SBT Bancorp (SBTB) 8-K SBT Bancorp, Inc. Reports Fourth Quarter 2017 Results

Exhibit 99.1

SBT Bancorp, Inc. Reports Fourth Quarter 2017 Results

SIMSBURY, Conn.--(BUSINESS WIRE)--January 29, 2018--SBT Bancorp, Inc. (the “Company”), (OTC Pink: SBTB), holding company for The Simsbury Bank & Trust Company, Inc. (the “Bank”), today announced net income of $682 thousand or $0.50 basic and $0.50 diluted earnings per share for the quarter ended December 31, 2017, compared to net income of $604 thousand or $0.45 basic and $0.45 diluted earnings per share for the prior year’s fourth quarter. Net income for the three and twelve months ended December 31, 2017 was impacted by a net write-down of the deferred tax assets related to the Tax Cuts & Jobs Act (TCJA) in the amount of $167 thousand. Excluding the impact of the TCJA, net income would have been $849 thousand or $0.62 basic and $0.62 diluted earnings per share for the quarter ended December 31, 2017.

Total revenue increased $1.1 million, or 6.9%, in fiscal 2017 as compared to fiscal 2016, primarily due to growth in the Bank’s commercial loan portfolio. Year over year, noninterest expenses decreased $174 thousand due principally to a decrease in salaries and employee benefits of $482 thousand and occupancy expenses of $130 thousand. These were offset by an increase in professional fees of $237 thousand and equipment expenses of $94 thousand.

“We are very pleased to report improved earnings for the full year and fourth quarter of 2017. Our strategic focus on increasing the Bank’s commercial banking activities, with particular focus on family owned businesses, and aggressively managing expenses,” said Simsbury Bank President & CEO Martin J. Geitz, “resulted in a 58% increase ($862 thousand) in net income for the year ended December 31, 2017 compared to the prior year ended December 31, 2016. Deposit balances for year ended December 31, 2017 increased 10.6% ($44 million) from the prior year end of December 31, 2016.”

Key highlights for quarter ended December 31, 2017 compared to quarter ended December 31, 2016 included:

• Net income increased $78 thousand, or 12.9%. (Excluding the impact of the deferred tax asset write-down due to TCJA, net income would have increased $245 thousand.)
• Total revenue, consisting of net interest and dividend income plus noninterest income, increased $71 thousand, or 1.6%.
• Net interest and dividend income increased 2.5% to $3.8 million.
• Mortgage banking activities revenue increased 10.3% to $430 thousand.
• Provision for loan losses totaled $75 thousand, a decrease of $230 thousand compared to the quarter ended December 31, 2016. The allowance for loan losses at December 31, 2017 was 1.03% of total gross loans.
• Commercial loan balances increased $8.2 million, or 4.6%, to $186.0 million compared to December 31, 2016.
• Total deposits increased $43.6 million, or 10.6%, to $457 million, driven by increases in savings and NOW deposits of $34.4 million, and demand deposits of $9.3 million.
• Income tax expenses increased $301 thousand related to higher pre-tax earnings and a $167 thousand write-down of deferred tax assets related to the Tax Cuts and Jobs Act.

Key highlights for year ended December 31, 2017 compared to year ended December 31, 2016 included:

• Net income increased $862 thousand, or 57.8%. (Excluding the impact of the deferred tax asset impairment due to TCJA, net income would have increased $1.0 million.)
• Total revenue, consisting of net interest and dividend income plus noninterest income, increased $1.1 million, or 6.9%.
• Net interest and dividend income increased 9.0% to $14.8 million.
• Mortgage banking activities increased 12.2% , or $157 thousand, to $1.4 million.
• Provision for loan losses totaled $645 thousand, a decrease of $266 thousand compared to the year ended December 31, 2016. The allowance for loan losses at December 31, 2017 was 1.03% of total gross loans.

