Somerset Hills Bancorp (Nasdaq:SOMH) (the "Company"), parent
company of Somerset Hills Bank (the "Bank"), today reported
full-year net income of $3.4 million for 2012, a 20.1% increase
over the $2.8 million earned in 2011. On a fully diluted per share
basis, net income was $0.63 per share for 2012 and $0.52 per share
for 2011. For the fourth quarter of 2012, the Company earned
$844,000, representing a 2.7% increase from 2011 fourth quarter net
income of $822,000. Diluted earnings per share amounted to $0.16 in
the fourth quarter of both 2012 and 2011.
Stewart E. McClure, Jr., President and CEO, noted, "The Company
reported another quarter of good financial results despite a
continuing difficult operating environment for banks that has been
marked by high levels of unemployment and weak real estate
valuations. Both the Company's and the banking industry's net
interest margins continue to be under duress as longer term assets
reprice at increasingly lower levels as a result of the lingering
low interest rate environment. Our credit quality remains
strong as nonaccrual loans were 0.31% of total loans at the end of
2012. In addition, our cost containment efforts have been
instrumental in the improvement in our efficiency ratio to 61.9%
for the year 2012, down from 66.8% for all of 2011."
Net Interest Income (Tax Equivalent Basis)
Fully taxable equivalent ("FTE") net interest income for 2012
was $12.1 million, up modestly, from the $12.0 million earned
in 2011. The slight increase in net interest income during
2012 was primarily attributable to a 4.7% increase in average
interest-earning assets to $334.0 million in 2012 from
$318.9 million in 2011, which was partially offset by a 16
basis-point decline in the net interest margin to 3.62% in 2012
from 3.78% in 2011. FTE net interest income for the fourth
quarter of 2012 totaled $2.9 million, a decline of $151,000,
or 4.9%, from the $3.1 million earned in the fourth quarter of
2011. The decrease in FTE net interest income for the fourth
quarter of 2012 from the same quarter of 2011 was primarily due to
a 20 basis-point narrowing of the net interest margin to 3.35% from
3.55% for the fourth quarter of 2011. Growth in average
interest earning assets of 1.1% in the fourth quarter of 2012 to
$346.7 million over $342.8 million for the fourth quarter
of 2011 served to partially offset the decline in net interest
income. Average total loans increased by 5.1% in the full-year
comparison and by 2.7% in the fourth-quarter comparison.
Non-Interest Income
Non-interest income increased to $2.8 million for the year
2012 from $2.0 million for 2011. After excluding net
securities gains realized in both years and a nonrecurring,
tax-free mortality gain recorded in 2011 of $267,000 on a
bank-owned life insurance policy, adjusted non-interest income grew
36.0% during 2012 to $2.3 million over the $1.7 million
earned in 2011. An increase in gains on sales of residential
loans at Sullivan Financial Services, Inc. ("Sullivan") in 2012 to
$1.4 million from $786,000 in 2011 was the primary factor
contributing to the year-to-year growth in adjusted non-interest
income. For the fourth quarter of 2012, non-interest income
amounted to $1.0 million, up from $503,000 earned in the
fourth quarter of 2011. Excluding net securities gains,
adjusted non-interest income increased to $666,000, or 32.4% in the
fourth quarter of 2012 from $503,000 earned in the fourth quarter
of 2011. This increase in adjusted non-interest income was
primarily attributable to increased origination volume and sales of
residential loans at Sullivan. The gains realized on the sales
of investment securities in 2012 amounted to $500,000 and were
undertaken by the Company as part of its ongoing asset liability
management strategy.
Non-Interest Expense
Non-interest expense declined to $9.3 million for the year
2012 from $9.6 million for all of 2011, and increased to
$2.5 million in the fourth quarter of 2012 from
$2.3 million in the same quarter of 2011. Included in
non-interest expense in the fourth quarter of 2012, in the third
quarter of 2011 and the respective full-year periods were
nonrecurring losses on the early extinguishment of Federal Home
Loan Bank borrowings of $334,000 in 2012 and $426,000 in
2011. Excluding these items, adjusted non-interest expense
decreased by $270,000 or 2.9% to $8.9 million for the year
2012 from $9.2 million in the year 2011 and declined by
$48,000 or 2.1% to $2.2 million for the fourth quarter of 2012
from $2.3 million for the fourth quarter of 2011. The
declines in operating expenses were primarily due to decreases in
personnel, occupancy and data processing expenses. Management
continues to aggressively manage its expense containment efforts,
which have yielded cost savings in many areas of the Company's
operations.
