October 24, 2008 at 13:59 PM EDT
CBT Posts Results for the Quarter Ended September 30, 2008
Assets Grow and Capital Remains Strong

HARTFORD, Conn., Oct. 24, 2008 (GLOBE NEWSWIRE) -- The Connecticut Bank and Trust Company (Nasdaq:CTBC) ("CBT") reported a net loss of $1,487,000, or $0.42 per share, for the third quarter of 2008, compared to a $530,000, or $0.15 per share loss, for the quarter ended September 30, 2007. The results included additions to the allowance for loan losses of $1,316,000 in the quarter compared to $111,000 in the third quarter of 2007. Chairman and CEO David A. Lentini remarked, "Banks in the United States have and will report some of the worst quarterly results in recent memory and many of these losses will come from the write-downs of the value of Fannie Mae and Freddie Mac securities they held for investment purposes. Even though CBT did not hold any of these securities, we were not immune to the recessionary pressures around us. The unusually large provision to the allowance for loan losses in this quarter is in direct response to those pressures and reflects both increases in recognition of a weakening economic outlook and for individual customers experiencing difficulty."

Lentini added, "Going forward we remain well-capitalized and look forward to reaching profitability in the near future. Although it is hard to predict anything in these difficult times, it appears that on an operating level, we will get close to a break-even situation in the fourth quarter. Further Federal Reserve interest rate reductions or more weakening in our local economy, could adversely affect our results."

For the nine-month period ended September 30, 2008, CBT reported a net loss of $2,178,000, or $0.61 per share, compared to a loss of $1,760,000, or $0.50 per share, for the nine-month period ended September 30, 2007.

Quarterly Results of Operations. Net interest income rose $256,000 to $1,734,000 for the three-month period ended September 30, 2008 over the same period in the prior year. In the 12 months ended September 30, 2008, the Federal Open Market Committee acted seven times to lower the Fed Funds Target Rate and the Prime Rate a total of 2.75%. These unprecedented actions taken by the Federal Reserve will take time to work through the local economy. CBT's net interest income grew by increasing interest earning assets and lowering its costs of funding. Average interest earning assets grew $40 million in the quarter ended September 30, 2008 over the same period in 2007. The net interest margin decreased 19 basis points to 3.39%, compared to 3.58% for the quarter ended September 30, 2007.

Noninterest income was $146,000 in the quarter ended September 30, 2008, an increase of 33% compared to the same period a year earlier primarily due to the increase in fee based services.

Noninterest expense increased $45,000 or 2%, to $2,051,000 for the three-month period ending September 30, 2008, compared to the same period in the prior year. The increase is primarily the result of higher occupancy costs, including rent, taxes and utilities. CBT's efficiency ratio, which measures recurring operating expenses as a percentage of net interest income plus noninterest income for the current quarter, improved to 1.09%, compared to 1.26%, in the same period last year.

Balance Sheet Performance. Total assets grew $44.8 million, or 25%, to $223.5 million at September 30, 2008, compared to $178.7 million at December 31, 2007. Total loans outstanding grew $26.8 million to $169.5 million and total investments grew $8.5 million to $28.4 million at September 30, 2008. Cash and cash equivalents increased $7.6 million to $19.1 million to ensure adequate liquidity and provide funding for future growth. Asset growth was funded through a combination of increased deposits and increased borrowings from the Federal Home Loan Bank of Boston. Total deposits were $169.9 million at September 30, 2008, an increase of $32.1 million from December 31, 2007. Borrowings from the Federal Home Loan Bank of Boston totaled $30.5 million, increasing $13.0 million from the $17.5 million at December 31, 2007. The Bank continues to be well-capitalized with stockholders' equity of $18.1 million at September 30, 2008. The ratio of stockholders' equity to total assets was 8.1%.

Asset Quality. Asset quality remains strong at CBT. Total nonaccrual loans were $2.0 million and represented 1.21% of total loans outstanding at September 30, 2008. The allowance for loan losses is $2.6 million at September 30, 2008, or 1.52% of outstanding loans, compared to $1.7 million, or 1.19% of outstanding loans at December 31, 2007. The coverage ratio, which measures the ratio of allowance for loan losses to nonperforming loans, was 126% at September 30, 2008. CBT had no other loans that were past due 90 days or more.