The Company’s allowance for loan losses at December 31, 2017 was 1.03% of total gross loans. The Company had non-accrual loans totaling $1.5 million, or 0.37%, of total loans on December 31, 2017, compared to non-accrual loans totaling $4.1 million, or 0.99%, of total loans a year ago. Total non-accrual and delinquent loans on December 31, 2017 was 0.52% of loans outstanding compared to 1.26% on December 31, 2016.

Total deposits on December 31, 2017 were $457 million, an increase of $43.6 million, or 10.6%, over a year ago. At the period end, 31% of total deposits were in non-interest bearing demand accounts, 54% were in low-cost savings, money market and NOW accounts and 15% were in time deposits.

For the quarter ended December 31, 2017, total net revenues, consisting of net interest and dividend income plus noninterest income, were $4.6 million compared to $4.5 million for the same period in 2016, an increase of $71 thousand, or 1.6%, above the prior year’s fourth quarter. Net interest and dividend income increased $92 thousand, or 2.5%, primarily driven by a $143 thousand, or 3.8%, increase in interest and fees on loans. The increase was partially offset by increased interest expense on deposits of $111 thousand. Noninterest income decreased by $21 thousand, or 2.5%, primarily due to a decrease in other income of $36 thousand and a decrease in investment services fees and commissions of $29 thousand.

For the year ended December 31, 2017, total net revenues, consisting of net interest and dividend income plus noninterest income, were $17.9 million compared to $16.7 million for the same period in 2016, an increase of $1.1 million, or 6.9%, above the prior year-to-date period. Net interest and dividend income increased $1.2 million, or 9.0%, primarily driven by a $1.8 million, or 12.9%, increase in interest and fees on loans. The increase was partially offset by decreased interest income on securities of $153 thousand and increased interest expense of $544 thousand. Noninterest income decreased by $73 thousand, or 2.3%, primarily due to a decrease in other income of $106 thousand, and a decrease in gain on sale of available-for-sale securities, net of write-downs, of $95 thousand. These were partially offset by an increase in mortgage banking activities income of $157 thousand.

The Company’s year-to-date 2017 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.03% compared to 2.98% for the comparable 2016 period. The Company’s yield on earning assets increased 15 basis points to 3.47% and the cost of funds increased 13 basis points to 0.61%, primarily driven by the subordinated debt interest and increased FHLB borrowings interest.

Total noninterest expense for the fourth quarter 2017 was $3.4 million, a decrease of $78 thousand compared to the fourth quarter of 2016. Total noninterest expense for the year-to-date period ended December 31, 2017 was $13.9 million, a decrease of $174 thousand compared to the 2016 year-to-date period.

Capital levels for The Simsbury Bank & Trust Company on December 31, 2017 remain above the regulatory “well-capitalized” designation. Capital ratios are calculated under Basel III rules.

Capital Ratios December 31, 2017
	Simsbury Bank & Trust Company	Regulatory Standard For Well-Capitalized
Tier 1 Leverage Capital Ratio	7.79%	5.00%
Tier 1 Risk-Based Capital Ratio	10.89%	8.00%
Total Risk-Based Capital Ratio	12.03%	10.00%
Common Equity Tier 1 Risk-Based Capital Ratio	10.89%	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
Consolidated Balance Sheets
	December 31, 2017 and December 31, 2016
(Dollars in thousands, except for share amounts)
			12/31/2017			12/31/2016
		(unaudited)
ASSETS
	Cash and due from banks	$	13,066		$	10,976
	Interest-bearing deposits with Federal Reserve Bank
	and Federal Home Loan Bank		23,853			9,786
	Money market mutual funds		388			95
	Federal funds sold		185			150
	Cash and cash equivalents		37,492			21,007
	Certificates of deposit		1,250			1,250
	Investments in available-for-sale securities at fair value		51,656			58,728
	Federal Home Loan Bank stock, at cost		903			2,896
	Loans held-for-sale		2,259			2,801
	Loans outstanding		396,413			409,164
	Less allowance for loan losses		4,088			3,753
	Loans, net		392,325			405,411
	Premises and equipment, net		1,863			1,905
	Accrued interest receivable		1,402			1,301
	Other real estate owned		192			-
	Bank owned life insurance		9,370			9,130
	Other assets		5,313			5,570
	Total other assets		18,140			17,906
	TOTAL ASSETS	$	504,025		$	509,999
LIABILITIES AND STOCKHOLDERS' EQUITY
	Deposits:
	Demand deposits	$	143,635		$	134,341
	Savings and NOW deposits		247,251			212,835
	Time deposits		66,514			66,588
	Total deposits		457,400			413,764
	Securities sold under agreements to repurchase		2,449			2,694
	Federal Home Loan Bank advances		2,318			54,058
	Long-term subordinated debt		7,281			7,252
	Other liabilities		2,358			1,944
	Total liabilities		471,806			479,712
	Stockholders' equity:
	Common stock, no par value; authorized 2,000,000 shares;
	issued and outstanding 1,373,532 shares and 1,373,118 shares, respectively, at
	December 31, 2017; 1,372,394 shares and 1,371,980 shares, respectively, at December 31, 2016		19,442			19,133
	Retained earnings		13,648			12,017
	Treasury stock, 414 shares		(7	)		(7	)
	Unearned compensation- restricted stock awards		(420	)		(293	)
	Accumulated other comprehensive loss		(444	)		(563	)
	Total stockholders' equity		32,219			30,287
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	504,025		$	509,999

SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except for share and per share amounts)
		For the three months ended						For the twelve months ended
		12/31/2017			12/31/2016			12/31/2017			12/31/2016
		(unaudited)						(unaudited)
Interest and dividend income:
	Interest and fees on loans	$	3,920		$	3,777		$	15,341		$	13,591
	Investment securities		308			344			1,320			1,473
	Federal funds sold and overnight deposits		55			15			250			81
	Total interest and dividend income		4,283			4,136			16,911			15,145
Interest expense:
	Deposits		372			261			1,326			881
	Repurchase agreements		2			2			7			6
	Long-term subordinated debt		136			137			542			515
	Federal Home Loan Bank advances		3			58			263			192
	Total interest expense		513			458			2,138			1,594
	Net interest and dividend income		3,770			3,678			14,773			13,551
Provision for loan losses			75			305			645			911
	Net interest and dividend income after
	provision for loan losses		3,695			3,373			14,128			12,640
Noninterest income:
	Service charges on deposit accounts		102			101			371			379
	(Loss) gain on available-for-sale securities, net of writedowns		(2	)		(1	)		(4	)		91
	Other service charges and fees		189			181			735			737
	Increase in cash surrender value
	of life insurance policies		60			64			240			241
	Mortgage banking activities		430			390			1,445			1,288
	Investment services fees and commissions		33			62			176			194
	Other income		10			46			160			266
	Total noninterest income		822			843			3,123			3,196
Noninterest expense:
	Salaries and employee benefits		1,754			1,799			7,017			7,499
	Occupancy expense		333			384			1,400			1,530
	Equipment expense		139			102			514			420
	Advertising and promotions		158			97			610			605
	Forms and supplies		26			41			110			202
	Professional fees		152			134			716			479
	Directors' fees		68			56			236			216
	Correspondent charges		93			86			316			314
	FDIC assessment		96			126			421			349
	Data processing fees		205			208			903			836
	Internet banking costs		45			61			207			282
	Other expenses		281			334			1,443			1,335
	Total noninterest expense		3,350			3,428			13,893			14,067
Income before income taxes			1,167			788			3,358			1,769
Income tax provision			485			184			1,004			277
Net income		$	682		$	604		$	2,354		$	1,492
Net income available to common stockholders		$	682		$	604		$	2,354		$	1,492
Weighted average shares outstanding, basic			1,360,136			1,347,872			1,359,222			1,350,725
Earnings per common share, basic		$	0.50		$	0.45		$	1.73		$	1.10
Weighted average shares outstanding, assuming dilution			1,370,224			1,357,070			1,368,238			1,359,265
Earnings per common share, assuming dilution		$	0.50		$	0.45		$	1.72		$	1.10

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