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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549



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FORM 10-Q



QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarter ended June 30, 2003



Commission file number 2-91511



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SMITHTOWN BANCORP

Incorporated pursuant to the laws of New York State



Internal Revenue Service  Employer Identification
No. 11-2695037



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



631-360-9300



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



Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable
date: 3,017,230 Shares of Common Stock ($1.25 Par Value) Outstanding as of July 31, 2003.



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SMITHTOWN BANCORP



INDEX



|                               | 
|------------------------------ | 
|Part I  FINANCIAL INFORMATION | 
|                               | 
|Item 1.                        | 
|                               | 
|                               | 
|                               | 
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|                               | 
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|                               | 
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|                               | 
|                               | 
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|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|                               | 
|Item 2.                        | 
|                               | 
|Item 3.                        | 
|                               | 
|Item 4.                        | 
|                               | 
|Part II  OTHER INFORMATION    | 
|                               | 
|Item 1.                        | 
|                               | 
|Item 2.                        | 



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|        |  |                                                           
|------- |  | ----------------------------------------------------------
|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                          



(1)
Exhibits



|                                                      | 
|----------------------------------------------------- | 
|Exhibit Number Referred to Item 601 of
Regulation S-K | 
|                                                      | 
|99.1                                                  | 
|                                                      | 
|99.2                                                  | 
|                                                      | 
|Signatures                                            | 
|                                                      | 
|Certifications                                        | 



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SMITHTOWN BANCORP

CONSOLIDATED BALANCE SHEETS



|                                                                                                          |  | As of        
|--------------------------------------------------------------------------------------------------------- |  | -------------
|                                                                                                          |  | June 30, 2003
|Assets                                                                                                    |  |              
|Cash and Due from Banks                                                                                   |  | $            
|Investment Securities:                                                                                    |  |              
|Investment Securities Held to Maturity:                                                                   |  |              
|Mortgage  Backed Securities                                                                              |  |              
|Obligations of State and Political Subdivisions                                                           |  |              
|                                                                                                          |  |              
|Total Investment Securities Held to Maturity                                                              |  |              
|                                                                                                          |  |              
|(Estimated Fair Value $2,454,544 and $3,118,644 at June 30, 2003 and December 31, 2002, respectively)     |  |              
|Investment Securities Available for Sale:                                                                 |  |              
|Obligations of U.S. Government Agencies                                                                   |  |              
|Mortgage  Backed Securities                                                                              |  |              
|Obligations of State and Political Subdivisions                                                           |  |              
|Other Securities                                                                                          |  |              
|                                                                                                          |  |              
|Total Investment Securities Available for Sale (At Estimated Fair Value)                                  |  |              
|                                                                                                          |  |              
|Total Investment Securities                                                                               |  |              
|                                                                                                          |  |              
|Federal Funds Sold                                                                                        |  |              
|                                                                                                          |  |              
|Loans                                                                                                     |  |              
|Less: Unearned Discount                                                                                   |  |              
|Reserve for Possible Loan Losses                                                                          |  |              
|                                                                                                          |  |              
|Loans, Net                                                                                                |  |              
|Equity Investment in SMTB Financial Group, LLC.                                                           |  |              
|Bank Premises and Equipment                                                                               |  |              
|Other Assets                                                                                              |  |              
|                                                                                                          |  |              
|Total Assets                                                                                              |  | $            
|                                                                                                          |  |              
|Liabilities                                                                                               |  |              
|Deposits:                                                                                                 |  |              
|Demand                                                                                                    |  | $            
|Money Market                                                                                              |  |              
|NOW                                                                                                       |  |              
|Savings                                                                                                   |  |              
|Time Deposits                                                                                             |  |              
|                                                                                                          |  |              
|Total Deposits                                                                                            |  |              
|(Estimated Fair Value $428,390,314 and $377,919,674 at June 30, 2003 and December 31, 2002, respectively) |  |              
|Dividend Payable                                                                                          |  |              
|Other Borrowed Funds                                                                                      |  |              
|Other Liabilities                                                                                         |  |              
|                                                                                                          |  |              
|Total Liabilities                                                                                         |  |              
|                                                                                                          |  |              
|Stockholders Equity                                                                                      |  |              
|Common Stock  $1.25 Par Value:                                                                           |  |              
|(7,000,000 Shares Authorized; 3,583,640 Shares Issued)                                                    |  |              
|Retained Earnings                                                                                         |  |              
|Additional Paid in Capital                                                                                |  |              
|Accumulated Other Comprehensive Income                                                                    |  |              
|                                                                                                          |  |              
|Total                                                                                                     |  |              
|Less: Treasury Stock                                                                                      |  |              
|                                                                                                          |  |              
|(565,860 and 536,142 Shares at Cost at June 30, 2003 and December 31, 2002, respectively)                 |  |              
|Total Stockholders' Equity                                                                                |  |              
|                                                                                                          |  |              
|Total Liabilities and Stockholders Equity                                                                |  | $            
|                                                                                                          |  |              



