SECURITIES AND EXCHANGE COMMISSION
                                 Washington, D.C. 20549
                               __________________

                                    FORM 10-Q
                               __________________

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


                      For the quarter ended March 31, 1998

                               __________________ 

                         Commission file number 2-91511

                                SMITHTOWN BANCORP
               Incorporated pursuant to the Laws of New York State


        Internal Revenue Service - Employer Identification No. 11-2695037

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

                                  516-360-9300
                               __________________

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

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date: 427,662 Shares of Common stock
($5.00 Par Value) Outstanding as of March 31, 1998.

<PAGE>
                                SMITHTOWN BANCORP

                                      INDEX


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

         Consolidated Balance Sheets
              March 31, 1998 and December 31, 1997 ....................   4 & 5

         Consolidated Statements of Income
              Three months ended March 31, 1998 and 1997 ..............       6

         Consolidated Statements of Changes in Stockholders' Equity
              Three months ended March 31, 1998 and 1997 ..............       7

         Consolidated Statements of Cash Flows
              Three months ended March 31, 1998 and 1997 ..............       8

     Item 2. Management's Discussion and Analysis of Financial Condition
              and Results of Operations ...............................   9 - 13

     Item 3. Notes to Consolidated Financial Statements ...............      14


Part II - OTHER INFORMATION

     Item 1. Legal Proceedings - None

     Item 2. Change in Securities - None

     Item 3. Defaults under Senior Securities - None

     Item 4. Submission of Matters to Vote of Security Holders - None

     Item 5. Other Information - None

     Item 6. (A) Exhibits - None


<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEETS
(unaudited)
                                                                                                          AS OF
                                                                                           March 31, 1998        December 31, 1997
____________________________________________________________________________________________________________________________________
<S>                                                                                        <C>                          <C> 
Assets

Cash and Due from Banks ......................................................            $    7,959,750             $    7,667,371
Investment Securities:
   Investment Securities Held to Maturity
     Obligations of U.S. Government ..........................................                 2,001,239                  2,002,757
     Mortgage - Backed Securities ............................................                 6,738,413                  7,237,038
     Obligations of State and Political Subdivisions .........................                 6,460,300                  6,458,344
                                                                                              ----------                ------------
         Total ...............................................................                15,199,952                 15,698,139
                                                                                              ----------                ------------
   Investment Securities Available for Sale
     Obligation of U.S. Government ...........................................                 6,169,620                  6,175,710
     Obligation of U.S. Government Agencies ..................................                16,247,095                 15,251,638
     Mortgage - Backed Securities ............................................                32,597,850                 36,190,088
     Oligations of State and Political Subdivisions ..........................                 1,961,661                          0
     Other Securities ........................................................                   856,800                    856,800
                                                                                              ----------                 -----------
         Total ...............................................................                57,833,026                 58,474,236
                                                                                              ----------                 -----------
     Total Investment Securities(Fair value $73,186,604 at March 31, 1998
                                     and $74,336,201 at December 31, 1997)                    73,032,978                 74,172,375
Federal Funds Sold ...........................................................                13,200,000                  8,300,000
Loans

     Real Estate .............................................................                69,897,343                 69,059,256
     Mortgage Loans Held for Sale ............................................                   474,000                          0
     Commercial and Industrial ...............................................                23,216,215                 23,745,418
     Loans to Individuals for Household, Family and
           Other Personal Expenditures .......................................                 6,650,023                  7,492,586
     Other ...................................................................                    92,563                    106,272
                                                                                             -----------                ------------
         Total ...............................................................               100,330,144                100,403,532
                                                                                             -----------                ------------
     Less: Unearned Discount .................................................                  (611,143)                  (690,328)
           Reserve for Possible Loan Losses ..................................                (1,774,483)                (1,677,594)
                                                                                             -----------                 -----------
Loans, Net ...................................................................                97,944,518                 98,035,610
                                                                                             -----------                 -----------
Bank Premises and Equipment ..................................................                 2,672,191                  2,454,834
Other Assets
     Other Real Estate Owned .................................................                 3,885,786                  3,927,786
     Other ...................................................................                 3,084,165                  3,098,459