Provision for Income Taxes
The Company recorded income tax provisions of $1.8 million
for the full-year and $449,000 for the fourth quarter 2012,
respectively, versus $1.2 million and $430,000 for the
full-year and fourth quarter of 2011, respectively. The
effective tax rates were 35.1% and 34.7% for the year and fourth
quarter of 2012, respectively and 29.7% and 34.3% for the year and
fourth quarter of 2011, respectively. The increase in the
effective tax rates for the year 2012 was due to an increase in
revenue from taxable sources.
Asset Quality
The full-year provision for loan losses was $290,000 in 2012
versus $220,000 for the year 2011, and the fourth-quarter provision
for loan losses was $50,000 in 2012 versus $20,000 for the fourth
quarter of 2011. Net charge-offs of $114,000 and $113,000
were recorded in the year 2012 and 2011, respectively. For
the fourth quarter of 2012, net charge-offs totaled $59,000
compared to $5,000 for the same quarter of 2011. The
allowance for loan losses was $3.2 million, or 1.31% of total
loans, at December 31, 2012 and $3.0 million, or 1.28% of
total loans, at December 31, 2011.
Non-accrual loans at the end of 2012 amounted to $746,000,
representing 0.31% of total loans, and $146,000, or 0.06% of total
loans at December 31, 2011. The non-performing asset ratio,
which is defined as nonaccrual loans and OREO as a percentage of
total assets, was 0.20% at December 31, 2012 and 0.04% at
December 31, 2011. The Company had no OREO at the end of both
2012 and 2011 and troubled debt restructured loans ("TDRs") were
$340,000 and $344,000 at December 31, 2012 and 2011,
respectively. Loans past due 90 days or more and still
accruing amounted to $420,000 at the end of 2012 compared with none
at year-end 2011. As of December 31, 2012, the Company had
$216,000 in loans delinquent 30 to 89 days, representing 0.09% of
total loans, versus $875,000, or 0.38%, of total loans at the end
of 2011.
Financial Ratios
As of December 31, 2012, the Company's tangible common equity
ratio and tangible book value per share were 11.34% and $7.79,
respectively. As of the end of 2011, the Company's tangible
common equity ratio and tangible book value per share were 11.09%
and $7.55, respectively.
Dividend Declaration
Based upon the Company's fourth quarter performance, the Board
of Directors declared a quarterly cash dividend of $0.08 per share
payable February 28, 2013 to shareholders of record as of
February 14, 2013.
Forward-Looking Statements
This news release contains certain forward-looking
statements which are based on certain assumptions and describe
future plans, strategies and expectations of the Company. These
forward-looking statements are generally identified by use of the
words "believe," "expect," "intend," "anticipate," "estimate,"
"project," or similar expressions. The Company's ability to predict
results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse
effect on the operations of the Company and its subsidiaries
include, but are not limited to, changes in interest rates, general
economic conditions, legislative/regulatory changes, monetary and
fiscal policies of the U.S. Government, including policies of the
U.S. Treasury and the Federal Reserve Board, the quality or
composition of the loan or investment portfolios, demand for loan
products, deposit flows, competition, demand for financial services
in the Company's market area and accounting principles and
guidelines. These risks and uncertainties should be considered in
evaluating forward-looking statements and undue reliance should not
be placed on such statements. The Company does not undertake, and
specifically disclaims any obligation, to publicly release the
result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or
unanticipated events.
