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

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 EARNINGS

AND A QUARTERLY CASH DIVIDEND OF $0.05 PER SHARE

BERNARDSVILLE, NJ – July 24, 2008…Somerset Hills Bancorp (NASDAQ:SOMH) reported net income for the quarter and six months ended June 30, 2008.  For the quarter ended June 30, 2008, net income was $367,000, or $0.07 per diluted share compared to $0.10 per diluted share during the second quarter 2007.  For the six months ended June 30, 2008, net income was $811,000, or $0.15 per diluted share compared to $0.19 per diluted share for the six months ending June 30, 2007.

The Company’s net interest income increased in both the quarterly and six month periods, to $2.7 million in the current quarter and $5.3 million for the first six months of 2008. These increases were offset by declines in non-interest income and increased non-interest expense and an increase in the provision for loan losses. The increase in the provision reflects the increase in our non performing assets.

At June 30, 2008, loans increased $10.0 million, or 5.0% to $209.1 million from $199.1 million when compared to June 30, 2007.  At June 30, 2008, deposits decreased $18.4 million, or 7.3% to $234.7 million from $253.1 when compared to June 30, 2007. The decrease in deposits is primarily related to the payout of funds held in accounts at the Bank pending consummation of certain customer transactions that closed during the second quarter and the run off of time deposits originated at promotional rates in connection with the opening of the Bank’s Long Valley and Madison branches. The Bank also increased its borrowed funds to $11 million at June 30, 2008, from no borrowed funds at June 30, 2007. The increase reflects a strategic asset liability decision made during the fourth quarter of 2007 and the first quarter of 2008 to utilize borrowings as a cost efficient source of funding. During the same period the net interest margin increased from 3.91% to 4.19%. Core deposits represent 86.2% of total deposits at June 30, 2008.

At June 30, 2008, total assets were $283.5 million, compared to $291.5 million at June 30, 2007. The decline in assets reflects the decline in deposits described above.

Stewart E. McClure, Jr., President and Chief Executive Officer said “During the first half of 2008, the difficult economic conditions continue and this has made for an extremely challenging operating environment for banks.  Loan demand remains weak and competition for deposits is fierce.  As I mentioned in our first quarter release, this is a time to be cautious, with our focus on credit quality, improving technology and

operations and taking a close look at expenses. With that in mind I am pleased that non-performers and OREO were reduced during the second quarter, to $2.4 million from $2.8 million, and our non interest expenses for the quarter grew only 0.8% over the same period last year. Our net interest margin of 4.19% and core deposit ratio of 86% are gratifying in this market.  We also introduced our new remote deposit product named EZ SCAN and we’re excited about the opportunities this provides to enhance existing relationships and attract new ones. Although no one can predict with certainty when the economy will turn around, we are grateful to face these challenges in a relatively strong geographic area and with a great franchise, from a profitable operation, and with a significant amount of capital.”

Somerset Hills Bancorp also declared a cash dividend of $0.05 per share payable August 29, 2008 to shareholders of record as of August 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.

($ in thousands except per share data)	Six Months Ended
	June 30
	2008			2007
Income Statement Data:
Interest income	$	7,632		$	8,865
Interest expense		2,294			3,710
Net interest income		5,338			5,155
Provision for loan losses		215			0
Net interest income after prov. for loan losses		5,123			5,155
Non-interest income		987			1,272
Non-interest expense		4,976			4,901
Income before income taxes		1,134			1,526
Income tax expense		323			470
Net income	$	811		$	1,056
Balance Sheet Data:
Total assets	$	283,517		$	291,452
Loans, net		206,163			196,819
Loans held for sale		4,419			9,286
Allowance for loan losses		3,041			2,170
Investment securities held to maturity		12,056			13,420
Investment securities held for sale		25,949			36,726
Deposits		234,735			253,079
Borrowings		11,000			0
Shareholders' equity		36,510			37,152
Performance Ratios:
Return on average assets		0.59	%		0.73	%
Return on average equity		4.39	%		5.60	%
Net interest margin		4.19	%		3.91	%
Efficiency ratio		78.68	%		76.3	%
Asset Quality:
Nonaccrual loans		2,100			217
OREO property		260			0
Net charge-offs (recoveries)		375			0
Allowance for loan losses to total loans		1.45	%		1.09	%
Nonperforming loans to total loans		1.00	%		0.11	%
Per Share Data:
Earnings per share- Basic	$	0.16		$	0.20
Earnings per share- Diluted	$	0.15		$	0.19
Book value per share	$	7.08		$	7.19
Tangible book value	$	7.08		$	6.95