Total Assets .................................................................            $  201,779,388             $  197,656,435
                                                                                            ============                ============
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                                                                          AS OF
                                                                                           MARCH 31, 1998         DECEMBER 31, 1997 
____________________________________________________________________________________________________________________________________
<S>                                                                                          <C>                        <C>       
SMITHTOWN BANCORP
CONSOLIDATED BALANCE SHEET (continued)
(unaudited)


Liabilities

Deposits:
     Demand ..................................................................            $   42,646,505              $  42,566,624
     Money Market ............................................................                39,484,932                 36,326,089
     NOW .....................................................................                15,514,590                 15,284,660
     Savings .................................................................                39,890,324                 40,998,166
     Certificates of Deposit $100,000 and Over ...............................                 8,750,098                  8,773,618
     Other Time Deposits .....................................................                25,843,307                 24,246,478
                                                                                           -------------              -------------
         Total ...............................................................               172,129,756                168,195,635
                                                                                           -------------              -------------
Dividend Payable .............................................................                   171,202                    151,644
Securities Sold Under Agreements to Repurchase ...............................                 2,800,000                  2,800,000
Demand Notes Issued to the U.S. Treasury .....................................                 5,294,184                  5,452,540
Other Borrowed Funds .........................................................                 3,000,000                  3,000,000
Other Liabilities ............................................................                 1,287,278                  1,077,158
                                                                                           -------------              -------------
         Total ...............................................................               184,682,420                180,676,977
                                                                                           -------------              -------------
Stockholders' Equity
Common Stock - $5.00 Par Value, 1,500,000 Shares .............................                 2,239,775                  2,239,775
     Authorized; 447,955 Shares Issued
Unrealized Gain on Investment Securities
     Available for Sale ......................................................                   264,886                    249,068
Surplus ......................................................................                 1,993,574                  1,993,574
Retained Earnings ............................................................                13,610,931                 12,943,680
                                                                                           -------------              -------------
     Total ...................................................................                18,109,166                 17,426,097
     Less: Treasury Stock ....................................................                (1,012,198)                  (446,639)
                                                                                           -------------              -------------
     Total ...................................................................                17,096,968                 16,979,458
                                                                                           -------------              -------------
     Total Liabilities and Capital ...........................................            $  201,779,388             $  197,656,435
                                                                                           =============              =============
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SMITHTOWN BANCORP
CONSOLIDATED INCOME STATEMENTS
(unaudited)
                                                                                                       For Three Months Ended
                                                                                            March 31, 1998           March 31, 1997
____________________________________________________________________________________________________________________________________
<S>                                                                                            <C>                        <C>    

Interest Income
Interest and Fees on Loans ...................................................            $    2,428,610             $    2,379,477
Interest and Dividends on:
     Obligations of U.S. Government ..........................................                   115,757                     24,877
     Obligations of U.S. Government Agencies .................................                   289,880                    222,412
     Mortgage - Backed Securities ............................................                   616,477                    685,754
     Obligations of State & Political Subdivisions ...........................                    92,298                     74,548
     Other Securities ........................................................                    14,340                      2,260
Interest on Federal Funds Sold ...............................................                   114,740                     54,304
Interest on Balances Due From Depository Institutions ........................                     2,907                        908
                                                                                              ----------                 ----------
     Total Interest Income ...................................................                 3,675,009                  3,444,540
                                                                                              ----------                 -----------

Interest Expense
Money Market Accounts ........................................................                   335,702                    232,263
Savings ......................................................................                   203,972                    276,540
Certificates of Deposit $100,000 and Over ....................................                   121,128                     56,782
Other Time Deposits ..........................................................                   297,127                    295,470
Interest on Federal Funds Purchased and Securities
     Sold Under Agreements to Repurchase .....................................                    44,081                     43,919
Interest on Demand Notes Issued by U. S. Treasury ............................                    50,192                     15,606
Interest on Other Borrowed Money .............................................                    41,700                     46,424
                                                                                              ----------                 ----------
     Total Interest Expense ..................................................                 1,093,902                    967,004
                                                                                              ----------                 ----------
Net Interest Income ..........................................................                 2,581,107                  2,477,536
Provision for Possible Loan Losses ...........................................                   110,000                          0
                                                                                              ----------                 ----------
Net Interest Income After Provision for Possible
Loan Losses ..................................................................                 2,471,107                  2,477,536
                                                                                              ----------                 ----------