|
SOMERSET HILLS
BANCORP |
Selected Consolidated
Financial Data |
(Unaudited) |
|
|
|
|
|
|
Quarter Ended
December 31, |
Year Ended
December 31, |
($ in thousands, except per share data) |
2012 |
2011 |
2012 |
2011 |
Income Statement Data: |
|
|
|
|
Net interest income |
$ 2,875 |
$ 3,020 |
$ 11,915 |
$ 11,847 |
Provision for loan losses |
50 |
20 |
290 |
220 |
Net interest income after loan loss
provision |
2,825 |
3,000 |
11,625 |
11,627 |
Non-interest income |
1,005 |
503 |
2,848 |
2,002 |
Non-interest expense |
2,537 |
2,251 |
9,265 |
9,627 |
Income before income taxes |
1,293 |
1,252 |
5,208 |
4,002 |
Income tax expense |
449 |
430 |
1,830 |
1,189 |
Net income |
$ 844 |
$ 822 |
$ 3,378 |
$ 2,813 |
Diluted earnings per share |
$ 0.16 |
$ 0.16 |
$ 0.63 |
$ 0.52 |
Balance Sheet Data: |
|
|
|
|
At period end |
|
|
|
|
Total assets |
$ 368,930 |
$ 364,025 |
|
|
Loans, net |
238,753 |
229,503 |
|
|
Loans held for sale |
6,977 |
2,969 |
|
|
Allowance for loan losses |
3,158 |
2,982 |
|
|
Investment securities held to
maturity |
8,900 |
10,738 |
|
|
Investment securities held for sale |
13,370 |
43,579 |
|
|
Deposits |
320,187 |
314,714 |
|
|
Borrowings |
5,500 |
7,500 |
|
|
Shareholders' equity |
41,848 |
40,369 |
|
|
Book value per share |
7.79 |
7.55 |
|
|
Tangible common equity ratio |
11.34% |
11.09% |
|
|
Average for the period |
|
|
|
|
Loans |
$ 237,098 |
$ 230,915 |
$ 235,457 |
$ 223,937 |
Interest-earning assets |
346,655 |
342,831 |
333,994 |
318,851 |
Total assets |
366,695 |
364,120 |
354,435 |
339,582 |
Shareholders' equity |
41,965 |
40,557 |
41,442 |
40,308 |
Diluted shares outstanding (in
thousands) |
5,380 |
5,395 |
5,371 |
5,459 |
|
|
|
|
|
Performance
Ratios/Amounts: |
|
|
|
|
Return on average assets |
0.92% |
0.90% |
0.95% |
0.83% |
Return on average equity |
8.00% |
8.04% |
8.15% |
6.98% |
Fully taxable equivalent net interest
margin |
3.35% |
3.55% |
3.62% |
3.78% |
Efficiency ratio |
61.5% |
63.0% |
61.9% |
66.8% |
Fully taxable equivalent net interest
income |
$ 2,918 |
$ 3,069 |
$ 12,091 |
$ 12,044 |
|
|
|
|
|
Asset Quality: |
|
|
|
|
Net charge-offs (recoveries) |
$ 59 |
$ 5 |
$ 114 |
$ 113 |
At period end |
|
|
|
|
Nonaccrual loans |
746 |
146 |
|
|
OREO property |
-- |
-- |
|
|
Total nonperforming assets |
746 |
146 |
|
|
Loans past due 90 days or more and still
accruing |
420 |
-- |
|
|
Troubled debt restructured loans |
340 |
344 |
|
|
Loans past due 30 to 89 days and still
accruing |
216 |
875 |
|
|
Nonaccrual loans to total loans |
0.31% |
0.06% |
|
|
Nonperforming assets to total assets |
0.20% |
0.04% |
|
|
Allowance for loan losses to total
loans |
1.31% |
1.28% |
|
|
Allowance as a % of nonperforming
loans |
423% |
2042% |
|
|
|
|
SOMERSET HILLS
BANCORP |
Statement of
Operations |
(Dollars in thousands,
except per share data) |
(Unaudited) |
|
|
|
|
|
|
Quarter Ended
December 31, |
Year Ended
December 31, |
|
2012 |
2011 |
2012 |
2011 |
INTEREST INCOME |
|
|
|
|
|
|
|
|
|
Loans, including fees |
$ 2,841 |
$ 3,015 |
$ 11,775 |
$ 11,879 |
Investment securities |
253 |
398 |
1,294 |
1,626 |
Interest bearing deposits with other
banks |
48 |
41 |
135 |
135 |
Total interest income |
3,142 |
3,454 |
13,204 |
13,640 |
|
|
|
|
|
INTEREST EXPENSE |
|
|
|
|
Deposits |
205 |
367 |
1,029 |
1,450 |
Federal Home Loan Bank advances |
62 |
67 |
260 |
343 |
Total interest expense |
267 |
