FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1995
Commission file number 2-91511
SMITHTOWN BANCORP
(Exact name of registrant as specified in its charter)
NEW YORK 11-2695037
(State or other jurisdiction (I.R.S. Employer Identification
of incorporation or Number)
organization)
One East Main Street, Smithtown, New York 11787-2801
(Address of principal executive offices)
(516) 360-9300
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
432,539 Shares of Common stock ($5.00 Par Value) Outstanding as of March
31, 1995.
<PAGE>
SMITHTOWN BANCORP
INDEX
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - March 31, 1995 and December 31, 1994
Consolidated Statements of Income - Three months ended March 31,
1995 and 1994
Consolidated Statements of Changes in Stockholders' Equity - Three
months ended March 31, 1995 and 1994
Consolidated Statements of Cash Flows - Three months ended March 31,
1995 and 1994
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Item 3. Notes to Consolidated Financial Statements
Part II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Change in Securities - None
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to Vote of Security Holders - None
Item 5. Other Information - None
Item 6. (a) Exhibits - None
<PAGE>
SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEETS
MARCH 31,
1995 DECEMBER 31,
(UNADUITED) 1994
ASSETS
Cash and Due from Banks $5,774,918 $5,955,650
Securities:
U.S. Government Obligations - HTM 2,017,613 3,019,956
U.S. Government Obligations - AFS 6,048,125 10,055,624
Obligations of U.S.
Government Agencies - HTM 2,045,437 2,051,544
Obligations of U.S.
Government Agencies - AFS 932,200 897,812
Mortgage Backed Securities - HTM 33,944,861 34,761,443
Mortgage Backed Securities - AFS 676,161 2,045,795
Obligations of State &
Political Subdivisions - HTM 5,575,869 6,137,424
Other Investment Securities - AFS 127,200 127,200
---------- ----------
Total Investment Securities 51,367,466 59,096,798
(Market value $49,497,872 at 3/31/95 ---------- ----------
and $56,001,626 at 12/31/94)
Federal Funds Sold 600,000 200,000
---------- ----------
Loans:
Real Estate 49,839,941 48,948,212
Commercial and Industrial 16,164,091 14,155,310
Loans to Individuals for Household,
Family and Other Personal
Expenditures 17,959,246 17,307,349
All Other Loans 71,194 80,383
---------- ----------
Total Loans 84,034,472 80,491,254
Less: Unearned Discount 761,720 707,034
Reserve for Possible Loan Losses 1,395,414 1,362,404
---------- ----------
Loans - Net 81,877,338 78,421,816
---------- ----------
Bank Premises and Equipment 3,109,366 3,167,149
Other Assets ---------- ----------
Other Real Estate Owned 5,676,888 5,589,789
Other 4,105,817 4,520,485
------------ ------------
Total $152,511,793 $156,951,687
============ ============
LIABILITIES
Deposits:
Demand $33,324,509 $34,655,348
Money Market 23,348,163 22,654,018
Savings 60,307,520 63,068,912
Certificates of Deposit
$100,000 and Over 9,162,443 3,934,020
Other Time Deposits 13,248,809 10,918,279
------------ ------------
Total Deposits 139,391,444 135,230,577
Dividends Payable 121,111 106,917
Securities Sold Under
Agreement to Repurchase 0 9,003,500
Other Liabilities 989,711 1,004,975
------------ ------------
Total Liabilities 140,502,266 145,345,969
STOCKHOLDERS' EQUITY
Common Stock - $5.00 Par Value 2,239,775 2,239,775
500,000 shares authorized;
447,955 issued
Unrealized Loss on Securities
Available for Sale (60,674) (134,616)
Surplus 1,993,118 1,993,118
Retained Earnings 8,301,898 8,092,029
------------ ------------
12,474,117 12,190,306
Less: Treasury Stock at Cost 464,590 584,588
------------ ------------
Total Stockholders' Equity 12,009,527 11,605,718
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $152,511,793 $156,951,687
============ ============
<PAGE>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For the 3 Months Ended
March 31, March 31,
1995 1994
INTEREST INCOME
