Washington, D.C. 20549
                               ------------------

                                    FORM 10-Q
                               ------------------

             X   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934


                      For the quarter ended June 30, 2001

                               ------------------

                         Commission file number 2-91511

                                SMITHTOWN BANCORP
               Incorporated pursuant to the Laws of New York State


        Internal Revenue Service - Employer Identification No. 11-2695037

              One East Main Street, Smithtown, New York 11787-2801

                                  631-360-9300
                               ------------------

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes X No __

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date:1,550,620 Shares of Common stock
($1.25 Par Value) Outstanding as of July 23, 2001.
<PAGE>

                                   SMITHTOWN BANCORP

                                         INDEX


Part I - FINANCIAL INFORMATION                                     PAGES
                                                                   ------
Item 1.    Financial Statements

           Consolidated Balance Sheets
                June 30, 2001 and December 31, 2000                   4

           Consolidated Statements of Income
                Three months ended June 30, 2001 and 2000             5

           Consolidated Statements of Income
                Six months ended June 30, 2001 and 2000               6

           Consolidated Statements of Changes in Stockholders' Equity
                Three months ended June 30, 2001 and 2000             7

           Consolidated Statements of Changes in Stockholders' Equity
                Six months ended June 30, 2001 and 2000               8

           Consolidated Statements of Comprehensive Income
                Three months ended June 30, 2001 and 2000             9

           Consolidated Statements of Comprehensive Income
                Six months ended June 30, 2001 and 2000               10

           Consolidated Statements of Cash Flows
                Three months ended June 30, 2001 and 2000             11

           Consolidated Statements of Cash Flows
                Six months ended June 30, 2001 and 2000               12

Item 2.    Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                 13 - 15

Item 3.    Quantitative and Qualitative Disclosures About Market Risk 16

Part II - OTHER INFORMATION

Item 1.    Legal Proceedings - None

Item 2.    Change in Securities and Use of Proceeds

     On 4/17/01, Article Fourth of the Registrant's Certificate of Incorporation
was  amended to change the number and par value of shares of  authorized  Common
Stock from  3,000,000  shares,  par value  $2.50 to 7,000,00  shares,  par value
$1.25.

     On 5/14/01, the Registrant effected a two-for-one stock split of its Common
Stock.

    There were no equity  securities  sold by the Registrant  during the quarter
ended June 30, 2001 that were not registered under the Securities Act of 1933.

Item 3.    Defaults under Senior Securities - None

Item 4.    Submission of Matters to Vote of Security Holders

     At the April 17, 2001 Annual Meeting of Shareholders the following  matters
were voted upon in addition to the election of three (3) directors.

     1. A proposal to amend the Smithtown Bancorp's Certificate of Incorporation
in order to change the number of authorized Common Shares from 3,000,000 shares,
par value $2.50,  to  7,000,000  shares,  par value $1.25,  in order to effect a
two-for-one split. Voting results;  Votes cast for 659,439,  against or withheld
2,098, Abstentions and broker non-votes 980.

     2. A proposal to ratify the  appointment  of Albrecht,  Viggiano,  Zureck &
Company,  P.C. as  independent  auditors for the year ending  December 31, 2001.
Voting results; Votes cast for 646,832, against or withheld 13,251,  Abstentions
and broker non-votes 2,952.


Item 5.    Other Information - None

Item 6.    Exhibits and Reports on Form 8-K-None

<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEETS
(unaudited)
                                                                                                            As of
                                                                                              June 30, 2001       December 31, 2000
____________________________________________________________________________________________________________________________________
<S>                                                                                         <C>                      <C>
Assets
Cash and Due from Banks .............................................................          $   7,293,919          $   8,953,761
Investment Securities:
   Investment Securities Held to Maturity
     Mortgage - Backed Securities ...................................................              1,118,951              1,280,026
     Obligations of State and Political Subdivisions ................................              3,842,771              4,054,155
                                                                                               -------------          -------------
       Total (Estimated Fair Value $5,122,316 and $5,393,473 ........................              4,961,722              5,334,181
         at 6/30/01 and 12/31/00, respectively) .....................................                   --                     --

   Investment Securities Available for Sale
     Obligations of U.S. Government Agencies ........................................              6,200,190             16,896,345
     Mortgage - Backed Securities ...................................................             28,143,966             22,512,702
     Oligations of State and Political Subdivisions .................................             14,057,593             11,950,147
     Other Securities ...............................................................              2,010,000              2,000,000
                                                                                               -------------          -------------
      Total (At Estimated Fair Value) ...............................................             50,411,749             53,359,194
                                                                                               -------------          -------------
     Total Investment Securities (Estimated Fair Value $55,534,065 ..................             55,373,471             58,693,375
       and  $58,752,667 at 6/30/01 and 12/31/00, respectively) ......................          -------------           ------------


