BERNARDSVILLE, N.J., Nov. 1, 2007 (PRIME NEWSWIRE) -- Somerset Hills Bancorp (Nasdaq:SOMH) reported its results of operations for the three and nine month periods ended September 30, 2007. For the nine months ended September 30, 2007, net income increased by $27,000 to $1.6 million or $0.30 per diluted share compared to $1.5 million or $0.35 per diluted share for the nine ended September 30, 2006. For the quarter ended September 30, 2007, net income decreased by $69,000 to $504,000, or $0.10 per diluted share compared to $0.13 per diluted share for the third quarter of 2006. The Company's return on average equity declined to 5.53% for the nine months ended September 30, 2007 from 7.56% for the nine months ended September 30, 2006. The decline in earnings per diluted share and return on average equity in the current period and year to date partially reflects the impact of the issuance of approximately 1.3 million shares in 2006, and the addition of approximately $10.3 million in equity, upon the exercise of the Company's outstanding common stock purchase warrants which expired in November, 2006.
For the nine months ended September 30, 2007, the Company's net interest income increased by $680,000 to $7.9 million, as interest income increased by $2.0 million and interest expense increased by $1.3 million. For the quarter ended September 30, 2007, the Company's net interest income increased by $289,000 to $2.7 million, as interest income increased by $524,000 and interest expense increased by $235,000.
As a result of these changes, the Company's net interest margin declined from 4.20% for the nine months ended September 30, 2006 to 3.92% for the nine months ended September 30, 2007. Our net interest margin for the quarter ended September 30, 2007 was 3.95%, compared to 4.05% for the quarter ended September 30, 2006. The decline reflects the impact of certain promotional rates offered on deposit products at the Bank's two newest offices, Madison and Long Valley, New Jersey, as well as the overall competitive marketplace for deposits in the Company's trade area.
At September 30, 2007, loans increased $23.0 million, or 12.9% to $201.4 million from $178.4 million when compared to September 30, 2006. At September 30, 2007, deposits increased $21.2 million, or 9.0% to $258.0 million from $236.8 million when compared to September 30, 2006. During the same period, core deposits increased 10.2% and account for 85.4% of total deposits at September 30, 2007.
At September 30, 2007, total assets were $296.6 million, up from $268.7 million at September 30, 2006, a 10.4% increase.
Shareholders' equity increased to $37.2 million at September 30, 2007 from $30.2 million at September 30, 2006, and tangible book value per share decreased to $7.39 per share from $7.42 per share at September 30, 2006.
Stewart E. McClure, Jr, President and Chief Executive Officer said, "During the past twelve months, we have had a number of successes in the face of an extremely difficult operating environment. We completed the conversion of our warrants into $10.3 million of additional equity which gives us an extremely strong capital base. Assets, loans and core deposits have continued to grow at rates of 10.4%, 12.9% and 10.2% respectively. We also increased the size of our franchise by 50% when we added two new branches, twelve months ago in Madison and four months ago in Long Valley. However, in addition to the costs associated with our branch expansion, we are also not immune from today's challenges in the residential housing and mortgage markets. As a result of fewer housing starts and slower sales there are fewer opportunities for construction lending and bridge loans. This slow down has occurred throughout 2007, but most particularly in the third quarter. These opportunities had historically accounted for part of our loan growth. During the 3rd quarter, we also saw our residential mortgage volume and profits fall, coincident with the rest of the industry. For the 3rd quarter of 2006, we reported a mortgage company profit of $46,000 versus a loss of $27,000 in the 3rd quarter of 2007. We will continue to reduce expenses while we wait for market conditions to improve as we still believe in the long-term profitability of this core product."
