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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended March 31, 2003
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: 3,023,609 Shares of Common
Stock ($1.25 Par Value) Outstanding as of April 29, 2003.
SMITHTOWN BANCORP
INDEX
Part I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
March 31, 2003 and December 31, 2002
Consolidated Statements of Income
Three months ended March 31, 2003 and 2002
Consolidated Statements of Comprehensive Income
Three months ended March 31, 2003 and 2002
Consolidated Statements of Changes in Stockholders' Equity
Three months ended March 31, 2003 and 2002
Consolidated Statements of Cash Flows
Three months ended March 31, 2003 and 2002
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - OTHER INFORMATION
Item 1. Legal Proceedings - None
Item 2. Change in Securities and Use of Proceeds - Not Applicable
Item 3. Defaults upon Senior Securities - None
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information - None
Item 6. Exhibits and Reports on Form 8-K
(1) Exhibits
Exhibit Number Referred to Item 601 of
Regulation S-K Description of Exhibit
99.1 Certification of Chief Executive
Officer pursuant to 18 U.S.C.
Section 1350
99.2 Certification of Chief Financial
Officer pursuant to 18 U.S.C.
Section 1350
Signatures
Certifications
SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEETS
As of As of
March 31, 2003 December 31, 2002
(Unaudited) (Audited)
- ------------------------------------------------------------------------------------------------------------------------------------
Assets
Cash and Due from Banks ...................................................................... $ 11,017,890 $ 8,169,673
Investment Securities:
Investment Securities Held to Maturity:
Mortgage - Backed Securities ............................................................ 495,307 579,622
Obligations of State and Political Subdivisions ......................................... 2,420,586 2,381,890
------------ ------------
Total Investment Securities Held to Maturity .......................................... 2,915,893 2,961,512
------------ ------------
(Estimated Fair Value $3,063,541 and $3,118,644
at March 31, 2003 and December 31, 2002, respectively)
Investment Securities Available for Sale:
Obligations of U.S. Government Agencies ................................................. 11,120,439 11,226,328
Mortgage - Backed Securities ............................................................ 13,660,570 15,905,791
Obligations of State and Political Subdivisions.......................................... 18,674,961 20,893,082
Other Securities ........................................................................ 7,375,140 7,222,864
------------ ------------
Total Investment Securities Available for Sale (At Estimated Fair Value) .............. 50,831,110 55,248,065
------------ ------------
Total Investment Securities ............................................................. 53,747,003 58,209,577
----------- ------------
Federal Funds Sold ........................................................................... 18,228,894 2,522,578
----------- ------------
Loans ........................................................................................ 363,640,882 358,171,477
Less: Unearned Discount ................................................................. 99,249 121,456
Reserve for Possible Loan Losses .................................................. 4,008,180 3,945,593
------------ ------------
Loans, Net ................................................................................... 359,533,453 354,104,428
Equity Investment in SMTB .................................................................... 19,700 2,623
Bank Premises and Equipment .................................................................. 9,364,238 8,780,182
Other Assets ................................................................................. 20,281,612 20,014,176
------------ ------------
Total Assets ................................................................................. $472,192,790 $451,803,237
============ ============
Liabilities
Deposits:
Demand .................................................................................. $ 73,309,467 $ 72,417,182
Money Market ............................................................................ 140,402,192 126,707,767
NOW ..................................................................................... 28,094,837 25,516,385
Savings ................................................................................. 45,983,311 45,852,116
Time Deposits ........................................................................... 108,588,884 107,426,224
------------ ------------
Total Deposits ........................................................................ 396,378,691 377,919,674
(Estimated Fair Value $396,378,691 and $377,919,674
at March 31, 2003 and December 31, 2002, respectively)
Dividend Payable ............................................................................. 272,412 229,251
Other Borrowed Funds ......................................................................... 38,000,000 38,000,000
Other Liabilities ............................................................................ 2,519,139 1,710,026
------------ ------------
Total Liabilities ....................................................................... 437,170,242 417,858,951
------------ ------------
Stockholders' Equity
Common Stock - $1.25 Par Value: .............................................................. 2,239,775 2,239,775
(7,000,000 Shares Authorized; 1,791,820 Shares Issued)
Retained Earnings ............................................................................ 37,603,451 35,887,008
Additional Paid in Capital ................................................................... 1,993,574 1,993,574
Accumulated Other Comprehensive Income ....................................................... 757,986 733,640
------------ ------------
Total ................................................................................... 42,594,786 40,853,997
Less: Treasury Stock .................................................................... 7,572,238 6,909,711
------------ ------------
