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Section 1: DEF 14A (SBT BANCORP, INC. DEF 14A)


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 14A

           Proxy Statement Pursuant to Section 14(a) of the Securities
                      Exchange Act of 1934 (Amendment No.)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:

[ ]    Preliminary Proxy Statement
[ ]    Confidential, for Use of the Commission Only (as permitted by Rule
       14a-6(e)(2))
[X]    Definitive Proxy Statement
[ ]    Definitive Additional Materials
[ ]    Soliciting Material Pursuant to ss.240.14a-12


                                SBT Bancorp, Inc.
--------------------------------------------------------------------------------
                (Name of Registrant as Specified In Its Charter)



--------------------------------------------------------------------------------
    (Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X]    No fee required.
[ ]    Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

       1) Title of each class of securities to which transaction applies:

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       2) Aggregate number of securities to which transaction applies:

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       3) Per unit price or other underlying value of transaction computed
          pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
          filing fee is calculated and state how it was determined):

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       4) Proposed maximum aggregate value of transaction:

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       5) Total fee paid:

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[ ]    Fee paid previously with preliminary materials.

[ ]    Check box if any part of the fee is offset as provided by Exchange Act
       Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
       paid previously. Identify the previous filing by registration statement
       number, or the Form or Schedule and the date of its filing.

       1) Amount Previously Paid:

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       2) Form, Schedule or Registration Statement No.:

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       3) Filing Party:

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       4) Date Filed:

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                                       2
      



                                SBT BANCORP, INC.

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                             TO BE HELD MAY 8, 2007




To the Shareholders of SBT Bancorp, Inc.:

         Notice is hereby given that the Annual Meeting of  Shareholders  of SBT
Bancorp, Inc. will be held at the main office of the Company's  subsidiary,  The
Simsbury Bank & Trust Company,  981 Hopmeadow Street,  Simsbury,  Connecticut on
Tuesday,  May 8, 2007 at 5:00 p.m., local time. At the meeting, the shareholders
will consider and vote upon the following matters:

          1.   The election of five directors, four of whom shall serve as Class
               II directors for a term expiring at the 2010 Annual Meeting and
               one of whom shall serve as a Class III director for a term
               expiring at the 2008 Annual Meeting.

          2.   The ratification of the appointment of Shatswell, MacLeod & Co.,
               P.C., certified public accountants, as independent auditors for
               SBT Bancorp, Inc. for the fiscal year ending December 31, 2007;

          3.   The transaction of such other business as may properly be brought
               before the meeting or any adjournment or postponement thereof.

         Only  shareholders of record at the close of business on March 16, 2007
are  entitled  to notice of and to vote at the  Annual  Meeting  and any and all
adjournments or postponements thereof.

         IT IS IMPORTANT THAT YOUR STOCK BE REPRESENTED AT THE MEETING.  WE URGE
YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE  WHETHER
OR NOT YOU PLAN TO ATTEND  THE  MEETING IN  PERSON.  SHAREHOLDERS  OF RECORD WHO
ATTEND THE MEETING MAY REVOKE THEIR PROXY AND VOTE IN PERSON.

                                         BY ORDER OF THE BOARD OF DIRECTORS



Simsbury, Connecticut                    Jane F. von Holzhausen,
April 12, 2007                           Secretary


      


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                                SBT BANCORP, INC.
                              760 Hopmeadow Street
                                  P.O. Box 248
                             Simsbury, CT 06070-0248
                                 (860) 408-5493

           --------------------------------------------------------
                                 PROXY STATEMENT
                                       OF
                                SBT BANCORP, INC.

                       FOR ANNUAL MEETING OF SHAREHOLDERS
                             TO BE HELD MAY 8, 2007
            --------------------------------------------------------

         This Proxy Statement is furnished to Shareholders of SBT Bancorp,  Inc.
(the "Company" or "we") in connection  with the  solicitation  of proxies by the
Company's  Board of Directors  (the  "Board")  for use at the Annual  Meeting of
Shareholders  of the  Company  to be held at the main  office  of the  Company's
subsidiary,  The Simsbury  Bank & Trust  Company  (the  "Bank"),  981  Hopmeadow
Street,  Simsbury,  Connecticut,  at 5:00 p.m.  on May 8, 2007,  and any and all
adjournments or postponements thereof (the "2007 Annual Meeting").

         This  Proxy  Statement,  the  Notice of the 2007  Annual  Meeting,  the
enclosed form of proxy and the Annual Report to Shareholders for the year ending
December 31, 2006 for SBT Bancorp,  Inc.  (the "Annual  Report") are first being
mailed to our  shareholders  on or about April 12, 2007.  We will,  upon written
request and without  charge,  furnish you with  additional  copies of the Annual
Report.  Please  address all such  requests to us by mail to SBT Bancorp,  Inc.,
Attention: Jane F. von Holzhausen, at the above address. The principal executive
offices of the  Company  are  located at 760  Hopmeadow  Street,  P.O.  Box 248,
Simsbury, Connecticut 06070-0248 (telephone number (860) 408-5493).


                    INFORMATION ABOUT SOLICITATION AND VOTING

         A shareholder  who executes the enclosed form of proxy may revoke it at
any time  before  it is voted by  written  notice of such  revocation  or a duly
executed proxy bearing a later date delivered to the Secretary of the Company at
the address set forth above or by attending the 2007 Annual Meeting and revoking
the proxy at such time.  Attendance  at the 2007 Annual  Meeting will not itself
revoke a proxy. Shares represented by properly executed proxies will be voted at
the  2007  Annual  Meeting  in  accordance  with  the  specifications   thereon.
Shareholders  of record who are present at the 2007  Annual  Meeting may vote by
ballot.

         The expense of soliciting  proxies in favor of the Company's  proposals
will be borne by the Company.  In addition to  solicitation  of proxies by mail,
proxies may also be  solicited  by  telephone  or personal  contact by employees
and/or  directors  of the Company who will not receive  additional  compensation
therefore.

         Only  Shareholders of record at the close of business on March 16, 2007
(the  "Record  Date")  are  entitled  to notice  and to vote at the 2007  Annual
Meeting.  On the Record  Date,  there  were  848,459  outstanding  shares of the
Company's common stock, no par value (the "Company common stock"). Each share of
common stock is entitled to one vote. The presence,  in person or by proxy, of a
majority  of the issued  and  outstanding  shares of common  stock on the Record
Date, or 424,230 shares,  is necessary to constitute a quorum at the 2007 Annual
Meeting.   Abstentions   and  broker   non-votes  are  counted  as  present  for
establishing  a quorum.  When a record holder (e.g.,  a bank or brokerage  firm)
holding shares for a beneficial owner votes on one proposal but does not vote on
another   proposal   because  the  beneficial  owner  has  not  provided  voting
instructions, this is referred to as a "broker non-vote."

         If the shares you own are held in "street  name" by a bank or brokerage
firm,  your bank or brokerage  firm,  as the record  holder of your  shares,  is
required to vote your shares  according to your  instructions.  In order to vote
your shares,  you will need to follow the directions your bank or brokerage firm
provides you.

      

         If your  shares  are held in  "street  name," you must bring an account
statement  or letter from your  brokerage  firm or bank showing that you are the
beneficial  owner of the shares as of the record date in order to be admitted to
the Annual  Meeting.  To be able to vote your  shares held in street name at the
Annual Meeting, you will need to obtain a proxy card from the holder of record.

         With respect to the proposals at the 2007 Annual Meeting,  the election
of directors and the approval of the  appointment  of the Company's  independent
auditors,  your broker is entitled to use its  discretion in voting your shares,
even if you do not give your broker instructions as to how to vote.

         The votes will be counted,  tabulated and certified by Robert J. Bogino
and James T. Fleming. Each proxy received will be voted as directed. However, if
no direction is indicated,  the proxy will be voted:  in Item 1 FOR the election
to the Board of  Directors  of the four Class II director  nominees  and the one
Class III director nominee; in Item 2 FOR the ratification of Shatswell, MacLeod
& Co., P.C. as independent  auditors;  and on such other matters as may properly
come  before the 2007  Annual  Meeting in such manner as the persons so named in
the proxy shall decide.

         We will  report the  voting  results  in our  quarterly  report on Form
10-QSB  for the  second  quarter  of 2007,  which  we  expect  to file  with the
Securities and Exchange Commission, on or before August 14, 2007.

         If you  have  any  questions  about  the 2007  Annual  Meeting  or your
ownership  of our common  stock,  please  contact  Jane F. von  Holzhausen,  our
corporate  secretary,  by mail at SBT  Bancorp,  Inc.,  Attention:  Jane F.  von
Holzhausen, Secretary, 760 Hopmeadow Street, P.O. Box 248, Simsbury, Connecticut
06070-0248,    or   by   email   to   Ms.   von   Holzhausen's    attention   at
[email protected]


         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         To the  knowledge  of the  Company,  as of March 9,  2007,  there is no
person who owns of record or beneficially  five percent or more of the Company's
common stock.

