**United      States**

**Securities      and Exchange Commission**

**Washington,      D.C. 20549**

**Form      10-Q**

**QUARTERLY**
** **
**REPORT      PURSUANT TO SECTION **
**13      or 15(d) **
**OF**

**THE      SECURITIES EXCHANGE **
**ACT      OF 1934**

**For      the quarter ended June 30, 2007**

**Commission      File #0 **
**-      **
**13314**

**SMITHTOWN      BANCORP, INC.**

| **New                York**                                                                  | **11-2695037**                                                  |
|----------------------------------------------------------------------------------------------|-----------------------------------------------------------------|
| (State                or other jurisdiction of incorporation or                organization) | (IRS                Employer Identification                No.) |
|                                                                                         |                                                            |
| **100                Motor Parkway, Suite 160, Hauppauge,                NY**                | **11788-5138**                                                  |
| (Address                of Principal Executive                Office)                        | (Zip                Code)                                       |

**(631)      360-9300**

**9,800,633**

----

**SMITHTOWN      BANCORP, INC.**

|                                                 |   |                      |   |                          |   |                            |   |                            |   |
|------------------------------------------------------|--------|---------------------------|--------|-------------------------------|--------|---------------------------------|--------|---------------------------------|--------|
| Issuer                Purchases of Equity Securities |   |                      |   |                          |   |                            |   |                            |   |
|                                                 |   |                      |   |                          |   |                            |   |                            |   |
|                                                 |   | (a)                       |   | (b)                           |   | (c)                             |   | (d)                             |   |
|                                                 |   |                      |   |                          |   |                            |   | Maximum                         |   |
|                                                 |   |                      |   |                          |   |                            |   | Number                          |   |
|                                                 |   |                      |   |                          |   | Total                Number of  |   | (or                Approximate  |   |
|                                                 |   |                      |   |                          |   | Shares(or                Units) |   | Dollar                Value) of |   |
|                                                 |   | Total                     |   |                          |   | Purchased                as     |   | Shares(or                Units) |   |
|                                                 |   | Number                    |   | Average                       |   | Part                of Publicly |   | That                May Yet Be  |   |
|                                                 |   | of                Shares  |   | Price                         |   | Announced                       |   | Purchased                Under  |   |
|                                                 |   | (or                Units) |   | Paid                Per       |   | Plans                           |   | the                Plans        |   |
| Period                                               |   | Purchased                 |   | Share(or                Unit) |   | or                Programs      |   | or                Programs      |   |
| April                1, 2007 - April 30, 2007        |   |                      | 0      |                          |   | 0                               |   |                            | 0      |   |   | 874,163 |   |
| May                1, 2007 - May 31, 2007            |   |                      | 0      |                          |   | 0                               |   |                            | 0      |   |   | 874,163 |   |
| June                1, 2007 - June 30, 2007          |   |                      | 0      |                          |   | 0                               |   |                            | 0      |   |   | 874,163 |   |
| Total                                                |   |                      | 0      |                          |   | 0                               |   |                            | 0      |   |   | 874,163 |   |
|                                                 |   |                      |   |                          |   |                            |   |                            |   |   |   |   |   |
|                                                 |   |                      |   |                          |   |                            |   |                            |   |   |   |   |   |

----

| Exhibit                Number Referred to in Item 601 of Regulation S-K | Description                of Exhibit                                                                                                       |
|-------------------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                    |                                                                                                                                        |
| 31.1                                                                    | Certification                of Chief Executive Officer pursuant to Rule 13a-14(a)                                                          |
| 31.2                                                                    | Certification                of Chief Financial Officer pursuant to Rule 13a-14(a)                                                          |
| 32.1                                                                    | Certification                of Chief Executive Officer pursuant                to Rule 13a-14(b) and 18 U.S.C. Section                1350 |
| 32.2                                                                    | Certification                of Chief Financial Officer pursuant                to Rule 13a-14(b) and 18 U.S.C. Section                1350 |

|   | (2) | Reports                on Form 8-K |
|--------|-----|------------------------------------|

