Annual Meeting 

April 25, 2007

Welcome To

 

**7% Increase**

**35% Increase**

Total Assets

**13% Increase**

**18% Increase**

**26% Increase**

2

 

Total Assets

**13% Increase**

**25% Increase**

**14% Increase**

**22% Increase**

**28% Increase**

3

 

Statement of Operations

Year

Net Income

Change From Prior Year

2002

$  179

2003

$

1

,173

+ 555

%

2004

$1,359

+ 16

%

2005

$2,115

 *

+   5

6%

2006

$2,198

+   4

%

*reflects a one time $449,000 reversal of the valuation allowance for taxes

4

 

Income Trend

**2002**

****

**2003**

****

**2004**

****

**2005**

****

**2006**

****

**2007**

****

1

st

 Qtr.

$ 17

$ 110

$ 222

$ 262

$ 475

$

520

2

nd

 Qtr.

130

272

313

345

    

485

3

rd

 Qtr.

4

454

410

457

    

573

   

   

4

th

 Qtr.

       28

33

7

414

1,051*

665

*reflects a one time $449,000 reversal of the valuation allowance for taxes

5

 

Loan Growth - Total Balances

**10% Increase**

**20% Increase**

**31% Increase**

**31% Increase**

**10% Increase**

6

 

Loan Mix Composition Total Balances

**March 31, 2007**

7

 

Net Interest Margin

4.15%

12/31/2006

3.92%

03/31/2007

4.31%

12/31/2005

3.78%

12/31/2004

3.40%

12/31/2003

3.52%

12/31/2002

8

 

Deposit Growth

**Total Deposits**

**Core Deposits**

**15% Increase**

**22% Increase**

**31% Increase**

**26% Increase**

**14% Increase**

**16% Increase**

**25% Increase**

**38% Increase**

**30% Increase**

**20% Increase**

9

 

Deposit Mix - Total Balances

86%

35,616

163,590

51,015

12/31/2006

90%

20,731

141,846

45,667

12/31/2005

85%

23,748

94,066

37,061

12/31/2004

79%

30,545

86,111

28,995

12/31/2003

66%

$42,538

$67,520

$15,386

12/31/2002

Core Deposits as a % of Total Deposits

Time Deposits

NOW/Money Market/Savings

Demand

10

 

Number of Accounts

11

 

Paramount Checking

**Total Balances**

**Number of Accounts**

**22% Increase**

**16% Increase**

**19% Increase**

**15% Increase**

**3% Increase**

**11% Increase**

**51% Increase**

**48% Increase**

**34% Increase**

**22% Increase**

12

 

Paramount Checking -continued

**Average Balance Per Account**

13

 

Escrow Ease

**Total Balances**

14

 

Escrow Ease - continued

**Number of Client Accounts**

15

 

Transaction Activity

**Teller Transactions**

**Per Month**

**ACH Transactions**

**Per Month**

**27% Increase**

**8% Increase**

**58% Increase**

**34% Increase**

**5% Increase**

**33% Increase**

**19% Increase**

**55% Increase**

**6% Increase**

**23% Increase**

16

 

Asset Quality and Reserves

From the outset, we have implemented a strong credit culture through the application of sound banking principles.  

As of December 31, 2006 Somerset Hills Bancorp had non-performing loans of 0.25% of total loans. 

Loan loss reserves as of the same date totaled $2.2 million. 

Loan Loss Reserve 1.13% of total loans. 

17

 

Capital Ratios

Actual

Well Capitalized

**December 31, 2006**

****

Amount

Ratio

Amount

Ratio

Total Capital (to risk

-

weighted assets)

$39,063

16.52

%

$23,645

>

10.00%

Tier I Capital (to risk

-

weighted assets)

36,893

15.60

14,187

>

  6.00

Tier I Capital (to average asse

ts)

36,893

13.69

13,475

>

  5.00

****

**December 31, 2005**

****

Total Capital (to risk

-

weighted assets)

$26,450

12.

