News Column

SBT Bancorp, Inc. Reports Fourth Quarter 2013 Results

January 28, 2014

SIMSBURY, Conn. --(BUSINESS WIRE)-- SBT Bancorp, Inc. , (OTCBB: SBTB), holding company for Simsbury Bank & Trust Company , today announced net income of $132,000 or $0.12 per diluted share for the fourth quarter of 2013, compared to $604,000 or $0.66 per diluted share for the fourth quarter of 2012. For the twelve months ended December 31, 2013 , net income amounted to $1,135,000 or $1.17 per diluted share. This compares to net income of $2,044,000 or $2.18 per diluted share for the twelve months ended December 31, 2012 . Total assets on December 31, 2013 were $422 million compared to $375 million on December 31, 2012 . “2013 featured double digit growth in our loans and continued strong deposit growth. We continue to enjoy leading market share in mortgage originations and the leading Connecticut based bank for deposits in our markets. We are also very pleased with the progress in our commercial banking operations, with commercial loan balances increasing by $22 million or 36% since yearend 2012. Our earnings performance, however, was disappointing as the sudden and dramatic rise in market interest rates adversely impacted our mortgage gain-on-sale revenue trend due to lower demand for mortgage re-financings.” stated SBT Bancorp President and CEO, Martin J. Geitz . Key highlights for year-to-date 2013 included: Overall loan growth of $46.6 million or 19.8% during 2013. Total asset growth of $46.8 million or 12.5%. Total deposits increased $18.1 million or 5.3% during 2013. Ranked number one in market share in our nine town core market for mortgage originations and in Hartford County ranked thirteenth overall and third among Hartford County headquartered banks. In four towns in which we have branch locations, ranked second overall and first among Connecticut headquartered banks in deposit market share. Net interest and dividend income increased $561 thousand or 5.3% compared to year to date 2012 and increased $319 thousand or 12.3% compared to fourth quarter of 2012. Year to date 2013 net interest margin of 3.13% was 4 basis points lower compared to year to date 2012 but was 11 basis points higher compared to the fourth quarter of 2012. Year to date 2013 net income was $909 thousand lower compared to year to date 2012 primarily due to the reduction in mortgage banking gains on loan sales as the increase in longer-term interest rates has negatively impacted residential mortgage refinancing activity. Total loan delinquency increased to 1.34% of total loans compared to the previous year’s 0.76% primarily due to one relationship totaling $0.9 million that was placed on non-accrual status during the second quarter, with no loss expected. Overall loan delinquency remains favorable to peers. The allowance for loan losses at December 31, 2013 was 0.99% of total loans. The Bank’s Total Risk Based Capital ratio remains strong ending the fourth quarter of 2013 at 13.08% On December 31, 2013 , loans outstanding were $283 million , an increase of $46.6 million , or 20%, over a year ago. Commercial loans grew by $22 million or 36%, residential mortgage loans grew by $23 million or 19%, and consumer loans grew by $1.6 million or 3%. Combined mortgage and consumer loan closings decreased by 34.6% during the fourth quarter 2013 as compared to the fourth quarter 2012 due to a 42.9% decrease in mortgage closings offset by a 3.6% increase in consumer closings. Combined mortgage and consumer closings for full year 2013 increased by 0.4% as compared to full year 2012 due to a 4.7% decrease in mortgage closings offset by 26.4% increase in consumer closings. The Bank was first in mortgage loan volume market share, according to the Warren Group , in its four town branch market as well as its nine town CRA market area. The profile of the Company’s loan portfolio remains relatively strong. The Company’s allowance for loan losses at December 31, 2013 was 0.99% of total loans. The Company had non-accrual loans totaling $2.8 million equal to 0.98% of total loans on December 31, 2013 compared to non-accrual loans totaling $1.2 million