SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-Q
__________________
X QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
__________________
Commission file number 2-91511
SMITHTOWN BANCORP
Incorporated pursuant to the Laws of New York State
Internal Revenue Service - Employer Identification No. 11-2695037
One East Main Street, Smithtown, New York 11787-2801
516-360-9300
__________________
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: 427,662 Shares of Common stock
($5.00 Par Value) Outstanding as of March 31, 1998.
<PAGE>
SMITHTOWN BANCORP
INDEX
Part I - FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 1998 and December 31, 1997 .................... 4 & 5
Consolidated Statements of Income
Three months ended March 31, 1998 and 1997 .............. 6
Consolidated Statements of Changes in Stockholders' Equity
Three months ended March 31, 1998 and 1997 .............. 7
Consolidated Statements of Cash Flows
Three months ended March 31, 1998 and 1997 .............. 8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ............................... 9 - 13
Item 3. Notes to Consolidated Financial Statements ............... 14
Part II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Change in Securities - None
Item 3. Defaults under 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>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEETS
(unaudited)
AS OF
March 31, 1998 December 31, 1997
____________________________________________________________________________________________________________________________________
<S> <C> <C>
Assets
Cash and Due from Banks ...................................................... $ 7,959,750 $ 7,667,371
Investment Securities:
Investment Securities Held to Maturity
Obligations of U.S. Government .......................................... 2,001,239 2,002,757
Mortgage - Backed Securities ............................................ 6,738,413 7,237,038
Obligations of State and Political Subdivisions ......................... 6,460,300 6,458,344
---------- ------------
Total ............................................................... 15,199,952 15,698,139
---------- ------------
Investment Securities Available for Sale
Obligation of U.S. Government ........................................... 6,169,620 6,175,710
Obligation of U.S. Government Agencies .................................. 16,247,095 15,251,638
Mortgage - Backed Securities ............................................ 32,597,850 36,190,088
Oligations of State and Political Subdivisions .......................... 1,961,661 0
Other Securities ........................................................ 856,800 856,800
---------- -----------
Total ............................................................... 57,833,026 58,474,236
---------- -----------
Total Investment Securities(Fair value $73,186,604 at March 31, 1998
and $74,336,201 at December 31, 1997) 73,032,978 74,172,375
Federal Funds Sold ........................................................... 13,200,000 8,300,000
Loans
Real Estate ............................................................. 69,897,343 69,059,256
Mortgage Loans Held for Sale ............................................ 474,000 0
Commercial and Industrial ............................................... 23,216,215 23,745,418
Loans to Individuals for Household, Family and
Other Personal Expenditures ....................................... 6,650,023 7,492,586
Other ................................................................... 92,563 106,272
----------- ------------
Total ............................................................... 100,330,144 100,403,532
----------- ------------
Less: Unearned Discount ................................................. (611,143) (690,328)
Reserve for Possible Loan Losses .................................. (1,774,483) (1,677,594)
----------- -----------
Loans, Net ................................................................... 97,944,518 98,035,610
----------- -----------
Bank Premises and Equipment .................................................. 2,672,191 2,454,834
Other Assets
Other Real Estate Owned ................................................. 3,885,786 3,927,786
Other ................................................................... 3,084,165 3,098,459
Total Assets ................................................................. $ 201,779,388 $ 197,656,435
============ ============
</TABLE>
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<TABLE>
<CAPTION>
AS OF
MARCH 31, 1998 DECEMBER 31, 1997
____________________________________________________________________________________________________________________________________
<S> <C> <C>
SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEET (continued)
(unaudited)
Liabilities
Deposits:
Demand .................................................................. $ 42,646,505 $ 42,566,624
Money Market ............................................................ 39,484,932 36,326,089
NOW ..................................................................... 15,514,590 15,284,660
Savings ................................................................. 39,890,324 40,998,166
Certificates of Deposit $100,000 and Over ............................... 8,750,098 8,773,618
Other Time Deposits ..................................................... 25,843,307 24,246,478
------------- -------------
Total ............................................................... 172,129,756 168,195,635