Federal Funds Sold ..................................................................             12,603,844                      0
Loans ...............................................................................            256,320,937            229,062,660
  Less: Unearned Discount ...........................................................                556,138                743,125
        Reserve for Possible Loan Losses ............................................              2,944,047              2,500,724
                                                                                               -------------          -------------
Loans, Net ..........................................................................            252,820,752            225,818,811
                                                                                               -------------          -------------
Equity Investment in SMTB Financial Group, LLC ......................................                 22,056                  2,500
Bank Premises and Equipment .........................................................              4,051,549              3,571,355
Other Assets
     Other Real Estate Owned ........................................................                730,354                730,354
     Other ..........................................................................             22,640,568             16,810,587
                                                                                               -------------          -------------
Total Assets ........................................................................          $ 355,536,513          $ 314,580,743
                                                                                               =============          =============
Liabilities
Deposits:
     Demand .........................................................................          $  58,093,925          $  56,352,317
     Money Market ...................................................................             93,492,422             71,880,093
     NOW ............................................................................             21,851,523             18,211,339
     Savings ........................................................................             34,694,982             33,215,757
     Time Deposits ..................................................................             91,423,934             77,499,816
                                                                                               -------------          -------------
       Total ........................................................................            299,556,786            257,159,322
Dividend Payable ....................................................................                201,581                188,522
Other Borrowed Funds ................................................................             30,000,000             33,500,000
Other Liabilities ...................................................................              1,225,835              1,341,619
                                                                                               -------------          -------------
     Total ..........................................................................            330,984,202            292,189,463
                                                                                               -------------          -------------
Stockholders' Equity
Common Stock - $1.25 Par Value,  7,000,000 Shares ...................................              2,239,775              2,239,775
     Authorized; 1,791,820 Shares Issued
Accumulated Other Comprehensive Income ..............................................                209,123               (196,117)
Surplus .............................................................................              1,993,574              1,993,574
Retained Earnings ...................................................................             25,795,181             23,498,921
                                                                                               -------------          -------------
     Total ..........................................................................             30,237,653             27,536,153
     Less: Treasury Stock (241,200 and 224,606 shares at cost) ......................              5,685,342              5,144,873
                                                                                               -------------          -------------
     Total ..........................................................................             24,552,311             22,391,280
                                                                                               -------------          -------------
Total Liabilities and Capital .......................................................          $ 355,536,513          $ 314,580,743
                                                                                               =============          =============
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
                                                                                               For the Three Months Ended June 30,
                                                                                                    2001                  2000
____________________________________________________________________________________________________________________________________
<S>                                                                                               <C>                     <C>
Interest Income
Interest and Fees on Loans ......................................................              $ 5,189,440                 4,375,836
Interest and Dividends on:
     Obligations of U.S. Government Agencies ....................................                  128,472                   417,143
     Mortgage - Backed Securities ...............................................                  501,774                   360,739
     Obligations of State & Political Subdivisions ..............................                  190,287                   216,710
     Other Securities ...........................................................                   40,150                    20,273
Interest on Federal Funds Sold ..................................................                  129,620                   224,731
Interest on Balances Due From Banks .............................................                      875                     6,076
Other Interest Income ...........................................................                   69,585                    60,923
                                                                                               -----------               -----------
      Total Interest Income .....................................................                6,250,203                 5,682,431
                                                                                               -----------               -----------
Interest Expense
Money Market Accounts ...........................................................                  759,186                   723,643
Savings .........................................................................                  113,159                   133,744
Time  Deposits $100,000 and Over ................................................                  487,060                   225,023
Other Time Deposits .............................................................                  668,640                   761,143
Interest on Other Borrowed Money ................................................                  467,883                   471,994
                                                                                               -----------               -----------
      Total Interest Expense ....................................................                2,495,928                 2,315,547
                                                                                               -----------               -----------
Net Interest Income .............................................................                3,754,275                 3,366,884
Provision for Possible Loan Losses ..............................................                  210,000                   120,000
                                                                                               -----------               -----------
Net Interest Income After Provision for Possible
  Loan Losses ...................................................................                3,544,275                 3,246,884
                                                                                               -----------               -----------
Other Non - Interest Income
Trust Department Income .........................................................                  114,863                   110,499
Service Charges on Deposit Accounts .............................................                  398,084                   401,958
Other Income ....................................................................                  518,155                   411,974
Net Securities Transactions .....................................................                   (5,234)                        0
                                                                                               -----------               -----------
     Total Other Non - Interest Income ..........................................                1,025,868                   924,431
                                                                                               -----------               -----------
Other Operating Expenses
Salaries ........................................................................                1,096,046                 1,008,188
Pension and Other Employee Benefits .............................................                  178,445                   235,199
Net Occupancy Expense of Bank Premises ..........................................                  239,911                   221,285
Furniture and Equipment Expense .................................................                  217,937                   208,113
Miscellaneous Operating Expense .................................................                  583,538                   494,817
                                                                                               -----------               -----------
  Total Other Operating Expense .................................................                2,315,877                 2,167,602
                                                                                               -----------               -----------
Income Before Income Taxes ......................................................                2,254,266                 2,003,713
Provision for Income Taxes ......................................................                  812,208                   698,013
                                                                                               -----------               -----------
     Net Income .................................................................              $ 1,442,058               $ 1,305,700
                                                                                               ===========               ===========

Earnings Per Share
Net Income.......................................................................              $      0.93               $      0.81
Cash Dividends Declared..........................................................              $      0.13               $      0.12
Weighted Average Shares Outstanding..............................................              $ 1,552,587               $ 1,612,250