Somerset Hills Bancorp is a bank holding company for Somerset Hills Bank, a full service commercial bank with offices in Bernardsville, Long Valley, Madison, Mendham, Morristown, and Summit, New Jersey. Somerset Hills Bank focuses its lending activities on small to medium sized businesses, high net worth individuals, professional practices, and consumer and retail customers. The Bank operates a licensed mortgage company subsidiary, Sullivan Financial Services, Inc. and also operates Somerset Hills Wealth Management Services, LLC, a wholly owned subsidiary licensed to provide financial services, including financial planning, insurance (life, health, property and casualty), mutual funds and annuities for individuals and commercial accounts, and Somerset Hills Title Group, LLC, which, with its partner, Property Title Group, provides title services in connection with the closing of real estate transactions. The common stock of the company is traded on NASDAQ Global Market under the symbol SOMH. You can visit our website at www.somersethillsbank.com.
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Those statements are subject to known and unknown risk, uncertainties and other factors that could cause the actual results to differ materially from those contemplated by the statements. We based the forward-looking statements on various factors and using numerous assumptions. Important factors that may cause actual results to differ from those contemplated by forward-looking statements include, for example, the rate of prepayment by our loan customers, the effect of changing economic conditions and, in particular, changes in interest rates, changes in government regulations, tax rates and similar matters, and other risks which may be described in our future filings with SEC.
Somerset Hills Bancorp
Selected Consolidated Financial data
(Unaudited)
($ in thousands except per share data)
Nine Months Ended
September 30
2007 2006
-------- --------
Income Statement Data:
Interest income $ 13,515 $ 11,504
Interest expense 5,634 4,303
-------- --------
Net interest income 7,881 7,201
Provision for loan losses 45 201
-------- --------
Net interest income after prov.
for loan losses 7,836 7,000
Non-interest income 1,838 2,025
Non-interest expense 7,448 6,671
-------- --------
Income before income taxes 2,226 2,354
Income tax expense 666 821
-------- --------
Net income $ 1,560 $ 1,533
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Balance Sheet Data:
Total assets $296,573 $268,672
Loans, net 201,421 178,444
Loans held for sale 5,916 6,077
Allowance for loan losses 2,215 2,170
Investment securities held to maturity 13,422 10,694
Investment securities held for sale 34,034 32,903
Deposits 258,042 236,811
Borrowings 0 0
Shareholders' equity 37,210 30,214
Performance Ratios:
Return on average assets 0.71% 0.82%
Return on average equity 5.53% 7.56%
Net interest margin 3.92% 4.20%
Efficiency ratio 76.6% 72.3%
Asset Quality:
Nonaccrual loans 217 236
OREO property 0 0
Net charge-offs (recoveries) 0 2
Allowance for loan losses to total loans 1.09% 1.20%
Nonperforming loans to total loans 0.11% 0.13%
Per Share Data:
Earnings per share- Basic $ 0.31 $ 0.41
Earnings per share- Diluted $ 0.30 $ 0.35
Book value per share $ 7.64 $ 7.73
Tangible book value $ 7.39 $ 7.42
SOMERSET HILLS BANCORP
Balance Sheets
(in thousands, except for share data)
Sept. 30, Dec. 31, Sept. 30,
2007 2006 2006
--------- --------- ---------
(unaudited) (unaudited)
ASSETS
Cash and due from banks $ 8,982 $ 22,662 $ 10,200
Federal funds sold 14,200 5,900 14,800
--------- --------- ---------
Total cash and cash equivalents 23,182 28,562 25,000
Loans held for sale,net 5,916 5,003 6,077
Investment securities held to
maturity (Approximate market value
of $13,344 in September 2007,
$10,552 in December 2006 13,422 10,485 10,694