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SMITHTOWN BANCORP

CONSOLIDATED STATEMENTS OF INCOME



|                                                             |  | For the Three Months Ended June 30,
|------------------------------------------------------------ |  | -----------------------------------
|                                                             |  | 2003                               
|Interest Income                                              |  |                                    
|Interest and Fees on Loans                                   |  | 6,591,374                          
|Interest and Dividends on:                                   |  |                                    
|Obligations of U.S. Government Agencies                      |  | 176,408                            
|Mortgage  Backed Securities                                 |  | 156,129                            
|Obligations of State & Political Subdivisions                |  | 206,227                            
|Other Securities                                             |  | 122,298                            
|Interest on Federal Funds Sold                               |  | 33,001                             
|Interest on Balances Due From Depository Institutions        |  | 256                                
|Other Interest Income                                        |  | 27,608                             
|                                                             |  |                                    
|Total Interest Income                                        |  | 7,313,301                          
|                                                             |  |                                    
|Interest Expense                                             |  |                                    
|Money Market Accounts                                        |  | 442,930                            
|Savings                                                      |  | 71,817                             
|Time Deposits $100,000 and Over                              |  | 361,409                            
|Other Time Deposits                                          |  | 655,488                            
|Interest on Other Borrowed Money                             |  | 356,512                            
|                                                             |  |                                    
|Total Interest Expense                                       |  | 1,888,156                          
|                                                             |  |                                    
|Net Interest Income                                          |  | 5,425,145                          
|Provision for Possible Loan Losses                           |  | 270,000                            
|                                                             |  |                                    
|Net Interest Income After Provision for Possible Loan Losses |  | 5,155,145                          
|                                                             |  |                                    
|Other Non-Interest Income                                    |  |                                    
|Trust Department Income                                      |  | 125,303                            
|Service Charges on Deposit Accounts                          |  | 482,411                            
|Other Income                                                 |  | 1,009,377                          
|Net Gain on Sale of Investment Securities                    |  | 6,282                              
|Net Income from Equity Investment                            |  | 14,050                             
|                                                             |  |                                    
|Total Other Non  Interest Income                            |  | 1,637,423                          
|                                                             |  |                                    
|Other Operating Expenses                                     |  |                                    
|Salaries                                                     |  | 1,573,413                          
|Pension and Other Employee Benefits                          |  | 331,925                            
|Net Occupancy Expense of Bank Premises                       |  | 368,718                            
|Furniture and Equipment Expense                              |  | 274,780                            
|Miscellaneous Operating Expense                              |  | 706,655                            
|                                                             |  |                                    
|Total Other Operating Expense                                |  | 3,255,491                          
|                                                             |  |                                    
|Income Before Income Taxes                                   |  | 3,537,077                          
|Provision for Income Taxes                                   |  | 1,303,877                          
|                                                             |  |                                    
|Net Income                                                   |  | 2,233,200                          
|                                                             |  |                                    
|Earnings Per Share                                           |  |                                    
|Net Income                                                   |  | 0.74                               
|Cash Dividends Declared                                      |  | 0.09                               
|Weighted Average Shares Outstanding                          |  | 3,020,459                          



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SMITHTOWN BANCORP

CONSOLIDATED STATEMENTS OF INCOME



|                                                             |  | For the Six Months Ended June 30,
|------------------------------------------------------------ |  | ---------------------------------
|                                                             |  | 2003                             
|Interest Income                                              |  |                                  
|Interest and Fees on Loans                                   |  | $                                
|Interest and Dividends on:                                   |  |                                  
|Obligations of U.S. Government Agencies                      |  |                                  
|Mortgage  Backed Securities                                 |  |                                  
|Obligations of State & Political Subdivisions                |  |                                  
|Other Securities                                             |  |                                  
|Interest on Federal Funds Sold                               |  |                                  
|Interest on Balances Due From Depository Institutions        |  |                                  
|Other Interest Income                                        |  |                                  
|                                                             |  |                                  
|Total Interest Income                                        |  |                                  
|                                                             |  |                                  
|Interest Expense                                             |  |                                  
|Money Market Accounts                                        |  |                                  
|Savings                                                      |  |                                  
|Time Deposits $100,000 and Over                              |  |                                  
|Other Time Deposits                                          |  |                                  
|Interest on Other Borrowed Money                             |  |                                  
|                                                             |  |                                  
|Total Interest Expense                                       |  |                                  
|                                                             |  |                                  
|Net Interest Income                                          |  |                                  
|Provision for Possible Loan Losses                           |  |                                  
|                                                             |  |                                  
|Net Interest Income After Provision for Possible Loan Losses |  |                                  
|                                                             |  |                                  
|Other Non-Interest Income                                    |  |                                  
|Trust Department Income                                      |  |                                  
|Service Charges on Deposit Accounts                          |  |                                  
|Other Income                                                 |  |                                  
|Net Gain on Sale of Investment Securities                    |  |                                  
|Net Income from Equity Investment                            |  |                                  
|                                                             |  |                                  
|Total Other Non  Interest Income                            |  |                                  
|                                                             |  |                                  
|Other Operating Expenses                                     |  |                                  
|Salaries                                                     |  |                                  
|Pension and Other Employee Benefits                          |  |                                  
|Net Occupancy Expense of Bank Premises                       |  |                                  
|Furniture and Equipment Expense                              |  |                                  
|Miscellaneous Operating Expense                              |  |                                  
|                                                             |  |                                  
|Total Other Operating Expense                                |  |                                  
|                                                             |  |                                  
|Income Before Income Taxes                                   |  |                                  
|Provision for Income Taxes                                   |  |                                  
|                                                             |  |                                  
|Net Income                                                   |  | $                                
|                                                             |  |                                  
|Earnings Per Share                                           |  |                                  
|Net Income                                                   |  | $                                
|Cash Dividends Declared                                      |  | $                                
|Weighted Average Shares Outstanding                          |  |                                  



