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SBT Bancorp, Inc. Reports Third Quarter 2015 Results

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SIMSBURY, Conn.--(BUSINESS WIRE)--

SBT Bancorp, Inc., (OTCQX: SBTB), holding company for The Simsbury Bank & Trust Company, Inc., today announced net income of $353,000 or $0.37 basic and diluted earnings per share for the quarter ended September 30, 2015, compared to a net income of $258,000 or $0.26 basic and diluted earnings per share, an increase of $0.11 diluted earnings per share compared to the prior year quarter. The increase in net income is mainly due to a $168,000 increase in mortgage banking activities, and a $121,000 increase in net interest and dividend income.

"The Bank showed strong growth as compared to September 30, 2014," said Martin J. Geitz, President and Chief Executive Officer. "Commercial loan balances increased by $18.0 million or 21.3% since September 30, 2014. Performance of our mortgage unit continued to show improvement during the 2015 year."

On October 15, 2015, SBT Bancorp, Inc. closed on the issuance of an unsecured subordinated term note in the aggregate principal amount of $7.5 million due October 1, 2025. The Company intends to use the net proceeds from the issuance to redeem a portion of the 9,000 shares of the Company's Senior Non-Cumulative Perpetual Preferred Stock, Series C, that the Company issued to the United States Department of the Treasury as part of the Company's participation in the Small Business Lending Fund program and to support the growth of the Company, including the Bank's expansion into the West Hartford, Connecticut market through the opening of a new branch office and the growth of the Bank's loan portfolio, and for other general corporate purposes.

Key highlights for September 30, 2015 compared to September 30, 2014 included:

  • Net loans grew $24.6 million or 8.8%.
  • Commercial loan balances increased 21.3%.
  • Total revenues for the quarter increased 10.4%.
  • Residential mortgage banking activities income for the quarter increased 66%.
  • Net interest margin of 2.97% for the quarter was 9 basis points higher compared to the prior year's quarter.
  • Total deposits decreased $1.3 million or 0.35%, driven by reductions in CDs ($5.1mm) and Money Market Accounts ($14.9mm), partially offset by increases in Checking Accounts ($15.4mm) and Savings Accounts ($3.3mm).
  • Tangible book value per common share was $23.58 at September 30, 2015 compared to $21.98 per common share at September 30, 2014.
  • The allowance for loan losses at September 30, 2015 was 0.94% of total loans.
  • Return on average assets for the nine months ended September 30, 2015 was 0.34% compared to 0.15% for the nine months ended September 30, 2014.
  • Return on equity for the nine months ended September 30, 2015 was 4.72% compared to 1.59% for the nine months ended September 30, 2014.

On September 30, 2015, loans outstanding were $307 million, an increase of $24.7 million, or 8.8% over a year ago. Commercial loans grew by $18.0 million or 21.3% and consumer loans grew by $1.5 million or 2.5%. Residential mortgage loans, including loans held for sale, increased by $4.6 million or 3.3% driven by an increase in jumbo mortgages which are being held in the portfolio.

The Company's loan portfolio remains strong. The Company's allowance for loan losses at September 30, 2015 was 0.94% of total loans. The Company had non-accrual loans totaling $4.0 million or 1.31% of total loans on September 30, 2015, compared to non-accrual loans totaling $1.9 million or 0.69% of total loans a year ago. The increase in non-accruals relates to placing a $1.1 million secured commercial borrowing in non-accrual status during the quarter. Total non-accrual and delinquent loans on September 30, 2015 was 1.50% of loans outstanding compared to 0.91% on September 30, 2014.

Total deposits on September 30, 2015 were $375 million, a decrease of $1.3 million or 0.35% over a year ago primarily due to a decrease in time deposits of $5.1 million and a $10.7 million decrease in savings and NOW deposits. These decreases were partially offset by an increase in demand deposits of $14.4 million. At quarter-end, 31% of total deposits were in non-interest bearing demand accounts, 53% were in low-cost savings, money market and NOW accounts and 16% were in time deposits.

