**United      States**

**Securities      and Exchange Commission**

**Washington,      D.C. 20549**

**Form      10-Q**

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

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

**For      the quarter ended June 30, 2008**

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

**SMITHTOWN      BANCORP, INC.**

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

**(631)      360-9300**

----

**SMITHTOWN      BANCORP, INC.**

| Part                I - FINANCIAL INFORMATION                                                                                                            |     |
|----------------------------------------------------------------------------------------------------------------------------------------------------------|----------|
|                                                                                                                                                     |     |
| Item                1. Financial Statements                                                                                                              | 2        |
|                                                                                                                                                     |     |
| Unaudited                Consolidated Balance Sheets as of June 30, 2008 and December 31,                2007                                            | 3        |
|                                                                                                                                                     |     |
| Unaudited                Consolidated Statements of Income for the Three Months Ended June                30, 2008                and 2007               | 4        |
|                                                                                                                                                     |     |
| Unaudited                Consolidated Statements of Income for the Six Months Ended June 30,                2008                and 2007                 | 5        |
|                                                                                                                                                     |     |
| Unaudited                Consolidated Statements of Changes in Stockholders’ Equity For the Six                Months Ended June 30, 2008 and 2007 | 6        |
|                                                                                                                                                     |     |
| Unaudited                Consolidated Statements of Cash Flows for the Six Months Ended June                30,                2008 and 2007             |  7  |
|                                                                                                                                                     |     |
| Item                2. Management’s Discussion and Analysis of Financial Condition and Results                of Operations                        |  15 |
|                                                                                                                                                     |     |
| Item                3. Quantitative and Qualitative Disclosures About Market                Risk                                                         |  22 |
|                                                                                                                                                     |     |
| Item                4. Controls and Procedures                                                                                                           |  23 |
|                                                                                                                                                     |     |
| Part                II - OTHER INFORMATION                                                                                                               |     |
|                                                                                                                                                     |     |
| Item                1. Legal Proceedings - None                                                                                                          |     |
|                                                                                                                                                     |     |
| Item                1a. Risk Factors                                                                                                                     |  23 |
|                                                                                                                                                     |     |
| Item                2. Change in Securities and Use of Proceeds                                                                                          |     |

|                                               |   | (a)             |      | (b)           |   | (c)                        |   | (d)                            |             |
|----------------------------------------------------|--------|-----------------|-----------|---------------|--------|----------------------------|--------|--------------------------------|------------------|
|                                               |   |            |      |          |   | Total Number of  |   | Maximum                        |             |
|                                               |   |            |      |          |   | Shares(or Units)      |   | Number of                 |             |
|                                               |   | Total           |      |          |   | Purchased as          |   | Shares(or Units)          |             |
|                                               |   | Number          |      | Average       |   | Part of Publicly |   | That May Yet Be |             |
|                                               |   | Of Shares  |      | Price         |   | Announced                  |   | Purchased Under           |             |
|                                               |   | (or Units) |      | Paid Per |   | Plans                      |   | the Plans                 |             |
| Period                                             |   |            | Purchased |          |   | Share(or Unit)        |   |                           | or Programs |   |   | or Programs |   |
| April 1,                2008 - April 30, 2008 |   |            | 0         |          |   | 0                          |   |                           | 0                |   |   | 852,163 |   |
| May                1, 2008 - May 31, 2008          |   |            | 0         |          |   | 0                          |   |                           | 0                |   |   | 852,163 |   |
| June                1, 2008 - June 30, 2008        |   |            | 0         |          |   | 0                          |   |                           | 0                |   |   | 852,163 |   |
| Total                                              |   |            | 0         |          |   | 0                          |   |                           | 0                |   |   | 852,163 | (1) |

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      BALANCE SHEETS**

| (in                thousands, except share data)                                                                                                                                                                                                                                                                                     |   | As                of    |                      |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------|---------------------------|
|                                                                                                                                                                                                                                                                                                                                 |   | June 30, 2008 |                      | December 31, 2007 |   |
| **ASSETS**                                                                                                                                                                                                                                                                                                                           |   |                    |                      |   |   |   |   |
| Cash                and due from banks                                                                                                                                                                                                                                                                                               |   | $                       | 19,332                    |   | $ | 17,401 |   |
| Federal                funds sold                                                                                                                                                                                                                                                                                                    |   |                    | 32                        |   |   | 54 |   |
| Total                cash and cash equivalents                                                                                                                                                                                                                                                                                       |   |                    | 19,364                    |   |   | 17,455 |   |
| Investment                securities:                                                                                                                                                                                                                                                                                                |   |                    |                      |   |   |   |   |
| Available                for sale:                                                                                                                                                                                                                                                                                                   |   |                    |                      |   |   |   |   |
| Obligations                of U.S. government agencies                                                                                                                                                                                                                                                                               |   |                    | 27,378                    |   |   | 32,394 |   |
| Mortgage                - backed securities                                                                                                                                                                                                                                                                                          |   |                    | 26,061                    |   |   | 7,619 |   |
| Obligations                of state and political subdivisions                                                                                                                                                                                                                                                                       |   |                    | 4,788                     |   |   | 6,312 |   |
| Other                securities                                                                                                                                                                                                                                                                                                      |   |                    | 6,464                     |   |   | 8,567 |   |
| Total                securities available for sale                                                                                                                                                                                                                                                                                   |   |                    | 64,691                    |   |   | 54,892 |   |
| Held                to maturity:                                                                                                                                                                                                                                                                                                     |   |                    |                      |   |   |   |   |
| Mortgage-backed                securities                                                                                                                                                                                                                                                                                            |   |                    | -                         |   |   | 8 |   |
| Obligations                of state and political subdivisions                                                                                                                                                                                                                                                                       |   |                    | 111                       |   |   | 202 |   |
| Total                securities held to maturity (estimated fair value $113 in 2008 and                $212 in                2007)                                                                                                                                                                                                  |   |                    | 111                       |   |   | 210 |   |
| Total                investment securities                                                                                                                                                                                                                                                                                           |   |                    | 64,802                    |   |   | 55,102 |   |
| Restricted                securities                                                                                                                                                                                                                                                                                                 |   |                    | 13,633                    |   |   | 2,113 |   |
| Loans                                                                                                                                                                                                                                                                                                                                |   |                    | 1,353,947                 |   |   | 983,918 |   |
| Less:                allowance for loan losses                                                                                                                                                                                                                                                                                       |   |                    | 9,749                     |   |   | 8,250 |   |
| Loans,                net                                                                                                                                                                                                                                                                                                            |   |                    | 1,344,198                 |   |   | 975,668 |   |
| Bank                premises and equipment                                                                                                                                                                                                                                                                                           |   |                    | 26,507                    |   |   | 22,611 |   |
| Other                assets                                                                                                                                                                                                                                                                                                          |   |                    |                      |   |   |   |   |
| Cash                value of company owned life insurance                                                                                                                                                                                                                                                                            |   |                    | 19,355                    |   |   | 18,961 |   |
| Goodwill                                                                                                                                                                                                                                                                                                                             |   |                    | 3,923                     |   |   | 3,923 |   |
| Intangible                assets                                                                                                                                                                                                                                                                                                     |   |                    | 1,170                     |   |   | 1,383 |   |
| Other                real estate owned                                                                                                                                                                                                                                                                                               |   |                    | 6,972                     |   |   | 6,972 |   |
| Other                                                                                                                                                                                                                                                                                                                                |   |                    | 23,097                    |   |   | 16,961 |   |
| Total                other assets                                                                                                                                                                                                                                                                                                    |   |                    | 54,517                    |   |   | 48,200 |   |
| Total                assets                                                                                                                                                                                                                                                                                                          |   | $                       | 1,523,021                 |   | $ | 1,121,149 |   |
|                                                                                                                                                                                                                                                                                                                                 |   |                    |                      |   |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                                                                                                                                                                              |   |                    |                      |   |   |   |   |
| Liabilities                                                                                                                                                                                                                                                                                                                          |   |                    |                      |   |   |   |   |
| Deposits:                                                                                                                                                                                                                                                                                                                            |   |                    |                      |   |   |   |   |
| Demand                (noninterest-bearing)                                                                                                                                                                                                                                                                                          |   | $                       | 116,234                   |   | $ | 111,726 |   |
| Money                market                                                                                                                                                                                                                                                                                                          |   |                    | 407,113                   |   |   | 389,891 |   |
| NOW                                                                                                                                                                                                                                                                                                                                  |   |                    | 29,231                    |   |   | 34,814 |   |
| Savings                                                                                                                                                                                                                                                                                                                              |   |                    | 62,184                    |   |   | 54,267 |   |
| Time                                                                                                                                                                                                                                                                                                                                 |   |                    | 497,955                   |   |   | 400,103 |   |
| Total                deposits                                                                                                                                                                                                                                                                                                        |   |                    | 1,112,717                 |   |   | 990,801 |   |
| Dividends                payable                                                                                                                                                                                                                                                                                                     |   |                    | 393                       |   |   | 392 |   |
| Federal                Home Loan Bank borrowings                                                                                                                                                                                                                                                                                     |   |                    | 274,275                   |   |   | 20,900 |   |
| Subordinated                debt                                                                                                                                                                                                                                                                                                     |   |                    | 38,836                    |   |   | 18,217 |   |
| Other                liabilities                                                                                                                                                                                                                                                                                                     |   |                    | 11,061                    |   |   | 10,737 |   |
| Total                liabilities                                                                                                                                                                                                                                                                                                     |   |                    | 1,437,282                 |   |   | 1,041,047 |   |
| Stockholders'                equity                                                                                                                                                                                                                                                                                                  |   |                    |                      |   |   |   |   |
| Common                stock - $.01 par value (20,000,000 shares authorized at June 30,                2008 and                December 31, 2007; 11,886,341 shares issued, 9,834,477 shares outstanding                at June 30, 2008; 11,852,374 shares issued, 9,800,510 shares outstanding                at December 31, 2007) |   |                    | 119                       |   |   | 119 |   |
| Additional                paid in capital                                                                                                                                                                                                                                                                                            |   |                    | 26,136                    |   |   | 25,755 |   |
| Retained                earnings                                                                                                                                                                                                                                                                                                     |   |                    | 70,971                    |   |   | 64,463 |   |
| Accumulated                other comprehensive loss                                                                                                                                                                                                                                                                                  |   |                    | (1,425                    | ) |   | (173 | ) |
|                                                                                                                                                                                                                                                                                                                                 |   |                    | 95,801                    |   |   | 90,164 |   |
| Treasury                stock (2,051,864 shares at cost)                                                                                                                                                                                                                                                                             |   |                    | (10,062                   | ) |   | (10,062 | ) |
| Total                stockholders' equity                                                                                                                                                                                                                                                                                            |   |                    | 85,739                    |   |   | 80,102 |   |
| Total                liabilities and stockholders' equity                                                                                                                                                                                                                                                                            |   | $                       | 1                ,523,021 |   | $ | 1,121,149 |   |