------------- -------------
Dividend Payable ............................................................. 171,202 151,644
Securities Sold Under Agreements to Repurchase ............................... 2,800,000 2,800,000
Demand Notes Issued to the U.S. Treasury ..................................... 5,294,184 5,452,540
Other Borrowed Funds ......................................................... 3,000,000 3,000,000
Other Liabilities ............................................................ 1,287,278 1,077,158
------------- -------------
Total ............................................................... 184,682,420 180,676,977
------------- -------------
Stockholders' Equity
Common Stock - $5.00 Par Value, 1,500,000 Shares ............................. 2,239,775 2,239,775
Authorized; 447,955 Shares Issued
Unrealized Gain on Investment Securities
Available for Sale ...................................................... 264,886 249,068
Surplus ...................................................................... 1,993,574 1,993,574
Retained Earnings ............................................................ 13,610,931 12,943,680
------------- -------------
Total ................................................................... 18,109,166 17,426,097
Less: Treasury Stock .................................................... (1,012,198) (446,639)
------------- -------------
Total ................................................................... 17,096,968 16,979,458
------------- -------------
Total Liabilities and Capital ........................................... $ 201,779,388 $ 197,656,435
============= =============
</TABLE>
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<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED INCOME STATEMENTS
(unaudited)
For Three Months Ended
March 31, 1998 March 31, 1997
____________________________________________________________________________________________________________________________________
<S> <C> <C>
Interest Income
Interest and Fees on Loans ................................................... $ 2,428,610 $ 2,379,477
Interest and Dividends on:
Obligations of U.S. Government .......................................... 115,757 24,877
Obligations of U.S. Government Agencies ................................. 289,880 222,412
Mortgage - Backed Securities ............................................ 616,477 685,754
Obligations of State & Political Subdivisions ........................... 92,298 74,548
Other Securities ........................................................ 14,340 2,260
Interest on Federal Funds Sold ............................................... 114,740 54,304
Interest on Balances Due From Depository Institutions ........................ 2,907 908
---------- ----------
Total Interest Income ................................................... 3,675,009 3,444,540
---------- -----------
Interest Expense
Money Market Accounts ........................................................ 335,702 232,263
Savings ...................................................................... 203,972 276,540
Certificates of Deposit $100,000 and Over .................................... 121,128 56,782
Other Time Deposits .......................................................... 297,127 295,470
Interest on Federal Funds Purchased and Securities
Sold Under Agreements to Repurchase ..................................... 44,081 43,919
Interest on Demand Notes Issued by U. S. Treasury ............................ 50,192 15,606
Interest on Other Borrowed Money ............................................. 41,700 46,424
---------- ----------
Total Interest Expense .................................................. 1,093,902 967,004
---------- ----------
Net Interest Income .......................................................... 2,581,107 2,477,536
Provision for Possible Loan Losses ........................................... 110,000 0
---------- ----------
Net Interest Income After Provision for Possible
Loan Losses .................................................................. 2,471,107 2,477,536
---------- ----------
Other Non - Interest Income
Trust Department Income ...................................................... 86,502 101,759
Service Charges on Deposit Accounts .......................................... 353,916 372,673
Other Income ................................................................. 161,621 154,493
---------- ----------
Total Other Non - Interest Income ....................................... 602,039 628,925
---------- ----------
Other Operating Expenses
Salaries ..................................................................... 761,635 723,175
Pension and Other Employee Benefits .......................................... 193,590 177,311
Net Occupancy Expense of Bank Premises ....................................... 212,764 237,529
Furniture and Equipment Expense .............................................. 121,511 156,177
Miscellaneous Operating Expense .............................................. 425,923 502,320
---------- ----------
Total Other Operating Expense ........................................... 1,715,423 1,796,512
---------- ----------
Income Before Income Taxes ................................................... 1,357,723 1,309,949
Provision for Income Taxes ................................................... 519,270 511,670
---------- ----------
Net Income .............................................................. $ 838,453 $ 798,279
