Pre-Tax Income Up 109.2% for the Quarter and 72.8% for the Year BERNARDSVILLE, N.J., Feb. 2 /PRNewswire-FirstCall/ -- Somerset Hills Bancorp (NASDAQ:SOMH) reported record net income for the fourth quarter and year end 2005. For the quarter ended December 31, 2005, net income increased by $189,000 to $603,000, or $0.16 per diluted share, up 45.7 percent from $0.11 per diluted share, achieved during the fourth quarter of 2004. The Company's return on average equity was 9.77 percent and return on average assets was 1.02 percent for the fourth quarter of 2005. The net interest margin was 4.48 percent for the fourth quarter of 2005. For the fourth quarter of 2004, the Company's return on average equity was 7.23 percent, its return on average assets was 0.89 percent, and its net interest margin was 4.14 percent. For the year ended December 31, 2005, net income increased to a record level of $1,666,000, or $0.44 per diluted share, up 22.6 percent when compared to $1,359,000, or $0.37 per diluted share, earned for the year ended December 31, 2004. The Company's return on average equity was 6.95 percent, return on average assets was 0.79 percent and the net interest margin was 4.32 percent for the year ended December 31, 2005. For the year ended December 31, 2004, the Company's return on average equity was 6.09 percent, its return on average assets was 0.76 percent, and its net interest margin was 3.78 percent. Somerset Hills Bancorp also declared a cash dividend of $.02 per share payable February 24, 2006 to shareholders of record as of February 13, 2006. Stewart E. McClure, Jr., President and Chief Executive Officer said, "We are extremely pleased that at a time when most of the industry is feeling pressure on their net interest margin, ours has significantly improved to 4.48% in the fourth quarter. This is partially a result of core deposits growing to 90 percent of total deposits, which in turn is based on our strong brand of old fashioned relationship banking built on outstanding personal service and some of the best products available in our market area." At December 31, 2005, loans increased $34.1 million, or 26.0 percent, to $165.1 million from $131.0 million when compared to the year ended December 31, 2004. At December 31, 2005, deposits increased $53.3 million, or 34.4 percent, to $208.2 million from $154.9 million when compared to the year ended December 31, 2004. At December 31, 2005, total assets were $245.2 million, up from $181.9 million at December 31, 2004, a 34.8 percent increase. Somerset Hills Bancorp is a bank holding company formed in January 2001 which owns all of the common stock of Somerset Hills Bank, a full service commercial bank with offices in Bernardsville, Mendham, Morristown, and Summit, New Jersey. It has announced plans to open three additional offices in Madison, Stirling, and Long Valley. Somerset Hills Bank focuses its lending activities on small to medium sized businesses, high net worth individuals, professional practice, 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 under the symbol SOMH and the Company's warrants are traded under the symbol SOMHW. You can visit our website at http://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 success or failure of our efforts to implement our business strategy, the effect of changing economic conditions and, in particular, changes in interest rates, changes in government regulations, tax rates and similar matters, our ability to attract and retain quality employees, and other risks which may be described in our future filings with SEC. SOMERSET HILLS BANCORP Selected Consolidated Financial Data (Unaudited) ($ in thousands except per share data) Three Months Ended Nine Months Ended September 30, September 30, 2005 2004 2005 2004 Income Statement Data: Interest income $3,105 $1,872 $8,130 $5,901 Interest expense 897 498 2,179 1,494 Net interest income 2,208 1,649 5,951 4,407 Provision for loan losses 192 50 249 150 Net interest income after prov. For loan losses 2,016 1,599 5,702 4,257 Non-interest income 849 735 2,129 2,177 Non-interest expense 2,135 1,880 6,241 5,418 Income before income taxes 730 454 1,590 1,016 Income tax expense 273 44 527 71 Net income $457 $410 $1,063 $945 Balance Sheet Data: Total assets $233,383 $187,385 Loans 157,827 123,993 Loans held for sale 11,630 7,340 Allowance for loan losses (1,886) (1,556) Investment securities held to maturity 7,582 7,388 Investment securities held for sale 29,386 20,946 Deposits 206,678 162,900 Shareholders' equity 24,452 22,702 Performance Ratios: Return on average assets 0.82% 0.89% 0.70% 0.72% Return on average equity 7.51% 7.33 5.97% 5.69% Net interest margin 4.24 3.87% 4.25 3.66% Efficiency ratio 69.8% 81.6% 77.2% 82.3% Asset Quality: Nonaccrual loans 0 0 OREO property 0 0 Net charge-offs (recoveries) (4) 11 Allowance for loan losses to total loans 1.20% 1.25% Nonperforming loans to total loans 0.00% 0.00% Per Share Data: Earnings per share- Basic $0.14 $0.13 $0.33 $0.30 Earnings per share- Diluted $0.12 $0.11 $0.28 $0.26 Book value per share $7.51 $7.44 Tangible book