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      STATEMENTS OF INCOME**

|                                                                  |   | For the Three Months EndedJune 30, |      |
|-----------------------------------------------------------------------|--------|-------------------------------------------------------------|-----------|
|                                                                  |   | 2008                                                        |      | 2007 |   |
| Interest                income                                        |   |                                                        |      |   |   |   |   |
| Loans                                                                 |   | $                                                           | 20,703    |   | $ | 18,380 |   |
| Federal                funds sold                                     |   |                                                        | 157       |   |   | 198 |   |
| Investment                securities:                                 |   |                                                        |      |   |   |   |   |
| Taxable:                                                              |   |                                                        |      |   |   |   |   |
| Obligations                of U.S. government agencies                |   |                                                        | 213       |   |   | 744 |   |
| Mortgage                - backed securities                           |   |                                                        | 284       |   |   | 33 |   |
| Other                securities                                       |   |                                                        | 95        |   |   | 88 |   |
| Subtotal                                                              |   |                                                        | 592       |   |   | 865 |   |
| Exempt                from federal income taxes:                      |   |                                                        |      |   |   |   |   |
| Obligations                of state & political subdivisions      |   |                                                        | 53        |   |   | 71 |   |
| Other                                                                 |   |                                                        | 205       |   |   | 53 |   |
| Total                interest income                                  |   |                                                        | 21,710    |   |   | 19,567 |   |
|                                                                  |   |                                                        |      |   |   |   |   |
| Interest                expense                                       |   |                                                        |      |   |   |   |   |
| Money                market accounts (including savings)              |   |                                                        | 2,769     |   |   | 3,923 |   |
| Time                deposits of $100,000 or more                      |   |                                                        | 1,974     |   |   | 1,864 |   |
| Other                time deposits                                    |   |                                                        | 2,753     |   |   | 2,781 |   |
| Federal                Home Loan Bank borrowings                      |   |                                                        | 1,438     |   |   | 409 |   |
| Subordinated                debt                                      |   |                                                        | 616       |   |   | 344 |   |
| Total                interest expense                                 |   |                                                        | 9,550     |   |   | 9,321 |   |
|                                                                  |   |                                                        |      |   |   |   |   |
| Net                interest income                                    |   |                                                        | 12,160    |   |   | 10,246 |   |
| Provision                for loan losses                              |   |                                                        | 700       |   |   | 300 |   |
| Net                interest income after provision for loan losses    |   |                                                        | 11,460    |   |   | 9,946 |   |
|                                                                  |   |                                                        |      |   |   |   |   |
| Noninterest                income                                     |   |                                                        |      |   |   |   |   |
| Trust                and investment services                          |   |                                                        | 194       |   |   | 237 |   |
| Service                charges on deposit accounts                    |   |                                                        | 528       |   |   | 468 |   |
| Revenues                from insurance agency                         |   |                                                        | 805       |   |   | 884 |   |
| Increase                in cash value of company owned life insurance |   |                                                        | 196       |   |   | 189 |   |
| Other                                                                 |   |                                                        | 510       |   |   | 432 |   |
| Total                noninterest income                               |   |                                                        | 2,233     |   |   | 2,210 |   |
|                                                                  |   |                                                        |      |   |   |   |   |
| Noninterest                expense                                    |   |                                                        |      |   |   |   |   |
| Salaries                                                              |   |                                                        | 3,360     |   |   | 2,977 |   |
| Pension                and other employee benefits                    |   |                                                        | 862       |   |   | 736 |   |
| Net                occupancy expense of bank premises                 |   |                                                        | 1,309     |   |   | 1,013 |   |
| Furniture                and equipment expense                        |   |                                                        | 667       |   |   | 672 |   |
| Amortization                of intangible assets                      |   |                                                        | 106       |   |   | 120 |   |
| Other                                                                 |   |                                                        | 1,487     |   |   | 1,099 |   |
| Total                noninterest expense                              |   |                                                        | 7,791     |   |   | 6,617 |   |
|                                                                  |   |                                                        |      |   |   |   |   |
| Income                before income taxes                             |   |                                                        | 5,902     |   |   | 5,539 |   |
| Provision                for income taxes                             |   |                                                        | 1,951     |   |   | 1,863 |   |
| Net                income                                             |   | $                                                           | 3,951     |   | $ | 3,676 |   |
|                                                                  |   |                                                        |      |   |   |   |   |
| Basic                earnings per share                               |   | $                                                           | 0.40      |   | $ | 0.38 |   |
| Diluted                earnings per share                             |   | $                                                           | 0.40      |   | $ | 0.38 |   |
| Cash                dividends declared                                |   | $                                                           | 0.04      |   | $ | 0.04 |   |
| Weighted                average common shares outstanding             |   |                                                        | 9,790,408 |   |   | 9,768,794 |   |
| Weighted                average common equivalent shares              |   |                                                        | 9,791,297 |   |   | 9,771,572 |   |
| Comprehensive                income                                   |   | $                                                           | 3,667     |   | $ | 3,566 |   |