For the third quarter 2015, total revenues, consisting of net interest and dividend income plus noninterest income, were $3.9 million compared to $3.5 million a year ago, an increase of $366,000 or 10.4%. Noninterest income increased by $245,000 or 36.2%, primarily due to an increase in mortgage banking activities of $168,000, partially offset by a reduction of deposit fee revenue of $21,000. For the nine months ended September 30, 2015, total revenues were $11.0 million compared to $10.3 million for the nine months ended September 30, 2014, an increase of $702,000 or 6.8%. Noninterest income increased by $473,000 or 26.2%, primarily due to an increase in mortgage banking activities of $458,000.

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 3.01% compared to 2.97% for the 2014 year-to-date period. The Company's yield on earning assets increased 2 basis points to 3.22%, while the cost of funds decreased 4 basis points to 0.29% for the nine months ended September 30, 2015 compared to the same period of 2014. The Company's taxable-equivalent net interest margin for the three months ended September 30, 2015 was 2.97% compared to 2.88% for the three months ended September 30, 2014.

Total noninterest expense for the third quarter 2015 was $3.4 million, an increase of $209,000 or 6.6% above the third quarter of 2014. The increase was primarily driven by an increase in salary and benefits expense of $215,000, partially offset by decreases in occupancy expenses of $23,000 and a decrease in advertising and promotions expenses of $68,000. For the nine months ended September 30, 2015, total noninterest expense was $9.6 million, a decrease of $233,000 or 2.4% compared to the nine months ended September 30, 2014. The decrease was primarily driven by a reduction in salary and benefits expense of $78,000, a reduction of advertising and promotion of $96,000 and a reduction in FDIC assessment of $51,000. These reductions were partially offset by an increase in professional fees of $71,000.

Capital levels for The Simsbury Bank & Trust Company on September 30, 2015 were above those required to meet the regulatory "well-capitalized" designation. Capital ratios are calculated under Basel III rules, which became effective January 1, 2015.

 
Capital Ratios (estimated)
September 30, 2015
       

Simsbury Bank &
Trust Company

     

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio       7.31%       5.00%
Tier 1 Risk-Based Capital Ratio       11.11%       8.00%
Total Risk-Based Capital Ratio       12.19%       10.00%
Common Equity Tier 1 Risk-Based Capital Ratio       11.11%       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
September 30, 2015, December 31, 2014 and September 30, 2014
 
(Dollars in thousands, except for share and per share amounts)
                   
  9/30/2015     12/31/2014     9/30/2014  
(unaudited) (unaudited)

ASSETS

Cash and due from banks $ 7,313 $ 10,118 $ 8,535
Interest-bearing deposits with Federal Reserve Bank of Boston
and Federal Home Loan Bank 5,919

 

9,696 13,599
Money market mutual funds 580 1 486
Federal funds sold   346     5     53  
Cash and cash equivalents 14,158 19,820 22,673
 
Investments in available-for-sale securities (at fair value) 71,816 83,805 85,051
Federal Home Loan Bank stock, at cost 3,074 1,801 1,260
 
Loans held-for-sale 6,892 5,374 7,140
 
Loans outstanding 307,323 286,142 282,593
Less allowance for loan losses   2,897     2,761     2,761  
Loans, net   304,426     283,381     279,832  
 
Premises and equipment 1,390 1,460 1,517
Accrued interest receivable 1,045 1,095 1,020
Other real estate owned - 105 130
Bank owned life insurance 7,338 7,184 7,130
Other assets   5,021     4,815     4,613  
Total other assets   14,794     14,659     14,410  
 
 
TOTAL ASSETS $ 415,160   $ 408,840   $ 410,366  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 115,105 $ 117,261 $ 100,685
Savings and NOW deposits 201,170 177,158 211,843
Time deposits   58,531     61,646     63,612  
Total deposits 374,806 356,065 376,140
 