and $10,794 in September 2006
Investments available for sale 34,034 38,914 32,903
Loans receivable 203,778 192,571 180,749
Less allowance for loan losses (2,215) (2,170) (2,170)
Deferred fees (142) (136) (135)
--------- --------- ---------
Net loans receivable 201,421 190,265 178,444
Premises and equipment,net 6,474 6,295 6,230
Goodwill, net 1,191 1,191 1,191
Bank owned life insurance 8,023 5,801 5,679
Accrued interest receivable 1,557 1,508 1,387
Deferred tax asset 857 805 760
Other assets 496 599 307
--------- --------- ---------
Total assets $ 296,573 $ 289,428 $ 268,672
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing
deposits-demand $ 46,928 $ 51,015 $ 42,533
Interest bearing deposits
NOW, M/M and savings 173,506 163,590 157,537
Certificates of deposit,
under $100,000 21,530 20,617 18,380
Certificates of deposit,
$100,000 and over 16,078 14,999 18,361
--------- --------- ---------
Total deposits 258,042 250,221 236,811
--------- --------- ---------
Accrued interest payable 749 697 648
Taxes payable 32 34 70
Other liabilities 540 580 929
--------- --------- ---------
Total liabilities 259,363 251,532 238,458
--------- --------- ---------
STOCKHOLDERS' EQUITY
Preferred stock - 1,000,000 shares
authorized, none issued -- -- --
Common stock- authorized 9,000,000
shares of no par value; issued and
outstanding, 4,873,138 shares at
September 30, 2007, 4,997,490 at
December 31, 2006 and 4,104,358 at
September 30, 2006* 37,011 36,916 28,226
Retained earnings 477 1,166 2,358
Accumulated other comprehensive
loss (278) (186) (370)
--------- --------- ---------
Total stockholders` equity 37,210 37,896 30,214
--------- --------- ---------
Total liabilities and
stockholders' equity $ 296,573 $ 289,428 $ 268,672
========= ========= =========
* Restated to reflect 5% Stock Dividend
SOMERSET HILLS BANCORP
Statements of Income
(Dollars In Thousands, Except Per Share Data)
Three months ended Nine months ended
Sept. 30, Sept. 30,
----------------- -----------------
2007 2006 2007 2006
------- ------- ------- -------
(unaudited) (unaudited)
Interest Income:
Loans, including fees $ 3,816 $ 3,602 $10,978 $10,024
Investment securities 628 489 1,955 1,406
Federal funds sold 196 27 543 50
Interest bearing deposits
with other banks 10 8 39 24
------- ------- ------- -------
Total interest income 4,650 4,126 13,515 11,504
Interest Expense:
Deposits 1,924 1,576 5,632 4,049
Federal funds purchased -- -- -- 1
Federal Home Loan Bank
advances -- 113 2 253
------- ------- ------- -------
Total interest expense 1,924 1,689 5,634 4,303
Net interest income 2,726 2,437 7,881 7,201
Provision for loan losses 45 75 45 201
------- ------- ------- -------
Net interest income after
provision for loan losses 2,681 2,362 7,836 7,000
------- ------- ------- -------
Non-Interest Income:
Service fees on deposit
accounts 85 67 255 217
Gains on sales of mortgage
loans, net 330 657 1,168 1,476
Other income 151 117 415 332
------- ------- ------- -------
Total Non-Interest Income 566 841 1,838 2,025
------- ------- ------- -------
Non-Interest Expense
Salaries and employee benefits 1,354 1,290 3,948 3,646
Occupancy expense 496 390 1,418 1,178
Advertising & business
promotion 81 136 308 437
Stationery and supplies 68 59 204 163
Data processing 127 112 388 318
Other operating expense 421 347 1,182 929
------- ------- ------- -------
Total Non-Interest Expense 2,547 2,334 7,448 6,671
------- ------- ------- -------
Income before provision
for taxes 700 869 2,226 2,354
Provision for Income Taxes 196 296 666 821
------- ------- ------- -------
Net income $ 504 $ 573 $ 1,560 $ 1,533
======= ======= ======= =======
Per share data*
Net income basic $ 0.10 $ 0.15 $ 0.31 $ 0.41
======= ======= ======= =======
Net income diluted $ 0.10 $ 0.13 $ 0.30 $ 0.35
======= ======= ======= =======
* Restated to reflect 5% Stock Dividend