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

Exhibit 99.1

SBT Bancorp, Inc. Reports Second Quarter 2016 Results

SIMSBURY, Conn.--(BUSINESS WIRE)--July 28, 2016--SBT Bancorp, Inc., (OTCQX: SBTB), holding company for The Simsbury Bank & Trust Company, Inc., today announced net income of $251 thousand or $0.19 basic and $0.19 diluted earnings per share for the quarter ended June 30, 2016, compared to a net income of $206 thousand or $0.15 basic and $0.15 diluted earnings per share for the quarter ended March 31, 2016.

Net interest and dividend income for the second quarter increased $123 thousand or 3.9% as compared to the first quarter of 2016 due to growth in the Bank’s commercial and consumer loan portfolios. Gain on sale of loans increased 52.3% to $367 thousand compared to the quarter ended March 31, 2016. Noninterest income increased $245 thousand compared to the quarter ended March 31, 2016, and noninterest expenses increased $278 thousand as the Bank continues to invest in its three primary business lines of Commercial, Retail and Mortgage Banking.

“During the Bank’s 2016 second quarter, we continued our focus on implementing strategies to deploy the capital we raised in 2015. We made the strategic decision to close the mortgage origination offices in Massachusetts and Rhode Island in order to focus on our primary central Connecticut market. Simsbury Bank is the top originator of mortgages through May in the towns in which it currently has branches.” said Martin J. Geitz, President and Chief Executive Officer. “Our Commercial Banking team continues to succeed at expanding existing and developing new relationships resulting in a $15.5 million or 11.2% increase in commercial loan balances since the end of the first quarter of 2016. We are also excited with our Retail Banking team’s contribution to continued growth from our new full-service branch office in West Hartford, which opened in April. The new West Hartford location had $23.2 million in deposit balances as of June 30, 2016, which contributed to the overall deposit growth of $43.9 million or 13.16% as compared to the quarter ended June 30, 2015.”

Key highlights for quarter ended June 30, 2016 compared to quarter ended June 30, 2015 included:

• Net loans grew $67.0 million or 22.3%.
• Commercial loan balances increased $54.9 million or 55.5%. Commercial yields increased 6 basis points to 4.22% compared to the quarter ended June 30, 2015.
• Consumer loans grew $14.3 million or 22.5% driven by the purchase of a $9.5 million portfolio of refinanced student loans in the second quarter of 2016.
• Net interest and dividend income for the quarter increased 14.4% to $3.3 million.
• Total deposits increased $43.9 million or 13.2%, driven by increases in Demand Deposits of $17.9 million, Savings and Now deposits of $22.0 million, and Time Deposits of $4.0 million.
• Provision for loan losses totaled $170 thousand for the quarter due to loan growth, and the allowance for loan losses at June 30, 2016 was 0.90% of total loans.
• Due to the decline in market interest rates during the second quarter and anticipation of more rapid prepayment of mortgages serviced by the Bank, the Bank recorded a $41 thousand non-cash expense related to the valuation of the mortgage servicing rights asset.

On June 30, 2016, gross loans outstanding were $370 million, an increase of $67.5 million, or 22.3% over a year ago. Commercial loans grew by $54.9 million or 55.5% and consumer loans grew by $14.3 million or 22.5%. Residential mortgage loans decreased by $1.7 million or 1.2% as the Company’s focus is to sell qualifying residential loans in the secondary market.

The Company’s allowance for loan losses at June 30, 2016 was 0.90% of total gross loans. The Company had non-accrual loans totaling $3.7 million or 1.0% of total loans on June 30, 2016, compared to non-accrual loans totaling $2.9 million or 0.96% of total loans a year ago. Total non-accrual and delinquent loans on June 30, 2016 was 1.67% of loans outstanding compared to 1.13% on June 30, 2015. Despite slight increases in non-accrual and delinquent loans, the Company’s loan portfolio remains strong.

Total deposits on June 30, 2016 were $378 million, an increase of $43.9 million or 13.2% over a year ago primarily due to an increase in demand deposits of $17.9 million and a $22.0 million increase in Savings and NOW accounts. At quarter-end, 34% of total deposits were in non-interest bearing demand accounts, 49% were in low-cost savings, money market and NOW accounts and 17% were in time deposits.