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SMITHTOWN BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



|                                                                   |  | For the Three Months Ended June 30,
|------------------------------------------------------------------ |  | -----------------------------------
|                                                                   |  | 2003                               
|Net Income                                                         |  | $                                  
|                                                                   |  |                                    
|Other Comprehensive Income, Before Tax:                            |  |                                    
|Unrealized Holding Gain Arising During the Period                  |  |                                    
|Less: Reclassification Adjustment for Gains Included in Net Income |  |                                    
|                                                                   |  |                                    
|                                                                   |  |                                    
|Income Tax Related to Other Comprehensive Income                   |  |                                    
|                                                                   |  |                                    
|Other Comprehensive Income, Net of Tax                             |  |                                    
|                                                                   |  |                                    
|Total Comprehensive Income                                         |  | $                                  
|                                                                   |  |                                    



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SMITHTOWN BANCORP

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME



|                                                                   |  | For the Six Months Ended June 30,
|------------------------------------------------------------------ |  | ---------------------------------
|                                                                   |  | 2003                             
|Net Income                                                         |  | $                                
|                                                                   |  |                                  
|Other Comprehensive Income, Before Tax:                            |  |                                  
|Unrealized Holding Gain Arising During the Period                  |  |                                  
|Less: Reclassification Adjustment for Gains Included in Net Income |  |                                  
|                                                                   |  |                                  
|                                                                   |  |                                  
|Income Tax Related to Other Comprehensive Income                   |  |                                  
|                                                                   |  |                                  
|Other Comprehensive Income, Net of Tax                             |  |                                  
|                                                                   |  |                                  
|Total Comprehensive Income                                         |  | $                                
|                                                                   |  |                                  



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SMITHTOWN BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY



|                            |  | Common Stock       |   | Capital Surplus |        | Retained Earnings |  |   | Cost of Common Stock in Treasury |  |   | Accumulated Other Comprehensive Income (Loss) |   | Total Stockholders Equity |  
|--------------------------- |  | ------------------ | - | --------------- | ------ | ----------------- |  | - | -------------------------------- |  | - | --------------------------------------------- | - | -------------------------- | -
|                            |  | Shares Outstanding |   |                 | Amount |                   |  |   |                                  | 
|Balance at 3/31/2002        |  | 3,071,534          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 30,433,373                                    |   |                            | $
|Comprehensive Income:       |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net Income                  |  |                    |   |                 |        |                   |  |   |                                  |  |   | 2,063,733                                     |   |                            |  
|Other Comprehensive Income, |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net of Tax                  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Total Comprehensive Income  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Cash Dividends Declared     |  |                    |   |                 |        |                   |  |   |                                  |  |   | (230,366                                      | ) |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Balance at 6/30/2002        |  | 3,071,534          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 32,266,740                                    |   |                            | $
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Balance at 3/31/2003        |  | 3,023,410          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 37,603,451                                    |   |                            | $
|Comprehensive Income:       |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net Income                  |  |                    |   |                 |        |                   |  |   |                                  |  |   | 2,233,200                                     |   |                            |  
|Other Comprehensive Income, |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net of Tax                  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Total Comprehensive Income  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Cash Dividends Declared     |  |                    |   |                 |        |                   |  |   |                                  |  |   | (271,601                                      | ) |                            |  
|Treasury Stock Purchases    |  | (5,630             | ) |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Balance at 6/30/2003        |  | 3,017,780          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 39,565,050                                    |   |                            | $
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  



---

SMITHTOWN BANCORP

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY



|                            |  | Common Stock       |   | Capital Surplus |        | Retained Earnings |  |   | Cost of Common Stock in Treasury |  |   | Accumulated Other Comprehensive Income (Loss) |   | Total Stockholders Equity |  
|--------------------------- |  | ------------------ | - | --------------- | ------ | ----------------- |  | - | -------------------------------- |  | - | --------------------------------------------- | - | -------------------------- | -
|                            |  | Shares Outstanding |   |                 | Amount |                   |  |   |                                  | 
|Balance at 12/31/2001       |  | 3,078,514          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 28,765,704                                    |   |                            | $
|Comprehensive Income:       |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net Income                  |  |                    |   |                 |        |                   |  |   |                                  |  |   | 3,961,983                                     |   |                            |  
|Other Comprehensive Income, |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net of Tax                  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Total Comprehensive Income  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Cash Dividends Declared     |  |                    |   |                 |        |                   |  |   |                                  |  |   | (460,947                                      | ) |                            |  
|Treasury Stock Purchases    |  | (6,980             | ) |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Balance at 6/30/2002        |  | 3,071,534          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 32,266,740                                    |   |                            | $
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Balance at 12/31/2002       |  | 3,047,498          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 35,887,008                                    |   |                            | $
|Comprehensive Income:       |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net Income                  |  |                    |   |                 |        |                   |  |   |                                  |  |   | 4,222,055                                     |   |                            |  
|Other Comprehensive Income, |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Net of Tax                  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Total Comprehensive Income  |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Cash Dividends Declared     |  |                    |   |                 |        |                   |  |   |                                  |  |   | (544,013                                      | ) |                            |  
|Treasury Stock Purchases    |  | (29,718            | ) |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  
|Balance at 6/30/2003        |  | 3,017,780          |   |                 | $      | 2,239,775         |  | $ | 1,993,574                        |  | $ | 39,565,050                                    |   |                            | $
|                            |  |                    |   |                 |        |                   |  |   |                                  |  |   |                                               |   |                            |  