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      STATEMENTS OF INCOME**

|                                                                  |   | For the Six Months EndedJune 30, |      |
|-----------------------------------------------------------------------|--------|-----------------------------------------------------------|-----------|
|                                                                  |   | 2008                                                      |      | 2007 |   |
| Interest income                                                  |   |                                                      |      |   |   |   |   |
| Loans                                                                 |   | $                                                         | 39,965    |   | $ | 36,093 |   |
| Federal                funds sold                                     |   |                                                      | 165       |   |   | 509 |   |
| Interest                and dividends on investment securities:       |   |                                                      |      |   |   |   |   |
| Investment                securities:                                 |   |                                                      |      |   |   |  |   |
| Taxable:                                                              |   |                                                      |      |   |   |   |   |
| Obligations                of U.S. government agencies                |   |                                                      | 486       |   |   | 1,603 |   |
| Mortgage                - backed securities                           |   |                                                      | 522       |   |   | 70 |   |
| Other                securities                                       |   |                                                      | 219       |   |   | 136 |   |
| Subtotal                                                              |   |                                                      | 1,227     |   |   | 1,809 |   |
| Exempt                from federal income taxes:                      |   |                                                      |      |   |   |   |   |
| Obligations                of state & political subdivisions      |   |                                                      | 111       |   |   | 150 |   |
| Other                interest income                                  |   |                                                      | 330       |   |   | 112 |   |
| Total                interest income                                  |   |                                                      | 41,798    |   |   | 38,673 |   |
|                                                                  |   |                                                      |      |   |   |   |   |
| Interest                expense                                       |   |                                                      |      |   |   |   |   |
| Money                market accounts (including savings)              |   |                                                      | 6,119     |   |   | 7,458 |   |
| Time                deposits of $100,000 or more                      |   |                                                      | 3,770     |   |   | 3,823 |   |
| Other                time deposits                                    |   |                                                      | 5,425     |   |   | 5,716 |   |
| Other                borrowings                                       |   |                                                      | 2,327     |   |   | 793 |   |
| Subordinated                debt                                      |   |                                                      | 1,038     |   |   | 688 |   |
| Total                interest expense                                 |   |                                                      | 18,679    |   |   | 18,478 |   |
|                                                                  |   |                                                      |      |   |   |   |   |
| Net                interest income                                    |   |                                                      | 23,119    |   |   | 20,195 |   |
| Provision                for loan losses                              |   |                                                      | 1,500     |   |   | 700 |   |
| Net                interest income after provision for loan losses    |   |                                                      | 21,619    |   |   | 19,495 |   |
|                                                                  |   |                                                      |      |   |   |   |   |
| Noninterest                income                                     |   |                                                      |      |   |   |   |   |
| Trust                and investment services                          |   |                                                      | 376       |   |   | 396 |   |
| Service                charges on deposit accounts                    |   |                                                      | 1,032     |   |   | 895 |   |
| Revenues                from insurance agency                         |   |                                                      | 1,853     |   |   | 1,787 |   |
| Increase                in cash value of company owned life insurance |   |                                                      | 394       |   |   | 419 |   |
| Other                                                                 |   |                                                      | 924       |   |   | 939 |   |
| Total                noninterest income                               |   |                                                      | 4,579     |   |   | 4,436 |   |
|                                                                  |   |                                                      |      |   |   |   |   |
| Noninterest                expense                                    |   |                                                      |      |   |   |   |   |
| Salaries                                                              |   |                                                      | 6,506     |   |   | 5,969 |   |
| Pension                and other employee benefits                    |   |                                                      | 1,711     |   |   | 1,476 |   |
| Net                occupancy expense of bank premises                 |   |                                                      | 2,444     |   |   | 2,033 |   |
| Furniture                and equipment expense                        |   |                                                      | 1,324     |   |   | 1,317 |   |
| Amortization                of intangible assets                      |   |                                                      | 213       |   |   | 240 |   |
| Other                                                                 |   |                                                      | 2,565     |   |   | 2,227 |   |
| Total                noninterest expense                              |   |                                                      | 14,763    |   |   | 13,262 |   |
|                                                                  |   |                                                      |      |   |   |   |   |
| Income                before income taxes                             |   |                                                      | 11,435    |   |   | 10,669 |   |
| Provision                for income taxes                             |   |                                                      | 3,909     |   |   | 3,614 |   |
| Net                income                                             |   | $                                                         | 7,526     |   | $ | 7,055 |   |
|                                                                  |   |                                                      |      |   |   |   |   |
| Basic                earnings per share                               |   | $                                                         | 0.77      |   | $ | 0.73 |   |
| Diluted                earnings per share                             |   | $                                                         | 0.77      |   | $ | 0.73 |   |
| Cash                dividends declared                                |   | $                                                         | 0.08      |   | $ | 0.08 |   |
| Weighted                average common shares outstanding             |   |                                                      | 9,788,837 |   |   | 9,767,779 |   |
| Weighted                average common equivalent shares              |   |                                                      | 9,789,952 |   |   | 9,770,758 |   |
| Comprehensive                income                                   |   | $                                                         | 6,274     |   | $ | 7,103 |   |

----

**SMITHTOWN      BANCORP, INC.**

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

|                                                                                                                                     |   | Common Stock |      | Additional |   |                             |   |     |                                               |     |   |                                |   |
|------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------|-----------|------------|--------|----------------------------------|--------|----------|----------------------------------------------------|----------|--------|-------------------------------------|--------|
|                                                                                                                                     |   | Shares            |      |       |   | Paid In                     |   | Retained |                                               | Treasury |   | Accumulated OtherComprehensive |   | Total Stockholders’ |   |
|                                                                                                                                     |   | Outstanding       |      | Amount     |   | Capital                          |   | Earnings |                                               | Stock    |   | Income (Loss)                  |   | Equity |   |
| Balance at 12/31/2006                                                                                                          |   |              | 9,774,025 |       | $      | 108                              |   | $        | 4,046                                              |     | $      | 73,046                              |   | $ | (10,062 | ) | $ | (331 | ) | $ | 66,807 |   |
| Comprehensive income:                                                                                                               |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   |   |   |   |  |   |
| Net                income                                                                                                                |   |              |      |       |   |                             |   |     |                                               |     |   | 7,055                               |   |   |   |   |   |   |   |   | 7,055 |   |
| Change                in unrealized gain (loss) on securities available for sale, net of                reclassification and tax effects |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   | 73 |   |   | 73 |   |
| Adjustment                to apply SFAS 158, net of tax                                                                                  |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   | (25 | ) |   | (25 | ) |
| Total                comprehensive Income                                                                                                |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   |   |   |   | 7,103 |   |
| 10%                stock dividend (1)                                                                                                    |   |              |      |       |   | 11                               |   |     | 21,314                                             |     |   | (21,325                             | )      |   |   |   |   |   |   |   | - |   |
| Cash                dividends declared                                                                                                   |   |              |      |       |   |                             |   |     |                                               |     |   | (749                                | )      |   |   |   |   |   |   |   | (749 | ) |
| Issuance                of shares for employee stock ownership plan                                                                      |   |              | 9,325     |       |   |                             |   |     | 225                                                |     |   |                                |   |   |   |   |   |   |   |   | 225 |   |
| Stock                awards vested                                                                                                       |   |              |      |       |   |                             |   |     | 85                                                 |     |   |                                |   |   |   |   |   |   |   |   | 85 |   |
| Stock                awards granted                                                                                                      |   |              | 17,160    |       |   |                   |   |     |                                     |     |   |                      |   |   |                   |   |   |                  |   |   | - |   |
| Balance                at 6/30/2007                                                                                                      |   |              | 9,800,510 |       | $      | 119                              |   | $        | 25,670                                             |     | $      | 58,027                              |   | $ | (10,062 | ) | $ | (283 | ) | $ | 73,471 |   |
|                                                                                                                                     |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   |  |   |   |  |   |
| Balance                at 12/31/2007                                                                                                     |   |              | 9,800,510 |       | $      | 119                              |   | $        | 25,755                                             |     | $      | 64,463                              |   | $ | (10,062 | ) | $ | (173 | ) | $ | 80,102 |   |
| Comprehensive                income:                                                                                                     |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   |  |   |   |  |   |
| Net                income                                                                                                                |   |              |      |       |   |                             |   |     |                                               |     |   | 7,526                               |   |   |   |   |   |  |   |   | 7,526 |   |
| Change                in unrealized gain (loss) on securities available for sale, net of                reclassification and tax effects |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   | (1,265 | ) |   | (1,265 | ) |
| Adjustment                to apply SFAS 158, net of tax                                                                                  |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   | 13 |   |   | 13 |   |
| Total                comprehensive Income                                                                                                |   |              |      |       |   |                             |   |     |                                               |     |   |                                |   |   |   |   |   |  |   |   | 6,274 |   |
| Retained                earnings reduction due to adoption of EITF 06-4                                                                  |   |              |      |       |   |                             |   |     |                                               |     |   | (233                                | )      |   |   |   |   |   |   |   | (233 | ) |
| Cash                dividends declared                                                                                                   |   |              |      |       |   |                             |   |     |                                               |     |   | (785                                | )      |   |   |   |   |  |   |   | (785 | ) |
| Issuance                of shares for employee stock ownership plan                                                                      |   |              | 11,967    |       |   |                             |   |     | 250                                                |     |   |                                |   |   |   |   |   |   |   |   | 250 |   |
| Stock                awards vested                                                                                                       |   |              |      |       |   |                             |   |     | 131                                                |     |   |                                |   |   |   |   |   |   |   |   | 131 |   |
| Stock                awards granted                                                                                                      |   |              | 22,000    |       |   |                        |   |     |                      |     |   |                      |   |   |                    |   |   |                    |   |   | - |   |
| Balance                at 06/30/2008                                                                                                     |   |              | 9,834,477 |       | $      | 119                              |   | $        | 26,136                                             |     | $      | 70,971                              |   | $ | (10,062 | ) | $ | (1,425 | ) | $ | 85,739 |   |