Other Non - Interest Income
Trust Department Income ......................................................                    86,502                    101,759
Service Charges on Deposit Accounts ..........................................                   353,916                    372,673
Other Income .................................................................                   161,621                    154,493
                                                                                              ----------                 ----------
     Total Other Non - Interest Income .......................................                   602,039                    628,925
                                                                                              ----------                 ----------

Other Operating Expenses
Salaries .....................................................................                   761,635                    723,175
Pension and Other Employee Benefits ..........................................                   193,590                    177,311
Net Occupancy Expense of Bank Premises .......................................                   212,764                    237,529
Furniture and Equipment Expense ..............................................                   121,511                    156,177
Miscellaneous Operating Expense ..............................................                   425,923                    502,320
                                                                                              ----------                 ----------
     Total Other Operating Expense ...........................................                 1,715,423                  1,796,512
                                                                                              ----------                 ----------

Income Before Income Taxes ...................................................                 1,357,723                  1,309,949
Provision for Income Taxes ...................................................                   519,270                    511,670
                                                                                              ----------                 ----------
     Net Income ..............................................................            $      838,453             $      798,279
                                                                                              ==========                 ===========
Earnings Per Share
Net Income ...................................................................            $         1.94             $         1.84
Cash Dividends Paid ..........................................................            $         0.40             $         0.32
Weighted Average Shares Outstanding ..........................................                   431,509                    433,268

</TABLE>
<PAGE>

<TABLE>
<CAPTION>

SMITHTOWN BANCORP
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(unaudited)


                                                                              Unrealized                    Cost of
                                          Common Stock                        Gain(Loss)                    Common         Total
                                       Shares                  Capital       On Securities       Retained  Stock in    Stockholders
                                     Outstanding     Amount    Surplus      Available for Sale   Earnings  Treasury       Equity
                                    _______________________________________________________________________________________________
<S>                                   <C>         <C>            <C>             <C>            <C>         <C>          <C>
 
Balance at 1/1/97 ................    433,268    $2,239,775     $1,993,574       $81,093       $10,229,436   $(446,639) $14,097,239
Net Income .......................                                                                 798,279                  798,279
Cash Dividend Declared ...........                                                                (151,644)                (151,644)
Allowance for Unrealized
     Gain(Loss) ..................                                              (121,141)                                  (121,141)
                                    ________________________________________________________________________________________________
Balance at 3/31/97 ...............    433,268    $2,239,775     $1,993,574      $(40,048)      $10,876,071   $(446,639)  $14,622,733
                                    ================================================================================================

Balance at 1/1/98 ................    433,268    $2,239,775     $1,993,574      $249,068       $12,943,680   $(446,639) $16,979,458
Net Income .......................                                                                 838,453                  838,453
Cash Dividend Declared ...........                                                                (171,202)                (171,202)
Purchase Treasury Stock ..........     (5,606)                                                                (565,559)    (565,559)
Allowance for Unrealized
     Gain(Loss)...................                                                15,818                                     15,818
                                    ________________________________________________________________________________________________
Balance at 3/31/98 ...............    427,662    $2,239,775     $1,993,574      $264,886       $13,610,931 $(1,012,198) $17,096,968
                                    ================================================================================================
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

SMITHTOWN BANCORP
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
                                                                                                       For Three Months Ended
                                                                                            March 31, 1998         March 31, 1997
____________________________________________________________________________________________________________________________________
<S>                                                                                            <C>                        <C>

Cash Flows from Operating Activities
Net Income                                                                                $      838,453             $       798,279
Adjustments to reconcile net income to net cash provided by operating
  activities:
     Valuation Reserve for Other Real Estate Owned ...........................                    42,000                     90,000
     Depreciation on Premises and Equipment ..................................                    85,513                    105,158
     Provision for Possible Loan Losses ......................................                   110,000                          0
     Amortization of Transition Obligation ...................................                    26,027                     26,027
     Increase/(Decrease)in Interest Payable ..................................                    (2,704)                    37,403
     Increase in Miscellaneous Payables and
         Accrued Expenses ....................................................                  (230,603)                  (107,595)
     Increase in Fees and Commissions Receivable .............................                    (4,800)                   (15,000)
     Increase in Interest Receivable .........................................                   (89,052)                  (212,704)
     Decrease in Prepaid Expenses ............................................                    21,783                    101,982
     Increase in Miscellaneous Receivables ...................................                   (13,137)                    (8,768)
     Decrease in Income Taxes Receivable .....................................                   599,650                    189,978
     Increase/(Decrease) in Deferred Taxes ...................................                   (80,380)                   117,265
     Decrease in Accumulated Post Retirement Benefit Obligation ..............                   (13,823)                   (15,754)
     Amortization of Investment Security Premiums and
         Accretion of Discounts ..............................................                    97,507                    (34,842)
                                                                                             -------------              ------------
   Cash Provided by Operating Activities ...................................                   1,386,434                  1,071,429
                                                                                             -------------              ------------

