Shareholder Class Action Filed Against Smithtown Bancorp, Inc. By the Law Firm of Barroway Topaz Kessler Meltzer & Check, LLP

RADNOR, Pa., March 29 /PRNewswire/ -- The following statement was issued today by the law firm of Barroway Topaz Kessler Meltzer & Check, LLP:

Notice is hereby given that a class action lawsuit was filed in the United States District Court for the Eastern District of New York on behalf of purchasers of Smithtown Bancorp, Inc. (Nasdaq: SMTB) ("SBI" or the "Company") between March 13, 2008 and February 1, 2010 inclusive (the "Class Period"), including purchasers of the securities issued pursuant or traceable to the Company's public offering on or about May 14, 2009.

If you wish to discuss this action or have any questions concerning this notice or your rights or interests with respect to these matters, please contact Barroway Topaz Kessler Meltzer & Check, LLP (Darren J. Check, Esq. or David M. Promisloff, Esq.) toll free at 1-888-299-7706 or 1-610-667-7706, or via e-mail at [email protected].

The Complaint charges SBI and certain of its officers and directors with violations of the Securities Act of 1933 and Securities Exchange Act of 1934. SBI is the holding company of Bank of Smithtown, which bills itself as the largest independent commercial bank headquartered on Long Island.  More specifically, the Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them:  (1) that SBI had materially understated its loan loss reserves; (2) that SBI had failed to state certain of its assets at their fair value; (3) that the Company had delayed recognition of impaired assets; (4) that the Company's financial statements were not prepared in accordance with Generally Accepted Accounting Principles; (5) that the Company lacked adequate internal and financial controls; (6) that, as a result of the foregoing, the Company's financial statements were materially false and misleading at all relevant times; (7) that the Company, through its subsidiary, was engaged in unsafe and/or unsound banking practices; and (8) that as a result, the Company lacked any reasonable basis for positive statements regarding the Company, its growth and/or its prospects.

Beginning on November 2, 2009, the truth about the Company began to be revealed.  On that date, the Company announced that its 2009 third quarter earnings were reduced by a provision of $10 million to its loan loss reserves. Upon the release of this news, shares of the Company's stock declined $1.44 per share, or 13.91 percent, to close on November 2, 2009 at $8.91 per share, on heavy trading volume.

Then, on February 1, 2010, the Company announced dismal results for the fourth quarter of 2009.  This included a quarterly loss of $19.8 million (and net loss for the year of $11.8 million), due to a provision of $38 million to the Company's loan loss reserves and a write-down of $7 million to another real estate owned property.  Additionally, the Company shocked investors when it announced that its subsidiary, Bank of Smithtown, had entered into a Consent Agreement with the Federal Deposit Insurance Corporation and a parallel Consent Order with the New York State Banking Department (the Consent Agreement and Consent Order are collectively referred to as the "Consent Agreement").  Under the Consent Agreement, the bank was required to improve credit administration, loan underwriting, internal loan review process, and maintain an adequate allowance for loan losses.  Further, the bank was required to implement plans to reduce classified assets, decrease the bank's concentration in commercial real estate loans, and increase its profitability. On this news, SBI's stock fell $0.81 per share, or 14.97 percent, to close on February 1, 2010 at $4.60 per share, on heavy trading volume.  SBI's stock has not recovered by an appreciable extent since that time.

Plaintiff seeks to recover damages on behalf of class members and is represented by the law firm of Barroway Topaz Kessler Meltzer & Check which prosecutes class actions in both state and federal courts throughout the country.  Barroway Topaz Kessler Meltzer & Check is a driving force behind corporate governance reform, and has recovered billions of dollars on behalf of institutional and individual investors from the United States and around the world.

For more information about Barroway Topaz Kessler Meltzer & Check, or for additional information about participating in this action, please visit www.btkmc.com.

If you are a member of the class described above, you may, not later than April 26, 2010, move the Court to serve as lead plaintiff of the class, if you so choose.  A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation.  In order to be appointed lead plaintiff, the Court must determine that the class member's claim is typical of the claims of other class members, and that the class member will adequately represent the class.  Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.  Any member of the purported class may move the court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member.  

SOURCE Barroway Topaz Kessler Meltzer & Check, LLP