========== ===========
Earnings Per Share
Net Income ................................................................... $ 1.94 $ 1.84
Cash Dividends Paid .......................................................... $ 0.40 $ 0.32
Weighted Average Shares Outstanding .......................................... 431,509 433,268
</TABLE>
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<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
Unrealized Cost of
Common Stock Gain(Loss) Common Total
Shares Capital 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 1/1/97 ................ 433,268 $2,239,775 $1,993,574 $81,093 $10,229,436 $(446,639) $14,097,239
Net Income ....................... 798,279 798,279
Cash Dividend Declared ........... (151,644) (151,644)
Allowance for Unrealized
Gain(Loss) .................. (121,141) (121,141)
________________________________________________________________________________________________
Balance at 3/31/97 ............... 433,268 $2,239,775 $1,993,574 $(40,048) $10,876,071 $(446,639) $14,622,733
================================================================================================
Balance at 1/1/98 ................ 433,268 $2,239,775 $1,993,574 $249,068 $12,943,680 $(446,639) $16,979,458
Net Income ....................... 838,453 838,453
Cash Dividend Declared ........... (171,202) (171,202)
Purchase Treasury Stock .......... (5,606) (565,559) (565,559)
Allowance for Unrealized
Gain(Loss)................... 15,818 15,818
________________________________________________________________________________________________
Balance at 3/31/98 ............... 427,662 $2,239,775 $1,993,574 $264,886 $13,610,931 $(1,012,198) $17,096,968
================================================================================================
</TABLE>
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<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For Three Months Ended
March 31, 1998 March 31, 1997
____________________________________________________________________________________________________________________________________
<S> <C> <C>
Cash Flows from Operating Activities
Net Income $ 838,453 $ 798,279
Adjustments to reconcile net income to net cash provided by operating
activities:
Valuation Reserve for Other Real Estate Owned ........................... 42,000 90,000
Depreciation on Premises and Equipment .................................. 85,513 105,158
Provision for Possible Loan Losses ...................................... 110,000 0
Amortization of Transition Obligation ................................... 26,027 26,027
Increase/(Decrease)in Interest Payable .................................. (2,704) 37,403
Increase in Miscellaneous Payables and
Accrued Expenses .................................................... (230,603) (107,595)
Increase in Fees and Commissions Receivable ............................. (4,800) (15,000)
Increase in Interest Receivable ......................................... (89,052) (212,704)
Decrease in Prepaid Expenses ............................................ 21,783 101,982
Increase in Miscellaneous Receivables ................................... (13,137) (8,768)
Decrease in Income Taxes Receivable ..................................... 599,650 189,978
Increase/(Decrease) in Deferred Taxes ................................... (80,380) 117,265
Decrease in Accumulated Post Retirement Benefit Obligation .............. (13,823) (15,754)
Amortization of Investment Security Premiums and
Accretion of Discounts .............................................. 97,507 (34,842)
------------- ------------
Cash Provided by Operating Activities ................................... 1,386,434 1,071,429
------------- ------------
Cash Flows from Investing Activities
Proceeds from Maturities of Investment Securities
Held to Maturity .................................................... 600,368 481,475
Proceeds from Maturities of Investment Securities
Available for Sale .................................................. 6,586,434 3,306,768
Purchases of Investment Securities Available for Sale ................... (6,002,330) (8,536,557)
Purchases of Investment Securities Held to Maturity ..................... (115,310) 0
Purchase of Treasury Stock .............................................. (565,559) 0
Net Increase in Federal Funds Sold ...................................... (4,900,000) (7,200,000)
Net (Increase)/Decrease in Loans ........................................ (18,909) 967,763
Purchases of Premises and Equipment ..................................... (302,870) (28,098)
Proceeds from Sale of Other Real Estate Owned ........................... 0 1,302,808
---------- ------------
Cash Used by Investing Activities ....................................... (4,718,176) (9,705,841)
---------- ------------
Cash Flows from Financing Activities
Net Increase in Demand Deposits, NOW
Accounts and Savings Accounts ....................................... 2,360,811 6,824,874
Net Increase(Decrease) in Time Accounts ................................. 1,573,310 (11,102)
Cash Dividends Paid ..................................................... (151,644) (138,646)
Net Increase/(Decrease) in Borrowed Funds ............................... (158,356) 2,814,277
----------- -----------
Cash Provided by Financing Activities ................................... 3,624,121 9,489,403
----------- ------------
Net Increase in Cash and Due from Banks ................................. 292,379 854,991