---

|SMITHTOWN BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS |  | 
|------------------------------------------------------- |  | 





|                                                                                  |  | For the Three Months Ended June 30 |            
|--------------------------------------------------------------------------------- |  | ---------------------------------- | -----------
|                                                                                  |  | 2003                               |            
|Cash Flows from Operating Activities                                              |  |                                    |            
|Net Income                                                                        |  | $                                  | 2,233,200  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                    |            
|Depreciation on Premises and Equipment                                            |  |                                    | 202,649    
|Provision for Possible Loan Losses                                                |  |                                    | 270,000    
|Net Gain on Sale of Investment Securities                                         |  |                                    | (6,282     
|Amortization of Transition Obligation                                             |  |                                    | (597       
|Increase (Decrease) in Interest Payable                                           |  |                                    | (116,528   
|Increase (Decrease) in Miscellaneous Payables and Accrued Expenses                |  |                                    | 33,122     
|Increase in Fees and Commissions Receivable                                       |  |                                    | (5,246     
|Decrease in Interest Receivable                                                   |  |                                    | 100,817    
|Decrease in Prepaid Expenses                                                      |  |                                    | 189,620    
|Increase in Miscellaneous Receivable                                              |  |                                    | (255,524   
|Decrease in Income Taxes Receivable                                               |  |                                    | (882,331   
|Increase in Deferred Taxes                                                        |  |                                    | (123,668   
|Increase (Decrease) in Accumulated Post Retirement Benefit Obligation             |  |                                    | 4,075      
|Amortization of Investment Security Premiums and Accretion of Discounts           |  |                                    | (86,334    
|Net Gain on Investment in SMTB Financial Group, LLC.                              |  |                                    | (14,050    
|                                                                                  |  |                                    |            
|Cash Provided by Operating Activities                                             |  |                                    | 1,542,923  
|                                                                                  |  |                                    |            
|Cash Flows from Investing Activities                                              |  |                                    |            
|Proceeds from Disposition of Mortgage-Backed Securities:                          |  |                                    |            
|Held to Maturity                                                                  |  |                                    | 83,968     
|Available for Sale                                                                |  |                                    | 1,857,733  
|Proceeds from Disposition of Other Investment Securities:                         |  |                                    |            
|Held to Maturity                                                                  |  |                                    | 312,612    
|Available for Sale                                                                |  |                                    | 11,235,294 
|Purchase of Other Investment Securities:                                          |  |                                    |            
|Held to Maturity                                                                  |  |                                    | 0          
|Available for Sale                                                                |  |                                    | (27,976,589
|Federal Funds Sold, Net                                                           |  |                                    | 11,101,869 
|Loans Made to Customers, Net                                                      |  |                                    | (27,926,183
|Purchase of Premises and Equipment                                                |  |                                    | (734,993   
|Increase in Cash Surrender Value of Officer's Life Insurance Policies             |  |                                    | (123,672   
|                                                                                  |  |                                    |            
|Cash Used by Investing Activities                                                 |  |                                    | (32,169,961
|                                                                                  |  |                                    |            
|Cash Flows from Financing Activities                                              |  |                                    |            
|Net Increase in Demand Deposits, NOW and Savings Accounts                         |  |                                    | 34,771,529 
|Net Increase (Decrease) in Time Accounts                                          |  |                                    | (2,759,905 
|Cash Dividends Paid                                                               |  |                                    | (272,412   
|Purchase of Treasury Stock                                                        |  |                                    | (163,930   
|                                                                                  |  |                                    |            
|Cash Provided by Financing Activities                                             |  |                                    | 31,575,282 
|                                                                                  |  |                                    |            
|Net Increase in Cash and Due from Banks                                           |  |                                    | 948,244    
|Cash and Due from Banks, Beginning of Period                                      |  |                                    | 11,017,890 
|                                                                                  |  |                                    |            
|Cash and Due from Banks, End of Period                                            |  | $                                  | 11,966,134 
|                                                                                  |  |                                    |            
|Supplemental Disclosures of Cash Flow Information                                 |  |                                    |            
|Cash Paid During Period for:                                                      |  |                                    |            
|Interest                                                                          |  | $                                  | 470,992    
|Income Taxes                                                                      |  |                                    | 2,288,450  
|Schedule of Noncash Investing Activities                                          |  |                                    |            
|Unrealized Gain on Securities Available for Sale                                  |  |                                    | 386,752    



