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



                                SBT BANCORP, INC.

                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
                             TO BE HELD MAY 13, 2008





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 13, 2008 at 5:00 p.m., local time. At the meeting, the shareholders
will consider and vote upon the following matters:

     1.   The election of four Class III  directors  for a term  expiring at the
          2011 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, 2008; and

     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 14, 2008 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                     /s/ Gary R. Kevorkian,
April 10, 2008                            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 13, 2008
        ----------------------------------------------------------------

      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 13, 2008,  and any and all
adjournments or postponements thereof (the "2008 Annual Meeting").

      This Proxy Statement,  the Notice of the 2008 Annual Meeting, the enclosed
form of proxy and the Annual Report to Shareholders for the year ending December
31, 2007 for SBT Bancorp,  Inc. (the "Annual  Report") are first being mailed to
our  shareholders  on or about April 10, 2008. 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: Gary R.
Kevorkian,  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 2008 Annual Meeting and revoking the
proxy at such time. Attendance at the 2008 Annual Meeting will not itself revoke
a proxy.  Shares  represented by properly  executed proxies will be voted at the
2008 Annual Meeting in accordance with the specifications thereon.  Shareholders
of record who are present at the 2008 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 14, 2008
(the  "Record  Date")  are  entitled  to notice  and to vote at the 2008  Annual
Meeting.  On the Record  Date,  there  were  850,896  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 425,449 shares,  is necessary to constitute a quorum at the 2008 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.


                                      -1-
      


      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 2008 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 James T. Fleming and
Edward J. Guarco. 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 III  director  nominees;  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 2008 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-Q for
the second  quarter  of 2008,  which we expect to file with the  Securities  and
Exchange Commission, on or before August 14, 2008.

      If you have any questions  about the 2008 Annual Meeting or your ownership
of our common stock, please contact Gary R. Kevorkian,  our corporate secretary,
by mail at SBT Bancorp,  Inc.,  Attention:  Gary R.  Kevorkian,  Secretary,  760
Hopmeadow Street, P.O. Box 248, Simsbury, Connecticut 06070-0248, or by email to
Mr. Kevorkian's attention at sbtinfo@simsburybank.com.


        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      To the knowledge of the Company,  as of March 19, 2008, 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 March 19, 2008 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.  All directors and executive  officers can receive mail in care
of SBT Bancorp, Inc., 760 Hopmeadow Street, P.O. Box 248, Simsbury, CT 06070.

                                            Amount and Nature        Percent
       Name of Beneficial Owner          Of Beneficial Ownership     Of Class
--------------------------------------------------------------------------------
Robert J. Bogino, Vice Chairman                        27,572 (1)      3.1%
James T. Fleming, Director                                492 (2)       *
Martin J. Geitz, President, Chief
 Executive Officer and Director                        22,064 (3)      2.5%
Edward J. Guarco, Director                              6,800 (4)       *
Gary R. Kevorkian, Director                            16,619 (5)      1.9%
Barry R. Loucks, Director                                  14,087     1.6 %


                                      -2-
      


                                            Amount and Nature        Percent
       Name of Beneficial Owner          Of Beneficial Ownership     Of Class
--------------------------------------------------------------------------------

George B. Odlum, Jr., DMD, Director                    13,581 (6)      1.5%
Rodney R. Reynolds, Director                                    0       *
David W. Sessions, Director                            15,736 (7)      1.8%
Penny R. Woodford, Director                             2,262 (8)       *
Lincoln S. Young, Chairman                             18,612 (9)      2.1%
Anthony F. Bisceglio, Executive Vice
 President and Chief Financial Officer                10,500 (10)      1.2%
Paul R. Little, Senior Vice President                                   *
 and Chief Lending Officer                             3,500 (11)
All directors and executive officers
(as a group)                                         158,825 (12)     18.0%
----------------------------
* 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.  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  14,000  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
     including 815 shares in a trust for Mr. Kevorkian's spouse.

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

(7)  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.  Mr.  Sessions  disclaims
     beneficial ownership of the shares beneficially owned by his children.

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

(9)  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.

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

(11) Includes  3,500  shares  which may be acquired  within 60 days  through the
     exercise of stock options.


                                      -3-
      


(12) Includes  32,766 in 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,  three are Class II directors and
four are Class III directors. 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 III directors expire at the 2008 Annual Meeting.

      At a meeting  held on February  20,  2008,  the Board of  Directors  voted
unanimously to recommend the following four persons for election to the Board of
Directors with terms expiring on the dates set forth below:

         Nominee             Class               Term Expiration
-------------------------- ---------- --------------------------------------
Robert J. Bogino           Class III   2011 Annual Meeting of Shareholders
Rodney R. Reynolds         Class III   2011 Annual Meeting of Shareholders
David W. Sessions          Class III   2011 Annual Meeting of Shareholders
Lincoln S. Young           Class III   2011 Annual Meeting of Shareholders

      Each of the nominees  currently serves as a director of the Company and is
nominated  to  serve  for his  term and  until  his  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 2008  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 III

Robert J. Bogino (65) - 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.