Cash and Due from Banks, Beginning of Period ............................ 7,667,371 7,689,964
---------- -----------
CASH AND DUE FROM BANKS, END OF PERIOD .................................. $ 7,959,750 $ 8,544,955
========== ===========
Supplemental Disclosures of Cash Flow Information
Cash Paid During the Period for:
Interest ............................................................... $ 1,096,606 $ 105,949
Income Taxes ........................................................... $ 0 $ 204,427
Non-Cash Investing Activities
Loans Transferred to Other Real Estate Owned ............................ $ 0 $ 179,370
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operation
SUMMARY
The Balance Sheet remained strong for the first quarter of 1998, ending with
total assets at $201,779,388 on March 31, 1998, compared to $197,656,435 on
December 31, 1997; a 2.09% increase. The Investment Portfolio decreased slightly
by 1.54%, due primarily to the increase in mortgage-backed prepayments, driven
by lowering interest rates. In the current low rate, flat yield curve
environment, investment products offering both high yields and minimal risk are
difficult to find. Two callable U. S. Government Agencies were purchased, during
the first quarter to replace securities of the same type that were called. The
remaining purchases consisted of tax exempt Obligations of State & Political
Subdivisions, clearly the best re-investment instruments for the first quarter
of 1998. Although the yields on these securities were lower than those they were
replacing, the tax advantage provided additional benefit to bottom line. The
Investment Portfolio currently totals $73,032,978, representing 36.19% of total
assets with an average yield of 6.15%. The loan portfolio remained virtually
unchanged, with balances at $100,330,144 on March 31, 1998, and $100,403,532 on
December 31, 1997. The loan portfolio provides an average yield of 9.66% and
represents 49.72% of total assets. The reserve for loan losses increased by
$96,889 for the first quarter as a result of a $110,000 provision, as well as a
charge-off for $21,813 and recoveries of $8,702. The Federal Funds Sold account
increased by $4,900,000, funded principally by deposit growth and investment
cash flow. These additional funds were earmarked to purchase investments,
however, security trades in February and March settled in April and therefore
were not reflected in March Balance Sheet numbers. Bank Premises and Equipment
increased by 8.85% due to the conversion of three branches to gas heat and the
waterproofing of several buildings. Other Real Estate Owned balances remained
the same with a $42,000 increase to the general valuation reserve account. Net
OREO balances represents 1.93% of total assets. On the liability side of the
Balance Sheet, total deposits increased by 2.34% or $3,934,121 from December 31,
1997. Money Market Accounts were responsible for the majority of this growth as
balances rose significantly by 8.70% from $36,326,089 on December 31, 1997, to
$39,484,932 on March 31, 1998. Certificate of Deposit accounts also increased by
$1,573,309 or 4.76%. Savings deposits declined by 2.70%, due principally to the
migration of these deposits to the higher yielding instruments mentioned above.
Substantial first quarter growth was the result of an aggressive 'Celebrate Our
Success' campaign, targeted to bring in new business, enhanced by promotional
CD's and an all out effort by our client services staff. Total deposits
represent 93.20% of total liabilities. Other Borrowed Funds remained virtually
unchanged at $11,094,184 on March 31, 1998; comprising 6.01% of total
liabilities. The dividend payable increased from $151,644 on December 31, 1997
to $171,202 on March 31, 1998, as the per share dividend rose from $.35 in the
last quarter of 1997 to $.40 in the first quarter of 1998. Total capital at
December 31, 1997, was $16,979,458 as compared to $17,096,968 on March 31, 1998.
While net income for the first quarter finished 5.03% above the same period last
year, this modest .69% increase to capital was a result of management's decision
to begin a buy back program of up to $2,000,000 worth of Common Stock throughout
1998. The Earnings Per share value continued to climb from $1.84 on December 31
, 1997, to $1.94 on March 31, 1998. The stock price during December 1997,
reached $85.00 per share, and escalated to $115.00 per share within the next 90
days. The first quarter of 1998, finished with an ROA of 1.66 and an ROE of
19.62. All capital ratios remained consistently strong by all guidelines and are
outlined below.
March 31, 1998 December 31, 1997 Required
Tier I 14.22 14.35 4.00
Tier II 1.25 1.25 *
Total Risk Based
Capital Ratio 15.51 15.63 8.00
Leverage Ratio 8.57 8.01 4.00
* Tier II Capital is limited to 100% of Tier I Capital.
<PAGE>
INTEREST INCOME
Interest income on earning assets rose 6.69% over last year's first quarter, due
primarily to increased balances in the Investment Portfolio and Federal Funds
Sold. Loan average balances remained virtually unchanged, however, the Loan
Portfolio yield increased slightly by .21% which accounts for the increase in
loan interest income. The average balance in the Investment Portfolio rose
substantially from $63,637,422 during first quarter 1997, to $73,467,367 for the
first quarter of 1998. While balances increased, the overall portfolio yield
decreased by .20%, attributed primarily to lower rates paid on new investments.