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                                                                                                                                                                                                                                             |   |   | As                of         |   |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------|--------|
|                                                                                                                                                                                                                                                                                                                                                                             |   |   | June                30, 2007 |   |   | December                31, 2006 |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                                                                       |   |   |                         |   |   |   |   |
| Cash                and due from banks                                                                                                                                                                                                                                                                                                                                           |   | $      | 12,738                       |   | $ | 27,384 |   |
| Federal                funds sold                                                                                                                                                                                                                                                                                                                                                |   |   | 8,951                        |   |   | 236 |   |
| Total                cash and cash equivalents                                                                                                                                                                                                                                                                                                                                   |   |   | 21,689                       |   |   | 27,620 |   |
| Investment                securities:                                                                                                                                                                                                                                                                                                                                            |   |   |                         |   |   |   |   |
| Available                for sale:                                                                                                                                                                                                                                                                                                                                               |   |   |                         |   |   |   |   |
| Obligations                of U.S. government agencies                                                                                                                                                                                                                                                                                                                           |   |   | 60,764                       |   |   | 84,713 |   |
| Mortgage                - backed securities                                                                                                                                                                                                                                                                                                                                      |   |   | 2,341                        |   |   | 2,972 |   |
| Obligations                of state and political subdivisions                                                                                                                                                                                                                                                                                                                   |   |   | 7,075                        |   |   | 8,943 |   |
| Other                securities                                                                                                                                                                                                                                                                                                                                                  |   |   | 7,084                        |   |   | 3,968 |   |
| Total                securities available for sale                                                                                                                                                                                                                                                                                                                               |   |   | 77,264                       |   |   | 100,596 |   |
| Held                to maturity:                                                                                                                                                                                                                                                                                                                                                 |   |   |                         |   |   |   |   |
| Mortgage-backed                securities                                                                                                                                                                                                                                                                                                                                        |   |   | 22                           |   |   | 41 |   |
| Obligations                of state and political subdivisions                                                                                                                                                                                                                                                                                                                   |   |   | 203                          |   |   | 374 |   |
| Total                securities held to maturity (estimated fair value                                                                                                                                                                                                                                                                                                           |   |   |                         |   |   |   |   |
| $226                in 2007 and $418 in 2006)                                                                                                                                                                                                                                                                                                                                    |   |   | 225                          |   |   | 415 |   |
| Total                investment securities                                                                                                                                                                                                                                                                                                                                       |   |   | 77,489                       |   |   | 101,011 |   |
| Restricted                securities                                                                                                                                                                                                                                                                                                                                             |   |   | 2,910                        |   |   | 4,249 |   |
| Loans                                                                                                                                                                                                                                                                                                                                                                            |   |   | 919,944                      |   |   | 849,258 |   |
| Less:                allowance for loan losses                                                                                                                                                                                                                                                                                                                                   |   |   | 7,698                        |   |   | 7,051 |   |
| Loans,                net                                                                                                                                                                                                                                                                                                                                                        |   |   | 912,246                      |   |   | 842,207 |   |
| Bank                premises and equipment                                                                                                                                                                                                                                                                                                                                       |   |   | 21,703                       |   |   | 20,598 |   |
| Other                assets                                                                                                                                                                                                                                                                                                                                                      |   |   |                         |   |   |   |   |
| Cash                value of bank-owned life insurance                                                                                                                                                                                                                                                                                                                           |   |   | 18,574                       |   |   | 18,195 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                                                                         |   |   | 2,077                        |   |   | 2,077 |   |
| Intangible                assets                                                                                                                                                                                                                                                                                                                                                 |   |   | 1,351                        |   |   | 1,591 |   |
| Other                real estate owned                                                                                                                                                                                                                                                                                                                                           |   |   | 6,972                        |   |   | 6,972 |   |
| Due                from broker                                                                                                                                                                                                                                                                                                                                                   |   |   | -                            |   |   | 9,225 |   |
| Other                                                                                                                                                                                                                                                                                                                                                                            |   |   | 18,051                       |   |   | 14,479 |   |
| Total                other assets                                                                                                                                                                                                                                                                                                                                                |   |   | 47,025                       |   |   | 52,539 |   |
| Total                assets                                                                                                                                                                                                                                                                                                                                                      |   | $      | 1,083,062                    |   | $ | 1,048,224 |   |
|                                                                                                                                                                                                                                                                                                                                                                             |   |   |                         |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                                                          |   |   |                         |   |   |   |   |
| Liabilities                                                                                                                                                                                                                                                                                                                                                                      |   |   |                         |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                                                                        |   |   |                         |   |   |   |   |
| Demand                (non-interest bearing)                                                                                                                                                                                                                                                                                                                                     |   | $      | 101,984                      |   | $ | 102,608 |   |
| Money                market                                                                                                                                                                                                                                                                                                                                                      |   |   | 352,598                      |   |   | 264,876 |   |
| NOW                                                                                                                                                                                                                                                                                                                                                                              |   |   | 38,051                       |   |   | 42,003 |   |
| Savings                                                                                                                                                                                                                                                                                                                                                                          |   |   | 53,856                       |   |   | 50,190 |   |
| Time                                                                                                                                                                                                                                                                                                                                                                             |   |   | 397,124                      |   |   | 432,640 |   |
| Total                deposits                                                                                                                                                                                                                                                                                                                                                    |   |   | 943,613                      |   |   | 892,317 |   |
| Dividends                payable                                                                                                                                                                                                                                                                                                                                                 |   |   | 392                          |   |   | 355 |   |
| Other                borrowings                                                                                                                                                                                                                                                                                                                                                  |   |   | 38,605                       |   |   | 59,580 |   |
| Subordinated                debt                                                                                                                                                                                                                                                                                                                                                 |   |   | 18,217                       |   |   | 18,217 |   |
| Other                liabilities                                                                                                                                                                                                                                                                                                                                                 |   |   | 8,764                        |   |   | 10,948 |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                                                                 |   |   | 1,009,591                    |   |   | 981,417 |   |
| Stockholders'                equity                                                                                                                                                                                                                                                                                                                                              |   |   |                         |   |   |   |   |
| Common                stock - $.01 par value (20,000,000 shares authorized at June 30,                2007 and                December                31, 2006; 11,852,497 shares issued, 9,800,633 shares outstanding                at June                30,                2007; 11,826,012 shares issued, 9,774,148 shares outstanding at December                31,2006) |   |   | 119                          |   |   | 108 |   |
| Additional                paid in capital                                                                                                                                                                                                                                                                                                                                        |   |   | 4,345                        |   |   | 4,046 |   |
| Retained                earnings                                                                                                                                                                                                                                                                                                                                                 |   |   | 79,352                       |   |   | 73,046 |   |
| Accumulated                other comprehensive loss                                                                                                                                                                                                                                                                                                                              |   |   | (283                         | )      |   | (331 | ) |
|                                                                                                                                                                                                                                                                                                                                                                             |   |   | 83,533                       |   |   | 76,869 |   |
| Treasury                stock (2,051,864 shares at cost)                                                                                                                                                                                                                                                                                                                         |   |   | (10,062                      | )      |   | (10,062 | ) |
| Total                stockholders' equity                                                                                                                                                                                                                                                                                                                                        |   |   | 73,471                       |   |   | 66,807 |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                                                                                                                                                        |   | $      | 1,083,062                    |   | $ | 1,048,224 |   |
| See                notes to consolidated financial statements.                                                                                                                                                                                                                                                                                                                   |   |   |                         |   |   |   |   |