</TABLE>
<PAGE>

<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
                                                                                                For the Six Months Ended June 30,
                                                                                                  2001                2000
____________________________________________________________________________________________________________________________________
<S>                                                                                           <C>                      <C>
Interest Income
Interest and Fees on Loans ....................................................              $ 10,365,907                 8,347,632
Interest and Dividends on:
     Obligations of U.S. Government ...........................................                         0                    23,602
     Obligations of U.S. Government Agencies ..................................                   308,392                   738,779
     Mortgage - Backed Securities .............................................                   873,989                   705,712
     Obligations of State & Political Subdivisions ............................                   375,982                   419,468
     Other Securities .........................................................                    43,801                    20,273
Interest on Federal Funds Sold ................................................                   210,697                   412,889
Interest on Balances Due From Banks ...........................................                     2,138                    11,988
Other Interest Income .........................................................                   148,722                   120,287
                                                                                             ------------              ------------
     Total Interest Income ....................................................                12,329,628                10,800,630
                                                                                             ------------              ------------
Interest Expense
Money Market Accounts .........................................................                 1,569,780                 1,294,919
Savings .......................................................................                   226,820                   264,963
Time  Deposits $100,000 and Over ..............................................                   788,064                   474,610
Other Time Deposits ...........................................................                 1,504,681                 1,301,301
Interest on Other Borrowed Money ..............................................                   940,285                 1,035,015
                                                                                             ------------              ------------
     Total Interest Expense ...................................................                 5,029,630                 4,370,808
                                                                                             ------------              ------------
Net Interest Income ...........................................................                 7,299,998                 6,429,822
Provision for Possible Loan Losses ............................................                   420,000                   240,000
                                                                                             ------------              ------------
Net Interest Income After Provision for Possible
  Loan Losses .................................................................                 6,879,998                 6,189,822
                                                                                             ------------              ------------
Other Non - Interest Income
Trust Department Income .......................................................                   227,054                   286,148
Service Charges on Deposit Accounts ...........................................                   852,619                   799,251
Other Income ..................................................................                 1,029,208                   734,142
Net Loss on Sale of Investment Securities .....................................                    14,037                    (1,359)
                                                                                             ------------              ------------
     Total Other Non - Interest Income ........................................                 2,122,918                 1,818,182
                                                                                             ------------              ------------
Other Operating Expenses
Salaries ......................................................................                 2,217,595                 1,984,280
Pension and Other Employee Benefits ...........................................                   441,569                   431,210
Net Occupancy Expense of Bank Premises ........................................                   500,519                   465,493
Furniture and Equipment Expense ...............................................                   440,057                   400,616
Miscellaneous Operating Expense ...............................................                 1,196,651                   937,646
                                                                                             ------------              ------------
     Total Other Operating Expense ............................................                 4,796,391                 4,219,245
                                                                                             ------------              ------------
Income Before Income Taxes ....................................................                 4,206,525                 3,788,759
Provision for Income Taxes ....................................................                 1,506,180                 1,358,174
                                                                                             ------------              ------------
     Net Income ...............................................................              $  2,700,345              $  2,430,585
                                                                                             ============              ============
Earnings Per Share
Net Income ....................................................................              $       1.73              $       1.51
Cash Dividends Declared .......................................................              $       0.26              $       0.24
Weighted Average Shares Outstanding ...........................................              $  1,557,702              $  1,612,294
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
                                                                                                  For Three Months Ended June 30,
                                                                                                    2001                2000
____________________________________________________________________________________________________________________________________
<S>                                                                                                   <C>                  <C>
Net Income .................................................................................          $1,442,058          $1,305,700
                                                                                                      ----------          ----------
Other Comprehensive Income, Before Tax:
     Unrealized Holding Gain Arising During the Period .....................................             125,443              50,811
     Less:  Reclassification Adjustment for Gains Included in Net Income ...................                   0                   0
                                                                                                      ----------          ----------
                                                                                                         125,443              50,811
     Income Tax Related to Other Comprehensive Income ......................................              52,686              21,341

                                                                                                      ----------          ----------
     Other Comprehensive Income, Net of Tax ................................................              72,757              29,470
                                                                                                      ----------          ----------
          Total Comprehensive Income .......................................................          $1,514,815          $1,335,170
                                                                                                      ==========          ==========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
                                                                                        For Six Months Ended June 30,
                                                                                                  2001                  2000
___________________________________________________________________________________________________________________________________
<S>                                                                                                <C>                  <C>
Net Income ...............................................................................         $ 2,700,345          $ 2,430,585
                                                                                                   -----------          -----------
Other Comprehensive Income (Loss), Before Tax:
     Unrealized Holding Gain(Loss) Arising During the Period .............................             698,690             (122,770)
     Less:  Reclassification Adjustment for Gains Included in Net Income .................                   0                    0
                                                                                                   -----------          -----------
                                                                                                       698,690             (122,770)
     Income Tax Related to Other Comprehensive Income (Loss) .............................             293,450              (51,563)
                                                                                                   -----------          -----------
     Other Comprehensive Income (Loss), Net of Tax .......................................             405,240              (71,207)
                                                                                                   -----------          -----------
          Total Comprehensive Income .....................................................         $ 3,105,585          $ 2,359,378
                                                                                                   ===========          ===========
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)

                                                                                           Cost of       Accumulated
                                        Common Stock                                       Common           Other          Total
                                      Shares                    Capital      Retained      Stock in     Comprehensive  Stockholders'
                                    Outstanding    Amount       Surplus      Earnings      Treasury      Income (Loss)      Equity
____________________________________________________________________________________________________________________________________
<S>                                  <C>        <C>           <C>          <C>           <C>            <C>            <C>

Balance at 3/31/00 ............     1,612,336   $ 2,239,775   $ 1,993,574  $20,246,400   $(3,788,953)   $(1,170,053)   $19,520,743
Comprehensive Income:
   Net Income .................                                              1,305,700                                   1,305,700
   Other Comprehensive Income,
     Net of Tax ...............                                                                              29,470         29,470
                                                                                                                       ------------
     Total Comprehensive Income                                                                                          1,335,170
   Cash Dividends Declared ....                                              (193,395)                                    (193,395)
Treasury Stock Purchases ......          (710)                                               (20,235)                      (20,235)
                                    ________________________________________________________________________________________________
Balance at 6/30/00 ............     1,611,626   $ 2,239,775  $  1,993,574  $21,358,705  $(3,809,188)   $(1,140,583)  $ 20,642,283
                                    ================================================================================================


Balance at 3/31/01 ............     1,557,728   $ 2,239,775  $  1,993,574  $24,554,704   $(5,446,288)   $   136,366  $  23,478,131
Comprehensive Income:
   Net Income .................                                              1,442,058                                   1,442,058
   Other Comprehensive Income,
     Net of Tax ...............                                                                              72,757         72,757
                                                                                                                      -------------
      Total Comprehensive Income                                                                                         1,514,815
   Cash Dividends Declared ....                                              (201,581)                                    (201,581)
Treasury Stock Purchases ......        (7,108)                                              (239,054)                     (239,054)
                                    ________________________________________________________________________________________________
Balance at 6/30/01 ............     1,550,620   $ 2,239,775  $ 1,993,574   $25,795,181   $(5,685,342)   $   209,123   $ 24,552,311
                                    ================================================================================================
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)

