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 September 30, 2000
------------------
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
631-360-9300
------------------
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: 793,987 Shares of Common stock
($2.50 Par Value) Outstanding as of September 30, 2000.
<PAGE>
SMITHTOWN BANCORP
INDEX
Part I - FINANCIAL INFORMATION PAGES
------
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 2000 and December 31, 1999 4
Consolidated Statements of Income
Three months ended September 30, 2000 and 1999 5
Consolidated Statements of Income
Nine months ended September 30, 2000 and 1999 6
Consolidated Statements of Changes in Stockholders' Equity
Three months ended September 30, 2000 and 1999 7
Consolidated Statements of Changes in Stockholders' Equity
Nine months ended September 30, 2000 and 1999 8
Consolidated Statements of Comprehensive Income
Three months ended September 30, 2000 and 1999 9
Consolidated Statements of Comprehensive Income
Nine months ended September 30, 2000 and 1999 9
Consolidated Statements of Cash Flows
Three months ended September 30, 2000 and 1999 10
Consolidated Statements of Cash Flows
Nine months ended September 30, 2000 and 1999 11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 12 - 16
Item 3. Notes to Consolidated Financial Statements 17
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
September 30, 2000 December 31, 1999
____________________________________________________________________________________________________________________________________
<S> <C> <C>
Assets
Cash and Due from Banks .......................................................... $ 12,972,170 $ 10,195,378
Investment Securities:
Investment Securities Held to Maturity
Mortgage - Backed Securities ................................................ 1,519,536 2,829,437
Obligations of State and Political Subdivisions ............................. 4,381,327 5,141,551
------------- -------------
Total (Estimated Fair Value $5,930,772 and $7,969,754 ...................... 5,900,863 7,970,988
at 9/30/00 and 12/31/99, respectively) ------------- --------------
Investment Securities Available for Sale
Obligations of U.S. Government .............................................. 0 3,012,570
Obligations of U.S. Government Agencies ..................................... 16,569,448 17,331,246
Mortgage - Backed Securities ................................................ 22,771,152 19,612,906
Oligations of State and Political Subdivisions .............................. 11,768,271 11,152,866
Other Securities ............................................................ 4,635,700 3,580,700
------------- -------------
Total (At Estimated Fair Value) ............................................ 55,744,571 54,690,288
------------- -------------
Total Investment Securities ................................................. 61,645,434 62,661,276
------------- -------------
(Estimated Fair Value $61,675,342 and $ 62,660,042
at 9/30/00 and 12/31/99, respectively)
Federal Funds Sold ............................................................... 0 10,350,000
------------- -------------
Loans ............................................................................ 225,887,192 176,819,745
Less: Unearned Discount ..................................................... 852,246 619,728
Allowance for Possible Loan Losses ................................. 2,560,842 2,251,668
------------- -------------
Loans, Net ....................................................................... 222,474,104 173,948,349
------------- -------------
Bank Premises and Equipment ...................................................... 3,182,887 3,207,348
------------- -------------
Other Assets
Other Real Estate Owned ..................................................... 730,354 855,353
Other ....................................................................... 10,527,334 4,863,739
------------- -------------
Total ....................................................................... $ 311,532,283 $ 266,081,443
============= =============
Liabilities
Deposits:
Demand (Non-Interest Bearing) ............................................... $ 56,134,897 $ 50,008,452
Money Market ................................................................ 68,873,748 53,667,605
NOW ......................................................................... 18,174,910 15,968,937
Savings ..................................................................... 34,302,981 35,594,368
Time ........................................................................ 78,163,766 52,566,899
------------- -------------
Total Deposits ............................................................ 255,650,302 207,806,261
------------- -------------
Dividend Payable ................................................................. 190,557 177,357
Other Borrowings ................................................................. 32,800,000 38,000,000
Other Liabilities ................................................................ 1,423,102 1,407,810
------------- -------------
Total Liabilities ........................................................... 290,063,961 247,391,428
------------- -------------
Stockholders' Equity
Common Stock - $2.50 Par Value: (3,000,000 Shares ................................ 2,239,775 2,239,775
Authorized; 895,910 Shares Issued)
Accumulated Other Comprehensive Loss ............................................. (708,355) (1,069,376)
Capital Surplus .................................................................. 1,993,574 1,993,574
Retained Earnings ................................................................ 22,444,004 19,314,995
------------- -------------
Total ..................................................................... 25,968,998 22,478,968
Less: Treasury Stock (101,923 and 89,742 shares at cost at ....................... 4,500,676 3,788,953
9/30/00 and 12/31/99, respectively) ....................... ------------- --------------