----

| **SMITHTOWN                BANCORP, INC.****CONSOLIDATED                STATEMENTS OF INCOME**(unaudited)                (in                thousands, except share and per share                data) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                               |   | For                the Three Months EndedJune                30, |      |
|--------------------------------------------------------------------|--------|------------------------------------------------------------------|-----------|
|                                                               |   | 2007                                                             |      |  2006 |   |
| Interest                income                                     |   |                                                             |      |    |   |
| Loans                                                              |   | $                                                                | 18,380    |   | $ | 15,210 |   |
| Federal                funds sold                                  |   |                                                             | 198       |   |   | 69 |   |
| Investment                securities:                              |   |                                                             |      |   |   |  |   |
| Taxable:                                                           |   |                                                             |      |   |   |   |   |
| Obligations                of U.S. treasury                        |   |                                                             | -         |   |   | 62 |   |
| Obligations                of U.S. government agencies             |   |                                                             | 744       |   |   | 1,082 |   |
| Mortgage                - backed securities                        |   |                                                             | 33        |   |   | 45 |   |
| Other                securities                                    |   |                                                             | 88        |   |   | 22 |   |
| Subtotal                                                           |   |                                                             | 865       |   |   | 1,211 |   |
| Exempt                from federal income taxes:                   |   |                                                             |      |   |   |   |   |
| Obligations                of state & political subdivisions   |   |                                                             | 71        |   |   | 118 |   |
| Other                interest income                               |   |                                                             | 53        |   |   | 58 |   |
| Total                interest income                               |   |                                                             | 19,567    |   |   | 16,666 |   |
|                                                               |   |                                                             |      |   |   |   |   |
| Interest                expense                                    |   |                                                             |      |   |   |   |   |
| Money                market accounts (including savings)           |   |                                                             | 3,923     |   |   | 2,165 |   |
| Time                deposits of $100,000 or more                   |   |                                                             | 1,864     |   |   | 2,167 |   |
| Other                time deposits                                 |   |                                                             | 2,781     |   |   | 1,721 |   |
| Other                borrowings                                    |   |                                                             | 409       |   |   | 677 |   |
| Subordinated                debt                                   |   |                                                             | 344       |   |   | 338 |   |
| Total                interest expense                              |   |                                                             | 9,321     |   |   | 7,068 |   |
|                                                               |   |                                                             |      |   |   |   |   |
| Net                interest income                                 |   |                                                             | 10,246    |   |   | 9,598 |   |
| Provision                for loan losses                           |   |                                                             | 300       |   |   | 500 |   |
| Net                interest income after provision for loan losses |   |                                                             | 9,946     |   |   | 9,098 |   |
|                                                               |   |                                                             |      |   |   |   |   |
| Noninterest                income                                  |   |                                                             |      |   |   |   |   |
| Trust                and investment services                       |   |                                                             | 237       |   |   | 141 |   |
| Service                charges on deposit accounts                 |   |                                                             | 468       |   |   | 472 |   |
| Revenues                from insurance agency                      |   |                                                             | 884       |   |   | 943 |   |
| Increase                in cash value of bank owned life insurance |   |                                                             | 189       |   |   | 161 |   |
| Other                                                              |   |                                                             | 432       |   |   | 594 |   |
| Total                noninterest income                            |   |                                                             | 2,210     |   |   | 2,311 |   |
|                                                               |   |                                                             |      |   |   |   |   |
| Noninterest                expense                                 |   |                                                             |      |   |   |   |   |
| Salaries                                                           |   |                                                             | 2,977     |   |   | 2,797 |   |
| Pension                and other employee benefits                 |   |                                                             | 736       |   |   | 605 |   |
| Net                occupancy expense of bank premises              |   |                                                             | 1,013     |   |   | 858 |   |
| Furniture                and equipment expense                     |   |                                                             | 672       |   |   | 495 |   |
| Amortization                of intangible assets                   |   |                                                             | 120       |   |   | 137 |   |
| Other                                                              |   |                                                             | 1,099     |   |   | 1,150 |   |
| Total                noninterest expense                           |   |                                                             | 6,617     |   |   | 6,042 |   |
|                                                               |   |                                                             |      |   |   |   |   |
| Income                before income taxes                          |   |                                                             | 5,539     |   |   | 5,367 |   |
| Provision                for income taxes                          |   |                                                             | 1,863     |   |   | 1,822 |   |
| Net                income                                          |   | $                                                                | 3,676     |   | $ | 3,545 |   |
|                                                               |   |                                                             |      |   |   |   |   |
| Basic                earnings per share                            |   | $                                                                | 0.38      |   | $ | 0.36 |   |
| Diluted                earnings per share                          |   | $                                                                | 0.38      |   | $ | 0.36 |   |
|                                                               |   |                                                             |      |   |   |   |   |
| Cash                dividends declared                             |   | $                                                                | 0.04      |   | $ | 0.04 |   |
| Weighted                average common shares outstanding          |   |                                                             | 9,768,794 |   |   | 9,753,581 |   |
| Weighted                average common equivalent shares           |   |                                                             | 9,771,572 |   |   | 9,756,486 |   |
| Comprehensive                income                                |   | $                                                                | 3,566     |   | $ | 3,241 |   |
| See                notes to consolidated financial statements.     |   |                                                             |      |   |   |   |   |
|                                                               |   |                                                             |      |   |   |   |   |

----

| **SMITHTOWN                BANCORP, INC.****CONSOLIDATED                STATEMENTS OF INCOME**(unaudited)                (in                thousands, except share and per share                data) |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|                                                               |   | For                the Six Months EndedJune                30, |      |
|--------------------------------------------------------------------|--------|----------------------------------------------------------------|-----------|
|                                                               |   | 2007                                                           |      | 2006 |   |
| Interest                income                                     |   |                                                           |      |   |   |
| Loans                                                              |   | $                                                              | 36,093    |   | $ | 28,923 |   |
| Federal                funds sold                                  |   |                                                           | 509       |   |   | 222 |   |
| Investment                securities:                              |   |                                                           |      |   |   |  |   |
| Taxable:                                                           |   |                                                           |      |   |   |   |   |
| Obligations                of U.S. treasury                        |   |                                                           | -         |   |   | 123 |   |
| Obligations                of U.S. government agencies             |   |                                                           | 1,603     |   |   | 1,935 |   |
| Mortgage                - backed securities                        |   |                                                           | 70        |   |   | 103 |   |
| Other                securities                                    |   |                                                           | 136       |   |   | 44 |   |
| Subtotal                                                           |   |                                                           | 1,809     |   |   | 2,205 |   |
| Exempt                from federal income taxes:                   |   |                                                           |      |   |   |   |   |
| Obligations                of state & political subdivisions   |   |                                                           | 150       |   |   | 243 |   |
| Other                                                              |   |                                                           | 112       |   |   | 105 |   |
| Total                interest income                               |   |                                                           | 38,673    |   |   | 31,698 |   |
|                                                               |   |                                                           |      |   |   |   |   |
| Interest                expense                                    |   |                                                           |      |   |   |   |   |
| Money                market accounts (including savings)           |   |                                                           | 7,458     |   |   | 4,045 |   |
| Time                deposits of $100,000 or more                   |   |                                                           | 3,823     |   |   | 3,428 |   |
| Other                time deposits                                 |   |                                                           | 5,716     |   |   | 3,779 |   |
| Other                borrowings                                    |   |                                                           | 793       |   |   | 1,393 |   |
| Subordinated                debt                                   |   |                                                           | 688       |   |   | 548 |   |
| Total                interest expense                              |   |                                                           | 18,478    |   |   | 13,193 |   |
|                                                               |   |                                                           |      |   |   |   |   |
| Net                interest income                                 |   |                                                           | 20,195    |   |   | 18,505 |   |
| Provision                for loan losses                           |   |                                                           | 700       |   |   | 1,100 |   |
| Net                interest income after provision for loan losses |   |                                                           | 19,495    |   |   | 17,405 |   |
|                                                               |   |                                                           |      |   |   |   |   |
| Noninterest                income                                  |   |                                                           |      |   |   |   |   |
| Trust                and investment services                       |   |                                                           | 396       |   |   | 353 |   |
| Service                charges on deposit accounts                 |   |                                                           | 895       |   |   | 975 |   |
| Revenues                from insurance agency                      |   |                                                           | 1,787     |   |   | 1,964 |   |
| Net                gain (loss) on sales of investment securities   |   |                                                           | -         |   |   | (11 | ) |
| Increase                in cash value of bank owned life insurance |   |                                                           | 419       |   |   | 318 |   |
| Other                                                              |   |                                                           | 939       |   |   | 1,096 |   |
| Total                noninterest income                            |   |                                                           | 4,436     |   |   | 4,695 |   |
|                                                               |   |                                                           |      |   |   |   |   |
| Noninterest                expense                                 |   |                                                           |      |   |   |   |   |
| Salaries                                                           |   |                                                           | 5,969     |   |   | 5,447 |   |
| Pension                and other employee benefits                 |   |                                                           | 1,476     |   |   | 1,239 |   |
| Net                occupancy expense of bank premises              |   |                                                           | 2,033     |   |   | 1,731 |   |
| Furniture                and equipment expense                     |   |                                                           | 1,317     |   |   | 1,033 |   |
| Amortization                of intangible assets                   |   |                                                           | 240       |   |   | 383 |   |
| Other                                                              |   |                                                           | 2,227     |   |   | 2,192 |   |
| Total                noninterest expense                           |   |                                                           | 13,262    |   |   | 12,025 |   |
|                                                               |   |                                                           |      |   |   |   |   |
| Income                before income taxes                          |   |                                                           | 10,669    |   |   | 10,075 |   |
| Provision                for income taxes                          |   |                                                           | 3,614     |   |   | 3,452 |   |
| Net                income                                          |   | $                                                              | 7,055     |   | $ | 6,623 |   |
|                                                               |   |                                                           |      |   |   |   |   |
| Basic                earnings per share                            |   | $                                                              | 0.73      |   | $ | 0.68 |   |
| Diluted                earnings per share                          |   | $                                                              | 0.73      |   | $ | 0.68 |   |
| Cash                dividends declared                             |   | $                                                              | 0.08      |   | $ | 0.08 |   |
| Weighted                average common shares outstanding          |   |                                                           | 9,767,779 |   |   | 9,752,992 |   |
| Weighted                average common equivalent shares           |   |                                                           | 9,770,758 |   |   | 9,754,879 |   |
| Comprehensive                income                                |   | $                                                              | 7,103     |   | $ | 6,224 |   |
| See                notes to consolidated financial statements.     |   |                                                           |      |   |   |   |   |
|                                                               |   |                                                           |      |   |   |   |   |