Interest and Fees on Loans $1,942,536 $1,535,497
Interest and Dividends on:
Obligations of U.S. Government 152,767 399,204
Obligations of U.S. Government Agencies 44,793 42,466
Mortgage-Backed Securities 507,508 459,231
Obligations of State and
Political Subdivisions 87,209 97,853
Other Securities 1,908 1,908
Interest on Federal Funds Sold 27,480 26,352
Total Interest Income 2,764,201 2,562,511
INTEREST EXPENSE
Money Market Accounts 181,945 135,015
Savings 342,664 303,927
Certificates of Deposit $100,000 and Over 35,501 30,793
Other Time Deposits 151,321 77,932
Interest on Fed Funds and Securities
Sold Under Agreement to Repurchase 86,507 518
---------- ----------
Total Interest Expense 797,938 548,185
Net Interest Income 1,966,263 2,014,326
Provision for Possible Loan Losses 30,000 0
Net Interest Income After Provision
for Possible Loan Losses 1,936,263 2,014,326
OTHER NON-INTEREST INCOME
Trust Department Income 72,018 67,310
Service Charges on Deposit Accounts 326,394 349,937
Miscellaneous Income 116,438 89,386
Gain on Sale of Investment Securities 1,826 22,695
---------- ----------
Total Other Non-Interest Income 516,676 529,328
OTHER OPERATING EXPENSES
Salaries 849,957 882,409
Pension and Other Employee Benefits 227,750 214,458
Net Occupancy Expense of Bank Premises 227,185 243,577
Furniture and Equipment Expense 152,012 147,029
Miscellaneous Operating Expenses 485,056 574,574
---------- ----------
Total Other Operating Expenses 1,941,960 2,062,047
Income Before Income Taxes 510,979 481,607
Provision for Income Taxes 180,000 160,200
---------- ----------
Net Income $330,979 $321,407
========== ==========
Earnings Per Share
Net Income $0.77 $0.73
Cash Dividends Paid $0.28 $0.25
Weighted Average Shares Outstanding 432,268 439,765
<PAGE>
<TABLE>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
(unaudited)
<CAPTION>
Unrealized Cost of
Common Stock Gain/(Loss) Common Total
Shares On Securities Retained Stock in Stockholders'
Outstanding Amount Surplus Available for Sale Earnings Treasury Equity
----------- ------- -------- ------------------ --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at 1/1/94 439,765 $2,239,775 $1,993,118 $0 $7,297,259 ($286,650) $11,243,502
Net Income 321,407 321,407
Cash Dividend Declared (109,941) (109,941)
Allowance for Unrealized Gain 121,676 121,676
----------- ---------- ----------- ---------------- ---------- --------- -----------
Balance at 3/31/94 439,765 $2,239,775 $1,993,118 $121,676 $7,508,725 ($286,650) $11,576,644
=========== ========== ========== ================ =========== ========== ===========
Balance at 1/1/95 427,666 $2,239,775 $1,993,118 ($134,616) $8,092,029 ($584,588) $11,605,718
Net Income 330,979 330,979
Cash Dividend Declared (121,111) (121,111)
Allowance for Unrealized Gain 73,943 73,943
Sale of Treasury Stock 4,873 119,998 119,998
----------- ---------- ----------- ---------------- ---------- --------- -----------
Balance at 3/31/95 439,539 $2,239,775 $1,993,118 ($60,673) $8,301,897 ($464,590) $12,009,527
=========== ========== ========== ================ =========== ========== ===========
</TABLE>
<PAGE>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the 3 Months Ended
March 31, 1995 March 31, 1994
Cash Flows from Operating Activities
Net Income $330,979 $321,407
Adjustments to reconcile net income to net
cash provided by operating activities:
Valuation Reserve for Other Real
Estate Owned 0 90,000
Depreciation on Premises and Equipment 107,528 97,764
Provision for Possible Loan Losses 30,000 0
Gain on Sale of Investment Securities (1,826) (22,695)
Amortization of Transition Obligation 31,800 0
Increase (Decrease) in Interest Payable 18,390 (11,431)
Decrease in Miscellaneous Payables and
Accrued Expenses (36,885) (151,583)
Decrease (Increase) in Fees and
Commissions Receivable 22,863 (1,225)
Decrease in Interest Receivable 177,866 76,692
Increase in Prepaid Expenses (65,436) (112,651)
(Decrease) Increase in Miscellaneous
Receivables (5,040) 105,385
