SOURCE: Smithtown Bancorp

July 27, 2005 09:33 ET

Smithtown Bancorp Announces Second Quarter Earnings

EPS Increase 7%; Ranked # 2 Community Bank in the Nation

SMITHTOWN, NY -- (MARKET WIRE) -- July 27, 2005 -- Smithtown Bancorp (NASDAQ: SMTB), the parent company of Bank of Smithtown, today announced that the company had earnings for the second quarter of 2005 of $2,698,175, or $.46 per share. These earnings per share reflect a 6.98% increase over the same period last year. Net income for the first six months of 2005 now stands at $5,047,053, which represents an EPS increase of 8.86% over the first six months of last year. Earnings per share for the last twelve months are now $1.76.

The company continued its strong growth during the second quarter. Assets reached almost $800 million, finishing the quarter at $794.6 million. Deposits grew by more than $23 million to $645.2 million. During the first six months of this year, deposits have increased by approximately $131 million, which represents an annualized growth rate of 51%.

The bank's deposit growth has been fueled, in part, by the growth of its newest branches in Miller Place, Hauppauge and Port Washington. The bank currently has four more branch projects in various stages of development.

Loans grew by $42.8 million to $620.2 million at quarter end. On an annualized basis, loan growth for the first six months stands at 17.6%. The company's Chairman & CEO, Bradley E. Rock, commented: "As we said we expected in our first quarter earnings release, loan closings continued at their usual strong pace, construction loan drawings increased and loan payoffs were higher than usual during the second quarter." The bank closed more than $116 million of loans during the quarter, but approximately $54 million of loans were paid off. Mr. Rock added: "We expect loan growth to continue to be strong for the balance of the year."

The company's return on average equity over the last twelve months was 22.13%. The average ROE for the 492 banks in the United States with assets between $500 million and $1 billion is 12.35%. The company's return on average assets over the last twelve months was 1.48%. The average ROA for peer group banks is 1.15%.

The flat yield curve has continued to impact net interest margins, but not as much as for other banks. The company's net interest margin so far this year is 4.32%.

The company's efficiency ratio over the last twelve months was 53.35%. This ratio has risen during the first six months of this year, in part, due to increased expenses associated with the bank's consolidation of its back office operations into a new corporate headquarters, and expenses associated with the bank's new branches. The ratio has also increased as a result of the bank's acquisition of the Seigerman-Mulvey insurance agency. The acquisition increased the company's noninterest income significantly, but it also increased noninterest expense (reflecting salaries and other expenses of the agency). The net impact has been very profitable, but has increased the efficiency ratio by approximately 215 basis points.

Commenting upon the efficiency ratio, Mr. Rock said: "Our principal focus is long-term earnings growth. Though we pay attention to ratios like efficiency and ROA, they do not drive our decision making. If we have an opportunity that will grow earnings with an effective return on our investment, but will raise the efficiency ratio or lower the ROA ratio, we will take the opportunity. That's what we've done by acquiring this insurance agency. It has already contributed to our earnings growth with an excellent return on investment, and we are not at all dismayed or surprised by our resulting efficiency ratio." In spite of these increases in noninterest expense, the average efficiency ratio for the 492 banks in the United States with assets between $500 million and $1 billion is 59.76%, and Smithtown Bancorp's trailing twelve month ratio of 53.35% puts it in the top 25% of peer group companies.

In the current July issue of U.S. Banker magazine, Smithtown Bancorp was rated the second highest performing bank among all publicly listed banking companies in the United States with assets of less than $1 billion. The ranking was based upon the company's 3-year average ROE of 24.8%. There are more than 7,000 banks in the U.S. with assets under $1 billion, although many of them are not listed on a public exchange. Smithtown Bancorp's stock is traded on NASDAQ under the symbol "SMTB."

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; 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.

Corporate Headquarters
100 Motor Parkway, Suite 160
Hauppauge, NY  11788-5138
Direct Dial:  631-360-9304
Direct Fax:   631-360-9380
brock@bankofsmithtown.net


SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except share and per share data)
                                                 For the Six Months Ended
                                                          June 30,
                                                    2005            2004
                                                ----------     ----------
Interest Income
Interest on loans                               $   19,947     $   16,017
Interest on federal funds sold                         330             92
Interest and dividends on investment securities:
     Taxable:
     Obligations of U.S. government                     72              -
     Obligations of U.S. government agencies         1,176            401
     Mortgage - backed securities                       88            159
     Other securities                                   74            136
                                                ----------     ----------
       Subtotal                                      1,410            696
     Exempt from federal income taxes
     Obligations of state & political
      subdivisions                                     229            370
Other interest income                                   95             36
                                                ----------     ----------
     Total interest income                          22,011         17,211
                                                ----------     ----------