----

| **SMITHTOWN                BANCORP, INC.**                                          |   |   |   |   |   |   |   |
|-------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------|
| **CONSOLIDATED                STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY** |   |   |   |   |   |   |
| (unaudited)                                                                         |   |   |   |   |   |   |
| (in                thousands, except shares outstanding)                            |   |   |   |   |   |   |   |

|                                                                 |   | Common                Stock |      | Additional |   |                   |   |     |                               | OtherAccumulated |   |                         |   | Total                       |                         |
|----------------------------------------------------------------------|--------|-----------------------------|-----------|------------|--------|------------------------|--------|----------|------------------------------------|------------------|--------|------------------------------|--------|-----------------------------|------------------------------|
|                                                                 |   | Shares                      |      |       |   | Paid                In |   | Retained |                               | Treasury         |   | Comprehensive                |   | Unearned                    |                         | Stockholders’ |   |
|                                                                 |   | Outstanding                 |      | Amount     |   | Capital                |   | Earnings |                               | Stock            |   | Income                (Loss) |   | Stock                Awards |                         | Equity |   |
|                                                                 |   |                        |      |       |   |                   |   |     |                               |             |   |                         |   |                        |                         |   |   |
| Balance                at 12/31/2005                                 |   |                        | 9,774,148 |       | $      | 108                    |   | $        | 4,372                              |             | $      | 62,124                       |   | $                           | (10,062                      | ) | $ | (601 | ) | $ | (91 | ) | $ | 55,850 |   |
| Comprehensive                income:                                 |   |                        |      |       |   |                        |   |     |                                    |             |   |                              |   |                        |                              |   |   |   |   |   |  |   |   |  |   |
| Net                income                                            |   |                        |      |       |   |                        |   |     |                                    |             |   | 6,623                        |   |                        |                              |   |   |   |   |   |  |   |   | 6,623 |   |
| Other                comprehensive loss                , net of tax  |   |                        |      |       |   |                        |   |     |                                    |             |   |                              |   |                        |                              |   |   | (399 | ) |   |   |   |   | (399 | ) |
| Total                comprehensive income                            |   |                        |      |       |   |                        |   |     |                                    |             |   |                              |   |                        |                              |   |   |   |   |   |  |   |   | 6,224 |   |
| Cash                dividends declared                               |   |                        |      |       |   |                        |   |     |                                    |             |   | (710                         | )      |                        |                              |   |   |   |   |   |  |   |   | (710 | ) |
| Transfer                due to the                                   |   |                        |      |       |   |                   |   |     |                               |             |   |                         |   |                        |                         |   |   |   |   |   |   |   |   |   |   |
| adoption                of SFAS 123R                                 |   |                        |      |       |   |                   |   |     | (91                                | )                |   |                         |   |                        |                         |   |   |  |   |   | 91 |   |   | - |   |
| Stock                awards vested                                   |   |                        |           |       |   |                   |   |     | 36                                 |             |   |                         |   |                        |                         |   |   |   |   |   |   |   |   | 36 |   |
| Stock                awards granted                                  |   |                        | 16,088    |       |   |                   |   |     | (323                               | )                |   |                         |   |                        | 323                          |   |   |   |   |   |   |   |   | - |   |
| Treasury                stock purchases                              |   |                        | (16,088   | )          |   |                   |   |     |                     |             |   |                    |   |                        | (323                         | ) |   |    |   |   |   |   |   | (323 | ) |
| Balance                at 6/30/2006                                  |   |                        | 9,774,148 |       | $      | 108                    |   | $        | 3,994                              |             | $      | 68,037                       |   | $                           | (10,062                      | ) | $ | (1,000 | ) | $ | - |   | $ | 61,077 |   |
|                                                                 |   |                        |      |       |   |                        |   |     |                                    |             |   |                         |   |                        |                              |   |   |  |   |   |  |   |   |  |   |
| Balance                at 12/31/2006                                 |   |                        | 9,774,148 |       | $      | 108                    |   | $        | 4,046                              |             | $      | 73,046                       |   | $                           | (10,062                      | ) | $ | (331 | ) | $ | - |   | $ | 66,807 |   |
| Comprehensive                income:                                 |   |                        |      |       |   |                        |   |     |                                    |             |   |                         |   |                        |                              |   |   |  |   |   |  |   |   |  |   |
| Net                income                                            |   |                        |      |       |   |                        |   |     |                                    |             |   | 7,055                        |   |                        |                              |   |   |  |   |   |  |   |   | 7,055 |   |
| Other                comprehensive income,                net of tax |   |                        |      |       |   |                        |   |     |                                    |             |   |                         |   |                        |                              |   |   | 48 |   |   |  |   |   | 48 |   |
| Total                comprehensive income                            |   |                        |      |       |   |                        |   |     |                                    |             |   |                         |   |                        |                              |   |   |  |   |   |  |   |   | 7,103 |   |
| Adjust                capital stock for shares outstanding           |   |                        |      |       |   | 11                     |   |     | (11                                | )                |   |                         |   |                        |                         |   |   |   |   |   |   |   |   | - |   |
| Cash                dividends declared                               |   |                        |      |       |   |                        |   |     |                                    |             |   | (749                         | )      |                        |                              |   |   |  |   |   |  |   |   | (749 | ) |
| Issuance                of shares for employee stock ownership plan  |   |                        | 9,325     |       |   |                   |   |     | 225                                |             |   |                         |   |                        |                         |   |   |   |   |   |   |   |   | 225 |   |
| Stock                awards vested                                   |   |                        |      |       |   |                   |   |     | 85                                 |             |   |                         |   |                        |                         |   |   |   |   |   |   |   |   | 85 |   |
| Stock                awards granted                                  |   |                        | 17,160    |       |   |         |   |     |                     |             |   |               |   |                        |                    |   |   |    |   |   |    |   |   | - |   |
| Balance                at 6/30/2007                                  |   |                        | 9,800,633 |       | $      | 119                    |   | $        | 4,345                              |             | $      | 79,352                       |   | $                           | (10,062                      | ) | $ | (283 | ) | $ | - |   | $ | 73,471 |   |
|                                                                 |   |                        |      |       |   |                   |   |     |                               |             |   |                         |   |                        |                         |   |   |   |   |   |   |   |   |   |   |