For the quarter ended June 30, 2016, total revenues, consisting of net interest and dividend income plus noninterest income, were $4.0 million compared to $3.7 million a year ago, an increase of $316 thousand or 8.5% above the prior year’s second quarter. Net interest and dividend income increased $418 thousand or 14.4% primarily driven by a $618 thousand, or 23%, increase in interest and fees on loans. The increase was partially offset by the interest expense on subordinated debt of $135 thousand. Noninterest income decreased by $102 thousand or 12.7%, primarily due to a decrease in mortgage loan servicing activities of $143 thousand, partially offset by an increase in the gain on sale of mortgages of $44 thousand. Mortgage loan servicing activities decreased $143 thousand due to a non-cash expense related to the decline in the mortgage servicing rights valuation. The decline in valuation is a result of the decline in long-term interest rates and related increase in implied prepayment rates. Gain on sale of loans sold in the second quarter was $367 thousand compared to $323 thousand for the second quarter ended June 30, 2015.

For the year-to-date ended June 30, 2016, total revenues, consisting of net interest and dividend income plus noninterest income, were $7.7 million compared to $7.1 million a year ago, an increase of $546 thousand or 7.7% above the year-to-date period ended June 30, 2015. Net interest and dividend income increased $719 thousand or 12.4% primarily driven by a $1.1 million, or 19.7%, increase in interest and fees on loans. The increase was partially offset by the interest expense on subordinated debt of $242 thousand. Noninterest income decreased by $173 thousand or 13.0%, primarily due to a decrease in mortgage loan servicing activities of $299 thousand, partially offset by an increase in the gain on sale of mortgages of $57 thousand. Mortgage loan servicing activities decreased $299 thousand due to a non-cash expense related to the decline in the mortgage servicing rights valuation. The decline in valuation is a result of the decline in long-term interest rates and related increase in implied prepayment rates. Gain on sale of loans sold for the year-to-date ended June 30, 2016 was $608 thousand compared to $551 thousand for the year-to-date ended June 30, 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 3.03% compared to 3.05% for the comparable 2015 period. The Company’s yield on earning assets increased 9 basis points to 3.35%, while the cost of funds increased 15 basis points to 0.45% for the three months ended June 30, 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 second quarter 2016 was $3.6 million, an increase of $330 thousand or 10.1% above the second quarter of 2015. The increase was primarily driven by an increase in salary and benefits expense of $218 thousand and occupancy costs of $62 thousand. The increases in these expenses are largely attributed to the new West Hartford branch. These were partially offset by decreases in professional fees of $28 thousand.

Total noninterest expense for the first six months of 2016 was $6.9 million, an increase of $678 thousand or 10.8% above the comparable year-to-date 2015 period. The increase was primarily driven by increases in salary and benefits expense of $470 thousand, data processing fees of $76 thousand, occupancy costs of $54 thousand, and advertising and promotions of $38 thousand. These were partially offset by decreases in professional fees of $49 thousand.

Capital levels for The Simsbury Bank & Trust Company on June 30, 2016 remains comfortably above the regulatory “well-capitalized” designation. Capital ratios are calculated under Basel III rules, which became effective January 1, 2015.