The majority of investments purchased in the first quarter of 1998, were
municipal general obligations bonds which pay historically lower yields but
provide excellent tax advantages. Interest income on Federal Funds Sold doubled
that of first quarter 1997, due to increased sales. These higher sales were the
result of increased balances in the Demand Notes Issued to the U.S. Treasury
Account, investment prepayments and an increase in deposits.
INTEREST EXPENSE
Interest expense was $1,093,902 on March 31, 1998 as compared to $967,004 on
March 31, 1997, an increase of 13.12%. Total average deposits grew by over nine
million dollars, with the largest areas of growth evidenced in Money Market
Accounts at 24.30%, followed by an increase of 16.76% in the Certificate of
Deposit Portfolio. The need to stay competitive and the Bank's desire to grow
resulted in a higher average yield paid on both money market and certificate
accounts in the first quarter of 1998. The Bank issued high rate promotional
CD's in conjunction with a 'Celebrate Our Success' campaign in order to attract
new business. The number and dollar volume of 'Preferred' accounts continued to
grow during the first quarter. These accounts offer various benefits such as
free checking and rate incentives to customers maintaining large deposits at the
Bank. Now and Holiday Club average balances remained virtually unchanged, while
Savings Accounts dropped by 12.08% or $5,502,284. The Savings balance decline
was a result of lower interest rates paid on these accounts and elimination of a
tiered rate structure as well as the continued downward market rate trend.
Interest on Other Borrowed Funds increased by approximately 28%, due exclusively
to the higher balances maintained in Demand Notes Issued to the U.S. Treasury.
Although the interest rate on these borrowings rose 1.13% above the same period
last year, the Bank continues to make a 25 basis point earnings spread on this
money.
OTHER NON-INTEREST INCOME
Other non-interest income decreased slightly by 4.27% . The Bank introduced two
new non-interest income sources: ATM access fees and prefunding income earned on
the outstanding official check balances. The full impact of the ATM access fees
will not be realized until second quarter as these charges were implemented late
in February. While this new income was substantial it was not enough to offset
the decrease in service charges and trust income. The increase in demand deposit
average balances consisted primarily of preferred accounts. As these accounts
carry no service charges, the Bank experienced a reduction in its fee income.
OTHER OPERATING EXPENSES
Total operating expenses decreased overall by 4.51%, as compared with last
year's first quarter. Salary and benefit expenses rose by an expected 6.08%, as
a result of 1998 salary increases and 1997 bonuses. Other Occupancy Expenses
were reduced by 10.43%, due to a reduction in real estate taxes and the
conversion of three branches to gas heat . Furniture and Equipment Expense
decreased by 22.20%, attributed primarily to the sale of two bank cars and the
depreciation runoff of the main frame computer software. Miscellaneous operating
expenses also declined significantly with decreases in office supplies, the
elimination of indirect auto servicing fees paid to a third party provider,
legal fees and trust expenditures.
NET INCOME
Net income reached $838,453, surpassing last year's record high first quarter of
$798,279 by 5.03% . This high net income level is the result of the bank's
continued growth, sustained low efficiency ratio of 53.10%, and a wide net
interest margin of 5.71%. The remainder of 1998 looks equally promising as we
explore new avenues of revenue while continuing to focus on new business
development. Loan growth is expected to climb as the bank added to its staff a
seasoned Commercial Loan Officer during April. Mutual funds, now offered by our
Trust Department are also expected to generate additional fee income in the near
future. As we approach the second quarter of 1998, management looks forward to
the challenges provided by current financial and competitive markets. We remain
committed to maintaining Bank of Smithtown's status as a leader among community
banks in both the state and the nation, while continuing to maximize shareholder
value.
