SOURCE: Bank of Smithtown

September 19, 2007 15:17 ET

Bank of Smithtown Acquires Second Insurance Agency

SMITHTOWN, NY--(Marketwire - September 19, 2007) - Bank of Smithtown Insurance Agents & Brokers, Inc. (a wholly-owned subsidiary of Bank of Smithtown) has acquired all of the assets of Payne & Palmieri, Inc., an independent insurance agency located in East Setauket, New York.

In August 2004, Bank of Smithtown purchased Seigerman-Mulvey Co., Inc., an independent insurance agency located in East Setauket. For the past three years, the Bank has continued to operate the agency, which offers personal and business lines of insurance. Now, through its insurance agency subsidiary, the Bank has purchased a second agency, also located in the East Setauket area. The three employees of Payne & Palmieri, including Ernest Palmieri, will continue with the agency.

Joanne Bentivegna, President of Bank of Smithtown Insurance, said: "This is a very natural extension for us. The customers of both agencies will benefit from the increased servicing capabilities and the increased customer choices created by the acquisition."

Brad Rock, Chairman & CEO of Bank of Smithtown and its parent holding company, Smithtown Bancorp (NASDAQ: SMTB), said: "We continue to believe that insurance fits well with our community banking business, and provides us with a source of increased noninterest income that counterbalances fluctuations in net income that can result from changes in the interest rate environment. Our first acquisition of an insurance agency helped us accomplish those goals, and this most recent acquisition will take us a step further on that path."

The terms of the deal were not disclosed, but Mr. Rock said that the transaction would be accretive to earnings immediately. He also added that, because Payne & Palmieri is a relatively small agency, the increase to Bank of Smithtown's income during the remainder of 2007 would not be "very significant." Bank of Smithtown has assets of approximately $1.1 billion and revenues of approximately $85 million.

Mr. Rock added: "There continue to be many small insurance agencies on Long Island where the principal or principals are nearing retirement. There are also a variety of pressures from insurance carriers and the competitive environment that are pushing smaller agencies to consolidate. We will continue to look for agencies that fit our model to build upon our existing insurance platform in the future."

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