---

|SMITHTOWN BANCORP CONSOLIDATED STATEMENTS OF CASH FLOWS |  | 
|------------------------------------------------------- |  | 





|                                                                                  |  | For the Three Months Ended June 30 |            
|--------------------------------------------------------------------------------- |  | ---------------------------------- | -----------
|                                                                                  |  | 2003                               |            
|Cash Flows from Operating Activities                                              |  |                                    |            
|Net Income                                                                        |  | $                                  | 4,222,055  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                    |            
|Depreciation on Premises and Equipment                                            |  |                                    | 356,204    
|Provision for Possible Loan Losses                                                |  |                                    | 350,000    
|Net Gain on Sale of Investment Securities                                         |  |                                    | (16,415    
|Amortization of Transition Obligation                                             |  |                                    | (1,194     
|Increase (Decrease) in Interest Payable                                           |  |                                    | (9,715     
|Increase in Miscellaneous Payables and Accrued Expenses                           |  |                                    | 123,659    
|Increase in Fees and Commissions Receivable                                       |  |                                    | (14,922    
|Increase in Interest Receivable                                                   |  |                                    | (108,721   
|Increase in Prepaid Expenses                                                      |  |                                    | (444,013   
|Increase in Miscellaneous Receivable                                              |  |                                    | 158,015    
|Decrease in Income Taxes Receivable                                               |  |                                    | 52,778     
|Increase in Deferred Taxes                                                        |  |                                    | (172,287   
|Increase (Decrease) in Accumulated Post Retirement Benefit Obligation             |  |                                    | 7,304      
|Amortization of Investment Security Premiums and Accretion of Discounts           |  |                                    | (45,012    
|Net Gain on Investment in SMTB Financial Group, LLC.                              |  |                                    | (31,128    
|                                                                                  |  |                                    |            
|Cash Provided by Operating Activities                                             |  |                                    | 4,426,608  
|                                                                                  |  |                                    |            
|Cash Flows from Investing Activities                                              |  |                                    |            
|Proceeds from Disposition of Mortgage-Backed Securities:                          |  |                                    |            
|Held to Maturity                                                                  |  |                                    | 168,284    
|Available for Sale                                                                |  |                                    | 4,011,082  
|Proceeds from Disposition of Other Investment Securities:                         |  |                                    |            
|Held to Maturity                                                                  |  |                                    | 312,612    
|Available for Sale                                                                |  |                                    | 13,929,484 
|Purchase of Other Investment Securities:                                          |  |                                    |            
|Held to Maturity                                                                  |  |                                    | (40,000    
|Available for Sale                                                                |  |                                    | (28,395,853
|Federal Funds Sold, Net                                                           |  |                                    | (4,604,447 
|Loans Made to Customers, Net                                                      |  |                                    | (33,435,207
|Distribution from SMTB Financial Group, LLC.                                      |  |                                    | 0          
|Purchase of Premises and Equipment                                                |  |                                    | (1,472,605 
|Increase in Cash Surrender Value of Officer's Life Insurance Policies             |  |                                    | (246,018   
|                                                                                  |  |                                    |            
|Cash Used by Investing Activities                                                 |  |                                    | (49,772,668
|                                                                                  |  |                                    |            
|Cash Flows from Financing Activities                                              |  |                                    |            
|Net Increase in Demand Deposits, NOW and Savings Accounts                         |  |                                    | 52,067,886 
|Net Increase (Decrease) in Time Accounts                                          |  |                                    | (1,597,245 
|Cash Dividends Paid                                                               |  |                                    | (501,663   
|Securities Sold Under Agreements to Repurchase and Other Borrowings, Net          |  |                                    | 0          
|Purchase of Treasury Stock                                                        |  |                                    | (826,457   
|                                                                                  |  |                                    |            
|Cash Provided by Financing Activities                                             |  |                                    | 49,142,521 
|                                                                                  |  |                                    |            
|Net Increase in Cash and Due from Banks                                           |  |                                    | 3,796,461  
|Cash and Due from Banks, Beginning of Period                                      |  |                                    | 8,169,673  
|                                                                                  |  |                                    |            
|Cash and Due from Banks, End of Period                                            |  | $                                  | 11,966,134 
|                                                                                  |  |                                    |            
|Supplemental Disclosures of Cash Flow Information                                 |  |                                    |            
|Cash Paid During Period for:                                                      |  |                                    |            
|Interest                                                                          |  | $                                  | 734,162    
|Income Taxes                                                                      |  |                                    | 2,512,363  
|Schedule of Noncash Investing Activities                                          |  |                                    |            
|Unrealized Gain on Securities Available for Sale                                  |  |                                    | 427,956    



---

Notes to Consolidated Financial Statements



Financial Statement Presentation



In the opinion of management, the accompanying unaudited interim consolidated financial
statements contain all adjustments (consisting of normal recurring accruals) necessary to present fairly its financial position as of June 30, 2003 and December 31, 2002 and its results of operations for the three months ended June 30, 2003 and 2002
and its cash flows for the three months ended June 30, 2003 and 2002 and its results of operations for the six months ended June 30, 2003 and 2002 and its cash flows for the six months ended June 30, 2003 and 2002. For further information, refer to
the consolidated financial statements and notes thereto included in the Companys annual report on Form 10-K for the year ended December 31, 2002.



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



Earnings Per Common Shares



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



Investment Securities



|Fair Value:       |  |   |           
|----------------- |  | - | ----------
|                  | 
|June 30, 2003     |  | $ | 68,840,663
|December 31, 2002 |  | $ | 58,366,709



Managements Discussion and
Analysis of Financial Condition and Results of Operation



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



---

The factors included here are not exhaustive. Other sections of this report may include additional factors that could
adversely impact the Companys performance.



Investors are cautioned not
to place undue reliance on forward-looking statements as a prediction of actual results. Except as required by applicable law or regulation, the Company undertakes no obligation to republish or revise forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrences of unanticipated results. Investors are advised, however, to consult any further disclosures the Company makes on related subjects in our reports to the Securities Exchange
Commission.



Smithtown Bancorp (the Bancorp) is a one-bank holding company
formed in 1984. Its income is derived primarily from the operations of its subsidiary, Bank of Smithtown (the Bank).



