**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 March 31, 2008**

**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**

----

**SMITHTOWN      BANCORP, INC.**

| Part                I - FINANCIAL INFORMATION |   |                                                                                                                                                        |
|-----------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                          |   |                                                                                                                                                        |   |   |
| Item                1.                        |   | Financial                Statements                                                                                                                         |   |  |
|                                          |   |                                                                                                                                                        |   |   |
|                                          |   | Unaudited                Consolidated Balance Sheets as of March 31, 2008 and December 31,                2007                                              |   | 4 |
|                                          |   |                                                                                                                                                        |   |   |
|                                          |   | Unaudited                Consolidated Statements of Income for the Three Months Ended March                31,                2008 and 2007                 |   | 5 |
|                                          |   |                                                                                                                                                        |   |   |
|                                          |   | Unaudited                Consolidated Statements of Changes in Stockholders’ Equity For the Three                Months Ended March 31, 2008 and 2007 |   | 6 |
|                                          |   |                                                                                                                                                        |   |   |
|                                          |   | Unaudited                Consolidated Statements of Cash Flows for the Three Months Ended                March 31,                2008 and 2007             |   | 7 |
|                                          |   |                                                                                                                                                        |   |   |
| Item                2.                        |   | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations                                   |   | 12 |
|                                          |   |                                                                                                                                                        |   |   |
| Item                3.                        |   | Quantitative                and Qualitative Disclosures About Market Risk                                                                                   |   | 18 |
|                                          |   |                                                                                                                                                        |   |   |
| Item                4.                        |   | Controls                and Procedures                                                                                                                      |   | 19 |
|                                          |   |                                                                                                                                                        |   |   |
| Part                II - OTHER INFORMATION    |   |                                                                                                                                                        |
|                                          |   |                                                                                                                                                        |   |   |
| Item                1.                        |   | Legal                Proceedings - None                                                                                                                     |   |   |
|                                          |   |                                                                                                                                                        |   |   |
|                                          |   | Risk                Factors – No change in factors as reported in Registrant’s Annual Report                on Form 10-K                        |   |   |
|                                          |   |                                                                                                                                                        |   |   |
| Item                2.                        |   | Change                in Securities and Use of Proceeds                                                                                                     |   |   |

|                                                      |   | (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               |   |
| January                1, 2008 – January 31, 2008   |   |            | 0      |                |   | 0                          |   |                           | 0      |   |   | 874,163 |   |
| February                1, 2008 – February 29, 2008 |   |            | 0      |                |   | 0                          |   |                           | 22,000 |   |   | 852,163 |   |
| March                1, 2008 – March 31, 2008       |   |            | 0      |                |   | 0                          |   |                           | 0      |   |   | 852,163 |   |
| Total                                                     |   |            | 0      |                |   | 0                          |   |                           | 22,000 |   |   | 852,163 | (1)  |

| Item 3.              |   | Defaults              upon Senior Securities – None                     |   |   |
|----------------------|--------|-------------------------------------------------------------------------------|--------|--------|
|                 |   |                                                                          |   |   |
| Item              4. |   | Submission              of Matters to a Vote of Security Holders – None |   |   |
|                 |   |                                                                          |   |   |
| Item              5. |   | Other              Information – None                                   |   |   |

----

| Item              6. Exhibits and Reports on Form 8-K |   |   |
|-------------------------------------------------------|--------|--------|
| Exhibits                                              |   |        |

| Exhibit                Number Referred to in Item601 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                                                                         |   |                                                                                                                         |
|                                                                                                               |   |                                                                                                                         |
| Other Events–              Filed January 14, 2008                                                            |   |                                                                                                                         |
| Incorporated                by Reference                                                                           |   |                                                                                                                         |
| Results              of              Operation and Financial Condition –              Filed February 1, 2008 |
| Incorporated                by Reference                                                                           |   |                                                                                                                         |
| Other Events–              Filed February 26, 2008                                                           |   |                                                                                                                         |
| Incorporated                by Reference                                                                           |   |                                                                                                                         |
| Other Events–              Filed February 27, 2008                                                           |   |                                                                                                                         |
| Incorporated                by Reference                                                                           |   |                                                                                                                         |
| Results              of              Operation and Financial Condition –              Filed April 24, 2008   |
| Incorporated                by Reference                                                                           |   |                                                                                                                         |

