BERNARDSVILLE, N.J., Feb. 1, 2008 (PRIME NEWSWIRE) -- Somerset Hills Bancorp (Nasdaq:SOMH) reported its results of operations for the year ended December 31, 2007. For the year, the Company reported net income of $382,000. The results for 2007 were impacted by several factors, including the slowdown in the housing and residential mortgage markets. As a result of these and other factors, the Company recognized a non-cash charge of approximately $1.2 million to write off the goodwill associated with the 2000 acquisition of Sullivan Financial Services, its mortgage banking unit, in the fourth quarter of 2007. In addition, in the fourth quarter, the Company recognized a $986,000 addition to its allowance for loan losses. The additional provision primarily reflects the impact of a $2.8 million credit relationship which was previously disclosed as a potentially troubled credit and which was placed on non-accrual status during the fourth quarter.
As a result of these factors, the Company's net income declined by 82.6% from the $2,198,000 recognized in 2006. The Company's basic earnings per share declined to $0.08 in 2007 from $0.56 in 2006, and diluted earnings per share declined to $0.07 in 2007 from $0.53 in 2006.
In the fourth quarter of 2007, after the write down of the goodwill and the additional provision discussed above, the Company recognized a loss of $1.2 million, or $(0.24) per basic and diluted share, compared to earnings of $665,000, or $0.15 per basic share and $0.14 per diluted share in the fourth quarter of 2006.
The year over year earnings per share numbers also reflect the impact of the issuance of approximately 1.3 million common shares in 2006, and the addition of approximately $10.1 million in equity, upon the exercise of the company's outstanding common stock purchase warrants which expired in November 2006.
At December 31, 2007, loans increased $14.8 million, or 7.8% to $205.3 million from $190.3 million when compared to December 31, 2006. At December 31, 2007, deposits decreased $5.5 million, or 2.2% to $244.7 million from $250.2 million when compared to December 31, 2006. During the same period core deposits, as a percentage of total deposits, increased 1.4% to 87.2% from 85.8% at December 31, 2006.
At December 31, 2007, the Company's shareholders equity totaled $36.6 million compared to $37.9 million at December 31, 2006. The decline reflects the impact of the Company's stock repurchase plan. During 2007, the Company repurchased approximately 144,000 shares of its common stock at an average price of $12.58 per share. Both the Company and the Bank are "well capitalized" under all regulatory capital requirements applicable to them.
During the fourth quarter of 2007, the Company's net interest margin increased 29 basis points to 4.31% from 4.02% in the fourth quarter of 2006. The increase reflects both the impact of promotional rates offered in the fourth quarter of 2006, and the more general impact of declining market rates of interest. The Company's net interest margin declined 13 basis points from 4.15% for the year ended December 31, 2006 to 4.02% for the year ended December 31, 2007.
At December 31, 2007, the Company's non-accrual loans increased to $3.0 million from $282 thousand at December 31, 2006, and the Company's ratio of non-performing loans to total loans increased to 1.46% from 0.15%. The increase in non-accrual loans primarily reflects the impact of a single credit relationship being placed on non-accrual status in the fourth quarter. This relationship had previously been disclosed as a potentially troubled credit in the Company's September 30, 2007 quarterly report.
Stewart E. McClure, Jr., President and Chief Executive Officer said, "The challenges of 2007 related to the sub-prime and residential housing crisis are well known and the effects are far reaching, even to those not directly involved. It appears that much of these effects will last into 2008 as well, making it challenging to continue our growth at the same pace. We feel grateful to face these challenges with an extremely strong capital base, tremendous balance sheet mix, six well located branches, and an excellent reputation with customers and shareholders alike. During this difficult economic environment we will focus on cross-selling and maximizing the opportunities within the investment in growth we've already made. We will also take a close look at expenses, with an eye toward maximizing the bottom line as we get to a friendlier operating environment, hopefully later in 2008."
The Board of Directors has also declared a quarterly cash dividend of $0.04 per share, payable February 29 to shareholders of record as of February 15, 2008.
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.