                                                                                         Cost of      Accumulated
                                      Common Stock                                       Common         Other            Total
                                    Shares                    Capital       Retained     Stock in     Comprehensive   Stockholders'
                                  Outstanding     Amount      Surplus       Earnings     Treasury     Income (Loss)      Equity
____________________________________________________________________________________________________________________________________
<S>                                   <C>       <C>          <C>          <C>            <C>            <C>           <C>

Balance at 1/1/00                   1,612,336   $ 2,239,775  $ 1,993,574  $ 19,314,995   $(3,788,953)   $(1,069,376)  $ 18,690,015
Comprehensive Income:
   Net Income                                                                2,430,585                                   2,430,585
   Other Comprehensive Income,
     Net of Tax                                                                                             (71,207)       (71,207)
                                                                                                                      --------------
    Total Comprehensive Income                                                                                           2,359,378
   Cash Dividends  Declared                                                  (386,875)                                    (386,875)
Treasury Stock Purchases                 (710)                                               (20,235)                      (20,235)
                                    ________________________________________________________________________________________________
Balance at 6/30/00                  1,611,626   $ 2,239,775  $ 1,993,574  $21,358,705    $(3,809,188)   $(1,140,583)  $ 20,642,283
                                    ================================================================================================


Balance at 1/1/01                   1,567,214   $ 2,239,775  $ 1,993,574  $23,498,921    $(5,144,873)   $  (196,117)  $ 22,391,280
Comprehensive Income:
   Net Income                                                               2,700,345                                    2,700,345
   Other Comprehensive Income,
     Net of Tax                                                                                             450,240        405,240
                                                                                                                      -------------
     Total Comprehensive Income                                                                                          3,105,585
   Cash Dividends  Declared                                                  (404,085)                                    (404,085)
Treasury Stock Purchases              (16,594)                                              (540,469)                     (540,469)
                                    ________________________________________________________________________________________________
Balance at 6/30/01               1,550,620.00  $2,239,775    $1,993,574   $25,795,181    $(5,685,342)       209,123   $ 24,552,311
                                    ================================================================================================
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
                                                                                                   For Three Months Ended June 30,
                                                                                                       2001                 2000
____________________________________________________________________________________________________________________________________
<S>                                                                                                  <C>                   <C>
Net Income ...............................................................................        $  1,442,058         $  1,305,700
Adjustments to reconcile net income to net cash
  provided by operating activities:
   Depreciation on Premises and Equipment ................................................             138,292              130,167
   Provision for Possible Loan Losses ....................................................             210,000              120,000
   Net Loss on Sale of Investment Securities .............................................               5,235                    0
   Amortization of Transition Obligation .................................................               5,358                9,000
   Decrease in Interest Payable ..........................................................            (144,990)            (145,057)
   Decrease in Miscellaneous Payables and Accrued Expenses ...............................             (75,381)             (64,103)
   Increase in Fees and Commissions Receivable ...........................................             (18,850)                   0
   Increase in Interest Receivable .......................................................              (7,056)             (74,878)
   Increase in Prepaid Expenses ..........................................................            (279,778)            (122,544)
   Increase in Miscellaneous Receivable ..................................................          (3,931,678)            (719,913)
   Increase in Income Taxes Receivable ...................................................            (585,894)            (342,237)
   Decrease in Deferred Taxes ............................................................             (99,898)             (88,449)
   Decrease in Accumulated Post Retirement Benefit Obligation ............................             (35,158)             (10,203)
   Amortization of Investment Security Premiums and Accretion of Discounts ...............            (115,736)            (134,522)
   Net Gain on Investment in SMTB Financial Group, LLC ...................................              (9,059)                   0
   Increase in Cash Surrender Value of Officer's Life Insurance Policies .................            (132,717)             (67,800)
                                                                                                  ------------         ------------
   Cash Used by Operating Activities .....................................................          (3,635,252)            (204,839)
Cash Flows from Investing Activities                                                              ------------         ------------
    Proceeds from Disposition of Mortgage-Backed Securities:
     Held to Maturity ....................................................................              89,621              521,656
     Available for Sale ..................................................................           2,586,483              838,713
   Proceeds from Disposition of Other Investment Securities:
     Held to Maturity ....................................................................             122,043              692,501
     Available for Sale ..................................................................           8,145,699                    0
   Purchase of Mortgage-Backed Securities
     Available for Sale ..................................................................                   0           (4,059,953)
   Purchase of Other Investment Securities:
     Available for Sale ..................................................................          (8,083,950)          (4,453,309)
   Federal Funds Sold, Net ...............................................................          (5,103,844)          18,050,000
   Loans Made to Customers, Net ..........................................................         (16,696,483)         (23,804,579)
   Purchase of Premises and Equipment ....................................................            (455,385)            (161,214)
                                                                                                  ------------         ------------
   Cash Used by Investing Activities .....................................................         (19,395,816)         (12,376,185)
                                                                                                  ------------         ------------
Cash Flows from Financing Activities
   Net Increase in Demand Deposits, NOW and Savings Accounts .............................          18,417,392            9,018,944
   Net Increase in Time Accounts .........................................................           9,594,660            8,206,894
   Cash Dividends Paid ...................................................................            (202,504)            (193,480)
   Securities Sold Under Agreements to Repurchase and Other Borrowings, Net ..............          (5,000,000)          (5,000,000)
   Purchase of Treasury Stock ............................................................            (239,054)             (20,235)
                                                                                                  ------------         ------------
    Cash Provided by Financing Activities ................................................          22,570,494           12,012,123
                                                                                                  ------------         ------------
   Net Decrease in Cash and Due from Banks ...............................................            (460,574)            (568,901)
   Cash and Due from Banks, Beginning of Period ..........................................           7,754,493            9,288,570
                                                                                                  ------------         ------------
   Cash and Due from Banks, End of Period ................................................        $  7,293,919         $  8,719,669
                                                                                                  ============         ============
Supplement Disclosures of Cash Flow Information
  Cash Paid During Period for:
   Interest ..............................................................................        $    616,948         $    641,876
   Income Taxes ..........................................................................           1,498,000            1,128,700