CEO Lentini ended his remarks by saying, "The economic pressures affecting our customers have, in turn, affected CBT as well. The unprecedented actions taken by the Federal Reserve and other federal agencies will take time to work through the local economy. With our strong capital position, our outlook remains positive about our ability to meet the continuing financial needs of our marketplace."



 ---------------------------------------------------------------------
                            Selected Performance Data
 ---------------------------------------------------------------------
                                Three months ended
 ---------------------------------------------------------------------
 Dollar
  values in
  thousands
  except    June 30,  Sept 30,   Dec 31,   Mar 31,  June 30,  Sept 30,
  per share   2007      2007      2007      2008      2008      2008
 -------------------  --------  --------  --------  --------  --------

 Total
  assets
  (EOP)     $169,816  $181,457  $178,739  $204,205  $200,128  $223,465

 Net
  operating
  loss      $   (592) $   (530) $   (388) $   (396) $   (295) $ (1,487)
 Net
  interest
  margin        3.46%     3.58%     3.64%     3.37%     3.43%     3.39%
 Net
  interest
  spread        2.49%     2.54%     2.58%     2.45%     2.75%     2.79%
 Ratio of
  total
  stock-
  holders'
  equity to
  total
  assets
  (EOP)        12.25%    11.35%    11.44%     9.82%     9.65%     8.09%
 Weighted
  avg shrs
  outstanding  3,534     3,534     3,537     3,545     3,550     3,552
 Loss per
  share     $  (0.17) $  (0.15) $  (0.11) $  (0.11) $  (0.08) $  (0.42)
 Book value
  per share
  (EOP)     $   5.83  $   5.77  $   5.72  $   5.62  $   5.40  $   5.06
 Allowance
  for loan
  losses to
  total
  loans (EOP)   1.22%     1.23%     1.19%     1.19%     1.21%     1.52%
 ---------------------------------------------------------------------

                                                    Nine months ended
                                                    ------------------
 Dollar values in thousands                         Sept 30,  Sept 30,
  except per share                                    2007      2008
 -------------------------------------------------  --------  --------

 Total assets (EOP)                                 $181,457  $223,465

 Net operating loss                                 $ (1,760) $ (2,178)
 Net interest margin                                    3.57%     3.40%
 Net interest spread                                    2.54%     2.67%
 Ratio of total stockholders'
  equity to total assets (EOP)                         11.35%     8.09%
 Weighted avg shrs outstanding                         3,534     3,548
 Loss per share                                     $  (0.50) $  (0.61)
 Book value per share (EOP)                         $   5.77  $   5.06
 Allowance for loan losses to total loans (EOP)         1.23%     1.52%
 ---------------------------------------------------------------------

Caution concerning forward-looking statements:

Statements contained in this release, which are not historical facts, may be considered forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated, due to a number of factors which include without limitation the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, changes in the interest rates, the effects of competition, and other factors that could cause actual results to differ materially from those provided in any such forward-looking statements. CBT does not undertake to update its forward-looking statements. See financial statements accompanying this release for additional data.



                THE CONNECTICUT BANK AND TRUST COMPANY
                     Summarized Statements of Loss
                              (Unaudited)

