BERNARDSVILLE, N.J., Feb. 2, 2009 (GLOBE NEWSWIRE) -- Somerset Hills Bancorp (Nasdaq:SOMH) reported its results of operations for the year ended December 31, 2008. For the year, the Company reported net income of $1,566,000 or $0.30 per diluted share, compared to earnings of $382,000, or $0.07 per diluted share for the prior year.
In the fourth quarter of 2008 net income was $330,000 or $0.06 per diluted share compared to a loss of ($1,178,000) or ($0.22) per diluted share for the quarter ending December 31, 2007. The current year fourth quarter included a pre tax charge of $109,000 in conjunction with the disposition of the Company's only OREO property, while the fourth quarter of 2007 included a one time charge of $1.2 million to write off the goodwill associated with the 2000 acquisition of Sullivan Financial Services, the Company's mortgage banking subsidiary.
For the year ended December 31, 2008, the provision added to the allowance for loan losses was $515,000 compared to $1.0 million in the prior year. The $516,000 decline reflects, among other factors, a $1.7 million decline in nonaccrual loans.
For the year ended December 31, 2008, the net interest margin increased 10 basis points to 4.12% from 4.02% for the prior year. During the fourth quarter of 2008, the Company's net interest margin decreased 43 basis points to 3.88% from 4.31% in the fourth quarter of 2007. The decrease reflects the Company's decision in the third quarter of 2008 to both increase liquidity and acquire new customers from larger competitors by offering higher rates for certain time deposit accounts. It also reflects the loss of some lower cost core deposits as customers reduced deposit levels to the maximum FDIC insurance limit. Finally, Federal Reserve interest rate cuts reduced interest income on federal funds sold.
At December 31, 2008, net loans increased $3.1 million, or 1.5% to $208.4 million from $205.3 million at December 31, 2007. At December 31, 2008, deposits increased $5.1 million, or 2.1% to $249.8 million from $244.7 million at December 31, 2007.
At December 31, 2008, the Company's shareholders' equity totaled $37.5 million compared to $36.6 million at December 31, 2007. The increase includes the exercise of 151,523 options. During the year 123,460 additional options expired unexercised and 944 options were forfeited, leaving 283,494 options issued and unexercised. During the year the Company also repurchased 148,436 shares of its common stock at an average price of $9.15 per share. However, pursuant to the requirements of the Treasury's Capital Purchase Program, the Company has suspended its stock repurchase program. Both the Company and the Bank are "well capitalized" under all regulatory capital requirements applicable to them.
On January 20, 2009, the Company received a $7.4 million investment from the U.S. Treasury under its Capital Purchase Program. The Company issued 7,414 shares of preferred stock and warrants to purchase 163,065 shares of common stock of the Company with an exercise price of $6.82 to the Treasury. As a result of the investment, the Company's year end capital ratios have subsequently increased by approximately 300 basis points.
At December 31, 2008, the Company's consolidated capital ratios were 12.57% , 14.70% and 15.83% for its leverage, Tier I risk based and total risk based ratios, respectively.
At December 31, 2008, the Company's non-accrual loans decreased to $1.4 million from $3.0 million at December 31, 2007, and the Company's ratio of non-performing loans to total loans decreased to .65% from 1.46%.
Stewart E. McClure, Jr., President and Chief Executive Officer said, "The economic and operating environment that we all face today is as challenging as anything we have ever seen. As unemployment continues to rise we are likely to see 2009 continue to be at least as challenging as 2008. We substantially reduced non-performing loans during the year and added no new non-accrual loans during the period. We also had no past due loans of 30 days or longer at December 31, 2008. While our capital levels are well above those necessary to be considered well capitalized, we decided to participate in Treasury's Capital Purchase Program. Our belief is that being among the most highly capitalized banks in our market will create more opportunities."
