NMIL Newmil Bancorp

The Board of Directors of NewMil Bancorp, Inc. (NASDAQ/NM:NMIL) today announced results of its second quarter ended June 30, 2005. Diluted earnings per share increased 10% to $0.53 for the second quarter ended June 30, 2005 from $0.48 for the second quarter ended June 30, 2004. Net income increased 9% to $2.2 million for the second quarter of 2005, compared with $2.1 million for the second quarter of 2004. The strong results were attributable to increases in net interest income and non-interest income. Net interest income increased primarily due to an increase of $84.5 million in average earning assets, which more than offset the 27 basis point decrease in the net interest margin to 3.61%, compared with 3.88% at June 30, 2004. Non-interest income increased primarily due to a gain on sale of a foreclosed residential real estate property and increased deposit fees. Non interest expense was also lower in the six month period ended June 30, 2005, contributing to an efficiency ratio of 57% for this period. NewMil's assets increased to $812 million, up $67 million since December 31, 2004. Total gross loans were $495 million at June 30, 2005, which increased $13 million, or 2.7%, since December 31, 2004. Credit quality remains strong, as evidenced by nonperforming assets at 3 basis points of total assets at June 30, 2005. Deposits increased $17 million to $604 million from $587 million at December 31, 2004. At June 30, 2005, book value and tangible book value per common share were $13.18 and $11.21, respectively, and tier 1 leverage and total risk-based capital ratios were 7.14% and 13.12%, respectively. Return on average shareholder's equity was 16% for the second quarter of 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, as activity remained strong in all of the markets we serve. Our residential mortgage business has also gained steam recently as the rate environment remains favorable to the housing market. "Our competitive deposit product programs and excellent customer service are continuing to attract many new business and personal household accounts to the Bank. We continue 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 remains strong. We expect short-term interest rates will increase over the next few quarters as the Federal Reserve tries to strike a balance between a growing economy and an acceptable inflation level. Despite the slope of the present yield curve, the outlook for longer-term interest rates is becoming clearer and we expect continued demand for quality lending projects. "We will open our 20th office in Shelton in August and are optimistic about our growth expectations for the balance of the year." The Board of Directors also announced a quarterly dividend of 20 cents per common share, payable on August 16, 2005 to shareholders of record on July 29, 2005. NewMil Bancorp is the parent company of NewMil Bank, which has served western Connecticut since 1858, and operates 19 full-service banking offices. 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. -0- *T NewMil Bancorp, Inc SELECTED CONSOLIDATED FINANCIAL DATA (in thousands except ratios and per share amounts) (unaudited) Three month Six month period ended period ended June 30 June 30 STATEMENT OF INCOME 2005 2004 2005 2004 ------- ------ ------- -------- Interest and dividend income $9,836 $8,697 $19,115 $17,528 Interest expense 3,285 2,301 6,004 4,622 Net interest income 6,551 6,396 13,111 12,906 Provision for loan losses - - - - Non-interest income Service fees on deposit accounts 741 746 1,443 1,430 Gains on sales of mortgage loans 39 68 91 108 Gains on sale of OREO 65 - 65 - Other non-interest income 196 198 389 391 Total non-interest income 1,041 1,012 1,988 1,929 Non-interest expense Compensation 2,441 2,419 4,753 4,885 Occupancy and equipment 783 741 1,570 1,471 Postage and telecommunication 145 157 278 288 Professional services, collection & OREO 188 217 414 514 Printing and office supplies 113 113 217 214 Marketing 81 100 148 221 Service bureau EDP 97 98 190 192 Amortization of intangible assets 36 49 73 98 Other 536 492 1,032 968 Total non-interest expense 4,420 4,386 8,675 8,851 Income before income taxes 3,172 3,022 6,424 5,984 Provision for income taxes 923 960 1,940 1,899 Net income $ 2,249 $ 2,062 $ 4,484 $ 4,085 Per common share Diluted earnings $ 0.53 $ 0.48 $ 1.04 $ 0.94 Basic earnings 0.53 0.49 1.07 0.97 Cash dividends 0.20 0.17 0.40 0.32 Statistical data Net interest margin, (fully tax equivalent) 3.61% 3.88% 3.68% 3.96% Efficiency ratio 58.22 59.21 57.45 59.66 Return on average assets 1.13 1.16 1.16 1.16 Return on average common shareholders' equity 16.34 15.30 16.21 15.23 Weighted average equivalent common shares outstanding, diluted 4,275 4,332 4,298 4,334 *T -0- *T NewMil Bancorp, Inc. SELECTED CONSOLIDATED FINANCIAL DATA (in thousands except ratios and per share amounts) June 30, June 30, December 31, FINANCIAL CONDITION 2005 2004 2004 ----------- ----------- ------------ Unaudited Unaudited Total assets $812,312 $730,756 $744,599 Loans, net 490,255 474,941 476,660 Allowance for loan losses 4,981 5,165 5,048 Securities 264,162 192,713 216,558 Cash and cash equivalents 24,091 29,947 18,493 Intangible assets 8,167 8,601 8,240 Deposits 603,577 584,696 587,010 Federal Home Loan Bank advances 128,836 70,403 75,654 Repurchase agreements 12,416 8,932 13,147 Long term debt 9,836 9,776 9,806 Shareholders' equity 54,541 53,185 55,613 Non-performing assets 280 1,506 922 Deposits Demand (non-interest bearing) $ 76,549 $ 65,830 $ 66,895 NOW accounts 79,316 89,011 85,889 Money market 146,571 152,723 147,375 Savings and other 84,903 88,413 85,829 Certificates of deposit 216,238 188,719 201,022 Total deposits 603,577 584,696 587,010 Per common share Book value $13.18 $12.64 $13.25 Tangible book value 11.21 10.59 11.29 Statistical data Non-performing assets to total assets 0.03% 0.21% 0.12% Allowance for loan losses to total loans 1.01 1.08 1.05 Allowance for loan losses to non-performing loans 1778.93 342.96 547.51 Common shareholders' equity to assets 6.71 7.28 7.47 Tangible common shareholders' equity to assets 5.71 6.10 6.36 Tier 1 leverage capital 7.14 7.61 7.79 Total risk-based capital 13.12 13.77 14.40 Common shares outstanding, net (period end) 4,138 4,208 4,197 *T