| Signatures |   |   |
|------------|--------|--------|

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      BALANCE SHEETS**

|                                                                                                                                                                                                                                                                                                                                   |   | As of               |                      |
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------|---------------------------|
|                                                                                                                                                                                                                                                                                                                                   |   | March 31, 2008 |                      | December 31, 2007 |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                             |   |                     |                      |   |   |
| Cash                and due from banks                                                                                                                                                                                                                                                                                                 |   | $                        | 19,936                    |   | $ | 17,401 |   |
| Federal                funds sold                                                                                                                                                                                                                                                                                                      |   |                     | 12,458                    |   |   | 54 |   |
| Total                cash and cash equivalents                                                                                                                                                                                                                                                                                         |   |                     | 32,394                    |   |   | 17,455 |   |
| Investment                securities:                                                                                                                                                                                                                                                                                                  |   |                     |                      |   |   |   |   |
| Available                for sale:                                                                                                                                                                                                                                                                                                     |   |                     |                      |   |   |   |   |
| Obligations                of U.S. government agencies                                                                                                                                                                                                                                                                                 |   |                     | 13,896                    |   |   | 32,394 |   |
| Mortgage                - backed securities                                                                                                                                                                                                                                                                                            |   |                     | 24,269                    |   |   | 7,619 |   |
| Obligations                of state and political subdivisions                                                                                                                                                                                                                                                                         |   |                     | 5,834                     |   |   | 6,312 |   |
| Other                securities                                                                                                                                                                                                                                                                                                        |   |                     | 7,581                     |   |   | 8,567 |   |
| Total                securities available for sale                                                                                                                                                                                                                                                                                     |   |                     | 51,580                    |   |   | 54,892 |   |
| Held                to maturity:                                                                                                                                                                                                                                                                                                       |   |                     |                      |   |   |   |   |
| Mortgage-backed                securities                                                                                                                                                                                                                                                                                              |   |                     | 3                         |   |   | 8 |   |
| Obligations                of state and political subdivisions                                                                                                                                                                                                                                                                         |   |                     | 202                       |   |   | 202 |   |
| Total                securities held to maturity (estimated fair value $205 in 2008 and                $212 in                2007)                                                                                                                                                                                                    |   |                     | 205                       |   |   | 210 |   |
| Total                investment securities                                                                                                                                                                                                                                                                                             |   |                     | 51,785                    |   |   | 55,102 |   |
| Restricted                securities                                                                                                                                                                                                                                                                                                   |   |                     | 9,048                     |   |   | 2,113 |   |
| Loans                                                                                                                                                                                                                                                                                                                                  |   |                     | 1,124,033                 |   |   | 983,918 |   |
| Less:                allowance for loan losses                                                                                                                                                                                                                                                                                         |   |                     | 9,039                     |   |   | 8,250 |   |
| Loans,                net                                                                                                                                                                                                                                                                                                              |   |                     | 1,114,994                 |   |   | 975,668 |   |
| Bank                premises and equipment                                                                                                                                                                                                                                                                                             |   |                     | 23,506                    |   |   | 22,611 |   |
| Other                assets                                                                                                                                                                                                                                                                                                            |   |                     |                      |   |   |   |   |
| Cash                value of company owned life insurance                                                                                                                                                                                                                                                                              |   |                     | 19,159                    |   |   | 18,961 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                               |   |                     | 3,923                     |   |   | 3,923 |   |
| Intangible                assets                                                                                                                                                                                                                                                                                                       |   |                     | 1,276                     |   |   | 1,383 |   |
| Other                real estate owned                                                                                                                                                                                                                                                                                                 |   |                     | 6,972                     |   |   | 6,972 |   |
| Other                                                                                                                                                                                                                                                                                                                                  |   |                     | 19,687                    |   |   | 16,961 |   |
| Total                other assets                                                                                                                                                                                                                                                                                                      |   |                     | 51,017                    |   |   | 48,200 |   |
| Total                assets                                                                                                                                                                                                                                                                                                            |   | $                        | 1,282,744                 |   | $ | 1,121,149 |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                                |   |                     |                      |   |   |   |   |
| Liabilities                                                                                                                                                                                                                                                                                                                            |   |                     |                      |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                              |   |                     |                      |   |   |   |   |
| Demand                (noninterest-bearing)                                                                                                                                                                                                                                                                                            |   | $                        | 108,637                   |   | $ | 111,726 |   |
| Money                market                                                                                                                                                                                                                                                                                                            |   |                     | 371,028                   |   |   | 389,891 |   |
| NOW                                                                                                                                                                                                                                                                                                                                    |   |                     | 30,681                    |   |   | 34,814 |   |
| Savings                                                                                                                                                                                                                                                                                                                                |   |                     | 59,167                    |   |   | 54,267 |   |
| Time                                                                                                                                                                                                                                                                                                                                   |   |                     | 404,217                   |   |   | 400,103 |   |
| Total                deposits                                                                                                                                                                                                                                                                                                          |   |                     | 973,730                   |   |   | 990,801 |   |
| Dividends                payable                                                                                                                                                                                                                                                                                                       |   |                     | 393                       |   |   | 392 |   |
| Federal                Home Loan Bank borrowings                                                                                                                                                                                                                                                                                       |   |                     | 175,000                   |   |   | 20,900 |   |
| Subordinated                debt                                                                                                                                                                                                                                                                                                       |   |                     | 38,836                    |   |   | 18,217 |   |
| Other                liabilities                                                                                                                                                                                                                                                                                                       |   |                     | 11,820                    |   |   | 10,737 |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                       |   |                     | 1,199,779                 |   |   | 1,041,047 |   |
| Stockholders'                equity                                                                                                                                                                                                                                                                                                    |   |                     |                      |   |   |   |   |
| Common                stock - $.01 par value (20,000,000 shares authorized at March 31,                2008 and                December 31, 2007; 11,886,341 shares issued, 9,834,477 shares outstanding                at March 31, 2008; 11,852,374 shares issued, 9,800,510 shares outstanding                at December 31, 2007) |   |                     | 119                       |   |   | 119 |   |
| Additional                paid in capital                                                                                                                                                                                                                                                                                              |   |                     | 26,070                    |   |   | 25,755 |   |
| Retained                earnings                                                                                                                                                                                                                                                                                                       |   |                     | 67,412                    |   |   | 64,463 |   |
| Accumulated                other comprehensive loss                                                                                                                                                                                                                                                                                    |   |                     | (574                      | ) |   | (173 | ) |
|                                                                                                                                                                                                                                                                                                                                   |   |                     | 93,027                    |   |   | 90,164 |   |
| Treasury                stock (2,051,864 shares at cost)                                                                                                                                                                                                                                                                               |   |                     | (10,062                   | ) |   | (10,062 | ) |
| Total                stockholders' equity                                                                                                                                                                                                                                                                                              |   |                     | 82,965                    |   |   | 80,102 |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                                                                                                              |   | $                        | 1                ,282,744 |   | $ | 1,121,149 |   |