Cash Flows from Investing Activities
     Proceeds from Maturities of Investment Securities
         Held to Maturity ....................................................                   600,368                    481,475
     Proceeds from Maturities of Investment Securities
         Available for Sale ..................................................                 6,586,434                  3,306,768
     Purchases of Investment Securities Available for Sale ...................                (6,002,330)                (8,536,557)
     Purchases of Investment Securities Held to Maturity .....................                  (115,310)                         0
     Purchase of Treasury Stock ..............................................                  (565,559)                         0
     Net Increase in Federal Funds Sold ......................................                (4,900,000)                (7,200,000)
     Net (Increase)/Decrease in Loans ........................................                   (18,909)                   967,763
     Purchases of Premises and Equipment .....................................                  (302,870)                   (28,098)
     Proceeds from Sale of Other Real Estate Owned ...........................                         0                  1,302,808
                                                                                               ----------               ------------
     Cash Used by Investing Activities .......................................                (4,718,176)                (9,705,841)
                                                                                               ----------               ------------

Cash Flows from Financing Activities
     Net Increase in Demand Deposits, NOW
         Accounts and Savings Accounts .......................................                 2,360,811                  6,824,874
     Net Increase(Decrease) in Time Accounts .................................                 1,573,310                    (11,102)
     Cash Dividends Paid .....................................................                  (151,644)                  (138,646)
     Net Increase/(Decrease) in Borrowed Funds ...............................                  (158,356)                 2,814,277
                                                                                              -----------               -----------
     Cash Provided by Financing Activities ...................................                 3,624,121                  9,489,403
                                                                                              -----------              ------------

     Net Increase in Cash and Due from Banks .................................                   292,379                    854,991
     Cash and Due from Banks, Beginning of Period ............................                 7,667,371                  7,689,964
                                                                                              ----------                -----------
     CASH AND DUE FROM BANKS, END OF PERIOD ..................................            $    7,959,750            $     8,544,955
                                                                                              ==========                ===========


Supplemental Disclosures of Cash Flow Information
     Cash Paid During the Period for:
      Interest ...............................................................            $    1,096,606             $      105,949
      Income Taxes ...........................................................            $            0             $      204,427

Non-Cash Investing Activities
     Loans Transferred to Other Real Estate Owned ............................            $            0             $      179,370

</TABLE>
<PAGE>
Management's Discussion and Analysis of Financial Condition and Results of 
Operation 