         The following table sets forth certain  information with respect to the
beneficial  ownership of the common stock of the Company as of February 12, 2007
by (i) each  director  and  nominee  for  director  of the  Company,  (ii) named
executive  officers,  and (iii) all directors and executive officers as a group.
Except as indicated by footnote, the persons named in the table have sole voting
and investment powers with respect to all shares shown as beneficially  owned by
them.  All persons  listed are directors of both the Company and the Bank unless
noted otherwise.

       
         
                                                                                            Amount and
                                                                                              Nature
                                                                                          Of Beneficial           Percent
       Name of Beneficial Owner                                Addresses                    Ownership            Of Class
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      
Robert J. Bogino, Vice Chairman                          22 Daventry Hill Road               27,572 (1)            3.1%
                                                         Avon, CT 06001

James T. Fleming, Director                               7 Simscroft Place                      492 (2)             *
                                                         Simsbury, CT 06070

Martin J. Geitz, President, Chief Executive              318 Strickland Street               14,274 (3)            1.6%
Officer and Director                                     Glastonbury, CT 06033

Edward J. Guarco, Director                               22 R East Street                     6,800 (4)             *
                                                         Granby, CT 06035

Gary R. Kevorkian, Director                              8 Apple Lane                        16,619 (5)            1.9%
                                                         Simsbury, CT 06070
        

      

       
         
                                                                                            Amount and
                                                                                              Nature
                                                                                          Of Beneficial           Percent
       Name of Beneficial Owner                                Addresses                    Ownership            Of Class
-------------------------------------------------------------------------------------------------------------------------------
                                                                                                                      
Barry R. Loucks, Director                                57 Summit Drive                     14,087 (6)            1.6%
                                                         Windsor, CT 06095

George B. Odlum, Jr., DMD, Director                      1 Westledge Road                    13,581 (7)            1.5%
                                                         W. Simsbury, CT 06092

Rodney R. Reynolds, Director (of Bank only)              160 Granville Road                       0                 *
                                                         North Granby, CT 06060

David W. Sessions, Director                              105 Turnbull Road                   15,736 (8)            1.8%
                                                         New Hartford, CT 06057

Jane F. von Holzhausen, Director and Secretary           29 Chimney Corner Circle            11,248 (9)            1.3%
                                                         Guilford, CT 06437

Penny R. Woodford, Director                              687 West Avon Road                   2,262 (10)            *
                                                         Avon, CT 06001

Lincoln S. Young, Chairman                               60 Pine Hill Road                   18,612 (11)           2.1%
                                                         New Hartford, CT 06057

Anthony F. Bisceglio, Executive Vice President and       418 Olde Stage Road                 10,500 (12)           1.2%
Chief Financial Officer                                  Glastonbury, CT 06033

Terry L. Boulton, Senior Vice President and Chief        36 Laurel Lane                         300                 *
Retail Banking Officer                                   Simsbury, CT 06070

Paul R. Little, Senior Vice President and Chief          344 Toll Gate Road                       0                 *
Lending Officer                                          Berlin, CT 06037

All directors and executive officers
(as a group)                                                                                152,083 (13)          17.2%
----------------------------
* Less than 1%
        

(1)  Includes 6,600 shares owned jointly with Mr.  Bogino's  spouse,  822 shares
     held in a trust of which Mr.  Bogino  serves as  trustee,  2,084  shares in
     trusts for two of his children for which Mr.  Bogino  serves as the trustee
     and 11,500 shares owned by his spouse.  Includes  1,000 shares which may be
     acquired  within 60 days through the exercise of stock options.  Mr. Bogino
     disclaims  beneficial  ownership  of the shares  beneficially  owned by his
     spouse.

(2)  Includes  266  shares  which may be  acquired  within 60 days  through  the
     exercise of stock options.

(3)  Includes  7,000  shares  which may be acquired  within 60 days  through the
     exercise of stock options.

(4)  Includes 1,200 shares owned jointly with Mr.  Guarco's  spouse,  600 shares
     held by both Mr. and Mrs. Guarco as custodians for their daughter and 4,000
     shares in a trust of which Mr.  Guarco  owns 6.6%.  Includes  1,000  shares
     which may be acquired within 60 days through the exercise of stock options.

(5)  Includes 9,426 shares held in trusts for which Mr. Kevorkian is trustee and
     280 shares owned by Mr. Kevorkian's spouse.

(6)  Shares held with Mr. Loucks's spouse as joint tenants in common.

      

(7)  Includes  3,550 shares owned by Dr.  Odlum's  spouse.  Dr. Odlum  disclaims
     beneficial ownership of the shares beneficially owned by his spouse.

(8)  Includes  1,564 shares  owned  jointly with Mr.  Sessions's  spouse,  1,357
     shares  owned  by a  private  corporation  owned  by Mr.  Sessions  and his
     siblings  and 1,252  shares owned by his  children.  Includes  1,000 shares
     which may be acquired within 60 days through the exercise of stock options.
     Mr.  Sessions  disclaims  beneficial  ownership of the shares  beneficially
     owned by his children.

(9)  Includes  6,590 owned jointly with Ms. von  Holzhausen's  spouse.  Includes
     1,000 shares  which may be acquired  within 60 days through the exercise of
     stock options.

(10) Includes 1,660 shares owned jointly with Ms. Woodford's spouse.

(11) Includes  3,506 shares owned by Mr. Young's  spouse.  Includes 1,000 shares
     which may be acquired within 60 days through the exercise of stock options.
     Mr. Young disclaims  beneficial  ownership of the shares beneficially owned
     by his spouse.

(12) Includes  10,500  shares  which may be acquired  within 60 days through the
     exercise of stock options.

(13) Includes 34,800 shares which  directors and executive  officers may acquire
     beneficial  ownership  of  within 60 days  through  the  exercise  of stock
     options.

                             DISCUSSION OF PROPOSALS

                                     ITEM 1
                                     ------

                              ELECTION OF DIRECTORS

         As of the date of this Proxy  Statement,  the Company's  Certificate of
Incorporation  provides that the Board of Directors  shall be divided into three
classes,  as nearly  equal in  number as  possible,  with  each  class  having a
three-year  term.  There are  currently  11 persons  serving as directors of the
Company.  Four of these are Class I directors,  four are Class II directors  and
three are Class III directors.  There is also one vacant Class III  directorship
that was created  when the Board of  Directors  voted  unanimously  to create an
additional  directorship  on  March  21,  2007.  The  terms of the  classes  are
staggered  so that the term of a class  expires  at each  annual  meeting of the
Company.  The terms of the four incumbent Class II directors  expire at the 2007
Annual Meeting.

         At meetings held on February 14, 2007 and March 21, 2007,  the Board of
Directors voted unanimously to recommend the following five persons for election
to the Board of Directors with terms expiring on the dates set forth below:

       
         

                      Nominee                      Class                      Term Expiration
         -----------------------------------    ------------     -------------------------------------------
                                                                        
           Martin J. Geitz                        Class II           2010 Annual Meeting of Shareholders
           Gary R. Kevorkian                      Class II           2010 Annual Meeting of Shareholders
           George B. Odlum, Jr., DMD              Class II           2010 Annual Meeting of Shareholders
           Jane F. von Holzhausen                 Class II           2010 Annual Meeting of Shareholders
           Rodney R. Reynolds                     Class III          2008 Annual Meeting of Shareholders
        

         Each of the nominees other than Rodney R. Reynolds  currently serves as
a director  of the  Company  and is  nominated  to serve for his or her term and
until his or her  successor is elected and  qualified.  In the event that any of
the nominees  become unable to serve,  an event which the Board does not expect,
the  shares  represented  by proxy may be voted for a  substitute  nominee to be
designated  by the Board or a  committee  thereof,  unless  the proxy  withholds
authority to vote for all nominees.

         If a quorum is present at the 2007  Annual  Meeting,  the  election  of
directors  will require the  affirmative  vote of a plurality of the votes cast.
Abstentions by shareholders and broker non-votes with respect to the election of
directors will not be included in determining whether nominees have received the
vote of such plurality. Certain information about the business experience of the
director nominees,  including their service as directors of other  corporations,
is listed below.  References to terms of service as a director or officer of the
Company  include  service as a director or officer of the Bank prior to the date
of the holding company reorganization on March 2, 2006.

      

Director Nominees, Class II

Martin J. Geitz (50) - Mr. Geitz is the President and Chief Executive Officer of
the Company and the Bank,  which positions he has held since 2004. He has been a
director  of the Company  since  2005.  He was  formerly a Vice  President  with
Massachusetts  Mutual Life  Insurance  Company until 2004 and was the President,
Chief  Executive  Officer  and Chief  Financial  Officer  of Cigna  Bank & Trust
Company,  which  positions  he held from 2000 to 2003,  and prior to that held a
variety of positions with Fleet Boston Financial since 1984. He is also Chairman
of the Board of the Hartford Economic Development  Corporation,  Board member of
McLean  Foundation,  the  Simsbury  Historical  Society,  the  Charter Oak State
College Foundation and Board member and Treasurer of the Simsbury Free Library.