| 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 EndedMarch                31, |      |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------------|-----------|
|                                                                  |   | 2008                                                              |      | 2007 |   |
| Interest                income                                        |   |                                                              |      |   |   |
| Loans                                                                 |   | $                                                                 | 19,262    |   | $ | 17,713 |   |
| Federal                funds sold                                     |   |                                                              | 8         |   |   | 311 |   |
| Investment                securities:                                 |   |                                                              |      |   |   |  |   |
| Taxable:                                                              |   |                                                              |      |   |   |   |   |
| Obligations                of U.S. government agencies                |   |                                                              | 273       |   |   | 859 |   |
| Mortgage                - backed securities                           |   |                                                              | 238       |   |   | 37 |   |
| Other                securities                                       |   |                                                              | 124       |   |   | 48 |   |
| Subtotal                                                              |   |                                                              | 635       |   |   | 944 |   |
| Exempt                from federal income taxes:                      |   |                                                              |      |   |   |   |   |
| Obligations                of state & political subdivisions      |   |                                                              | 58        |   |   | 79 |   |
| Other                                                                 |   |                                                              | 125       |   |   | 59 |   |
| Total                interest income                                  |   |                                                              | 20,088    |   |   | 19,106 |   |
| Interest                expense                                       |   |                                                              |      |   |   |   |   |
| Money                market accounts (including savings)              |   |                                                              | 3,350     |   |   | 3,535 |   |
| Time                deposits of $100,000 or more                      |   |                                                              | 1,796     |   |   | 1,959 |   |
| Other                time deposits                                    |   |                                                              | 2,672     |   |   | 2,935 |   |
| Federal                Home Loan Bank borrowings                      |   |                                                              | 889       |   |   | 384 |   |
| Subordinated                debt                                      |   |                                                              | 422       |   |   | 344 |   |
| Total                interest expense                                 |   |                                                              | 9,129     |   |   | 9,157 |   |
| Net                interest income                                    |   |                                                              | 10,959    |   |   | 9,949 |   |
| Provision                for loan losses                              |   |                                                              | 800       |   |   | 400 |   |
| Net                interest income after provision for loan losses    |   |                                                              | 10,159    |   |   | 9,549 |   |
| Noninterest                income                                     |   |                                                              |      |   |   |   |   |
| Trust                and investment services                          |   |                                                              | 182       |   |   | 159 |   |
| Service                charges on deposit accounts                    |   |                                                              | 504       |   |   | 427 |   |
| Revenues                from insurance agency                         |   |                                                              | 1,048     |   |   | 903 |   |
| Increase                in cash value of company owned life insurance |   |                                                              | 198       |   |   | 230 |   |
| Other                                                                 |   |                                                              | 414       |   |   | 507 |   |
| Total                noninterest income                               |   |                                                              | 2,346     |   |   | 2,226 |   |
| Noninterest                expense                                    |   |                                                              |      |   |   |   |   |
| Salaries                                                              |   |                                                              | 3,146     |   |   | 2,992 |   |
| Pension                and other employee benefits                    |   |                                                              | 849       |   |   | 740 |   |
| Net                occupancy expense of bank premises                 |   |                                                              | 1,135     |   |   | 1,020 |   |
| Furniture                and equipment expense                        |   |                                                              | 657       |   |   | 645 |   |
| Amortization                of intangible assets                      |   |                                                              | 107       |   |   | 120 |   |
| Other                                                                 |   |                                                              | 1,078     |   |   | 1,128 |   |
| Total                noninterest expense                              |   |                                                              | 6,972     |   |   | 6,645 |   |
| Income                before income taxes                             |   |                                                              | 5,533     |   |   | 5,130 |   |
| Provision                for income taxes                             |   |                                                              | 1,958     |   |   | 1,751 |   |
| Net                income                                             |   | $                                                                 | 3,575     |   | $ | 3,379 |   |
| Basic                earnings per share                               |   | $                                                                 | 0.37      |   | $ | 0.35 |   |
| Diluted                earnings per share                             |   | $                                                                 | 0.37      |   | $ | 0.35 |   |
| Cash                dividends declared                                |   | $                                                                 | 0.04      |   | $ | 0.04 |   |
| Weighted                average common shares outstanding             |   |                                                              | 9,787,266 |   |   | 9,766,753 |   |
| Weighted                average common equivalent shares              |   |                                                              | 9,788,606 |   |   | 9,769,936 |   |
| Comprehensive                income                                   |   | $                                                                 | 3,174     |   | $ | 3,537 |   |

| See                notes to consolidated financial                statements. |
|-------------------------------------------------------------------------------|

