SBT Bancorp (SBTB) 8-K SBT Bancorp, Inc. Reports First Quarter 2016 Results

Exhibit 99.1

SBT Bancorp, Inc. Reports First Quarter 2016 Results

SIMSBURY, Conn.--(BUSINESS WIRE)--April 29, 2016--SBT Bancorp, Inc., (OTCQX: SBTB), holding company for The Simsbury Bank & Trust Company, Inc., today announced net income of $206 thousand or $.15 basic and $.15 diluted earnings per share for the quarter ended March 31, 2016, compared to a net income of $343 thousand or $0.36 basic and $0.36 diluted earnings per share for the prior year’s first quarter.

Net interest and dividend income increased $301 thousand or 10.4% as compared to the prior year’s first quarter due to growth in the Bank’s commercial and consumer loan portfolios. Gain on sale of loans increased 5.3% to $241 thousand compared to the prior year’s quarter. Noninterest expenses increased $349 thousand as the Bank continues to invest in its three primary business lines of Commercial, Retail and Mortgage Banking. Mortgage loan servicing activities income decreased $155 thousand due to a decline in the mortgage servicing rights valuation as result of the decline in long-term interest rates and related increase in implied prepayment rates. The provision for loan losses increased $81 thousand consistent with strong commercial loan growth.

“During the Bank’s 2016 first quarter, we focused on implementing strategies to deploy the capital we raised in the fourth quarter of 2015 to fund growth of higher margin activities,” said Martin J. Geitz, President and Chief Executive Officer. “In particular, we are pleased with our Commercial Banking team’s success at expanding existing and developing new relationships resulting in a $45.8 million or 50% increase in loan balances since the end of the first quarter of 2015. We are also excited with the prospects for our Retail Banking team’s contribution to continued growth that we expect from our new full-service branch office in West Hartford, which opened in April.”

Key highlights for quarter ended March 31, 2016 compared to quarter ended March 31, 2015 included:

• Net loans grew $54.3 million or 18.7%.
• Commercial loan balances increased $45.8 million or 50.0%.
• Net interest and dividend income for the quarter increased 10.4%.
• Net interest margin of 3.06% for the quarter was 1 basis point higher compared to the prior year’s quarter.
• Total deposits increased $23 million or 6.3%, driven by increases in Demand Deposits of $15.3 million, Savings and Now deposits of $12.1 million, partially offset by decreases in Time Deposits of $4.8 million.
• Provision for loan losses totaled $131 thousand for the quarter due to loan growth, and the allowance for loan losses at March 31, 2016 was 0.91% of total loans.
• Due to the decline in market interest rates during the first quarter and anticipation of more rapid prepayment of mortgages serviced by the Bank, the Bank recorded a $193 thousand decrease in the valuation of the mortgage servicing rights asset. This valuation decline reduced the value of the servicing asset approximately 10% to $1.8 million.
• Return on average assets for the three months ended March 31, 2016 was 0.18% compared to 0.34% for the three months ended March 31, 2015.
• Return on average equity for the three months ended March 31, 2016 was 2.70% compared to 4.55% for the three months ended March 31, 2015.

On March 31, 2016, gross loans outstanding were $347 million, an increase of $54.6 million, or 18.7% over a year ago. Commercial loans grew by $45.8 million or 50.0% and consumer loans grew by $6.1 million or 9.9% due principally to an increase home equity line of credit borrowings and purchased auto loans. Residential mortgage loans increased by $2.7 million or 1.9%.

The Company’s allowance for loan losses at March 31, 2016 was 0.91% of total gross loans. The Company had non-accrual loans totaling $3.8 million or 1.09% of total loans on March 31, 2016, compared to non-accrual loans totaling $2.2 million or 0.74% of total loans a year ago. Total non-accrual and delinquent loans on March 31, 2016 was 1.72% of loans outstanding compared to 1.14% on March 31, 2015. Despite slight increases in non-accrual and delinquent loans, the Company’s loan portfolio remains strong.