Capital Ratios June 30, 2016
	Simsbury Bank & Trust Company	Regulatory Standard For Well-Capitalized
Tier 1 Leverage Capital Ratio	7.87%	5.00%
Tier 1 Risk-Based Capital Ratio	11.49%	8.00%
Total Risk-Based Capital Ratio	12.54%	10.00%
Common Equity Tier 1 Risk-Based Capital Ratio	11.49%	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
	June 30, 2016, December 31, 2015 and June 30, 2015
(Dollars in thousands, except for share and per share amounts)
		6/30/2016			12/31/2015			6/30/2015
		(unaudited)						(unaudited)
ASSETS
	Cash and due from banks		10,133			8,933			10,606
	Interest-bearing deposits with Federal Reserve Bank of Boston
	and Federal Home Loan Bank		9,352			19,795			9,622
	Money market mutual funds		45			13			566
	Federal funds sold		128			149			50
	Cash and cash equivalents		19,658			28,890			20,844
	Certificates of Deposit		1,500			1,250			-
	Investments in available-for-sale securities (at fair value)		68,853			71,517			75,346
	Federal Home Loan Bank stock, at cost		3,363			2,047			3,074
	Loans held-for-sale		6,794			2,167			5,744
	Loans outstanding		370,269			326,723			302,796
	Less allowance for loan losses		3,329			3,028			2,834
	Loans, net		366,940			323,695			299,962
	Premises and equipment, net		2,070			1,420			1,394
	Accrued interest receivable		1,231			1,143			1,088
	Bank owned life insurance		9,002			7,389			7,286
	Other assets		5,146			5,262			4,963
	Total other assets		17,449			15,214			14,731
	TOTAL ASSETS	$	484,557		$	444,780		$	419,701
LIABILITIES AND STOCKHOLDERS' EQUITY
	Deposits:
	Demand deposits	$	128,392		$	135,580		$	110,534
	Savings and NOW deposits		186,743			179,775			164,696
	Time deposits		62,693			57,287			58,663
	Total deposits		377,828			372,642			333,893
	Securities sold under agreements to repurchase		2,848			1,915			2,917
	Federal Home Loan Bank advances		64,000			31,500			51,500
	Long-term subordinated debt		7,237			7,230			-
	Other liabilities		1,813			1,751			1,683
	Total liabilities		453,726			415,038			389,993
	Stockholders' equity:
	Preferred stock, senior non-cumulative perpetual, Series C, no par; 9,000
	shares issued and outstanding at June 30, 2015;		-			-			8,994
	Common stock, no par value; authorized 2,000,000 shares;
	issued and outstanding 1,361,601 shares and 1,361,187 shares, respectively, at
	June 30, 2016; 1,360,591 shares and 1,360,177 shares, respectively, at
	December 31, 2015, and 908,170 shares and 907,756 shares, respectively, at June 30, 2015		18,873			18,856			10,324
	Retained earnings		11,368			11,288			10,933
	Treasury stock, 414 shares		(7	)		(7	)		(7	)
	Unearned compensation- restricted stock awards		(127	)		(206	)		(322	)
	Accumulated other comprehensive income (loss)		724			(189	)		(214	)
	Total stockholders' equity		30,831			29,742			29,708
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	484,557		$	444,780		$	419,701

SBT Bancorp, Inc. and Subsidiary
Condensed Consolidated Statements of Income
(Unaudited)
(Dollars in thousands, except for share and per share amounts)
		For the quarter ended						For the six months ended
		6/30/2016			6/30/2015			6/30/2016			6/30/2015
Interest and dividend income:
	Interest and fees on loans	$	3,305		$	2,687		$	6,380		$	5,328
	Investment securities		382			409			771			842
	Federal funds sold and overnight deposits		16			5			39			12
	Total interest and dividend income		3,703			3,101			7,190			6,182
Interest expense:
	Deposits		188			188			347			374
	Repurchase agreements		2			1			3			2
	Interest on long-term subordinated debt		135			-			242			-
	Federal Home Loan Bank advances		66			18			98			25
	Total interest expense		391			207			690			401
	Net interest and dividend income		3,312			2,894			6,500			5,781
Provision for loan losses			170			30			301			80
	Net interest and dividend income after
	provision for loan losses		3,142			2,864			6,199			5,701
Noninterest income:
	Service charges on deposit accounts		91			101			181			205
	Gain on available-for-sale securities, net of writedowns		23			25			70			67
	Other service charges and fees		208			200			440			353
	Increase in cash surrender value
	of life insurance policies		62			51			113			103
	Mortgage loan servicing activities		(110	)		33			(357	)		(58	)
	Gain on sale of mortgages		367			323			608			551
	Investment services fees and commissions		52			77			79			110
	Other income (loss)		11			(4	)		29			5
	Total noninterest income		704			806			1,163			1,336
Noninterest expense:
	Salaries and employee benefits		1,921			1,703			3,752			3,282
	Occupancy expense		390			328			760			706
	Equipment expense		113			100			206			202
	Advertising and promotions		187			152			294			256
	Forms and supplies		35			45			74			77
	Professional fees		119			147			203			252
	Directors' fees		54			63			107			114
	Correspondent charges		73			92			146			121
	FDIC Assessment		91			78			153			156
	Data Processing Fees		197			189			409			333
	Internet banking costs		93			51			145			105
	Other expenses		323			318			663			630
	Total noninterest expense		3,596			3,266			6,912			6,234
Income before income taxes			250			404			450			803
Income tax (benefit) provision			(1	)		54			(7	)		110
Net income		$	251		$	350		$	457		$	693
Net income available to common stockholders		$	251		$	316		$	457		$	633
Average shares outstanding, basic			1,351,924			888,587			1,350,247			888,290
Earnings per common share, basic		$	0.19		$	0.36		$	0.34		$	0.71
Average shares outstanding, assuming dilution			1,352,239			889,611			1,351,365			888,090
Earnings per common share, assuming dilution		$	0.19		$	0.36		$	0.34		$	0.71

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