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY**

|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   | Other              |   |                |    |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|------------|--------|--------------|--------|----------|--------|-------------|--------|--------------------|--------|---------------------|---------|
|                                                                                                                                     |   | Common Stock |      | Additional |   |         |   |     |   | Accumulated |   | Total              |   |
|                                                                                                                                     |   | Shares            |      |       |   | Paid In |   | Retained |   | Treasury    |   | Comprehensive      |   | Stockholders’ |    |
|                                                                                                                                     |   | Outstanding       |      | Amount     |   | Capital      |   | Earnings |   | Stock       |   | Income (Loss) |   | Equity              |    |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |
| Balance                at 12/31/2006                                                                                                     |   |              | 9,774,025 |       | $      | 108          |   | $        | 4,046  |        | $      | 73,046             |   | $                   | (10,062 | ) | $ | (331 | ) | $ | 66,807 |   |
| Comprehensive                income:                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Net                income                                                                                                                |   |              |      |       |   |         |   |     |   |        |   | 3,379              |   |                |    |   |   |   |   |   | 3,379 |   |
| Change                in unrealized gain (loss) on securities available for sale, net of                reclassification and tax effects |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   | 158 |   |   | 158 |   |
| Total                comprehensive income                                                                                                |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   | 3,537 |   |
| Adjust                capital stock for shares outstanding                                                                               |   |              |      |       |   | 11           |   |     | (11    | )           |   |               |   |                |    |   |   |   |   |   | - |   |
| Cash                dividends declared                                                                                                   |   |              |      |       |   |         |   |     |   |        |   | (357               | )      |                |    |   |   |   |   |   | (357 | ) |
| Issuance                of shares for employee stock ownership plan                                                                      |   |              | 9,325     |       |   |         |   |     | 225    |        |   |               |   |                |    |   |   |   |   |   | 225 |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Stock                awards vested                                                                                                       |   |              |      |       |   |         |   |     | 42     |        |   |               |   |                |    |   |   |   |   |   | 42 |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Stock                awards granted                                                                                                      |   |              | 17,160    |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   | - |   |
| Balance                at 3/31/2007                                                                                                      |   |              | 9,800,510 |       | $      | 119          |   | $        | 4,302  |        | $      | 76,068             |   | $                   | (10,062 | ) | $ | (173 | ) | $ | 70,254 |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Balance                at 12/31/2007                                                                                                     |   |              | 9,800,510 |       | $      | 119          |   | $        | 25,755 |        | $      | 64,463             |   | $                   | (10,062 | ) | $ | (173 | ) | $ | 80,102 |   |
| Comprehensive                income:                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Net                income                                                                                                                |   |              |      |       |   |         |   |     |   |        |   | 3,575              |   |                |    |   |   |   |   |   | 3,575 |   |
| Change                in unrealized gain (loss) on securities available for sale, net of                reclassification and tax effects |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   | (414 | ) |   | (414 | ) |
| Adjustment                to apply SFAS 158, net of tax                                                                                  |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   | 13 |   |   | 13 |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Total                comprehensive income                                                                                                |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   | 3,174 |   |
| Adoption                of EITF 06-4                                                                                                     |   |              |      |       |   |         |   |     |   |        |   | (233               | )      |                |    |   |   |   |   |   | (233 | ) |
| Cash                dividends declared                                                                                                   |   |              |      |       |   |         |   |     |   |        |   | (393               | )      |                |    |   |   |   |   |   | (393 | ) |
| Issuance                of shares for employee stock ownership plan                                                                      |   |              | 11,967    |       |   |         |   |     | 250    |        |   |               |   |                |    |   |   |   |   |   | 250 |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Stock                awards vested                                                                                                       |   |              |      |       |   |         |   |     | 65     |        |   |               |   |                |    |   |   |   |   |   | 65 |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Stock                awards granted                                                                                                      |   |              | 22,000    |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   | - |   |
|                                                                                                                                     |   |              |      |       |   |         |   |     |   |        |   |               |   |                |    |   |   |   |   |   |   |   |
| Balance                at 03/31/2008                                                                                                     |   |              | 9,834,477 |       | $      | 119          |   | $        | 26,070 |        | $      | 67,412             |   | $                   | (10,062 | ) | $ | (574 | ) | $ | 82,965 |   |