Rodney  R.  Reynolds  (68) - Mr.  Reynolds  was a  co-founder  of  Equistrides
Therapeutic  Riding  Center,  Inc., a non-profit  organization  that  provided
services to people with disabilities,  and served as co-manager and trustee of
that  organization  from 2000 to 2006.  Mr.  Reynolds  served as a director of
the Trust Company of Connecticut,  an investment management and trust services
company,  from 1990 to 2005. 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 Company since 2007.


                                      -4-
      


David W.  Sessions  (57) - 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 also is a
member  of the  Board  of  Finance  of the Town of New  Hartford  and of the New
Hartford Town Democratic Committee.  He has been a director of the Company since
1992.

Lincoln S. Young (73) - 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.



                         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 II Directors, Terms Expiring at the 2010 Annual Meeting of Shareholders

Martin J. Geitz (51) - Mr. Geitz is the President and Chief Executive Officer of
the Company and the Bank, and has held these positions 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 from 2000 to 2003. He is 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 Trustee and
Treasurer of the Simsbury Free Library.

Gary R.  Kevorkian  (53) - Mr.  Kevorkian  has been the Secretary of the Company
since 2007 and a director of the Company since 1994. He is an Attorney-at-Law in
his own practice in Granby,  Connecticut,  since 1981.  Mr.  Kevorkian is not an
employee of the Company and is not  compensated for his service as the Company's
Secretary.

George B. Odlum,  Jr.,  DMD (68) - Dr.  Odlum was a family  practice  dentist in
Simsbury,  Connecticut,  where he had  practiced  dentistry  from 1968 until his
retirement in 2007.  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.

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

James  T.  Fleming  (52)  - Mr.  Fleming  is  currently  the  President  of  the
Connecticut  Automotive  Retailers  Association which position he has held since
March  2008.  Prior to this he was  Commissioner  of the  Department  of  Public
Utility Control, State of Connecticut, which position he held from 2007 to March
2008. Prior to this he was Commissioner of the Department of Public Works, State
of Connecticut, from 2003 to 2007 and Commissioner of Consumer Protection, State
of Connecticut. He is also a Director of the Simsbury Cemetery Association, 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  (54) - 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 (65) - 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  serves on the  Finance  Committee  of the New
England  Certified  Development  Corporation-CT.  He has been a director  of the
Company since 1994.


                                      -5-
      


Penny R.  Woodford  (63) - 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 (60) - 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 (51) - 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 (48) - Mr.  Little is a Senior Vice  President  and Chief Lending
Officer of the Bank,  which  positions he has held since 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.

Howard  R. Zern  (61) - Mr.  Zern is a Senior  Vice  President  and  Chief  Bank
Operations & Technology  Officer of the Bank,  which positions he has held since
January 2008. Prior to joining the Bank, he was Executive Vice President of Bank
of America, from which he retired in 2005. Mr. Zern is a Director of Stony Brook
University Alumni Association,  Vice Chairman of TheaterWorks,  Treasurer of the
Artists  Collective  in Hartford  and  Chairman  of the Urban  League of Greater
Hartford.

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 Financial  Industry  Regulatory  Authority's  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  Financial  Industry   Regulatory
Authority's 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, Penny R. Woodford and Lincoln S. Young.

Board Committees

      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's wholly-owned  subsidiary
has a standing Personnel  Committee which performs functions that are similar to
those of a compensation committee.


                                      -6-
      


      Audit and  Compliance  Committee of the Company.  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 Financial
Industry  Regulatory  Authority's  listing  standards.  The Audit and Compliance
Committee met four times during 2007. The Audit and Compliance Committee Charter
was included in the proxy statement delivered to shareholders in 2006.

      Corporate  Governance  Committee of the Company.  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 Financial Industry Regulatory Authority's listing standards.  The members
of the Corporate  Governance  Committee are Messrs.  Young  (Chair),  Bogino and
Fleming and Ms.  Woodford.  The  Corporate  Governance  Committee met four times
during 2007.  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:  Gary R.  Kevorkian,  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 the ability 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 of the Company. 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 and Young. The Executive Committee met 15 times
during 2007.

      Personnel  Committee  of the Bank.  The  Company  does not have a standing
compensation  committee,   but  the  board  of  directors  of  its  wholly-owned
subsidiary has a standing Personnel  Committee which performs functions that are
similar to those of a compensation  committee.  The Bank's  Personnel  Committee
determines the compensation of the Bank's employees, which include the Company's
executive officers. The members of the Personnel Committee are Messrs.  Sessions
(Chair),  Guarco,  Kevorkian,  Reynolds and Young.  The Personnel  Committee met
eight times in 2007. 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.   Compensation  for  the
Company's  directors  is  determined  by  the  Company's  Corporate   Governance
Committee.