Securities sold under agreements to repurchase 2,722 3,921 3,845
Federal Home Loan Bank advances 5,500 17,500 -
Other liabilities   1,717     1,882     1,591  
Total liabilities   384,745     379,368     381,576  
 
Stockholders' equity:
Preferred stock, senior non-cumulative perpetual, Series C, no par; 9,000
shares issued and outstanding at September 30, 2015 and 2014
and December 31, 2014; liquidation value of $1,000 per share 8,997 8,988 8,985
Common stock, no par value; authorized 2,000,000 shares;
issued and outstanding 908,660 shares and 908,246 shares, respectively,
at 09/30/15 and 898,105 shares and 897,691 shares, respectively, at 12/31/14
and 901,625 shares and 901,211 shares, respectively, at 09/30/14 10,333 10,127 10,116
Retained earnings 11,135 10,549 10,345
Treasury stock, 414 shares (7 ) (7 ) (7 )
Unearned compensation- restricted stock awards (254 ) (207 ) (235 )
Accumulated other comprehensive income (loss)   211     22     (414 )
Total stockholders' equity   30,415     29,472     28,790  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 415,160   $ 408,840   $ 410,366  
 

 
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 nine months ended
  9/30/2015         9/30/2014     9/30/2015         9/30/2014  
 
Interest and dividend income:
Interest and fees on loans $ 2,748 $ 2,590 $ 8,057 $ 7,733
Investment securities 393 438 1,235 1,373
Federal funds sold and overnight deposits   14   21     26   38  
Total interest and dividend income   3,155   3,049     9,318   9,144  
 
Interest expense:
Deposits 192 213 566 647
Repurchase agreements 1 1 3 3
Federal Home Loan Bank advances   8   2     35   9  
Total interest expense   201   216     604   659  
 
Net interest and dividend income 2,954 2,833 8,714 8,485
 
Provision for loan losses   65   25     145   55  
 
Net interest and dividend income after
provision for loan losses   2,889   2,808     8,569   8,430  
 
Noninterest income:
Service charges on deposit accounts 98 119 303 353
Gain (loss) on available-for-sale securities, net of writedowns 26 (1 ) 93 96
Other service charges and fees 208 173 561 560
Increase in cash surrender value
of life insurance policies 51 55 154 151
Mortgage banking activities 422 254 866 408
Investment services fees and commissions 48 43 159 172
Other income   68   33     141   64  
Total noninterest income   921   676     2,277   1,804  
 
Noninterest expense:
Salaries and employee benefits 1,779 1,564 5,062 5,140
Occupancy expense 340 363 1,046 1,030
Equipment expense 104 112 306 340
Advertising and promotions 109 177 365 461
Forms and supplies 48 45 125 139
Professional fees 196 167 448 377
Directors' fees 66 65 180 196
Correspondent charges 67 42 187 173
FDIC assessment 78 80 234 285
Data processing fees 198 170 531 490
Other expenses   397   388     1,132   1,218  
Total noninterest expense   3,382   3,173     9,616   9,849  
 
Income before income taxes 428 311 1,230 385
Income tax expense (benefit)   75   53     185   (66 )
 
Net income $ 353 $ 258   $ 1,045 $ 451  
 
Less: Preferred stock dividend and accretion $ 26 $ 25   $ 86 $ 76  
 
Net income available to common stockholders $ 327 $ 233   $ 959 $ 375  
 
Average shares outstanding, basic 890,190 883,998 889,473 882,158
Earnings per common share, basic $ 0.37 $ 0.26   $ 1.08 $ 0.42  
 
Average shares outstanding, assuming dilution 894,380 888,335 892,004 886,694
Earnings per common share, assuming dilution $ 0.37 $ 0.26   $ 1.08 $ 0.42  
 

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



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