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                 |   | For the Three Months |     |
|----------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|----------|
|                                                                                                                 |   | Ended March 31,           |     |
|                                                                                                                 |   | 2008                                |     | 2007 |   |
| **Cash                flows from operating activities**                                                              |   |                                |     |   |   |
| Net                income                                                                                            |   | $                                   | 3,575    |   | $ | 3,379 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:      |   |                                |     |   |   |   |   |
| Depreciation                on premises and equipment                                                                |   |                                | 706      |   |   | 570 |   |
| Provision                for loan losses                                                                             |   |                                | 800      |   |   | 400 |   |
| Net                increase in other liabilities                                                                     |   |                                | 1,083    |   |   | 83 |   |
| Net                increase in other assets                                                                          |   |                                | (661     | ) |   | (53 | ) |
| Net                increase in deferred taxes                                                                        |   |                                | (1,196   | ) |   | (413 | ) |
| Amortization                of unearned restricted stock awards                                                      |   |                                | 65       |   |   | 42 |   |
| Increase                in cash surrender value of company owned life insurance                                      |   |                                | (198     | ) |   | (230 | ) |
| Amortization                of investment security premiums and accretion of discount                                |   |                                | 26       |   |   | (9 | ) |
| Amortization                of intangible assets                                                                     |   |                                | 107      |   |   | 120 |   |
| Cash                provided                by operating activities                                                  |   |                                | 4,307    |   |   | 3,889 |   |
|                                                                                                                 |   |                                |     |   |   |   |   |
| **Cash                flows from investing activities**                                                              |   |                                |     |   |   |   |   |
| Proceeds                from calls, repayments, maturities and sales of available-for-sale                securities |   |                                | 28,775   |   |   | 27,607 |   |
| Proceeds                from calls, repayments and maturities of held-to-maturity                securities          |   |                                | 5        |   |   | 90 |   |
| Purchases                of available-for-sale securities                                                            |   |                                | (26,134  | ) |   | (2,160 | ) |
| Proceeds                from broker                                                                                  |   |                                | -        |   |   | 9,225 |   |
| Purchases                of restricted securities                                                                    |   |                                | (9,557   | ) |   | (665 | ) |
| Redemptions                of restricted securities                                                                  |   |                                | 2,622    |   |   | 2,367 |   |
| Loans                made to customers, net                                                                          |   |                                | (140,115 | ) |   | (41,247 | ) |
| Purchases                of premises and equipment                                                                   |   |                                | (1,601   | ) |   | (2,306 | ) |
| Cash                used in investing activities                                                                     |   |                                | (146,005 | ) |   | (7,089 | ) |
|                                                                                                                 |   |                                |     |   |   |   |   |
| **Cash                flows from financing activities**                                                              |   |                                |     |   |   |   |   |
| Net                increase (decrease) in demand deposits, money market, NOW and                savings              |   |                                | (21,185  | ) |   | 85,829 |   |
| Increase                (decrease) in time deposits                                                                  |   |                                | 4,114    |   |   | (23,827 | ) |
| Cash                dividends paid                                                                                   |   |                                | (392     | ) |   | (355 | ) |
| Federal                Home Loan Bank term advances                                                                  |   |                                | 155,000  |   |   | - |   |
| Maturities                of Federal Home Loan Bank term advances                                                    |   |                                | -        |   |   | (20,000 | ) |
| Net                decrease in overnight borrowings                                                                  |   |                                | (900     | ) |   | (4,580 | ) |
| Proceeds                from subordinated debt issuance                                                              |   |                                | 20,000   |   |   | - |   |
| Cash                provided by financing activities                                                                 |   |                                | 156,637  |   |   | 37,067 |   |
|                                                                                                                 |   |                                |     |   |   |   |   |
| Net                increase in cash and cash equivalents                                                             |   |                                | 14,939   |   |   | 33,867 |   |
| Cash                and cash equivalents, beginning of period                                                        |   |                                | 17,455   |   |   | 27,620 |   |
| Cash                and cash equivalents, end of period                                                              |   | $                                   | 32,394   |   | $ | 61,487 |   |
|                                                                                                                 |   |                                |     |   |   |   |   |
| Supplemental                disclosures of cash flow information                                                     |   |                                |     |   |   |   |   |
| Cash                paid during the year for:                                                                        |   |                                |     |   |   |   |   |
| Interest                                                                                                             |   | $                                   | 8,619    |   | $ | 8,896 |   |
| Income                taxes                                                                                          |   |                                | 1,340    |   |   | 899 |   |
| Schedule                of noncash activities                                                                        |   |                                |     |   |   |   |   |
| Issuance                of common stock to employee stock ownership plan                                             |   | $                                   | 250      |   | $ | 225 |   |
| Issuance                of common stock to restricted stock plan                                                     |   |                                | 460      |   |   | 414 |   |

----

----

|                                                                                |   | Three Months Ended |      |
|-------------------------------------------------------------------------------------|--------|------------------------------|-----------|
|                                                                                |   | March 31,               |      | March 31, |   |
|                                                                                |   | 2008                         |      | 2007 |   |
| Computation                of per share income                                      |   |                         |      |   |   |
| (in                thousands, except share and per share data)                      |   |                         |      |   |   |
|                                                                                |   |                         |      |   |   |
| Net                income                                                           |   | $                            | 3,575     |   | $ | 3,379 |   |
|                                                                                |   |                         |      |   |   |   |   |
| Common                equivalent shares:                                            |   |                         |      |   |   |   |   |
|                                                                                |   |                         |      |   |   |   |   |
| Weighted                average common shares outstanding*                          |   |                         | 9,787,266 |   |   | 9,766,753 |   |
| Weighted                average common equivalent shares*                           |   |                         | 1,340     |   |   | 3,183 |   |
| Weighted                average common and common equivalent                shares* |   |                         | 9,788,606 |   |   | 9,769,936 |   |
| Basic                earnings per share                                             |   | $                            | 0.37      |   | $ | 0.35 |   |
| Diluted                earnings per share                                           |   | $                            | 0.37      |   | $ | 0.35 |   |