Schedule of Noncash Investing Activities
Unrealized Gain on Securities Available for Sale .........................................              72,757               29,470
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
                                                                                                    For Six Months Ended June 30,
                                                                                                       2001             2000
____________________________________________________________________________________________________________________________________
<S>                                                                                                  <C>                 <C>
Cash Flows from Operating Activities
Net Income .................................................................................       $  2,700,345        $  2,430,585
Adjustments to reconcile net income to net cash
   provided by operating activities:
     Depreciation on Premises and Equipment ................................................            269,858             259,483
     Provision for Possible Loan Losses ....................................................            420,000             240,000
     Net (Gain) Loss on Sale of Investment Securities ......................................            (14,037)              1,359
     Amortization of Transition Obligation .................................................             22,146              18,000
     Increase (Decrease) in Interest Payable ...............................................            (70,619)             19,810
     Decrease in Miscellaneous Payables and Accrued Expenses ...............................               (687)           (131,825)
     Increase in Fees and Commissions Receivable ...........................................            (36,392)                  0
     (Increase) Decrease in Interest Receivable ............................................            345,816             (52,778)
     Increase in Prepaid Expenses ..........................................................           (836,504)           (615,028)
     Increase in Miscellaneous Receivable ..................................................         (4,178,149)           (450,181)
     Decrease in Income Taxes Receivable ...................................................             59,479             132,215
     Decrease in Deferred Taxes ............................................................           (238,671)            (70,951)
     Decrease in Accumulated Post Retirement Benefit Obligation ............................            (45,361)            (20,811)
     Amortization of Investment Security Premiums and Accretion of Discounts ...............           (301,075)           (136,079)
     Net Gain on Investment in SMTB Financial Group, LLC ...................................            (19,556)                  0
     Increase in Cash Surrender Value of Officer's Life Insurance Policies .................           (260,268)           (113,000)
                                                                                                   ------------        ------------
Cash Provided (Used) by Operating Activities ...............................................         (2,183,675)          1,510,799
                                                                                                   ------------        ------------
Cash Flows from Investing Activities
     Proceeds from Disposition of Mortgage-Backed Securities:
       Held to Maturity ....................................................................            161,074             773,829
       Available for Sale ..................................................................          4,933,786           2,096,730
     Proceeds from Disposition of Other Investment Securities:
       Held to Maturity ....................................................................            209,002             752,501
       Available for Sale ..................................................................         18,326,290           4,084,350
     Purchase of Mortgage-Backed Securities
       Available for Sale ..................................................................        (10,212,500)         (4,059,953)
     Purchase of Other Investment Securities:
       Available for Sale ..................................................................        (10,083,950)         (9,727,516)
     Purchase of Officer's Life Insurance Policies .........................................                  0          (5,000,000)
     Federal Funds Sold, Net ...............................................................        (12,603,844)          9,400,000
     Loans Made to Customers, Net ..........................................................        (27,421,940)        (35,303,418)
     Purchase of Premises and Equipment ....................................................           (750,052)           (200,400)
                                                                                                   ------------        ------------
     Cash Used by Investing Activities .....................................................        (37,442,134)        (37,183,877)
                                                                                                   ------------        ------------
Cash Flows from Financing Activities
     Net Increase in Demand Deposits, NOW and Savings Accounts .............................         28,473,343          21,253,718
     Net Increase in Time Accounts .........................................................         13,924,118          21,334,723
     Cash Dividends Paid ...................................................................           (391,026)           (370,837)
     Securities Sold Under Agreements to Repurchase and Other Borrowings, Net ..............         (3,500,000)         (8,000,000)
     Purchase of Treasury Stock ............................................................           (540,468)            (20,235)
                                                                                                   ------------        ------------
     Cash Provided by Financing Activities .................................................         37,965,967          34,197,369
                                                                                                   ------------        ------------

     Net Decrease in Cash and Due from Banks ...............................................         (1,659,842)         (1,475,709)
     Cash and Due from Banks, Beginning of Period ..........................................          8,953,761          10,195,378
                                                                                                   ------------        ------------
     Cash and Due from Banks, End of Period ................................................       $  7,293,919        $  8,719,669
                                                                                                   ============        ============
Supplemental Disclosures of Cash Flow Information
   Cash Paid During Period for:
     Interest ..............................................................................       $    963,552        $  1,123,051
     Income Taxes ..........................................................................          1,685,372           1,296,910

Schedule of Noncash Investing Activities
   Unrealized Gain (Loss) on Securities Available for Sale .................................            405,240             (71,207)
</TABLE>
<PAGE>


Management's Discussion and Analysis of Financial Condition and Results of
Operations