----

| **SMITHTOWN                BANCORP, INC.**                                                                      |   |                              |    |   |   |
|-----------------------------------------------------------------------------------------------------------------|--------|-----------------------------------|---------|--------|--------|
| **CONSOLIDATED                STATEMENTS OF CASH FLOWS**                                                        |   |                              |    |   |   |
| (unaudited)                                                                                                     |   | For                the Six Months |    |
| (in                thousands)                                                                                   |   | Ended                June 30,     |    |
|                                                                                                            |   | 2007                              |    | 2006   |   |
| **Cash                flows from operating activities**                                                         |   |                              |    |   |   |
| Net                income                                                                                       |   | $                                 | 7,055   |   | $      | 6,623 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities: |   |                              |         |   |   |  |   |
| Depreciation                on premises and equipment                                                           |   |                              | 1,238   |   |   | 453 |   |
| Provision                for loan losses                                                                        |   |                              | 700     |   |   | 1,100 |   |
| Net                loss on sale of investment securities                                                        |   |                              | -       |   |   | 11 |   |
| Net                increase (decrease) in other liabilities                                                     |   |                              | (2,982  | )      |   | 318 |   |
| Net                (increase) decrease in other assets                                                          |   |                              | (1,529  | )      |   | 389 |   |
| Net                increase in deferred taxes                                                                   |   |                              | (938    | )      |   | (486 | ) |
| Amortization                of unearned stock awards                                                            |   |                              | 84      |   |   | 36 |   |
| Increase                in cash surrender value of bank-owned life insurance                policies            |   |                              | (419    | )      |   | (318 | ) |
| Amortization                of investment security premiums and accretion of discounts,                net      |   |                              | (10     | )      |   | (36 | ) |
| Amortization                of intangible assets                                                                |   |                              | 240     |   |   | 383 |   |
|                                                                                                            |   |                              |    |   |   |   |   |
|  Cash                provided                by operating activities                                       |   |                              | 3,439   |   |   | 8,473 |   |
|                                                                                                            |   |                              |         |   |   |  |   |
| **Cash                flows from investing activities**                                                         |   |                              |         |   |   |  |   |
| Mortgage-backed                securities:                                                                      |   |                              |         |   |   |  |   |
| Proceeds                from calls, repayments, maturities and sales of available for                sale       |   |                              | 643     |   |   | 4,218 |   |
| Proceeds                from calls, repayments and maturities of held to maturity                               |   |                              | -       |   |   | 27 |   |
| Other                securities:                                                                                |   |                              |         |   |   |  |   |
| Proceeds                from calls, repayments, maturities and sales of available for                sale       |   |                              | 41,169  |   |   | 17,062 |   |
| Proceeds                from calls, repayments and maturities of held to maturity                               |   |                              | 190     |   |   | 703 |   |
| Purchase                of investment securities:                                                               |   |                              |         |   |   |  |   |
| Available                for sale                                                                               |   |                              | (9,164  | )      |   | (25,012 | ) |
| Purchases                of restricted securities                                                               |   |                              | (3,644  | )      |   | (2,220 | ) |
| Redemptions                of restricted securities                                                             |   |                              | 4,983   |   |   | 4,149 |   |
| Loans                made to customers, net                                                                     |   |                              | (70,687 | )      |   | (90,006 | ) |
| Purchases                of premises and equipment                                                              |   |                              | (2,469  | )      |   | (922 | ) |
|                                                                                                            |   |                              |         |   |   |  |   |
|  Cash                used in investing activities                                                          |   |                              | (38,979 | )      |   | (92,001 | ) |
|                                                                                                            |   |                              |         |   |   |  |   |
| **Cash                flows from financing activities**                                                         |   |                              |         |   |   |  |   |
| Net                increase in demand deposits, money market, NOW and savings                                   |   |                              | 86,812  |   |   | 40,770 |   |
| Net                increase (decrease) in time deposits                                                         |   |                              | (35,516 | )      |   | 90,539 |   |
| Cash                dividends paid                                                                              |   |                              | (712    | )      |   | (711 | ) |
| Maturities                of Federal Home Loan Bank term advances                                               |   |                              | (25,000 | )      |   | (45,949 | ) |
| Net                increase in overnight borrowings                                                             |   |                              | 4,025   |   |   | - |   |
| Proceeds                from subordinated debt issue                                                            |   |                              | -       |   |   | 7,000 |   |
| Purchase                of treasury stock                                                                       |   |                              | -       |   |   | (323 | ) |
|                                                                                                            |   |                              |         |   |   |  |   |
| Cash                provided by financing activities                                                            |   |                              | 29,609  |   |   | 91,326 |   |
|                                                                                                            |   |                              |         |   |   |  |   |
| Net                increase (decrease) in cash and cash equivalents                                             |   |                              | (5,931  | )      |   | 7,798 |   |
| Cash                and cash equivalents, beginning of period                                                   |   |                              | 27,620  |   |   | 13,467 |   |
|                                                                                                            |   |                              |         |   |   |  |   |
| Cash                and cash equivalents, end of period                                                         |   | $                                 | 21,689  |   | $      | 21,265 |   |
|                                                                                                            |   |                              |         |   |   |  |   |
| Supplemental                disclosures of cash flow information                                                |   |                              |         |   |   |  |   |
| Cash                paid during the year for:                                                                   |   |                              |         |   |   |  |   |
| Interest                                                                                                        |   | $                                 | 18,594  |   | $      | 12,309 |   |
| Income                taxes                                                                                     |   |                              | 6,529   |   |   | 3,705 |   |
| Noncash                financing activities                                                                     |   |                              |    |   |   |   |   |
| Proceeds                from issuance of common stock                                                           |   | $                                 | 225     |   | $      | - |   |
| See                notes to consolidated financial statements.                                                  |   |                              |    |   |   |   |   |