                              Three Months Ended     Nine Months Ended
                                 September 30,         September 30,
                              ------------------    ------------------
(Dollars in thousands,
 except share data)             2008       2007       2008       2007
                              -------    -------    -------    -------
Interest and dividend income:
 Interest and fees on loans   $ 2,651    $ 2,423    $ 7,805    $ 6,708
 Debt securities                  356        254        938        749
 Dividends                         10         26         61         71
 Federal funds sold/other          37        196        149        340
                              -------    -------    -------    -------
Total interest and dividend
 income                         3,054      2,899      8,953      7,868
                              -------    -------    -------    -------
Interest expense:
 Deposits                       1,039      1,236      3,282      3,325
 Borrowed funds                   281        185        781        528
                              -------    -------    -------    -------
Total interest expense          1,320      1,421      4,063      3,853
                              -------    -------    -------    -------
Net interest income             1,734      1,478      4,890      4,015
Provision for loan losses       1,316        111      1,537        238
                              -------    -------    -------    -------
  Net interest income, after
   provisions                     418      1,367      3,353      3,777
                              -------    -------    -------    -------
Noninterest income:
 Service charges and fees          69         44        172        127
 Brokerage commissions             77         65        213        189
 Gains (losses) from sales of
  available-for-sale
  securities, net                  --         --         65        (42)
                              -------    -------    -------    -------
  Total noninterest income        146        109        450        274
                              -------    -------    -------    -------
Noninterest expenses:
 Salaries and benefits          1,102      1,104      3,244      3,276
 Occupancy and equipment          467        386      1,333      1,067
 Data processing                   76         58        218        157
 Marketing                         90        118        230        339
 Professional services            115        138        325        359
 Other general and
  administrative                  201        202        631        613
                              -------    -------    -------    -------
  Total noninterest expenses    2,051      2,006      5,981      5,811
                              -------    -------    -------    -------
Net loss                      $(1,487)   $  (530)   $(2,178)   $(1,760)
                              =======    =======    =======    =======
Net loss per share:
 Basic                        $ (0.42)   $ (0.15)   $ (0.61)   $ (0.50)
 Diluted                      $ (0.42)   $ (0.15)   $ (0.61)   $ (0.50)


               THE CONNECTICUT BANK AND TRUST COMPANY
                           BALANCE SHEETS
                       (Dollars in Thousands)

                               ASSETS

                                     Sept. 30,   Dec. 31,    Sept. 30,
                                       2008        2007        2007
                                    (Unaudited)             (Unaudited)
                                    ----------  ----------  ----------
 Cash and due from banks            $    7,564  $    3,411  $    6,383
 Federal funds sold                     11,545       8,080      17,609
                                    ----------  ----------  ----------
   Cash and cash equivalents            19,109      11,491      23,992

 Securities available for sale          28,381      19,894      21,089
 Certificates of deposit                   491          76          76
 Federal Reserve Bank stock, at cost       585         635         635
 Federal Home Loan Bank stock, at
  cost                                   1,585         945         914

 Loans                                 169,467     142,686     132,172
 Less: allowance for loan losses        (2,572)     (1,693)     (1,622)
                                    ----------  ----------  ----------
 Loans, net                            166,895     140,993     130,550

 Premises and equipment, net             2,710       3,053       2,652
 Accrued interest receivable               867         830         820
 Other assets                            2,842         822         729
                                    ----------  ----------  ----------
 Total Assets                       $  223,465  $  178,739  $  181,457
                                    ==========  ==========  ==========

                LIABILITIES AND STOCKHOLDERS' EQUITY

 Deposits                           $  169,936  $  137,800  $  140,607
 Short-term borrowings                   2,529       2,255       2,028
 Long-term debt                         30,450      17,450      17,450
 Other liabilities                       2,480         793         777
                                    ----------  ----------  ----------
   Total liabilities                   205,395     158,298     160,862
                                    ----------  ----------  ----------

 Stockholders' equity;
  Common stock, $1.00 par value;
   10,000,000 shares authorized;
   3,572,450 shares issued and
   outstanding at September 30,
   2008, and December 31, 2007           3,572       3,572       3,572
  Common stock warrants                    853         853         853
  Additional paid-in capital            29,759      29,700      29,678
  Restricted stock unearned
   compensation                           (172)       (279)       (318)
  Retained deficit                     (15,320)    (13,142)    (12,754)
  Accumulated other comprehensive
   loss                                   (622)       (263)       (436)
                                    ----------  ----------  ----------
   Total stockholders' equity           18,070      20,441      20,595
                                    ----------  ----------  ----------
 Total Liabilities and
  Stockholders' Equity              $  223,465  $  178,739  $  181,457
                                    ==========  ==========  ==========
CONTACT:  The Connecticut Bank and Trust Company
          David A. Lentini
          860-748-4250
          dlentini@thecbt.com
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