Gary R. Kevorkian (53) - Mr. Kevorkian is an Attorney-at-Law in his own practice
in Granby, Connecticut,  since 1981. He has been a director of the Company since
1994.

George B.  Odlum,  Jr.,  DMD (67) - Dr.  Odlum is a family  practice  dentist in
Simsbury,  Connecticut,  where he has practiced  dentistry since 1968. He is the
retired  President and Board member of the Horace Wells Club. Dr. Odlum has been
a director  of the  Company  since  1992 and  formerly  served as the  Company's
Secretary.

Jane F. von Holzhausen (62) - Ms. von Holzhausen is the Secretary of the Company
and the Bank and has served as a director  since 1994.  She is Vice President of
Operations,  Southwest Region, of Prudential  Connecticut  Realty which position
she has held since  December  2006;  prior to that she was the Sales  Manager of
that  organization's  office in Avon,  Connecticut since 1998. She is the former
President of Valley  Properties,  Inc. d/b/a Coldwell Banker Valley  Properties,
which she owned from 1988 to 1998.

Director Nominee, Class III

Rodney R. Reynolds (67) - Mr.  Reynolds has been nominated to fill the Company's
vacant Class III  directorship.  Mr.  Reynolds was the co-founder of Equistrides
Therapeutic  Riding  Center,  Inc. and served as co-manager  and trustee of that
organization  from 2000 to 2006. Mr. Reynolds was  self-employed as a commercial
real estate developer and owner/manager of real estate from 1984 to 2006. He has
served as a Director of the Bank (but not the Company)  since March 2007 when he
was elected to fill the vacancy resulting from the death of Owen P. Murphy.  Mr.
Reynolds  was also a Founding  Director  of the Trust  Company  of  Connecticut,
serving from 1990 to 2005.


                         INFORMATION ABOUT OUR DIRECTORS

         Certain  information  about the business  experience  of the  remaining
incumbent  directors  and the  non-director  officers of the Company,  including
their service as directors of other  companies,  is listed below.  References to
terms of service as a director  or officer of the Company  include  service as a
director  or  officer  of the  Bank  prior to the  date of the  holding  company
reorganization on March 2, 2006.

Class III Directors,  Terms Expiring at the 2008 Annual Meeting of Shareholders

Robert J. Bogino (64) - Mr.  Bogino is the Vice  Chairman of the Company and the
Bank and has been a director of the Company since 1994.  Mr.  Bogino  previously
served as the Company's Secretary. He was the president and co-owner of Bogino &
DeMaria,  Inc.  in Avon,  Connecticut,  an  insurance  agency  of which he was a
founder in 1972.  In 2003, he became a Vice  President of the Watson  Group,  an
insurance agency in Wethersfield until his retirement in 2004.

      

David W.  Sessions  (56) - Mr.  Sessions is the  President  and Treasurer of the
Casle Corporation, headquartered in Avon, Connecticut, a commercial design-build
development  and  construction  company  which he co-founded in 1981. He is also
Chairman of the New Hartford Architectural Review Committee, a member of the New
Hartford Town Democratic Committee, a Board Member of the Wheeler Clinic as well
as the Licia and Mason Beekley Community Library.  He has been a director of the
Company since 1992.

Lincoln S. Young (72) - Mr.  Young is the Chairman of the Company and has been a
director since 1994. Mr. Young previously served as the Company's Secretary.  He
is the retired Chief  Executive  Officer of Turbine Engine Services Corp., a jet
engine servicing company, a position he held until 1995. Mr. Young is a director
of the New England Air Museum and a Board Member of the Licia and Mason  Beekley
Community Library.

Class I Directors,  Terms Expiring at the 2009 Annual Meeting of Shareholders

James T.  Fleming  (51) - Mr.  Fleming  is  currently  the  Commissioner  of the
Department of Public Works,  State of  Connecticut,  which  position he accepted
after leaving his former position as the Commissioner of the Consumer Protection
Agency, State of Connecticut,  which he held from 1999 until 2003. Prior to that
position,  Mr.  Fleming was the Director of Community  Relations  for Asea Brown
Boveri,  Inc., which position he held until 1998. He was a member of Connecticut
House and  Senate  from 1981  until  1999.  His is also  Vice  President  of the
Simsbury  Volunteer Fire District and is a Corporator of Saint Francis Hospital.
He has been a director of the Company since 1992.

Edward J. Guarco  (53) - Mr.  Guarco is a Vice  President  of State Line Oil, in
Granby,  Connecticut,  where he has been employed  since 1976. He also serves as
Vice President of the  Independent  Connecticut  Petroleum  Association and as a
Board  member of the Granby  Development  Commission  and the Granby  Chamber of
Commerce. He has been a director of the Company since 1998.

Barry R. Loucks (64) - Mr. Loucks is the former  President  and Chief  Executive
Officer of the Bank,  which  positions he held since the Bank's  in-organization
stage in 1994,  and which he retired from in 2004. He is a Trustee of the Nutmeg
Big Brothers/Big Sisters and the Metropolitan  Hartford YMCA; he is also a Board
Member  of  McLean   Foundation  and  of  New  England   Certified   Development
Corporation-CT. He has been a director of the Company since 1994.

Penny R.  Woodford  (62) - Ms.  Woodford  is an Agent with the  Coldwell  Banker
Residential Brokerage, which position she has held since 2003, prior to that she
was an Agent with DeWolf  Companies  since 1996 and Westledge  Real Estate since
1983. She is Chairman of the Nominating  Committee of the Avon  Republican  Town
Committee. She has been a director of the Company since 1992.

Non-Director Executive Officers

Anthony F. Bisceglio (59) - Mr.  Bisceglio is an Executive Vice President of the
Company and the Bank,  positions he has held since January 2005 as well as Chief
Financial  Officer and Treasurer of the Company and the Bank, which positions he
has held since 1995.  Prior to joining the Bank in 1995,  he was Vice  President
and Group Financial Officer of Shawmut National  Corporation and Chief Financial
Officer of Shawmut Bank of Rhode Island.  He is also on the Connecticut  Bankers
Association's  Management  Development  Committee,  is a  Board  member  of  the
Financial Managers Society and Chairman of its Strategic Issues Council,  serves
on the Economic  Policy  Survey Panel of the National  Association  for Business
Economics and is a member of the American Finance Association.

Terry L. Boulton (50) - Ms.  Boulton is a Senior Vice President and Chief Retail
Banking Officer of the Bank,  which positions she has held since 2005.  Prior to
joining the Bank, she held a variety of positions  including as a Vice President
of Bank of America, formerly Fleet Bank, N.A. where she was employed since 1988.
She is  past-president  of the  Simsbury/Granby  Rotary  Club  and the  Simsbury
Chamber of Commerce.

Paul R. Little (47) - Mr.  Little is a Senior Vice  President  and Chief Lending
Officer of the Bank, which positions he accepted in April 2006. Prior to joining
the Bank,  he served as Vice  President  of  Commercial  Real Estate  Lending at
Liberty Bank since 2004;  from 1993 to 2004 he was Vice President of Real Estate
Loans for New Alliance Bank,  formerly  Savings Bank of Manchester  where he had
been employed since 1990.

      

Charles D. Forgie (64) - Mr.  Forgie was an Executive  Vice  President and Chief
Lending  Officer  of the Bank,  which  positions  he held  from  1995  until his
retirement  from the  Company on August 31,  2006.  Prior to joining the Bank in
1995, he was Vice President of Commercial Lending at Fleet Bank, N.A.

Audit Committee Financial Expert

         The Board has  determined  that the Company  currently has at least one
audit committee financial expert serving on its Audit Committee.  That person is
Robert J. Bogino.  Mr. Bogino is  "independent," as that term is defined in Rule
4200(a)(15)  of  the  National   Association  of  Securities   Dealers'  listing
standards.

Independence of Directors and Director Nominees

         The  following  directors  and  director  nominees are  independent  in
accordance  with Rule  4200(a)(15)  of the National  Association  of  Securities
Dealers'  listing  standards:  Robert J.  Bogino,  James T.  Fleming,  Edward J.
Guarco, Gary R. Kevorkian,  George B. Odlum, Jr., DMD, David W. Sessions, Rodney
R. Reynolds, Jane F. von Holzhausen, Penny R. Woodford and Lincoln S. Young.

Board Committees and 2006 Meetings

         The Company has established  three standing  committees of the Board of
Directors:   the  Audit  and  Compliance  Committee,  the  Corporate  Governance
Committee, and the Executive Committee.

