Attached files
| file | filename |
|---|---|
| 8-K - SMITHTOWN BANCORP INC | v172782_8k.htm |
| EX-99.2 - SMITHTOWN BANCORP INC | v172782_ex99-2.htm |
| EX-99.3 - SMITHTOWN BANCORP INC | v172782_ex99-3.htm |
| EX-99.1 - SMITHTOWN BANCORP INC | v172782_ex99-1.htm |
EXHIBIT
4
Corporate
Headquarters
100 Motor
Parkway, Suite 160
Hauppauge,
NY 11788-5138
Direct
Dial: 631-360-9304
Direct
Fax: 631-360-9380
brock@bankofsmithtown.net
PRESS
RELEASE
Release
Date: February 1, 2010
Contact: Ms.
Judith Barber
Corporate
Secretary
SMITHTOWN
BANCORP ANNOUNCES
FOURTH
QUARTER RESULTS
Loss
Due to Increased
Provisions
for Loan Losses
Bank
Enters into Consent Agreement with FDIC
and
NY State Banking Department
Core
Deposits
Remain
Strong
Smithtown,
NY, February 1, 2010 - Smithtown Bancorp (NASDAQ: SMTB) today
announced a loss of $19.8 million for the fourth quarter of 2009, or ($1.34) per
fully diluted share. Operating earnings were more than offset by a
provision of $38 million to the loan loss reserve and a write-down of an other
real estate owned property of $7 million. The net loss for the year
was $11.8 million, or ($.87) per fully diluted share.
The
Company further announced that, on January 29, 2010, its subsidiary, Bank of
Smithtown, entered into a Consent Agreement with the Federal Deposit Insurance
Corporation (FDIC) and a parallel Consent Order with the New York State Banking
Department (NYSBD), hereinafter collectively referred to as the “Consent
Agreement.”
At
December 31, 2009, the Company’s Tier 1 Leverage ratio was 6.39%, the Tier 1
Risk-Based Capital ratio was 8.41% and the Total Risk-Based Capital ratio was
10.52%. The Bank’s Tier 1 Leverage ratio was 6.31%, the Tier 1
Risk-Based Capital ratio was 8.29% and the Total Risk-Based Capital ratio was
10.40%.
The
allowance for loan losses was $38.5 million at December 31, 2009, or 1.84% of
total loans. Asset quality deterioration became an increasing problem
in 2009 as the economic recession, especially commercial real estate
difficulties, hit our region later than other areas of the
country. Nonperforming loans ended the quarter at $130.2 million, or
6.23% of total loans. Loans 30-89 days past due decreased from $51.2
million at the end of the third quarter to $20.8 million, or .99% of total
loans, at the end of the fourth quarter. Net charge-offs for the
fourth quarter were $22.6 million and for the year were $23.8 million, or 1.22%
of average loans. More detailed information about the Bank’s
nonperforming loans and asset quality can be found on the investor page of the
Bank’s website at www.bankofsmithtown.com.
Loan
growth slowed to less than 1% during the fourth quarter or $16.6 million as we
focused our efforts on managing our existing portfolio. There were
continued efforts during the quarter to reduce land and construction loan
exposure resulting in a $44.8 million decrease in these types of loans, due to a
combination of pay-downs and charge-offs. At December 31, 2009, this
loan category constituted 17% of the total loan portfolio, well below the
September 30, 2007 high of 31%.
As a
result of a strategic effort to reduce single service certificate of deposit
customers in favor of building more relationship accounts (especially in our new
branches), deposits and core deposits were relatively flat during the fourth
quarter. For 2009, core deposits were up by $483.4 million, or by
45%. Total deposits increased for the year by $708.1 million, or by
52%. The Bank’s deposit growth was boosted by the development of ten
new branches during 2009. The new branches have collected $154
million in deposits, 71% in core deposits, which is consistent with the overall
Bank figure of 75%.
There are
currently four new branch projects under development in Manhasset, Hicksville,
Brentwood and Bayport. The Manhasset location is expected to open in
July of 2010 with the other locations expected to be completed between the
fourth quarter of 2010 and the first quarter of 2011. The success of
our expanding branch network continues to add to the franchise value of the
Company.
The net
interest margin for the fourth quarter decreased to 2.89%, and for the year to
2.99%. The net interest margin was negatively impacted during 2009 by
an unusually rapid inflow of deposits during the first quarter of the year and
reversals of accrued interest on nonperforming loans in the second half of the
year. The Company’s efficiency ratio moved below 50% during the
fourth quarter to 49.80%. The ratio for all of 2009 was
54.97%.
