SOURCE: Smithtown Bancorp

October 26, 2005 10:16 ET

Smithtown Bancorp Announces Third Quarter Earnings

EPS Increase 11%; 49% Deposit Growth; 22% ROE; Margin up 13 Basis Points

SMITHTOWN, NY -- (MARKET WIRE) -- October 26, 2005 -- Smithtown Bancorp (NASDAQ: SMTB), the parent company of Bank of Smithtown, today announced that the company had earnings for the third quarter of 2005 of $2,945,892, or $.50 per share. Net income for the first nine months of 2005 now stands at $7,992,944, which represents an EPS increase of 9.68% over the first nine months of last year. Earnings per share for the last twelve months are now $1.81.

The company continued its strong growth during the third quarter. Assets crossed the $800 million mark, finishing the quarter at $837.8 million.

Deposits grew by more than $59 million to $704.4 million. During the first nine months of this year, deposits have increased by approximately $190 million, which represents an annualized growth rate of 49.3%.

The bank's deposit growth has been fueled, in part, by the growth of its newest branches in Port Washington, Hauppauge and Miller Place. The bank presently expects to open two more branches in Coram and Bohemia next year.

Loans grew by approximately $33 million to $652 million. During the first nine months of this year, loans have increased by approximately $82 million, which represents an annualized growth rate of 19.2%.

The company's return on average equity during the third quarter was 22.51%. The ROE over the last twelve months is 21.75%. The average ROE for the 500 banks in the United States with assets between $500 million and $1 billion is 12.35%. The company's return on average assets during the third quarter was 1.45%. The ROA over the last twelve months is 1.44%. The average ROA for peer group banks is 1.15%.

The company's net interest margin during the third quarter increased over the margin for the first six months by 13 basis points. The net interest margin for the third quarter was 4.45%.

The company's efficiency ratio for the third quarter was 52.54%. This figure represents an efficiency more than 350 basis points lower than the efficiency for the first six months. The average efficiency ratio for banks in the $500 million - $1 billion range is 59.90%.

Commenting upon the company's performance during the third quarter, the company's Chairman & CEO, Brad Rock, said: "We are pleased with our performance in an economic environment where some banks have had difficulty growing earnings. We continue to acquire new customers, resulting in continued strong deposit growth and loan growth, which more than offsets the earnings pressures created by the flat yield curve." He added: "As we continue to grow rapidly, we are also absorbing the expenses associated with our expanded back-office operations and insurance agency acquisition. We believe that the investment we have made in having an increased capacity to service more deposit and loan customers is paying off, and will result in increasing benefits in the future."

Earlier this year, U.S. Banker magazine rated Smithtown Bancorp 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 publicly traded. 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.

SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(in thousands, except share and per share data)



                            For the Three Months      For the Nine Months
                            Ended September 30,       Ended September 30,
                             2005         2004         2005         2004
                         -----------  -----------  -----------  -----------
Interest income
  Interest on loans      $    11,432  $     8,674  $    31,379  $    24,691
  Interest on federal
   funds sold                    146           43          476          135
  Interest and dividends
   on investment
   securities:
     Taxable:
       Obligations of
        U.S. government
        treasury                  62            -          134            -
       Obligations of
        U.S. government
        agencies                 815          278        1,991          679
       Mortgage -
        backed
        securities                47           66          135          225
       Other securities           26           52          100          200
                         -----------  -----------  -----------  -----------
           Subtotal              950          396        2,360        1,104
    Exempt from federal
     income taxes:
       Obligations of
        state &
        political
        subdivisions             119          165          348          535
  Other interest income           54           33          149           57
                         -----------  -----------  -----------  -----------
           Total
            interest
            income            12,701        9,311       34,712       26,522

Interest expense
  Money market accounts
   (including savings)         1,196          700        2,904        1,956
  Time deposits of
   $100,000 or more              882          569        2,271        1,613
  Other time deposits          1,518          857        4,067        2,627
  Other borrowings               600          404        1,789        1,045
  Subordinated debentures        185          128          508          345
                         -----------  -----------  -----------  -----------
           Total
            interest
            expense            4,381        2,658       11,539        7,586
                         -----------  -----------  -----------  -----------
Net interest income            8,320        6,653       23,173       18,936
Provision for loan losses        300           60          525           60
                         -----------  -----------  -----------  -----------
Net interest income after
 provision for
 loan losses                   8,020        6,593       22,648       18,876