Smithtown  Bancorp  (also  referred  to herein as the  'Company')  is a one-bank
holding company formed in 1984. Its income is derived from the operations of its
sole  subsidiary,  Bank of Smithtown (the 'Bank').  The Bank's  subsidiary  SMTB
Financial Group, LLC was formed in October 1999, and it's activities are limited
to the sale of insurance  products.  The Company's  Balance Sheet  remained very
strong during second quarter 2001.  Total assets grew by 7.00% during the period
from March 31, 2001 to June 30, 2001.  Total asset growth from  December 2000 to
June 2001 is now 13.02%. Investment securities continued to decline in volume by
4.52% during second  quarter and by a total of 5.66% for the first six months of
the year.  Loan growth also  continued in an upward trend,  as has been the case
during prior years. Loan demand remains strong, with slight downward pressure on
market rates.  Total loan growth  increased by 11.96% during 2001, with 6.98% of
this growth  occurring  during second  quarter.  Federal Funds sales continue to
increase  during the year,  with no sales at December  31, 2000,  $7,500,000  at
March 31, 2001 and  $12,603,844 at June 30, 2001.  Excess funds are  temporarily
sold  overnight as  appropriate  investment  vehicles and loans are added to the
Balance Sheet. The Bank's investment in SMTB Financial Group, LLC has also grown
from $2,500 to $22,056 during the year 2001.  Insurance  sales activity has been
increasing  steadily since  operations  began during the year 2000. Other assets
increased  during  2001  due to the  purchase  of  additional  bank  owned  life
insurance,  the vehicle  used to fund the split dollar life  insurance  policies
purchased for selected  members of  management.  Deposit  growth also  continues
during  2001,  with total  deposits  increasing  by 16.49%  during the first six
months of 2001, of which 10.32% was added during second quarter.  Other borrowed
funds  have  declined  for the second  quarter of 2001,  as the Bank was able to
repay a repurchase agreement entered into during May 2000. As of May 4, 2001 the
Bancorp  increased its  authorized  shares of Common Stock from 3,000,000 with a
par value of $2.50 to  7,000,000  shares with a par value of $1.25,  in order to
effect a two-for-one split.  Accumulated Other Comprehensive  Income turned from
an  unrealized  loss on securities  available for sale to an unrealized  gain, a
result of the  lower  interest  rate  environment  at  midyear  2001.  The 9.77%
increase in retained  earnings for the first and second  quarters of 2001 is the
result of the high level of net income earned this year. The Bancorp repurchased
16,594  shares of its own stock during 2001 for a total cost of $540,469.  Total
Stockholders'  Equity also  continued  on an upward  trend of 9.65% growth since
December 31, 2000.
<PAGE>
The Bank's  Income  Statement  for the six months ended June 30, 2001 as well as
for the second quarter continues to show strong performance. Interest income and
fees on loans for second  quarter  increased by 9.99% over the same  three-month
period in 2000.  For the six month  period  ended  June 30,  2001 loan  interest
increased by 24.18% over 2000 income.  Interest expense for the same three-month
periods in 2000 and 2001  increased  by 7.79% and for the six months  ended June
30, 2000 and 2001,  increased  by 15.07%.  This  increased  interest  expense on
deposits  is the  result of  aggressive  marketing  of a prestige  money  market
account and promotional certificates of deposit. The Bank's low cost of funds is
better  maintained  through  deposit  collection than other forms of borrowings.
Through repayment of a repurchase  agreement during second quarter,  interest on
borrowed money was significantly  reduced.  Other non-interest  income has grown
during 2001 over  comparable  periods in 2000 due to greater ATM fee collection,
debit card fee income,  service charge and  uncollected  fee income,  as well as
gains on bank  owned  life  insurance.  The  primary  reason  for the  growth in
non-interest  income is  attributable  to fee income on loans.  Other  operating
expenses for the six months ended June 2001 have also increased over  comparable
periods in 2000 by 13.68%,  due in part to the expenses  related to salaries and
other employee benefits,  as well as occupancy expenses and business development
expenses.  Net income for the  six-month  period  ended June 30, 2001  increased
11.10% over the same six-month period in 2000. Earnings per share rose by 14.99%
during this same six-month  period.  Return on Average Assets and Average Equity
for the first six months of 2001 are 1.62% and 23.01%, respectively.  The Bank's
capital  ratios  remain  strong,  with a slight  decline  in Tier One risk based
capital,  a result of growth in the commercial real estate loan  portfolio.  The
Bank's ratios are as follows:
                                            6/30/01            12/31/00

                           Total RBC         10.57%            10.81%
                           Leverage           7.29%             7.06%

The Company  believes  that the  remainder of the year 2001 will continue in the
same direction as the first six months.  Loan volume is projected to increase at
the same pace to December 2001 with additional  originations which, if realized,
would bring the portfolio to  approximately  $275,000,000.  The Company  expects
segregation of the loan portfolio to remain constant, with significant growth in
the real  estate  sector.  The  Company  plans  on  continuing  to make  deposit
collection  a major  effort  throughout  the  remainder  of the  year.  Based on
management  projections,  the  Company  believes  that 2001 will prove to be the
Bank's most  profitable  year.  The Company  believes  that  continued  downward
pressure on market rates should  prove to benefit the Bank's  earnings  position
due to a slightly negative gap over the one-year time frame.

<PAGE>
<Table>
<CAPTION>

                                                             Three     Six                  One      Three
                                                             Months   Months   Total        Year     Year
                                                     Three   Through  Through  Sensitive  Through   Through   Over      All
                                                     Months   Six      One     Within      Three     Five     Five   Other(1)  Total
(in Thousands)                              One Day  or Less Months   Year     One Year    Years     Years    Years
____________________________________________________________________________________________________________________________________
<S>                                          <C>      <C>     <C>     <C>      <C>      <C>       <C>      <C>      <C>     <C>
Total Interest Earning Assets             $ 54,174 $ 17,768 $  8,328 $ 20,324 $ 100,594 $ 46,334  $ 79,117 $ 97,162 $ 7,144 $330,351

Total Interest Bearing Liabilities &
   Demand Deposits(2)                            0   39,037   36,563   63,644   139,244   107,906   53,359       0  29,047   329,556

Interest Sensitivity Gap Per Period         54,174  (21,269) (28,235) (43,320)  (38,650)  (61,572)  25,758  97,162 (21,903)      795

Cumulative Interest Senitivity Gap          54,174   32,905    4,670  (38,650)  (38,650) (100,222) (74,464)  22,698    795       795

Percent of Cummulative Gap to Total Assets(%)15.24     9.26     1.31   (10.87)   (10.87)   (28.19)  (20.94)    6.38   0.22      0.22
</TABLE>
(1)Includes interest-earning assets and interest-bearing liabilities that do not
reprice as well $1,078,353 in nonaccrual loans and cash on hand in the amount of
$7,143,556.