----

|                                                                 |   | Three                Months Ended |      |
|----------------------------------------------------------------------|--------|-----------------------------------|-----------|
|                                                                 |   | June                30,           |      | June                30, |   |
|                                                                 |   | 2007                              |      | 2006 |   |
| Computation                of per share income                       |   |                              |      |   |   |
| (in                thousands, except share and per share data)       |   |                              |      |   |   |
|                                                                 |   |                              |      |   |   |
| Net                income                                            |   | $                                 | 3,676     |   | $ | 3,545 |   |
|                                                                 |   |                              |      |   |   |   |   |
| Common                equivalent shares:                             |   |                              |      |   |   |   |   |
|                                                                 |   |                              |      |   |   |   |   |
| Weighted                average common shares outstanding*           |   |                              | 9,768,794 |   |   | 9,753,581 |   |
| Weighted                average common equivalent shares*            |   |                              | 2,778     |   |   | 2,905 |   |
| Weighted                average common and common equivalent shares* |   |                              | 9,771,572 |   |   | 9,756,486 |   |
| Basic                earnings per share                              |   | $                                 | 0.38      |   | $ | 0.36 |   |
| Diluted                earnings per share                            |   | $                                 | 0.38      |   | $ | 0.36 |   |
|                                                                 |   |                              |      |   |   |   |   |

----

|                                                                 |   | Six                Months Ended |      |
|----------------------------------------------------------------------|--------|---------------------------------|-----------|
|                                                                 |   | June                30,         |      | June                30, |   |
|                                                                 |   | 2007                            |      | 2006 |   |
| Computation                of per share income                       |   |                            |      |   |   |
| (in                thousands, except share and per share data)       |   |                            |      |   |   |
|                                                                 |   |                            |      |   |   |
| Net                income                                            |   | $                               | 7,055     |   | $ | 6,623 |   |
|                                                                 |   |                            |      |   |   |   |   |
| Common                equivalent shares:                             |   |                            |      |   |   |   |   |
|                                                                 |   |                            |      |   |   |   |   |
| Weighted                average common shares outstanding*           |   |                            | 9,767,779 |   |   | 9,752,992 |   |
| Weighted                average common equivalent shares*            |   |                            | 2,979     |   |   | 1,887 |   |
| Weighted                average common and common equivalent shares* |   |                            | 9,770,758 |   |   | 9,754,879 |   |
| Basic                earnings per share                              |   | $                               | 0.73      |   | $ | 0.68 |   |
| Diluted                earnings per share                            |   | $                               | 0.73      |   | $ | 0.68 |   |
|                                                                 |   |                            |      |   |   |   |   |

| For                the Three Months Ended June 30, 2007 |   |         |   | Weighted                Average       |   |
|---------------------------------------------------------|--------|--------------|--------|---------------------------------------|--------|
|                                                    |   | Shares  |   | Grant                Date Share Value |   |
| Nonvested                at beginning of period         |   |         | 32,542 |                                  | $      | 21.45 |   |
| Granted                                                 |   |         | -      |                                  |   | - |   |
| Vested                                                  |   |         | (2,042 | )                                     |   | 20.82 |   |
| Nonvested                at end of period               |   |         | 30,500 |                                  | $      | 21.49 |   |

| For                the Three Months Ended June 30, 2006 |   |         |   | Weighted                Average       |   |
|---------------------------------------------------------|--------|--------------|--------|---------------------------------------|--------|
|                                                    |   | Shares  |   | Grant                Date Share Value |   |
| Nonvested                at beginning of period         |   |         | 14,705 |                                  | $      | 16.73 |   |
| Granted                                                 |   |         | 6,600  |                                  |   | 23.25 |   |
| Vested                                                  |   |         | (1,513 | )                                     |   | 19.49 |   |
| Nonvested                at end of period               |   |         | 19,792 |                                  | $      | 18.70 |   |

----

|                                            |   | For                the Three Months Ended |   |
|-------------------------------------------------|--------|-------------------------------------------|--------|
|                                            |   | June                30,                   |   |
|                                            |   | 2007                                      |   | 2006 |   |
| 401(K)                Defined Contribution Plan |   | $                                         | 52     |   | $ | 50 |   |
| Employee                Stock Ownership Plan    |   |                                      | 56     |   |   | 50 |   |

|                                            |   | For                the Six Months Ended  |   |
|-------------------------------------------------|--------|-----------------------------------------------|--------|
|                                            |   | June                30,                  |   |
|                                            |   | 2007                                     |   | 2006 |   |
| 401(K)                Defined Contribution Plan |   | $                                             | 110    |   | $ | 104 |   |
| Employee                Stock Ownership Plan    |   |                                          | 113    |   |   | 101 |   |

| For                the Three Months Ended |   |                         |   |         |   |                       |   |
|-------------------------------------------|--------|------------------------------|--------|--------------|--------|----------------------------|--------|
|                                      |   |                         |   | Amortization |   | Amortization               |   |   |   |
|                                      |   | Interest                Cost |   | Cost         |   | of                Net Gain |   | Total                Expense |   |
| June                30, 2007              |   | $                            | 4      |         | $      | 8                          |   | $ | 2 |   | $ | 14 |   |
| June                30, 2006              |   |                         | 4      |         |   | 8                          |   |   | 2 |   |   | 14 |   |

| For                the Six Months Ended |   |                         |   |         |   |                       |   |
|-----------------------------------------|--------|------------------------------|--------|--------------|--------|----------------------------|--------|
|                                    |   |                         |   | Amortization |   | Amortization               |   |   |   |
|                                    |   | Interest                Cost |   | Cost         |   | of                Net Gain |   | Total                Expense |   |
| June                30, 2007            |   | $                            | 8      |         | $      | 16                         |   | $ | 4 |   | $ | 28 |   |
| June                30, 2006            |   |                         | 8      |         |   | 16                         |   |   | 3 |   |   | 27 |   |

|                                   |   | For                the Three Months Ended  |   | For                the Six Months Ended  |   |
|----------------------------------------|--------|-------------------------------------------------|--------|-----------------------------------------------|--------|
|                                   |   | June                30,                         |   | June                30,                       |   |
|                                   |   | 2007                                            |   | 2006                                          |   | 2007 |   | 2006 |   |
| Incentive              Retirement Plan |   | $                                               | 77     |                                          | $      | 66 |   | $ | 146 |   | $ | 125 |   |