434 |
1,289 |
1,793 |
|
|
|
|
|
Net Interest Income |
2,875 |
3,020 |
11,915 |
11,847 |
|
|
|
|
|
PROVISION FOR LOAN LOSSES |
50 |
20 |
290 |
220 |
|
|
|
|
|
Net Interest Income after
Provision for Loan Losses |
2,825 |
3,000 |
11,625 |
11,627 |
|
|
|
|
|
NON-INTEREST INCOME |
|
|
|
|
Service fees on deposit accounts |
89 |
73 |
322 |
286 |
Gains on sales of mortgage loans,
net |
406 |
262 |
1,362 |
786 |
Bank owned life insurance |
67 |
73 |
270 |
555 |
Gain on sales of investment securities,
net |
339 |
-- |
500 |
9 |
Other income |
104 |
95 |
394 |
366 |
Total Non-Interest Income |
1,005 |
503 |
2,848 |
2,002 |
|
|
|
|
|
NON-INTEREST EXPENSE |
|
|
|
|
Salaries and employee benefits |
1,272 |
1,338 |
5,238 |
5,324 |
Occupancy expense |
319 |
358 |
1,328 |
1,499 |
Advertising and business promotions |
30 |
29 |
119 |
129 |
Printing stationery and supplies |
25 |
24 |
134 |
128 |
Data processing |
127 |
136 |
505 |
539 |
Loss on debt extinguishment |
334 |
-- |
334 |
426 |
Other operating expense |
430 |
366 |
1,607 |
1,582 |
Total Non-Interest Expense |
2,537 |
2,251 |
9,265 |
9,627 |
|
|
|
|
|
Income before Provision for Taxes |
1,293 |
1,252 |
5,208 |
4,002 |
|
|
|
|
|
PROVISION FOR INCOME TAXES |
449 |
430 |
1,830 |
1,189 |
|
|
|
|
|
Net income |
$ 844 |
$ 822 |
$ 3,378 |
$ 2,813 |
|
|
|
|
|
Diluted earnings per common share |
$ 0.16 |
$ 0.16 |
$ 0.63 |
$ 0.52 |
|
|
SOMERSET HILLS
BANCORP |
Balance
Sheets |
(Dollars in
thousands) |
(Unaudited) |
|
|
|
|
December 31, |
December 31, |
|
2012 |
2011 |
ASSETS |
|
|
|
|
|
Cash and due from banks |
$ 7,544 |
$ 4,588 |
Interest bearing deposits at other banks |
75,902 |
55,411 |
Total cash and cash equivalents |
83,446 |
59,999 |
Loans held for sale |
6,977 |
2,969 |
Investment securities held to maturity
(Approximate market value of $9,186 in 2012 and $10,849 in
2011) |
8,900 |
10,738 |
Investments available for sale |
13,370 |
43,579 |
Loans receivable |
241,911 |
232,485 |
Less allowance for loan losses |
(3,158) |
(2,982) |
|
|
|
Net loans receivable |
238,753 |
229,503 |
|
|
|
Premises and equipment, net |
4,868 |
4,996 |
Bank owned life insurance |
8,245 |
8,000 |
Accrued interest receivable |
1,036 |
1,168 |
Prepaid expenses |
790 |
985 |
Other assets |
2,545 |
2,088 |
|
|
|
Total assets |
$ 368,930 |
$ 364,025 |
|
|
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
|
LIABILITIES |
|
|
Deposits: |
|
|
Non-interest bearing deposits -
demand |
$ 87,279 |
$ 80,532 |
Interest bearing deposits |
|
|
NOW, money market and savings |
198,595 |
193,276 |
Certificates of deposit, under
$100,000 |
17,716 |
20,875 |
Certificates of deposit, $100,000 and
over |
16,597 |
20,031 |
Total deposits |
320,187 |
314,714 |
|
|
|
Federal Home Loan Bank advances |
5,500 |
7,500 |
Other liabilities |
1,395 |
1,442 |
|
|
|
Total liabilities |
327,082 |
323,656 |
|
|
|
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, 5,369,673
shares in 2012 and 5,344,648 shares in 2011 |
37,143 |
36,972 |
Retained earnings |
4,333 |
2,608 |
Accumulated other comprehensive
income |
372 |
789 |
|
|
|
Total stockholders'
equity |
41,848 |
40,369 |
|
|
|
Total liabilities and stockholders'
equity |
$ 368,930 |
$ 364,025 |
CONTACT: Stewart E. McClure, Jr.
President & CEO
908.630.5000
Alfred J. Soles
Executive VP & CFO
908.630.5018
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