The Banks Balance Sheet continued to grow through the second quarter of 2003. During the first two quarters of 2003 total assets grew 11.89% from $451,803,237
to $505,521,375. While loan growth during the first quarter of 2003 was 1.53%, loans grew by 7.68% during the second quarter of 2003 resulting in a 9.33% year to date growth in loans. Management expects loan growth to continue during the foreseeable
future. Loans represent 76.6% of total assets at June 30, 2003 as compared to 79.3% at December 31, 2002. Loans collateralized with real estate assets represent 90.16% of total loans. Due to the continued pressure of low market rates, the yields on
interest earning assets fell during the first two quarters of 2003. The yield on loans was 6.98% and 7.35% at June 30, 2003 and December 31, 2002, respectively. The yield on investments was 5.61% and 5.94% at June 30, 2003 and December 31,
2002, respectively. The yield on Federal Funds Sold was 1.15% and 1.56% at June 30, 2003 and December 31, 2002, respectively. The banks net interest margin through the first six months of 2003 was 4.96% down from 5.14% at December 31, 2002.
The overall yield on interest earning assets was 6.67% through the first two quarters of 2003, as compared to 7.14% for the same period in 2002. During the first six months of 2003, premises and equipment increased by approximately $1,116,400. This
change is attributable to the opening of a new store front branch and equipment upgrades. From the period January 1, 2003 to June 30, 2003, the liability side of the Balance Sheet increased by approximately $51,010,000, deposit growth accounted for
approximately $50,618,000 of this increase which was attributable to the competitive pricing of deposit products and successful sales efforts put forth by the retail staff. The Banks overall cost of funds for the six months ended June 30, 2003
was 2.08%, as compared to 2.29% at December 31, 2002.The change in stockholders equity was the result of net income of $4,222,055, dividends declared of $544,013, treasury stock purchases of $826,457 and other comprehensive income of
$248,214. The Return on Average Assets was 1.77% through the second quarter of 2003 as compared to 1.94% for the same period of 2002. The Return on Average Equity was 23.90% for the first two quarters of 2003 compared to 27.54% for the same period
in 2002. Leverage capital at June 30, 2003 and 2002 was 7.77% and 7.55%, respectively. Total Risk Based Capital was 10.34% and 9.87% at the end of the second quarter of 2003 and 2002, respectively.



Smithtown Bancorps most recent two-for-one stock split was completed on April 18, 2003.
It was the third two-for-one stock split of the companys shares during the past five



---

years. The shares are traded on the OTC Bulletin Board, which is an electronic market owned by and operated by NASDAQ.



Net income for the second quarter 2003 was $2,233,200 compared to $2,063,733
for the three months ended June 30, 2002, an increase of 8.21%. Earnings per share for the second quarter was $0.74, as compared to $0.67 for the same quarter in 2002. Interest income on loans increased by 13.45%, as compared to the same quarter in
2002. For the second quarter of 2003, total interest expense paid on deposits increased by 14.77% over that of the same quarter of 2002. Non-interest income increased by $181,454 or 12.46% for the three months ended June 30, 2003 compared to the
same period in 2002. This increase is primarily the result of loan fees collected during the second quarter of 2003 verses that of the same period in 2002. During the three months ended June 30, 2003, the Provision for Possible Loan Losses, a direct
charge to earnings, increased by $20,000 over that of the same in 2002. The level of the Reserve for Possible Loan Losses at June 30, 2003 is considered adequate since it surpasses managements estimate of potential loss on internally
classified loans plus allocations to provide for components of the loan portfolio that were not classified. Management also considered the following factors in determining the adequacy of the Reserve for Possible Loan Losses at June 30, 2003: (a)
Reserves against all classified loans at June 30, 2003 now stands at 468%, up from 209% at March 31, 2003; (b) Reserve coverage of Non-Performing loans at June 30, 2003 increased to 17,043%, up from 312% at March 31, 2003; (c) Non-performing loans
totaled approximately $25,000 at June 30, 2003 as compared to $1,285,000 at March 31, 2003; and (d) Delinquency of accruing loans, 30 to 89 days at June 30, 2003 increased to approximately $2,124,000 from $88,000 at March 31, 2003. Management is
confidant that the reserve for loan loss account provides adequate coverage for any known losses in the loan portfolio. Other operating expenses increased by 11.27% due to increased salary and benefit expenses as well as increased equipment,
advertising, and business development expenses related to the opening of the new branch.



Net income for the six months ended June 30, 2003 was $4,222,055 compared to $3,961,983 for the same period in 2002, an increase of 6.56%. Earnings per share for the six months ended was $1.39, as compared to $1.29
for the same period in 2002. For the six months ended June 30, 2003, interest income on loans increased by 14.01%, as compared to the same quarter in 2002. Through the second quarter of 2003, total interest expense paid on deposits increased by
14.30% over that of the same period of 2002, as a result of greater balances in interest bearing deposits and not because of higher interest rates. Non-interest income increased by $103,231 or 3.72% for the six months ended June 30, 2003 as compared
to the same period in 2002. This increase is primarily the result of loan fees collected through the second quarter of 2003 verses that of the same period in 2002. During the six months ended June 30, 2003, the Provision for Possible Loan Losses, a
direct charge to earnings, decreased by $110,000 over that of the same in 2002. The level of the Reserve for Possible Loan Losses at June 30, 2003 is considered adequate since it surpasses managements estimate of potential loss on internally
classified loans plus allocations to provide for components of the loan portfolio that were not classified. Other operating expenses increased by $883,688 or 14.59% due to increased salary and benefit expenses as well as increased equipment,
advertising, and business development expenses related to the opening of the new branch.