----

**SMITHTOWN      BANCORP, INC.**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

|                                                                                                                 |   | For the Six Months    |     |
|----------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|----------|
| (in thousands)                                                                                                  |   |  Ended June 30,  |     |
|                                                                                                                 |   | 2008                                 |     | 2007 |   |
| **Cash                flows from operating activities**                                                              |   |                                 |     |   |   |   |   |
| Net                income                                                                                            |   | $                                    | 7,526    |   | $ | 7,055 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:      |   |                                 |          |   |   |  |   |
| Depreciation                on premises and equipment                                                                |   |                                 | 1,406    |   |   | 1,238 |   |
| Provision                for loan losses                                                                             |   |                                 | 1,500    |   |   | 700 |   |
| Net                increase (decrease) in other liabilities                                                          |   |                                 | 324      |   |   | (2,982 | ) |
| Net                increase in other assets                                                                          |   |                                 | (2,031   | ) |   | (1,530 | ) |
| Net                increase in deferred taxes                                                                        |   |                                 | (2,568   | ) |   | (938 | ) |
| Amortization                of unearned restricted stock awards                                                      |   |                                 | 131      |   |   | 85 |   |
| Increase                in cash surrender value of company owned life insurance                                      |   |                                 | (394     | ) |   | (419 | ) |
| Amortization                of investment security premiums and accretion of discount                                |   |                                 | (108     | ) |   | (10 | ) |
| Amortization                of intangible assets                                                                     |   |                                 | 213      |   |   | 240 |   |
| Cash                provided                by operating activities                                                  |   |                                 | 5,999    |   |   | 3,439 |   |
|                                                                                                                 |   |                                 |          |   |   |  |   |
| **Cash                flows from investing activities**                                                              |   |                                 |          |   |   |  |   |
| Proceeds                from calls, repayments, maturities and sales of available-for-sale                securities |   |                                 | 34,169   |   |   | 41,812 |   |
| Proceeds                from calls, repayments and maturities of held-to-maturity                securities          |   |                                 | 215      |   |   | 190 |   |
| Purchases                of available-for-sale securities                                                            |   |                                 | (46,129  | ) |   | (9,164 | ) |
| Purchases                of restricted securities                                                                    |   |                                 | (14,447  | ) |   | (3,644 | ) |
| Redemptions                of restricted securities                                                                  |   |                                 | 2,927    |   |   | 4,983 |   |
| Loans                made to customers, net                                                                          |   |                                 | (370,029 | ) |   | (70,687 | ) |
| Purchases                of premises and equipment                                                                   |   |                                 | (5,302   | ) |   | (2,469 | ) |
| Cash                used in investing activities                                                                     |   |                                 | (398,596 | ) |   | (38,979 | ) |
|                                                                                                                 |   |                                 |          |   |   |  |   |
| **Cash                flows from financing activities**                                                              |   |                                 |          |   |   |  |   |
| Net                increase in demand deposits, money market, NOW and savings                                        |   |                                 | 24,064   |   |   | 86,812 |   |
| Increase                (decrease) in time deposits                                                                  |   |                                 | 97,852   |   |   | (35,516 | ) |
| Cash                dividends paid                                                                                   |   |                                 | (785     | ) |   | (712 | ) |
| Federal                Home Loan Bank term advances                                                                  |   |                                 | 240,000  |   |   | - |   |
| Maturities                of Federal Home Loan Bank term advances                                                    |   |                                 | -        |   |   | (25,000 | ) |
| Net                decrease in overnight borrowings                                                                  |   |                                 | 13,375   |   |   | 4,025 |   |
| Proceeds                from subordinated debt issuance                                                              |   |                                 | 20,000   |   |   | - |   |
| Cash                provided by financing activities                                                                 |   |                                 | 394,506  |   |   | 29,609 |   |
|                                                                                                                 |   |                                 |          |   |   |  |   |
| Net                increase in cash and cash equivalents                                                             |   |                                 | 1,909    |   |   | (5,931 | ) |
| Cash                and cash equivalents, beginning of period                                                        |   |                                 | 17,455   |   |   | 27,620 |   |
| Cash                and cash equivalents, end of period                                                              |   | $                                    | 19,364   |   | $ | 21,689 |   |
|                                                                                                                 |   |                                 |          |   |   |  |   |
| Supplemental                disclosures of cash flow information                                                     |   |                                 |          |   |   |  |   |
| Cash                paid during the year for:                                                                        |   |                                 |          |   |   |  |   |
| Interest                                                                                                             |   | $                                    | 17,946   |   | $ | 18,594 |   |
| Income                taxes                                                                                          |   |                                 | 4,545    |   |   | 6,529 |   |
| Schedule                of noncash activities                                                                        |   |                                 |     |   |   |   |   |
| Issuance                of common stock to employee stock ownership plan                                             |   | $                                    | 250      |   | $ | 225 |   |
| Issuance                of common stock to restricted stock plan                                                     |   |                                 | 460      |   |   | 414 |   |

----

|                                                                 |   | Three Months Ended  |      |
|----------------------------------------------------------------------|--------|------------------------------------|-----------|
|                                                                 |   | June 30,                      |      | June 30, |   |
|                                                                 |   | 2008                               |      | 2007 |   |
| Computation of                per share income                  |   |                               |      |   |   |   |   |
| (in                thousands, except share and per share data)       |   |                               |      |   |   |   |   |
|                                                                 |   |                               |      |   |   |   |   |
| Net                income                                            |   | $                                  | 3,951     |   | $ | 3,676 |   |
|                                                                 |   |                               |      |   |   |   |   |
| Common                equivalent shares:                             |   |                               |      |   |   |   |   |
|                                                                 |   |                               |      |   |   |   |   |
| Weighted                average common shares outstanding*           |   |                               | 9,790,408 |   |   | 9,768,794 |   |
| Weighted                average common equivalent shares*            |   |                               | 889       |   |   | 2,778 |   |
| Weighted                average common and common equivalent shares* |   |                               | 9,791,297 |   |   | 9,771,572 |   |
| Basic                earnings per share                              |   | $                                  | 0.40      |   | $ | 0.38 |   |
| Diluted                earnings per share                            |   | $                                  | 0.40      |   | $ | 0.38 |   |

----

|                                                                 |   | Six Months Ended  |      |
|----------------------------------------------------------------------|--------|----------------------------------|-----------|
|                                                                 |   | June 30,                    |      | June 30, |   |
|                                                                 |   | 2008                             |      | 2007 |   |
| Computation                of per share income                       |   |                             |      |   |   |   |   |
| (in                thousands, except share and per share data)       |   |                             |      |   |   |   |   |
|                                                                 |   |                             |      |   |   |   |   |
| Net                income                                            |   | $                                | 7,526     |   | $ | 7,055 |   |
|                                                                 |   |                             |      |   |   |   |   |
| Common                equivalent shares:                             |   |                             |      |   |   |   |   |
|                                                                 |   |                             |      |   |   |   |   |
| Weighted                average common shares outstanding*           |   |                             | 9,788,837 |   |   | 9,767,779 |   |
| Weighted                average common equivalent shares*            |   |                             | 1,115     |   |   | 2,979 |   |
| Weighted                average common and common equivalent shares* |   |                             | 9,789,952 |   |   | 9,770,758 |   |
| Basic                earnings per share                              |   | $                                | 0.77      |   | $ | 0.73 |   |
| Diluted                earnings per share                            |   | $                                | 0.77      |   | $ | 0.73 |   |
|                                                                 |   |                             |      |   |   |   |   |

| For                the Three Months Ended June 30, 2008   |   |         |   |                                  |   |
|-----------------------------------------------------------|--------|--------------|--------|---------------------------------------|--------|
|                                                      |   |         |   | Weighted Average                 |   |
|                                                      |   | Shares  |   | Grant Date Share Value |   |
| Nonvested at beginning                of period |   |         | 48,416 |                                  | $      | 21.27 |   |
| Granted                                                   |   |         | -      |                                  |   | - |   |
| Vested                                                    |   |         | -      |                                  |   | - |   |
| Nonvested                at end of period                 |   |         | 48,416 |                                  | $      | 21.27 |   |

