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SBT Bancorp, Inc. Reports Fourth Quarter 2017 Results

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SBT Bancorp, Inc. (the "Company"), (OTC:SBTB), holding company for
The Simsbury Bank & Trust Company, Inc. (the "Bank"), today announced
net income of $682 thousand or $0.50 basic and $0.50 diluted earnings
per share for the quarter ended December 31, 2017, compared to net
income of $604 thousand or $0.45 basic and $0.45 diluted earnings per
share for the prior year's fourth quarter. Net income for the three and
twelve months ended December 31, 2017 was impacted by a net write-down
of the deferred tax assets related to the Tax Cuts & Jobs Act (TCJA) in
the amount of $167 thousand. Excluding the impact of the TCJA, net
income would have been $849 thousand or $0.62 basic and $0.62 diluted
earnings per share for the quarter ended December 31, 2017.

Total revenue increased $1.1 million, or 6.9%, in fiscal 2017 as
compared to fiscal 2016, primarily due to growth in the Bank's
commercial loan portfolio. Year over year, noninterest expenses
decreased $174 thousand due principally to a decrease in salaries and
employee benefits of $482 thousand and occupancy expenses of $130
thousand. These were offset by an increase in professional fees of $237
thousand and equipment expenses of $94 thousand.

"We are very pleased to report improved earnings for the full year and
fourth quarter of 2017. Our strategic focus on increasing the Bank's
commercial banking activities, with particular focus on family owned
businesses, and aggressively managing expenses," said Simsbury Bank
President & CEO Martin J. Geitz, "resulted in a 58% increase ($862
thousand) in net income for the year ended December 31, 2017 compared to
the prior year ended December 31, 2016. Deposit balances for year ended
December 31, 2017 increased 10.6% ($44 million) from the prior year end
of December 31, 2016."

Key highlights for quarter ended December 31, 2017 compared to quarter
ended December 31, 2016 included:

  • Net income increased $78 thousand, or 12.9%. (Excluding the impact of
    the deferred tax asset write-down due to TCJA, net income would have
    increased $245 thousand.)
  • Total revenue, consisting of net interest and dividend income plus
    noninterest income, increased $71 thousand, or 1.6%.
  • Net interest and dividend income increased 2.5% to $3.8 million.
  • Mortgage banking activities revenue increased 10.3% to $430 thousand.
  • Provision for loan losses totaled $75 thousand, a decrease of $230
    thousand compared to the quarter ended December 31, 2016. The
    allowance for loan losses at December 31, 2017 was 1.03% of total
    gross loans.
  • Commercial loan balances increased $8.2 million, or 4.6%, to $186.0
    million compared to December 31, 2016.
  • Total deposits increased $43.6 million, or 10.6%, to $457 million,
    driven by increases in savings and NOW deposits of $34.4 million, and
    demand deposits of $9.3 million.
  • Income tax expenses increased $301 thousand related to higher pre-tax
    earnings and a $167 thousand write-down of deferred tax assets related
    to the Tax Cuts and Jobs Act.

Key highlights for year ended December 31, 2017 compared to year ended
December 31, 2016 included:

  • Net income increased $862 thousand, or 57.8%. (Excluding the impact of
    the deferred tax asset impairment due to TCJA, net income would have
    increased $1.0 million.)
  • Total revenue, consisting of net interest and dividend income plus
    noninterest income, increased $1.1 million, or 6.9%.
  • Net interest and dividend income increased 9.0% to $14.8 million.
  • Mortgage banking activities increased 12.2% , or $157 thousand, to
    $1.4 million.
  • Provision for loan losses totaled $645 thousand, a decrease of $266
    thousand compared to the year ended December 31, 2016. The allowance
    for loan losses at December 31, 2017 was 1.03% of total gross loans.