or 0.53% of total loans a year ago. Total non-accrual and delinquent loans on December 31, 2013 were 1.32% of loans outstanding compared to 0.76% on December 31, 2012 . The increase in non-accrual and delinquent loans was primarily due to one relationship totaling $0.9 million which is fully collateralized with no loss expected. Total deposits on December 31, 2013 were $358 million , an increase of $18.1 million or 5.3% over a year ago. At quarter-end, 32% of total deposits were in non-interest bearing demand accounts, 49% were in low-cost savings and NOW accounts and 19% were in time deposits. For the fourth quarter, total revenues, consisting of net interest and dividend income plus noninterest income, were $3,556,000 compared to $3,889,000 a year ago, a decrease of $333,000 or 9%. Net interest and dividend income increased by $319,000 or 12% primarily due to an increase in yield on earning assets and increases in average outstanding balances. Non-interest income decreased by $652,000 or 51%, primarily due to a decrease in gain on loan sales in the amount of $588,000 . For the twelve months ended December 31, 2013 , total revenues were $14,213,000 compared to $14,579,000 for the twelve months ended December 31, 2012 , a decrease of $366,000 or 3%. Over this period, net interest and dividend income increased by $561,000 or 5%, while noninterest income decreased by $927,000 or 23% primarily due to a decrease in gains on loans sold in the amount of $876,000 . The Company’s taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.26% for the fourth quarter of 2013, compared to 3.15% for the fourth quarter of 2012. The Company’s cost of funds declined 3 basis points while the yield on interest earning assets increased 8 basis points during the fourth quarter of 2013, compared to the fourth quarter of 2012. Total noninterest expenses for the fourth quarter of 2013 were $3,399,000 , an increase of $448,000 or 15% above the fourth quarter of 2012. Fourth quarter 2013 expense increases included salaries and employee benefits in the amount of 169,000 or 10%, occupancy costs related to lease expense related to the company’s new administration offices in the amount of $79,000 or 31%. Data processing fees increased by $52,000 or 39% and other expenses increased by $63,000 or 23%. For the twelve months ended December 31, 2013 , total noninterest expenses were $12,599,000 compared to $11,508,000 for the twelve months ended December 31, 2012 , an increase of $1,091,000 or 9.5%. Over this period, the increase in expenses was primarily in salary and employee benefits and occupancy expenses. Capital levels for the Simsbury Bank & Trust Company on December 31, 2013 were above those required to meet the regulatory “well-capitalized” designation. Capital Ratios December 31, 2013 Simsbury Bank & Trust Company Regulatory Standard For Well-Capitalized Tier 1 Leverage Capital Ratio 7.09% 5.00% Tier 1 Risk-Based Capital Ratio 11.92% 6.00% Total Risk-Based Capital Ratio 13.08% 10.00% Simsbury Bank is an independent, publicly owned community bank for consumers and businesses based in Central Connecticut’s Farmington Valley . The Bank has approximately $422 million in assets. Simsbury Bank’s parent company is SBT Bancorp, Inc. whose stock is traded under the ticker symbol OTCBB: SBTB. The Bank serves customers locally through branches in Avon , Bloomfield , Granby and Simsbury and regionally through mortgage and commercial bankers active throughout Southern New England. Simsbury Bank customers enjoy internet banking and mortgage services at, respectively, www.simsburybank.com and www.simsburybank.com/mortgages . Bank customers have free ATM access at thousands of machines across the country through the SUM program. The Bank offers financial planning, investment and insurance products through LPL Financial and its affiliates, member FINRA/ SIPC . 