Total deposits on March 31, 2016 were $383 million, an increase of $22.6 million or 6.3% over a year ago primarily due to an increase in demand deposits of $15.3 million and a $12.1 million increase in Savings and NOW accounts. At quarter-end, 32% of total deposits were in non-interest bearing demand accounts, 53% were in low-cost savings, money market and NOW accounts and 15% were in time deposits.

For the first quarter 2016, total revenues, consisting of net interest and dividend income plus noninterest income, were $3.6 million compared to $3.4 million a year ago. Noninterest income decreased by $71 thousand or 13.4%, primarily due to a decrease in mortgage loan servicing activities of $155 thousand, partially offset by an increase of service charges and fees revenue of $90 thousand. Mortgage loan servicing activities decreased $155 thousand due to a decline in the mortgage servicing rights valuation as result of the decline in long-term interest rates and related increase in implied prepayment rates. Gain on sale of loans sold in the first quarter was $241 thousand compared to $229 thousand for the first quarter ended March 31, 2015.

The Company’s year-to-date 2016 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.06% compared to 3.05% for the comparable 2015 period. The Company’s yield on earning assets increased to 3.34%, while the cost of funds increased 12 basis points to 0.41% for the three months ended March 31, 2016 compared to the same period of 2015. The increase in cost of funds was primarily due to the interest on the subordinated debt issued in 2015.

Total noninterest expense for the first quarter 2016 was $3.3 million, an increase of $349 thousand or 11.7% above the first quarter of 2015. The increase was primarily driven by an increase in salary and benefits expense of $250 thousand and data processing costs of $68 thousand. These were partially offset by decreases in professional fees of $21 thousand and a decrease in FDIC assessment of $16 thousand.

Capital levels for The Simsbury Bank & Trust Company on March 31, 2016 were above those required to meet the regulatory “well-capitalized” designation. Capital ratios are calculated under Basel III rules, which became effective January 1, 2015.

Capital Ratios March 31, 2016
	Simsbury Bank & Trust Company	Regulatory Standard For Well-Capitalized
Tier 1 Leverage Capital Ratio	8.18%	5.00%
Tier 1 Risk-Based Capital Ratio	12.39%	8.00%
Total Risk-Based Capital Ratio	13.46%	10.00%
Common Equity Tier 1 Risk-Based Capital Ratio	12.39%	6.50%

Simsbury Bank is an independent, community bank for consumers and businesses based in Connecticut. Simsbury Bank Home Loans is a division of Simsbury Bank serving the home financing needs of consumers throughout Southern New England. Simsbury Bank is wholly-owned by publicly traded SBT Bancorp, Inc. Its stock is traded on the OTCQX marketplace under the ticker symbol of SBTB. For more information, visit www.simsburybank.com.

Certain statements in this press release, including statements regarding the intent, belief or current expectations of SBT Bancorp, Inc., The Simsbury Bank & Trust Company, or their directors or officers, are “forward-looking” statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements are subject to risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements.