The Company's allowance for loan losses at December 31, 2017 was 1.03%
of total gross loans. The Company had non-accrual loans totaling $1.5
million, or 0.37%, of total loans on December 31, 2017, compared to
non-accrual loans totaling $4.1 million, or 0.99%, of total loans a year
ago. Total non-accrual and delinquent loans on December 31, 2017 was
0.52% of loans outstanding compared to 1.26% on December 31, 2016.

Total deposits on December 31, 2017 were $457 million, an increase of
$43.6 million, or 10.6%, over a year ago. At the period end, 31% of
total deposits were in non-interest bearing demand accounts, 54% were in
low-cost savings, money market and NOW accounts and 15% were in time
deposits.

For the quarter ended December 31, 2017, total net revenues, consisting
of net interest and dividend income plus noninterest income, were $4.6
million compared to $4.5 million for the same period in 2016, an
increase of $71 thousand, or 1.6%, above the prior year's fourth
quarter. Net interest and dividend income increased $92 thousand, or
2.5%, primarily driven by a $143 thousand, or 3.8%, increase in interest
and fees on loans. The increase was partially offset by increased
interest expense on deposits of $111 thousand. Noninterest income
decreased by $21 thousand, or 2.5%, primarily due to a decrease in other
income of $36 thousand and a decrease in investment services fees and
commissions of $29 thousand.

For the year ended December 31, 2017, total net revenues, consisting of
net interest and dividend income plus noninterest income, were $17.9
million compared to $16.7 million for the same period in 2016, an
increase of $1.1 million, or 6.9%, above the prior year-to-date period.
Net interest and dividend income increased $1.2 million, or 9.0%,
primarily driven by a $1.8 million, or 12.9%, increase in interest and
fees on loans. The increase was partially offset by decreased interest
income on securities of $153 thousand and increased interest expense of
$544 thousand. Noninterest income decreased by $73 thousand, or 2.3%,
primarily due to a decrease in other income of $106 thousand, and a
decrease in gain on sale of available-for-sale securities, net of
write-downs, of $95 thousand. These were partially offset by an increase
in mortgage banking activities income of $157 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 fourth quarter 2017 was $3.4 million,
a decrease of $78 thousand compared to the fourth quarter of 2016. Total
noninterest expense for the year-to-date period ended December 31, 2017
was $13.9 million, a decrease of $174 thousand compared to the 2016
year-to-date period.

Capital levels for The Simsbury Bank & Trust Company on December 31,
2017 remain above the regulatory "well-capitalized" designation. Capital
ratios are calculated under Basel III rules.

 
Capital Ratios

December 31, 2017

     

Simsbury Bank &
Trust Company

   

Regulatory Standard For
Well-Capitalized

Tier 1 Leverage Capital Ratio     7.79%     5.00%
Tier 1 Risk-Based Capital Ratio     10.89%     8.00%
Total Risk-Based Capital Ratio     12.03%     10.00%
Common Equity Tier 1 Risk-Based Capital Ratio     10.89%     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
  December 31, 2017 and December 31, 2016
 
(Dollars in thousands, except for share amounts)
 
  12/31/2017     12/31/2016  
(unaudited)

ASSETS

Cash and due from banks $ 13,066 $ 10,976
Interest-bearing deposits with Federal Reserve Bank
and Federal Home Loan Bank 23,853 9,786
Money market mutual funds 388 95
Federal funds sold   185     150  
Cash and cash equivalents 37,492 21,007
 
Certificates of deposit 1,250 1,250
 
Investments in available-for-sale securities at fair value 51,656 58,728
Federal Home Loan Bank stock, at cost 903 2,896
 
Loans held-for-sale 2,259 2,801
 
Loans outstanding 396,413 409,164
Less allowance for loan losses   4,088     3,753  
Loans, net   392,325     405,411  
 
Premises and equipment, net 1,863 1,905
Accrued interest receivable 1,402 1,301
Other real estate owned 192 -
Bank owned life insurance 9,370 9,130
Other assets   5,313     5,570  
Total other assets   18,140     17,906  
 