Regarding
the Consent Agreement with the FDIC and NYSBD, the Bank is required to improve
credit administration, loan underwriting and internal loan review processes and
maintain an adequate allowance for loan losses. Other required
actions include the implementation of plans to reduce classified assets,
decrease the Bank’s concentration in commercial real estate loans and increase
profitability. The Bank’s payment of dividends and growth in average
assets require prior approval of the FDIC and NYSBD. In addition, the
Bank is required to maintain no later than June 30, 2010, Tier 1 Capital at
least equal to 7% of Total Assets, Tier 1 Risk-Based Capital at least equal to 9
percent of Total Risk-Weighted Assets and Total Risk-Based Capital at least
equal to 11 percent of Total Risk-Weighted Assets.
The
Company’s Chairman & Chief Executive Officer, Brad Rock,
commented: “The board of directors and management are committed to
meeting the requirements of the Consent Agreement in a prompt
manner. Many of the loan administration items are already completed
or near completion. Senior level positions have been filled in credit
administration, loan review and workouts.”
“Notwithstanding
our fourth quarter loss and the Consent Agreement, we believe we have made the
decisions necessary to provide the Company with the foundation to return to
profitability. We expect net interest income resulting from prior
growth in core deposits, amortizing mortgage loans and investments, combined
with efficient operations, will provide solid earnings once loan loss provisions
are normalized. Although it is always difficult to predict the
future, especially in these difficult and uncertain economic times, we currently
expect our provisions and charge offs to trend lower as the year
progresses.”
Mr. Rock
continued: “The value of our branch network on Long Island, our core
deposit base and strong operating income before taxes and provisions are
attractive assets. Now that ‘blackout’ restrictions have been lifted
as a result of the issuance of this earnings release, members of the management
team and the entire board of directors will be purchasing shares in the open
market as we believe our shares are significantly undervalued. In
addition, although the Bank currently does not meet the capital ratios required
to be maintained under the Consent Agreement by June 30, 2010, based on our
existing plans and forecasts, we currently expect to be able to satisfy that
requirement without any need to raise additional capital.”
Mr. Rock
concluded: “Our agreement with the FDIC and NYSBD will not inhibit
our ability to provide exceptional service to our customers, a hallmark of Bank
of Smithtown’s success. Our branch operations and new branch
development will continue uninterrupted and our deposits continue to carry FDIC
insurance up to the maximum limits allowed. The Bank also has
insurance on the entire amount of all noninterest bearing checking accounts
through our participation in the FDIC’s Transaction Account Guarantee Program
through June 30, 2010. We expect Bank of Smithtown to emerge from
these challenging times ready to meet our long term strategic
goals.”
With
approximately $2.6 billion in assets and 29 branches, Bank of Smithtown is the
largest independent commercial bank headquartered on Long
Island. Founded in 1910, Bank of Smithtown is nearing its 100th
anniversary as a community bank. The stock of its parent holding
company, Smithtown Bancorp, is traded on the NASDAQ Global Select Market under
the symbol “SMTB”.
* * *
Forward-Looking
Statements
Certain
statements contained in this release that are not statements of historical fact
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 (the “Act”), notwithstanding that such
statements are not specifically identified as such. In addition,
certain statements may be contained in our future filings with the Securities
and Exchange Commission, in press releases, and in oral and written statements
made by us or with our approval that are not statements of historical fact and
constitute forward-looking statements within the meaning of the
Act. Examples of forward-looking statements include, but are not
limited to: (i) projections of revenues, expenses, income or loss, earnings or
loss per share, the payment or nonpayment of dividends, capital structure and
other financial items; (ii) statements of our plans, objectives and expectations
or those of our management or Board of Directors, including those relating to
products or services; (iii) statements of future economic performance; and (iv)
statements of assumptions underlying such statements. Words such as
“believes,” “anticipates,” “expects,” “intends,” “targeted,” “continue,”
“remain,” “will,” “should,” “may” and other similar expressions are intended to
identify forward-looking statements but are not the exclusive means of
identifying such statements.
