SOURCE: Smithtown Bancorp

January 31, 2007 10:12 ET

Smithtown Bancorp Announces Record Fourth Quarter Earnings and Record Annual Earnings

4Q EPS Up 20%; Assets Top $1 Billion; Annual EPS Up 26%; Deposits Up 28%; Loans Up 22%; Stock Price Up 37% for 2006

SMITHTOWN, NY -- (MARKET WIRE) -- January 31, 2007 -- Smithtown Bancorp (NASDAQ: SMTB), the parent company of Bank of Smithtown, today announced that the Company had earnings for the fourth quarter of 2006 of $3,694,856, or $.42 per share. These basic earnings per share reflect a 20.00% increase over the same period last year, and are the highest level of quarterly earnings in the bank's 97-year history.

Net income for the fourth quarter grew on a year-over-year basis from $3,072,858 to $3,694,856, an increase of 20.24%.

For the year, Smithtown Bancorp earned $13,967,146, a record level of net income. This marks the company's twelfth consecutive year of record annual earnings.

These earnings also reflect basic earnings per share for the year of $1.58, a 26.40% increase over basic EPS for the prior year. The Company has posted double-digit EPS increases during the last eight consecutive years, and during twelve of the last thirteen years. The Company's average EPS increase over the last 10 years is 26.96%.

The Company's assets grew during 2006 to more than one billion dollars, finishing the year at $1.05 billion. According to the latest figures available from the FDIC, there are currently 7,450 commercial banks in the United States, with only 488 of those having assets of $1 billion or more. This means that, ranked by size, Bank of Smithtown now ranks within the top 7% of banks in the United States.

Return on average equity was 22.63%, the tenth year in a row that ROE has exceeded 20%. The average ROE for the 401 banks in the United States with assets between $1 billion and $10 billion is 12.01%. Smithtown Bancorp's average ROE over the last 10 years is 23.24%.

Deposits increased during the fourth quarter by $42.7 million, an increase of 5.02%. This deposit growth was fueled, in part, by the opening of the bank's 14th branch in Bohemia near the Long Island MacArthur Airport.

Deposits grew substantially for the year by $195.4 million to $892.3 million at year-end. These figures represent a deposit increase of 28.04% for the year. Core deposits increased by 17.83% for the year, with money market accounts increasing by 21.85% and NOW accounts increasing by 33.65%. Overall, 35.60% of the 2006 deposit growth was in core deposits, with the balance being in time deposits. We expect this deposit growth in 2007 to be aided significantly by the further development of the Bohemia branch and the recent opening of our 15th branch in Coram.

The bank currently has four new branches in various stages of development in Nesconset, Huntington, Deer Park and Setauket. We presently expect two of these branches to open during the second half of 2007.

Loans increased during the fourth quarter by $44.2 million, an increase of 5.49%. This growth was ahead of the pace of average quarterly loan growth of $37.7 million during 2006 and average quarterly loan growth of $32.1 million during 2005.

Loan growth for 2006 continued to be strong with loans increasing by $150.8 million. At year-end, loans stood at $849.3 million, up by 21.60% from the prior year. The bank's average annual loan growth for the last 10 years is 24.35%. Asset quality also remained strong with nonperforming loans of only $28,045 at year-end, representing less than .003% of total loans. Net charge-offs were .056% of average loans. During the fourth quarter, the bank took one property into the "Other Real Estate" category, and the bank intends to make efforts to dispose of this property during 2007.

Net interest margin was up 4 basis points during the fourth quarter to 4.24%. Net interest margin for the year 2006 was also 4.24%. The Company's Chief Financial Officer, Anita Florek, commented: "Although we have felt some of the same margin pressures that other banks have experienced as a result of the unusual interest rate environment, we have not been impacted as much as many of our competitors."

Insurance revenues grew during 2006 by 8.94% to $3.77 million, and net income from insurance sales grew by 19.30%. Revenues from trust and investment services grew by 25.90% to $559,287. Overall, non-interest income increased for the year by 14.25% to $9.36 million.

