Simsbury Bank Third Quarter Results

PRESS RELEASE FOR IMMEDIATE RELEASE

For More Information, Contact: October 30, 2014
Richard J. Sudol, SVP & CFO
Simsbury Bank
(860) 408-5493
(860) 408-4679 (fax)
rsudol@simsburybank.com

SBT Bancorp, Inc. Reports Third Quarter 2014 Results

SIMSBURY, CT. – October 30, 2014 - SBT Bancorp, Inc., (OTCBB: SBTB), holding company for The Simsbury Bank & Trust Company, today announced net income of $258,000 or $0.26 basic and diluted earnings per share for the quarter ended September 30, 2014 compared to a net income of $115,000 or $0.10 basic and diluted earnings per share in the linked quarter. For the nine months ended September 30, 2014, net income amounted to $451,000 or $0.42 basic and diluted earnings per share. This compares to net income of $1,003,000 or $1.06 basic and $1.05 diluted earnings per share for the nine months ended September 30, 2013.

Net interest and dividend income for the nine months ended September 30, 2014 increased $335 thousand or 4.1% compared to nine months ending September 30, 2013. Total loans outstanding, including loans held-for-sale, amounted to $290 million, an increase of $12 million or 4.3% as compared to $278 million on September 30, 2013. Total assets on September 30, 2014 were $410 million compared to $407 million on September 30, 2013.

“The Bank showed strong loan and deposit growth as compared to September 30, 2013,” said Martin J. Geitz, President and Chief Executive Officer. “Commercial banking continues to grow, with commercial loan balances increasing by $7.1 million or 9.1% since September 30, 2013. Retail banking remains strong as evidenced by our deposit growth. Performance of our mortgage unit has showed some improvement during the third quarter, however, continues to be challenging. We experienced a significant increase in applications and closed purchase mortgages during the third quarter; however, the levels were still well 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 during the balance of the year.”

Key highlights for September 30, 2014 compared to September 30, 2013 included:
• Net loans, including loans held-for-sale, grew $11.9 million or 4.3%.
• Total asset growth of $3.4 million or 0.8%.
• Total deposits increased $12.3 million or 3.4% over the same period.
• Year-to-date net interest and dividend income increased $335 thousand or 4.1% compared to year-to-date September 30, 2013.
• Year-to-date 2014 net interest margin of 2.98% was 11 basis points lower compared to year-to-date September 30, 2013.
• Total loan delinquency (non-accrual and delinquent loans) decreased to 0.91% of total loans compared to the previous year’s 1.24%. Overall loan delinquency remains favorable to peers.
• The allowance for loan losses at September 30, 2014 was 0.98% of total loans.
• The Bank’s Total Risk Based Capital ratio remains strong, ending the third quarter of 2014 at 12.79%.

On September 30, 2014, loans outstanding, including loans held-for-sale, were $290 million, an increase of $11.9 million, or 4.3% over a year ago. Commercial loans grew by $7.1 million or 9.1%, residential mortgage loans, including loans held-for-sale, grew by $1.5 million or 1.1% and consumer loans grew by $3.4 million or 5.7%. Combined mortgage and consumer loan closings decreased by 46.6% during the third quarter 2014 as compared to the third quarter 2013 due to a 47.1% decrease in mortgage closings and a 71.3% decrease in consumer closings.

The Company’s loan portfolio remains strong. The Company’s allowance for loan losses at September 30, 2014 was 0.98 % of total loans. The Company had non-accrual loans totaling $1.9 million equal to 0.69% of total loans on September 30, 2014 compared to non-accrual loans totaling $2.9 million or 1.05% of total loans a year ago. Total non-accrual and delinquent loans on September 30, 2014 were 0.90% of loans outstanding compared to 1.24% on September 30, 2013.

Total deposits on September 30, 2014 were $376 million, an increase of $12.3 million or 3.4% over a year ago. At quarter-end, 27% of total deposits were in non-interest bearing demand accounts, 56% were in low-cost savings and NOW accounts and 17% were in time deposits.

For the third quarter 2014, total revenues, consisting of net interest and dividend income plus noninterest income, were $3,509,000 compared to $3,331,000 a year ago, an increase of $178,000 or 5.3%. Non-interest income increased by $181,000 or 37.2%, primarily due to an increase in gain on loans sold in the amount of $150,000. For the nine months ended September 30, 2014, total revenues were $10,289,000 compared to $10,657,000 for the nine months ended September 30, 2013, a decrease of $368,000. Over this period, net interest and dividend income increased by $335,000 while noninterest income decreased by $703,000 or 28.3%, primarily due to a decrease in the gain on loans sold in the amount of $821,000, offset slightly by an increase in other service charges and fees of $77,000.

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 2.98% compared to 3.09% for year-to-date 2013. The Company’s yield on earning assets decreased 14 basis points to 3.20%, while the cost of funds remained the same at 0.33% for the nine months ended September 30, 2014 compared to the same period of 2013.

Total noninterest expense for the third quarter 2014 was $3,173,000, an increase of $13,000 or 0.4% above the third quarter of 2013. The $13,000 increase was primarily due to a $73,000 increase in the occupancy expenses, $43,000 due to an increase in the equipment expense and $33,000 due to an increase in professional fees. These increases were offset by a decrease in salary and employee benefits in the amount of $67,000 and a decrease in advertising and promotion expense of $58,000. For the nine months ended September 30, 2014, total noninterest expense was $9,849,000 compared to $9,200,000 for the nine months ended September 30, 2013, an increase of $649,000. This increase is mainly due to increases in salary and benefits of $52,000, occupancy and equipment expenses of $333,000, FDIC assessment of $166,000 and other expenses of $248,000. These increases were offset by a decrease in advertising expense of $132,000.

Capital levels for The Simsbury Bank & Trust Company on September 30, 2014 were above those required to meet the regulatory “well-capitalized” designation.

Capital Ratios
September 30, 2014
Simsbury Bank & Trust Company Regulatory Standard For Well-Capitalized
Tier 1 Leverage Capital Ratio 6.78% 5.00%
Tier 1 Risk-Based Capital Ratio 11.67% 6.00%
Total Risk-Based Capital Ratio 12.79% 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 OTCBB: SBTB. The Bank serves customers locally through branches in Avon, Bloomfield, Granby and Simsbury and regionally through mortgage and commercial bankers active throughout Southern New England. Simsbury Bank customers enjoy internet banking and mortgage services at, respectively, www.simsburybank.com and www.simsburybank.com/mortgages. Bank customers have free ATM access at thousands of machines across the country through the SUM program. The Bank offers financial planning, investment and insurance products through LPL Financial and its affiliates, member FINRA/SIPC.

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.
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