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
MARCH 31, 1998
TOTAL
3 MONTHS 3-6 6-12 SENITIVE
REVOLVING OR LESS MONTHS MONTHS WITHIN 1 YR
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS ............................... $ 4,684,024 $ 8,459,024 $ 5,913,120 $ 14,888,441 $ 33,944,609
FED FUNDS SOLD ............................ 13,200,000 0 0 0 13,200,000
LOANS:
INSTALLMENT ............................... 940,048 823,226 1,858,883 2,923,883 6,546,040
REAL ESTATE/COMM .......................... 26,163,123 2,848,908 3,739,130 12,013,723 44,764,884
CASH AND DUE FROM BANKS ................... 248,551 0 0 0 248,551
FIXED ASSETS .............................. 0 0 0 0 0
OTHER ASSETS .............................. 0 0 0 0 0
RESERVE FOR POSSIBLE LOAN LOSSES .......... 0 0 0 0 0
NON-ACCRUALS .............................. 0 0 0 0 0
UNEARNED DISCOUNT ......................... 0 0 0 0 0
------------ ----------- ----------- ----------- -----------
TOTAL ..................................... $ 45,235,746 $ 12,131,158 $ 11,511,133 $ 29,826,047 $ 98,704,084
------------ ----------- ----------- ----------- -----------
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continue)
MARCH 31, 1998
1-3 3-5 5+
YEARS YEARS YEARS OTHER TOTAL
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS ............................... $ 21,446,330 $ 3,547,590 $ 13,237,649 $ 856,800 $ 73,032,978
FED FUNDS SOLD ............................ 0 0 0 0 13,200,00
LOANS:
INSTALLMENT ............................... 4,877,728 4,616,267 959,068 0 16,999,103
REAL ESTATE AND COMMERCIAL ................ 13,524,497 16,878,032 6,195,869 566,564 81,929,846
CASH AND DUE FROM BANKS ..................... 0 0 0 7,711,199 7,959,750
FIXED ASSETS ................................ 0 0 0 2,672,191 2,672,191
OTHER ASSETS ................................ 0 0 0 6.969,951 6,969,951
RESERVE FOR POSSIBLE LOAN LOSSES ............ 0 0 0 (1,774,483) (1,774,483)
NON-ACCRUALS ................................ 0 0 0 1,401,195 1,401,195
UNEARNED DISCOUNT ........................... 0 0 0 (611,143) (611,143)
------------ ----------- ----------- ----------- -----------
TOTAL ....................................... $ 39,848,555 $ 25,041,889 $ 20,392,586 $ 17,792,274 $ 201,779,388
------------ ----------- ----------- ----------- -----------
</TABLE>
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<TABLE>
<CAPTION>
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
MARCH 31, 1998
TOTAL
3 MONTHS 3-6 6-12 SENITIVE
REVOLVING OR LESS MONTHS MONTHS WITHIN 1 YR
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
LIABILITIES:
SAVINGS .................................... $ 0 $ 1,994,516 $ 1,994,516 $ 3,989,032 $ 7,978,064
MONEY MARKETS .............................. 0 4,935,617 4,935,617 9,871,232 19,742,466
NOW ........................................ 0 775,730 775,730 1,551,458 3,102,918
TIME<100 ................................... 50,557 7,434,042 4,721,231 8,034,673 20,240,503
TIME>100 ................................... 0 3,611,946 683,628 2,125,992 6,421,566
DEMAND ..................................... 0 1,066,163 1,066,163 2,132,325 4,264,651
REPURCHASE AGREEMENTS ...................... 0 2,800,000 0 0 2,800,000
OTHER BORROWED MONEY ....................... 5,294,184 0 0 0 5,294,184
OTHER LIABILITIES .......................... 0 0 0 0 0
STOCKHOLDERS' EQUITY ....................... 0 0 0 0 0
--------- ---------- ---------- ---------- -----------
TOTAL .......................................... $ 5,344,741 $ 22,618,014 $14,176,885 $ 27,704,712 $ 69,844,352
--------- ---------- ---------- ---------- -----------
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continue)
MARCH 31, 1998
1-3 3-5 5+
YEARS YEARS YEARS OTHER TOTAL
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
LIABILITIES:
SAVINGS .................................... $ 15,956,130 $ 15,956,130 $ 0 $ 0 $ 39,890,324
MONEY MARKETS .............................. 19,742,466 0 0 0 39,484,932
NOW ........................................ 6,205,836 6,205,836 0 0 15,514,590
