SOURCE: Smithtown Bancorp

October 27, 2006 09:09 ET

Smithtown Bancorp Announces Third Quarter Earnings

EPS Increase 24%; Deposits Growing at 29% Pace; ROE Continues Near 23%

SMITHTOWN, NY -- (MARKET WIRE) -- October 27, 2006 -- Smithtown Bancorp (NASDAQ: SMTB), the parent company of Bank of Smithtown, today announced that the company had earnings for the third quarter of 2006 of $3,649,209, or $.41 per share. These basic earnings per share reflect a 24.24% increase over the same period last year. Basic earnings per share for the last twelve months now stand at $1.51.

Net income for the third quarter grew on a year-over-year basis from $2,945,891 to $3,649,208, an increase of 23.87%.

Deposits grew by $21.4 million during the third quarter to $849.6 million at quarter-end. For the first nine months of 2006, on an annualized basis, deposits are growing at a 29.22% pace. On the last weekend of the third quarter, the Bank opened its new Bohemia branch. Although the branch opened too late to contribute to third quarter deposit growth, the Company expects this location near the Long Island MacArthur Airport and the surrounding office/industrial area to make a significant contribution to deposit growth during the fourth quarter and during 2007.

Loans grew by $18.7 million during the third quarter to $805.1 million at the end of the period. For the first nine months of 2006, on an annualized basis, loans are growing at a 20.36% pace. The loan growth of $18.7 million during the third quarter was lower than other recent quarters, but only because a number of loans scheduled to close by quarter's end did not close until the first week of October. At September 30, 2006, the Bank had $125 million of approved, but unfunded, loans, which is a higher level than usual. During the first week of October, the Bank closed $20.6 million of loans which, if added to the $18.7 million would bring loan growth to $39.3 million, which would be more commensurate with loan growth in other recent quarters. The $39.3 million figure would also compare favorably with loan growth of $33 million during the third quarter of 2005.

Nonperforming loans increased to $8.44 million, mostly because management decided to place one slow-paying loan on nonaccrual status. This one mortgage loan of $7.23 million has been in the 30-89 day category at each previous quarter's end since the first quarter of 2005, and has been discussed in all of the Company's quarterly reports since December 2004. For more detailed information about asset quality, see the "Asset Quality" section on the investor page of the Bank's website located at www.bankofsmithtownonline.com.

Net interest margin was 4.20% for the third quarter. Although this figure represents a slight decrease of 11 basis points from the prior quarter, the company's margin remains considerably stronger than that of most of its competitors. The slight decrease is primarily the result of rate competition for deposits. The company's net interest margin for the first nine months of 2006 is 4.25%.

The company's return on average equity for the third quarter was 22.93%. Year-to-date ROE is 22.75%. The company's average ROE for the last 10 years is 23.25%. The average ROE for the 481 banks in the United States with assets between $500 million and $1 billion is 13.08%.

Return on average assets for the quarter was 1.49%. Year-to-date ROA is 1.45%. The average ROA for peer group banks throughout the nation is 1.21%.

Efficiency for the first nine months was 52.08%, which is 20 basis points higher than efficiency for the first six months. The slight increase was mostly attributable to expenses associated with the opening of the new branch. The average efficiency for peer group banks throughout the nation is 60.60%.

Bank of Smithtown currently has five new branch projects in various stages of development in Coram, Nesconset, Huntington, Setauket and Deer Park. The Bank expects to open the Coram branch toward the end of the fourth quarter.

So far this year, the price for the company's stock has risen by 32%. In contrast, the S & P 500 and the NASDAQ Composite Index have year-to-date gains of 9.51% and 6.15%, respectively. Earlier this year, Investors Business Daily added Smithtown Bancorp to its list of the "Top 100" stocks in the United States. Over the past 10 years, the market value of Smithtown Bancorp stock has risen at a compounded annual growth rate of more than 30% per year.

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.

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


                                                         As of Sept 30,
                                                        2006       2005
                                                      --------------------
ASSETS
Cash and due from banks                               $  10,480  $  11,661
Federal funds sold                                       11,371      9,763
                                                      ---------  ---------
      Total cash and cash equivalents                    21,851     21,424

Investment securities:
         Obligations of U.S. treasury                     1,990      6,895
         Obligations of U.S. government agencies         97,499     87,409
         Mortgage - backed securities                     3,417      5,843
         Obligations of state and political
          subdivisions                                    9,652     14,605
         Other securities                                 3,966      1,998
                                                      ---------  ---------
                   Total investment securities          116,524    116,750

Restricted securities                                     4,043      3,755

Loans                                                   805,056    651,917
       Less: allowance for loan losses                    7,372      5,346
                                                      ---------  ---------
       Loans, net                                       797,684    646,571

Bank premises and equipment                              19,954     18,664

Other assets
     Cash value of bank-owned life insurance             18,057     17,415
     Goodwill                                             2,077      1,809
     Intangible assets                                    2,127        523
     Other                                               13,364     10,910
                                                      ---------  ---------
         Total other assets                              35,625     30,657

              Total assets                            $ 995,681  $ 837,821
                                                      =========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
     Deposits:
           Demand (non-interest bearing)              $ 101,231  $ 107,993
           Money market                                 243,195    222,155
           NOW                                           36,080     35,699
           Savings                                       48,253     47,404
           Time                                         420,881    291,180
                                                      ---------  ---------
               Total deposits                           849,640    704,431