---

On July 17, 2003, Smithtown Bancorp, Inc., formed a statutory trust organized under the laws of the State of Delaware
known as Smithtown Bancorp Capital Trust I (the Trust). It is the intention of the Trust to issue Trust Preferred Securities (TPS) in a pooled transaction in order to purchase subordinated debentures issued by Smithtown Bancorp,
Inc. The capital raised by the Smithtown Bancorp, Inc., will then be used for general corporate purposes, including the repurchase of Smithtown Bancorp common stock. Management anticipates it will raise approximately $11,000,000 with the following
terms: fixed rate for five years, converting to LIBOR Floating Rate for the remaining 25 years and are callable after five years and for special events.



As we enter the third quarter, management remains very optimistic about the banks performance during 2003.



---

Quantitative and Qualitative Disclosures About Market Risk



Quantitative and Qualitative Disclosures About Market Risk Liquidity provides the source of
funds for anticipated and unanticipated deposit outflow and loan growth. The Banks primary sources of liquidity include deposits, repayments of loan principal, maturities of investment securities, principal reductions on Mortgage-Backed
Securities, unpledged securities available for sale, overnight federal funds sold, and borrowing potential from correspondent banks. The primary factors affecting these sources of liquidity are their immediate availability if necessary
and their market rate of interest, which can cause fluctuations in levels of deposits and prepayments on loans and securities. The method by which the Bank controls its liquidity and interest rate sensitivity is through asset liability management.
The goal of asset liability management is the combination of maintaining adequate liquidity levels without sacrificing earnings. The Bank matches the maturity of its assets and liabilities in a way that takes advantage of the current and anticipated
rate environment. Asset liability management is of great concern to management and is reviewed on an ongoing basis. The Chief Executive Officer, Chief Financial Officer, Chief Lending Officer, Chief Commercial Lending Officer, and the Chief Retail
Officer of the Bank serve on the Asset Liability Management Committee. Reports detailing current liquidity position and projected liquidity as well as projected funding requirements are reviewed monthly, or as often as deemed necessary.
Semi-annually, the Bank collects the necessary information to run an income simulation model, which tests the Banks sensitivity to fluctuations in interest rates. These rate fluctuations are large and immediate and actually reflect the
Banks earnings under these simulations. These income simulations are reviewed by the Board of Directors. The simulation performed during 2003 reflected minimal sensitivity to upward or downward rate fluctuations. Interest income, margins, and
net income remain stable regardless of changes in market interest rates. These models then lead to investment, loan, and deposit strategies and decisions for earnings maximization within acceptable risk levels.



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



The following table sets forth the amounts of estimated cash flows for the
various interest earning assets and interest bearing liabilities that are sensitive to changes in interest rates at June 30, 2003 and 2002. Adjustable rate assets are included in the period in which interest rates are next scheduled to adjust rather
than in the period in which they are due. Money Market deposit accounts are assumed to decline over a two-year period. Savings and NOW deposit accounts are assumed to decline over a five-year period.



---

|As of June 30, 2003                                                        |  | Expected Maturity Between |         |                          
|-------------------------------------------------------------------------- |  | ------------------------- | ------- | -------------------------
|                                                                           |  | 7/1/03  12/31/03         |         | 1/1/04  12/31/04        
|(In thousands)                                                             |  | Balance                   |         | Weighted Average Rate (%)
|Other Financial Instruments                                                |  |                           |         |                          
|Interest Earning Assets                                                    |  |                           |         |                          
|Investments                                                                |  |                           |         |                          
|Available for Sale (Fair Value)                                            |  | $                         | 13,069  |                          
|Held to Maturity (Book Value)                                              |  |                           | 375     |                          
|Federal Funds Sold                                                         |  |                           |         |                          
|Loans:                                                                     |  |                           |         |                          
|Fixed Rate                                                                 |  |                           |         |                          
|Real Estate Loans, Construction                                            |  |                           | 0       |                          
|Real Estate Loans, Other                                                   |  |                           |         |                          
|Commercial                                                                 |  |                           | 17      |                          
|Residential                                                                |  |                           | 6       |                          
|Commercial and Industrial Loans                                            |  |                           | 4,783   |                          
|Loans to Individuals for Household, Family and Other Personal Expenditures |  |                           | 672     |                          
|Variable Rate                                                              |  |                           |         |                          
|Real Estate Loans, Construction                                            |  |                           | 64,686  |                          
|Real Estate Loans, Other                                                   |  |                           |         |                          
|Commercial                                                                 |  |                           | 4,747   |                          
|Residential                                                                |  |                           | 20,395  |                          
|Commercial and Industrial Loans                                            |  |                           | 22,198  |                          
|Loans to Individuals for Household, Family and Other Personal Expenditures |  |                           | 431     |                          
|                                                                           |  |                           |         |                          
|Total Interest Earning Assets                                              |  | $                         | 131,379 |                          
|                                                                           |  |                           |         |                          
|Interest Bearing Liabilities                                               |  |                           |         |                          
|Deposits                                                                   |  |                           |         |                          
|Savings                                                                    |  | $                         | 4,699   |                          
|Money Market                                                               |  |                           | 39,640  |                          
|NOW                                                                        |  |                           | 3,178   |                          
|Time Deposits of 100,000 or more                                           |  |                           | 8,347   |                          
|Other Time Deposits                                                        |  |                           | 8,452   |                          
|Other Borrowings                                                           |  |                           | 7,000   |                          
|                                                                           |  |                           |         |                          
|Total Interest Bearing Liabilities                                         |  | $                         | 71,316  |                          
|                                                                           |  |                           |         |                          