value $7.14 $7.05 SOMERSET HILLS BANCORP Selected Consolidated Financial Data (Unaudited) ($ in thousands except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 Income Statement Data: Interest income $3,474 $2,302 $11,605 $8,202 Interest expense 1,015 525 3,194 2,019 Net interest income 2,459 1,777 8,411 6,183 Provision for loan losses 143 75 392 225 Net interest income after prov. for loan losses 2,316 1,702 8,019 5,958 Non-interest income 810 668 2,939 2,845 Non-interest expense 2,172 1,914 8,414 7,331 Income before income taxes 954 456 2,544 1,472 Income tax expense 351 42 878 113 Net income $603 $414 $1,666 $1,359 Balance Sheet Data: Total assets $245,217 $181,876 Loans, net 165,118 131,039 Loans held for sale 15,380 10,328 Allowance for loan losses (2,029) (1,634) Investment securities held to maturity 9,366 5,847 Investment securities held for sale 31,899 17,484 Deposits 208,244 154,875 Shareholders' equity 24,856 23,048 Performance Ratios: Return on average assets 1.02% 0.89% 0.79% 0.76% Return on average equity 9.77% 7.23% 6.95% 6.09% Net interest margin 4.48% 4.14% 4.32% 3.78% Efficiency ratio 66.4% 78.3% 74.1% 81.2% Asset Quality: Nonaccrual loans 0 0 OREO property 0 0 Net charge-offs (recoveries) (4) 8 Allowance for loan losses to total loans 1.21% 1.23% Nonperforming loans to total loans 0.00% 0.00% Per Share Data: Earnings per share- Basic $0.19 $0.13 $0.51 $0.42 Earnings per share- Diluted $0.16 $0.11 $0.44 $0.37 Book value per share 7.62 7.20 Tangible book value 7.25 6.83 SOMERSET HILLS BANCORP Balance Sheets (in thousands, except per share data) December 31, 2005 December 31, 2004 (Unaudited) ASSETS Cash and due from banks $10,218 $5,000 Interest bearing deposits 103 85 Federal funds sold - - Total cash and cash equivalents 10,321 5,085 Loans held for sale, net 15,380 10,328 Investment securities held to maturity (Market value 9,366 5,847 $9,372 in 2005 and $ 5,862 in 2004) Investment securities available-for-sale 31,899 17,484 Loans receivable 167,301 132,871 less allowance for loan losses (2,029) (1,634) deferred fees (154) (198) Net loans receivable 165,118 131,039 Premises and equipment, net 4,679 4,231 Goodwill, net 1,191 1,191 Bank owned life insurance 5,533 5,341 Accrued interest receivable 1,135 652 Other assets 595 678 Total assets $245,217 $181,876 LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits Non-interest bearing deposits- demand $45,667 $37,061 Interest bearing deposits-NOW, money market and savings 141,846 94,066 Certificates of deposit, under $100,000 14,034 16,819 Certificates of deposit, $100,000 and over 6,697 6,929 Total deposits 208,244 154,875 Federal Home Loan Bank advances 10,600 3,200 Accrued interest payable 252 88 Other liabilities 1,265 665 Total liabilities 220,361 158,828 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, 3,263,132 shares in 2005 and 3,201,920 in 2004 24,389 23,940 Retained earnings (Accumulated deficit) 774 (827) Accumulated other comprehensive loss income (307) (65) Total stockholders' equity 24,856 23,048 Total liabilities and stockholders' equity $245,217 $181,876 * Restated to reflect 5% stock dividend SOMERSET HILLS BANCORP Statement of Operations (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, 2005 2004 2005 2004 (unaudited) (unaudited) (unaudited) INTEREST INCOME Loans, including fees $3,043 $2,027 $10,152 $7,128 Federal funds sold 11 19 181 67 Investment securities 415 252 1,239 998 Cash and due from banks 5 4 33 9 Total interest income 3,474 2,302 11,605 8,202 INTEREST EXPENSE Deposits 963 512 3,089 1,962 Federal Funds Purchased 4 - 4 2 Federal Home Loan Bank advances 48 13 101 55 Total interest expense 1,015 525 3,194 2,019 Net Interest Income 2,459 1,777 8,411 6,183 PROVISION FOR LOAN LOSSES 143 75 392 225 Net interest income after provision for loan losses 2,316 1,702 8,019 5,958 NON-INTEREST INCOME Service fees on deposit accounts 70 75 273 289 Gains on sales of mortgage loans, net 630 475 2,251 2,183 Gains (losses) on sales of investment securities, net - 9 (2) 9 Other income 110 109 417 364 Total Non-Interest Income 810 668 2,939 2,845 NON-INTEREST EXPENSE Salaries and employee benefits 1,088 937 4,192 3,707 Occupancy expense 336 334 1,397 1,242 Advertising & business promotions 144 166 540 504 Printing stationery and supplies 69 59 250 204 Data processing 99 74 379 288 Other operating expense 436 344 1,656 1,386 Total Non-Interest Expense 2,172 1,914 8,414 7,331 Income before provision for taxes 954 456 2,544 1,472 PROVISION FOR INCOME TAX 351 42 878 113 Net income $603 $414 $1,666 $1,359 Per share data Net income - basic $0.19 $0.13 $0.51 $0.42 Net income - diluted $0.16 $0.11 $0.44 $0.37 Per share data reflects a 5% stock dividend which was effective June 30, 2005 First Call Analyst: FCMN Contact: DATASOURCE: Somerset Hills Bancorp CONTACT: Stewart E. McClure, Jr., President and Chief Executive Officer, +1-908-630- 5000, or Gerard Riker, EVP and Chief Financial Officer, +1-908-630-5018, Somerset Hills Bancorp Web site: http://www.bankofsomersethills.com/

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