(280,115 and 268,071 Shares at Cost at March 31, 2003 and
December 31, 2002, respectively)
Total Stockholders' Equity .............................................................. 35,022,548 33,944,286
------------ ------------
Total Liabilities and Stockholders' Equity ................................................... $472,192,790 $451,803,237
============ ============
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS of Income
(unaudited)
For Three Months Ended
March 31, 2003 March 31, 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Income
Interest and Fees on Loans ............................................................. 6,293,394 5,491,554
Interest and Dividends on:
Obligations of U.S. Government Agencies ........................................... 93,322 115,938
Mortgage - Backed Securities ...................................................... 187,358 375,024
Obligations of State & Political Subdivisions ..................................... 247,484 274,004
Other Securities .................................................................. 125,993 77,650
Interest on Federal Funds Sold ......................................................... 23,682 28,651
Interest on Balances Due From Depository Institutions .................................. 263 285
Other Interest Income .................................................................. 28,600 26,708
---------- ---------
Total Interest Income ............................................................. 7,000,096 6,389,814
---------- ---------
Interest Expense
Money Market Accounts .................................................................. 406,953 445,506
Savings ................................................................................ 70,353 74,999
Time Deposits $100,000 and Over ....................................................... 375,830 337,276
Other Time Deposits .................................................................... 636,931 451,419
Interest on Other Borrowed Money ....................................................... 355,770 441,821
---------- ---------
Total Interest Expense ............................................................ 1,845,837 1,751,021
---------- ---------
Net Interest Income .................................................................... 5,154,259 4,638,793
Provision for Possible Loan Losses ..................................................... 80,000 210,000
---------- ---------
Net Interest Income After Provision for Possible Loan Losses ........................... 5,074,259 4,428,793
--------- ---------
Other Non-Interest Income
Trust Department Income ................................................................ 100,760 110,063
Service Charges on Deposit Accounts .................................................... 455,275 424,834
Other Income ........................................................................... 655,510 772,817
Net Gain on Sale of Investment Securities .............................................. 10,133 0
Net Income from Equity Investment ...................................................... 17,078 9,265
---------- ---------
Total Other Non - Interest Income ................................................. 1,238,756 1,316,979
---------- ---------
Other Operating Expenses
Salaries ............................................................................... 1,488,171 1,276,028
Pension and Other Employee Benefits .................................................... 332,663 263,937
Net Occupancy Expense of Bank Premises ................................................. 376,855 236,738
Furniture and Equipment Expense ........................................................ 249,409 222,713
Miscellaneous Operating Expense ........................................................ 755,383 789,055
---------- ---------
Total Other Operating Expense ..................................................... 3,202,481 2,788,471
---------- ---------
Income Before Income Taxes ............................................................. 3,110,534 2,957,301
Provision for Income Taxes ............................................................. 1,121,679 1,059,051
---------- ---------
Net Income ............................................................................. 1,988,855 1,898,250
========== =========
Earnings Per Share
Net Income ............................................................................. 1.31 1.23
Cash Dividends Declared ................................................................ 0.18 0.15
Weighted Average Shares Outstanding .................................................... 1,517,488 1,538,170
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
For Three Months Ended March 31,
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Net Income ................................................................................ $ 1,988,855 $ 1,898,250
----------- -----------
Other Comprehensive Income, Before Tax:
Unrealized Holding Gain Arising During the Period .................................... 41,204 58,824
Less: Reclassification Adjustment for Gains Included in Net Income .................. 0 0
------------ -----------
41,204 58,824
Income Tax Related to Other Comprehensive Income ..................................... 16,858 24,706
----------- -----------
Other Comprehensive Income, Net of Tax ............................................... 24,346 34,118
------------ -----------
Total Comprehensive Income ........................................................ $ 2,013,201 $ 1,932,368
============ ===========
SMITHTOWN BANCORP
CONSOLIDATED STATEMENT 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
-----------------------------------------------------------------------------------------------
Balance at 12/31/2001 ......... 1,539,257 $ 2,239,775 $ 1,993,574 $ 28,765,704 $ (6,095,915) $ 95,645 $ 26,998,783
Comprehensive Income:
Net Income ................. 1,898,250 1,898,250
Other Comprehensive Income,
Net of Tax ............... 34,118 34,118
------------
Total Comprehensive Income 1,932,368
Cash Dividends Declared ... (230,581) (230,581)
Treasury Stock Purchases ...... (3,490) (146,950) (146,950)
------------------------------------------------------------------------------------------------