         The  Company   does  not  have  a  standing   compensation   committee.
Compensation  of  the  Company's   directors  is  determined  by  the  Corporate
Governance  Committee.  Compensation  of the  Company's  executive  officers  is
determined  by the  Personnel  Committee,  which is a committee  of the board of
directors  of the Bank.  The  members of this  committee  are  Messrs.  Sessions
(Chair),  Guarco, Kevorkian and Young. The Personnel Committee met four times in
2006. In determining  the  compensation of the Bank's  employees,  including the
Company's   executive   officers,   the   Personnel   Committee   considers  the
recommendations  of Martin J.  Geitz,  President  and CEO of the Company and the
Bank. The Board of Directors has determined that it is appropriate not to have a
standing  compensation  committee because the Company's  executive  officers are
compensated  primarily by the Bank and the Bank has a standing committee that is
responsible for making compensation determinations.

         Audit and Compliance Committee.  The Audit and Compliance Committee has
oversight  responsibility  for and  reviews  all  financial  and  other  reports
provided by the Company's  independent auditors and the Company's internal audit
firm. The Audit and Compliance  Committee  evaluates and selects the independent
auditor subject to shareholder ratification. The Audit and Compliance Committee,
in its meetings  with the Company's  auditors,  discusses and approves the audit
and compliance  scope and reviews all audit  findings.  The members of the Audit
and Compliance Committee are Messrs. Odlum (Chair),  Bogino, Fleming, Guarco and
Ms. Woodford.  All members of the Audit and Compliance Committee are independent
in accordance  with Rule  4200(a)(15) of the National  Association of Securities
Dealers' listing  standards.  The Audit and Compliance  Committee met four times
during  2006.  The Audit and  Compliance  Committee  Charter was included in the
proxy statement delivered to shareholders in 2006.

         Corporate  Governance  Committee.  The Corporate  Governance  Committee
functions  as the  nominating  committee  for  director  candidates,  identifies
qualified  individuals  to become  members of the Company's  Board of Directors,
determines  the  composition  of the  Board  of  Directors  and its  committees,
monitors and assesses the effectiveness of the Board of Directors,  develops and
implements  the  Company's  corporate  governance  guidelines  and  reviews  and
recommends  director  compensation.  All  members  of the  Corporate  Governance
Committee are  independent  as that term is defined in Rule  4200(a)(15)  of the
National  Association of Securities  Dealers' listing standards.  The members of
the Corporate Governance Committee are Messrs.  Young (Chair),  Bogino,  Fleming
and Ms. von Holzhausen. The Corporate Governance Committee met five times during
2006.  The  Corporate  Governance  Committee  Charter was  included in the proxy
statement delivered to shareholders in 2006.

      

         The Corporate  Governance  Committee has a formal policy  regarding the
consideration  of director  candidates  recommended by  shareholders  which sets
forth the minimum  qualifications  of suitable  nominees for director as well as
approved  processes  for  identifying  and  evaluating  nominees.  The Corporate
Governance  Committee  will  consider  any  director  candidate  recommended  by
shareholders  in accordance  with the  standards set forth in its Charter.  Such
suggestions,  together  with  appropriate  biographical  information,  should be
submitted to: SBT Bancorp,  Inc., Attn: Jane F. von Holzhausen,  Secretary,  760
Hopmeadow Street, P.O. Box 248, Simsbury, Connecticut 06070. Possible candidates
who  have  been  suggested  by  shareholders  are  evaluated  by  the  Corporate
Governance Committee in the same manner as are other possible candidates.

         The  general  criteria  used to  establish  the traits,  abilities  and
experience  that the Corporate  Governance  Committee  looks for in  determining
candidates  for  election  to  the  Board  include  highest  ethical  character,
independence  from  Management,  ability to represent  all  shareholders  of the
Company,  ability to exercise sound business  judgment,  relevant  expertise and
experience  that  would  benefit  the  Company  and be able to offer  advice and
guidance to the Chief Executive and the Board.  The board as a whole should be a
diverse body, with diversity reflecting age, gender, background and professional
experience.  Key  among  the  criteria  is a  director's  existing  ties  to the
Company's  markets and adherence to Company's Code of Ethics.  All directors are
subject to mandatory retirement from service on the Company's Board of Directors
upon reaching seventy-six years of age.

         Executive  Committee.  The Executive  Committee is responsible  for the
general supervision of the Company's affairs between meetings of the full Board,
oversees  the  Company's  investments,  asset/liability  management,  budget and
capital planning and reviews the Company's interest rate sensitivity and deposit
and loan pricing. The Executive Committee also is responsible for overseeing the
Company's information technology planning, security and development. The members
of the Executive  Committee are Messrs.  Loucks (Chair),  Bogino,  Geitz, Odlum,
Sessions,  Young and Ms. von  Holzhausen.  The Executive  Committee met 12 times
during 2006.

         The Board held 13 meetings,  including the annual meeting, during 2006.
All of the Company's  incumbent directors attended at least 75% of the aggregate
of (i) the total number of meetings of the Board of Directors and (ii) the total
number of meetings  held by the  Committees  of the Board of  Directors on which
such directors  served during 2006. Mr. Murphy,  who served as a director of the
Bank prior to the March 2, 2006  reorganization,  did not attend any meetings in
2006.

         Attendance at the Annual Meeting.  Board members are expected to attend
the Company's annual meeting of shareholders.  Ten of the Company's 11 directors
attended the May 9, 2006 annual meeting of shareholders of the Company.

Shareholder Communications

         The Board of Directors  has a formal  process in place for  shareholder
communication to the Board of Directors or any individual director. Shareholders
wishing to communicate  with the Board of Directors or any  individual  director
may write to SBT Bancorp,  Inc., Secretary,  760 Hopmeadow Street, P.O. Box 248,
Simsbury,  Connecticut 06070. All  communications  received of a relevant nature
will be  forwarded  to the full  Board or  appropriate  individual  director  as
directed.  The Board of Directors  believes this approach is reasonable in light
of the relatively small number of Shareholders of the Company and the relatively
small number of  communications  the Board expects to receive in the foreseeable
future.

Code of Ethics

         The Company has adopted a Code of Ethics that applies to all employees,
officers  and  directors.  The Company  will supply a copy of the Code of Ethics
upon  written  or oral  request.  To  obtain  a copy  please  write to us at SBT
Bancorp,  Inc.,  760  Hopmeadow  Street,  P.O.  Box 248,  Simsbury,  Connecticut
06070-0248 or call the Company at (860) 408-5493.

      


                         COMPENSATION AND OTHER MATTERS

Executive Compensation

         The following table presents  information  relating to the compensation
of the Company's CEO and the other executive officers named below for the fiscal
year ended December 31, 2006 and 2005.

       
         
                                                      Summary Compensation Table

 Name and principal       Year    Salary         Bonus        Stock  Option awards   Nonequity     Non-     All other     Total
     position                                                awards                  incentive  qualified    Compen-
                                                                                       plan      deferred     sation
                                                                                      compen-    earnings
                                                                                       sation
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                            
Martin J. Geitz           2006   $183,443 (1)  $      0 (2)     $0    $      0          $0          $0    $ 18,452 (3)   $201,895
 President & Chief        2005   $172,204      $ 22,275 (4)     $0    $ 60,179 (5)                        $ 12,591 (6)   $267,249
 Executive Officer

Anthony F. Bisceglio      2006   $122,074      $  5,133 (2)                                               $  7,802 (7)   $135,009
 Executive Vice           2005   $117,445      $ 14,500 (4)                                               $  7,062 (7)   $139,007
 President & Chief
 Financial Officer

Charles D. Forgie         2006   $118,328 (8)  $  6,638 (8)                                               $120,006 (9)   $244,972
 Executive Vice           2005   $113,010      $ 13,276 (4)                                               $  4,541 (10)  $130,827
 President & Chief
 Lending Officer (8)

Terry L. Boulton          2006   $102,496      $  2,023 (2)           $ 15,354 (11)                       $  3,892 (12)  $123,765
 Senior Vice President    2005   $ 93,258      $ 10,500 (4)                                               $    315 (13)  $104,073
 & Chief Retail Banking
 Officer
        

(1)  Mr. Geitz also serves as a director,  but did not receive any  compensation
     for those services.

(2)  2006 performance bonus to be paid in 2007.

(3)  Includes Mr. Geitz's personal use of a Bank-leased automobile,  annual dues
     for country club membership,  employer match of 401k Plan contributions and
     employer-paid premiums for group term life insurance in excess of $50,000.

(4)  2005 performance bonus paid in 2006.

(5)  The dollar value of the stock options was determined  using the calculation
     explained in Footnote 15 of the Consolidated Financial Statements appearing
     in the Company's 2006 Annual  Report.  Options may not be exercised in full
     or in part prior to the expiration of one year from the date of grant.  One
     third of the options become  exercisable on each of the first through third
     annual anniversary dates of the grant.

(6)  Includes Mr. Geitz's personal use of a Bank-leased automobile,  annual dues
     for country club membership and employer-paid  premiums for group term life
     insurance in excess of $50,000.

