Item 1.01 Entry Into a Material Definitive Agreement

On July 27, 2009, Smithtown Bancorp, Inc. (the "Company"), the parent company of Bank of Smithtown (the "Bank"), announced that the Company and the Bank have sold (the "Sale") to institutional accredited investors (the "Investors"), through substantially identical subscription agreements ("Subscription Agreements"), $14 million of the Bank's Subordinated Notes due July 1, 2019 ("Notes") and warrants to purchase shares of the Company's common stock. A copy of the Company's press release dated July 28, 2009, announcing the completion of the Sale is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Under the terms of the Sale, the Investors purchased a total of $14 million principal amount of the Bank's Notes. For every $1,000,000 of Notes purchased, Investors received warrants to purchase 25,000 shares of the Company's common stock with an exercise price of $11.50 per share and a seven-year term ("Warrants"). The offer and sale of the Warrants to the Investors was exempt from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), under Section 4(2) of, and Regulation D under, the Securities Act.

The Subscription Agreements contain provisions with respect to registration rights, indemnification and certain other matters. This summary of the Subscription Agreements does not purport to be a complete description of such agreements, and is qualified in its entirety by reference to the form of Subscription Agreement attached hereto as Exhibit 10.1.

Item 3.02 Unregistered Sales of Equity Securities

The information provided in Item 1.01 is hereby incorporated by reference to this Item 3.02.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Description

10.1 Form of Subscription Agreement

99.1 Press Release dated July 28, 2009

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