TIME<100 ................................... 3,588,934 2,013,870 0 0 25,843,307
TIME>100 ................................... 1,299,717 1,028,815 0 0 8.750,098
DEMAND ..................................... 8,529,301 8,529,301 0 21,323,252 42,646,505
REPURCHASE AGREEMENTS ...................... 0 0 0 0 2,800,000
OTHER BORROWED MONEY ....................... 0 3,000,000 0 0 8,294,184
OTHER LIABILITIES .......................... 0 0 0 1,458,480 1,458,480
STOCKHOLDERS' EQUITY ....................... 0 0 0 17,096,968 17,096,968
---------- ---------- -------- ---------- ------------
TOTAL ....................................... $ 55,322,384 $ 36,733,952 $ 0 $ 39,878,700 $ 201,779,388
---------- ---------- -------- ---------- ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
MARCH 31, 1998
TOTAL
3 MONTHS 3-6 6-12 SENITIVE
REVOLVING OR LESS MONTHS MONTHS WITHIN 1 YR
___________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
INTEREST SENSITIVITY GAP
PER PERIOD ..................... 39,891,005 (10,486,856) (2,665,752) 2,121,335 28,859,732
GAP/TOTAL ASSETS ............... 19.77% -5.20% -1.32% 1.05% 14.30%
CUMULATIVE INTEREST
SENSITIVITY GAP ................ 39,891,005 29,404,149 26,738,397 28,859,732 28,859,732
CUMULATIVE GAP TO
TOTAL ASSETS ................... 19.77% 14.57% 13.25% 14.30% 14.30%
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continue)
MARCH 31, 1998
1-3 3-5 5+
YEARS YEARS YEARS OTHER TOTAL
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
INTEREST SENSITIVITY GAP
PER PERIOD ..................... (15,473,829) (11,692,063) 20,392,586 (22,086,426)
GAP/TOTAL ASSETS ............... -7.67% -5.79% 10.11%
CUMULATIVE INTEREST
SENSITIVITY GAP ................ 13,385,903 1,693,840 22,086,426
CUMULATIVE GAP TO
TOTAL ASSETS ................... 6.63% 0.84% 10.95%
</TABLE>
ASSUMPTIONS:
1) BALANCE SHEET FIGURES AS OF MARCH 31, 1998
2) SAVINGS AND NOW ACCOUNTS ASSUMED TO DECLINE OVER 5 YEAR PERIOD
3) MONEY MARKET ACCOUNTS ASSUMED TO DECLINE OVER 2 YEAR PERIOD
<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 as of March 31,
1998, and its results of operations for the three months ended March 31, 1998
and 1997 and its cash flows for the three months ended March 31, 1998 and 1997.
For further information, refer to the consolidated financial statements and
notes thereto included in the Company's annual report on Form 10-K for the year
ended December 31, 1997.
Earnings Per Common Shares
Earnings per share are calculated by dividing Net Income by the weighted average
number of common shares outstanding.
Investment Securities
Fair Value:
March 31, 1998 $73,186,604
December 31, 1997 $74,336,201
<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 14, 1998
/s/ Bradley E. Rock
___________________________
Bradley E. Rock, President
May 14, 1998
/s/ Anita M. Florek
___________________________
Anita M. Florek, Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-END> Mar-31-1998
<CASH> 3,448,545
<INT-BEARING-DEPOSITS> 248,551
<FED-FUNDS-SOLD> 13,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 57,833,026
<INVESTMENTS-CARRYING> 15,199,952
<INVESTMENTS-MARKET> 73,186,604
<LOANS> 99,719,001
<ALLOWANCE> 1,774,483
<TOTAL-ASSETS> 201,779,388
<DEPOSITS> 172,129,756
<SHORT-TERM> 8,265,386
<LIABILITIES-OTHER> 1,287,278
<LONG-TERM> 3,000,000
0
0
<COMMON> 2,239,775
<OTHER-SE> 14,857,193
<TOTAL-LIABILITIES-AND-EQUITY> 201,779,388
<INTEREST-LOAN> 2,428,610
<INTEREST-INVEST> 1,243,492
<INTEREST-OTHER> 2,907
<INTEREST-TOTAL> 3,675,009
<INTEREST-DEPOSIT> 975,929
<INTEREST-EXPENSE> 1,093,902
<INTEREST-INCOME-NET> 2,581,107
<LOAN-LOSSES> 110,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,715,423
<INCOME-PRETAX> 1,357,723
<INCOME-PRE-EXTRAORDINARY> 838,453
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 838,453
<EPS-PRIMARY> 1.94
<EPS-DILUTED> 1.94
<YIELD-ACTUAL> 8.12
<LOANS-NON> 1,401,915
<LOANS-PAST> 1,432,227
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 21,813
<RECOVERIES> 8,702
<ALLOWANCE-CLOSE> 1,677,594
<ALLOWANCE-DOMESTIC> 1,774,483
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 345,584
</TABLE>
