SIMSBURY, Conn. -- (Business Wire)

SBT Bancorp, Inc., (OTCQX: SBTB), holding company for The Simsbury Bank & Trust Company, Inc., today announced net income of $206 thousand or $.15 basic and $.15 diluted earnings per share for the quarter ended March 31, 2016, compared to a net income of $343 thousand or $0.36 basic and $0.36 diluted earnings per share for the prior year’s first quarter.

Net interest and dividend income increased $301 thousand or 10.4% as compared to the prior year’s first quarter due to growth in the Bank’s commercial and consumer loan portfolios. Gain on sale of loans increased 5.3% to $241 thousand compared to the prior year’s quarter. Noninterest expenses increased $349 thousand as the Bank continues to invest in its three primary business lines of Commercial, Retail and Mortgage Banking. Mortgage loan servicing activities income decreased $155 thousand due to a decline in the mortgage servicing rights valuation as result of the decline in long-term interest rates and related increase in implied prepayment rates. The provision for loan losses increased $81 thousand consistent with strong commercial loan growth.

“During the Bank’s 2016 first quarter, we focused on implementing strategies to deploy the capital we raised in the fourth quarter of 2015 to fund growth of higher margin activities,” said Martin J. Geitz, President and Chief Executive Officer. “In particular, we are pleased with our Commercial Banking team’s success at expanding existing and developing new relationships resulting in a $45.8 million or 50% increase in loan balances since the end of the first quarter of 2015. We are also excited with the prospects for our Retail Banking team’s contribution to continued growth that we expect from our new full-service branch office in West Hartford, which opened in April.”

Key highlights for quarter ended March 31, 2016 compared to quarter ended March 31, 2015 included:

• Net loans grew $54.3 million or 18.7%.
• Commercial loan balances increased $45.8 million or 50.0%.
• Net interest and dividend income for the quarter increased 10.4%.
• Net interest margin of 3.06% for the quarter was 1 basis point higher compared to the prior year’s quarter.
• Total deposits increased $23 million or 6.3%, driven by increases in Demand Deposits of $15.3 million, Savings and Now deposits of $12.1 million, partially offset by decreases in Time Deposits of $4.8 million.
• Provision for loan losses totaled $131 thousand for the quarter due to loan growth, and the allowance for loan losses at March 31, 2016 was 0.91% of total loans.
• Due to the decline in market interest rates during the first quarter and anticipation of more rapid prepayment of mortgages serviced by the Bank, the Bank recorded a $193 thousand decrease in the valuation of the mortgage servicing rights asset. This valuation decline reduced the value of the servicing asset approximately 10% to $1.8 million.
• Return on average assets for the three months ended March 31, 2016 was 0.18% compared to 0.34% for the three months ended March 31, 2015.
• Return on average equity for the three months ended March 31, 2016 was 2.70% compared to 4.55% for the three months ended March 31, 2015.

On March 31, 2016, gross loans outstanding were $347 million, an increase of $54.6 million, or 18.7% over a year ago. Commercial loans grew by $45.8 million or 50.0% and consumer loans grew by $6.1 million or 9.9% due principally to an increase home equity line of credit borrowings and purchased auto loans. Residential mortgage loans increased by $2.7 million or 1.9%.

The Company’s allowance for loan losses at March 31, 2016 was 0.91% of total gross loans. The Company had non-accrual loans totaling $3.8 million or 1.09% of total loans on March 31, 2016, compared to non-accrual loans totaling $2.2 million or 0.74% of total loans a year ago. Total non-accrual and delinquent loans on March 31, 2016 was 1.72% of loans outstanding compared to 1.14% on March 31, 2015. Despite slight increases in non-accrual and delinquent loans, the Company’s loan portfolio remains strong.

Total deposits on March 31, 2016 were $383 million, an increase of $22.6 million or 6.3% over a year ago primarily due to an increase in demand deposits of $15.3 million and a $12.1 million increase in Savings and NOW accounts. At quarter-end, 32% of total deposits were in non-interest bearing demand accounts, 53% were in low-cost savings, money market and NOW accounts and 15% were in time deposits.

For the first quarter 2016, total revenues, consisting of net interest and dividend income plus noninterest income, were $3.6 million compared to $3.4 million a year ago. Noninterest income decreased by $71 thousand or 13.4%, primarily due to a decrease in mortgage loan servicing activities of $155 thousand, partially offset by an increase of service charges and fees revenue of $90 thousand. Mortgage loan servicing activities decreased $155 thousand due to a decline in the mortgage servicing rights valuation as result of the decline in long-term interest rates and related increase in implied prepayment rates. Gain on sale of loans sold in the first quarter was $241 thousand compared to $229 thousand for the first quarter ended March 31, 2015.

The Company’s year-to-date 2016 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.06% compared to 3.05% for the comparable 2015 period. The Company’s yield on earning assets increased to 3.34%, while the cost of funds increased 12 basis points to 0.41% for the three months ended March 31, 2016 compared to the same period of 2015. The increase in cost of funds was primarily due to the interest on the subordinated debt issued in 2015.

Total noninterest expense for the first quarter 2016 was $3.3 million, an increase of $349 thousand or 11.7% above the first quarter of 2015. The increase was primarily driven by an increase in salary and benefits expense of $250 thousand and data processing costs of $68 thousand. These were partially offset by decreases in professional fees of $21 thousand and a decrease in FDIC assessment of $16 thousand.

Capital levels for The Simsbury Bank & Trust Company on March 31, 2016 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.

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.

View source version on businesswire.com: http://www.businesswire.com/news/home/20160429005112/en/

Contacts:

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

Source: SBT Bancorp, Inc.