NewMil Bancorp Reports 11% Increase in Earnings Per Share and Net Income Up 10.5% for First Quarter 2005; Announces $0.20 Quarterly Dividend

Business Wire, April 20, 2005

NEW MILFORD, Conn. -- The Board of Directors of NewMil Bancorp, Inc. (NASDAQ/NM:NMIL) today announced results of its first quarter ended March 31, 2005.

Diluted earnings per share increased 11% to $0.52 for the first quarter ended March 31, 2005 from $0.47 for the first quarter ended March 31, 2004.

Net income increased 10.5% to $2.2 million for the first quarter of 2005, compared with $2.0 million for the first quarter of 2004. The strong results were attributable to increases in net interest income, non-interest income and lower non-interest expense. Net interest income increased primarily due to an increase of $58.7 million in average earning assets, which more than offset the 30 basis point decrease in the net interest margin to 3.71%, compared with 4.01% at March 31, 2004. Non-interest income increased due to higher service fees collected as well as higher gains on sales of residential loans. Non-interest expense decreased $0.2 million, or 5% for the first quarter of 2005, primarily due to lower compensation, marketing and advertising costs as well as lower professional service expenses.

NewMil's assets increased to $790 million, up $45 million since December 31, 2004. Total gross loans were $482 million at March 31, 2005, which increased slightly since December 31, 2004. Credit quality remains strong, as evidenced by nonperforming assets at 6 basis points of total assets at March 31, 2005. Deposits increased $17 million to $604 million from $587 million at December 31, 2004. At March 31, 2005, book value and tangible book value per common share were $12.96 and $11.01, respectively, and tier 1 leverage and total risk-based capital ratios were 7.75% and 14.23%, respectively. Return on average shareholder's equity was 16% for the first quarter of 2005. NewMil's efficiency ratio was under 57% for the quarter ending March 31, 2005.

Francis J. Wiatr, NewMil's Chairman, President and CEO noted, "We are very pleased with our results for the quarter. Our commercial lending business had an excellent quarter, while our residential business softened as expected due to higher interest rates.

"Our competitive deposit product programs and excellent customer service are continuing to attract many new business and personal household accounts to the Bank. While our market place is competitive, we are continuing to build market share as people appreciate the difference dealing with a local bank who can deliver excellent and timely service.

"The economy in the markets we serve is strong. However, there is a confused outlook as to the threat of inflation at the national level over the next few quarters. Consequently, we are expecting a continued rise in interest rates in the near term. While this could soften things a bit, there is enough momentum for quality projects that we expect continued strong loan demand.

"With prudent consideration for the uncertainty that accompanies changing economic scenarios, we are optimistic about our growth prospects as we move forward into the year. We are in the process of opening two additional Fairfield County locations this year and are confident in our overall outlook for 2005."

The Board of Directors also announced a quarterly dividend of 20 cents per common share, payable on May 17, 2005 to shareholders of record on May 3, 2005.

NewMil Bancorp is the parent company of NewMil Bank, which has served western Connecticut since 1858, and operates 19 full-service banking offices.

Financial highlights are attached.

Statements in this news release concerning future results, performance, expectations or intentions are forward-looking statements. Actual results, performance or developments may differ materially from forward-looking statements as a result of known or unknown risks, uncertainties, and other factors, including those identified from time to time in the Company's other filings with the Securities and Exchange Commission, press releases and other communications.

NewMil Bancorp, Inc
                 SELECTED CONSOLIDATED FINANCIAL DATA
          (in thousands except ratios and per share amounts)
                              (unaudited)

                                                    Three month
                                                    period ended
                                                       March 31
STATEMENT OF INCOME                              2005          2004
                                                ------        ------
Interest and dividend income                    $9,279        $8,831
Interest expense                                 2,719         2,321
Net interest income                              6,560         6,510
Provision for loan losses                            -             -
Non-interest income
    Service fees on deposit accounts               702           684
    Gains on sales of mortgage loans                52            40
    Other non-interest income                      193           193
    Total non-interest income                      947           917
Non-interest expense
    Compensation                                 2,312         2,466
    Occupancy and equipment                        787           730
    Postage and telecommunication                  133           131
    Professional services, collection & OREO       226           297
    Printing and office supplies                   104           101
    Marketing                                       67           121
    Service bureau EDP                              93            94
    Amortization of intangible assets               37            49
    Other                                          496           476
    Total non-interest expense                   4,255         4,465
Income before income taxes                       3,252         2,962
Provision for income taxes                       1,017           939
Net income                                      $2,235        $2,023

Per common share
Diluted earnings                                 $0.52         $0.47
Basic earnings                                    0.53          0.48
Cash dividends                                    0.20          0.15

Statistical data
Net interest margin                               3.71%         4.01%
Efficiency ratio                                 56.68         60.12
Return on average assets                          1.19          1.16
Return on average common
 shareholders' equity                            16.08         15.16
Weighted average equivalent
 common shares outstanding, diluted              4,309         4,334


                         NewMil Bancorp, Inc.
                 SELECTED CONSOLIDATED FINANCIAL DATA
          (in thousands except ratios and per share amounts)

                                   March 31,   March 31,  December 31,
FINANCIAL CONDITION                   2005        2004        2004
                                    --------    --------    --------
                                   Unaudited   Unaudited

Total assets                        $789,800    $714,370    $744,599
Loans, net                           476,772     452,301     476,660
Allowance for loan losses              5,001       5,178       5,048
Securities                           258,079     199,087     216,558
Cash and cash equivalents             20,664      30,460      18,493
Intangible assets                      8,203       8,650       8,240
Deposits                             604,284     558,841     587,010
Federal Home Loan Bank advances       98,663      75,546      75,654
Repurchase agreements                 14,186      11,066      13,147
Long term debt                         9,821       9,761       9,806
Shareholders' equity                  54,582      54,424      55,613
Non-performing assets                    476       1,518         922
Deposits
  Demand (non-interest bearing)     $ 71,039   $  49,178    $ 66,895
  NOW accounts                        84,766      78,025      85,889
  Money market                       151,220     156,872     147,375
  Savings and other                   87,130      85,073      85,829
  Certificates of deposit            210,129     189,693     201,022
  Total deposits                     604,284     558,841     587,010

Per common share
Book value                            $12.96      $12.90      $13.25
Tangible book value                    11.01       10.85       11.29

Statistical data
Non-performing assets to total
 assets                                 0.06%       0.21%       0.12%
Allowance for loan losses to
 total loans                            1.04        1.13        1.05
Allowance for loan losses to
 non-performing loans               1,240.94      341.11      547.51
Common shareholders' equity to
 assets                                 6.91        7.62        7.47
Tangible common shareholders'
 equity to assets                       5.87        6.41        6.36
Tier 1 leverage capital                 7.75        7.61        7.79
Total risk-based capital               14.23       13.78       14.40
Common shares outstanding, net
 (period end)                          4,211       4,220       4,197