Balance at 3/31/2002 .......... 1,535,767 $ 2,239,775 $ 1,993,574 $ 30,433,373 $(6,242,865) $ 129,763 $ 28,553,620
================================================================================================
Balance at 12/31/2002 ......... 1,523,749 $ 2,239,775 $ 1,993,574 $ 35,887,008 $(6,909,711) $ 733,640 $ 33,944,286
Comprehensive Income:
Net Income ................. 1,988,855 1,988,855
Other Comprehensive Income,
Net of Tax ............... 24,346 24,346
-------------
Total Comprehensive Income 2,013,201
Cash Dividends Declared ... (272,412) (272,412)
Treasury Stock Purchases ...... (12,044) (662,527) (662,527)
------------------------------------------------------------------------------------------------
Balance at 3/31/2003 .......... 1,511,705 $ 2,239,775 $ 1,993,574 $ 37,603,451 $(7,572,238) $ 757,986 $ 35,022,548
=================================================================================================
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For Three Months Ended March 31,
2003 2002
- ------------------------------------------------------------------------------------------------------------------------------------
Cash Flows from Operating Activities
Net Income ................................................................................. $ 1,988,855 $ 1,898,250
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation on Premises and Equipment ............................................... 153,555 117,128
Provision for Possible Loan Losses ................................................... 80,000 210,000
Net Gain on Sale of Investment Securities ............................................ (10,133) 0
Amortization of Transition Obligation ................................................ (597) 0
Increase in Interest Payable ......................................................... 106,813 112,969
Increase in Miscellaneous Payables and Accrued Expenses .............................. 90,537 96,864
Increase in Fees and Commissions Receivable .......................................... (9,676) (13,290)
Increase in Interest Receivable ...................................................... (209,538) (318,968)
Increase in Prepaid Expenses ......................................................... (633,633) (612,757)
(Increase) Decrease in Miscellaneous Receivable ...................................... 413,539 (332,154)
Decrease in Income Taxes Receivable .................................................. 935,109 960,443
Increase in Deferred Taxes ........................................................... (48,619) (114,187)
Decrease in Accumulated Post Retirement Benefit Obligation ........................... 3,229 6,528
Amortization of Investment Security Premiums and Accretion of Discounts .............. 41,322 (61,844)
Net Gain on Investment in SMTB Financial Group, LLC .................................. (17,078) (9,265)
------------ ------------
Cash Provided by Operating Activities ................................................ 2,883,685 1,939,717
------------ ------------
Cash Flows from Investing Activities
Proceeds from Disposition of Mortgage-Backed Securities:
Held to Maturity ................................................................... 84,316 110,607
Available for Sale ................................................................. 2,153,349 2,855,884
Proceeds from Disposition of Other Investment Securities:
Held to Maturity ................................................................... 0 35,911
Available for Sale ................................................................. 2,694,190 2,581,750
Purchase of Other Investment Securities:
Held to Maturity ................................................................... (40,000) 0
Available for Sale ................................................................. (419,264) (193,096)
Federal Funds Sold, Net .............................................................. (15,706,316) (10,634,388)
Loans Made to Customers, Net ......................................................... (5,509,024) (18,855,062)
Distribution from SMTB Financial Group, LLC .......................................... 0 30,000
Purchase of Premises and Equipment ................................................... (737,612) (1,915,273)
Increase in Cash Surrender Value of Officer's Life Insurance Policies ................ (122,346) (153,266)
------------ ------------
Cash Used by Investing Activities .................................................... (17,602,707) (26,136,933)
------------ ------------
Cash Flows from Financing Activities
Net Increase in Demand Deposits, NOW and Savings Accounts ............................ 17,296,357 15,717,118
Net Increase (Decrease) in Time Accounts ............................................. 1,162,660 (3,716,732)
Cash Dividends Paid .................................................................. (229,251) (200,103)
Securities Sold Under Agreements to Repurchase and Other Borrowings, Net ............. 0 13,250,000
Purchase of Treasury Stock ........................................................... (662,527) (146,950)
------------ ------------
Cash Provided by Financing Activities ................................................ 17,567,239 24,903,333
------------ ------------
Net Increase in Cash and Due from Banks .............................................. 2,848,217 706,117
Cash and Due from Banks, Beginning of Period ......................................... 8,169,673 10,911,762
------------ ------------
Cash and Due from Banks, End of Period ............................................... $ 11,017,890 $ 11,617,879
============ ============
Supplemental Disclosures of Cash Flow Information
Cash Paid During Period for:
Interest ............................................................................. $ 263,170 $ 282,472
Income Taxes ......................................................................... 223,913 212,525
Schedule of Noncash Investing Activities
Unrealized Gain on Securities Available for Sale ....................................... 41,204 58,824
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, 2003 and December 31, 2002 and its results of operations for the three
months ended March 31, 2003 and 2002 and its cash flows for the three months
ended March 31, 2003 and 2002. 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, 2002.