On January 25, 2009, Somerset Hills Bank experienced the loss of its Chief Financial Officer Gerard Riker. Mr. Riker was one of the original employees of Somerset Hills Bank and served as the Executive Vice President and Chief Financial Officer since the Bank's inception in 1998. Mr. McClure said, "Jerry was a wonderful friend to all who knew him and was well respected in the banking community. We will all miss him in our personal and professional lives."
In connection with Mr. Riker's death the Bank previously reported that his rights under his Supplemental Executive Retirement Plan fully vested and his beneficiary is entitled to payments under the plan. During the first quarter 2009 the Bank will record an after tax charge to earnings of approximately $110,000 related to this vesting. In addition, the Bank is a beneficiary of bank owned life insurance policies on Mr. Riker. The Company expects to recognize income of approximately $560,000 in the first quarter of 2009, from payouts under these policies. The insurance proceeds received by the bank will not be subject to income tax.
The Board of Directors has also declared a quarterly cash dividend of $0.05 per share, payable February 27, 2009 to shareholders of record as of February 13, 2009.
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 and health), 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 certain forward-looking statements which are based on certain assumptions and describe future plans, strategies and expectations of the Company. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and the subsidiaries include, but are not limited to, changes in interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company does not undertake -- and specifically disclaims any obligation -- to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
Somerset Hills Bancorp
Selected Consolidated Financial data
(Unaudited)
($ in thousands except per share data) Twelve Months Ended
December 31
2008 2007
-------- --------
Income Statement Data:
Interest income $14,988 $17,867
Interest expense 4,275 7,142
-------- --------
Net interest income 10,713 10,725
Provision for loan losses 515 1,031
-------- --------
Net interest income after prov. for loan losses 10,198 9,694
Non-interest income 1,747 2,386
Non-interest expense 9,780 11,159
-------- --------
Income before income taxes 2,165 921
Income tax expense 599 539
-------- --------
Net income $1,566 $382
======== ========
Balance Sheet Data:
Total assets $299,663 $285,470
Loans, net 208,427 205,257
Loans held for sale 2,366 3,063
Allowance for loan losses 2,819 3,201
Investment securities held to maturity 12,293 13,646
Investment securities held for sale 37,687 27,954
Deposits 249,760 244,673
Borrowings 11,000 3,000
Shareholders' equity 37,529 36,621
Capital Ratios:
Somerset Hills Bank:
Leverage ratio 10.20% 9.84%
Tier 1 risk-based 11.93% 11.47%
Total risk-based 13.06% 12.72%
Somerset Hills Bancorp:
Leverage ratio 12.57% 12.68%
Tier 1 risk-based 14.70% 14.76%
Total risk-based 15.83% 16.01%
Performance Ratios:
Return on average assets 0.56% 0.13%
Return on average equity 4.24% 1.01%
Net interest margin 4.12% 4.02%
Efficiency ratio 78.5% 85.1%
Asset Quality:
Nonaccrual loans 1,365 3,036
OREO property 0 0
Net charge-offs (recoveries) 897 0
Allowance for loan losses to total loans 1.33% 1.54%
Nonperforming loans to total loans 0.65% 1.46%
Per Share Data:
Earnings per share- Basic $0.30 $0.07
Earnings per share- Diluted $0.30 $0.07
Book value per share $7.24 $7.07
SOMERSET HILLS BANCORP
Balance Sheets
(in thousands, except for share data)
December 31, December 31,
2008 2007
------------ ------------
(unaudited) (unaudited)
------------ ------------
ASSETS
Cash and due from banks $ 19,997 $ 12,069
Federal funds sold 1,500 5,800
------------ ------------
Total cash and cash equivalents 21,497 17,869
Loans held for sale,net 2,366 3,063
Investment securities held to maturity