Other noninterest income
  Trust department income        116           94          330          302
  Service charges on
   deposit accounts              500          373        1,475        1,286
  Revenues from
   insurance agency              900          415        2,664          415
  Net gain on sales of
   investment securities           -           49           13          337
  Gain in cash value of
   bank owned life
   insurance                     157          152          473          475
  Net income from equity
   investment                     15           21           53          102
  Other income                   445          387        1,174          711
                         -----------  -----------  -----------  -----------
           Total other
            noninterest
            income             2,133        1,491        6,182        3,628

Other operating expenses
  Salaries                     2,652        1,965        7,520        5,327
  Pension and other
   employee benefits             575          409        1,743        1,181
  Net occupancy expense
   of bank premises              800          326        2,405        1,143
  Furniture and equipment
   expense                       487          336        1,364          907
  Other expense                  929          836        3,007        2,339
                         -----------  -----------  -----------  -----------
           Total other
            operating
            expenses           5,443        3,872       16,039       10,897
                         -----------  -----------  -----------  -----------
Income before income
 taxes                         4,710        4,212       12,791       11,607
Provision for income
 taxes                         1,764        1,570        4,798        4,257
                         -----------  -----------  -----------  -----------
Net income               $     2,946  $     2,642  $     7,993  $     7,350
                         ===========  ===========  ===========  ===========

Basic earnings per share $      0.50  $      0.45  $      1.36  $      1.24
Diluted earnings
 per share               $      0.50  $      0.45  $      1.36  $      1.24
Cash dividends declared  $      0.06  $      0.05  $      0.18  $      0.15
Weighted average shares
 outstanding               5,923,726    5,932,102    5,923,726    5,939,053
Comprehensive income     $     2,515  $     3,044  $     7,616  $     7,111


SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share data)


                                                      As of
                                          Sept 30, 2005    Sept 30, 2004
ASSETS
Cash and due from banks                        $  11,661       $  11,591
Federal funds sold                                 9,763           1,405
                                               ---------       ---------
   Total cash and cash equivalents                21,424          12,996

Investment securities:
   Obligations of U.S. government treasuries       6,895               -
   Obligations of U.S. government agencies        87,409          30,010
   Mortgage - backed securities                    5,843           5,799
   Obligations of state and political
     subdivisions                                 14,605          18,144
   Other securities                                1,998           5,511
                                               ---------       ---------
      Total investment securities                116,750          59,464

Restricted securities                              3,755           3,242

Loans                                            651,917         552,954
   Less: allowance for loan losses                 5,346           4,699
                                               ---------       ---------
   Loans, net                                    646,571         548,255

Bank premises and equipment                       18,664          12,054

Other assets
   Cash value of bank-owned life insurance        17,415          16,763
   Goodwill                                        1,809             284
   Intangible assets                                 523             594
   Other                                          10,910           8,434
                                               ---------       ---------
       Total other assets                         30,657          26,075

              Total assets                     $ 837,821       $ 662,086
                                               =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
  Deposits:
    Demand (non-interest bearing)              $ 107,993       $  99,845
    Money market                                 222,155         195,118
    NOW                                           35,699          32,551
    Savings                                       47,404          55,780
    Time                                         291,180         165,530
                                               ---------       ---------
      Total deposits                             704,431         548,824

    Dividends payable                                355             296
    Other borrowings                              62,000          52,750
    Subordinated debt                             11,000          11,000
    Other liabilities                              6,644           4,498
                                               ---------       ---------
       Total liabilities                         784,430         617,368

Stockholders' equity
    Common Stock - $.01 par value
     (20,000,000 shares authorized;                   72              72
     7,167,280 shares issued)
    Additional paid in capital                     4,408           4,408
    Retained earnings                             59,407          50,117
    Unearned stock awards                           (102)              -
    Accumulated other comprehensive income
     (loss)                                         (332)            181
                                               ---------       ---------
                                                  63,453          54,778
    Treasury stock (1,243,554 and 1,243,482
     shares at cost)                             (10,062)        (10,060)
        Total stockholders' equity                53,391          44,718
                                               ---------       ---------

Total liabilities and stockholders' equity     $ 837,821       $ 662,086
                                               =========       =========


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

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