SBT Bancorp, Inc. Reports First Quarter 2019 Results

SBT Bancorp, Inc. (the "Company"), (OTC:SBTB), holding company for The Simsbury Bank & Trust Company, Inc. (the "Bank"), today announced net income of $907 thousand or $0.66 basic and $0.65 diluted earnings per share for the quarter ended March 31, 2019, compared to net income of $934 thousand or $0.69 basic and $0.68 diluted earnings per share for the prior year's first quarter. Total revenue increased $257 thousand, or 5.7%, in the three months ended March 31, 2019 as compared to the three months ended March 31, 2018, primarily due to higher rates in the Bank's loan portfolio.

On March 21, 2019, Liberty Bank, headquartered in Middletown, CT and the Company jointly announced that they had entered into a definitive agreement for the merger of the Company and the Bank, with and into Liberty Bank. The transaction is subject to approval by the shareholders of the Company, as well as customary regulatory approvals, including the State of Connecticut Department of Banking and the Federal Deposit Insurance Corporation. The transaction is expected to close in October of 2019.

"We are very pleased to report another quarter of improved revenue growth. We are also pleased that our earnings before one-time expenses related to our pending merger with Liberty Bank of $1,142 thousand were 22% higher than 2018's first quarter earnings. We and our Liberty Bank colleagues are working closely to ensure a seamless merger integration for our many customers early in the fourth quarter of 2019."

Year over year, noninterest expenses increased $79 thousand due principally to increases in data processing expenses of $78 thousand, and salaries and employee benefits of $64 thousand. These were partially offset by a decrease in advertising and promotions of $17 thousand, equipment expenses of $23 thousand and forms and supplies of $13 thousand. Deposit balances for the period ended March 31, 2019 decreased $15.3 million or 3.3% from the prior year end of March 31, 2018.

Key highlights for quarter ended March 31, 2019 compared to quarter ended March 31, 2018 included:

• Total revenue, consisting of net interest and dividend income plus noninterest income, increased $257 thousand, or 5.7%.
• Net interest and dividend income increased 7.5% to $4.6 million.
• Provision for loan losses totaled $10 thousand, a decrease of $15 thousand compared to the quarter ended March 31, 2018. The allowance for loan losses at March 31, 2019 was 0.97% of total gross loans compared to 1.04% at March 31, 2018.
• Service charges on deposit accounts for the three months ended March 31, 2019 decreased $21 thousand, or 15.3%, compared to the three months ended March 31, 2018, primarily driven by decreases in overdraft fees.
• Commercial loan balances increased $2.1 million, or 1.1%, to $191.3 million compared to March 31, 2018.
• Total deposits decreased $15.3 million, or 3.3%, to $451 million, driven by decreases in savings and NOW deposits of $9.0 million, time deposits of $5.1 million and demand deposits of $1.1 million.

The Company's allowance for loan losses at March 31, 2019 was 0.97% of total gross loans compared to 1.04% at March 31, 2018. The Company had non-accrual loans totaling $4.1 million, or 1.05%, of total loans on March 31, 2019, compared to non-accrual loans totaling $1.4 million, or 0.35%, of total loans a year ago. Total non-accrual and delinquent loans on March 31, 2019 was 1.35 % of loans outstanding compared to 1.17% on March 31, 2018.

Total deposits on March 31, 2019 were $451 million, a decrease of $15.3 million, or 3.3%, over a year ago. At the period end, 30% of total deposits were in non-interest bearing demand accounts, 58% were in low-cost savings, money market and NOW accounts and 12% were in time deposits.

For the three months ended March 31, 2019, total net revenues, consisting of net interest and dividend income plus noninterest income, were $4.7 million compared to $4.5 million for the same period in 2018, an increase of $257 thousand, or 5.7%, above the prior year's first quarter. Net interest and dividend income increased $259 thousand, or 6.8%, primarily driven by a $307 thousand, or 7.9%, increase in interest and fees on loans and a $55 thousand increase in interest on federal funds sold and overnight deposits. The increase was partially offset by increased interest expense on deposits of $65 thousand. Noninterest income decreased by $2 thousand, or 0.3%, primarily due to a decrease in service charges on deposit accounts of $21 thousand.

The Company's year-to-date 2019 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.50% compared to 3.14% for the comparable 2018 period. The Company's yield on earning assets increased 44 basis points to 4.00% and the cost of funds increased 14 basis points to 0.74%, primarily driven by a 14 basis point increase in deposit interest expense.

Total noninterest expense for the first quarter 2019 was $3.4 million, an increase of $79 thousand compared to the first quarter of 2018 primarily driven by increases in professional fees, data processing expenses and salaries and employee benefits.

Capital levels for The Simsbury Bank & Trust Company on March 31, 2019 remain above the regulatory "well-capitalized" designation. Capital ratios are calculated under Basel III rules.

