SBT Bancorp, Inc. Reports Third Quarter 2017 Results

SBT Bancorp, Inc. (the "Company"), (OTCQX:SBTB), holding company for
The Simsbury Bank & Trust Company, Inc. (the "Bank"), today announced
net income of $602 thousand or $0.44 basic and $0.44 diluted earnings
per share for the quarter ended September 30, 2017, compared to net
income of $431 thousand or $0.32 basic and $0.32 diluted earnings per
share for the prior year's third quarter.

Net interest and dividend income increased $438 thousand, or 13.0%, as
compared to the prior year's third quarter primarily due to growth in
the Bank's commercial loan portfolio. Noninterest income decreased $296
thousand due principally to a decrease in mortgage banking activities
income of $204 thousand. Noninterest expenses for the three months ended
September 30, 2017 were $3.6 million, a decrease of 2.8% from the prior
year's third quarter.

"We are very pleased to report improved earnings for the third quarter
of 2017 resulting principally from increased commercial loan interest
and strong expense management," said Simsbury Bank President & CEO
Martin J. Geitz. "Our net income for the quarter ended September 30,
2017 increased over 39% ($171 thousand) compared to the prior year
period ended September 30, 2016. Deposit balances for period ended
September 30, 2017 increased 8.1% ($35 million) compared to the period
ended September 30, 2016. Most of this growth can be attributed to the
success of our new West Hartford branch opened in the second quarter of
2016."

Key highlights for quarter ended September 30, 2017 compared to quarter
ended September 30, 2016 included:

• Net income increased $171 thousand, or 39.7%.
• Total revenue, consisting of net interest and dividend income plus
  noninterest income, increased $142 thousand, or 3.1%.
• Net interest and dividend income increased 13.0% to $3.8 million.
• Provision for loan losses totaled $235 thousand, a decrease of $70
  thousand compared to the quarter ended September 30, 2016. The
  allowance for loan losses at September 30, 2017 was 1.01% of total
  gross loans.
• Net loans grew $6.2 million, or 1.6%.
• Commercial loan balances increased $31.8 million, or 20.4%, to $187.4
  million compared to September 30, 2016.
• Total deposits increased $35.0 million, or 8.1%, to $468 million,
  driven by increases in savings and NOW deposits of $31.8 million, and
  time deposits of $4.0 million.

The Company's allowance for loan losses at September 30, 2017 was 1.01%
of total gross loans. The Company had non-accrual loans totaling $1.6
million, or 0.40%, of total loans on September 30, 2017, compared to
non-accrual loans totaling $3.1 million, or 0.77%, of total loans a year
ago. Total non-accrual and delinquent loans on September 30, 2017 was
0.48% of loans outstanding compared to 0.90% on September 30, 2016.

Total deposits on September 30, 2017 were $468 million, an increase of
$35.0 million, or 8.1%, over a year ago. At quarter end, 27% of total
deposits were in non-interest bearing demand accounts, 58% were in
low-cost savings, money market and NOW accounts and 15% were in time
deposits.

For the quarter ended September 30, 2017, total net revenues, consisting
of net interest and dividend income plus noninterest income, were $4.7
million compared to $4.6 million for the same period in 2016, an
increase of $142 thousand, or 3.1%, above the prior year's third
quarter. Net interest and dividend income increased $438 thousand, or
13.0%, primarily driven by a $516 thousand, or 15%, increase in interest
and fees on loans. The increase was partially offset by decreased
interest income on securities of $29 thousand. Noninterest income
decreased by $296 thousand, or 24.9%, primarily due to a decrease in
income from mortgage banking activities of $204 thousand and a decrease
in other service charges and fees of $78 thousand.

For the year-to-date ended September 30, 2017, total net revenues,
consisting of net interest and dividend income plus noninterest income,
were $13.3 million compared to $12.2 million for the same period in
2016, an increase of $1.1 million, or 8.8%, above the prior year-to-date
period. Net interest and dividend income increased $1.1 million, or
11.5%, primarily driven by a $1.6 million, or 16.4%, increase in
interest and fees on loans. The increase was partially offset by
decreased interest income on securities of $119 thousand and increased
interest expense of $488 thousand. Noninterest income decreased by $52
thousand, or 2.2%, primarily due to a decrease in other service charges
and fees of $97 thousand, and a decrease in gain on sale of
available-for-sale securities, net of writedowns, of $95 thousand.

The Company's year-to-date 2017 taxable-equivalent net interest margin
(taxable-equivalent net interest and dividend income divided by average
earning assets) was 3.03% compared to 2.98% for the comparable 2016
period. The Company's yield on earning assets increased 15 basis points
to 3.47% and the cost of funds increased 13 basis points to 0.61%,
primarily driven by the subordinated debt interest and increased FHLB
borrowings interest.

Total noninterest expense for the third quarter 2017 was $3.6 million, a
decrease of $104 thousand compared to the third quarter of 2016. Total
noninterest expense for the year-to-date ended September 30, 2017 was
$10.5 million, a decrease of $95 thousand compared to the 2016
year-to-date period.

Capital levels for The Simsbury Bank & Trust Company on September 30,
2017 remain above the regulatory "well-capitalized" designation. Capital
ratios are calculated under Basel III rules.

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.

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