                                      -7-
      


Board Meetings

      The Board held 14 meetings, including the annual meeting, during 2007. 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 2007.

      Board  members are  expected  to attend the  Company's  annual  meeting of
shareholders.  All of the Company's 11 directors attended the May 8, 2007 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.,  Gary R.  Kevorkian,  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, 2007 and 2006.

                             Summary Compensation Table

       
         
                                                                                                                          
   Name and principal position  Year     Salary         Bonus    Stock  Option awards Nonequity     Non-     All other    Total
                                                                awards               incentive  qualified   Compen-
                                                                                       plan     deferred    sation
                                                                                     compen-    earnings
                                                                                      sation
--------------------------------------------------------------------------------------------------------------------------------

Martin J. Geitz               2007    $179,000 (1)  $23,739 (2) $    0  $   60,179   $       0  $       0 $ 14,329 (3) $ 277,247
President & Chief             2006    $178,000 (1)  $     0 (4) $    0  $   60,179   $       0  $       0 $ 18,452 (3) $ 256,631
Executive Officer


Anthony F. Bisceglio          2007    $   122,377   $14,236 (2) $    0  $        0   $       0  $       0 $  2,886 (5) $ 139,499
Executive Vice                2006    $   121,300   $ 5,633 (4) $    0  $        0   $       0  $       0 $  7,802 (6) $ 134,735
   President & Chief
Financial Officer
        


                                      -8-
      

       
         
                                                                                                                          

   Name and principal position  Year     Salary         Bonus    Stock  Option awards Nonequity     Non-     All other    Total
                                                                awards               incentive  qualified   Compen-
                                                                                       plan     deferred    sation
                                                                                     compen-    earnings
                                                                                      sation
--------------------------------------------------------------------------------------------------------------------------------

Paul R. Little                2007    $   121,827   $13,823 (2) $    0  $18,934 (7)  $       0  $       0 $  1,855 (8) $ 156,439
Senior Vice President &       2006    $    77,673   $ 3,360 (4) $    0  $        0   $       0  $       0 $    412 (8) $  81,445
  Chief Lending Officer
        

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

(2) Estimated 2007 performance bonus to be paid in 2008.

(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) 2006 performance bonus paid in 2007.

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

(6) 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
    benefits.

(7) The dollar value of the stock options was determined  using the  calculation
    explained in Footnote 16 of the Consolidated  Financial Statements appearing
    in the Company's 2007 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.

(8) Includes  Mr.  Little's  employer  match  of  401k  Plan  contributions  and
    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  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, Reynolds and Young.

Employment Agreements

      The  Bank  maintains  employment  agreements  with the  following  named
executive  officers:  Messrs.  Geitz,  Bisceglio  and  Little.  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. 


                                      -9-
      


     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.


                                      -10-
      


      Paul R. Little,  Senior Vice President and Chief Lending Officer - Paul R.
Little is an at-will  employee  of the Bank.  He is  entitled  to  receive  paid
vacation of four weeks per year and to  participate in the Bank's benefit plans,
including its medical plan,  dental plan and 401k  retirement  plan.  Mr. Little
also is entitled to the following  compensation if his position is terminated as
a result of a change of control:  (1) a lump sum payment equal to two years base
salary and bonus;  (2)  accelerated  vesting of his stock  options and any other
performance related incentive compensation awards; and (3) 24 months coverage of
health benefits on the same terms as were provided prior to termination.  Change
of control, for purposes of Mr. Little's change in control arrangement, means an
acquisition by any person or business  organization of 25% or more of the Bank's
voting common stock, or sale or merger of the Bank.


                  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,
President & Chief
Executive Officer           14,000 (1)          7,000 (1)               0      $31.500        12/20/2015

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

Paul R. Little,
Senior Vice President
& Chief Lending
Officer                          0 (3)         10,500 (3)               0      $30.000         5/16/2017
        

(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)   Options  vest at the  rate of 33 1/3%  per  year,  with  vesting  dates of
      5/17/2008,  5/17/2009 and  5/17/2010.  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.
      Little's offer letter agreement and the Company's 1998 Stock Plan.

Director Compensation

      The  Company  has adopted a Director  Compensation  Plan for  non-employee
directors.  During 2007, 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 2007.


