SBT Bancorp, Inc. Reports First Quarter 2015 Results

PRESS RELEASE

For More Information, Contact:

Richard J. Sudol, SVP & CFO

Simsbury Bank

(860) 651-2057

(860) 408-4679 (fax)

rsudol@simsburybank.com

SBT Bancorp, Inc. Reports First Quarter 2015 Results

SIMSBURY, CT. – April 29, 2015 - SBT Bancorp, Inc., (OTCQX: SBTB), holding company for The Simsbury Bank & Trust Company, today announced net income of $343,000 or $0.36 basic and diluted earnings per share for the quarter ended March 31, 2015, compared to a net income of $78,000 or $0.06 basic and diluted earnings per share, an increase of $0.30 diluted earnings per share compared to the prior year quarter. The increase in net income is mainly due to a $391,000 decrease in noninterest expense, a $177,000 increase in mortgage banking activities, partially offset by a decrease in other service charges and fees of $143,000.

“The Bank showed strong loan growth as compared to March 31, 2014,” said Martin J. Geitz, President and Chief Executive Officer. “Commercial banking continues to grow, with commercial loan balances increasing by $11.0 million or 13.5% since March 31, 2014. Performance of our mortgage unit has showed some improvement during the first quarter of 2015. We experienced a significant increase in applications and closed purchased mortgages during the quarter. The launch of the wholesale mortgage origination channel has contributed incremental loan volume to our retail origination platform, and we expect measured improvement in the mortgage business contribution to earnings.”

Key highlights for March 31, 2015 compared to March 31, 2014 included:

• Net loans grew $13.9 million or 5.0%.
• Quarter-to-date 2015 net interest margin of 3.05% was 1 basis point higher compared to quarter-to-date March 31, 2014.

· Total deposits decreased $11.0 million driven by reductions in CD’s ($8.6mm) and Money Market Accounts ($9.1mm). These were partially offset by growth in Checking ($1.4mm) and Savings Accounts ($5.3mm).

· Total loan delinquency (non-accrual and delinquent loans) decreased to 1.12% of total loans compared to the previous year’s 1.33%. Overall loan delinquency remains favorable to peers.

· The allowance for loan losses at March 31, 2015 was 0.96% of total loans.

• The Bank’s Total Risk Based Capital ratio remains strong, ending the first quarter of 2015 at 12.60% (estimated).

On March 31, 2015, loans outstanding were $292 million, an increase of $13.9 million, or 5.0% over a year ago. Commercial loans grew by $11.0 million or 13.5% and residential mortgage loans decreased by $1.3 million or 1.0%. Consumer loans grew by $5.1 million or 9.1%, mainly due to an increase in purchased auto loans.

The Company’s loan portfolio remains strong. The Company’s allowance for loan losses at March 31, 2015 was 0.96% of total loans. The Company had non-accrual loans totaling $2.2 million equal to 0.73% of total loans on March 31, 2015 compared to non-accrual loans totaling $2.3 million or 0.84% of total loans a year ago. Total non-accrual and delinquent loans on March 31, 2015 was 1.12% of loans outstanding compared to 1.33% on March 31, 2014.

Total deposits on March 31, 2015 were $361 million, a decrease of $11.0 million or 3.0% over a year ago primarily due to a decrease in time deposits of $8.6 million and a $2.4 million decrease in low cost Demand, Savings and NOW deposits. At quarter-end, 30% of total deposits were in non-interest bearing demand accounts, 53% were in low-cost savings, money market and NOW accounts and 17% were in time deposits.

For the first quarter 2015, total revenues, consisting of net interest and dividend income plus noninterest income, were $3,418,000 compared to $3,399,000 a year ago, an increase of $19,000 or 0.6%. Non-interest income increased by $18,000 or 3.5%, primarily due to an increase in mortgage banking activities of $177,000 and security gains of $43,000, offset by a reduction of fee revenue of $138,000. Over this period, net interest and dividend income remained flat at $2.9 million.

The Company’s year-to-date 2015 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.05% compared to 3.04% for the comparable 2014 period. The Company’s yield on earning assets decreased 1 basis point to 3.25%, while the cost of funds decreased 3 basis points to 0.29% for the three months ended March 31, 2015 compared to the same period of 2014.

Total non interest expense for the first quarter 2015 was $2,969,000, a decrease of $391,000 or 11.6% below the first quarter of 2014. The $391,000 decrease was primarily due to decreases of $393,000 in salaries and employee benefits, $51,000 related to correspondent bank charges, and a $25,000 reduction in FDIC assessment. These decreases were offset slightly by increases in occupancy and equipment expense of $31,000 and an increase in professional fees of $28,000.

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

Capital Ratios (estimated)

March 31, 2015

Simsbury Bank & Trust Company

Regulatory Standard For Well-Capitalized

Tier 1 Leverage Capital Ratio

7.11%

5.00%

Tier 1 Risk-Based Capital Ratio

11.49%

8.00%

Total Risk-Based Capital Ratio

12.60%

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. The Bank serves customers through full-service branches in central Connecticut; mortgage loan advisors and commercial bankers active throughout Southern New England; Simsbury Bank Online internet banking at simsburybank.com; Simsbury Bank Mobile Banking; free ATM transactions at hundreds of machines throughout the northeastern U.S. via the SUM program; and 24 hour telephone banking. The Bank’s wholly-owned subsidiary, SBT Investment Services, Inc., offers securities and insurance products through LPL Financial and its affiliates, Member FINRA/SIPC. 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.