(7)  Includes  Mr.  Bisceglio's  employer  match  of  401k  Plan  contributions,
     employer-paid  premiums for group term life  insurance in excess of $50,000
     and  the  present  value  of the  Supplemental  Executive  Retirement  Plan
     benefit.

(8)  Retired  August  31,  2006;   salary  and  bonus  payments  per  employment
     agreement.

(9)  Includes  Mr.   Forgie's   employer  match  of  401k  Plan   contributions,
     employer-paid  premiums for group term life  insurance in excess of $50,000
     and  the  present  value  of the  Supplemental  Executive  Retirement  Plan
     benefit.  Upon Mr.  Forgie's  retirement  on  August  31,  2006,  he became
     entitled to receive a supplemental  pension.  Per Mr.  Forgie's  employment
     agreement  he is  entitled to receive 20 annual  payments of $10,000  each.
     Additional   information   regarding   this  pension  is  provided  in  the
     "Employment Agreements" section below.

(10) Includes  Mr.   Forgie's   employer  match  of  401k  Plan   contributions,
     employer-paid  premiums for group term life  insurance in excess of $50,000
     and  the  present  value  of the  Supplemental  Executive  Retirement  Plan
     benefit.

      

(11) The dollar value of the stock options was determined  using the calculation
     explained in Footnote 15 of the Consolidated Financial Statements appearing
     in the Company's 2006 Annual  Report.  Options may not be exercised in full
     or in part prior to the expiration of one year from the date of grant.  One
     third of the options become  exercisable on each of the first through third
     annual anniversary dates of the grant.

(12) Includes  Ms.  Boulton's  employer  match of 401k  Plan  contributions  and
     employer-paid premiums for group term life insurance in excess of $50,000.

(13) Includes Ms. Boulton's employer-paid premiums for group term life insurance
     in excess of $50,000.

         The Personnel Committee is a Committee of the Bank's board of directors
and  is  responsible  for  reviewing  the  performance  and   establishing   the
compensation  of  the  Bank's  compensation  of  the  Bank's  officers  and  key
employees, including the Company's executive officers. The Committee relies upon
industry   information,   including  surveys  of  similarly  sized  and  located
institutions, gathered by Management at the Committee's request, and targets the
Bank's compensation to be generally at the level of its peer group institutions.
The members of this committee are Messrs.  Sessions (Chair),  Guarco,  Kevorkian
and Young.

Employment Agreements

         The Bank maintains employment agreements with Messrs. Geitz,  Bisceglio
and Forgie and Ms.  Boulton.  The continued  success of the Company and the Bank
depends to a significant  degree on the skills and competence of these officers.
These agreements are with the Bank, not the Company.

         Martin  J.  Geitz,  President  and Chief  Executive  Officer - The Bank
entered into an Employment  Agreement with Martin J. Geitz effective  October 4,
2004. The term of that agreement is the earlier to occur of Mr. Geitz  attaining
the age of sixty-five or the termination of Mr. Geitz's contract  voluntarily or
upon some other basis. Mr. Geitz is to be paid a salary of $170,000,  subject to
adjustment by the Board.  In addition,  Mr. Geitz is entitled to an annual bonus
in an amount  and form set by the Board.  Option  grants  are  discussed  in the
footnotes of the Summary  Compensation  Table and the Outstanding  Equity Awards
Table.  Mr. Geitz is entitled to: (1)  participate  in the Bank's  comprehensive
health  insurance and major medical  coverage;  (2) participate in any long-term
disability  insurance  plan and pension plan  maintained  by the Bank;  (3) paid
vacation  of four  weeks per year;  (4) the use of an  automobile  for  business
purposes;  (5)  membership in a private  "country" or similar golf club; and (6)
attendance at two banking trade association  conventions per year, including the
cost of  attendance  and  travel  for Mr.  Geitz  and his  spouse.  The Bank may
terminate Mr. Geitz's  employment at any time without notice.  The Bank may give
up to sixty days' prior  notice of the  termination.  If such notice is given to
Mr. Geitz,  the Bank may require him to remain in the employ of the Bank for the
period of notice given. If the Bank terminates Mr. Geitz's  employment for other
than Cause or due to a Change in Control or potential Change in Control (as each
event is defined in the  agreement),  Mr.  Geitz  shall be entitled to receive a
lump sum payment equal to the  aggregate  of: (1) twelve  months of Mr.  Geitz's
then current salary base salary;  (2) an amount equal to bonus to which he would
have been entitled  under the agreement  had a Change of Control  occurred;  (3)
payment for any accrued but unused vacation time; and (4) payment of Mr. Geitz's
medical  insurance for twelve months  following his  termination.  This lump sum
amount  shall be  reduced  by any  compensation  Mr.  Geitz  receives  for other
employment  after the termination of his employment with the Bank. Mr. Geitz may
voluntarily  terminate his  employment on ninety days' prior notice to the Bank,
however, notice need not be given where the termination has been approved by the
Board of Directors or there has been a material breach of the Bank's obligations
under the  agreement.  If Mr.  Geitz  fails to meet the  terms of the  agreement
concerning  his voluntary  termination,  the Bank will be entitled to enjoin Mr.
Geitz's  employment with any significant  competitor of the Bank for a period of
twelve  months.  In the  event of a Change in  Control  or  Potential  Change in
Control of the Bank or the  Company,  Mr. Geitz would be entitled to receive (1)
credit  for his years of  service  to the Bank plus  five  additional  years for
purposes of vesting and  calculation  of benefits  under any benefit plan of the
Bank or a successor  thereto;  (2) twelve  months notice of  termination  during
which time he shall receive  payment at his then current  salary and the highest
bonus  received by Mr. Geitz during the preceding  thirty-six  months,  provided
that if the Change in Control  occurs  prior to December  31, 2005 the amount of
the bonus will equal  $25,000;  (3) at Mr. Geitz's  election,  either a lump sum
cash payment or twelve monthly period  payments in an amount equal to the sum of
Mr.  Geitz's then current  salary plus the highest bonus he had received  during
the  preceding  36 months;  and (4)  outplacement  services  in an amount not to
exceed  $10,000.  Mr.  Geitz is not  entitled to receive  compensation  or other
benefits for any period after termination for Cause.

      

         Anthony F.  Bisceglio,  Executive Vice  President,  Treasurer and Chief
Financial  Officer - The Bank entered into an Employment  Agreement with Anthony
F. Bisceglio  dated February 6, 2004. The term of that Agreement is three years.
Mr. Bisceglio is to be paid a base salary of $102,846, or such larger sum as the
Board may decide.  In addition,  Mr. Bisceglio is entitled to an annual bonus in
an  amount  and  form set by the  Board.  Option  grants  are  discussed  in the
footnotes of the Summary  Compensation  Table and the Outstanding  Equity Awards
Table. Mr. Bisceglio also is entitled to (1) comprehensive  health insurance and
major medical coverage,  (2) participation in any long-term disability insurance
plan and pension plan maintained by the Bank, (3) paid vacation of at least four
weeks  per year,  and (4)  reimbursement  of all  travel  and  other  reasonable
business expenses. If Mr. Bisceglio's employment with the Bank is terminated for
other than Cause or Disability,  or if he voluntarily  terminates his employment
for Good Reason,  Mr. Bisceglio shall be entitled to receive (1) his base salary
in effect at the time for a period of six months following termination, less the
amount of any  severance  pay, (2) an amount equal to one-half the highest bonus
he received during the preceding 36 months,  (3) crediting of additional service
as may be required to vest any form of  compensation  previously  granted to Mr.
Bisceglio,  and (4) the  continuation of health benefits he was receiving at the
time of  termination  for six months  following  termination.  If Mr.  Bisceglio
accepts these  payments,  he agrees that he will not, for a period of six months
following  termination,  perform  any  services  or accept any  remuneration  or
compensation  as an officer,  director,  employee,  agent or consultant with any
depository or other financial institution which maintains its main office in the
Farmington Valley of Connecticut.

         The Bank also has entered into a Change in Control  Agreement  with Mr.
Bisceglio  dated July 30,  1999.  That  Agreement  provides  for  payment to Mr.
Bisceglio in the event of a Change in Control or Potential Change in Control (as
those terms are  defined in the  Agreement)  of the  Company or the Bank.  Under
those  circumstances,  Mr. Bisceglio would be entitled to receive (1) credit for
his years of  service to the Bank plus five years for  purposes  of vesting  and
calculation  of  benefits  under  any  benefit  plan of the Bank or a  successor
thereto,  (2) twelve  months  notice of  termination  during which time he shall
receive payment at his then current salary and the highest bonus received by Mr.
Bisceglio  during the  preceding  36 months,  (3) at Mr.  Bisceglio's  election,
either a lump sum cash payment or twelve  monthly  period  payments in an amount
equal to the sum of Mr.  Bisceglio's  then current salary plus the highest bonus
he had received during the preceding 36 months, and (4) outplacement services in
an amount not to exceed $10,000.