SBT Bancorp, Inc. and Subsidiary
Condensed Consolidated Balance Sheets
March 31, 2016, December 31, 2015 and March 31, 2015
(Dollars in thousands, except for share and per share amounts)
		3/31/2016			12/31/2015			3/31/2015
		(unaudited)						(unaudited)
ASSETS
	Cash and due from banks		6,111			8,933			9,934
	Interest-bearing deposits with Federal Reserve Bank of Boston
	and Federal Home Loan Bank		5,867			19,795			4,016
	Interest bearing deposits		393			13			509
	Federal funds sold		200			149			43
	Cash and cash equivalents		12,571			28,890			14,502
	Certificates of Deposit		1,500			1,250			-
	Investments in available-for-sale securities (at fair value)		72,874			71,517			81,332
	Federal Home Loan Bank stock, at cost		2,009			2,047			1,881
	Loans held-for-sale		1,187			2,167			4,531
	Loans outstanding		346,863			326,723			292,252
	Less allowance for loan losses		3,160			3,028			2,799
	Loans, net		343,703			323,695			289,453
	Premises and equipment, net		1,688			1,420			1,426
	Accrued interest receivable		1,161			1,143			1,004
	Other real estate owned		-			-			-
	Bank owned life insurance		8,940			7,389			7,236
	Other assets		4,831			5,262			4,477
	Total other assets		16,620			15,214			14,143
	TOTAL ASSETS	$	450,464		$	444,780		$	405,842
LIABILITIES AND STOCKHOLDERS' EQUITY
	Deposits:
	Demand deposits	$	123,904		$	135,580		$	108,596
	Savings and NOW deposits		204,187			179,775			192,092
	Time deposits		55,121			57,287			59,874
	Total deposits		383,212			372,642			360,562
	Securities sold under agreements to repurchase		1,988			1,915			3,078
	Federal Home Loan Bank advances		26,000			31,500			10,500
	Long-term subordinated debt		7,230			7,230			-
	Other liabilities		1,621			1,751			1,669
	Total liabilities		420,051			415,038			375,809
	Stockholders' equity:
	Preferred stock, senior non-cumulative perpetual, Series C, no par; 9,000
	shares issued and outstanding at March 31, 2015;		-			-			8,991
	Common stock, no par value; authorized 2,000,000 shares;
	issued and outstanding 1,361,103 shares and 1,360,689 shares, respectively, at
	March 31, 2016; 1,360,591 shares and 1,360,177 shares, respectively, at
	December 31, 2015, and 906,350 shares and 905,936 shares, respectively, at March 31, 2015		18,871			18,856			10,313
	Retained earnings		11,305			11,288			10,741
	Treasury stock, 414 shares		(7	)		(7	)		(7	)
	Unearned compensation- restricted stock awards		(172	)		(206	)		(375	)
	Accumulated other comprehensive income (loss)		416			(189	)		370
	Total stockholders' equity		30,413			29,742			30,033
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	450,464		$	444,780		$	405,842

SBT Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Income
(Unaudited)
(Dollars in thousands, except for per share amounts)
		For the quarter ended
		3/31/2016			3/31/2015
Interest and dividend income:
	Interest and fees on loans	$	3,075		$	2,641
	Investment securities		390			434
	Federal funds sold and overnight deposits		23			7
	Total interest and dividend income		3,488			3,082
Interest expense:
	Deposits		159			185
	Repurchase agreements		1			1
	Interest on Long Term Debt		107			-
	Federal Home Loan Bank advances		32			8
	Total interest expense		299			194
	Net interest and dividend income		3,189			2,888
Provision for loan losses			131			50
	Net interest and dividend income after
	provision for loan losses		3,058			2,838
Noninterest income:
	Service charges on deposit accounts		90			104
	Gain on available-for-sale securities		47			43
	Other service charges and fees		233			143
	Increase in cash surrender value
	of life insurance policies		51			52
	Mortgage loan servicing activities		(247	)		(92	)
	Gain on sale of mortgages		241			229
	Investment services fees and commissions		27			34
	Other income		17			17
	Total noninterest income		459			530
Noninterest expense:
	Salaries and employee benefits		1,830			1,580
	Occupancy expense		370			377
	Equipment expense		93			102
	Advertising and promotions		107			105
	Forms and supplies		39			32
	Professional fees		84			105
	Directors' fees		53			51
	Correspondent charges		72			29
	FDIC Assessment		62			78
	Data Processing Fees		213			144
	Internet banking costs		53			53
	Other expenses		342			313
	Total noninterest expense		3,318			2,969
Income before income taxes			199			399
Income tax (benefit) provision			(7	)		56
Net income		$	206		$	343
Net income available to common stockholders		$	206		$	317
Average shares outstanding, basic			1,348,572			887,891
Earnings per common share, basic		$	0.15		$	0.36
Average shares outstanding, assuming dilution			1,350,507			888,988
Earnings per common share, assuming dilution		$	0.15		$	0.36

CONTACT:
Simsbury Bank
Richard J. Sudol, 860-651-2057
860-408-4679 (fax)
SVP & CFO
rsudol@simsburybank.com