Somerset Hills Bancorp (SOMH) 8-K Somerset Hills Bancorp Reports

EXHIBIT 99.1

Stewart E. McClure, Jr.	Gerard Riker
President and Chief Executive Officer	EVP and Chief Financial Officer
908-630-5000	908-630-5018

PRESS RELEASE FOR IMMEDIATE RELEASE

SOMERSET HILLS BANCORP REPORTS

NET INCOME UP 10.5% FOR THE QUARTER

BERNARDSVILLE, NJ – July 23, 2007…Somerset Hills Bancorp (NASDAQ:SOMH) reported its results of operations for the second quarter of 2007.  For the quarter ended June 30, 2007, net income increased by $51,000 to $536,000, or $0.10 per diluted share compared to $0.11 per share during the second quarter of 2006. For the six months ended June 30, 2007, net income increased by $96,000 to $1.1 million, or $0.20 per diluted share compared to $0.22 per diluted share for the six months ended June 30, 2006. The Company’s return on equity declined to 5.60% for the six months ended June 30, 2007 from 7.32% for the six months ended June 30, 2006. The decline in earnings per diluted share and return on equity in the current period reflects the impact of the issuance of approximately 1.3 million shares in the fourth quarter of 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 quarter ended June 30, 2007 the Company’s net interest income increased by $171,000 to $2.6 million, as interest income increased by $657,000 and interest expense increased by $486,000.   For the six months ended June 30, 2007 the Company’s net interest income increased by $391,000 to $5.2 million, as interest income increased by $1.5 million and interest expense increased by $1.1 million.

As a result of these changes, the Company’s net interest margin declined from 4.28% for the six months ended June 30, 2006 to 3.91% for the six months ended June 30, 2007. 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 June 30, 2007, loans increased $19.4 million, or 10.9 percent to $196.8 million from $177.4 million when compared to June 30, 2006.  At June 30, 2007, deposits increased $34.1 million, or 15.6 percent to $253.1 million from $219.0 million when compared to June 30, 2006.  During the same period, core deposits increased 9.4 percent and account for 83.5 percent of total deposits at June 30, 2007.

At June 30, 2007, total assets were $291.5 million, up from $257.6 million at June 30, 2006, or 13.2 percent increase.

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Shareholders equity increased to $37.2 million at June 30, 2007 from $27.1 million at June 30, 2006, and tangible book value per share increased to $7.30 per share from $6.81 per share at June 30, 2006.

Stewart E. McClure, Jr., President and Chief Executive Officer said, “During this quarter we opened our sixth branch in Long Valley and I’m pleased to report it is already over $5 million in deposits.  Additionally, our fifth office in Madison, which we opened just this past September, is now over $25 million in deposits.  Despite the costs associated with opening these two offices and a very challenging operating environment, we showed solid growth in earnings, 10.5 percent, and look forward to continued growth in both our franchise and our earnings.”

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. The Company has announced plans to open an additional office in Stirling, 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.

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SOMERSET HILLS BANCORP

Selected Consolidated Financial Data

(Unaudited)

($ in thousands except per share data)	Six Months Ended
	June 30
	2007			2006
Income Statement Data:
Interest income	$	8,865		$	7,378
Interest expense		3,710			2,614
Net interest income		5,155			4,764
Provision for loan losses		0			126
Net interest income after prov. for loan losses		5,155			4,638
Non-interest income		1,272			1,184
Non-interest expense		4,901			4,337
Income before income taxes		1,526			1,485
Income tax expense		470			525
Net income	$	1,056		$	960
Balance Sheet Data:
Total assets	$	291,452		$	257,573
Loans, net		196,819			177,441
Loans held for sale		9,286			15,507
Allowance for loan losses		2,170			2,095
Investment securities held to maturity		13,420			10,205
Investment securities held for sale		36,726			29,522
Deposits		253,079			218,957
Borrowings		0			10,500
Shareholders' equity		37,152			27,053
Performance Ratios:
Return on average assets		0.73	%		0.80	%
Return on average equity		5.60	%		7.32	%
Net interest margin		3.91	%		4.28	%
Efficiency ratio		76.3	%		72.9	%
Asset Quality:
Nonaccrual loans		217			0
OREO property		0			0
Net charge-offs (recoveries)		0			2
Allowance for loan losses to total loans		1.09	%		1.17	%
Nonperforming loans to total loans		0.11	%		0
Per Share Data:
Earnings per share- Basic	$	0.21		$	0.26
Earnings per share- Diluted	$	0.20		$	0.22
Book value per share	$	7.55		$	7.12
Tangible book value	$	7.30		$	6.81