Total Stockholders' Equity .................................................. 21,468,322 18,690,015
------------- -------------
Total ....................................................................... $ 311,532,283 $ 266,081,443
============= =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For Three Months Ended
September 30, 2000 September 30, 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest Income
Interest and Fees on Loans ......................................................... $4,914,265 $3,289,269
Interest and Dividends on:
Obligations of U.S. Government ................................................ 0 90,648
Obligations of U.S. Government Agencies ....................................... 425,143 303,743
Mortgage - Backed Securities .................................................. 381,287 412,961
Obligations of State & Political Subdivisions ................................. 195,474 200,419
Other Securities .............................................................. 92,121 24,681
Interest on Federal Funds Sold ..................................................... 36,025 159,223
Interest on Balances Due From Depository Institutions .............................. 1,222 39,680
---------- ----------
Total Interest Income ........................................................ 6,045,537 4,520,624
---------- ----------
Interest Expense
Money Market Accounts .............................................................. 780,552 404,473
Savings ............................................................................ 123,678 139,127
Time Deposits $100,000 and Over ................................................... 283,513 192,286
Other Time Deposits ................................................................ 833,459 329,265
Interest on Other Borrowed Money ................................................... 489,705 333,547
---------- ----------
Total Interest Expense ........................................................ 2,510,907 1,398,698
---------- ----------
Net Interest Income ................................................................ 3,534,630 3,121,926
Provision for Possible Loan Losses ................................................. 150,000 90,000
--------- ----------
Net Interest Income After Provision for Possible
Loan Losses ...................................................................... 3,384,630 3,031,926
---------- ----------
Other Non - Interest Income
Trust Department Income ............................................................ 87,076 157,669
Service Charges on Deposit Accounts ................................................ 394,227 390,146
Other Income ....................................................................... 350,403 319,682
Net Securities Transactions ........................................................ (53,260) 472
---------- ----------
Total Other Non - Interest Income .............................................. 778,446 867,969
---------- ----------
Other Operating Expenses
Salaries ........................................................................... 1,026,507 930,401
Pension and Other Employee Benefits ................................................ 196,636 185,828
Net Occupancy Expense of Bank Premises ............................................. 223,550 219,080
Furniture and Equipment Expense .................................................... 164,006 210,519
Miscellaneous Operating Expense .................................................... 546,848 472,128
---------- ----------
Total Other Operating Expense ................................................. 2,157,547 2,017,956
---------- ----------
Income Before Income Taxes ......................................................... 2,005,529 1,881,939
Provision for Income Taxes ......................................................... 729,673 700,357
------------- ----------
Net Income .................................................................... $ 1,275,856 $1,181,582
============= ==========
Earnings Per Share
Net Income ......................................................................... $ 1.60 $ 1.46
Cash Dividends Declared ............................................................ $ 0.24 $ 0.22
Weighted Average Shares Outstanding ................................................ 798,834 806,951
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
For Nine Months Ended
September 30, 2000 September 30, 1999
____________________________________________________________________________________________________________________________________
<S> <C> <C>
Interest Income
Interest and Fees on Loans ...................................................... $ 13,261,897 $ 8,991,975
Interest and Dividends on:
Obligations of U.S. Government ............................................. 23,602 271,754
Obligations of U.S. Government Agencies .................................... 1,163,922 844,480
Mortgage - Backed Securities ............................................... 1,086,999 1,262,940
Obligations of State & Political Subdivisions .............................. 614,942 626,078
Other Securities ........................................................... 232,681 55,488
Interest on Federal Funds Sold .................................................. 448,914 293,336
Interest on Balances Due From Depository Institutions ........................... 13,210 41,649
------------ ------------
Total Interest Income ...................................................... 16,846,167 12,387,700
------------ ------------
Interest Expense
Money Market Accounts ........................................................... 2,075,471 1,108,728
Savings ......................................................................... 388,641 413,797
Time Deposits $100,000 and Over ................................................ 758,123 483,256
Other Time Deposits ............................................................. 2,134,760 903,099