----

|                                            |   | For the Three Months Ended |   |
|-------------------------------------------------|--------|------------------------------------------------|--------|
|                                            |   | June 30,                                  |   |
|                                            |   | 2008                                      |   | 2007 |   |
| 401(K)                Defined Contribution Plan |   | $                                              | 59     |   | $ | 52 |   |
| Employee                Stock Ownership Plan    |   |                                           | 63     |   |   | 56 |   |

|                                            |   | For the Six Months Ended |   |
|-------------------------------------------------|--------|----------------------------------------------|--------|
|                                            |   | June 30,                                |   |
|                                            |   | 2008                                         |   | 2007 |   |
| 401(K)                Defined Contribution Plan |   | $                                            | 125    |   | $ | 110 |   |
| Employee                Stock Ownership Plan    |   |                                         | 125    |   |   | 113 |   |

| For                the Three Months Ended |   |               |   |         |   |                  |   |    |   |
|-------------------------------------------|--------|--------------------|--------|--------------|--------|-----------------------|--------|---------|--------|
|                                      |   | Amortization       |   | Amortization |   | Total Net        |   |    |   |
|                                      |   | Interest Cost |   | Cost         |   | of Net Gain |   | Expense |   |
| June 30, 2008              |   | $                  | 3      |         | $      | 8                     |   | $       | 3      |   | $ | 8 |   |
| June                30, 2007              |   |               | 4      |         |   | 8                     |   |    | 2      |   |   | 10 |   |

| For                the Six Months Ended |   |               |   |         |   |                  |   |    |   |
|-----------------------------------------|--------|--------------------|--------|--------------|--------|-----------------------|--------|---------|--------|
|                                    |   | Amortization       |   | Amortization |   | Total Net        |   |    |   |
|                                    |   | Interest Cost |   | Cost         |   | of Net Gain |   | Expense |   |
| June                30, 2008            |   | $                  | 6      |         | $      | 16                    |   | $       | 6      |   | $ | 16 |   |
| June                30, 2007            |   |               | 8      |         |   | 16                    |   |    | 4      |   |   | 20 |   |

| For the Three Months Ended |   | For the Six Months Ended |   |
|------------------------------------------------|--------|----------------------------------------------|--------|
| June 30,                                  |   | June 30,                                |   |
| 2008                                           |   | 2007                                         |   | 2008 |   | 2008 |   |
| $                                              | 90     |                                         | $      | 77 |   | $ | 180 |   | $ | 146 |   |

| For the Three Months Ended |   | For the Six Months Ended |   |
|------------------------------------------------|--------|----------------------------------------------|--------|
| June 30,                                  |   | June 30,                                |   |
| 2008                                           |   | 2007                                         |   | 2008 |   | 2008 |   |
| $                                              | 116    |                                         | $      | 97 |   | $ | 233 |   | $ | 187 |   |

----

|                                         |   | Fair Value Measurements at June 30, 2008 Using |   |
|----------------------------------------------|--------|-----------------------------------------------------------------------------------|--------|
|                                         |   |                                                                              |   |   |   |   |   |
|                                         |   | Quoted Prices in                                                        |   | Significant |   | Significant |   |
|                                         |   | Active Markets for                                                      |   | Other |   | Unobservable |   |
|                                         |   | Identical Assets                                                             |   | Observable Inputs |   | Inputs |   |
|                                         |   | (Level 1)                                                                    |   | (Level 2) |   | (Level 3) |   |
| Available                for sale securities |   |                                                                              | -      |   | $ | 64,691 |   |   | - |   |

----

|                |   | Fair Value Measurements at June 30, 2008 Using |   |
|---------------------|--------|-----------------------------------------------------------------------------------|--------|
|                |   |                                                                              |   |   |   |   |   |
|                |   | Quoted Prices in                                                        |   | Significant |   | Significant |   |
|                |   | Active Markets for                                                      |   | Other |   | Unobservable |   |
|                |   | Identical Assets                                                             |   | Observable Inputs |   | Inputs |   |
|                |   | (Level 1)                                                                    |   | (Level 2) |   | (Level 3) |   |
| Impaired Loans |   |                                                                              | -      |   |   | - |   | $ | 371 |   |

|                                                                                                     |   | 2008   |      | 2007   |   |
|----------------------------------------------------------------------------------------------------------|--------|--------|-----------|--------|--------|
|                                                                                                     |   |   |      |   |   |
| Real                estate loans, construction                                                           |   | $      | 352,072   |   | $      | 261,416 |   |
| Real                estate loans, other                                                                  |   |   |      |   |   |   |   |
| Commercial                                                                                               |   |   | 579,419   |   |   | 416,970 |   |
| Residential                                                                                              |   |   | 371,039   |   |   | 193,521 |   |
| Agricultural                                                                                             |   |   | -         |   |   | 695 |   |
| Commercial                and industrial loans                                                           |   |   | 51,466    |   |   | 45,184 |   |
| Loans                to individuals for household, family and other personal                expenditures |   |   | 3,477     |   |   | 3,791 |   |
| All                other loans (including overdrafts)                                                    |   |   | 605       |   |   | 553 |   |
| Total                loans, gross                                                                        |   |   | 1,358,078 |   |   | 922,130 |   |
| Less:                deferred fees                                                                       |   |   | 4,131     |   |   | 2,186 |   |
| allowance                for loan losses                                                                 |   |   | 9,749     |   |   | 7,698 |   |
| Loans,                net                                                                                |   | $      | 1,344,198 |   | $      | 912,246 |   |

|                                                |   | 2008   |   | 2007   |   |
|-----------------------------------------------------|--------|--------|--------|--------|--------|
|                                                |   |   |   |   |   |
| Beginning                balance                    |   | $      | 8,250  |   | $      | 7,050 |   |
| Add:                                                |   |   |   |   |   |   |   |
| Recoveries                                          |   |   | 46     |   |   | 13 |   |
| Provision                charged to current expense |   |   | 1,500  |   |   | 700 |   |
| Total                                               |   |   | 9,796  |   |   | 7,763 |   |
| Less:                charge-offs                    |   |   | 47     |   |   | 65 |   |
| Balance,                June 30                     |   | $      | 9,749  |   | $      | 7,698 |   |

----

|                                                                                                                                              |   | 2008   |   | 2007   |   | 2006 |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|------|--------|
| Gross                interest income which would have been recorded during the period                under                original contract terms |   | $      | 14     |   | $      | 18   |   | $ | 1 |   |
| Gross                interest income recorded during the period                                                                                   |   |   | 10     |   |   | -    |   |   | - |   |

|                                                           |   |   |   | Gross      |   | Gross      |   |
|----------------------------------------------------------------|--------|--------|--------|------------|--------|------------|--------|
|                                                           |   | Fair   |   | Unrealized |   | Unrealized |   |
|                                                           |   | Value  |   | Gains      |   | Losses     |   |
| June                30, 2008                                   |   |   |   |       |   |       |   |   |   |   |
| Obligations                of U.S. government agencies         |   | $      | 27,378 |       | $      | 119        |   | $ | (101 | ) |
| Mortgage-backed                securities                      |   |   | 26,061 |       |   | 63         |   |   | (362 | ) |
| Obligations                of state and political subdivisions |   |   | 4,788  |       |   | 13         |   |   | (17 | ) |
| Other                securities                                |   |   | 6,464  |       |   | -          |   |   | (1,919 | ) |
|                                                           |   |   |   |       |   |       |   |   |   |   |
| Total                                                          |   | $      | 64,691 |       | $      | 195        |   | $ | (2,399 | ) |
|                                                           |   |   |   |       |   |       |   |   |   |   |
| June                30, 2007                                   |   |   |   |       |   |       |   |   |   |   |
| Obligations                of U.S. government agencies         |   | $      | 60,764 |       | $      | 7          |   | $ | (401 | ) |
| Mortgage-backed                securities                      |   |   | 2,341  |       |   | 18         |   |   | - |   |
| Obligations                of state and political subdivisions |   |   | 7,075  |       |   | 12         |   |   | (64 | ) |
| Other                securities                                |   |   | 7,084  |       |   | -          |   |   | (27 | ) |
|                                                           |   |   |   |       |   |       |   |   |   |   |
| Total                                                          |   | $      | 77,264 |       | $      | 37         |   | $ | (492 | ) |

|                                                           |   |     |   | Gross      |   | Gross      |   |   |   |
|----------------------------------------------------------------|--------|----------|--------|------------|--------|------------|--------|--------|--------|
|                                                           |   | Carrying |   | Unrealized |   | Unrealized |   | Fair   |   |
|                                                           |   | Amount   |   | Gains      |   | Losses     |   | Value  |   |
| June                30, 2008                                   |   |     |   |       |   |       |   |   |   |   |   |   |   |
| Obligations                of state and political subdivisions |   | $        | 111    |       | $      | 1          |   | $      | -      |   | $ | 112 |   |
| Total                                                          |   | $        | 111    |       | $      | 1          |   | $      | -      |   | $ | 112 |   |
|                                                           |   |     |   |       |   |       |   |   |   |   |   |   |   |
| June                30, 2007                                   |   |     |   |       |   |       |   |   |   |   |   |   |   |
| Mortgage-backed                securities                      |   | $        | 22     |       | $      | -          |   | $      | -      |   | $ | 22 |   |
| Obligations                of state and political subdivisions |   |     | 202    |       |   | 1          |   |   | -      |   |   | 203 |   |
| Total                                                          |   | $        | 224    |       | $      | 1          |   | $      | -      |   | $ | 225 |   |