SUMMARY

The Balance Sheet  remained  strong for the first  quarter of 1998,  ending with
total assets at  $201,779,388  on March 31, 1998,  compared to  $197,656,435  on
December 31, 1997; a 2.09% increase. The Investment Portfolio decreased slightly
by 1.54%, due primarily to the increase in mortgage-backed  prepayments,  driven
by  lowering  interest  rates.  In  the  current  low  rate,  flat  yield  curve
environment,  investment products offering both high yields and minimal risk are
difficult to find. Two callable U. S. Government Agencies were purchased, during
the first quarter to replace  securities of the same type that were called.  The
remaining  purchases  consisted of tax exempt  Obligations  of State & Political
Subdivisions,  clearly the best re-investment  instruments for the first quarter
of 1998. Although the yields on these securities were lower than those they were
replacing,  the tax advantage  provided  additional  benefit to bottom line. The
Investment Portfolio currently totals $73,032,978,  representing 36.19% of total
assets with an average yield of 6.15%.  The loan  portfolio  remained  virtually
unchanged,  with balances at $100,330,144 on March 31, 1998, and $100,403,532 on
December 31, 1997.  The loan  portfolio  provides an average  yield of 9.66% and
represents  49.72% of total  assets.  The reserve for loan losses  increased  by
$96,889 for the first quarter as a result of a $110,000 provision,  as well as a
charge-off for $21,813 and recoveries of $8,702.  The Federal Funds Sold account
increased by  $4,900,000,  funded  principally  by deposit growth and investment
cash flow.  These  additional  funds were  earmarked  to  purchase  investments,
however,  security  trades in February and March  settled in April and therefore
were not reflected in March Balance Sheet  numbers.  Bank Premises and Equipment
increased by 8.85% due to the  conversion of three  branches to gas heat and the
waterproofing of several  buildings.  Other Real Estate Owned balances  remained
the same with a $42,000 increase to the general valuation  reserve account.  Net
OREO balances  represents  1.93% of total assets.  On the liability  side of the
Balance Sheet, total deposits increased by 2.34% or $3,934,121 from December 31,
1997.  Money Market Accounts were responsible for the majority of this growth as
balances rose  significantly  by 8.70% from $36,326,089 on December 31, 1997, to
$39,484,932 on March 31, 1998. Certificate of Deposit accounts also increased by
$1,573,309 or 4.76%.  Savings deposits declined by 2.70%, due principally to the
migration of these deposits to the higher yielding instruments  mentioned above.
Substantial first quarter growth was the result of an aggressive  'Celebrate Our
Success'  campaign,  targeted to bring in new business,  enhanced by promotional
CD's  and an all  out  effort  by our  client  services  staff.  Total  deposits
represent 93.20% of total  liabilities.  Other Borrowed Funds remained virtually
unchanged  at  $11,094,184  on  March  31,  1998;   comprising  6.01%  of  total
liabilities.  The dividend payable  increased from $151,644 on December 31, 1997
to $171,202 on March 31, 1998,  as the per share  dividend rose from $.35 in the
last  quarter  of 1997 to $.40 in the first  quarter of 1998.  Total  capital at
December 31, 1997, was $16,979,458 as compared to $17,096,968 on March 31, 1998.
While net income for the first quarter finished 5.03% above the same period last
year, this modest .69% increase to capital was a result of management's decision
to begin a buy back program of up to $2,000,000 worth of Common Stock throughout
1998. The Earnings Per share value  continued to climb from $1.84 on December 31
, 1997,  to $1.94 on March 31,  1998.  The stock  price  during  December  1997,
reached $85.00 per share,  and escalated to $115.00 per share within the next 90
days.  The first  quarter  of 1998,  finished  with an ROA of 1.66 and an ROE of
19.62. All capital ratios remained consistently strong by all guidelines and are
outlined below.

                      March 31, 1998       December 31, 1997          Required

Tier I                     14.22                 14.35                 4.00

Tier II                     1.25                  1.25                    *

Total Risk Based
Capital Ratio              15.51                 15.63                 8.00

Leverage Ratio              8.57                  8.01                 4.00


* Tier II Capital is limited to 100% of Tier I Capital.


<PAGE>

INTEREST INCOME
Interest income on earning assets rose 6.69% over last year's first quarter, due
primarily to increased  balances in the  Investment  Portfolio and Federal Funds
Sold. Loan average balances  remained  virtually  unchanged,  however,  the Loan
Portfolio  yield  increased  slightly by .21% which accounts for the increase in
loan interest  income.  The average  balance in the  Investment  Portfolio  rose
substantially from $63,637,422 during first quarter 1997, to $73,467,367 for the
first quarter of 1998.  While balances  increased,  the overall  portfolio yield
decreased by .20%,  attributed primarily to lower rates paid on new investments.
The  majority  of  investments  purchased  in the first  quarter  of 1998,  were
municipal  general  obligations  bonds which pay  historically  lower yields but
provide excellent tax advantages.  Interest income on Federal Funds Sold doubled
that of first quarter 1997, due to increased sales.  These higher sales were the
result of increased  balances in the Demand  Notes  Issued to the U.S.  Treasury
Account, investment prepayments and an increase in deposits.