(Approximate maket value of $11,608 in
2008 and $13,531 in 2007) 12,293 13,646
Investments available for sale 37,687 27,954
Loans receivable 211,115 208,376
Less allowance for loan losses (2,819) (3,201)
Net deferred costs 131 82
------------ ------------
Net loans receivable 208,427 205,257
Premises and equipment, net 5,973 6,343
Goodwill, net -- --
Bank owned life insurance 8,459 8,111
Accrued interest receivable 1,227 1,435
Deferred tax asset 750 723
Other assets 984 1,069
------------ ------------
Total assets $ 299,663 $ 285,470
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing deposits-demand $ 50,957 $ 53,783
Interest bearing deposits
Now, M/M and savings 140,945 159,462
Certificates of deposit, under $100,000 32,774 19,170
Certificates of deposit, $100,000 and over 25,084 12,258
------------ ------------
Total deposits 249,760 244,673
------------ ------------
Federal Home Loan Bank advances 11,000 3,000
Accrued interest payable 236 523
Taxes payable 135 --
Other liabilities 1,003 653
------------ ------------
Total liabilities 262,134 248,849
------------ ------------
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,
5,180,012 shares in 2008 and 5,176,586
in 2007 37,361 37,513
Accumulated deficit (326) (896)
Accumulated other comprehensive income 494 4
------------ ------------
Total stockholders` equity 37,529 36,621
------------ ------------
Total liabilities and stockholders'
equity $ 299,663 $ 285,470
============ ============
*Restated to reflect 5% Stock Dividend
SOMERSET HILLS BANCORP
Statements of Income
(Dollars In Thousands, Except Per Share Data)
Three Three Twelve Twelve
months months months months
ended ended ended ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
2008 2007 2008 2007
----------- ----------- ----------- -----------
(unaudited) (unaudited) (unaudited) (unaudited)
Interest Income:
Loans, including
fees $ 3,117 $ 3,702 $ 12,978 $ 14,680
Investment
securities 516 560 1,879 2,515
Federal funds sold 9 82 106 625
Interest bearing
deposits with
other banks 9 8 25 47
----------- ----------- ----------- -----------
Total interest
income 3,651 4,352 14,988 17,867
Interest Expense:
Deposits 922 1,493 3,890 7,125
Federal funds
purchased -- -- 12 --
Federal Home Loan
Bank advances 93 15 373 17
----------- ----------- ----------- -----------
Total interest
expense 1,015 1,508 4,275 7,142
Net interest
income 2,636 2,844 10,713 10,725
Provision for loan
losses 150 986 515 1,031
----------- ----------- ----------- -----------
Net interest
income after
provision for
loan losses 2,486 1,858 10,198 9,694
----------- ----------- ----------- -----------
Non-Interest
Income:
Service fees on
deposit accounts 88 74 313 329
Gains on sales of
mortgage loans,
net 150 305 943 1,473
Gain on sales of
investments 7 3 7 3
Loss on sale of
other real estate
owned (109) -- (109) --
Other income 145 166 593 581
----------- ----------- ----------- -----------
Total Non-Interest
Income 281 548 1,747 2,386
----------- ----------- ----------- -----------
Non-Interest
Expense
Salaries and
employee benefits 1,224 1,215 5,141 5,163
Occupancy expense 466 446 1,917 1,864
Advertising &
business
promotion 51 57 274 365
Stationery and
supplies 45 72 183 276
Data processing 122 133 540 521
Goodwill
impairment -- 1,191 -- 1,191
Other operating
expense 428 597 1,725 1,779
----------- ----------- ----------- -----------
Total
Non-Interest
Expense 2,336 3,711 9,780 11,159
----------- ----------- ----------- -----------
Income before
provision for
taxes 431 (1,305) 2,165 921
Provision for
Income Taxes 101 (127) 599 539
----------- ----------- ----------- -----------
Net income $ 330 $ (1,178) $ 1,566 $ 382
=========== =========== =========== ===========
*Per share data
Net income basic $ 0.06 $ (0.23) $ 0.30 $ 0.07
=========== =========== =========== ===========
Net income
diluted $ 0.06 $ (0.22) $ 0.30 $ 0.07
=========== =========== =========== ===========
*Restated to reflect 5% Stock Dividend