|                                                                 |   | Available               |   |                            |   |
|----------------------------------------------------------------------|--------|-------------------------|--------|---------------------------------|--------|
|                                                                 |   | for                Sale |   | Held                to Maturity |   |
|                                                                 |   | Fair Value         |   | Carrying Amount            |   | Fair Value |   |
| Type and                Maturity Grouping                       |   |                    |   |                            |   |   |   |   |   |   |
|                                                                 |   |                    |   |                            |   |   |   |   |   |   |
| Obligations                of U.S. government agencies               |   |                    |   |                            |   |   |   |   |   |   |
| After                1 year, but within 5 years                      |   | $                       | 3,371  |                            | $      | - |   | $ | - |   |
| After                5 years, but within 10 years                    |   |                    | 6,009  |                            |   | - |   |   | - |   |
| After                10 years                                        |   |                    | 17,998 |                            |   | - |   |   | - |   |
| Total                obligations of U.S. government agencies         |   | $                       | 27,378 |                            | $      | - |   | $ | - |   |
| Mortgage-backed                securities                            |   |                    |   |                            |   |   |   |   |   |   |
| After                10 years                                        |   | $                       | 26,061 |                            | $      | - |   | $ | - |   |
| Total                mortgage-backed securities                      |   | $                       | 26,061 |                            | $      | - |   | $ | - |   |
|                                                                 |   |                    |   |                            |   |   |   |   |   |   |
| Obligations                of state and political subdivisions       |   |                    |   |                            |   |   |   |   |   |   |
| Within                1 year                                         |   | $                       | 432    |                            | $      | 46 |   | $ | 46 |   |
| After                1 year, but within 5 years                      |   |                    | 2,183  |                            |   | 65 |   |   | 66 |   |
| After                5 years, but within 10 years                    |   |                    | 697    |                            |   | - |   |   | - |   |
| After                10 years                                        |   |                    | 1,476  |                            |   | - |   |   | - |   |
| Total                obligations of state and political subdivisions |   | $                       | 4,788  |                            | $      | 111 |   | $ | 112 |   |
|                                                                 |   |                    |   |                            |   |   |   |   |   |   |
| Other                securities                                      |   |                    |   |                            |   |   |   |   |   |   |
| Within                1 year                                         |   | $                       | 1,000  |                            | $      | - |   | $ | - |   |
| After                1 year, but within 5 years                      |   |                    | 3,000  |                            |   | - |   |   | - |   |
| After                5 years, but within 10 years                    |   |                    | 480    |                            |   | - |   |   | - |   |
| After                10 years                                        |   |                    | 1,984  |                            |   | - |   |   | - |   |
| Total                other securities                                |   | $                       | 6,464  |                            | $      | - |   | $ | - |   |

----

| The                following table presents the sales of available for sale                securities: |   | As                of June 30, |   |
|--------------------------------------------------------------------------------------------------------|--------|-------------------------------|--------|
|                                                                                                   |   | 2008                          |   | 2007 |   |
|                                                                                                   |   |                          |   |   |   |
| Proceeds                                                                                               |   | $                             | -      |   | $ | - |   |
| Gross                gains                                                                             |   |                          | -      |   |   | - |   |
| Gross                losses                                                                            |   |                          | -      |   |   | - |   |

| As                of June 30, 2008                             |   | Less                than 12 Months |   | 12                Months or More |   | Total  |   |
|----------------------------------------------------------------|--------|------------------------------------|--------|----------------------------------|--------|--------|--------|
|                                                           |   | Fair                               |   | Unrealized                       |   | Fair   |   | Unrealized |   | Fair |   | Unrealized |   |
| Description                of Securities                       |   | Value                              |   | Loss                             |   | Value  |   | Loss |   | Value |   | Loss |   |
| Securities                available for sale:                  |   |                               |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations                of U.S. government agencies         |   | $                                  | 14,897 |                             | $      | (101   | )      | $ | - |   | $ | - |   | $ | 14,897 |   | $ | (101 | ) |
| Mortgage-backed                securities                      |   |                               | 20,534 |                             |   | (362   | )      |   | - |   |   | - |   |   | 20,534 |   |   | (362 | ) |
| Obligations                of state and political subdivisions |   |                               | 531    |                             |   | (6     | )      |   | 339 |   |   | (11 | ) |   | 870 |   |   | (17 | ) |
| Other                securities                                |   |                               | -      |                             |   | -      |   |   | 3,984 |   |   | (1,919 | ) |   | 3,984 |   |   | (1,919 | ) |
| Total                temporarily impaired                      |   | $                                  | 35,962 |                             | $      | (469   | )      | $ | 4,323 |   | $ | (1,930 | ) | $ | 40,285 |   | $ | (2,399 | ) |

| As                of June 30, 2007                             |   | Less                than 12 Months |   | 12                Months or More |   | Total  |   |
|----------------------------------------------------------------|--------|------------------------------------|--------|----------------------------------|--------|--------|--------|
|                                                           |   | Fair                               |   | Unrealized                       |   | Fair   |   | Unrealized |   | Fair |   | Unrealized |   |
| Description                of Securities                       |   | Value                              |   | Loss                             |   | Value  |   | Loss |   | Value |   | Loss |   |
| Securities                available for sale:                  |   |                               |   |                             |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Obligations                of U.S. government agencies         |   | $                                  | 6,993  |                             | $      | (9     | )      | $ | 43,783 |   | $ | (392 | ) | $ | 50,776 |   | $ | (401 | ) |
| Obligations                of state and political subdivisions |   |                               | 1,709  |                             |   | (20    | )      |   | 2,796 |   |   | (44 | ) |   | 4,505 |   |   | (64 | ) |
| Other                securities                                |   |                               | 4,119  |                             |   | (27    | )      |   | - |   |   | - |   |   | 4,119 |   |   | (27 | ) |
| Total                temporarily impaired                      |   | $                                  | 12,821 |                             | $      | (56    | )      | $ | 46,579 |   | $ | (436 | ) | $ | 59,400 |   | $ | (492 | ) |

----

|   | - | Year                over year quarterly EPS growth of 5.26% and linked quarter EPS growth                of                8.11% |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------|

|   | - | Net                loan growth for the quarter of over $229,914 or 20.45% |
|--------|---|---------------------------------------------------------------------------|

|   | - | Net                income for the quarter and the year of $3,951 and $7,526 representing                a                7.48% increase over the second quarter of 2007, and a 6.68% increase                over                the six month period ending June 30,                2007 |
|--------|---|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | An                increase of 10.55% in net income from the first quarter of 2008 to                the                second quarter of 2008 |
|--------|---|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | “Well                capitalized” regulatory capital ratios with Tier 1 Leverage and Total Risk                Based Capital at June 30 of 7.71% and                10.36% |
|--------|---|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | - | Deposit                increase of 14.27% for the second                quarter |
|--------|---|---------------------------------------------------------------------------------|

|  | - | An                ROAA and ROAE of 1.15% and 18.17% for the six month period ended                June 30,                2008 as compared to 1.33% and 20.08% for the same period in 2007 |
|--|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

**Application      of Critical Accounting Policies**

*“Accounting      by Creditors for Impairment of a Loan”*
*“Accounting      by Creditors for Impairment of a Loan - Income Recognition and      Disclosures”*