SOMERSET HILLS BANCORP
Statement of Operations
(in thousands, except per share data)
Three months ended Twelve months ended
Dec. 31, Dec. 31,
2007 2006 2007 2006
------------------- -------------------
(unaudited) (unaudited)
INTEREST INCOME
Loans, including fees $ 3,702 $ 3,577 $14,680 $13,601
Federal funds sold 82 108 625 158
Investment securities 560 579 2,515 1,985
Cash and due from
banks 8 14 47 38
--------- --------- --------- ---------
Total interest
income 4,352 4,278 17,867 15,782
INTEREST EXPENSE
Deposits 1,493 1,733 7,125 5,782
Federal Funds
Purchased -- -- -- 1
Federal Home Loan
Bank advances 15 18 17 271
--------- --------- --------- ---------
Total interest
expense 1,508 1,751 7,142 6,054
--------- --------- --------- ---------
Net Interest Income 2,844 2,527 10,725 9,728
PROVISION FOR LOAN
LOSSES 986 -- 1,031 201
--------- --------- --------- ---------
Net interest income
after provision for
loan losses 1,858 2,527 9,694 9,527
--------- --------- --------- ---------
NON-INTEREST INCOME
Service fees on
deposit accounts 74 66 329 283
Gains on sales of
mortgage loans, net 305 607 1,473 2,083
Gains on sales of
investment
securities, net 3 -- 3 --
Other income 166 171 581 503
--------- --------- --------- ---------
Total Non-Interest
Income 548 844 2,386 2,869
--------- --------- --------- ---------
NON-INTEREST EXPENSE
Salaries and employee
benefits 1,215 1,233 5,163 4,879
Occupancy expense 446 425 1,864 1,603
Advertising &
business promotions 57 115 365 552
Printing stationery
and supplies 72 98 276 261
Data processing 133 117 521 435
Goodwill Impairment 1,191 -- 1,191 --
Other operating
expense 597 363 1,779 1,292
--------- --------- --------- ---------
Total Non-Interest
Expense 3,711 2,351 11,159 9,022
--------- --------- --------- ---------
(Loss) Income before
provision for taxes (1,305) 1,020 921 3,374
PROVISION FOR
INCOME TAX (127) 355 539 1,176
--------- --------- --------- ---------
Net (loss) income $ (1,178) $ 665 $ 382 $ 2,198
========= ========= ========= =========
Per share data
Net (loss) income -
basic $ (0.24) $ 0.15 $ 0.08 $ 0.56
========= ========= ========= =========
Net (loss) income -
diluted $ (0.24) $ 0.14 $ 0.07 $ 0.48
========= ========= ========= =========
Per share data reflects a 5% stock dividend
which was effective May 31, 2007
SOMERSET HILLS BANCORP
Balance Sheet
(in thousands, except for share data)
December 31, December 31,
2007 2006
------------ ------------
(Unaudited) (Unaudited)
ASSETS
Cash and due from banks $ 12,009 $ 21,312
Interest bearing deposits 60 1,350
Federal funds sold 5,800 5,900
------------ ------------
Total cash and cash
equivalents 17,869 28,562
Loans held for sale,net 3,063 5,003
Investment securities held
to maturity (Market value
$ 13,531 in 2007 and
$ 10,552 in 2006) 13,646 10,485
Investment securities
available-for-sale 27,954 38,914
Loans receivable 208,376 192,571
less allowance for loan
losses (3,201) (2,170)
deferred fees (123) (136)
------------ ------------
Net loans receivable 205,052 190,265
Premises and equipment, net 6,343 6,295
Goodwill, net -- 1,191
Bank owned life insurance 8,111 5,801
Accrued interest receivable 1,435 1,508
Deferred tax asset 723 805
Other assets 1,274 599
------------ ------------
Total assets $285,470 $289,428
============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Deposits
Non-interest bearing
deposits-demand $ 53,783 $ 51,015
Interest bearing
deposits-NOW,
money market and savings 159,462 163,590
Certificates of deposit,
under $100,000 19,170 20,617
Certificates of deposit,
$100,000 and over 12,258 14,999
------------ ------------
Total deposits 244,673 250,221
------------ ------------
Federal Home Loan Bank
advances 3,000 --
Accrued interest payable 523 697
Taxes Payable -- 34
Other liabilities 653 580
------------ ------------
Total liabilities 248,849 251,532
------------ ------------
Commitments and contingencies
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, 4,930,082
shares in 2007 and 4,997,490
in 2006 37,513 36,916
(Accumulated deficit)
retained earnings (896) 1,166
Accumulated other
comprehensive income (loss) 4 (186)
------------ ------------
Total stockholders' equity 36,621 37,896
------------ ------------
Total liabilities and
stockholders' equity $285,470 $289,428
============ ============
*Restated to reflect 5% stock dividend
SOMERSET HILLS BANCORP
Selected Consolidated Financial Data
(Unaudited)
($ in thousands except
per share data) Twelve Months Ended
December 31
2007 2006
-------- --------
Income Statement Data:
Interest income $17,867 $15,782
Interest expense 7,142 6,054
-------- --------
Net interest income 10,725 9,728
Provision for loan losses 1,031 201
-------- --------
Net interest income after
prov. for loan losses 9,694 9,527
Non-interest income 2,386 2,869
Non-interest expense 11,159 9,022
-------- --------
Income before income taxes 921 3,374
Income tax expense 539 1,176
-------- --------
Net income $382 $2,198
======== ========
Balance Sheet Data:
Total assets $285,470 $289,428
Loans, net 205,052 190,265
Loans held for sale 3,063 5,003
Allowance for loan losses 3,201 2,170
Investment securities
held to maturity 13,646 10,485
Investment securities held
for sale 27,954 38,914
Deposits 244,673 250,221
Borrowings 3,000 0
Shareholders' equity 36,621 37,896
Performance Ratios:
Return on average assets 0.13% 0.86%
Return on average equity 1.01% 7.62%
Net interest margin 4.02% 4.15%
Efficiency ratio 85.11% 71.62%
Asset Quality:
Nonaccrual loans 3,036 282
OREO property 0 0
Net charge-offs (recoveries) 0 (2)
Allowance for loan losses
to total loans 1.54% 1.13%
Nonperforming loans to
total loans 1.46% 0.15%
Per Share Data:
Earnings per share- Basic $0.08 $0.56
Earnings per share- Diluted $0.07 $0.48
Book value per share $7.43 $7.58
Tangible book value $7.43 $7.34