----

|                                                       |   | For                  the Three Months Ended  |   | For                  the Six Months Ended  |   |
|------------------------------------------------------------|--------|--------------------------------------------------------|--------|-------------------------------------------------|--------|
|                                                       |   | June                  30,                              |   | June                  30,                       |   |
|                                                       |   | 2007                                                   |   | 2006                                            |   | 2007 |   | 2006 |   |
| Supplemental                Executive Retirement Agreement |   | $                                                      | 97     |                                            | $      | 66 |   | $ | 154 |   | $ | 125 |   |

----

|   | - | Linked              quarter EPS growth increased from $.35 to $.38 per share, an increase              of              8.57% |
|--------|---|------------------------------------------------------------------------------------------------------------------------------|
|   | - | Year                over year EPS growth increased from $.68 to $.73 per share, an increase                of                7.35% |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------|

|   | - | An                increase in net income for the second three months of 2007 over 2006                of                3.70% |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------|

|   | - | An                increase in net income for the first six months of 2007 over the                same                period in 2006 of 6.52% |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | An                ROAE for the second quarter of 2007 of 20.43% as compared to 19.71%                for                the first quarter of 2007 |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | An                ROAE for the first six months of                20.08% |
|--------|---|--------------------------------------------------------------------------|

|   | - | Loan                growth increased by 3.31% over first quarter and 8.33% over year                end                2006 |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------|

|   | - | NIM                expansion of 7 basis points |
|--------|---|------------------------------------------------|

|                                                 |   |                         |                      |                             |   |    |   |   |        |
|------------------------------------------------------|--------|------------------------------|---------------------------|----------------------------------|--------|---------|--------|--------|-------------|
|                                                 |   | June                30, 2007 |                      | December                31, 2006 |   |
| Real                estate                loans      |   |                         |                      |                             |   |    |   |   |        |
| Construction                                         |   | $                            | 261,416                   |                             |   | 28.35   | %      | $      | 219,641     |   |   | 25.80 | % |
| Residential                                          |   |                         | 193,521                   |                             |   | 20.98   |   |   | 191,550     |   |   | 22.50 |   |
| Commercial                                           |   |                         | 416,970                   |                             |   | 45.22   |   |   | 391,758     |   |   | 46.02 |   |
| AgriculturalCommercial                and industrial |   |                         | 695                45,184 |                             |   | .084.89 |   |   | 1,69543,775 |   |   | 0.205.15 |   |
| Consumer                                             |   |                         | 3,791                     |                             |   | .42     |   |   | 2,471       |   |   | 0.29 |   |
| Other                loans                           |   |                         | 553                       |                             |   | .06     |   |   | 367         |   |   | 0.04 |   |
| Total                loansLess:                      |   |                         | 922,130                   |                             |   | 100.00  | %      |   | 851,257     |   |   | 100.00 | % |
| Deferred                fees                         |   |                         | 2,186                     |                             |   |    |   |   | 1,999       |   |   |   |   |
| Allowance                for loan losses             |   |                         | 7,698                     |                             |   |    |   |   | 7,051       |   |   |   |   |
| Loans,                net                            |   | $                            | 912,246                   |                             |   |    |   | $      | 842,207     |   |   |   |   |

----

|                                                           |   | June                30, 2007 |   | December                31, 2006 |   |
|----------------------------------------------------------------|--------|------------------------------|--------|----------------------------------|--------|
| Securities                available for sale                   |   |                         |   |                             |   |
| Obligations                of U.S. government agencies         |   | $                            | 60,764 |                             | $      | 84,713 |   |
| Mortgage-backed                securities                      |   |                         | 2,341  |                             |   | 2,972 |   |
| Obligations                of state and political subdivisions |   |                         | 7,075  |                             |   | 8,943 |   |
| Other                securities                                |   |                         | 7,084  |                             |   | 3,968 |   |
| Total                securities available for sale             |   | $                            | 77,264 |                             | $      | 100,596 |   |
|                                                           |   |                         |   |                             |   |   |   |
| Securities                held                to maturity      |   |                         |   |                             |   |   |   |
| Mortgage-backed                securities                      |   | $                            | 22     |                             | $      | 41 |   |
| Obligations                of state and political subdivisions |   |                         | 203    |                             |   | 374 |   |
| Total                securities held to maturity               |   | $                            | 225    |                             | $      | 415 |   |
|                                                           |   |                         |   |                             |   |   |   |
| Total                investment securities                     |   | $                            | 77,489 |                             | $      | 101,011 |   |

|                                         |   | June                30, 2007 |    | December                31, 2006 |   |
|----------------------------------------------|--------|------------------------------|---------|----------------------------------|--------|
| Demand                (non interest bearing) |   | $                            | 101,984 |                             | $      | 102,608 |   |
| Money                market                  |   |                         | 352,598 |                             |   | 264,876 |   |
| NOW                                          |   |                         | 38,051  |                             |   | 42,003 |   |
| Savings                                      |   |                         | 53,856  |                             |   | 50,190 |   |
| Time                                         |   |                         | 397,124 |                             |   | 432,640 |   |
| Total                deposits                |   | $                            | 943,613 |                             | $      | 892,317 |   |