 
TOTAL ASSETS $ 504,025   $ 509,999  
 

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits:
Demand deposits $ 143,635 $ 134,341
Savings and NOW deposits 247,251 212,835
Time deposits   66,514     66,588  
Total deposits 457,400 413,764
 
Securities sold under agreements to repurchase 2,449 2,694
Federal Home Loan Bank advances 2,318 54,058
Long-term subordinated debt 7,281 7,252
Other liabilities   2,358     1,944  
Total liabilities   471,806     479,712  
 
 
Stockholders' equity:
Common stock, no par value; authorized 2,000,000 shares;
issued and outstanding 1,373,532 shares and 1,373,118 shares,
respectively, at
December 31, 2017; 1,372,394 shares and 1,371,980 shares,
respectively, at December 31, 2016
19,442 19,133
Retained earnings 13,648 12,017
Treasury stock, 414 shares (7 ) (7 )
Unearned compensation- restricted stock awards (420 ) (293 )
Accumulated other comprehensive loss   (444 )   (563 )
Total stockholders' equity   32,219     30,287  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 504,025   $ 509,999  
 

 
SBT Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
                     
 
(Dollars in thousands, except for share and per share amounts)
 
For the three months ended For the twelve months ended
12/31/2017 12/31/2016 12/31/2017 12/31/2016
(unaudited) (unaudited)
Interest and dividend income:
Interest and fees on loans $ 3,920 $ 3,777 $ 15,341 $ 13,591
Investment securities 308 344 1,320 1,473
Federal funds sold and overnight deposits   55     15     250     81
Total interest and dividend income   4,283     4,136     16,911     15,145
 
Interest expense:
Deposits 372 261 1,326 881
Repurchase agreements 2 2 7 6
Long-term subordinated debt 136 137 542 515
Federal Home Loan Bank advances   3     58     263     192
Total interest expense   513     458     2,138     1,594
 
Net interest and dividend income 3,770 3,678 14,773 13,551
 
Provision for loan losses   75     305     645     911
 
Net interest and dividend income after
provision for loan losses   3,695     3,373     14,128     12,640
 
Noninterest income:
Service charges on deposit accounts 102 101 371 379
(Loss) gain on available-for-sale securities, net of writedowns (2 ) (1 ) (4 ) 91
Other service charges and fees 189 181 735 737
Increase in cash surrender value
of life insurance policies 60 64 240 241
Mortgage banking activities 430 390 1,445 1,288
Investment services fees and commissions 33 62 176 194
Other income   10     46     160     266
Total noninterest income   822     843     3,123     3,196
 
Noninterest expense:
Salaries and employee benefits 1,754 1,799 7,017 7,499
Occupancy expense 333 384 1,400 1,530
Equipment expense 139 102 514 420
Advertising and promotions 158 97 610 605
Forms and supplies 26 41 110 202
Professional fees 152 134 716 479
Directors' fees 68 56 236 216
Correspondent charges 93 86 316 314
FDIC assessment 96 126 421 349
Data processing fees 205 208 903 836
Internet banking costs 45 61 207 282
Other expenses   281     334     1,443     1,335
Total noninterest expense   3,350     3,428     13,893     14,067
 
Income before income taxes 1,167 788 3,358 1,769
Income tax provision   485     184     1,004     277
 
Net income $ 682   $ 604   $ 2,354   $ 1,492
 
Net income available to common stockholders $ 682   $ 604   $ 2,354   $ 1,492
 
Weighted average shares outstanding, basic 1,360,136 1,347,872 1,359,222 1,350,725
Earnings per common share, basic $ 0.50   $ 0.45   $ 1.73   $ 1.10
 
Weighted average shares outstanding, assuming dilution 1,370,224 1,357,070 1,368,238 1,359,265
Earnings per common share, assuming dilution $ 0.50   $ 0.45   $ 1.72   $ 1.10
 

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