----

| For                the Three Months Ended March 31, 2008 |   |                  |   |
|----------------------------------------------------------|--------|-----------------------|--------|
|                                                     |   | Weighted Average |   |
|                                                     |   | Shares                |   | Grant Date Share Value |   |
| Nonvested                at beginning of period          |   |                  | 26,416 |   | $ | 21.59 |   |
| Granted                                                  |   |                  | 22,000 |   |   | 20.89 |   |
| Vested                                                   |   |                  | (3,142 | ) |   | 20.85 |   |
| Nonvested                at end of period                |   |                  | 45,274 |   | $ | 21.30 |   |

|                                            |   | For the Three Months Ended |   |
|-------------------------------------------------|--------|------------------------------------------------|--------|
|                                            |   | March 31,                                 |   |
|                                            |   | 2008                                           |   | 2007 |   |
| 401(K)                Defined Contribution Plan |   | $                                              | 66     |   | $ | 58 |   |
| Employee                Stock Ownership Plan    |   |                                           | 62     |   |   | 56 |   |

| For                the Three Months Ended |   |          |   |    |   |             |   |
|-------------------------------------------|--------|--------------------|--------|--------------|--------|-----------------------|--------|
|                                 |   | Amortization       |   | Amortization |   | Total Net        |   |
|                                 |   | Interest Cost |   | Cost         |   | of Net Gain |   | Expense |   |
| March                31, 2008             |   | $                  | 3      |         | $      | 8                     |   | $ | 3 |   | $ | 8 |   |
| March                31, 2007             |   |               | 4      |         |   | 8                     |   |   | 2 |   |   | 10 |   |

|                                     |   | For the Three Months Ended |   |
|------------------------------------------|--------|------------------------------------------------|--------|
|                                     |   | March                31,                       |   |
|                                     |   | 2008                                           |   | 2007 |   |
| Incentive                Retirement Plan |   | $                                              | 90     |   | $ | 69 |   |

|                                                       |   | For the Three Months Ended |   |
|------------------------------------------------------------|--------|------------------------------------------------|--------|
|                                                       |   | March 31,                                 |   |
|                                                       |   | 2008                                           |   | 2007 |   |
| Supplemental                Executive Retirement Agreement |   | $                                              | 116    |   | $ | 90 |   |

----

|                                         |   | Fair Value Measurements at March 31, 2008 Using |   |
|----------------------------------------------|--------|------------------------------------------------------------------------------------|--------|
|                                         |   | Quoted Prices in                                                         |   | Significant |   | Significant |   |
|                                         |   | Active Markets for                                                       |   | Other |   | Unobservable |   |
|                                         |   | Identical Assets                                                              |   | Observable Inputs |   | Inputs |   |
|                                         |   | (Level 1)                                                                     |   | (Level 2) |   | (Level 3) |   |
|                                         |   |                                                                               |   |   |   |   |   |
| Available                for sale securities |   |                                                                               | -      |   | $ | 51,580 |   |   | - |   |

----

|                          |   | Fair Value Measurements at March 31, 2008 Using |   |
|-------------------------------|--------|------------------------------------------------------------------------------------|--------|
|                          |   | Quoted Prices in                                                         |   | Significant |   | Significant |   |
|                          |   | Active Markets for                                                       |   | Other |   | Unobservable |   |
|                          |   | Identical Assets                                                              |   | Observable Inputs |   | Inputs |   |
|                          |   | (Level 1)                                                                     |   | (Level 2) |   | (Level 3) |   |
|                          |   |                                                                               |   |   |   |   |   |
| Impaired                Loans |   |                                                                               | -      |   |   | - |   | $ | 322 |   |

|   | - | EPS                growth of 5.71% over the 2007 linked quarter, and 4.91% over the                fourth                quarter of 2007 |
|--------|---|------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Net                loan growth for the quarter of over $140,115 or 14.24% with total                loans                funded of $185,109 for the first                quarter |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Net                income for the quarter of $3,575, representing a 5.80% increase over                the                first quarter of 2007 |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | A                fourteen basis point reduction in net interest margin for the first                quarter as compared to the fourth quarter of 2007, from 4.04% to                3.90% |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Tier                I leverage ratio and total risk based capital ratio at March 31 of                8.71%                and 11.83% |
|--------|---|---------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Deposit                reduction of 1.72% and total borrowings increase of 737.32% from                December                31, 2007 |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------|