         The Bank entered into a  Supplemental  Executive  Retirement  Agreement
with Mr.  Bisceglio dated April 23, 2001. This Agreement  provides that upon Mr.
Bisceglio's  retirement  on or after  attaining age 65, the Bank shall pay him a
supplemental annual pension of $10,000,  payable in equal monthly  installments,
for a period of twenty years. Upon Mr.  Bisceglio's  death, while still actively
employed  with the Bank,  his  designated  beneficiary  shall  receive an annual
survivor's benefit equal to $10,000, payable in equal monthly installments,  for
a period of twenty  years.  Upon Mr.  Bisceglio's  death,  while  receiving  the
supplemental  annual  pension,  his  designated  beneficiary  shall  receive the
remaining  equal monthly  payments  which would have been due to Mr.  Bisceglio.
Furthermore,  upon a Change in Control (as defined in his Employment  Agreement)
of the Company or the Bank, Mr.  Bisceglio  would be credited with five years of
service with respect to the Supplemental Executive Retirement Agreement.

         Charles D. Forgie,  retired  Executive Vice President and Chief Lending
Officer - The Bank entered into an employment  agreement  with Charles D. Forgie
dated  February  6,  2004  which  was  replaced  and  superceded  by an  amended
employment  agreement dated November 15, 2005. The term of the amended agreement
commenced on November 15, 2005 and  continued  until August 31, 2006.  Under the
agreement, Mr. Forgie was to be paid a base salary of $114,022 per year, or such
larger sum as the Board may decide.  In  addition,  Mr.  Forgie was  eligible to
receive  a  year-end  bonus  in an  amount  to be  determined  by the  Board  of
Directors.  Mr. Forgie was also entitled to (1)  comprehensive  health insurance
and major  medical  coverage,  (2)  participation  in any  long-term  disability
insurance plan and pension plan  maintained by the Bank, (3) paid vacation of at
least  four  weeks per  year,  and (4)  reimbursement  of all  travel  and other
reasonable  business  expenses.  If Mr.  Forgie's  employment  with the Bank was
terminated for other than Cause or Disability,  or if he voluntarily  terminated
his employment for Good Reason, Mr. Forgie was to be entitled to receive (1) his
base  salary  in  effect  at the  time  for a  period  of six  months  following
termination,  less the  amount of any  severance  pay,  (2) an  amount  equal to
one-half the 2005 annual bonus paid to Mr.  Forgie,  (3) crediting of additional
service as may be required to vest any form of compensation  previously  granted
to Mr. Forgie,  and (4) the  continuation of health benefits he was receiving at
the time of  termination  for  eighteen  months  following  termination.  If Mr.
Forgie's  employment  was  terminated  by  reason  of  retirement,  he was to be
entitled to receive (1) his base salary in effect at the time  through  February
28,  2007,  (2) an amount  equal to one-half  the 2005 annual  bonus paid to Mr.
Forgie and (3) the  continuation of health benefits he was receiving at the time
of his retirement  through March 1, 2008.  If,  following his  termination,  Mr.
Forgie accepted the  compensation  described in the preceding two sentences,  he
agreed  that he would not,  for a period of three years  following  termination,
perform any services or accept any  remuneration  or compensation as an officer,
director,  employee,  agent or consultant with any depository or other financial
institution  which maintains an office in the Farmington  Valley of Connecticut.
Mr. Forgie retired as an executive officer of the Bank on August 31, 2006.

      

         The Bank also has entered into a Change in Control  Agreement  with Mr.
Forgie dated July 30, 1999. That Agreement provided for payment to Mr. Forgie in
the event of a Change in Control or Potential  Change in Control (as those terms
are  defined  in  the  Agreement)  of  the  Company  or the  Bank.  Under  those
circumstances,  Mr. Forgie would be entitled to receive (1) credit for his years
of service to the Bank plus five years for  purposes of vesting and  calculation
of benefits  under any  benefit  plan of the Bank or a  successor  thereto,  (2)
twelve months notice of termination  during which time he shall receive  payment
at his then current  salary and the highest bonus  received by Mr. Forgie during
the preceding 36 months,  (3) at Mr. Forgie's  election,  either a lump sum cash
payment or twelve monthly  period  payments in an amount equal to the sum of Mr.
Forgie's then current  salary plus the highest bonus he had received  during the
preceding 36 months,  and (4)  outplacement  services in an amount not to exceed
$10,000.

         The Bank entered into a  Supplemental  Executive  Retirement  Agreement
with Mr.  Forgie dated April 23, 2001.  This  Agreement  provided  that upon Mr.
Forgie's  retirement  and  attaining  full  vesting,  the Bank  shall  pay him a
supplemental annual pension of $10,000,  payable in equal monthly  installments,
for a period of twenty  years.  Upon Mr.  Forgie'  death,  while still  actively
employed  with the Bank,  his  designated  beneficiary  would  receive an annual
survivor's benefit equal to $10,000, payable in equal monthly installments,  for
a period  of  twenty  years.  Upon  Mr.  Forgie's  death,  while  receiving  the
supplemental  annual  pension,  his  designated  beneficiary  would  receive the
remaining  equal  monthly  payments  which  would  have been due to Mr.  Forgie.
Furthermore,  upon a Change in Control (as defined in his Employment  Agreement)
of the Company or the Bank,  Mr.  Forgie  would be  credited  with five years of
service with respect to the Supplemental Executive Retirement Agreement.

         Terry L.  Boulton,  Senior  Vice  President  and Chief  Retail  Banking
Officer - The Bank  entered  into a Change in  Control  Agreement  with Terry L.
Boulton  dated  December 23, 2005.  That  Agreement  provides for payment to Ms.
Boulton in the event  that her  employment  is  terminated  by the Bank  without
"Cause"  or by Ms.  Boulton  with "Good  Reason"  within 12 months  following  a
"Change in  Control"  of the Bank or the  Company (as those terms are defined in
the  Agreement).  Under those  circumstances,  Ms.  Boulton would be entitled to
receive  payment in an amount  equal to two times the sum of (1) her annual base
salary and (2) her annual target bonus. Additionally, under those circumstances,
Ms. Boulton would be entitled to (1) immediate  vesting of any outstanding stock
options,  (2) continued health insurance benefits for a period of 24 months, (3)
an amount  equal to the  amounts  that the Bank  would have  contributed  on Ms.
Boulton's  behalf to any 401(k)  Plan or similar  plan that the Bank may have in
effect for the 24-month period following her  termination,  and (4) outplacement
services in an amount not to exceed $10,000.  Option grants are discussed in the
footnotes of the Summary  Compensation  Table and the Outstanding  Equity Awards
Table.



      

       
         
                                                Outstanding Equity Awards at Fiscal Year-End

       Name                                                            Option awards
                                Number of               Number of             Equity            Option        Option
                                securities              securities           incentive          exercise    expiration
                                underlying              underlying             plan              price         date
                                unexercised             unexercised           awards:             ($)
                                  options                 options            Number of
                                    (#)                     (#)             securities
                                Exercisable            Unexercisable        underlying
                                                                            unexercised
                                                                             unearned
                                                                              options
                                                                                (#)
------------------------------------------------------------------------------------------------------------------------
                                                                                                                       
Martin J. Geitz,                  7,000 (1)              14,000 (1)                 0           $31.500       12/20/2015
 President & Chief
 Executive Officer

Anthony F. Bisceglio,            10,500 (2)                   0                     0           $13.625        5/19/2008
 Executive Vice
 President & Chief
 Executive Officer

Charles D. Forgie,                    0 (3)                   0                     0               n/a              n/a
 Executive Vice
 President & Chief
 Lending Officer,
 Retired

Terry L. Boulton,                     0                  10,500 (4)                 0           $29.000        6/21/2016
 Senior Vice President
 & Chief Retail Banking
 Officer
        


(1)  Options  vest at the  rate of 33 1/3%  per  year,  with  vesting  dates  of
     12/21/2006,  12/21/2007 and 12/21/2008. Vesting is conditioned on the named
     individual  remaining  an employee  until the end of each  vesting  period.
     Vesting may be accelerated under the circumstances described in Mr. Geitz's
     employment agreement and the Company's 1998 Stock Plan.

(2)  Options  vest at the  rate of 33 1/3%  per  year,  with  vesting  dates  of
     5/20/1999,  5/20/2000 and  5/20/2001.  Vesting is  conditioned on the named
     individual  remaining  an employee  until the end of each  vesting  period.
     Vesting  may  be  accelerated  under  the  circumstances  described  in Mr.
     Bisceglio's employment agreement and the Company's 1998 Stock Plan.

(3)  There were no outstanding options as of 12/31/2006.