     Dividends payable                                      355        355
     Other borrowings                                    55,000     62,000
     Subordinated debt                                   18,217     11,000
     Other liabilities                                    7,491      6,644
                                                      ---------  ---------
           Total liabilities                            930,703    784,430

Stockholders' equity
      Common stock - $.01 par value (20,000,000
       shares authorized;
       10,750,920 shares issued; 8,885,589 shares
        outstanding)                                        108        108
      Additional paid in capital                          4,020      4,270
      Retained earnings                                  71,330     59,407
      Accumulated other comprehensive loss                 (418)      (332)
                                                      ---------  ---------
                                                         75,040     63,453
      Less: treasury stock (1,865,331 shares at cost)   (10,062)   (10,062)
            Total stockholders' equity                   64,978     53,391
                                                      ---------  ---------

Total liabilities and stockholders' equity            $ 995,681  $ 837,821
                                                      =========  =========



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

                             For the Three Months     For the Nine Months
                                    Ended                   Ended
                                   Sept 30,                Sept 30,
                               2006        2005        2006        2005
                            ----------- ----------- ----------- -----------
Interest income
  Loans                     $    15,757 $    11,432 $    44,680      31,379
  Federal funds sold                127         146         349         476
  Investment securities:
     Taxable:
      Obligations of  U.S.
       treasury                      45          62         168         134
      Obligations of U.S.
       government agencies        1,119         815       3,054       1,991
      Mortgage - backed
       securities                    43          47         146         135
      Other securities               27          26          71         100
                            ----------- ----------- ----------- -----------
         Subtotal                 1,234         950       3,439       2,360
     Exempt from federal
      income taxes:
       Obligations of state
        & political
        subdivisions                105         119         348         348
   Other                             75          54         180         149
                            ----------- ----------- ----------- -----------
            Total interest
             income              17,298      12,701      48,996      34,712

Interest expense
   Money market accounts
    (including savings)           2,278       1,196       6,323       2,904
   Time deposits of
    $100,000 or more              1,659         882       4,075       2,271
   Other time deposits            2,861       1,518       7,652       4,067
   Other borrowings                 572         600       1,965       1,789
   Subordinated debt                355         185         903         508
                            ----------- ----------- ----------- -----------
      Total interest
       expense                    7,725       4,381      20,918      11,539
                            ----------- ----------- ----------- -----------
Net interest income               9,573       8,320      28,078      23,173
Provision for loan losses           300         300       1,400         525
                            ----------- ----------- ----------- -----------
Net interest income after
 provision for loan losses        9,273       8,020      26,678      22,648


Noninterest income
    Trust and investment
     services                       121         116         364         330
    Service charges on
     deposit accounts               448         500       1,423       1,475
    Revenues from insurance
     agency                         984         900       2,948       2,664
    Net gain on sales of
     investment securities          205           -         194          13
    Increase in cash value
     of bank-owned life
     insurance                      164         157         482         473
       Other                        588         460       1,794       1,227
                            ----------- ----------- ----------- -----------
               Total
                noninterest
                income            2,510       2,133       7,205       6,182

Noninterest expense
    Salaries                      2,823       2,652       8,270       7,520
    Pension and other
     employee benefits              587         575       1,826       1,743
    Net occupancy expense
     of bank premises               907         800       2,638       2,405
    Furniture and equipment
     expense                        560         487       1,593       1,364
    Amortization of
     intangible assets              229          18         612          54
    Other                         1,051         911       3,243       2,953
                            ----------- ----------- ----------- -----------
             Total
              noninterest
              expense             6,157       5,443      18,182      16,039
                            ----------- ----------- ----------- -----------
Income before income taxes        5,626       4,710      15,701      12,791
Provision for income taxes        1,977       1,764       5,429       4,798
                            ----------- ----------- ----------- -----------
Net income                  $     3,649 $     2,946 $    10,272 $     7,993
                            =========== =========== =========== ===========

Basic earnings per share    $      0.41 $      0.33 $      1.16 $      0.90
Diluted earnings per share  $      0.41 $      0.33 $      1.16 $      0.90
Cash dividends declared     $      0.04 $      0.04 $      0.12 $      0.12
Weighted average common
 shares outstanding           8,867,968   8,879,497   8,866,895   8,879,155
Weighted average common
 equivalent shares          $ 8,871,139 $ 8,879,681   8,873,669   8,880,063
Comprehensive income        $     4,231 $     2,515 $    10,455 $     7,616




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

                                                For the Three
                                                 Months Ended     % Growth
                                              Sept 30,  Sept 30,  2005 to
                                                2006      2005      2006

Basic Earnings per share                      $    0.41 $    0.33    24.24%
Diluted Earnings per share                    $    0.41 $    0.33    24.24%

Assets                                        $ 995,681 $ 837,821    18.84%
Loans                                           805,056   651,917    23.49%
Deposits                                        849,640   704,431    20.61%

Return on Average Equity                          22.93     22.37
Cash Return on Average Equity (1)                 23.80     22.45
Return on Average Tangible Equity (2)             24.06     22.77
Cash Return on Average Tangible Equity (3)        24.96     22.86

Return on Average Assets                           1.49      1.45
Cash Return on Average Assets (1)                  1.54      1.46
Return on Average Tangible Assets (2)              1.49      1.46
Cash Return on Average Tangible Assets (3)         1.55      1.46

Net Interest Margin                                4.20      4.45

Efficiency                                        52.46     55.09
Efficiency - Cash Basis                           50.54     55.07


(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

    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