Decrease in Income Taxes Receivable 245,148 170,444
Increase in Deferred Taxes (35,175) (32,026)
Decrease in Accumulated Postretirement
Benefit Obligations (11,772) (17,099)
Accretion of Investment
Security Discounts (2,929) 234,749
---------- ----------
Total Adjustments 474,532 426,324
Cash Flows from Investing Activities
Proceeds from Disposition of
Investment Securities
- Held to Maturity 3,355,852 10,588,622
- Available for Sale 4,509,824 0
Purchase of Investments Held
to Maturity 0 (7,272,280)
Federal Funds Sold, Net (400,000) (575,000)
Loans Made to Customers, Net (3,572,621) (17,267)
Purchase of Premises and Equipment (49,746) (61,683)
Proceeds from Sale of Other
Real Estate Owned 0 109,650
---------- ----------
Cash Provided by Investing
Activities 3,843,309 2,772,042
Cash Flows from Financing Activities
Net Decrease in Demand Deposits,
NOW Accounts and Savings Accounts (3,398,086) (1,441,509)
Net Increase (Decrease) in
Time Deposits 7,558,953 (368,758)
Cash Dividends Paid (106,917) 0
Securities Sold Under Agreements
to Repurchase (9,003,500) 0
Proceeds from Sale of Treasury Stock 119,998 0
---------- ----------
Cash Used by Financing Activities (4,829,552) (1,810,267)
Net (Decrease) Increase in Cash and
Due from Banks (180,732) 1,709,506
Cash and Due from Banks, Beginning 5,955,650 5,700,738
---------- ----------
Cash and Due from Banks, Ending $5,774,918 $7,410,244
========== ==========
Schedule of Noncash Investing Activities
Loans Transferred to Other
Real Estate Owned $87,099 $0
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Smithtown Bancorp (Bancorp), a one-bank holding company, acquired 100% of
the outstanding common stock of Bank of Smithtown (Bank) on November 1, 1984.
Smithtown Bancorp, and its subsidiary, Bank of Smithtown, filed an Annual
Report 10-KSB for the year ended December 31, 1994.
The bank's balance sheet underwent some significant changes during the
first quarter of 1995. Investment securities declined by $7,729,332 or 13.08%
as a result of $4,402,600 in sales of both U.S. Treasury Notes and various
mortgage-backed securities. The sale was affected in order to reduce the
level of short term borrowings and resulted in a small gain of $1,826. Loan
volume has continued to climb in 1995 with a net increase of $3,543,218 or
4.40%. Loans now represent 60.28% of deposits. One additional residential
property valued at $87,099 was transferred to Other Real Estate Owned. Total
deposits increased by $4,160,867 or 3.08% with the greatest increase in the
certificate of deposit accounts. No borrowings existed at March 31, 1995, due
to the increased level of deposits and the sale of investment securities.
During the first quarter, the Bank's Employee Stock Ownership Program (ESOP)
purchased 4,873 shares of Treasury Stock for its employees, thereby reducing
the number of outstanding Treasury Shares to 15,416. The level of non-
performing loans at March 31, 1995 was $1,682,106 as compared to $1,999,450 at
March 31, 1994. Capital for the Bank remains strong and is detailed in the
following table.
March 31, December 31, Required
1995 1994
Tier I 11.89% 12.20% 4.00%
Tier II 1.25% 1.25% **
Total Risk Based Capital Ratio 13.42% 13.45% 8.00%
Leverage Ratio 7.91% 7.48% 4.00%
Net income for the first quarter was $330,979 as compared to $321,407, a
2.98% increase. Loan income increased significantly in line with the
increased balances. Interest expense also increased, as certificates of
deposit climbed in volume. The bank's average cost of funds for first
quarter was 2.92%. Net interest margin remains extremely high in comparison
to peers at 5.97%. Operating expenses showed a slight 5.82% decline from the
same period in 1994 primarily due to the decrease in salary and benefit
expense. No provision has been taken this year for possible losses on OREO
properties. Management is confident that all properties currently in OREO
have been adequately reserved against.