INTEREST  EXPENSE
Interest  expense  was  $1,093,902  on March 31, 1998 as compared to $967,004 on
March 31, 1997, an increase of 13.12%.  Total average deposits grew by over nine
million  dollars,  with the largest  areas of growth  evidenced  in Money Market
Accounts at 24.30%,  followed by an  increase  of 16.76% in the  Certificate  of
Deposit  Portfolio.  The need to stay  competitive and the Bank's desire to grow
resulted in a higher  average  yield paid on both money  market and  certificate
accounts in the first  quarter of 1998.  The Bank  issued high rate  promotional
CD's in conjunction with a 'Celebrate Our Success'  campaign in order to attract
new business.  The number and dollar volume of 'Preferred' accounts continued to
grow during the first quarter.  These  accounts  offer various  benefits such as
free checking and rate incentives to customers maintaining large deposits at the
Bank. Now and Holiday Club average balances remained virtually unchanged,  while
Savings  Accounts  dropped by 12.08% or $5,502,284.  The Savings balance decline
was a result of lower interest rates paid on these accounts and elimination of a
tiered  rate  structure  as well as the  continued  downward  market rate trend.
Interest on Other Borrowed Funds increased by approximately 28%, due exclusively
to the higher balances  maintained in Demand Notes Issued to the U.S.  Treasury.
Although the interest rate on these  borrowings rose 1.13% above the same period
last year, the Bank  continues to make a 25 basis point earnings  spread on this
money.

OTHER NON-INTEREST INCOME
Other non-interest  income decreased slightly by 4.27% . The Bank introduced two
new non-interest income sources: ATM access fees and prefunding income earned on
the outstanding official check balances.  The full impact of the ATM access fees
will not be realized until second quarter as these charges were implemented late
in February.  While this new income was  substantial it was not enough to offset
the decrease in service charges and trust income. The increase in demand deposit
average balances consisted  primarily of preferred  accounts.  As these accounts
carry no service charges, the Bank experienced a reduction in its fee income.

OTHER OPERATING EXPENSES
Total  operating  expenses  decreased  overall by 4.51%,  as compared  with last
year's first quarter.  Salary and benefit expenses rose by an expected 6.08%, as
a result of 1998 salary  increases and 1997 bonuses.  Other  Occupancy  Expenses
were  reduced  by  10.43%,  due to a  reduction  in real  estate  taxes  and the
conversion  of three  branches to gas heat .  Furniture  and  Equipment  Expense
decreased by 22.20%,  attributed  primarily to the sale of two bank cars and the
depreciation runoff of the main frame computer software. Miscellaneous operating
expenses also declined  significantly  with  decreases in office  supplies,  the
elimination  of indirect  auto  servicing  fees paid to a third party  provider,
legal fees and trust expenditures.


NET INCOME
Net income reached $838,453, surpassing last year's record high first quarter of
$798,279  by 5.03% . This high net  income  level is the  result  of the  bank's
continued  growth,  sustained  low  efficiency  ratio of 53.10%,  and a wide net
interest  margin of 5.71%.  The remainder of 1998 looks equally  promising as we
explore  new  avenues  of  revenue  while  continuing  to focus on new  business
development.  Loan  growth is expected to climb as the bank added to its staff a
seasoned  Commercial Loan Officer during April. Mutual funds, now offered by our
Trust Department are also expected to generate additional fee income in the near
future.  As we approach the second quarter of 1998,  management looks forward to
the challenges provided by current financial and competitive  markets. We remain
committed to maintaining Bank of Smithtown's  status as a leader among community
banks in both the state and the nation, while continuing to maximize shareholder
value.

<PAGE>

<TABLE>
<CAPTION>


SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
MARCH 31, 1998
                                                                                                                        TOTAL
                                                                       3 MONTHS           3-6               6-12        SENITIVE 
                                                  REVOLVING            OR LESS           MONTHS            MONTHS       WITHIN 1 YR
____________________________________________________________________________________________________________________________________
<S>                                               <C>                  <C>               <C>             <C>              <C>    
ASSETS:

INVESTMENTS ...............................      $  4,684,024       $  8,459,024      $  5,913,120     $ 14,888,441   $  33,944,609
FED FUNDS SOLD ............................        13,200,000                  0                 0                0      13,200,000
LOANS:
INSTALLMENT ...............................           940,048            823,226         1,858,883        2,923,883       6,546,040
REAL ESTATE/COMM ..........................        26,163,123          2,848,908         3,739,130       12,013,723      44,764,884
CASH AND DUE FROM BANKS ...................           248,551                  0                 0                0         248,551
FIXED ASSETS ..............................                 0                  0                 0                0               0
OTHER ASSETS ..............................                 0                  0                 0                0               0
RESERVE FOR POSSIBLE LOAN LOSSES ..........                 0                  0                 0                0               0
NON-ACCRUALS ..............................                 0                  0                 0                0               0
UNEARNED DISCOUNT .........................                 0                  0                 0                0               0
                                                  ------------       -----------       -----------      -----------      -----------
TOTAL .....................................      $  45,235,746      $ 12,131,158      $ 11,511,133     $ 29,826,047   $  98,704,084
                                                  ------------       -----------       -----------      -----------      -----------

SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continue)
MARCH 31, 1998
                                                      1-3                3-5              5+
                                                     YEARS             YEARS             YEARS              OTHER          TOTAL
____________________________________________________________________________________________________________________________________
<S>                                                <C>                  <C>               <C>             <C>              <C>    

ASSETS:


INVESTMENTS ...............................      $  21,446,330      $  3,547,590      $ 13,237,649     $    856,800    $ 73,032,978
FED FUNDS SOLD ............................                  0                 0                 0                0       13,200,00
LOANS:
  INSTALLMENT ...............................        4,877,728         4,616,267           959,068                0      16,999,103
  REAL ESTATE AND COMMERCIAL ................       13,524,497        16,878,032         6,195,869          566,564      81,929,846
CASH AND DUE FROM BANKS .....................                0                 0                 0        7,711,199       7,959,750
FIXED ASSETS ................................                0                 0                 0        2,672,191       2,672,191
OTHER ASSETS ................................                0                 0                 0        6.969,951       6,969,951
RESERVE FOR POSSIBLE LOAN LOSSES ............                0                 0                 0       (1,774,483)     (1,774,483)
NON-ACCRUALS ................................                0                 0                 0        1,401,195       1,401,195
UNEARNED DISCOUNT ...........................                0                 0                 0         (611,143)       (611,143)
                                                  ------------       -----------       -----------      -----------      -----------
TOTAL .......................................    $  39,848,555      $ 25,041,889      $ 20,392,586     $ 17,792,274   $ 201,779,388
                                                  ------------       -----------       -----------      -----------      -----------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
MARCH 31, 1998
                                                                                                                         TOTAL
                                                                       3 MONTHS           3-6               6-12         SENITIVE 
                                                     REVOLVING          OR LESS           MONTHS            MONTHS       WITHIN 1 YR
____________________________________________________________________________________________________________________________________
<S>                                                  <C>               <C>              <C>               <C>              <C>    
LIABILITIES:

 SAVINGS ....................................    $           0      $  1,994,516      $ 1,994,516      $  3,989,032  $    7,978,064
 MONEY MARKETS ..............................                0         4,935,617        4,935,617         9,871,232      19,742,466
 NOW ........................................                0           775,730          775,730         1,551,458       3,102,918
 TIME<100 ...................................           50,557         7,434,042        4,721,231         8,034,673      20,240,503
 TIME>100 ...................................                0         3,611,946          683,628         2,125,992       6,421,566
 DEMAND .....................................                0         1,066,163        1,066,163         2,132,325       4,264,651
 REPURCHASE AGREEMENTS ......................                0         2,800,000                0                 0       2,800,000
 OTHER BORROWED MONEY .......................        5,294,184                 0                0                 0       5,294,184
 OTHER LIABILITIES ..........................                0                 0                0                 0               0
 STOCKHOLDERS' EQUITY .......................                0                 0                0                 0               0
                                                     ---------        ----------       ----------        ----------      -----------
TOTAL .......................................... $   5,344,741      $ 22,618,014      $14,176,885      $ 27,704,712  $   69,844,352
                                                     ---------        ----------       ----------        ----------      -----------

SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continue)
MARCH 31, 1998
                                                      1-3                3-5              5+
                                                     YEARS             YEARS             YEARS              OTHER          TOTAL
____________________________________________________________________________________________________________________________________
<S>                                                <C>                  <C>               <C>             <C>              <C>    

LIABILITIES:

 SAVINGS ....................................    $  15,956,130     $  15,956,130      $         0      $          0  $   39,890,324
 MONEY MARKETS ..............................       19,742,466                 0                0                 0      39,484,932
 NOW ........................................        6,205,836         6,205,836                0                 0      15,514,590
 TIME<100 ...................................        3,588,934         2,013,870                0                 0      25,843,307
 TIME>100 ...................................        1,299,717         1,028,815                0                 0       8.750,098
 DEMAND .....................................        8,529,301         8,529,301                0        21,323,252      42,646,505
 REPURCHASE AGREEMENTS ......................                0                 0                0                 0       2,800,000
 OTHER BORROWED MONEY .......................                0         3,000,000                0                 0       8,294,184
 OTHER LIABILITIES ..........................                0                 0                0         1,458,480       1,458,480
 STOCKHOLDERS' EQUITY .......................                0                 0                0        17,096,968      17,096,968
                                                     ----------       ----------         --------        ----------     ------------
 
TOTAL .......................................    $   55,322,384    $  36,733,952      $         0      $ 39,878,700  $  201,779,388
                                                     ----------       ----------         --------        ----------     ------------
</TABLE>
<PAGE>

<TABLE>
<CAPTION>


SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT
MARCH 31, 1998
                                                                                                                    TOTAL
                                                               3 MONTHS           3-6               6-12            SENITIVE 
                                            REVOLVING          OR LESS           MONTHS            MONTHS           WITHIN 1 YR
___________________________________________________________________________________________________________________________________
<S>                                         <C>               <C>              <C>               <C>                   <C>    

INTEREST SENSITIVITY GAP
PER PERIOD .....................          39,891,005        (10,486,856)      (2,665,752)          2,121,335            28,859,732
GAP/TOTAL ASSETS ...............              19.77%              -5.20%           -1.32%              1.05%                14.30%
CUMULATIVE INTEREST
SENSITIVITY GAP ................          39,891,005          29,404,149       26,738,397         28,859,732            28,859,732
CUMULATIVE GAP TO
TOTAL ASSETS ...................              19.77%              14.57%           13.25%             14.30%                14.30%


SMITHTOWN BANCORP
INTEREST RATE SENSITIVITY GAP REPORT (continue)
MARCH 31, 1998
                                               1-3                 3-5              5+
                                               YEARS              YEARS             YEARS              OTHER              TOTAL
____________________________________________________________________________________________________________________________________
<S>                                        <C>                    <C>             <C>                 <C>                 <C>      

 INTEREST SENSITIVITY GAP
 PER PERIOD .....................         (15,473,829)           (11,692,063)      20,392,586          (22,086,426)                 
GAP/TOTAL ASSETS ...............                -7.67%                 -5.79%          10.11%                                       
 CUMULATIVE INTEREST
SENSITIVITY GAP ................            13,385,903              1,693,840      22,086,426                                       
CUMULATIVE GAP TO
TOTAL ASSETS ...................                6.63%                   0.84%          10.95%                                       

</TABLE>

 ASSUMPTIONS:
  1) BALANCE SHEET FIGURES AS OF MARCH 31, 1998
  2) SAVINGS AND NOW ACCOUNTS ASSUMED TO DECLINE OVER  5 YEAR PERIOD
  3) MONEY MARKET ACCOUNTS ASSUMED TO DECLINE OVER 2  YEAR PERIOD


<PAGE>
Notes to Consolidated Financial Statements

Financial Statement Presentation

In the opinion of management,  the accompanying  unaudited interim  consolidated
financial  statements  contain all adjustments  (consisting of normal  recurring
accruals)  necessary to present  fairly its  financial  position as of March 31,
1998,  and its results of  operations  for the three months ended March 31, 1998
and 1997 and its cash flows for the three  months ended March 31, 1998 and 1997.
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, 1997.

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:

        March 31, 1998                $73,186,604
        December 31, 1997             $74,336,201



<PAGE>


                                   SIGNATURES



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

                                SMITHTOWN BANCORP



May 14, 1998

                                                    /s/ Bradley E. Rock
                                                    ___________________________
                                                    Bradley E. Rock, President



May 14, 1998
                                                    /s/ Anita M. Florek
                                                    ___________________________
                                                    Anita M. Florek, Treasurer