SBT Bancorp, Inc. Reports Fourth Quarter 2014 Results

PRESS RELEASE FOR IMMEDIATE RELEASE

January 30, 2015

For More Information, Contact:

Richard J. Sudol, SVP & CFO

Simsbury Bank

(860) 408-5493

(860) 408-4679 (fax)

rsudol@simsburybank.com

SBT Bancorp, Inc. Reports Fourth Quarter 2014 Results

SIMSBURY, CT. – January 30, 2015 - SBT Bancorp, Inc., (OTCQX: SBTB), holding company for The Simsbury Bank & Trust Company, today announced net income of $354,000 or $0.37 basic and diluted earnings per share for the quarter ended December 31, 2014 compared to a net income of $258,000 or $0.26 basic and diluted earnings per share, an increase of $0.11 or 42% basic and diluted earnings per share in the linked quarter. The increase in net income is mainly due to a $19,000 increase in noninterest income, a $25,000 reduction in the provision for loan losses and a $78,000 reduction in noninterest expenses. Net income increased $222,000 as compared to a net income of $132,000 during the quarter ended December 31, 2013 due primarily to a $304,000 decrease in noninterest expenses.

“The Bank showed strong loan growth as compared to December 31, 2013,” said Martin J. Geitz, President and Chief Executive Officer. “Commercial banking continues to grow, with commercial loan balances increasing by $5.4 million or 6.6% since December 31, 2013. Performance of our mortgage unit has showed some improvement during the second half of the year, however, continues to be challenging. We experienced a significant increase in applications and closed purchased mortgages during the second half of the year; however, the levels were still below 2013’s levels. 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.”

For the twelve months ended December 31, 2014, net income amounted to $805,000 or $0.80 basic and $0.79 diluted earnings per share. This compares to net income of $1,135,000 or $1.18 basic and $1.17 diluted earnings per share for the twelve months ended December 31, 2013. Net interest and dividend income for the twelve months ended December 31, 2014 increased $244 thousand or 2.2% compared to twelve months ending December 31, 2013. Total loans outstanding, including loans held-for-sale, amounted to $291 million, an increase of $9 million or 3.2% as compared to $283 million on December 31, 2013. Total assets on December 31, 2014 were $409 million compared to $422 million on December 31, 2013.

Key highlights for December 31, 2014 compared to December 31, 2013 included:

• Net loans, including loans held-for-sale, grew $9.0 million or 3.2%.
• Year-to-date net interest and dividend income increased $244 thousand or 2.2% compared to year-to-date December 31, 2013.
• Year-to-date 2014 net interest margin of 2.99% was 14 basis points lower compared to year-to-date December 31, 2013.

· Low cost Demand, Savings and NOW deposits grew $4.9 million.

· Total loan delinquency (non-accrual and delinquent loans) decreased to 1.08% of total loans compared to the previous year’s 1.34%. Overall loan delinquency remains favorable to peers.

· The allowance for loan losses at December 31, 2014 was 0.97% of total loans.

• The Bank’s Total Risk Based Capital ratio remains strong, ending the fourth quarter of 2014 at 12.80%.

On December 31, 2014, loans outstanding, including loans held-for-sale, were $291 million, an increase of $9.0 million, or 3.2% over a year ago. Commercial loans grew by $5.4 million or 6.6% and residential mortgage loans, including loans held-for-sale, decreased by $1.4 million or 1.0%. Consumer loans grew by $5.0 million or 8.6%, mainly due to an increase in purchased auto loans.

The Company’s loan portfolio remains strong. The Company’s allowance for loan losses at December 31, 2014 was 0.97 % of total loans. The Company had non-accrual loans totaling $2.0 million equal to 0.72% of total loans on December 31, 2014 compared to non-accrual loans totaling $2.8 million or 1.02% of total loans a year ago. Total non-accrual and delinquent loans on December 31, 2014 was 1.08% of loans outstanding compared to 1.34% on December 31, 2013.

Total deposits on December 31, 2014 were $356 million, a decrease of $2.4 million or 0.7% over a year ago primarily due to a decrease in time deposits, offset slightly by a $4.9 million increase in low cost Demand, Savings and NOW deposits. At quarter-end, 33% of total deposits were in non-interest bearing demand accounts, 50% were in low-cost savings and NOW accounts and 17% were in time deposits.

For the fourth quarter 2014, total revenues, consisting of net interest and dividend income plus noninterest income, were $3,511,000 compared to $3,556,000 a year ago, a decrease of $45,000 or 1.3%. Non-interest income increased by $47,000 or 7.4%, primarily due to an increase in gain on sales of securities available-for-sale of $36,000. For the twelve months ended December 31, 2014, total revenues were $13,801,000 compared to $14,213,000 for the twelve months ended December 31, 2013, a decrease of $412,000. Over this period, net interest and dividend income increased by $244,000 while noninterest income decreased by $656,000, primarily due to a decrease in mortgage banking activities in the amount of $809,000, offset slightly by an increase in other service charges and fees of $45,000, and other income of $87,000.

The Company’s year-to-date 2014 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 2.99% compared to 3.13% for year-to-date 2013. The Company’s yield on earning assets decreased 18 basis points to 3.21%, while the cost of funds decreased 2 basis points to 0.32% for the twelve months ended December 31, 2014 compared to the same period of 2013.

Total noninterest expense for the fourth quarter 2014 was $3,095,000, a decrease of $304,000 or 8.9% below the fourth quarter of 2013. The $304,000 decrease was primarily due to decreases of $197,000 in salaries and employee benefits, $31,000 in advertising and promotions expense, $43,000 in correspondent charges and $87,000 related to the sale and write-down of other real estate owned. These decreases were offset slightly by increases of $20,000 in FDIC assessment and $75,000 in other expenses. For the twelve months ended December 31, 2014, total noninterest expense was $12,945,000 compared to $12,599,000 for the twelve months ended December 31, 2013, an increase of $346,000. This increase is mainly due to increases in occupancy and equipment expenses of $326,000, FDIC assessment of $186,000 and other expenses of $323,000. These increases were offset by decreases in salaries and benefits expense of $144,000, advertising expense of $163,000 and correspondent charges of $112,000.

Capital levels for The Simsbury Bank & Trust Company on December 31, 2014 were above those required to meet the regulatory “well-capitalized” designation.

Capital Ratios

December 31, 2014

Simsbury Bank & Trust Company

Regulatory Standard For Well-Capitalized

Tier 1 Leverage Capital Ratio

7.17%

5.00%

Tier 1 Risk-Based Capital Ratio

11.69%

6.00%

Total Risk-Based Capital Ratio

12.80%

10.00%

Simsbury Bank is an independent, publicly owned community bank for consumers and businesses based in Central Connecticut’s Farmington Valley. Simsbury Bank’s parent company is SBT Bancorp, Inc. whose stock is traded under the ticker symbol OTCQX: SBTB. The Bank serves customers through full-service branches in Avon, Bloomfield, Granby and Simsbury, Connecticut; mortgage loan advisors and commercial bankers active throughout Southern New England; Simsbury Bank Online internet banking at simsburybank.com; Simsbury Bank Mobile app; free ATM transactions at hundreds of machines throughout the northeastern U.S. via the SUM program; and with 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. 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.

# # #