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Somerset Hills Bancorp

Balance Sheets
(in thousands, except for share data)

		June 30, 2007			December 31, 2006
		(unaudited)
ASSETS
Cash and due from banks		$	11,382		$	22,662
Federal funds sold			5,100			5,900
	Total cash and cash equivalents		16,482			28,562
Loans held for sale,net			9,286			5,003
Investment securities held to maturity(Approximate market value
of $13,283 in 2007 and $10,552 in 2006)			13,420			10,485
Investment securities available- for- sale			36,726			38,914
Loans receivable			199,140			192,571
Less: allowance for loan losses			(2,170	)		(2,170	)
Deferred fees			(151	)		(136	)
	Net loans receivable		196,819			190,265
Premises and equipment,net			6,545			6,295
Goodwill, Net			1,191			1,191
Bank owned life insurance			7,933			5,801
Accrued interest receivable			1,474			1,508
Deferred tax asset			1,033			805
Other assets			543			599
	TOTAL ASSETS	$	291,452		$	289,428
	LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Non-interest bearing deposits-demand		$	44,581		$	51,015
Interest bearing deposits
NOW, money market and savings			166,807			163,590
Certificates of deposit, under $100,000			21,692			20,617
Certificates of deposit, $100,000 and over			19,999			14,999
	Total deposits		253,079			250,221
Accrued interest payable			869			697
Taxes payable			62			34
Other liabilities			290			580
	Total liabilities		254,300			251,532
STOCKHOLDERS' EQUITY
Preferred stock-1,000,000 shares authorized:none issued			-			-
Common stock- authorized, 10,000,000 shares
of no par value;issued and outstanding,
4,923,584 in 2007 and 4,997,490 in 2006			37,614			36,916
Retained earnings			168			1,166
Accumulated other comprehensive loss			(630	)		(186	)
	Total Stockholders` Equity		37,152			37,896
	TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	291,452		$	289,428
	*Restated to reflect 5% stock dividends
	in 2007 and 2006

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Somerset Hills Bancorp
Statement of Operations

(in thousands, except for share data)

	Three months ended		Three months ended		Six months ended		Six months ended
	June 30, 2007		June 30, 2006		June 30, 2007		June 30, 2006
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Interest Income:
Loans, including fees	$	3,617	$	3,349	$	7,162	$	6,422
Investment securities		649		458		1,326		917
Federal funds sold		203		13		347		23
Interest bearing deposits with other banks		16		8		30		16
Total interest income		4,485		3,828		8,865		7,378
Interest Expense:
Deposits		1,874		1,344		3,708		2,473
Federal Home Loan Bank advances		-		44		2		140
Federal funds purchased		-		-		-		1
Total interest expense		1,874		1,388		3,710		2,614
Net Interest Income		2,611		2,440		5,155		4,764
Provision for loan losses		-		50		-		126
Net Interest Income After
Provision for
Loan Losses		2,611		2,390		5,155		4,638
Non-Interest Income:
Service fees on deposit accounts		90		75		169		150
Gains on sales of mortgage loans,net		423		354		838		819
Other Income		161		99		265		215
Total Non-Interest Income		674		528		1,272		1,184
Non-Interest Expenses:
Salaries and employee benefits		1,334		1,210		2,594		2,356
Occupancy expense		468		398		922		788
Advertising and business promotion		114		131		226		301
Stationery and supplies		69		45		135		104
Data processing		127		104		262		206
Other operating expense		406		290		762		582
Total Non-Interest Expense		2,518		2,178		4,901		4,337
Income before provision for income taxes		767		740		1,526		1,485
Provision for Income Taxes		231		255		470		525
Net Income	$	536	$	485	$	1,056	$	960
Per share data
Net Income -basic	$	0.11	$	0.13	$	0.21	$	0.26
Net Income -diluted	$	0.10	$	0.11	$	0.20	$	0.22
*Restated to reflect 5% stock dividends
in 2007 and 2006

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