[October 18, 2018]

SBT Bancorp, Inc. Reports Third Quarter 2018 Results

SBT Bancorp, Inc. (the "Company"), (OTC Pink: SBTB), holding company for The Simsbury Bank & Trust Company, Inc. (the "Bank"), today announced net income of $1.04 million or $0.76 basic and diluted earnings per share for the quarter ended September 30, 2018, compared to net income of $602 thousand or $0.44 basic and diluted earnings per share for the prior year's third quarter.

Net interest and dividend income increased $207 thousand or 5.4% as compared to the prior year's third quarter primarily driven by increased interest and fees on loans. The net interest margin for the quarter ended September 30, 2018 increased 13 basis points to 3.17% when compared to the three months ended September 30, 2017. Noninterest income increased $168 thousand due principally to an increase in other income of $106 thousand and service charges on deposit accounts of $56 thousand. Noninterest expenses for the three months ended September 30, 2018 were $3.6 million, a decrease of $11 thousand compared to the three months ended September 30, 2017. The decrease was due primarily to a decrease in FDIC expense of $37 thousand, salaries and benefits of $13 thousand, equipment expenses of $22 thousand and other noninterest expenses of $76 thousand. These were offset by an increase in professional fees of $80 thousand, advertising and promotions of $37 thousand and occupancy and expense of $18 thousand.

"We are very pleased to report the fourth consecutive quarter of record earnings," said Simsbury Bank President & CEO Martin J. Geitz. "The initiatives we have taken in the past year to increase revenues and manage expenses continue to result in improved earnings. Our strategic focus on increasing the Bank's commercial banking activities, with particular focus on family owned businesses, continues to yield excellent results."

Key highlights for quarter ended September 30, 2018 compared to quarter ended September 30, 2017 included:

• Net income increased $441 thousand, or 73.3%.
• Total revenue, consisting of net interest and dividend income plus noninterest income, increased $375 thousand, or 7.9%.
• Net interest and dividend income increased 5.4% to $4.0 million.
• Net interest margin increased 13 basis points to 3.17%. The yield on interest earning assets increased 17 basis points to 3.69%.
• Provision for loan losses totaled $150 thousand, a decrease of $85 thousand compared to the quarter ended September 30, 2017. The allowance for loan losses at September 30, 2018 was 1.10% of total gross loans compared to 1.01% at September 30, 2017.
• Service charges on deposit accounts for the three months ended September 30, 2018 increased $56 thousand, or 65.1%, compared to the three months ended September 30, 2017, primarily driven by increases in overdraft fees related to the implementation of an overdraft privilege program in the fourth quarter of 2017.
• Commercial loan balances increased $5.4 million, or 2.9%, to $192.9 million compared to September 30, 2017.
• Total deposits increased $15.6 million, or 3.3%, to $483 million, driven by increases in demand deposits of $7.5 million and time deposits of $7.5 million.
• Income tax expenses increased $30 thousand related to higher pre-tax earnings.

The Company's allowance for loan losses at September 30, 2018 was 1.10% of total gross loans compared to 1.01% at September 30, 2017. The Company had non-accrual loans totaling $2.2 million, or 0.57%, of total loans on September 30, 2018, compared to non-accrual loans totaling $1.6 million, or 0.40%, of total loans a year ago. Total non-accrual and delinquent loans on September 30, 2018 was 1.50% of loans outstanding compared to 0.48% on September 30, 2017.

Total deposits on September 30, 2018 were $483 million, an increase of $15.6 million, or 3.3%, over a year ago. At the period end, 28% of total deposits were in non-interest bearing demand accounts, 56% were in low-cost savings, money market and NOW accounts and 16% were in time deposits.

For the three months ended September 30, 2018, total net revenues, consisting of net interest and dividend income plus noninterest income, were $5.1 million compared to $4.7 million for the same period in 2017, an increase of $375 thousand, or 7.9%, above the prior year's third quarter. Net interest and dividend income increased $207 thousand, or 5.4%, primarily driven by a $133 thousand, or 3.4%, increase in interest and fees on loans and a $192 thousand increase in interest on federal funds sold and overnight deposits. The increase was also partially offset by an interest expense on deposits of $102 thousand. Noninterest income increased by $168 thousand, or 18.3%, primarily due to an increase in service charges on deposit accounts of $56 thousand and an increase in other income of $106 thousand.

The Company's taxable-equivalent net interest margin for the three months ended September 30, 2018 (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.17% compared to 3.04% for the comparable 2017 period. The Company's yield on earning assets increased 17 basis points to 3.69% and the cost of funds increased 7 basis points to 0.73%, primarily driven by increased interest expense on deposits.

For the year-to-date ended September 30, 2018, total net revenues, consisting of net interest and dividend income plus noninterest income, were $14.3 million compared to $13.3 million for the same period in 2017, an increase of $1.0 million or 7.4% above the prior year-to-date period. Net interest and dividend income increased $770 thousand or 6.1%, primarily driven by a $543 thousand, or 4.8%, increase in interest and fees on loans. The increase was partially offset by decreased interest income on securities of $190 thousand and increased interest expense on deposits of $277 thousand. Noninterest income increased by $228 thousand or 9.9%, primarily due to an increase in service charges on deposits of $143 thousand, partially offset by a decrease in investment services activities of $16 thousand.

The Company's year-to-date 2018 taxable-equivalent net interest margin (taxable-equivalent net interest and dividend income divided by average earning assets) was 3.30% compared to 3.03% for the comparable 2017 period. The Company's yield on earning assets increased 29 basis points to 3.76% and the cost of funds was 0.65% for the nine months ended September 30, 2018 and 0.61% ended September 30, 2017.

Total noninterest expense for the year-to-date 2018 was $10.4 million, a decrease of $184 thousand, or 1.8% compared to the nine months ended September 30, 2017.

Capital levels for The Simsbury Bank & Trust Company on September 30, 2018 remain above the regulatory "well-capitalized" designation. Capital ratios are calculated under Basel III rules.

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.

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