                                      -11-
      


                                      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   $17,200     $0      $0          $0           $0            $0        $17,200

James F. Fleming   $11,500     $0      $0          $0           $0            $0        $11,500

Edward J. Guarco   $10,900     $0      $0          $0           $0            $0        $10,900

Gary R. Kevorkian  $14,650     $0      $0          $0           $0            $0        $14,650

Barry R. Loucks    $14,800     $0      $0          $0           $0            $0        $14,800

George B. Odlum    $12,100     $0      $0          $0           $0            $0        $12,100

Rodney R.
 Reynolds           $7,840     $0      $0          $0           $0            $0         $7,840

David W. Sessions  $16,150     $0      $0          $0           $0            $0        $16,150

Jane F. von
 Holzhausen (1)     $6,233     $0      $0          $0           $0            $0         $6,233

Penny R. Woodford  $10,900     $0      $0          $0           $0            $0        $10,900

Lincoln S. Young   $18,400     $0      $0          $0           $0            $0        $18,400
        

      (1) Ms. von Holzhausen resigned from the Board of Directors effective June
25, 2007.


Stock Option Plan

      The Company  currently  issues  options to  purchase  shares of its common
stock under the SBT Bancorp  1998 Stock Plan.  As of March 19,  2008,  there are
options  outstanding  to purchase an aggregate of 65,583 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 2017.  This includes
10,500 options granted to the Company's named  executives  during the year ended
December 31, 2007.

      The following  table sets forth the total number of securities  authorized
for issuance under equity compensation plans as of December 31, 2007.


                                      -12-
      


       
         
                                                                                  
                                                                     Number of securities
                                  Number of                           remaining available
                               securities to be                       for future issuance
                                 issued upon      Weighted-average       under equity
                                 exercise of      exercise price of   compensation plans
                                 outstanding         outstanding          (excluding
                               options, warrants  options, warrants   securities reflected
                                  and rights          and rights         in column (a))
                                     (a)                 (b)                  (c)
                              ------------------ ------------------- ---------------------
Equity compensation plans
approved by shareholders            69,208             $27.21                6,931
Equity compensation plans not
approved by shareholders              0                   0                    0
                              ------------------ ------------------- ---------------------
                 Total              69,208             $27.21                6,931
                              ================== =================== =====================
        

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  2007 and 2006,  certain of the  Company's  and the Bank's  current
directors,  executive  officers and their affiliates had outstanding  loans from
the Bank.  The largest  aggregate  amount of such loans  outstanding  during the
period from  January 1, 2007 to February 15, 2008 was on February 14, 2008 in an
aggregate amount of $3,648,307, which represented 20.74% of the Bank's equity on
that date, and  approximately  2.20% 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 2007 and 2006 the Bank paid $61,939 and $58,194,  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,  $9,784 and $4,802 were for
real estate taxes on the property during 2007 and 2006,  respectively.  The Bank
believes this to represent a fair market value lease. During 2007, the Bank paid
$1,369  in  maintenance  costs  related  to the  Bank's  main  office  to  Casle
Corporation,  a company of which David W. Sessions,  one of its directors,  is a
principal. During 2006, the Bank paid $375,876 in construction costs and related
fees for the Bank's Bloomfield and Canton branch offices to the same company; 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  III  directors  of the  Company  shall  require  the
affirmative  vote of a plurality  of the votes cast at the 2008 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.
BOGINO, REYNOLDS, SESSIONS AND YOUNG TO THE BOARD OF DIRECTORS.


                                      -13-
      


                                     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, 2008.  Shatswell,  MacLeod &
Co.,  P.C.  served as the Company's  independent  auditors for the fiscal year
ended  December  31,  2007  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 2008  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.

                               2007           2006
                         -------------- --------------
Audit Fees                      $60,025        $55,436
Audit Related Fees (1)               $0             $0
Tax Compliance Fees (2)          $6,596         $5,259
All Other Fees                       $0             $0
                         -------------- --------------
              Total             $66,621        $60,695
                         ============== ==============

(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  2007  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,  2008  (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 2008.


                                      -14-
      


                      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, 2007
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,
2007, and on written  representations  by certain  officers and  directors,  the
Company has determined that no Reporting Persons were delinquent with respect to
their reporting obligations:


                                      -15-
      


                                  OTHER MATTERS

      The Board knows of no other  business to be brought before the 2008 Annual
Meeting.  If,  however,  any other business should properly come before the 2008
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 2009
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
12, 2009. 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
2009 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 2009 Annual Meeting,  which is expected to be held on
May 12, 2009. 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 2009 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  2009 Annual  Meeting the proposal  must be
received by the Company not later than  January 22, 2009 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, 2009
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 Gary R.  Kevorkian,
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.


                                      -16-
      


                       ANNUAL REPORT ON FORM 10-KSB REPORT

      The  financial  statements  of the  Company  as of and for the year  ended
December 31, 2007 are  contained in the  Company's  Annual Report on Form 10-KSB
filed with the Securities  and Exchange  Commission on or before March 31, 2008.
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 Gary R.  Kevorkian,  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               /s/ Gary R. Kevorkian, Secretary
April 10, 2008


                                      -17-

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