----

----

| AVERAGE                BALANCE SHEET AND YIELD ANALYSIS    |   |
|------------------------------------------------------------|--------|
|                                                       |   | For                the Six Months Ended |   | For                the Six Months Ended |   |
|                                                       |   | June                30, 2007 |   | June                30, 2006 |   |
|                                                       |   | Average |   |   |   | Average |   | Average |   |   |   | Average |   |
|                                                       |   | Balance |   |  Interest |   |  Rate |   |                  Balance |   |  Interest |   |  Rate |   |
| ASSETS                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                       |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                assets:                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities:                      |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                    |   | $ | 74,942 |   | $ | 1,809 |   |   | 4.83 | % | $ | 101,784 |   | $ | 2,205 |   |   | 4.33 | % |
| Nontaxable                                                 |   |   | 8,648 |   |   | 229 |   |   | 5.31 |   |   | 13,411 |   |   | 368 |   |   | 5.49 |   |
| Total                investment securities                 |   |   | 83,590 |   |   | 2,038 |   |   | 4.88 |   |   | 115,195 |   |   | 2,573 |   |   | 4.47 |   |
|                                                       |   |   |   |   |   |  |   |   |  |   |   |   |   |   |   |   |   |   |   |
| Total                loans                                 |   |   | 887,042 |   |   | 36,093 |   |   | 8.16 |   |   | 736,672 |   |   | 28,923 |   |   | 7.85 |   |
| Federal                funds sold                          |   |   | 19,416 |   |   | 509 |   |   | 5.21 |   |   | 9,584 |   |   | 222 |   |   | 4.63 |   |
| Other                interest-earning assets               |   |   | 3,083 |   |   | 112 |   |   | 7.35 |   |   | 4,468 |   |   | 105 |   |   | 4.74 |   |
| Total                interest-earning assets               |   |   | 993,131 |   |   | 38,752 |   |   | 7.82 |   |   | 865,919 |   |   | 31,823 |   |   | 7.35 |   |
| Noninterest-earning                assets                  |   |   | 89,931 |   |   |  |   |   |  |   |   | 57,777 |   |   |   |   |   |  |   |
|                                                       |   |   |  |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Total                assets                                |   | $ | 1,083,062 |   |   |  |   |   |  |   | $ | 923,696 |   |   |  |   |   |  |   |
|                                                       |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY        |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
|                                                       |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Liabilities                                                |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Interest-bearing                liabilities:               |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Savings                deposits (including NOW)            |   | $ | 89,817 |   | $ | 552 |   |   | 1.23 | % | $ | 79,242 |   | $ | 211 |   |   | 0.54 | % |
| Money                market                                |   |   | 331,275 |   |   | 6,906 |   |   | 4.20 |   |   | 245,608 |   |   | 3,834 |   |   | 3.15 |   |
| Time                deposits                               |   |   | 405,260 |   |   | 9,539 |   |   | 4.75 |   |   | 350,719 |   |   | 7,207 |   |   | 4.14 |   |
| Total                interest-bearing deposits             |   |   | 826,352 |   |   | 16,997 |   |   | 4.15 |   |   | 675,569 |   |   | 11,252 |   |   | 3.36 |   |
|                                                       |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Other                borrowings                            |   |   | 38,480 |   |   | 793 |   |   | 4.15 |   |   | 69,333 |   |   | 1,393 |   |   | 4.05 |   |
| Subordinated                debt                           |   |   | 18,000 |   |   | 688 |   |   | 7.60 |   |   | 14,094 |   |   | 548 |   |   | 7.73 |   |
| Total                interest-bearing liabilities          |   |   | 882,832 |   |   | 18,478 |   |   | 4.22 |   |   | 758,996 |   |   | 13,193 |   |   | 3.51 |   |
| Non-interest                bearing liabilities:           |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Demand                deposits                             |   |   | 102,771 |   |   |  |   |   |  |   |   | 99,863 |   |   |  |   |   |  |   |
| Other                liabilities                           |   |   | 28,900 |   |   |  |   |   |  |   |   | 6,348 |   |   |  |   |   |  |   |
| Total                liabilities                           |   |   |  |   |   |  |   |   |  |   |   | 865,207 |   |   |  |   |   |  |   |
| Stockholders'                equity                        |   |   | 68,559 |   |   |  |   |   |  |   |   | 58,489 |   |   |  |   |   |  |   |
|                                                       |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Total                liabilites & stockholders' equity |   | $ | 1,083,062 |   |   |  |   |   |  |   | $ | 923,696 |   |   |  |   |   |  |   |
|                                                       |   |   |   |   |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Net                interest income/interest rate spread    |   |   |   |   | $ | 20,274 |   |   | 3.60 | % |   |   |   | $ | 18,630 |   |   | 3.84 | % |
| Net                earning assets/net yield on average     |   |   |   |   |   |   |   |   |  |   |   |   |   |   |   |   |   |  |   |
| interest                - earning assets                   |   | $ | 110,299 |   |   |   |   |   | 4.07 | % | $ | 106,293 |   |   |   |   |   | 4.28 | % |

*Accounting for Certain Hybrid Financial Instruments-an      amendment to FASB Statements No. 133 and 140*

*Accounting for Servicing of      Financial Assets-an amendment of FASB Statement No. 140.”*

*Fair Value      Measurements*

----

*Accounting for      Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109”*

*Accounting for Deferred Compensation and Postretirement Benefit Aspects      of      Endorsement Split-Dollar Life Insurance Arrangements*

| Change              In Interest Rates    |   | As                of June 30, 2007     |   | As                of February 28, 2007 |   |
|------------------------------------------|--------|----------------------------------------|--------|----------------------------------------|--------|
| In              Basis Points        |   | Potential                Change In Net |   | Potential                Change In Net |   |
| (Rate                Shock)         |   | Interest                Income         |   | Interest                Income         |   |
|                                     |   | $                Change                |   | %                Change                |   | $                Change |   | %                Change |   |
| Up              200 basis points    |   |                                   | 812    |                                   |   | 1.63 |   |   | (101 | ) |   | (0.22 | ) |
| Up                100 basis points       |   |                                   | (58    | )                                      |   | (0.12 | ) |   | 1,558 |   |   | 3.38 |   |
| Static                                   |   |                                   | -      |                                   |   | - |   |   | - |   |   | - |   |
| Down              100 basis points  |   |                                   | (681   | )                                      |   | (1.37 | ) |   | (304 | ) |   | (0.66 | ) |
| Down              200 basis points       |   |                                   | (404   | )                                      |   | (0.81 | ) |   | 340 |   |   | 0.74 |   |

----

|   | SMITHTOWN BANCORP, INC.                                                                                                              |
|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                 |
|   | August              8, 2007                                                                                                          |
|   |                                                                                                                                 |
|   |                                                                                                                                 |
|   |                                                                                                                                 |
|   | /s/                Bradley E. Rock Bradley                E. Rock, Chairman, President andChief                Executive Officer     |
|   |                                                                                                                                 |
|   |                                                                                                                                 |
|   | /s/                Anita M. FlorekAnita                M. Florek, Executive Vice President andChief                Financial Officer |
|   |                                                                                                                                 |

----