Forward-looking
statements involve risks and uncertainties that may cause actual results to
differ materially from those in such statements. Factors that could
cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to: local, regional, national
and international economic conditions and the impact they may have on us and our
customers and our assessment of that impact, changes in the level of
non-performing assets and charge-offs; changes in estimates of future reserve
requirements based upon the periodic review thereof under relevant regulatory
and accounting requirements; the effects of and changes in trade and monetary
and fiscal policies and laws, including the interest rate policies of the
Federal Reserve Board; inflation, interest rate, securities market and monetary
fluctuations; political instability; acts of war or terrorism; the timely
development and acceptance of new products and services and perceived overall
value of these products and services by users; changes in consumer spending,
borrowings and savings habits; changes in the financial performance and/or
condition of our borrowers; technological changes; acquisitions and integration
of acquired businesses; the ability to increase market share and control
expenses; changes in the competitive environment among financial holding
companies and other financial service providers; the quality and composition of
our loan or investment portfolio; the effect of changes in laws and regulations
(including laws and regulations concerning taxes, banking, securities and
insurance) with which we and our subsidiaries must comply; the effect of changes
in accounting policies and practices, as may be adopted by the regulatory
agencies, as well as the Public Company Accounting Oversight Board, the
Financial Accounting Standards Board and other accounting standard setters;
changes in our organization, compensation and benefit plans; the costs and
effects of legal and regulatory developments, including the resolution of legal
proceedings or regulatory or other governmental inquiries and the results of
regulatory examinations or reviews; greater than expected costs or difficulties
related to the opening of new branch offices or the integration of new products
and lines of business, or both; and/or our success at managing the risk involved
in the foregoing items.
Forward-looking
statements speak only as of the date on which such statements are
made. We undertake no obligation to update any forward-looking
statement to reflect events or circumstances after the date on which such
statement is made, or to reflect the occurrence of unanticipated
events.
|
As
of
|
||||||||
|
December
31, 2009
|
December
31 2008
|
|||||||
|
ASSETS
|
||||||||
|
Cash
and cash equivalents
|
$ | 18,745 | $ | 17,130 | ||||
|
Interest-earning
deposits with banks
|
3,409 | 8,839 | ||||||
|
Term
placements
|
507 | 507 | ||||||
|
Securities
available for sale
|
397,274 | 57,698 | ||||||
|
Securities
held to maturity (fair value of $67 and $113,
respectively)
|
66 | 112 | ||||||
|
Loans
held for sale
|
16,450 | - | ||||||
|
Loans
|
2,090,896 | 1,688,700 | ||||||
|
Less:
allowance for loan losses
|
38,483 | 11,303 | ||||||
|
Loans,
net
|
2,052,413 | 1,677,397 | ||||||
|
Federal
Home Loan Bank stock, at cost
|
18,353 | 15,916 | ||||||
|
Real
estate owned, net
|
2,013 | 6,972 | ||||||
|
Premises
and equipment, net
|
47,708 | 32,994 | ||||||
|
Goodwill
|
3,923 | 3,923 | ||||||
|
Intangible
assets
|
617 | 956 | ||||||
|
Cash
value of company owned life insurance
|
24,874 | 19,654 | ||||||
|
Accrued
interest receivable and other assets
|
48,578 | 23,292 | ||||||
|
Total
assets
|
$ | 2,634,930 | $ | 1,865,390 | ||||
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
|
Liabilities
|
||||||||
|
Demand
deposits
|
152,306 | $ | 123,620 | |||||
|
Savings,
NOW and money market deposits
|
999,066 | 548,502 | ||||||
|
Time
deposits of $100,000 or more
|
508,632 | 283,933 | ||||||
|
Other
time deposits
|
415,024 | 410,882 | ||||||
|
Total
deposits
|
2,075,028 | 1,366,937 | ||||||
|
Other
borrowings
|
352,820 | 326,480 | ||||||
|
Subordinated
debt
|
56,351 | 38,836 | ||||||
|
Other
liabilities
|
14,976 | 13,519 | ||||||
|
Total
liabilities
|
2,499,175 | 1,745,772 | ||||||
|
Stockholders'
equity
|
||||||||
|
Preferred
stock, par value $.01 per share :
|
||||||||
|
Authorized:
1,000,000 and 100,000 shares at December 31, 2009 and
|
||||||||
|
2008,
respectively; no shares issued or outstanding
|
- | - | ||||||
|
Common
stock, par value $.01 per share:
|
||||||||
|
Authorized:
35,000,000 and 20,000,000 shares at December 31, 2009
|
||||||||
|
and
2008, respectively; 16,907,346 and 13,851,341 shares issued
at
|
||||||||
|
December
31, 2009 and 2008, respectively; 14,855,482 and
11,799,477
|
||||||||
|
shares
outstanding at December 31, 2009 and 2008, respectively
|
169 | 139 | ||||||
|
Additional
paid in capital
|
82,318 | 51,947 | ||||||
|
Retained
earnings
|
64,820 | 78,302 | ||||||
|
Less:
Treasury stock at cost, 2,051,864 shares
|
(10,062 | ) | (10,062 | ) | ||||
| 137,245 | 120,326 | |||||||
|
Accumulated
other comprehensive loss
|
(1,490 | ) | (708 | ) | ||||
|
Total
stockholders' equity
|
135,755 | 119,618 | ||||||
|
Total
liabilities and stockholders' equity
|
2,634,930 | 1,865,390 | ||||||