(2) Money Market Accounts assumed to decline over a two year period.  Savings
Accounts and Now assumed to decline over a five-year period.  Demand Deposits,
totaling $58,093,925, ar spread based on historical experience.

<PAGE>
Special Note Regarding Forward-Looking Statements and Analyst Reports
_____________________________________________________________________

This report may contain certain forward-looking statements within the meaning of
the Private  Securities  Litigation  Reform Act of 1995.  These  forward-looking
statements  are based on current  expectations,  but actual  results  may differ
materially from anticipated  future results.  Forward-looking  statements may be
identified by use of the words  'believe',  'expect',  'anticipate',  'project',
'estimate',  'will  be',  'will continue',  'will likely result'  or  similar
expressions.  The Company's  ability to predict  results or the actual effect of
future  strategic  plans is  inherently  uncertain.  Factors  that  could have a
material  adverse effect on the  operations of the Company and its  subsidiaries
include but are not limited to changes in: general economic conditions, interest
rates,  deposit  flows,  loan demand,  competition,  accounting  principles  and
guidelines, and governmental, regulatory and technological factors affecting the
Company's operations,  pricing, products and services. The factors included here
are not exhaustive. Other sections of this report may include additional factors
which could adversely impact the Company's performance.

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
hereof 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 Exchange Commission.

Quantitative and Qualitative Disclosures About Market Risk

The  Company's  market risk is  primarily  its  exposure to interest  rate risk.
Interest  rate risk is the effect that changes in interest  rates have in future
earnings.  The principal objective in managing interest rate risk is to maximize
net interest income within  acceptable  levels of risk that have been previously
established by policy.

The  following  table sets forth the  amounts  of  estimated  cash flows for the
various  interest  earning  assets and  interest  bearing  liabilities  that are
sensitive to changes in interest rates at June 30, 2001.  Adjustable rate assets
are included in the period in which  interest rates are next scheduled to adjust
rather than in the period in which they are due. Money Market  deposit  accounts
are assumed to decline over a two-year period.  Savings and NOW deposit accounts
are assumed to decline over a five-year period.

<PAGE>
<TABLE>
<CAPTION>


                                                       Expected Maturity Between

                                  7/1/01 - 12/31/01   1/1/02 - 12/31/02   1/1/03 - 12/31/03   1/1/04 - 12/31/04    1/1/05 - 12/31/05
------------------------------------------------------------------------------------------------------------------------------------
                                            Weighted            Weighted            Weighted            Weighted            Weighted
                                            Average             Average             Average             Average             Average
(In thousands)                     Balance    Rate     Balance    Rate     Balance    Rate     Balance    Rate     Balance    Rate
____________________________________________________________________________________________________________________________________
<S>                                  <C>      <C>      <C>        <C>      <C>        <C>     <C>        <C>      <C>        <C>
OTHER FINANCIAL INSTRUMENTS

Interest Earning Assets

   INVESTMENTS
    AVAILABLE FOR SALE (Fair Valu$) $ 4,736    5.71    $ 5,155     5.92    $ 461       4.00   $ 1,232    4.79     $ 3,328    5.64
    HELD TO MATURITY (Book Value)       215    4.52      1,412     5.68      727       5.41       241    5.11         416    5.09
   FEDERAL FUNDS SOLD                12,604    4.00          0                 0                    0                   0
   LOANS:
    Fixed rate
      INSTALLMENT                        87   10.01        661    10.35    1,087      10.14     2,063    9.89       2,154   10.52
      HOME EQUITY AND OTHER               0              1,135     8.50      997       8.25         0                   0
      REAL ESTATE                         0                110    10.44      685       9.62       322    9.81      12,352    8.84
      COMMERCIAL                      5,826    8.75         18     9.49        0                  582    8.75           0
    Variable Rate
      INSTALLMENT                     4,385    9.58          0                 0                  701    8.25           0
      HOME EQUITY AND OTHER           9,020    6.76          0                 0                    0                   0
      REAL ESTATE                     2,002    8.90     14,396     8.88   12,998      8.53     28,548    8.06      24,940   8.85
      COMMERCIAL                     39,713    8.10         24     9.75        0                    0                   0
                                   ---------            ------            ------               ------            --------
      TOTAL LOANS                    61,033             16,344            15,767               32,216              39,446
                                   ---------            ------           -------              -------            --------
   Total Interest Earning Assets   $ 78,588            $22,911           $16,955              $33,689            $ 43,190
                                   ================================================================================================
</TABLE>

<TABLE>
<CAPTION>
                            Expected Maturity Between
                                  1/1/06 - 12/31/06        Thereafter
--------------------------------------------------------------------------------
                                            Weighted            Weighted
                                            Average             Average    Fair
(In thousands)                     Balance    Rate     Balance    Rate     Value
________________________________________________________________________________
<S>                                  <C>      <C>      <C>        <C>      <C>
OTHER FINANCIAL INSTRUMENTS