Interest on Other Borrowed Money ................................................ 1,524,720 634,039
------------ ------------
Total Interest Expense ..................................................... 6,881,715 3,542,919
------------ ------------
Net Interest Income ............................................................. 9,964,452 8,844,781
Provision for Possible Loan Losses .............................................. 390,000 270,000
------------ ------------
Net Interest Income After Provision for Possible
Loan Losses ................................................................... 9,574,452 8,574,781
------------ ------------
Other Non - Interest Income
Trust Department Income ......................................................... 373,224 334,557
Service Charges on Deposit Accounts ............................................. 1,193,478 1,127,554
Other Income .................................................................... 1,084,545 900,446
Net Securities Transactions ..................................................... (54,619) 472
------------ ------------
Total Other Non - Interest Income .......................................... 2,596,628 2,363,029
------------ ------------
Other Operating Expenses
Salaries ........................................................................ 3,010,787 2,681,843
Pension and Other Employee Benefits ............................................. 627,846 580,809
Net Occupancy Expense of Bank Premises .......................................... 689,043 644,582
Furniture and Equipment Expense ................................................. 564,622 599,594
Miscellaneous Operating Expense ................................................. 1,484,494 1,441,633
------------ ------------
Total Other Operating Expense .............................................. 6,376,792 5,948,461
------------ ------------
Income Before Income Taxes ...................................................... 5,794,288 4,989,349
Provision for Income Taxes ...................................................... 2,087,847 1,821,722
------------ ------------
Net Income ................................................................. $ 3,706,441 $ 3,167,627
============ ============
Earnings Per Share
Net Income ...................................................................... $ 4.61 $ 3.90
Cash Dividends Declared ......................................................... $ 0.72 $ 0.66
Weighted Average Shares Outstanding ............................................. 803,691 811,366
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
Cost of Accumulated
Common Stock Common Other Total
Shares Capital Retained Stock in Comprehensive Stockholders'
Outstanding Amount Surplus Earnings Treasury Income (Loss) Equity
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at 6/30/99 807,531 $ 2,239,775 $ 1,993,574 $ 17,402,154 $ (3,707,664) $ (595,090) $ 17,332,749
Comprehensive Income:
Net Income 1,181,582 1,181,582
Other Comprehensive Income,
Net of Tax (108,417) (108,417)
Total Comprehensive Income
Cash Dividends Declared (177,519) (177,519)
Treasury Stock Purchases (628) (37,366) (37,366)
--------------------------------------------------------------------------------------------------
Balance at 9/30/99 806,903 $ 2,239,775 $ 1,993,574 $ 18,406,217 $ (3,745,030) $ (703,507) $ 18,191,029
==================================================================================================
Balance at 6/30/00 805,813 $ 2,239,775 $ 1,993,574 $ 21,358,705 $ (3,809,188) $ (1,140,583) $ 20,642,283
Comprehensive Income:
Net Income 1,275,856 1,275,856
Other Comprehensive Income,
Net of Tax 432,228 432,228
Total Comprehensive Income
Cash Dividends Declared (190,557) (190,557)
Treasury Stock Purchases (11,826) (691,488) (691,488)
--------------------------------------------------------------------------------------------------
Balance at 9/30/00 793,987 $ 2,239,775 $ 1,993,574 $ 22,444,004 $ (4,500,676) $ (708,355) $ 21,468,322
==================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)
Cost of Accumulated
Common Stock Common Other Total
Shares Capital Retained Stock in Comprehensive Stockholders'
Outstanding Amount Surplus Earnings Treasury Income (Loss) Equity
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at 1/1/99 822,765 $ 2,239,775 $ 1,993,574 $ 15,770,822 $ (2,841,437) $ 249,455 $ 17,412,189
Comprehensive Income:
Net Income 3,167,627 3,167,627
Other Comprehensive Income,
Net of Tax (952,962) (952,962)
Total Comprehensive Income
Cash Dividends Declared (532,232) (532,232)
Treasury Stock Purchases (15,862) (903,593) (903,593)
--------------------------------------------------------------------------------------------------
Balance at 9/30/99 806,903 $ 2,239,775 $ 1,993,574 $ 18,406,217 $ (3,745,030) $ (703,507) $ 18,191,029
==================================================================================================
Balance at 1/1/00 806,168 $ 2,239,775 $ 1,993,574 $ 19,314,995 $ (3,788,953) $ (1,069,376) $ 18,690,015
Comprehensive Income:
Net Income 3,706,441 3,706,441
Other Comprehensive Income,
Net of Tax 361,021 361,021
Total Comprehensive Income
Cash Dividends Declared (577,432) (577,432)
Treasury Stock Purchases (12,181) (711,723) (711,723)
--------------------------------------------------------------------------------------------------
Balance at 9/30/00 793,987 $ 2,239,775 $ 1,993,574 $ 22,444,004 $ (4,500,676) $ (708,355) $ 21,468,322
==================================================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For Three Months Ended September 30,
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income ............................................................................... $ 1,275,856 $ 1,181,582
----------- -----------
Other Comprehensive Income, Before Tax:
Unrealized Holding Gain(Loss) Arising During the Period ............................. 745,221 (186,926)
Less: Reclassification Adjustment for Gains Included in Net Income ................. -- --