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 December 31, 2013 and 2012 (In Thousands, Except Share Data) 12/31/2013 12/31/2012 (unaudited) ASSETS Cash and due from banks $ 13,355 $ 12,372 Interest-bearing deposits with Federal Reserve Bank of Boston and Federal Home Loan Bank 24,165 19,276 Money market mutual funds 346 358 Federal funds sold 724 2,094 Cash and cash equivalents 38,590 34,100 Interest-bearing time deposits with other bank - 3,789 Investments in available-for-sale securities (at fair value) 87,449 91,820 Federal Home Loan Bank stock, at cost 2,196 589 Loans outstanding 282,528 235,884 Less allowance for loan losses 2,792 2,594 Loans, net 279,736 233,290 Premises and equipment 1,618 824 Accrued interest receivable 1,074 1,019 Other real estate owned - 213 Bank owned life insurance 6,729 6,520 Other assets 4,456 2,855 Total other assets 13,877 11,431 TOTAL ASSETS $ 421,848 $ 375,019 LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Demand deposits $ 116,015 $ 92,670 Savings and NOW deposits 173,500 175,268 Time deposits 68,989 72,471 Total deposits 358,504 340,409 Securities sold under agreements to repurchase 4,390 3,569 FHLBB Advances 30,000 0 Other liabilities 1,558 1,604 Total liabilities 394,452 345,582 Stockholders' equity: Preferred Stock, senior non-cumulative perpetual, Series C, no par; 9,000 shares issued and outstanding at June 30, 2013 and 2012; liquidation value of $1,000 per share 8,976 8,964 Common Stock, no par value; authorized 2,000,000 shares; issued and outstanding 900,264 shares and 899,850 shares, respectively, at 12/31/13 and 888,724 shares and 870,268 shares, respectively, at 12/31/12 10,136 9,901 Retained earnings 10,347 9,819 Treasury Stock, 414 shares (7 ) (7 ) Unearned compensation restricted stock awards (401 ) (368 ) Accumulated other comprehensive (loss) income (1,655 ) 1,128 Total stockholders' equity 27,396 29,437 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 421,848 $ 375,019 SBT Bancorp, Inc Condensed Consolidated Statements of Income (Unaudited) (Dollars in thousands, except for per share amounts) For the quarter ended For the twelve months ended 12/31/2013 12/31/2012 12/31/2013 12/31/2012 Interest and dividend income: Interest and fees on loans $ 2,658 $ 2,368 $ 9,853 $ 9,656 Investment securities 504 316 2,116 1,662 Federal funds sold and overnight deposits 6 168 35 249 Total interest and dividend income 3,168 2,852 12,004 11,567 Interest expense: Deposits 239 253 894 1,037 Repurchase agreements 1 1 4 4 Federal Home Loan Bank advances 11 - 19 - Total interest expense 251 254 917 1,041 Net interest and dividend income 2,917 2,598 11,087 10,526 Provision for loan losses 115 110 345 320 Net interest and dividend income after provision for loan losses 2,802 2,488 10,742 10,206 Noninterest income: Service charges on deposit accounts 120 134 488 495 Gain on sales of available-for-sale securities 11 35 109 113 Other service charges and fees 207 240 686 798 Increase in cash surrender value of life insurance policies 50 56 209 208 Gain on loans sold 187 775 1,390 2,266 Investment services fees and commissions 59 51 231 171 Other income 5 - 13 2 Total noninterest income 639 1,291 3,126 4,053 Noninterest expense: Salaries and employee benefits 1,792 1,623 6,880 6,271 Occupancy expense 336 257 1,185 1,059 Equipment expense 102 75 290 275 Loss on sale of other real estate owned 45 38 45 38 Advertising and promotions 163 149 756 655 Forms and supplies 35 35 144 173 Professional fees 157 139 543 577 Directors' fees 77 59 264 229 Correspondent charges 76 77 318 344 Postage 20 25 86 93 FDIC Assessment 69 62 188 176 Data Processing Fees 185 133 619 502 Other expenses 342 279 1,281 1,116 Total noninterest expense 3,399 2,951 12,599 11,508 Income before income taxes 42 828 1,269 2,751 Income tax provision (benefit) (90) 224 134 707 Net income $ 132 $ 604 $ 1,135 $ 2,044 Net income available to common shareholders $ 107 $ 579 $ 1,029 $ 1,898 Average shares outstanding, basic 875,833 869,931 872,411 867,087 Earnings per common share, basic $ 0.12 $ 0.67 $ 1.18 $ 2.19 Average shares outstanding, assuming dilution 879,186 876,000 876,987 872,206 Earnings per common share, assuming dilution $ 0.12 $ 0.66 $ 1.17 $ 2.18 The Simsbury Bank & Trust Company Richard J. Sudol , SVP & CFO, 860-408-5493 860-408-4679 (fax) rsudol@simsburybank.com Source: SBT Bancorp, Inc.


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