Certain reclassifications have been made to the prior year's financial
statements to conform to the current period presentation. These
reclassifications had no effect on previously reported results of operations or
retained earnings.
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, 2003 $53,894,651
December 31, 2002 $58,366,709
Management's Discussion and Analysis of Financial Condition and Results of
Operation
This report may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements are based on current expectations, but actual results may differ
materially from anticipated future results. Forward-looking statements may be
identified by the use of the words 'believe', 'expect', 'anticipate', 'project',
'estimate', 'will be', 'will continue', 'will likely result', or similar
expressions. The Company's ability to predict results of the actual effect of
future strategic plans is inherently uncertain. Factors that could have a
material adverse effect on the operations of the Company as well as its
subsidiaries include but are not limited to changes in: general economic
conditions, interest rates, deposit flows, loan demand, competition, accounting
principals and guidelines, and governmental, regulatory and technological
factors affecting the Company's operations, pricing, products and services. The
factors included here are not exhaustive. Other sections of this report may
include additional factors that could adversely impact the Company's
performance.
Investors are cautioned not to place undue reliance on forward-looking
statements as a prediction of actual results. Except as required by applicable
law or regulation, the Company undertakes no obligation to republish or revise
forward-looking statements to reflect events or circumstances after the date
hereof or to reflect the occurrences of unanticipated results. Investors are
advised, however, to consult any further disclosures the Company makes on
related subjects in our reports to the Securities Exchange Commission.
Bank of Smithtown is a one-bank holding company formed in 1984. Its income is
derived primarily from the operations of its subsidiary, Bank of Smithtown.
The Bank's Balance Sheet continued to grow throughout the first quarter of 2003.
Total assets grew by 4.51% from $451,708,581 to $472,192,790 during the period
from January 1, 2003 to March 31, 2003. During the first quarter of 2003 loan
growth increased by 1.53% to $363,640,882 at March 31, 2003. This performance is
attributable to the post-holiday lull, locally poor weather conditions, and the
impending war with Iraq. Loans represent 77.0% of total assets at March 31, 2003
as compared to 79.3% at December 31, 2002. Real estate loans continue to be the
largest component of the loan portfolio, representing 90.76% of total loans. Due
to the continued pressure of low market rates, the yields on interest earning
assets fell during the first quarter of 2003. The yield on loans was 7.01% and
7.35% at March 31, 2003 and December 31, 2002, respectively. The yield on
investments was 5.81% and 5.94% at March 31, 2003 and December 31, 2002,
respectively. The yield on Federal Funds Sold was 1.19% and 1.56% at March 31,
2003 and December 31, 2002, respectively. The bank's net interest margin through
the first three months of 2003 was 5.00% down from 5.14% at December 31, 2002.
The overall yield on interest earning assets was 6.74% through the first quarter
of 2003, as compared to 7.17% for the same period in 2002. During the first
three months of 2003, premises and equipment increased by approximately
$584,000. This change is attributable to the opening of a new store front
branch. From the period January 1, 2003 to March 31, 2003, the liability side of
the Balance Sheet increased by approximately $19,300,000. Deposit growth
accounted for approximately $18,500,000 of this increase which was attributable
to the competitive pricing of deposit products and successful sales efforts put
forth by the retail staff. The Bank's overall cost of funds for the three months
ended March 31, 2003 was 2.11%, as compared to 2.29% at December 31, 2002. The
change in stockholders' equity was the result of net income of $1,988,855,
dividends declared of $272,412, treasury stock purchases of $662,527 and other
comprehensive income of $24,346. All ratios remain very strong. The Return on
Average Assets was 1.79% for the first quarter of 2003 as compared to 1.93% for
the first quarter of 2002. The Return on Average Equity was 24.73% for the first
quarter of 2003 compared to 27.34% for the same period in 2002. Leverage capital
at March 31, 2003 and 2002 was 7.90% and 7.24%, respectively. Total Risk Based
Capital was 10.61% and 10.31% at the end of the first quarter of 2003 and 2002,
respectively.
Smithtown Bancorp's most recent two-for-one stock split was completed on April
18, 2003. It was the third two-for-one stock split of the company's shares
during the past five years. The shares are traded on the OTC Bulletin Board,
which is an electronic market owned by and operated by NASDAQ.