----------- -----------
745,221 (186,926)
Income Tax Related to Other Comprehensive Income .................................... 312,993 (78,509)
----------- -----------
Other Comprehensive Income, Net of Tax .............................................. 432,228 (108,417)
----------- -----------
Total Comprehensive Income ..................................................... $ 1,708,084 $ 1,073,165
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For Nine Months Ended September 30,
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net Income ............................................................................... $ 3,706,441 $ 3,167,627
----------- -----------
Other Comprehensive Income, Before Tax:
Unrealized Holding Gain(Loss) Arising During the Period ............................. 622,450 (1,643,038)
Less: Reclassification Adjustment for Gains Included in Net Income ................. -- --
----------- -----------
622,450 (1,643,038)
Income Tax Related to Other Comprehensive Income .................................... 261,429 (690,076)
----------- -----------
Other Comprehensive Income, Net of Tax .............................................. 361,021 (952,962)
----------- -----------
Total Comprehensive Income ..................................................... $ 4,067,462 $ 2,214,665
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For Three Months Ended September 30 ,
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income ................................................................................. $ 1,275,856 $ 1,181,582
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation on Premises and Equipment ............................................... 122,958 128,410
Provision for Possible Loan Losses ................................................... 150,000 90,000
(Gain) Loss on Sale of Investment Securities ......................................... 53,260 (472)
Amortization of Transition Obligation ................................................ 43,434 38,169
Gain on Other Real Estate Owned ...................................................... (10,106) 0
Increase in Interest Payable ......................................................... 86,122 142,179
(Increase) Decrease in Miscellaneous Payables and Accrued Expenses ................... (13,821) 228,940
Decrease in Fees and Commissions Receivable .......................................... 0 61,500
Increase in Interest Receivable ...................................................... (86,748) (211,175)
(Increase) Decrease in Prepaid Expenses .............................................. 177,421 (4,555)
(Increase) Decrease in Miscellaneous Receivable ...................................... 289,092 (72,032)
Decrease in Income Taxes Receivable .................................................. 55,878 106,193
Increase in Deferred Taxes ........................................................... (102,755) (6,836)
Decrease in Accumulated Post Retirement Benefit Obligation ........................... (6,005) (11,418)
Amortization of Investment Security Premiums and Accretion of Discounts .............. (222,272) (20,142)
Increase in Cash Surrender Value of Officer's Life Insurance Policies ................ (67,800) 0
------------ ------------
Cash Provided by Operating Activities ................................................ 1,744,514 1,650,343
------------ -------------
Cash Flows from Investing Activities
Proceeds from Disposition of Mortgage-Backed Securities:
Held to Maturity ................................................................... 602,906 485,037
Available for Sale ................................................................. 1,861,562 4,577,596
Proceeds from Disposition of Other Investment Securities:
Available for Sale ................................................................. 9,502,449 1,468,339
Purchase of Mortgage-Backed Securities
Available for Sale ................................................................. (2,925,938) (5,276,828)
Purchase of Other Investment Securities:
Available for Sale ................................................................. (1,018,900) (4,085,000)
Net Decrease in Federal Funds Sold ................................................... 950,000 12,900,000
Net Increase in Loans ................................................................ (13,612,334) (18,335,752)
Proceeds from Disposition of OREO Property ........................................... 135,106 0
Purchase of Equipment ................................................................ (157,581) (70,909)
Purchase of Treasury Stock ........................................................... (691,488) (37,366)
------------- -------------
Cash Used by Investing Activities .................................................... (5,354,218) (8,374,883)
------------- -------------
Cash Flows from Financing Activities
Net Increase in Demand Deposits, NOW Accounts
and Savings Accounts ............................................................... 993,457 4,446,562
Net Increase in Time Accounts ........................................................ 4,262,144 976,852
Cash Dividends Paid .................................................................. (193,396) (177,766)
Net Increase in Borrowed Funds ....................................................... 2,800,000 4,318,309
------------ -------------
Cash Provided by Financing Activities ................................................ 7,862,205 9,563,957
------------ -------------
Net Increase in Cash and Due from Banks .............................................. 4,252,501 2,839,417
Cash and Due from Banks, Beginning of Period ......................................... 8,719,669 8,831,921
------------ -------------
Cash and Due from Banks, End of Period ............................................... $ 12,972,170 $ 11,671,338
=========== ===========
Supplemental Disclosures of Cash Flow Information
Cash Paid During Period for:
Interest ............................................................................. $ 432,573 $ 333,546
Income Taxes ......................................................................... 776,550 601,000
Non-Cash Investing Activities
Unrealized (Gain) Loss on Securities Available for Sale ................................ $ (745,221) $ 186,926
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For Nine Months Ended September 30
2000 1999
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income ................................................................................. $ 3,706,441 $ 3,167,627
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation on Premises and Equipment ............................................... 382,441 382,532
Provision for Possible Loan Losses ................................................... 390,000 270,000
(Gain) Loss on Sale of Investment Securities ......................................... 54,619 (472)
Amortization of Transition Obligation ................................................ 61,434 90,219
Gain on Other Real Estate Owned ...................................................... (10,106) (29,281)
Increase in Interest Payable ......................................................... 105,934 182,645
Decrease in Miscellaneous Payables and Accrued Expenses .............................. (145,647) (30,806)
Decrease in Fees and Commissions Receivable .......................................... 0 56,700
Increase in Interest Receivable ...................................................... (139,526) (480,671)
Increase in Prepaid Expenses ......................................................... (437,607) (134,053)
Increase in Miscellaneous Receivable ................................................. (161,089) (24,047)
Decrease in Income Taxes Receivable .................................................. 188,093 77,357
Increase in Deferred Taxes ........................................................... (173,706) (105,925)
Decrease in Accumulated Post Retirement Benefit Obligation ........................... (26,816) (34,254)
Amortization of Investment Security Premiums and Accretion of Discounts .............. (358,351) 104,654
Increase in Cash Surrender Value of Officer's Life Insurance Policies ................ (180,800) 0
---------- ------------
Cash Provided by Operating Activities ................................................ 3,255,314 3,492,225
---------- ------------
Cash Flows from Investing Activities
Proceeds from Disposition of Mortgage-Backed Securities:
Held to Maturity ................................................................... 1,376,735 1,526,825
Available for Sale ................................................................. 3,958,292 9,421,629
Proceeds from Disposition of Other Investment Securities:
Held to Maturity ................................................................... 752,501 1,248,604
Available for Sale ................................................................. 13,586,799 2,477,714
Purchase of Mortgage-Backed Securities
Available for Sale ................................................................. (6,985,891) (15,492,452)
Purchase of Other Investment Securities:
Held to Maturity ................................................................... 0 (723,862)
Available for Sale ................................................................. (10,746,416) (8,285,400)
Purchase of Officer's Life Insurance Policies ........................................ (5,000,000) 0
Net Decrease in Federal Funds Sold ................................................... 10,350,000 8,100,000
Net Increase in Loans ................................................................ (48,915,753) (43,983,388)
Purchase of Equipment ................................................................ (357,981) (255,844)
Proceeds from Sale of Other Real Estate Owned ........................................ 135,106 246,423
Purchase of Treasury Stock ........................................................... (711,723) (903,594)
----------- -------------
Cash Used by Investing Activities .................................................... (42,558,331) (46,623,345)
----------- ------------
Cash Flows from Financing Activities
Net Increase in Demand Deposits, NOW Accounts
and Savings Accounts ............................................................... 22,247,175 13,620,502
Net Increase in Time Accounts ........................................................ 25,596,867 8,434,533
Cash Dividends Paid .................................................................. (564,233) (520,606)
Net Increase (Decrease) in Borrowed Funds ............................................ (5,200,000) 26,143,664
----------- -------------
Cash Provided by Financing Activities ................................................ 42,079,809 47,678,093
----------- -------------
Net Increase in Cash and Due from Banks .............................................. 2,776,792 4,546,973
Cash and Due from Banks, Beginning of Period ......................................... 10,195,378 7,124,365
------------ -------------
Cash and Due from Banks, End of Period ............................................... $ 12,972,170 $ 11,671,338
============ =============
Supplemental Disclosures of Cash Flow Information
Cash Paid During Period for:
Interest ............................................................................. $ 1,555,624 $ 634,038
Income Taxes ......................................................................... 2,073,460 1,850,290
Non-Cash Investing Activities
Unrealized (Gain) Loss on Securities Available for Sale ................................ $ (622,450) $ 1,643,038
</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Smithtown Bancorp, a one-bank holding company acquired 100% of the outstanding
common stock of Bank of Smithtown on November 1, 1984. Smithtown Bancorp and its
subsidiary Bank of Smithtown, filed an Annual report 10KSB for the period ended
December 31, 1999.