Capital Ratios March 31, 2019
		Simsbury Bank & Trust Company		Regulatory Standard For Well-Capitalized
Tier 1 Leverage Capital Ratio		8.82%		5.00%
Tier 1 Risk-Based Capital Ratio		12.15%		8.00%
Total Risk-Based Capital Ratio		13.20%		10.00%
Common Equity Tier 1 Risk-Based Capital Ratio		12.15%		6.50%

Simsbury Bank is a Central Connecticut based independent, community bank for businesses and consumers. Simsbury Bank Home Loans is a division of Simsbury Bank serving the home financing needs of consumers. 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., whose stock is traded on the OTC Pink 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
March 31, 2019, December 31, 2018 and March 31, 2018
(Dollars in thousands, except for share amounts)
				3/31/2019				12/31/2018				3/31/2018
			(unaudited)			(unaudited)
ASSETS
	Cash and due from banks			12,170				14,678				12,816
	Interest-bearing deposits with Federal Reserve Bank of Boston
	and Federal Home Loan Bank			48,414				16,804				42,056
	Money Market Mutual Funds			-				1,051				44
	Federal funds sold			-				-				500
	Cash and cash equivalents			61,612				32,533				55,416
	Certificates of Deposit			-				250				1,250
	Investments in available-for-sale securities (at fair value)			39,652				41,255				47,730
	Federal Home Loan Bank stock, at cost			575				903				903
	Loans held-for-sale			3,303				2,154				1,211
	Loans outstanding			383,926				388,359				393,354
	Less: Allowance for loan losses			3,727				4,387				4,099
	Loans, net			380,199				383,972				389,255
	Premises and equipment, net			1,353				1,450				1,782
	Accrued interest receivable			1,249				1,232				1,221
	Other real estate owned			-				-				192
	Bank owned life insurance			9,656				9,602				9,428
	Other assets			9,521				5,325				5,528
	Total other assets			21,779				17,609				18,151
	TOTAL ASSETS		$	507,120			$	478,676			$	513,916
LIABILITIES AND STOCKHOLDERS' EQUITY
	Deposits:
	Demand deposits		$	135,830			$	151,292			$	136,988
	Savings and NOW deposits			259,444				219,448				268,493
	Time deposits			56,031				57,305				61,119
	Total deposits			451,305				428,045				466,600
	Federal Home Loan Bank advance
	Securities sold under agreements to repurchase			1,841				1,681				3,120
	Federal Home Loan Bank advances			3,748				4,191				2,318
	Long-term subordinated debt			7,317				7,310				7,288
	Other liabilities			6,494				2,320				2,345
	Total liabilities			470,705				443,547				481,671
	Stockholders' equity:
	Common stock, no par value; authorized 2,000,000 shares;
	issued and outstanding, 1,382,754 shares and 1,382,340 shares, respectively, at
	March 31, 2019; 1,382,754 shares and 1,382,340 shares, respectively, at
	December 31, 2018, and 1,381,840 shares and 1,381,426 shares, respectively, at March 31, 2018			19,462				19,437				19,434
	Retained earnings			17,642				16,941				14,380
	Treasury stock, 414 shares			(7	)			(7	)			(7	)
	Unearned compensation- restricted stock awards			(208	)			(244	)			(369	)
	Accumulated other comprehensive loss			(474	)			(998	)			(1,193	)
	Total stockholders' equity			36,415				35,129				32,245
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	507,120			$	478,676			$	513,916

SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Dollars in thousands, except for share and per share amounts)
			For the quarter ended
				3/31/2019			3/31/2018
			(unaudited)
Interest and dividend income:
	Interest and fees on loans		$	4,179		$	3,872
	Investment securities			245			284
	Federal funds sold and overnight deposits			215			160
	Total interest and dividend income			4,639			4,316
Interest expense:
	Deposits			449			384
	Repurchase agreements			1			2
	Long-term subordinated debt			134			134
	Federal Home Loan Bank advances			-			-
	Total interest expense			584			520
	Net interest and dividend income			4,055			3,796
Provision for loan losses			10			25
	Net interest and dividend income after
	provision for loan losses			4,045			3,771
Noninterest income:
	Service charges on deposit accounts			116			137
	(Loss) gain on available-for-sale securities			-			(1	)
	Other service charges and fees			174			183
	Increase in cash surrender value
	of life insurance policies			54			58
	Mortgage banking activities, net			250			230
	Investment services fees and commissions			45			29
	Other income			38			43
	Total noninterest income			677			679
Noninterest expense:
	Salaries and employee benefits			1,749			1,685
	Occupancy expense			348			350
	Equipment expense			113			136
	Advertising and promotions			170			187
	Forms and supplies			17			30
	Professional fees			110			182
	Directors' fees			79			70
	Correspondent charges			74			74
	FDIC Assessment			85			93
	Data Processing Fees			270			192
	Internet banking costs			49			47
	Other expenses			324			263
	Total noninterest expense			3,388			3,309
Income before income taxes			1,334			1,141
Income tax provision			192			207
Net income from continuing operations			1,142			934
	Less: One-time merger-related costs (net of tax)			235			-
Net income available to common shareholders		$	907		$	934
Average shares outstanding, basic			1,372,890			1,363,802
Earnings per common share, basic		$	0.66		$	0.69
Average shares outstanding, assuming dilution			1,376,012			1,366,588
Earnings per common share, assuming dilution		$	0.65		$	0.68

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