Net income for the first quarter 2003 was $1,988,855 compared to $1,898,250, for
the three months ended March 31, 2003, an increase of 4.77%. Earnings per share
for the first quarter was $1.31, as compared to $1.23 for the same quarter in
2002. Interest income on loans increased by 9.55% as compared to the same
quarter in 2002. The level of interest bearing deposits was greater during the
first quarter of 2003 than that of the first quarter of 2002. This caused total
interest expense to increase by 5.41% over that of the same quarter of 2002.
Non-interest income decreased by $78,223 or 5.94% for the three months ended
March 31, 2003 compared to the same period in 2002. This decrease is primarily
the result of reduction in loan fees collected during the first quarter of 2003
verses that of the same period in 2002. The Provision for Possible Loan Losses,
a direct charge to earnings, decreased to $80,000 for the three-month period
ending March 31, 2003, as compared to $210,000 for the same three-month period
in 2002. The level of the Reserve for Possible Loan Losses at March 31, 2003 is
considered adequate since it surpasses management's estimate of potential loss
on internally classified loans plus allocations to provide for components of the
loan portfolio that were not classified. At March 31, 2003, loans internally
classified as Sub-Standard totaled $1,919,451. During April 2003, approximately
$1,000,000 of that balance has been recovered along with related expenses
associated with the recovery efforts. Management also considered the following
factors in determining the adequacy of the Reserve for Possible Loan Losses at
March 31, 2003: (a) Reserves against all classified loans at March 31, 2003 now
stands at 209%, up from 183% at December 31, 2002; (b) Reserve coverage of
Non-Performing loans at March 31, 2003 increased to 312%, up from 208% at
December 31, 2002; (c) Non-performing loans totaled approximately $1,285,000 at
March 31, 2003, down 32% from December 31, 2002; (d) As a percentage of total
loans, non-performing loans at March 31, 2003 has decreased to 0.35% from 0.53%
at December 31, 2002; and (e) Delinquency of accruing loans, 30 to 89 days at
March 31, 2003 has decreased to approximately $88,000 from approximately
$1,342,000 at December 31, 2002. Management is confidant that the reserve for
loan loss account provides adequate coverage for any known losses in the loan
portfolio. Other operating expenses increased by 14.85% due to increased salary
and benefit expenses as well as increased equipment, advertising, and business
development expenses related to the opening of the new branch.
As we enter the second quarter, management remains very optimistic about the
bank's performance during 2003.
Quantitative and Qualitative Disclosures About Market Risk
Quantitative and Qualitative Disclosures About Market Risk Liquidity provides
the source of funds for anticipated and unanticipated deposit outflow and loan
growth. The Bank's primary sources of liquidity include deposits, repayments of
loan principal, maturities of investment securities, principal reductions on
Mortgage-Backed Securities, "unpledged" securities available for sale, overnight
federal funds sold, and borrowing potential from correspondent banks. The
primary factors affecting these sources of liquidity are their immediate
availability if necessary and their market rate of interest, which can cause
fluctuations in levels of deposits and prepayments on loans and securities. The
method by which the Bank controls its liquidity and interest rate sensitivity is
through asset liability management. The goal of asset liability management is
the combination of maintaining adequate liquidity levels without sacrificing
earnings. The Bank matches the maturity of its assets and liabilities in a way
that takes advantage of the current and anticipated rate environment. Asset
liability management is of great concern to management and is reviewed on an
ongoing basis. The Chief Executive Officer, Chief Financial Officer, Chief
Lending Officer, Chief Commercial Lending Officer, and the Chief Retail Officer
of the Bank serve on the Asset Liability Management Committee. Reports detailing
current liquidity position and projected liquidity as well as projected funding
requirements are reviewed monthly, or as often as deemed necessary.
Semi-annually, the Bank collects the necessary information to run an income
simulation model, which tests the Bank's sensitivity to fluctuations in interest
rates. These rate fluctuations are large and immediate and actually reflect the
Bank's earnings under these simulations. These income simulations are reviewed
by the Board of Directors. The simulation performed during 2002 reflected
minimal sensitivity to upward or downward rate fluctuations. Interest income,
margins, and net income remain stable regardless of changes in market interest
rates. These models then lead to investment, loan, and deposit strategies and
decisions for earnings maximization within acceptable risk levels.
The Bank's market risk is primarily its exposure to interest rate risk. Interest
rate risk is the effect that changes in interest rates have in future earnings.
The principal objective in managing interest rate risk is to maximize net
interest income within acceptable levels of risk that have been previously
established by policy.
The following table sets forth the amounts of estimated cash flows for the
various interest earning assets and interest bearing liabilities that are
sensitive to changes in interest rates at March 31, 2003 and 2002. Adjustable
rate assets are included in the period in which interest rates are next
scheduled to adjust rather than in the period in which they are due. Money
Market deposit accounts are assumed to decline over a two-year period. Savings
and NOW deposit accounts are assumed to decline over a five-year period.