Interest Earning Assets

   INVESTMENTS
    AVAILABLE FOR SALE (Fair Value) $  478    4.40    $35,022     6.12   50,412
    HELD TO MATURITY (Book Value)      661    5.19      1,290     6.38    5,122
   FEDERAL FUNDS SOLD                    0                  0
   LOANS:
    Fixed rate
      INSTALLMENT                     1,275   9.92      3,740     8.81
      HOME EQUITY AND OTHER               0               244    17.14
      REAL ESTATE                     3,756   8.17     44,639     7.86
      COMMERCIAL                          0                42     8.75
    Variable Rate
      INSTALLMENT                       693   9.00        439     8.25
      HOME EQUITY AND OTHER               0                 0
       REAL ESTATE                   21,689   8.18     13,633     8.44
      COMMERCIAL                          0               286     8.71
                                   --------           -------           -------
      TOTAL LOANS                    27,413            63,023            257,279
                                   --------           -------           -------
   Total Interest Earning Assets   $ 28,552           $99,335
                                   ========           ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                       Expected Maturity Between

                                  7/1/01 - 12/31/01   1/1/02 - 12/31/02   1/1/03 - 12/31/03   1/1/04 - 12/31/04    1/1/05 - 12/31/05
------------------------------------------------------------------------------------------------------------------------------------
                                            Weighted            Weighted            Weighted            Weighted            Weighted
                                            Average             Average             Average             Average             Average
(In thousands)                     Balance    Rate     Balance    Rate     Balance    Rate     Balance    Rate     Balance    Rate
____________________________________________________________________________________________________________________________________
<S>                                  <C>      <C>      <C>        <C>      <C>        <C>     <C>        <C>      <C>        <C>
Interest Bearing Liabilities
 Deposits:
      SAVINGS                       $  3,469  0.98    $ 6,939     0.98     $ 6,939    0.98    $ 6,939    0.98     $ 6,939    0.98
      MONEY MARKET                    23,373  2.93     46,746     2.93      23,373    2.93          0                   0
      NOW                              2,186  0.55      4,372     0.55       4,372    0.55      4,372    0.55       4,372    0.55
      TIME DEPOSITS OF $100,000+      23,088  4.43      9,052     5.01         135    4.14      1,757    6.55       4,012    6.81
      OTHER TIME DEPOSITS             20,191  5.54     18,185     4.70       1,214    4.86      1,712    6.19      10,107    6.79
  OTHER BORROWED MONEY                     0           13,000     5.63       7,000    6.40     10,000    4.81           0
                                    --------          --------             -------            -------            --------
 Total Interest Bearing Liabilities $ 72,308          $ 98,294             $43,033            $24,780            $ 25,430
                                    ========           ========            ========           ========           =========
</TABLE>

<TABLE>
<CAPTION>
                           Expected Maturity Between
                                  1/1/06 - 12/31/06        Thereafter
--------------------------------------------------------------------------------
                                            Weighted            Weighted
                                            Average             Average    Fair
(In thousands)                     Balance    Rate     Balance    Rate     Value
________________________________________________________________________________
<S>                                  <C>      <C>      <C>        <C>      <C>
Interest Bearing Liabilities
 Deposits:
      SAVINGS                       $  3,470  0.98    $     0
      MONEY MARKET                         0                0     2.93
      NOW                              2,178  0.55          0     0.55
      TIME DEPOSITS OF $100,000+         442  5.44          0     5.01
      OTHER TIME DEPOSITS              1,529  5.37          0     4.70
  OTHER BORROWED MONEY                     0                0     5.63
                                    --------          --------           ------
 Total Interest Bearing Liabilities $  7,619          $     0            271,464
                                    ========           ========          =======
</TABLE>
<Page>


Notes to Consolidated Financial Statements

Financial Statement Presentation

In the opinion of management,  the accompanying  unaudited interim  consolidated
financial  statements  contain all adjustments  (consisting of normal  recurring
accruals)  necessary  to present  fairly its  financial  position as of June 30,
2001,  and its results of operations for the three and six months ended June 30,
2001 and 2000 and its cash  flows for the three and six  months  ended  June 30,
2001 and 2000.  For further  information,  refer to the  consolidated  financial
statements  and notes thereto  included in the  Company's  annual report on Form
10-KSB for the year ended December 31, 2000.

Certain   reclassifications  have  been  made  to  the  prior  year's  financial
statements   to   conform   to   the   current   period   presentation.    These
reclassifications  had no effect on previously reported results of operations or
retained earnings.

Recent Accounting Pronouncements

In July 2001, the Financial  Accounting  Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141, Business Combinations,  effective for
all business combinations initiated after June 30, 2001, as well as all business
combinations  accounted  for by the  purchase  method  of  accounting  that  are
completed  after June 30, 2001.  The new  statement  requires  that the purchase
method of accounting be used for all business combinations and prohibits the use
of the  pooling-of-interest  method.  The adoption of  Statement  No. 141 is not
expected  to have a  material  effect on the  Company's  financial  position  or
results of operations.

In July 2001, the FASB issued  Statement of Financial  Accounting  Standards No.
142, Goodwill and Other Intangible Assets,  effective for fiscal years beginning
after December 15, 2001.  The new statement  changes the accounting for goodwill
from an amortization method to an impairment-only  approach.  Thus, amortization
of goodwill,  including  goodwill recorded in past business  combinations,  will
cease upon adoption of this statement.  The adoption of Statement No. 142 is not
expected  to have a  material  effect on the  Company's  financial  position  or
results of operations.

Earnings Per Common Shares

Earnings per share are calculated by dividing Net Income by the weighted average
number of common shares outstanding.


Investment Securities

         Fair Value:
                   June 30, 2001              $55,534,065
                   December 31, 2000          $58,752,667


<PAGE>


                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                               SMITHTOWN BANCORP



August 13, 2001
                                        /s/ Bradley E. Rock
                                        -------------------------------------
                                        Bradley E. Rock, President and
                                        Chief Executive Officer



August 13, 2001
                                         /s/ Anita M. Florek
                                        -------------------------------------
                                        Anita Florek, Executive Vice President,
                                        Treasurer and Chief Financial Officer