753,813			15,805,786
Investments in available-for-sale
	securities (at fair value)					24,870,548			37,817,246
Federal Home Loan Bank Stock, at cost						630,700			667,800
Loans						165,689,992			157,211,164
	Less allowance for loan losses					1,924,552			1,698,329
		Loans, net				163,765,440			155,512,835
Loans held-for-sale						-			268,000
Premises and equipment						1,222,955			1,551,960
Accrued interest receivable						808,430			894,999
Bank owned life insurance						1,818,081			2,827,460
Other assets						1,520,314			1,700,464
	Total other assets					5,369,780			7,242,883
			Total assets		$	210,390,281		$	217,046,550
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
	Demand deposits				$	40,195,563		$	38,791,256
	Savings and NOW deposits					83,444,481			85,035,535
	Time deposits					63,165,821			74,575,367
			Total deposits			186,805,865			198,402,158
Securities sold under agreements to
	repurchase					1,363,033			1,627,896
Federal Home Loan Bank advance						2,000,000			0
Due to Broker						1,433,223			0
Other liabilities						1,470,101			897,432
			Total liabilities			193,072,222			200,927,486
Stockholders' equity:
	Common stock, no par value; authorized
		2,000,000 shares; issued and
		outstanding 849,468 shares in 2007 and
		841,191 shares in 2006				8,975,051			8,636,380
	Retained earnings					8,602,875			7,837,022
	Accumulated other comprehensive loss					(259,867	)		(354,338	)
			Total shareholders' equity			17,318,059			16,119,064
			Total liabilities and
				stockholders' equity	$	210,390,281		$	217,046,550

SBT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31, 2007 and 2006
				2007			2006
Interest and dividend income:
	Interest and fees on loans		$	9,656,912		$	9,068,964
	Interest on debt securities:
		Taxable		1,191,681			1,558,164
		Tax-exempt		205,940			208,591
		Dividends		94,034			83,544
	Other interest			200,547			216,357
		Total interest and dividend income		11,349,114			11,135,620
Interest expense:
	Interest on deposits			3,355,093			3,462,049
	Interest on Federal Home Loan Bank advances			85,312			93,619
	Interest on securities sold under
		agreements to repurchase		36,927			41,219
		Total interest expense		3,477,332			3,596,887
		Net interest and dividend income		7,871,782			7,538,733
Provision for loan losses				250,000			-
		Net interest and dividend income
		after provision for loan losses		7,621,782			7,538,733
Noninterest income:
	Service charges on deposit accounts			413,758			336,664
	Other service charges and fees			525,625			486,458
	Increase in cash surrender value of life
		insurance policies		123,120			130,656
	BOLI Death Benefit Income			605,000			-
	Broker commissions			210,631			165,496
	Gain (losses) on loans sold			(414	)		3,977
	Gain (losses) on securities			(313,569	)		-
	Other income			29,326			32,988
		Total noninterest income		1,593,477			1,156,239
Noninterest expenses:
	Salaries and employee benefits			4,166,414			4,036,284
	Occupancy expense			1,115,588			1,028,280
	Equipment expense			391,122			324,683
	Professional fees			417,476			364,181
	Advertising and promotions			335,999			346,677
	Forms and supplies			126,826			209,355
	Correspondent charges			187,484			196,001
	Postage			92,744			102,850
	Directors fees			140,500			129,335
	Other expense			926,937			942,306
		Total noninterest expense		7,901,090			7,679,952
		Income before income tax expense		1,314,169			1,015,020
Income tax expense				174,458			298,087
		Net income	$	1,139,711		$	716,933
Earnings per common share			$	1.34		$	0.85
Earnings per common share, assuming dilution			$	1.33		$	0.84

SBT BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except for per share amounts)
			For the Quarter Ended					For the Year Ended
				12/31/07			12/31/06		12/31/07			12/31/06
Interest and dividend income
	Interest and fees on loans		$	2,453		$	2,347	$	9,657		$	9,069
	Investment securities			338			465		1,492			1,851
	Federal funds sold and overnight deposits			28			75		200			216
		Total interest and dividend income		2,819			2,887		11,349			11,136
Interest expense
	Deposits			837			978		3,355			3,462
	Repurchase agreements			11			16		37			41
	Federal Home Loan Bank advances			14			29		85			94
		Total interest expense		862			1,023		3,477			3,597
		Net interest and dividend income		1,957			1,864		7,872			7,539
Provision for loan losses				250			-		250			-
		Net interest and dividend income
		after provision for loan losses		1,707			1,864		7,622			7,539
Noninterest income
	Service charges on deposit accounts			116			95		414			337
	Other service charges and fees			132			127		526			486
	Increase in cash surrender value
		of life insurance policies		10			5		123			131
	BOLI Death Benefit Income			605			-		605			-
	Gains (losses) on loans sold			-			-		-			4
	Gains (losses) on securities			(314	)		-		(314	)
	Investment services fees and commissions			44			35		210			165
	Other income			10			6		29			33
		Total noninterest income		603			268		1,593			1,156
Noninterest expense
	Salaries and employee benefits			1,045			1,052		4,166			4,036
	Premises and equipment			378			385		1,507			1,353
	Advertising and promotions			77			65		336			347
	Forms and supplies			26			48		127			210
	Professional fees			74			76		417			364
	Directors fees			36			27		141			129
	Correspondent charges			48			45		187			196
	Postage			25			28		93			103
	Other expenses			224			250		927			942
		Total noninterest expense		1,933			1,976		7,901			7,680
		Income before taxes		377			156		1,314			1,015
Income tax provision				(108	)		37		174			298
Net income			$	485		$	119	$	1,140		$	717
Net income per share, basic			$	0.57		$	0.14	$	1.34		$	0.85
Net income per share, assuming dilution			$	0.56		$	0.14	$	1.33		$	0.84

CONTACT:
The Simsbury Bank & Trust Company
Anthony F. Bisceglio, 860-408-5493
EVP & CFO
860-408-4679 (fax)
abisceglio@simsburybank.com