AS of March 31, 2003 Expected Maturity Between
4/1/03 - 12/31/03 1/1/04 - 12/31/04 1/1/05 - 12/31/05 1/1/06 - 12/31/06
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Balance Rate (%) Balance Rate (%) Balance Rate (%) Balance Rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
Other Financial Instruments
Interest Earning Assets
Investments
Available for Sale (Fair Value) $ 15,545 5.84 $1,832 4.49 $ 3,622 4.64 $ 573 4.33
Held to Maturity (Book Value) 880 4.88 262 5.04 437 3.15 671 5.17
Federal Funds Sold 18,229 1.13 0 0.00 0 0.00 0 0.00
Loans:
Fixed Rate
Real Estate Loans, Construction 0 0.00 175 9.50 0 0.00 0 0.00
Real Estate Loans, Other
Commercial 27 11.00 99 8.70 1,541 7.99 58 9.50
Residential 10 11.55 14 8.91 242 8.74 209 7.78
Commercial and Industrial Loans 2,956 6.48 2,211 7.17 828 10.03 954 8.72
Loans to Individuals for 1,484 5.90 541 8.54 267 12.00 236 11.24
Household, Family and
Other Personal Expenditures
Variable Rate
Real Estate Loans, Construction 64,245 5.90 0 0.00 0 0.00 0 0.00
Real Estate Loans, Other
Commercial 12,291 7.46 20,276 7.62 13,063 8.43 35,608 8.09
Residential 20,427 4.45 2,215 7.77 1,560 8.21 2,467 7.95
Commercial and Industrial Loans 15,130 5.51 850 6.23 2,301 5.40 346 6.62
Loans to Individuals for 0 0.00 33 5.25 0 0.00 0 0.00
Household, Family and
Other Personal Expenditures
---------- -------- ------- --------
Total Interest Earning Assets $151,224 $28,508 $23,861 $ 41,122
========== ======== ======= =========
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continued)
Expected Maturity Between
1/1/07 - 12/31/07 Thereafter
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted
Average Average Fair
Balance Rate (%) Balance Rate (%) Value
- -----------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
Other Financial Instruments
Interest Earning Assets
Investments
Available for Sale (Fair Value) $ 0 0.00 $ 29,259 5.72 $50,831
Held to Maturity (Book Value) 126 5.50 540 6.45 3,064
Federal Funds Sold 0 0.00 0 0.00 18,229
Loans:
Fixed Rate
Real Estate Loans, Construction 0 0.00 0 0.00 175
Real Estate Loans, Other
Commercial 159 7.00 20,569 7.50 22,564
Residential 64 8.08 33,832 7.01 34,375
Commercial and Industrial Loans 1,282 7.18 877 8.36 9,153
Loans to Individuals for 312 11.42 220 16.85 3,082
Household, Family and
Other Personal Expenditures
Variable Rate
Real Estate Loans, Construction 0 0.00 0 0.00 64,245
Real Estate Loans, Other
Commercial 56,458 7.57 25,057 7.65 163,865
Residential 9,700 7.27 9,587 6.06 46,038
Commercial and Industrial Loans 1,291 5.70 1,425 6.69 21,343
Loans to Individuals for 0 0.00 33 8.25 67
Household, Family and
Other Personal Expenditures
---------- ---------
Total Interest Earning Assets $ 69,392 $121,399
========== =========
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
Expected Maturity Between
4/1/03 - 12/31/03 1/1/04 - 12/31/04 1/1/05 - 12/31/05 1/1/06 - 12/31/06
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Balance Rate (%) Balance Rate (%) Balance Rate (%) Balance Rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Bearing Liabilities
Deposits
Savings $ 6,897 0.54 $ 9,197 0.54 $ 9,197 0.54 $ 9,197 0.54
Money Market 52,651 1.23 70,201 1.23 17,550 1.23 0 0.00
NOW 4,214 0.15 5,619 0.15 5,619 0.15 5,619 0.15
Time Deposits of 100,000 or more 11,429 1.64 9,602 3.89 6,174 6.60 1,123 4.76
Other Time Deposits 17,263 2.84 28,431 3.91 11,686 6.27 3,304 4.32
Other Borrowings 7,000 6.40 21,000 3.10 5,000 2.89 0 0.00
-------- -------- ---------- ---------
Total Interest Bearing Liabilities $ 99,454 $144,050 $ 55,226 $ 19,243
========= ======== ========== =========
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continued)
Expected Maturity Between
1/1/07 - 12/31/07 Thereafter
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted
Average Average Fair
Balance Rate (%) Balance Rate (%) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Interest Bearing Liabilities
Deposits
Savings $ 9,197 0.54 $ 2,298 0.54 $ 45,983
Money Market 0 0.00 0 0.00 140,402
NOW 5,619 0.15 1,405 0.15 28,095
Time Deposits of 100,000 or more 7,400 4.65 0 0.00 35,728
Other Time Deposits 10,830 4.48 727 3.67 72,241
Other Borrowings 0 0.00 5,000 3.67 38,000
-------- --------
Total Interest Bearing Liabilities $ 33,046 $ 9,430
========= ========
AS of March 31, 2002 Expected Maturity Between