|  | - | An                ROAA and ROAE of 1.19% and 17.56% at March 31, 2008 as compared to                1.32%                and 19.40% at December 31, 2007 |
|--|---|----------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                     |   | March 31, 2008 |      | December 31, 2007 |   |
|------------------------------------------|--------|--------------------------|-----------|-----------------------------|--------|
| Real                estate loans         |   |                     |      |                        |   |   |   |   |   |
| Construction                             |   | $                        | 324,054   |                        |   | 28.75 | % | $ | 296,397 |   |   | 30.05 | % |
| Residential                              |   |                     | 280,083   |                        |   | 24.84 |   |   | 211,609 |   |   | 21.45 |   |
| Commercial                               |   |                     | 469,997   |                        |   | 41.69 |   |   | 425,983 |   |   | 43.18 |   |
| Commercial                and Industrial |   |                     | 49,397    |                        |   | 4.38 |   |   | 48,124 |   |   | 4.88 |   |
| Consumer                                 |   |                     | 3,407     |                        |   | .30 |   |   | 3,670 |   |   | 0.37 |   |
| Other                loans          |   |                     | 416       |                        |   | .04 |   |   | 726 |   |   | 0.07 |   |
| Total                loans               |   |                     | 1,127,354 |                        |   | 100.00 | % |   | 986,509 |   |   | 100.00 | % |
| Less:                                    |   |                     |      |                        |   |   |   |   |   |   |   |   |   |
| Deferred                fees             |   |                     | 3,321     |                        |   |   |   |   | 2,591 |   |   |   |   |
| Allowance                for loan losses |   |                     | 9,039     |                        |   |   |   |   | 8,250 |   |   |   |   |
| Loans,                net                |   | $                        | 1,114,994 |                        |   |   |   | $ | 975,668 |   |   |   |   |

----

|                                                           |   | March 31, 2008 |   | December 31, 2007 |   |
|----------------------------------------------------------------|--------|--------------------------|--------|-----------------------------|--------|
| Securities                available for sale                   |   |                     |   |                        |   |
| Obligations                of U.S. government agencies         |   | $                        | 13,896 |                        | $      | 32,394 |   |
| Mortgage-backed                securities                      |   |                     | 24,269 |                        |   | 7,619 |   |
| Obligations                of state and political subdivisions |   |                     | 5,834  |                        |   | 6,312 |   |
| Other                securities                                |   |                     | 7,581  |                        |   | 8,567 |   |
| Total                securities available for sale             |   | $                        | 51,580 |                        | $      | 54,892 |   |
|                                                           |   |                     |   |                        |   |   |   |
| Securities                held to maturity                     |   |                     |   |                        |   |   |   |
| Mortgage-backed                securities                      |   | $                        | 3      |                        |   | 8 |   |
| Obligations                of state and political subdivisions |   |                     | 202    |                        |   | 202 |   |
| Total                securities held to maturity               |   | $                        | 205    |                        | $      | 210 |   |
|                                                           |   |                     |   |                        |   |   |   |
| Total                investment securities                |   | $                        | 51,785 |                        | $      | 55,102 |   |

----

|                                         |   | March 31, 2008 |    | December 31, 2007 |   |
|----------------------------------------------|--------|--------------------------|---------|-----------------------------|--------|
| Demand                (non interest bearing) |   | $                        | 108,637 |                        | $      | 111,726 |   |
| Money                market                  |   |                     | 371,028 |                        |   | 389,891 |   |
| NOW                                          |   |                     | 30,681  |                        |   | 34,814 |   |
| Savings                                      |   |                     | 59,167  |                        |   | 54,267 |   |
| Time                                         |   |                     | 404,217 |                        |   | 400,103 |   |
| Total                deposits                |   | $                        | 973,730 |                        | $      | 990,801 |   |