Interest Expense
Money market accounts (including savings)            1,708          1,256
Time deposits $100,000 and over                      1,389          1,044
Other time deposits                                  2,549          1,770
Other borrowings                                     1,512            858
                                                ----------     ----------
     Total interest expense                          7,158          4,928
                                                ----------     ----------
Net interest income                                 14,853         12,283
Provision for loan losses                              225              -
                                                ----------     ----------
Net interest income after provision for
  loan losses                                       14,628         12,283
                                                ----------     ----------

Other Non - Interest Income
Trust department income                                214            208
Service charges on deposit accounts                    975            913
Other income                                         2,847            728
Net gain on sales of investment securities              13            288
                                                ----------     ----------
     Total other non - interest income               4,049          2,137
                                                ----------     ----------

Other Operating Expenses
Salaries                                             4,868          3,362
Pension and other employee benefits                  1,168            772
Net occupancy expense of bank premises               1,605            817
Furniture and equipment expense                        877            571
Other expense                                        2,078          1,503
                                                ----------     ----------
     Total other operating expense                  10,596          7,025
                                                 ---------      ---------
Income before income taxes                           8,081          7,395
Provision for income taxes                           3,034          2,687
                                                ----------     ----------
     Net Income                                 $    5,047     $    4,708
                                                 =========      =========

Basic and diluted earnings per share            $     0.86     $     0.79
Cash dividends declared                         $     0.12     $     0.10
Weighted average shares outstanding              5,923,726      5,942,567
Comprehensive income                            $    5,101     $    4,067


SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share data)
                                                        As of June 30,
                                                     2005            2004
                                                  --------        --------
Assets
Cash and due from banks                           $ 14,079        $ 10,279
Federal funds sold                                     397          11,617
Investment securities:
  Investment securities held to maturity
    Mortgage - backed securities                       122             219
    Obligations of state and political
     subdivisions                                    1,217           1,498
                                                  --------        --------
        Total investment securities held
         to maturity                                 1,339           1,717
                                                  --------        --------
        (Estimated fair value $1,369 in 2005
          and $1,788 in 2004)
  Investment securities available for sale
    Obligations of U.S. government                   6,913               -
    Obligations of U.S. government agencies         85,960          29,676
    Mortgage - backed securities                     4,374           6,205
    Obligations of state and political
     subdivisions                                   13,381          15,839
    Other securities                                 1,990           3,091
                                                  --------        --------
      Total investment securities available for
       sale (at estimated fair value)              112,618          54,811
                                                  --------        --------
    Total investment securities                    113,957          56,528

Restricted securities                                4,745           2,719

Loans                                              620,183         521,160
    Less: unearned discount                          1,240              29
          allowance for loan losses                  5,071           4,558
                                                  --------        --------
Loans, net                                         613,872         516,573
Bank premises and equipment                         18,422          10,583
                                                  --------        --------
Other assets
    Cash surrender value - bank owned
     life insurance                                 17,258          16,612
    Goodwill                                           389               -
    Intangible assets                                  429               -
    Other                                           11,034           8,569
                                                  --------        --------
Total assets                                      $794,582        $633,480
                                                  ========        ========

Liabilities
Deposits:
    Demand (non-interest bearing)                 $109,193         $96,815
    Money market                                   203,497         179,401
    NOW                                             35,650          38,156
    Savings                                         52,144          51,984
    Time                                           244,710         168,924
                                                  --------        --------
      Total deposits                               645,194         535,280
Dividends payable                                      355             298
Other borrowings                                    82,000          42,000
Subordinated debt                                   11,000          11,000
Other liabilities                                    4,700           2,551
                                                  --------        --------
    Total liabilities                              743,249         591,129

Stockholders' Equity
Common Stock - $.01 par value (20,000,000
 shares authorized; 7,167,280 shares issued)            72              72
Additional paid in capital                           4,408           4,408
Retained earnings                                   56,816          47,769
Accumulated other comprehensive income                  99            (221)
                                                  --------        --------
    Total                                           61,395          52,028
    Less: treasury stock (1,243,554 and
     1,229,382 shares at cost)                      10,062           9,677
                                                  --------        --------
    Total stockholders' equity                      51,333          42,351
                                                  --------        --------
Total liabilities and stockholders' equity        $794,582        $633,480
                                                  ========        ========

Contact Information

  • Contact:
    Ms. Judith Barber
    Corporate Secretary

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