Bank of Smithtown's Balance Sheet remains very strong, with significant growth
since December 31, 1999. Total assets at September 30, 2000 and December 31,
1999 were $311,532,283 and $266,081,443 respectively, a 17.08% increase. Loan
growth during this same period was $49,067,447 or 27.72%, predominantly in the
real estate sector. Residential and commercial mortgages increased by
$53,376,583 or 48.62%, and now account for 72.50% of the total portfolio. The
Allowance for Possible Loan Loss Account remains adequate and represents 1.13%
of total loans and 155.6% of non-performing loans. The investment portfolio also
increased in volume, but asset allocation remained relatively constant during
the nine month period ended September 30, 2000. Sales were transacted during the
year resulting in a net loss for the period, with the portfolio in a better
position for future earnings. Federal Funds Sold decreased from $10,350,000 at
December 31, 1999 to $0 at September 30, 2000. These funds were used throughout
the year to support higher yielding loan growth. One OREO property was sold
during 2000, resulting in a $125,000 decrease in this asset category. Currently,
only one property remains in OREO. Other Assets increased by $5,663,595 since
December 31, 1999, primarily due to the purchase of bank-owned life insurance.
This insurance served to increase deferred retirement benefits paid to certain
officers and directors as well as to increase the yield on earning assets.
Significant changes can also be seen on the Liability side of the Balance Sheet.
Deposit growth has once again been at a very high level this year. The Bank has
seen an increase of $47,844,041 or 23.02% growth. This has been due to a very
competitive rate structure, various deposit promotion programs including new
deposit products and intense sales training for staff. The Bank' deposit mix has
also changed this year, with a higher volume of regular and jumbo CD's as well
as money market accounts. This is due to the introduction of new deposit
products. The Bank now offers a Prestige Money Market Account, a variable rate
product whose yield increases with increasing balances. Also part of its
standard list of products are Jumbo CD's, which are offered for CD balances over
$100,000 for terms under one year. Debit cards and credit cards were introduced
this year, and on-line banking is due to be launched during early November.
Borrowings have decreased during 2000, as deposits have provided most of the
funding for new loan growth. Capital levels are very strong with an increase
since December 31, 1999 of 14.86%. By all regulatory guidelines, the Bank's
capital ratios remain high and are detailed below.
September 30, 2000 December 31, 1999 Required Ratios
Tier I 9.91% 10.01% 6.00%
Tier II 1.14% 1.10% *
Total Risk Based 11.06% 11.10% 10.00%
Capital Ratio
Leverage Ratio 8.06% 7.26% 5.00%
(for the quarter)
*Tier II Capital is limited to 100% of Tier I Capital.
Net income for the nine month period ended September 30, 2000 was $3,706,441
compared to $3,167,627 for the same period in 1999. This represents a
17.01%ncrease. Reasons for the increase are derived from the previously
discussed adjustments to the Bank's Balance Sheet. Loan income grew by 47.48% as
a result of the growth in the portfolio. Yield on the portfolio is now at 9.37%.