7

3

%

$20,772

>

10.00%

Tier I Capital (to risk

-

weighted assets)

24,421

11.76

12,4

63

>

  6.00

Tier I Capital (to average assets)

24,421

1

0.4

0

11,739

>

  5.00

**December 31, 2004**

****

Total Capital (to risk

-

weighted assets)

$23,557

13.77

%

$17,106

>

10.00%

Tier I Capital (to risk

-

weighted assets)

21

,

923

12.82

10,263

>

  6.00

Tier I Capital (to average assets)

21,923

11.83

9,268

>

  5.00

18

 

Sullivan Financial Services, Inc.

a subsidiary of Somerset Hills Bank

Headquarters

             100 Executive Drive, Suite 140 

             West Orange, NJ 07052 

             Phone:          973-325-5000 

             Fax:                             973-736-7947

19

 

Sullivan Financial Services, Inc.Products and Services

Conventional Mortgage Loans 

Fixed and Adjustable Rate Loans 

FHA/VA Loans 

Jumbo Mortgages 

1st Time Buyer Programs 

No Doc Loans 

No Cost Refinances 

20

 

Sullivan Financial Services, Inc.Loan Volume

**2002**

****

**2003**

****

**2004**

****

**2005**

****

**2006**

****

****

Originations 

$404,513

$530,913

$330,491

$379,114

$341,689

Originations

1

,

701

2

,

159

1

,

297

1

,

362

1

,

293

Closings 

$320,978

$505,384

$270,803

$311,273

$293,329

Closings 

1

,

384

2

,

098

1

,

091

1

,

132

1

,

089

21

 

Somerset Hills Wealth Management, LLC

a subsidiary of Somerset Hills Bank

22

 

Somerset Hills Wealth Management, LLC

For the Individual:

Financial Planning 

Investment Management 

Estate Review 

Life, Health & Long Term Care Insurance 

Property and Casualty Insurance

23

 

Somerset Hills Wealth Management, LLC

For the Business Owner:

Business Succession Planning 

Buy-Sell & Key Person Agreements 

Retirement Plans & Group Insurance 

Property and Casualty Insurance

24

 

Somerset Hills Title Company, LLC

PROVIDING TITLE SERVICE IN CONNECTION WITH THE CLOSING OF REAL ESTATE TRANSACTIONS

2005

2006

1

st

 Qtr 2007

Total Transactions

62

36

6

Amount of Closed Transactions

(approximate)

$57

 Million

$55

 Million

$2

 Million

Net

 Income to Bank

$64

,000

$

101

,000

$

6,000

25

 

Look to the FutureBuilding the Franchise

 Cross Sell Opportunities  

 Staffing Opportunities  

 New Branch Opportunities 

 Acquisition Opportunities

26

 

Where We Are

27

 

**Grand Opening Saturday May 12****th****!**

**Then and now...**

**24 Schooley’s Mt. Road**

**Long Valley, NJ 07853**

**908-876-5525**

28

 

5% Stock Dividend !!!

29

 

$0.04 per quarter33% Increase!!!

Cash Dividend

30

 

Stock Price

Stock 

-

 SOMH

        Declared 5%

Stock Dividend 

(

5/15/2002

)

12/31/2002

$6.46

  3/31/2003

6.13

        Declared 5% Stock Dividend

  6/30/2003

7.52

  9/30/2003

7.88

12/31/2003

10.17

  3/31/2004

11.06

        Declared 5% Stock Dividend

6/30/2004

10.87

9/30/2004

10.73

12/31/2004

11.51

*Prices Adjusted to reflect 5% Stock Dividend of 5/15/2002, 6/30/2003, 6/2/2004, 6/30/2005 and 5/31/2006

31

 

Stock Price (continued)

****

**Stock**

**-**

**SOMH**

****

****

****

****

****

**3/31/2005**

****

**$10.29**

****

****

**Declared 5% Stock Dividend and $0.02 Cash Dividend**

****

**6/30/2005**

****

**10.95**

****

****

****

**9/30/2005**

****

**1**

**0.71**

****

****

**   **

**Declared**

**$0.02 Cash Dividend**

****

**12/31/2005**

****

**1**

**1.95**

****

****

**   **

**Declared $0.02 Cash Dividend**

****

**3/31/2006**

****

**1**

**3.64**

****

****

**   **

**Decl**

**ared 5% Stock Dividend and $0.03**

**Cash Dividend**

****

*Prices Adjusted to reflect 5% Stock Dividend of 5/15/2002, 6/30/2003, 6/2/2004, 6/30/2005 and 5/31/2006

32

 

Stock Price (continued)

****

**Stock**

**-**

**SOMH**

****

****

****

****

****

**          6/30/2006                        13.16**

****

**        Declared $0.03 Cash Dividend**

****

**          9/30/2006                        12.20                     **

****

**        Declared $0.03 Cash Dividend**

****

**        12/31/2006                  **

**      13.22**

****

**        Declared $0.03 Cash Dividend**

****

**          3/31/2007                        14.34**

****

*Prices Adjusted to reflect 5% Stock Dividend of 5/15/2002, 6/30/2003, 6/2/2004, 6/30/2005 and 5/31/2006

33