---

|As of June 30, 2002                                                        |  | Expected Maturity Between |         |                  
|-------------------------------------------------------------------------- |  | ------------------------- | ------- | -----------------
|                                                                           |  | 7/1/02  12/31/02         |         | 1/1/03  12/31/03
|                                                                           |  |                           |         | Weighted         
|                                                                           |  |                           |         | Average          
|(In thousands)                                                             |  | Balance                   |         | Rate (%)         
|Other Financial Instruments                                                |  |                           |         |                  
|Interest Earning Assets                                                    |  |                           |         |                  
|Investments                                                                |  |                           |         |                  
|Available for Sale (Fair Value)                                            |  | $                         | 7,146   |                  
|Held to Maturity (Book Value)                                              |  |                           | 941     |                  
|Federal Funds Sold                                                         |  |                           | 10,986  |                  
|Loans:                                                                     |  |                           |         |                  
|Fixed Rate                                                                 |  |                           |         |                  
|Real Estate Loans, Construction                                            |  |                           | 0       |                  
|Real Estate Loans, Other                                                   |  |                           |         |                  
|Commercial                                                                 |  |                           | 0       |                  
|Residential                                                                |  |                           | 17      |                  
|Commercial and Industrial Loans                                            |  |                           | 2,796   |                  
|Loans to Individuals for Household, Family and Other Personal Expenditures |  |                           | 441     |                  
|Variable Rate                                                              |  |                           |         |                  
|Real Estate Loans, Construction                                            |  |                           | 53,212  |                  
|Real Estate Loans, Other                                                   |  |                           |         |                  
|Commercial                                                                 |  |                           | 6,892   |                  
|Residential                                                                |  |                           | 16,759  |                  
|Commercial and Industrial Loans                                            |  |                           | 12,838  |                  
|Loans to Individuals for Household, Family and Other Personal Expenditures |  |                           | 0       |                  
|                                                                           |  |                           |         |                  
|Total Interest Earning Assets                                              |  | $                         | 112,028 |                  
|                                                                           |  |                           |         |                  
|Interest Bearing Liabilities                                               |  |                           |         |                  
|Deposits                                                                   |  |                           |         |                  
|Savings                                                                    |  | $                         | 4,010   |                  
|Money Market                                                               |  |                           | 29,516  |                  
|NOW                                                                        |  |                           | 2,713   |                  
|Time Deposits of 100,000 or more                                           |  |                           | 13,210  |                  
|Other Time Deposits                                                        |  |                           | 14,933  |                  
|Other Borrowings                                                           |  |                           | 27,000  |                  
|                                                                           |  |                           |         |                  
|Total Interest Bearing Liabilities                                         |  | $                         | 91,382  |                  
|                                                                           |  |                           |         |                  





---

CONTROLS AND PROCEDURES



Under the supervision of and with the participation of the Companys management, including the Chief Executive Officer and Chief
Financial Officer, the Company evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-14(c) under the Exchange Act) as of a date (the Evaluation Date) within 90 days
prior to the filing date of this report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, these disclosure controls and procedures are effective in timely alerting them to
the material information relating to the Company (or the consolidated subsidiaries) required to be included in the Companys periodic SEC filings.



There were no significant changes in the Companys internal controls during the period covered by this report or in other factors that could significantly affect
these controls subsequent to the date of the most recent evaluation.



---

SIGNATURES



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



SMITHTOWN BANCORP



|               |  | 
|-------------- |  | 
|August 7, 2003 |  | 
|               |  | 



|               |  | 
|-------------- |  | 
|August 7, 2003 |  | 
|               |  | 



---

CERTIFICATION PURSUANT TO RULE 13a-14

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Bradley E. Rock, Chairman, President and Chief Executive Officer, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Smithtown Bancorp;
|-- |  | ------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date) ;and
| | -- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



---

|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|               |  | 
|-------------- |  | 
|August 7, 2003 |  | 
|               |  | 



---

CERTIFICATION PURSUANT TO RULE 13a-14

OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002



I, Anita M. Florek, Executive Vice President, and Treasurer, certify that:



|1. |  | I have reviewed this quarterly report on Form 10-Q of Smithtown Bancorp;
|-- |  | ------------------------------------------------------------------------



|2. |  | Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|3. |  | Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|4. |  | The registrants other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14
and 15d-14) for the registrant and we have:
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this quarterly report is being prepared;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | evaluated the effectiveness of the registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the
Evaluation Date);and
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c. |  | presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the registrants auditors and the audit committee of
registrants board of directors (or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | a. |  | all significant deficiencies in the design or operation of internal controls which could adversely affect the registrants ability to record, process, summarize and report
financial data and have identified for the registrants auditors any material weaknesses in internal controls; and
| | -- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. |  | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal controls; and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------



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|6. |  | The registrants other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors
that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
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|August 7, 2003 |  | 
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