4/1/02 - 12/31/02 1/1/03 - 12/31/03 1/1/04 - 12/31/05 1/1/05 - 12/31/05
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Balance Rate (%) Balance Rate (%) Balance Rate (%) Balance Rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
Other Financial Instruments
Interest Earning Assets
Investments
Available for Sale (Fair Value) $ 11,104 5.34 $ 463 4.00 $ 1,679 4.61 $ 3,480 5.19
Held to Maturity (Book Value) 1,384 5.67 735 5.40 252 5.11 427 5.09
Federal Funds Sold 40 1.65 0 0.00 0 0.00 0 0.00
Loans:
Fixed Rate
Real Estate Loans, Construction 0 0.00 0 0.00 175 9.50 0 0.00
Real Estate Loans, Other
Commercial 6 10.50 400 9.10 172 8.77 5,970 8.51
Residential 33 10.05 35 11.54 293 8.49 349 8.76
Commercial and Industrial Loans 4,058 8.04 449 9.08 759 9.43 1,301 10.15
Loans to Individuals for
Household, Family and
Other Personal Expenditures 131 9.80 263 10.82 531 10.95 406 11.47
Variable Rate
Real Estate Loans, Construction 45,353 6.21 0 0.00 0 0.00 0 0.00
Real Estate Loans, Other
Commercial 7,139 8.22 12,718 7.94 21,395 7.95 24,044 8.47
Residential 15,050 4.97 1,102 7.96 3,750 7.96 438 8.10
Commercial and Industrial Loans 12,276 5.98 210 8.34 1,329 6.55 592 7.42
Loans to Individuals for 0 0.00 0 0.00 0 0.00 0 0.00
Household, Family and
Other Personal Expenditures
---------- -------- ------- --------
Total Interest Earning Assets $ 96,574 $16,375 $30,335 $ 37,007
========== ======== ======= ========
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continued)
Expected Maturity Between
1/1/06 - 12/31/06 Thereafter
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted
Average Average Fair
Balance Rate (%) Balance Rate (%) Value
- -----------------------------------------------------------------------------------------------------------------------------------
(In Thousands)
Other Financial Instruments
Interest Earning Assets
Investments
Available for Sale (Fair Value) $ 573 4.33 $ 40,298 5.45 $57,598
Held to Maturity (Book Value) 661 5.19 983 6.35 4,596
Federal Funds Sold 0 0.00 0 0.00 40
Loans:
Fixed Rate
Real Estate Loans, Construction 0 0.00 21 8.75 198
Real Estate Loans, Other
Commercial 294 11.70 15,364 8.03 22,498
Residential 3,359 7.75 38,193 7.60 42,851
Commercial and Industrial Loans 1,283 9.43 715 9.12 4,557
Loans to Individuals for
Household, Family and
Other Personal Expenditures 267 11.37 805 9.40 2,309
Variable Rate
Real Estate Loans, Construction 0 0.00 0 0.00 45,353
Real Estate Loans, Other
Commercial 37,528 8.11 31,232 7.93 127,840
Residential 5,757 8.29 3,408 7.00 14,550
Commercial and Industrial Loans 406 7.66 1,099 8.07 3,665
Loans to Individuals for 0 0.00 42 8.75 42
Household, Family and
Other Personal Expenditures
---------- ---------
Total Interest Earning Assets $ 50,128 $132,160
========== =========
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
Expected Maturity Between
4/1/02 - 12/31/02 1/1/03 - 12/31/03 1/1/04 - 12/31/04 1/1/05 - 12/31/05
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted Weighted Weighted
Average Average Average Average
Balance Rate (%) Balance Rate (%) Balance Rate (%) Balance Rate (%)
- ------------------------------------------------------------------------------------------------------------------------------------
Interest Bearing Liabilities
Deposits
Savings $ 5,897 0.62 $ 7,863 0.62 $ 7,863 0.62 $ 7,863 0.62
Money Market 40,987 1.73 68,311 1.73 0 0.00 0 0.00
NOW 4,023 0.30 5,364 0.30 5,364 0.30 5,364 0.30
Time Deposits of 100,000 or more 25,615 2.50 1,756 2.14 2,005 6.22 5,378 6.81
Other Time Deposits 21,988 3.27 5,527 2.48 4,568 4.46 9,099 6.72
Other Borrowings 27,000 2.56 7,000 6.40 19,000 3.40 0 0.00
-------- -------- ---------- ---------
Total Interest Bearing Liabilities $ 125,510 $ 95,821 $ 38,800 $ 27,704
========= ======== ========== =========
SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continued)
Expected Maturity Between
1/1/06 - 12/31/06 Thereafter
- ------------------------------------------------------------------------------------------------------------------------------------
Weighted Weighted
Average Average Fair
Balance Rate (%) Balance Rate (%) Value
- -----------------------------------------------------------------------------------------------------------------------------------
Interest Bearing Liabilities
Deposits
Savings $ 7,863 0.62 $ 1,966 0.62 $ 39,315