(4)  Options  vest at the  rate of 33 1/3%  per  year,  with  vesting  dates  of
     6/22/2007,  6/22/2008 and  6/22/2009.  Vesting is  conditioned on the named
     individual  remaining  an employee  until the end of each  vesting  period.
     Vesting  may  be  accelerated  under  the  circumstances  described  in Ms.
     Boulton's employment agreement and the Company's 1998 Stock Plan.


Director Compensation

         The Company has adopted a Director  Compensation  Plan for non-employee
directors.  During 2006, directors were compensated for service by means of: (1)
an annual  retainer  of $4,000 per  director;  (2) $450 for each  Board  meeting
attended in person; and (3) $150 for each standing committee meeting attended in
person.  That  compensation  rate  structure  remains in effect.  No  individual
arrangements were granted during 2006.


      


       
         
                                                       Director Compensation

      Name                  Fees       Stock      Option     Non-equity       Non-           All other       Total
                           earned      awards     awards      incentive     qualified      Compensation
                             or                                 plan        deferred
                            paid                               compen-       compen-
                             in                                sation        sation
                            cash                                            earnings

-------------------------------------------------------------------------------------------------------------------
                                                                                                               
Robert J. Bogino           $16,150       $0         $0            $0            $0               $0         $16,150

James F. Fleming           $11,150       $0         $0            $0            $0               $0         $11,150

Edward J. Guarco           $10,250       $0         $0            $0            $0               $0         $10,250

Gary R. Kevorkian          $12,350       $0         $0            $0            $0               $0         $12,350

Barry R. Loucks            $15,050       $0         $0            $0            $0               $0         $15,050

George B. Odlum            $10,550       $0         $0            $0            $0               $0         $10,550

David W. Sessions          $15,200       $0         $0            $0            $0               $0         $15,200

Jane F. von Holzhausen     $10,700       $0         $0            $0            $0               $0         $10,700

Penny R. Woodford          $10,100       $0         $0            $0            $0               $0         $10,100

Lincoln S. Young           $16,850       $0         $0            $0            $0               $0         $16,850
        


Stock Option Plan

         The Company  currently  issues options to purchase shares of its common
stock under the SBT Bancorp 1998 Stock Plan. As of February 12, 2007,  there are
options  outstanding  to purchase an aggregate of 61,363 shares of the Company's
authorized but unissued  common stock at a price of between  $13.625 and $36.550
per share and which will expire  between the years 2008 and 2016.  This includes
10,500 options granted to the Company's named  executives  during the year ended
December 31, 2006.

         The  following   table  sets  forth  the  total  number  of  securities
authorized for issuance under equity compensation plans as of December 31, 2006.

       
         
                                                                                         Number of securities
                                                                                        remaining available for
                                     Number of securities                                future issuance under
                                       to be issued upon         Weighted-average        equity compensation
                                          exercise of           exercise price of         plans (excluding
                                      outstanding options,      outstanding options,    securities reflected in
                                       warrants and rights      warrants and rights           column (a))
                                              (a)                       (b)                      (c)
                                    -----------------------   -----------------------   -----------------------
                                                                                                   
Equity compensation plans
  approved by shareholders                   68,927                   $25.22                    16,117

Equity compensation plans not
  approved by shareholders                        0                        0                         0

                                    -----------------------   -----------------------   -----------------------
        Total                                68,927                   $25.22                    16,117
                                    =======================   =======================   =======================
        

      

Committee Interlocks and Insider Participation in Compensation Decisions

         There are no interlocking  relationships where (a) an executive officer
of the  Company  served as a member of the  compensation  committee  on  another
entity,  one of whose  executive  officers  served on the  Corporate  Governance
Committee  of the  Company;  (b) an  executive  officer  served as a director of
another  entity,  one of  whose  executive  officers  served  on  the  Corporate
Governance  Committee of the Company; or (c) an executive officer of the Company
served as a member of the compensation committee of another entity, one of whose
executive officers served as a Director of the Company.

Certain Transactions

         During 2006 and 2005,  certain of the Company's and the Bank's  current
directors,  executive  officers and their affiliates had outstanding  loans from
the Bank.  Mr.  Forgie had such a loan;  he retired  from the Bank on August 31,
2006. The largest aggregate amount of such loans  outstanding  during the period
from  January 1, 2006 to  February  12,  2007 was on  February  6-7,  2007 in an
aggregate  amount  of  $3,401,518  (including  Mr.  Forgie's  relationship)  and
$3,230,407 (excluding his relationship),  which represented 20.9% (including Mr.
Forgie's  relationship)  and 19.9%  (excluding his  relationship)  of the Bank's
equity  on  that  date,  and   approximately   2.18%   (including  Mr.  Forgie's
relationship) and 2.07% (excluding his  relationship) of the Bank's  outstanding
loans as of that date.  All such loans were made in the  ordinary  course of the
Bank's business,  were made on substantially the same terms,  including interest
rates  and  collateral,   as  those   prevailing  at  the  time  for  comparable
transactions with other persons and did not involve more than the normal risk of
collectability or present other unfavorable features.

         During 2006 and 2005 the Bank paid $58,194 and  $65,089,  respectively,
for rent and  related  expenses  of the Bank's  Granby  branch  office to Granby
Pharmacy  Shoppers  Plaza,  LLC,  a company of which Mr.  Kevorkian,  one of the
Company's  directors,  is a principal.  Of these amounts paid, $4,802 and $9,255
were for real estate taxes on the property  during 2006 and 2005,  respectively.
The Bank believes this to represent a fair market value lease.  During 2006, the
Bank paid  $375,876  in  construction  costs  and  related  fees for the  Bank's
Bloomfield  and Canton branch  offices to a company of which David W.  Sessions,
one of  its  directors,  is a  principal.  Of  this  amount,  $359,204  was  for
Bloomfield and $16,672 was for Canton.

Recommendation of the Board of Directors

         The Board of Directors  intends to vote all proxies held by it in favor
of all director nominees, unless shareholders direct otherwise.  Election to the
Board of the four Class II  directors  and one Class III director of the Company
shall require the affirmative  vote of a plurality of the votes cast at the 2007
Annual Meeting. Abstentions and broker non-votes with respect to the election of
directors will not be included in determining whether nominees have received the
votes of such plurality.

         THE BOARD  RECOMMENDS  UNANIMOUSLY  A VOTE  "FOR"  ELECTION  OF MESSRS.
GEITZ,  KEVORKIAN,  ODLUM AND  REYNOLDS AND MS. VON  HOLZHAUSEN  TO THE BOARD OF
DIRECTORS.

                                     ITEM 2
                                     ------


               RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS

         The Audit and Compliance  Committee has selected  Shatswell,  MacLeod &
Co.,  P.C. as  independent  auditors to audit the  financial  statements  of the
Company for the fiscal year ending December 31, 2007. Shatswell,  MacLeod & Co.,
P.C.  served as the  Company's  independent  auditors  for the fiscal year ended
December 31, 2006 and has reported on the  Company's  financial  statements  for
such  year.  Prior  to the  reorganization  that  occurred  on  March  2,  2006,
Shatswell, MacLeod & Co., P.C. served as the independent auditor of the Bank.

      

         A  representative  of Shatswell,  MacLeod & Co., P.C. is expected to be
present  at the 2007  Annual  Meeting  and will have the  opportunity  to make a
statement  if he or she  desires  to do so and will be  available  to respond to
appropriate questions from Shareholders.

         The  Audit  and  Compliance   Committee  has  not  developed   detailed
pre-approval  policies  because all  engagements of independent  accountants for
audit and  non-audit  services  must be  approved  by the  Audit and  Compliance
Committee.

Principal Accountant Fees and Services

         The following table reflects the aggregate fees billed for the last two
fiscal  years for  professional  services  by the  principal  accountant  of the
Company  and the  Bank  for the  audit  of  their  respective  annual  financial
statements  and the  aggregate  fees billed in each of the last two fiscal years
for  professional  services  rendered  by  such  principal  accountant  for  tax
compliance, tax advice and tax planning.

                                              2006            2005
                                         --------------  --------------
             Audit Fees                      $55,436         $53,742
             Audit Related Fees (1)               $0            $777
             Tax Compliance Fees (2)          $5,259          $5,241
             All Other Fees                       $0              $0
                                         --------------  --------------
                   Total                     $60,695         $59,760
                                         ==============  ==============

            (1)    Non-financial statement audits.

            (2)    Preparation of tax returns and estimates for each year.

All of the fees paid to Shatswell, MacLeod & Co., P.C. in 2006 were pre-approved
by the Audit & Compliance Committee.

Recommendation of the Board of Directors

         The Board of Directors  intends to vote all proxies held by it in favor
of ratifying the  selection of  Shatswell,  MacLeod & Co., P.C. as the Company's
independent  auditors for the year ending December 31, 2007 (unless shareholders
direct otherwise).

         THE BOARD  RECOMMENDS  UNANIMOUSLY  A VOTE  "FOR"  RATIFICATION  OF THE
SELECTION OF THE FIRM OF SHATSWELL,  MACLEOD & CO., P.C. AS INDEPENDENT AUDITORS
FOR THE COMPANY FOR 2007.