Investment income also increased as a result of changes in the portfolio. Yield
on a tax equivalent basis on the Investment Portfolio is 7.10%. Interest income
on Federal Funds Sold increased by $155,578 or 53.03% due to a higher average
level of sales as well as a higher average yield of 5.89%. Overall interest
income grew by $4,458,467 or 35.99% over the comparable period in 1999. Average
yield on interest earning assets was 8.70% compared to 8.32% for the nine months
ended September 30, 2000 and 1999. Interest expense increased by $3,338.796 or
94.23% over the 1999 comparable period, due to a significantly higher cost of
funds. At September 30, 2000 and September 30, 1999 the Bank' cost of funds was
4.21% compared to 2.97%. This result was expected due to the competitive rate
structure necessary for deposit collection. Interest expense on deposits remains
significantly lower than comparable borrowing expenses. In spite of this
increased cost of funds, net interest margin has only declined from 5.36% to
5.33% at September 30, 1999 compared to the same period in 2000. Other
non-interest income increased by $233,599 or 9.88% due primarily to increased
loan origination fees. Operating expenses also increased by $428,331 or 7.20%
resulting from increased salary and benefit expenses as well as technology
expenses related to enhanced software and hardware products.
Two important measures of a Bank's profitability are its Return on Average
Assets (ROAA) and Return on Average Equity (ROAE). Both of these ratios remain
very high by all industry standards. As of September 30, 2000 the Bank's ROAA
and ROAE were 1.69 and 26.11. EPS for the nine month period ended September 30,
2000 was $4.61 compared to $3.90 during the same period in 1999, an 18.20%
increase. Management remains very confident that 2000 will once again witness
record earnings secured by high asset quality, a winning combination by any
standard.
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY REPORT
SEPTEMBER 30, 2000
TOTAL
3 MONTHS 3 -6 6 - 12 SENSITIVE
REVOLVING OR LESS MONTHS MONTHS WITHIN I YR
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS ................................ $ 0 $ 491,562 $ 85,970 $ 8,348,983 $ 8,926,515
LOANS:
INSTALLMENT ............................ 0 1,195,073 2,287,671 2,016,529 5,499,273
REAL ESTATE AND COMMERCIAL ............. 36,057,803 7,625,413 6,023,188 9,612,838 59,319,242
CASH AND DUE FROM BANKS .................... 261,581 0 0 0 261,581
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 ........................ $36,319,384 $ 9,312,048 $ 8,396,829 $19,978,350 $74,006,611
-------------------------------------------------------------------------------
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY REPORT(continue)
SEPTEMBER 30, 2000
1-3 3-5 5+
YEARS YEARS YEARS OTHER TOTAL
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
ASSETS:
INVESTMENTS .............................. $ 6,355,195 $ 7,484,749 $ 35,243,275 $ 3,635,700 $ 61,645,434
LOANS:
INSTALLMENT .......................... 3,169,793 4,685,602 10,412,369 0 23,767,037
REAL ESTATE AND COMMERCIAL ........... 24,424,101 60,166,703 56,900,146 126,133 200,936,325
CASH AND DUE FROM BANKS .................. 0 0 0 12,710,589 12,972,170
FIXED ASSETS ............................. 0 0 0 3,182,887 3,182,887
OTHER ASSETS ............................. 0 0 0 11,257,688 11,257,688
RESERVE FOR POSSIBLE LOAN LOSSES ......... 0 0 0 (2,560,842) (2,560,842)
NON-ACCRUALS ............................. 0 0 0 1,183,830 1,183,830
UNEARNED DISCOUNT ........................ 0 0 0 (852,246) (852,246)
-----------------------------------------------------------------------------------
TOTAL ...................... $ 33,949,089 $ 72,337,054 $ 102,555,790 $ 28,683,739 $ 311,532,283
-----------------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY REPORT
SEPTEMBER 30, 2000
TOTAL
3 MONTHS 3 -6 6 - 12 SENSITIVE
REVOLVING OR LESS MONTHS MONTHS WITHIN I YR
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
LIABILITIES:
SAVINGS .............................................. $ 0 $ 1,715,149 $ 1,715,149 $ 3,430,298 $ 6,860,596