----

|                                                                                          |   | For the Three Months Ended |      | For the Three Months Ended |   |
|-----------------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|------------------------------------------------|--------|
|                                                                                          |   | March 31, 2008                       |      | March 31, 2007                       |   |
|                                                                                          |   | Average                                        |      |                                           |   | Average |   | Average |   |   |   | Average |   |
|                                                                                          |   | Balance                                        |      |  Interest                                 |   |  Rate |   |   Balance |   |  Interest |   |  Rate |   |
| ASSETS                                                                                        |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                assets:                                                       |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities:                                                         |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                                                       |   | $                                              | 48,410    |                                           | $      | 635 |   |   | 5.32 | %  | $ | 79,255 |   | $ | 943 |   |   | 4.76 | % |
| Nontaxable                                                                                    |   |                                           | 6,064     |                                           |   | 90 |   |   | 5.90 |   |   | 9,033 |   |   | 121 |   |   | 5.37 |   |
| Total                investment securities                                                    |   |                                           | 54,474    |                                           |   | 725 |   |   | 5.32 |   |   | 88,288 |   |   | 1,064 |   |   | 4.82 |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                loans                                                                    |   |                                           | 1,064,259 |                                           |   | 19,262 |   |   | 7.25 |   |   | 872,059 |   |   | 17,713 |   |   | 8.17 |   |
| Federal                funds sold                                                             |   |                                           | 1,428     |                                           |   | 8 |   |   | 2.29 |   |   | 23,910 |   |   | 311 |   |   | 5.21 |   |
| Other                interest-earning assets                                                  |   |                                           | 6,947     |                                           |   | 124 |   |   | 7.35 |   |   | 3,306 |   |   | 60 |   |   | 7.38 |   |
| Total                interest-earning assets                                                  |   |                                           | 1,127,108 |                                           |   | 20,119 |   |   | 7.15 |   |   | 987,563 |   |   | 19,148 |   |   | 7.80 |   |
| Noninterest-earning                assets                                                     |   |                                           | 77,542    |                                           |   |   |   |   |   |   |   | 70,161 |   |   |   |   |   |   |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                assets                                                                   |   | $                                              | 1,204,650 |                                           |   |   |   |   |   |   | $ | 1,057,724 |   |   |   |   |   |   |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY                                           |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Liabilities                                                                                   |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:                                                  |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Savings                deposits (including NOW)                                               |   | $                                              | 88,373    |                                           | $      | 308 |   |   | 1.39 | % | $ | 88,551 |   | $ | 267 |   |   | 1.21 | % |
| Money                market                                                                   |   |                                           | 380,932   |                                           |   | 3,042 |   |   | 3.21 |   |   | 317,078 |   |   | 3,268 |   |   | 4.18 |   |
| Time                deposits                                                                  |   |                                           | 391,052   |                                           |   | 4,468 |   |   | 4.57 |   |   | 417,819 |   |   | 4,894 |   |   | 4.75 |   |
| Total                interest-bearing deposits                                                |   |                                           | 860,357   |                                           |   | 7,818 |   |   | 3.65 |   |   | 823,448 |   |   | 8,429 |   |   | 4.09 |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Federal                Home Loan Bank borrowings                                    |   |                                           | 124,610   |                                           |   | 889 |   |   | 2.87 |   |   | 38,045 |   |   | 384 |   |   | 4.09 |   |
| Subordinated                debt                                                              |   |                                           | 24,192    |                                           |   | 422 |   |   | 6.89 |   |   | 18,000 |   |   | 344 |   |   | 7.64 |   |
| Total                interest-bearing liabilities                                             |   |                                           | 1,009,159 |                                           |   | 9,129 |   |   | 3.64 |   |   | 879,493 |   |   | 9,157 |   |   | 4.22 |   |
| Noninterest-bearing                liabilities:                                               |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Demand                deposits                                                                |   |                                           | 102,235   |                                           |   |   |   |   |   |   |   | 101,479 |   |   |   |   |   |   |   |
| Other                liabilities                                                              |   |                                           | 11,828    |                                           |   |   |   |   |   |   |   | 8,193 |   |   |   |   |   |   |   |
| Total                liabilities                                                              |   |                                           | 1,123,222 |                                           |   |   |   |   |   |   |   | 989,165 |   |   |   |   |   |   |   |
| Stockholders'                equity                                                           |   |                                           | 81,428    |                                           |   |   |   |   |   |   |   | 68,559 |   |   |   |   |   |   |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                liabilites & stockholders equity                                     |   | $                                              | 1,204,650 |                                           |   |   |   |   |   |   | $ | 1,057,724 |   |   |   |   |   |   |   |
|                                                                                          |   |                                           |      |                                           |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net interest income/interest rate spread                                  |   |                                           |      |                                           | $      | 10,990 |   |   | 3.51 | % |   |   |   | $ | 9,991 |   |   | 3.58 | % |
| Net                earning assets/net yield on average interest earning                assets |   | $                                              | 117,949   |                                           |   |   |   |   | 3.90 | % | $ | 108,070 |   |   |   |   |   | 4.04 | % |

----

**Recent      Regulatory and Accounting Developments**

----

|                                    |   | As of February 29, 2008 |   | As of November 30, 2007 |   |
|-----------------------------------------|--------|---------------------------------------------|--------|---------------------------------------------|--------|
| Change In Interest Rates |   | Potential Change In Net      |   | Potential Change In Net      |   |
|  In Basis Points         |   | Interest Income                        |   | Interest Income                        |   |
| (Rate Shock)                       |   | $ Change                               |   | % Change                               |   | $ Change |   | % Change |   |
| Up                200 basis points      |   |                                        | 1,047  |                                        |   | 2.12 |   |   | 515 |   |   | 1.19 |   |
| Up                100 basis points      |   |                                        | (1,857 | )                                           |   | (3.75 | ) |   | 853 |   |   | 1.96 |   |
| Static                                  |   |                                        | -      |                                        |   | - |   |   | - |   |   | - |   |
| Down                100 basis points    |   |                                        | (8,304 | )                                           |   | (16.79 | ) |   | 136 |   |   | .31 |   |
| Down                200 basis points    |   |                                        | (4,951 | )                                           |   | (10.01 | ) |   | (926 | ) |   | (2.13 | ) |

----

|   | SMITHTOWN                BANCORP, INC.                       |
|--------|--------------------------------------------------------------|
|   |                                                         |
|   | May                8, 2008                                   |
|   |                                                         |
|   | /s/                Bradley E. Rock                           |
|   | Bradley                E. Rock, Chairman, President and      |
|   | Chief                Executive Officer                       |
|   |                                                         |
|   | /s/                Anita M. Florek                           |
|   | Anita                M. Florek, Executive Vice President and |
|   | Chief                Financial Officer                       |

----