Money Market 0 0.00 0 0.00 109,298
NOW 5,364 0.30 1,342 0.30 26,821
Time Deposits of 100,000 or more 1,080 5.07 442 4.31 36,276
Other Time Deposits 2,365 4.81 835 4.16 44,382
Other Borrowings 0 0.00 0 0.00 53,000
-------- --------
Total Interest Bearing Liabilities $ 16,672 $ 4,585
========= ========
CONTROLS AND PROCEDURES
Under the supervision of and with the participation of the Company's
management, including the Chief Executive Officer and Chief Financial Officer,
the Company evaluated the effectiveness of the design and operation of its
disclosure controls and procedures (as defined in Rule 13a-14(c) under the
Exchange Act) as of a date (the "Evaluation Date") within 90 days prior to the
filing date of this report. Based upon that evaluation, the Chief Executive
Officer and Chief Financial Officer concluded that, as of the Evaluation Date,
these disclosure controls and procedures are effective in timely alerting them
to the material information relating to the Company (or the consolidated
subsidiaries) required to be included in the Company's periodic SEC filings.
There were no significant changes in the Company's internal controls during
the period covered by this report or in other factors that could significantly
affect these controls subsequent to the date of the most recent evaluation.
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 15, 2003 /s/ Bradley E. Rock
________________________________________
Bradley E. Rock, Chairman, President and
Chief Executive Officer
May 15, 2003 /s/ Anita Florek
________________________________________
Anita Florek, Executive Vice President,
Treasurer and Chief Financial Officer
CERTIFICATION PURSUANT TO RULE 13a-14
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bradley E. Rock, Chairman, President and Chief Executive Officer,
certify that:
1. I have reviewed this quarterly report on Form 10-Q of Smithtown Bancorp;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date") ; and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
May 15, 2003 /s/ Bradley E. Rock
______________________________
Bradley E. Rock
Chairman, President and Chief
Executive Officer
CERTIFICATION PURSUANT TO RULE 13a-14
OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,
AS ADOPTED PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Anita M. Florek, Executive Vice President, and Treasurer, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Smithtown Bancorp;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this quarterly
report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a. designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date") ; and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the equivalent
functions):
a. all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b. any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any corrective
actions with regard to significant deficiencies and material weaknesses.
May 15, 2003 /s/ Anita M. Florek
_____________________________
Anita M. Florek,
Executive Vice President, and
Treasurer
Exhibit 99.1
SMITHTOWN BANCORP
Certification of Periodic Report
I, Bradley E. Rock, Chairman, President and Chief Executive Officer of
Smithtown Bancorp (the 'Company'), certify, pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarterly
period ended March 31, 2003 (the 'Report') fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78o(d); and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: May 15, 2003
/s/ Bradley E. Rock
________________________________________
Bradley E. Rock
Chairman, President and Chief Executive
Officer of Smithtown Bancorp
Exhibit 99.2
SMITHTOWN BANCORP
Certification of Periodic Report
I, Anita M. Florek, Executive Vice President and Treasurer of Smithtown
Bancorp (the 'Company'), certify, pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, 18 U.S.C. Section 1350, that:
(1) the Quarterly Report on Form 10-Q of the Company for the quarterly
period ended March 31, 2003 (the 'Report') fully complies with the
requirements of Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m or 78o(d); and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations
of the Company.
Dated: May 15, 2003
/s/ Anita M. Florek
_________________________________________
Anita M. Florek, Executive Vice President
and Treasurer of Smithtown Bancorp