MONEY MARKETS ........................................ 0 8,609,219 8,609,219 17,218,436 34,436,874
NOW .................................................. 0 908,746 908,746 1,817,492 3,634,984
TIME DEPOSITS OF $100,000 + .......................... 0 10,870,480 4,372,623 2,830,525 18,073,628
OTHER TIME DEPOSITS .................................. 0 10,371,906 10,263,450 15,254,030 35,889,386
DEMAND ............................................... 0 1,403,373 1,403,373 2,806,745 5,613,491
OTHER BORROWED MONEY ................................. 0 12,800,000 0 5,000,000 17,800,000
OTHER LIABILITIES .................................... 0 0 0 0 0
STOCKHOLDERS' EQUITY ................................. 0 0 0 0 0
------------------------------------------------------------------------
TOTAL ................................... $ 0 $ 46,678,873 $ 27,272,560 $ 48,357,526 $122,308,959
------------------------------------------------------------------------
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY REPORT(continue)
SEPTEMBER 30, 2000
1-3 3-5 5+
YEARS YEARS YEARS OTHER TOTAL
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
LIABILITIES:
SAVINGS .............................................. $ 13,721,192 $ 13,721,193 $ 0 $ 0 $ 34,302,981
MONEY MARKETS ........................................ 34,436,874 0 0 0 68,873,748
NOW .................................................. 7,269,963 7,269,963 0 0 18,174,910
TIME DEPOSITS OF $100,000 + .......................... 2,116,542 6,103,503 0 0 26,293,673
OTHER TIME DEPOSITS .................................. 5,029,593 10,951,114 0 0 51,870,093
DEMAND ............................................... 11,226,979 11,226,979 0 28,067,448 56,134,897
OTHER BORROWED MONEY ................................. 3,000,000 12,000,000 0 0 32,800,000
OTHER LIABILITIES .................................... 0 0 0 1,613,659 1,613,659
STOCKHOLDERS' EQUITY ................................. 0 0 0 21,468,322 21,468,322
------------------------------------------------------------------------
TOTAL .................................. $ 76,801,143 $ 61,272,752 $ 0 $ 51,149,429 $311,532,283
------------------------------------------------------------------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY REPORT
TOTAL
3 MONTHS 3 -6 6 - 12 SENSITIVE
REVOLVING OR LESS MONTHS MONTHS WITHIN I YR
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
INTEREST SENSITIVITY GAP
PER PERIOD 36,319,384 (37,366,825) (18,875,731) (28,379,176) (48,302,348)
GAP/TOTAL ASSETS 11.66% -11.99% -6.06% -9.11% -15.50%
CUMULATIVE INTEREST
SENSITIVITY GAP 36,319,384 (1,047,441) (19,923,172) (48,302,348) (48,302,348)
% OF CUMULATIVE GAP
TO TOTAL ASSETS 11.66% -0.34% -6.40% -15.50% -15.50%
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY REPORT(continue)
SEPTEMBER 30, 2000
1-3 3-5 5+
YEARS YEARS YEARS OTHER TOTAL
____________________________________________________________________________________________________________________________________
<S> <C> <C> <C> <C> <C>
INTEREST SENSITIVITY GAP
PER PERIOD (42,852,054) 11,064,302 102,555,790 (22,465,690)
GAP/TOTAL ASSETS -13.76% 3.55% 32.92%
CUMULATIVE INTEREST
SENSITIVITY GAP (91,154,402) (80,090,100) 22,465,690
% OF CUMULATIVE GAP
TO TOTAL ASSETS -29.26% -25.71% 7.21%
ASSUMPTIONS:
1) BALANCE SHEET FIGURES AS OF SEPTEMBER 30, 2000
2) SAVINGS AND NOW ACCOUNTS ASSUMED TO DECLINE OVER 5 YEAR PERIOD
3) MONEY MARKET ACCOUNTS ASSUMED TO DECLINE OVER 2 YEAR PERIOD
</TABLE>
<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 September 30,
2000, and its results of operations for the nine months and three months ended
September 30, 2000 and 1999 and its cash flows for the nine months and three
months ended September 30, 2000 and 1999. 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, 1999.
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:
September 30, 2000 $61,675,342
December 31, 1999 $62,660,042
<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
November 13, 2000
/s/ Bradley E. Rock
________________________
Bradley E. Rock, President
November 13, 2000
/s/ Anita M. Florek
______________________
Anita Florek, Treasurer