Efficiency was 51.82% for the year, an improvement of 101 basis points over last year. The average efficiency ratio for peer group banks across the nation is 57.01%. The Company's average efficiency over the last 10 years is 49.51%.

The Company's Chairman & Chief Executive Officer, Bradley Rock, commented: "We are very pleased with the Company's achievements during 2006. For more than 10 years now, we have consistently been able to grow earnings, deposits and loans in a manner that has continued to build significant value for our shareholders."

The Company's stock price rose during the year by 36.56%. This growth compares very favorably with all of the major stock indexes. The S & P 500 was up 13.6% for the year, the Dow Jones Industrial Average was up 16.3%, the NASDAQ Composite Index increased by 9.5% and the Russell 2000 Index increased by 17.0%. Most bank stock indexes were up about 12% for the year.

2006 was an eventful and successful year for the Company's stock. In May, the Company issued a 3-for-2 stock split, giving the shareholders, in effect, a 50% stock dividend. In June, the Company was added to the Russell 2000 Index of mid-cap and small-cap stocks. In July, U.S. Banker magazine ranked Smithtown Bancorp fourth among the top 200 publicly traded community banks in the nation and, shortly thereafter, Investor's Business Daily included Smithtown Bancorp among the Top 100 Rated Stocks in the United States. Finally, in December, Smithtown Bancorp shares began trading on the NASDAQ Global Market, the highest level of NASDAQ listing.

The value of the Company's stock has grown significantly over the years. For shareholders with a $10,000 investment in the Company on January 1, 1995, twelve years later on December 31, 2006, that investment was worth $264,370. This increase in value represents a compounded annual growth rate of 31.38%.

Forward-Looking Statements

This release and other written materials and statements management may make, may contain forward-looking statements regarding the Company's prospective performance and strategies within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of said safe harbor provisions.

Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are sometimes identified by use of the words "plan," "believe," "expect," "intend," "anticipate," "estimate," "project," or other similar expressions. The Company's ability to predict results or the actual effects of its plans and strategies is inherently uncertain. Accordingly actual results may differ materially from anticipated results.

Factors that could have a material adverse effect on the operations of the Company and its subsidiaries include, but are not limited to, a change in economic conditions; changes in interest rates, deposit flows, loan demand, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation and regulation; other risk factors disclosed in the Company's reports filed with the Securities and Exchange Commission; and other economic, competitive, governmental, regulatory, geopolitical and technological factors affecting the Company's operations, pricing and services.

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 the statements were made 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 and Exchange Commission.


Consolidated Statements of income
                                      For the Three       For the Twelve
                                       Months Ended        Months Ended
                                       December 31,        December 31,
                                      2006      2005      2006      2005
                                    --------- --------- --------- ---------
Interest income
   Loans                            $  17,357 $  12,650 $  62,037 $  44,029
   Federal funds sold                      63        31       412       507
   Investment securities:
     Taxable:
      Obligations of U.S. treasury         21        62       189       196
      Obligations of U.S. government
       agencies                         1,099       859     4,153     2,850
      Mortgage - backed securities         41        95       187       230
      Other securities                     50        22       121       122
                                    --------- --------- --------- ---------
         Subtotal                       1,211     1,038     4,650     3,398
     Exempt from federal income
      taxes:
         Obligations of state &
          political subdivisions           85       133       433       481
   Other interest income                   69        59       249       208
                                    --------- --------- --------- ---------
          Total interest income        18,785    13,911    67,781    48,623

Interest expense
   Money market accounts (including
    savings)                            2,676     1,444     8,999     4,348
   Time deposits of $100,000 or more    2,007     1,019     6,082     3,290
   Other time deposits                  3,040     1,792    10,692     5,859
   Other borrowings                       567       660     2,532     2,449
   Subordinated debt                      356       198     1,259       706
                                    --------- --------- --------- ---------
          Total interest expense        8,646     5,113    29,564    16,652
                                    --------- --------- --------- ---------
Net interest income                    10,139     8,798    38,217    31,971
Provision for loan losses                 100       675     1,500     1,200
                                    --------- --------- --------- ---------
Net interest income after provision
 for loan losses                       10,039     8,123    36,717    30,771