                      AUDIT AND COMPLIANCE COMMITTEE REPORT

         The Audit and  Compliance  Committee  of the Board is  responsible  for
providing   independent,   objective  oversight  of  the  Company's   accounting
functions,  internal  controls and financial  reporting  process.  The Audit and
Compliance Committee is comprised of five directors, each of whom is independent
as defined by the National Association of Securities Dealers' listing standards.
The members of the Audit and Compliance Committee are the same as the members of
the Bank's Audit and Compliance Committee.

         Management  is  responsible  for the  Company's  internal  controls and
financial  reporting process.  The Company's  independent  auditors,  Shatswell,
MacLeod & Co., P.C., are responsible for performing an independent  audit of the
Company's   consolidated   financial  statements  in  accordance  with  auditing
standards  generally  accepted  in the United  States of America  and to issue a
report  thereon.  The  Audit and  Compliance  Committee's  responsibility  is to
monitor and oversee the financial reporting and audit processes.

      

         In connection  with these  responsibilities,  the  Company's  Audit and
Compliance Committee,  as the successor to the Bank, met with management and the
independent  auditors  to review and  discuss the  Company's  December  31, 2006
consolidated  financial  statements.  The Audit and  Compliance  Committee  also
discussed  with the  independent  auditors the matters  required by Statement on
Auditing Standards No. 61 (Communication  with Audit Committees).  The Audit and
Compliance  Committee also received written  disclosures and the letter from the
independent  auditors  required by  Independence  Standards Board Standard No. 1
(Independence  Discussions with Audit Committees),  and the Audit and Compliance
Committee discussed with the independent auditors that firm's independence.

         Based  upon the  Audit  and  Compliance  Committee's  discussions  with
management and the  independent  accountants,  and its review of the information
described  in the  preceding  paragraph,  the  Audit  and  Compliance  Committee
recommended that the Board include the audited consolidated financial statements
of the Company in the Company's annual report on Form 10-KSB for the last fiscal
year filed.

         The Board has  adopted a  written  charter  for the Audit &  Compliance
Committee which was included in the proxy statement delivered to shareholders in
2006.

                                 Audit Committee
                      George B. Odlum, Jr., DMD (Chairman)
                                Robert J. Bogino
                                James T. Fleming
                                Edward J. Guarco
                                Penny R. Woodford


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934,  as  amended,
requires  the   Company's   directors,   executive   officers  and  persons  who
beneficially  own  more  than  10% of the  Company's  common  stock  ("Reporting
Persons") to file certain reports  concerning their beneficial  ownership of the
Company's common stock with the Securities and Exchange  Commission (the "SEC").
Prior to the bank holding company reorganization on March 2, 2006, these reports
were filed by Reporting  Persons of the Bank with the Federal Deposit  Insurance
Corporation  (the  "FDIC").  Based  solely  upon  the  Company's  review  of its
Reporting  Persons'  Forms 3, 4 and 5 filed with the SEC during and for the year
ended December 31, 2006, and on written  representations by certain officers and
directors,  the Company has determined that the following Reporting Persons were
delinquent with respect to their reporting obligations: Terry L. Boulton did not
timely report the  acquisition  of stock options  acquired on June 22, 2006; and
Paul R. Little did not timely file an initial statement of beneficial  ownership
of securities.


                                  OTHER MATTERS

         The Board  knows of no other  business  to be  brought  before the 2007
Annual Meeting.  If, however, any other business should properly come before the
2007 Annual Meeting,  the persons named in the accompanying  proxy will vote the
proxy as in their discretion they may deem appropriate, unless they are directed
by the proxy to do otherwise.


                      SHAREHOLDER PROPOSALS AND NOMINATIONS

         Shareholders entitled to vote for the election of directors at the 2008
Annual Meeting may make  nominations  of individuals  for election to the Board.
Such nominations shall be made in writing,  and shall be delivered or mailed and
received  by the  Secretary  of the  Company  not less than 90 nor more than 130
calendar days prior to such Annual Meeting,  which is expected to be held on May
13, 2008. The Board's Corporate Governance Committee considers such nominations.

      

         Such written  nominations shall contain the following  information,  to
the extent known to the nominating Shareholder:  (1) the name, age, business and
residence  address of each proposed  nominee;  (2) the  principal  occupation or
employment  of each proposed  nominee;  (3) the total number of shares of common
stock of the Company that are beneficially  owned by each proposed nominee;  (4)
the name and  address of the  nominating  Shareholder;  (5) the total  number of
shares of common stock of the Company owned by the nominating Shareholder; (6) a
representation  that the  Shareholder  is a  holder  of  record  of stock of the
Company  entitled to vote at such  meeting and intends to appear in person or by
proxy at the meeting to nominate the person or persons  specified in the notice;
and  (7) a  description  of  all  arrangements  or  understandings  between  the
Shareholder and each nominee and any other person or persons (naming such person
or persons)  pursuant to which the nomination or  nominations  are to be made by
the  Shareholders.  Nominations by beneficial owners of stock of the Company who
are not record  holders  must be  accompanied  by evidence  satisfactory  to the
Secretary of the Company  showing that such  nominating  persons are entitled to
act with respect to such  shares.  Nominations  that are not made in  accordance
with these procedures  shall be deemed void. The credentials and  qualifications
of all nominees also are subject to review by the Board.

         Any proposal intended to be presented by a Shareholder at the Company's
2008 Annual Meeting of Shareholders  which is not a nomination to the Board must
be  presented  to the Company in writing,  and must be  delivered  or mailed and
received  by the  Secretary  of the  Company  not less than 90 nor more than 130
calendar days prior to the 2008 Annual Meeting,  which is expected to be held on
May 13, 2008. Such notice shall include: (1) a brief description of the business
desired to be brought  before the Annual  Meeting and the reasons for conducting
such  business at the 2008 Annual  Meeting;  (2) the name and  address,  as they
appear on the Company's records, of the Shareholder proposing such business; (3)
the number of shares of the Company's common stock which are beneficially  owned
by the  Shareholder;  and (4) any material  interest of the  Shareholder in such
business.

         In  order  for a  shareholder  proposal  to be  included  in the  proxy
statement and form of proxy for the Company's  2008 Annual  Meeting the proposal
must be received by the Company not later than  January 24, 2008 and comply with
all the  requirements  of Rule 14a-8 of the Securities  Exchange Act of 1934. In
addition,  if the Company is not notified of a shareholder  proposal by February
24,  2008 then the  proxies  held by  management  of the Company may provide the
discretion to vote against such shareholder proposal,  even though such proposal
is not included in the proxy statement and form of proxy.

         Nominations   and  proposals   should  be  addressed  to  Jane  F.  von
Holzhausen,  Secretary,  SBT Bancorp,  Inc., 760 Hopmeadow Street, P.O. Box 248,
Simsbury,  Connecticut  06070-0248.  It is suggested that such  nominations  and
proposals be sent by Certified Mail-Return Receipt Requested.


                       ANNUAL REPORT ON FORM 10-KSB REPORT

         The  financial  statements  of the Company as of and for the year ended
December 31, 2006 are  contained in the  Company's  Annual Report on Form 10-KSB
filed with the Securities  and Exchange  Commission on or before March 31, 2007.
The Annual  Report is not to be  considered  as a part of this proxy  soliciting
material.  Copies of  Company's  Annual  Report on Form 10-KSB will be forwarded
without charge upon written  request to Jane F. von Holzhausen,  Secretary,  SBT
Bancorp,  Inc.,  760  Hopmeadow  Street,  P.O.  Box 248,  Simsbury,  Connecticut
06070-0248.


          DELIVERY OF DOCUMENTS TO SECURITY HOLDERS SHARING AN ADDRESS

         The  Company  intends  to  deliver  one  Proxy  Statement  to  multiple
Shareholders  of the  Company  sharing an  address,  unless we receive  contrary
instructions from one or more of such Shareholders. Upon written or oral request
we  will  provide  a  separate  copy  of  the  Company's  Proxy  Statement  to a
Shareholder  sharing an address with another  Shareholder to which a single copy
of the Proxy  Statement  were sent. To request an  additional  copy of the Proxy
Statement,  please  call the  Company  at (860)  408-5493  or write to us at SBT
Bancorp, 760 Hopmeadow Street, P.O. Box 248, Simsbury,  Connecticut  06070-0248.
In the future,  if you wish to receive a separate  copy of the  Company's  Proxy
Statement,  please call or write to us at the number and address  listed  above.

      

Similarly,  Shareholders sharing an address who are receiving multiple copies of
the  Company's  Proxy  Statement  and who wish to receive only one copy of these
materials at their address can so request by contacting us at the same telephone
number and address.

                                       By order of the Board of Directors



Simsbury, Connecticut                  Jane F. von Holzhausen, Secretary
April 12, 2007


      


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