The focus of management during 1995 remains deposit growth. One of the
avenues for achievement of this goal will be through the addition of a new
branch. Application has been submitted to the Federal Reserve Bank and New
York State Banking Department. Scheduled opening of the Northport branch is
September 1995. Expense reduction also is a major goal of management and is
a primary focus of strategic planning. Interest rate sensitivity and
liquidity management are closely monitored and results have been favorable
(see Interest Sensitivity Gap Table). The outlook for increased earnings
during 1995 remains positive.
<PAGE>
Notes to Consolidated Financial Statements
Financial Statement Presentation
In the opinion of management, the accompanying unaudited interim
consolidated financial statements contain all adjustments (consisting of
normal recurring accruals) necessary to present fairly its financial position
at March 31, 1995, and December 31, 1994, its results of operations for the
three months ended March 31, 1995 and 1994, and its cash flows for the three
months ended March 31, 1995 and 1994. For further information, refer to the
consolidated financial statements and notes thereto included in the Company's
annual report or Form 10-KSB for the year ended December 31, 1994.
Earnings Per Common Share
Earnings per share are calculated by dividing Net Income by the weighted
average number of common shares outstanding.
Investment Securities
Market Value:
March 31, 1995 $49,497,872
December 31, 1994 $56,001,626
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMITHTOWN BANCORP
May 11, 1995 by /s/ Bradley E. Rock, President
May 11, 1995 by /s/ Anita Florek, Treasurer
<PAGE>
<TABLE>
SMITHTOWN BANCORP
INTEREST SENSITIVITY GAP TABLE
For the Quarter Ended
March 31, 1995
(in thousands)
<CAPTION>
Total
Three Over Three Over Six Sensitivity Over One
Months Months to Months to Within Year to Over
or Less Six Months One Year One Year Five Years Five Years All Other(*) Total
--------- ----------- ---------- ----------- ---------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Interest- 21,696 2,936 8,738 33,370 65,672 35,506 18,903 153,451
Earning Assets
Total Interest- 15,289 10,708 17,752 43,749 61,609 0 0 105,358
Bearing Liabilities
Interest Sensitivity 6,407 (7,772) (9,014) (10,379) 4,063 35,506 18,903 48,093
Gap Per Period
Cumulative Interest 6,407 (1,365) (10,379) (10,379) (6,316) 29,190 48,093 48,093
Sensitivity Gap
Percent of Cumulative 4.11% -.87% -6.65% -6.65% -4.05% 18.70% 30.82% 30.82%
Gap to Total Assets
<FN>
(*) Includes interest-earning assets and interest-bearing liabilities that do
not reprice, as well as $1,504,310 in non-accrual loans.
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 2243439
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 600000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7783686
<INVESTMENTS-CARRYING> 43583806
<INVESTMENTS-MARKET> 41714188
<LOANS> 84034472
<ALLOWANCE> 1395414
<TOTAL-ASSETS> 152511793
<DEPOSITS> 139391444
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1110822
<LONG-TERM> 0
<COMMON> 2239775
0
0
<OTHER-SE> 9769752
<TOTAL-LIABILITIES-AND-EQUITY> 152511793
<INTEREST-LOAN> 1942536
<INTEREST-INVEST> 794185
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2764201
<INTEREST-DEPOSIT> 711431
<INTEREST-EXPENSE> 797938
<INTEREST-INCOME-NET> 1936264
<LOAN-LOSSES> 30000
<SECURITIES-GAINS> 1826
<EXPENSE-OTHER> 1941960
<INCOME-PRETAX> 510979
<INCOME-PRE-EXTRAORDINARY> 330979
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 330979
<EPS-PRIMARY> .77
<EPS-DILUTED> .77
<YIELD-ACTUAL> 8.13
<LOANS-NON> 1504309
<LOANS-PAST> 177797
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1362404
<CHARGE-OFFS> 2273
<RECOVERIES> 5284
<ALLOWANCE-CLOSE> 1395414
<ALLOWANCE-DOMESTIC> 1395414
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 591477
</TABLE>