Noninterest income
   Trust and investment services          195       114       559       444
   Service charges on deposit
    accounts                              439       525     1,862     2,000
   Revenues from insurance agency         819       794     3,767     3,458
   Net gain on sales of investment
    securities                              -         -       194        13
   Increase in cash value of bank
    owned life insurance                  139       160       621       633
   Other income                           560       415     2,354     1,642
                                    --------- --------- --------- ---------
          Total noninterest income      2,152     2,008     9,357     8,190

Noninterest expense
   Salaries                             2,854     2,326    11,124     9,846
   Pension and other employee
    benefits                              610       546     2,436     2,289
   Net occupancy expense of bank
    premises                            1,037       819     3,675     3,224
   Furniture and equipment expense        574       483     2,167     1,847
   Amortization of intangible
    assets                                 64        19       676        73
   Other expense                        1,092       908     4,335     3,861
                                    --------- --------- --------- ---------
          Total noninterest expense     6,231     5,101    24,413    21,140
                                    --------- --------- --------- ---------
Income before income taxes              5,960     5,030    21,661    17,821
Provision for income taxes              2,265     1,957     7,694     6,755
Net income                          $   3,695 $   3,073 $  13,967 $  11,066
                                    ========= ========= ========= =========

Earnings per share
   Basic earnings per share         $    0.42 $    0.35 $    1.58 $    1.25
   Diluted earnings per share       $    0.42 $    0.35 $    1.58 $    1.25

Cash dividends declared             $    0.04 $    0.04 $    0.16 $    0.16
Weighted average common shares
 outstanding                        8,869,040 8,879,843 8,867,442 8,879,329
Weighted average common equivalent
 shares                             8,872,251 8,880,175 8,877,428 8,880,569
Comprehensive income                $   3,782 $   2,804 $  14,237 $  10,420



Consolidated Balance Sheets
                                                     As of December 31,
                                                      2006         2005
                                                  -----------  -----------
ASSETS
Cash and due from banks                           $    27,384  $    13,107
Federal funds sold                                        236          360
                                                  -----------  -----------
   Total cash and cash equivalents                     27,620       13,467

Investment securities:
   Available for sale:
      Obligations of U.S. treasury                          -        6,896
      Obligations of U.S. government agencies          84,713       84,602
      Mortgage - backed securities                      2,972        8,080
      Obligations of state and political
       subdivisions                                     8,943       13,523
      Other securities                                  3,968        1,990
                                                  -----------  -----------
         Total securities available for sale          100,596      115,091
   Held to maturity:
      Mortgage - backed securities                         41           89
      Obligations of state and political
       subdivisions                                       374        1,012
                                                  -----------  -----------
         Total securities held to maturity
          (estimated fair value $418 in 2006
          and $1,135 in 2005)                             415        1,101
                                                  -----------  -----------

          Total investment securities                 101,011      116,192

Restricted securities                                   4,249        6,338

Loans                                                 849,258      698,421
   Less: allowance for loan losses                      7,051        5,964
                                                  -----------  -----------
   Loans, net                                         842,207      692,457

Bank premises and equipment                            20,598       18,446

Other assets
   Cash value of bank-owned life insurance             18,195       17,575
   Goodwill                                             2,077          481
   Intangible assets                                    1,591        2,831
   Other real estate owned                              6,972            -
   Accounts receivable - redeemed investment
    securities                                          9,225            -
   Other                                               14,479       10,495
                                                  -----------  -----------
      Total other assets                               52,539       31,382
                                                  -----------  -----------

         Total assets                             $ 1,048,224  $   878,282
                                                  ===========  ===========


LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
   Deposits:
      Demand (non-interest bearing)               $   102,608  $    95,828
      Money market                                    264,876      217,386
      NOW                                              42,003       31,427
      Savings                                          50,190       45,481
      Time                                            432,640      306,803
                                                  -----------  -----------
         Total deposits                               892,317      696,925

