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Smithtown bank takeover nears

Bank of Smithtown

Bank of Smithtown Photo Credit: Audrey C. Tiernan

The Bank of Smithtown is one step closer toward ceasing to exist, after the federal Office of Thrift Supervision approved the merger of its holding company, Smithtown Bancorp, with People's United Financial Inc. of Connecticut.

The final step in People's United's takeover is a special meeting Friday of Smithtown shareholders, where they are being asked to approve the $60 million deal.

Smithtown put itself up for sale this year in the midst of a dizzying collapse. In the space of a year, it had gone from one of the most respected community banks in the nation to losing $63.5 million so far this year as bad loans ballooned to $280 million -- 14.6 percent of total loans, or about five times as high as many similar banks.

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