----

*Accounting      for Certain Investments in Debt and Equity Securities*

|   | · | Securities                Held to Maturity:** **Bonds                and notes for which the Company has the positive intent and ability                to                hold to maturity are reported at cost, adjusted for amortization                of                premiums and accretion of discounts, which are recognized in interest                income using the interest method over the period to                maturity. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | · | Securities                Available for Sale**:**Bonds,                notes and certain equity securities are carried at estimated fair                value. |
|--------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                     |   |   June 30, 2008 |      |  December 31, 2007 |   |
|------------------------------------------|--------|-------------------------------------|-----------|-----------------------------------|--------|
| Real                estate loans         |   |                                |           |                              |   |   |   |   |   |   |   |   |   |
| Construction                             |   | $                                   | 352,072   |                              |   | 25.92 | % | $ | 296,397 |   |   | 30.05 | % |
| Residential                              |   |                                | 371,039   |                              |   | 27.32 |   |   | 211,609 |   |   | 21.45 |   |
| Commercial                               |   |                                | 579,419   |                              |   | 42.67 |   |   | 425,983 |   |   | 43.18 |   |
| Commercial                and Industrial |   |                                | 51,466    |                              |   | 3.79 |   |   | 48,124 |   |   | 4.88 |   |
| Consumer                                 |   |                                | 3,477     |                              |   | .26 |   |   | 3,670 |   |   | 0.37 |   |
| Other                loans          |   |                                | 605       |                              |   | .04 |   |   | 726 |   |   | 0.07 |   |
| Total                loans               |   |                                | 1,358,078 |                              |   | 100.00 | % |   | 986,509 |   |   | 100.00 | % |
| Less:                               |   |                                |      |                              |   |   |   |   |   |   |   |   |   |
| Deferred                fees             |   |                                | 4,131     |                              |   |   |   |   | 2,591 |   |   |   |   |
| Allowance                for loan losses |   |                                | 9,749     |                              |   |   |   |   | 8,250 |   |   |   |   |
| Loans,                net                |   | $                                   | 1,344,198 |                              |   |   |   | $ | 975,668 |   |   |   |   |

|                                                           |   | June 30, 2008  |   | December 31, 2007 |   |
|----------------------------------------------------------------|--------|-------------------------------|--------|-----------------------------|--------|
| Securities                available for sale                   |   |                          |   |                        |   |   |   |
| Obligations                of U.S. government agencies         |   | $                             | 27,378 |                        | $      | 32,394 |   |
| Mortgage-backed                securities                      |   |                          | 26,061 |                        |   | 7,619 |   |
| Obligations                of state and political subdivisions |   |                          | 4,788  |                        |   | 6,312 |   |
| Other                securities                                |   |                          | 6,464  |                        |   | 8,567 |   |
| Total                securities available for sale             |   | $                             | 64,691 |                        | $      | 54,892 |   |
|                                                           |   |                          |   |                        |   |   |   |
| Securities                held to maturity                     |   |                          |   |                        |   |   |   |
| Mortgage-backed                securities                      |   | $                             | -      |                        | $      | 8 |   |
| Obligations                of state and political subdivisions |   |                          | 111    |                        |   | 202 |   |
| Total                securities held to maturity               |   | $                             | 111    |                        | $      | 210 |   |
|                                                           |   |                          |   |                        |   |   |   |
| Total                investment securities                |   | $                             | 64,802 |                        | $      | 55,102 |   |

----

**%**

|                                         |   | June 30, 2008  |      | December 31, 2007 |   |
|----------------------------------------------|--------|-------------------------------|-----------|-----------------------------|--------|
| Demand                (non interest bearing) |   | $                             | 116,234   |                        | $      | 111,726 |   |
| Money                market                  |   |                          | 407,113   |                        |   | 389,891 |   |
| NOW                                          |   |                          | 29,231    |                        |   | 34,814 |   |
| Savings                                      |   |                          | 62,184    |                        |   | 54,267 |   |
| Time                                         |   |                          | 497,955   |                        |   | 400,103 |   |
| Total                deposits                |   | $                             | 1,112,717 |                        | $      | 990,801 |   |

----

** **

----

|                                                      |   | For                the Six Months Ended | For                the Six Months Ended |                         |
|-----------------------------------------------------------|--------|-----------------------------------------|-----------------------------------------|------------------------------|
|                                                      |   | June                30, 2008            |                                    | June                30, 2007 |   |
|                                                      |   | Average                                 |                                    |                         |   | Average |   | Average |   |   |   | Average |   |
|                                                      |   | Balance                                 |                                    |  Interest               |   |  Rate |   |                  Balance |   |  Interest |   |  Rate |   |
| ASSETS                                                    |   |                                    |                                    |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                      |   |                                    |                                    |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Interest-earning                assets:                   |   |                                    |                                    |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Investment                securities:                     |   |                                    |                                    |                         |   |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Taxable                                                   |   | $                                       | 48,918                                  |                         | $ | 1,227 |   |   | 5.02 | % | $ | 74,942 |   | $ | 1,809 |   |   | 4.83 | % |
| Nontaxable                                                |   |                                    | 5,859                                   |                         |   | 171 |   |   | 5.84 |   |   | 8,648 |   |   | 229 |   |   | 5.31 |   |
| Total                investment securities                |   |                                    | 54,777                                  |                         |   | 1,398 |   |   | 5.10 |   |   | 83,590 |   |   | 2,038 |   |   | 4.88 |   |
|                                                      |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |   |   |   |   |   |
| Total                loans                                |   |                                    | 1,153,028                               |                         |   | 39,965 |   |   | 6.94 |   |   | 887,042 |   |   | 36,093 |   |   | 8.16 |   |
| Federal                funds sold                         |   |                                    | 16,147                                  |                         |   | 165 |   |   | 2.02 |   |   | 19,416 |   |   | 509 |   |   | 5.21 |   |
| Other                interest-earning assets              |   |                                    | 9,022                                   |                         |   | 330 |   |   | 7.36 |   |   | 3,083 |   |   | 112 |   |   | 7.35 |   |
| Total                interest-earning assets              |   |                                    | 1,232,974                               |                         |   | 41,858 |   |   | 6.80 |   |   | 993,131 |   |   | 38,752 |   |   | 7.82 |   |
| Noninterest-earning                assets                 |   |                                    | 80,593                                  |                         |   |  |   |   |  |   |   | 89,931 |   |   |   |   |   |  |   |
|                                                      |   |                                    |                                         |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Total                assets                               |   | $                                       | 1,313,567                               |                         |   |  |   |   |  |   | $ | 1,083,062 |   |   |  |   |   |  |   |
|                                                      |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| LIABILITIES                AND STOCKHOLDERS' EQUITY       |   |                                         |                                    |                         |  |   |   |   |   |   |  |   |   |  |   |
|                                                      |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Liabilities                                               |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Interest-bearing                liabilities:              |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Savings                deposits (including NOW)           |   | $                                       | 90,134                                  |                         | $ | 594 |   |   | 1.33 | % | $ | 89,817 |   | $ | 552 |   |   | 1.23 | % |
| Money                market                               |   |                                    | 385,402                                 |                         |   | 5,525 |   |   | 2.88 |   |   | 331,275 |   |   | 6,906 |   |   | 4.20 |   |
| Time                deposits                              |   |                                    | 435,343                                 |                         |   | 9,195 |   |   | 4.25 |   |   | 405,260 |   |   | 9,539 |   |   | 4.75 |   |
| Total                interest-bearing deposits            |   |                                    | 910,879                                 |                         |   | 15,314 |   |   | 3.38 |   |   | 826,352 |   |   | 16,997 |   |   | 4.15 |   |
|                                                      |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Federal                Home Loan Bank borrowings          |   |                                    | 170,693                                 |                         |   | 2,327 |   |   | 2.74 |   |   | 38,480 |   |   | 793 |   |   | 4.15 |   |
| Subordinated                debt                          |   |                                    | 31,514                                  |                         |   | 1,038 |   |   | 6.51 |   |   | 18,000 |   |   | 688 |   |   | 7.60 |   |
| Total                interest-bearing liabilities         |   |                                    | 1,113,086                               |                         |   | 18,679 |   |   | 3.37 |   |   | 882,832 |   |   | 18,478 |   |   | 4.22 |   |
| Noninterest-bearing                liabilities:           |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Demand                deposits                            |   |                                    | 106,431                                 |                         |   |  |   |   |  |   |   | 102,771 |   |   |  |   |   |  |   |
| Other                liabilities                          |   |                                    | 8,311                                   |                         |   |  |   |   |  |   |   | 28,900 |   |   |  |   |   |  |   |
| Total                liabilities                          |   |                                    | 1,227,828                               |                         |   |  |   |   |  |   |   | 1,014,503 |   |   |  |   |   |  |   |
| Stockholders'                equity                       |   |                                    | 85,739                                  |                         |   |  |   |   |  |   |   | 68,559 |   |   |  |   |   |  |   |
|                                                      |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Total                liabilites & stockholders equity |   | $                                       | 1,313,567                               |                         |   |  |   |   |  |   | $ | 1,083,062 |   |   |  |   |   |  |   |
|                                                      |   |                                    |                                    |                         |   |  |   |   |  |   |   |   |   |   |  |   |   |  |   |
| Net                interest income/interest rate spread   |   |                                    |                                    |                         | $ | 23,179 |   |   | 3.43 | % |   |   |   | $ | 20,274 |   |   | 3.60 | % |
| Net                earning assets/net yield on average    |   |                                    |                                    |                         |   |   |   |   |  |   |   |   |   |   |   |   |   |  |   |
| interest-earning                assets                    |   | $                                       | 119,888                                 |                         |   |   |   |   | 3.76 | % | $ | 110,299 |   |   |   |   |   | 4.07 | % |