   Dividends payable                                      355          355
   Other borrowings                                    59,580      107,949
   Subordinated debt                                   18,217       11,000
   Other liabilities                                   10,948        6,203
                                                  -----------  -----------
      Total liabilities                               981,417      822,432

Stockholders' equity
   Common stock - $.01 par value (20,000,000
    shares authorized at December 31, 2006 and
    2005, 10,750,920 shares issued; 8,885,589
    shares outstanding)                                   108          108
   Additional paid in capital                           4,046        4,372
   Unearned stock awards                                    -          (91)
   Retained earnings                                   73,046       62,124
   Accumulated other comprehensive loss                  (331)        (601)
                                                  -----------  -----------
                                                       76,869       65,912
   Treasury stock (1,865,331 shares at cost)          (10,062)     (10,062)
      Total stockholders' equity                       66,807       55,850
                                                  -----------  -----------

Total liabilities and stockholders' equity        $ 1,048,224  $   878,282
                                                  ===========  ===========



SELECTED FINANCIAL DATA
(in thousands, except per share data)

                             For the Three Months   For the Twelve Months
                                     Ended                  Ended
                              Dec. 31,    Dec. 31,   Dec. 31,    Dec. 31,
                                2006        2005       2006       2005
                            ----------- ----------- ----------- -----------
Basic earnings per share    $      0.42 $      0.35 $      1.58 $      1.25
                            ----------- ----------- ----------- -----------
Diluted earnings per share         0.42        0.35        1.58        1.25
                            ----------- ----------- ----------- -----------

                            ----------- ----------- ----------- -----------
Assets                                              $ 1,048,224 $   878,282
                            ----------- ----------- ----------- -----------
Loans                                                   849,258     698,421
                            ----------- ----------- ----------- -----------
Deposits                                                892,317     696,925
                            ----------- ----------- ----------- -----------

                            ----------- ----------- ----------- -----------
Return on Average Equity          22.33       22.40       22.63       21.48
                            ----------- ----------- ----------- -----------
Cash Return on Average
 Equity (1)                       22.58       22.49       23.36       21.58
                            ----------- ----------- ----------- -----------
Return on Average Tangible
 Equity (2)                       23.81       23.39       23.86       22.02
                            ----------- ----------- ----------- -----------
Cash Return on Average
 Tangible Equity (3)              24.08       23.49       24.62       22.11
                            ----------- ----------- ----------- -----------

                            ----------- ----------- ----------- -----------
Return on Average Assets           1.43        1.45        1.45        1.41
                            ----------- ----------- ----------- -----------
Cash Return on Average
 Assets (1)                        1.45        1.45        1.49        1.41
                            ----------- ----------- ----------- -----------
Return on Average Tangible
 Assets (2)                        1.44        1.45        1.45        1.41
                            ----------- ----------- ----------- -----------
Cash Return on Average
 Tangible Assets (3)               1.45        1.46        1.50        1.42
                            ----------- ----------- ----------- -----------

                            ----------- ----------- ----------- -----------
Net Interest Margin                4.24        4.49        4.24        4.39
                            ----------- ----------- ----------- -----------

                            ----------- ----------- ----------- -----------
Efficiency                        51.07       47.41       51.82       52.83
                            ----------- ----------- ----------- -----------
Efficiency - Cash Basis           50.55       47.25       50.41       52.65
                            ----------- ----------- ----------- -----------

(1) Excludes amortization of intangibles
(2) Excludes intangible assets
(3) Excludes amortization of intangibles and intangible assets

Contact Information

  • Contact:
    Ms. Judith Barber
    Corporate Secretary
    631-360-9304
    Email Contact

    News Contact:
    Peter Hamilton
    Rubenstein Associates
    (work) 212-843-8015
    (home) 631-928-8437
    (cell) 516-375-6434

    Corporate Headquarters
    100 Motor Parkway, Suite 160
    Hauppauge, NY 11788-5138
    Direct Dial: 631-360-9304
    Direct Fax: 631-360-9380
    Email Contact