	Three months ended		Three months ended		Six months ended		Six months ended
	June 30, 2008		June 30, 2007		June 30, 2008		June 30, 2007
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
INTEREST INCOME
Loans, including fees	$	3,168	$	3,617	$	6,605	$	7,162
Federal funds sold		51		203		87		347
Investment securities		457		649		929		1,326
Cash and due from  banks		5		16		11		30
Total interest income		3,681		4,485		7,632		8,865
INTEREST EXPENSE
Deposits		913		1,874		2,112		3,708
Federal Home Loan Bank advances		92		-		182		2
Total interest expense		1,005		1,874		2,294		3,710
Net Interest Income		2,676		2,611		5,338		5,155
PROVISION FOR LOAN LOSSES		145		-		215		-
Net interest income after provision for
loan losses		2,531		2,611		5,123		5,155
NON-INTEREST INCOME
Service fees on deposit accounts		76		90		142		169
Gains on sales of mortgage loans, net		288		423		545		838
Other income		158		161		300		265
Total Non-Interest Income		522		674		987		1,272
NON-INTEREST EXPENSE
Salaries and employee benefits		1,310		1,334		2,615		2,594
Occupancy expense		474		468		958		922
Advertising & business promotions		84		114		144		226
Printing stationery and supplies		54		69		97		135
Data processing		142		127		281		262
Other operating expense		475		406		881		762
Total Non-Interest Expense		2,539		2,518		4,976		4,901
Income before provision for taxes	��	514		767		1,134		1,526
PROVISION FOR INCOME TAX		147		231		323		470
	$	367	$	536	$	811	$	1,056
Per share data
Net income - basic	$	0.07	$	0.10	$	0.16	$	0.20
Net income - diluted	$	0.07	$	0.10	$	0.15	$	0.19

		June 30, 2008			December 31, 2007
		(Unaudited)			(Unaudited)
ASSETS
Cash and due from banks		$	12,463		$	12,009
Interest bearing deposits			236			60
Federal funds sold			4,100			5,800
	Total cash and cash equivalents		16,799			17,869
Loans held for sale,net			4,419			3,063
Investment securities held to maturity (Market value			12,056			13,646
$ 11,736 in 2008 and $ 13,531 in 2007)
Investment securities available- for- sale			25,949			27,954
Loans receivable			209,071			208,376
less allowance for loan losses			(3,041	)		(3,201	)
deferred costs			133			82
Net loans receivable			206,163			205,257
Premises and equipment, net			6,253			6,343
Bank owned life insurance			8,284			8,111
Accrued interest receivable			1,203			1,435
Deferred tax asset			824			723
Other assets			1,567			1,069
	Total assets	$	283,517		$	285,470
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
Non-interest bearing deposits-demand		$	48,712		$	53,783
Interest bearing deposits-NOW,
money market and savings			153,695			159,462
Certificates of deposit, under $100,000			18,268			19,170
Certificates of deposit, $100,000 and over			14,060			12,258
	Total deposits		234,735			244,673
Federal Home Loan Bank advances			11,000			3,000
Accrued interest payable			429			523
Taxes Payable			163			-
Other liabilities			680			653
	Total liabilities		247,007			248,849
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,
5,155,810 shares in 2008 and 5,176,586 in 2007			37,245			37,513
Accumulated deficit			(565	)		(896	)
Accumulated other comprehensive (loss) income			(170	)		4
Total stockholders` equity			36,510			36,621
	Total liabilities and
	stockholders' equity	$	283,517		$	285,470
	*Restated to reflect 5% stock dividend