----

**Recent      Regulatory and Accounting Developments**

----

| Change                  In Interest Rates |   | As                of May 31, 2008      |   | As                of February 29, 2008 |   |
|-------------------------------------------|--------|----------------------------------------|--------|----------------------------------------|--------|
| In                Basis Points            |   | Potential                Change In Net |   | Potential                Change In Net |   |
| (Rate                Shock)               |   | Interest                Income         |   | Interest                Income         |   |
|                                      |   | $                Change                |   | %                Change                |   | $                Change |   | %                Change |   |
| Up                200 basis points        |   |                                   | 1,848  |                                   |   | 3.13 |   |   | 1,047 |   |   | 2.12 |   |
| Up                100 basis points        |   |                                   | 2,209  |                                   |   | 3.74 |   |   | (1,857 | ) |   | (3.75 | ) |
| Static                                    |   |                                   | -      |                                   |   | - |   |   | - |   |   | - |   |
| Down                100 basis points      |   |                                   | 986    |                                   |   | 1.67 |   |   | (8,304 | ) |   | (16.79 | ) |
| Down                200 basis points      |   |                                   | (596   | )                                      |   | (1.01 | ) |   | (4,951 | ) |   | (10.01 | ) |

----

| **Exhibit                No.** |   | **Description**                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|--------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 3.1                            |   | Articles                of Incorporation, as amended (incorporated herein by reference and                filed                as part of the Registrant’s Registration Statement on Form S-14                Registration Statement under the Securities Act of 1933, Reg #2-91511                filed on June 6, 1984, with amendments filed as part of the Registrant’s                Proxy Statements filed on February 22, 1996, February 19, 1998, February                23, 2001, March 16, 2004, and March 17, 2005, all of which are                incorporated herein by reference)                                                                                                                                                 |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 3.2                            |   | By-Laws,                  as amended and restated as of December 27, 2005 (filed as Exhibit                  3b to                  the Registrant’s Annual Report on Form 10-K for the fiscal year ended                  December 31, 2005 and incorporated herein by                  reference)                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.1                            |   | Articles                of Incorporation Page No. 2 (incorporated herein by reference and                filed as                part of the Registrant’s Registration Statement on Form S-14 Registration                Statement under the Securities Act of 1933, Reg #2-91511 filed June                6,                1984 and incorporated herein by reference)                                                                                                                                                                                                                                                                                                                                                                                |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.2                            |   | By-Laws                Page Nos. 2,11,12,13 and 14                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|                           |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| 4.3                            |   | Shareholder                  Protection Rights Agreement, dated as of September 23, 1997, between                  the                  Registrant and Mellon Investor Services LLC as Rights Agent, as                  amended                  (filed as Exhibit 1 to the Registrant’s Registration Statement on Form                  8-A, filed on October 8, 1997, with amendments filed as Exhibit                  1 to the                  Registrant’s Registration Statements on Form 8-A/A filed on January 26,                  1998, April 26, 2002, January 22, 2004, February 5, 2004, August                  24, 2004,                  and March 14, 2008, all of which are incorporated herein by                  reference) |

----

| 9      |   | No                voting trust agreements                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.1*  |   | Smithtown                Bancorp Supplemental Executive Retirement Agreement (filed as Exhibit                1 to                the Registrant’s Current Report on Form 8-K filed on February 2, 2007 and                incorporated herein by reference)                                                                                                                                                                        |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.2*  |   | Bank                of Smithtown Bankwide Annual Cash Incentive Plan (filed as Exhibit                2 to                the Registrant’s Current Report on Form 8-K filed on April 25, 2007 and                incorporated herein by reference)                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.3*  |   | Smithtown                Bancorp, Inc. 2007 Stock Compensation Plan (filed as Exhibit 3 to                the                Registrant’s Current Report on Form 8-K filed on April 25, 2007 and                incorporated herein by reference)                                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.4*  |   | Amended                and Restated Change in Control Agreement by and between the Registrant,                Bank of Smithtown and Bradley E. Rock (filed as Exhibit 1 to the                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.5*  |   | Amended                and Restated Change in Control Agreement by and between the Registrant,                Bank of Smithtown and Anita Florek (filed as Exhibit 2 to the Registrant’s                Current Report on Form 8-K filed on December 28, 2006 and incorporated                herein by reference)                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.6*  |   | Amended                and Restated Change in Control Agreement by and between the Registrant,                Bank of Smithtown and Robert J. Anrig (filed as Exhibit 3 to the                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                                                                                                               |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.7*  |   | Amended                and Restated Change in Control Agreement by and between the Registrant,                Bank of Smithtown and Thomas J. Stevens (filed as Exhibit 4 to the                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                                                                                                             |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.8*  |   | Amended                and Restated Change in Control Agreement by and between the Registrant,                Bank of Smithtown and John A. Romano (filed as Exhibit 5 to the                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                                                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.9*  |   | Amendment                to Bank of Smithtown Executive Incentive Retirement Agreement by                and                between the Registrant, Bank of Smithtown and Bradley E. Rock,                as amended (filed herewith, with amendment filed as Exhibit 7 to                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.10* |   | Amendment                to Bank of Smithtown Executive Incentive Retirement Agreement by                and                between the Registrant, Bank of Smithtown and Anita Florek,                as amended (filed herewith, with amendment filed as Exhibit 8 to                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.11* |   | Amendment                to Bank of Smithtown Executive Incentive Retirement Agreement by                and                between the Registrant, Bank of Smithtown and Robert J. Anrig,                as amended (filed herewith, with amendment filed as Exhibit 9 to                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.12* |   | Amendment                to Bank of Smithtown Executive Incentive Retirement Agreement by                and                between the Registrant, Bank of Smithtown and Thomas J.                Stevens,                as amended (filed herewith, with amendment filed as Exhibit 10 to                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference) |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.13* |   | Amendment                to Bank of Smithtown Executive Incentive Retirement Agreement by                and                between the Registrant, Bank of Smithtown and John A. Romano,                as amended (filed herewith, with amendment filed as Exhibit 11 to                Registrant’s Current Report on Form 8-K filed on December 28, 2006 and                incorporated herein by reference)                   |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.14* |   | Smithtown                Bancorp, Inc. Restricted Stock Plan, as amended (filed as Exhibit                1 to                Registrant’s Current Report on Form 8-K filed on April 26, 2005, with                amendment filed as Item 5.02 to Registrant’s Current Report on Form 8-K                filed December 4, 2006, all of which are incorporated herein by                reference)                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.15* |   | Bank                of Smithtown Directors’ Deferred Fee Plan (filed                herewith)                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.16* |   | Bank                of Smithtown Executive Deferred Compensation Plan (filed                herewith)                                                                                                                                                                                                                                                                                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| 10.17* |   | Bank                of Smithtown Amended and Restated Employee Stock Ownership Plan (filed                herewith)                                                                                                                                                                                                                                                                                                                       |

----

| 18                       |   | No                change in accounting principles                                                                                                                                                        |
|--------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                     |   |                                                                                                                                                                                                     |
| 23                       |   | Accountant’s                Consent (with respect to Registrant’s Annual Report on Form 10-K filed                March 13, 2008 for the fiscal year ended December 31,                2007) |
|                     |   |                                                                                                                                                                                                     |
| 24                       |   | None                                                                                                                                                                                                     |
|                     |   |                                                                                                                                                                                                     |
| 31.1                     |   | Certification                of Chief Executive Officer pursuant to Rule 13a-14(a) (filed                herewith)                                                                                       |
|                     |   |                                                                                                                                                                                                     |
| 31.2                     |   | Certification                of Chief Financial Officer pursuant to Rule 13a-14(a) (filed                herewith)                                                                                       |
|                     |   |                                                                                                                                                                                                     |
| 32.1                     |   | Certification                of Chief Executive Officer pursuant to Rule 13a-14(b) and 18 U.S.C.                Section 1350 (filed herewith)                                                            |
|                     |   |                                                                                                                                                                                                     |
| 32.2                     |   | Certification                of Chief Financial Officer pursuant to Rule 13a-14(b) and 18 U.S.C.                Section 1350 (filed herewith)                                                            |
|                     |   |                                                                                                                                                                                                     |
| 99                  |   | Independent                Auditor's Report filed as part of Form 10-K for the fiscal year ended                December 31, 2007                                                                   |

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

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