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

RESULTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 2007

BERNARDSVILLE, NJ – November 1, 2007…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

5

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 3^rd 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.

6

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
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

7

SOMERSET HILLS BANCORP

Balance Sheets
(in thousands, except for share data)

		September 30, 2007			December 31, 2006			September 30, 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 maket 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
		$	296,573		$	289,428		$	268,672
	Total assets
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,			37,011			36,916			28,226
2006 and 4,104,358 at September 30, 2006
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

8

SOMERSET HILLS BANCORP
Statements of Income
(Dollars in Thousands, Except Per Share Data)

	Three months ended		Three months ended		Nine months ended		Nine months ended
	Sept. 30, 2007		Sept. 30, 2006		Sept. 30, 2007		Sept. 30, 2006
	(unaudited)		(unaudited)		(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

9