NMIL Newmil Bancorp

The Board of Directors of NewMil Bancorp, Inc. (NASDAQ/NM:NMIL) today announced results of its first quarter ended March 31, 2006. Diluted earnings per share increased 4% to $0.54 for the first quarter ended March 31, 2006 from $0.52 for the first quarter ended March 31, 2005. Net income for the quarter was substantially unchanged at $2.22 million compared to $2.23 million for first quarter of 2005. NewMil's results for the first quarter of 2006 reflect the challenging interest rate environment affecting the entire banking industry. Net interest income was $6.3 million for the quarter as compared with $6.4 million in the fourth quarter of 2005 and $6.6 million in the first quarter of 2005. Taxable equivalent net interest income was $6.5 million for the quarter compared with $6.6 million in the fourth quarter of 2005 and $6.6 million in the first quarter of 2005. The net interest margin was 3.19% for the quarter compared to 3.31% in the fourth quarter of 2005 and 3.71% in the first quarter of 2005. The compression in net interest margin was mostly due to the rise in short term rates and the prolonged flatness of the yield curve, which has reduced the gap between short- and intermediate-term interest rates and the spread between what banks earn on loans and securities and pay on deposits and borrowings. NewMil has sought to offset this effect by growing earning assets. During the quarter average earning assets were up $20 million over the fourth quarter of 2005 and up $120 million over the first quarter of 2005. Non-interest income was $1.1 million for the quarter, and included a gain of $200,000 from the sale of OREO, as compared with $0.9 million for the first quarter of 2005. Non-interest expense was $4.3 million for the quarter and was substantially unchanged when compared with the prior year period. The decrease in the provision for income tax for the quarter when compared with the prior year period was principally due to increased holdings of tax exempt securities. The efficiency ratio was 58.6% for the first quarter of 2006. NewMil's assets grew $3.3 million during the first quarter to $877.8 million at March 31, 2006. Gross loans increased $18.5 million during the quarter to $516.2 million at March 31, 2006. Asset quality remains strong, as evidenced by nonperforming assets at 23 basis points of total assets at March 31, 2006. Deposits grew $3.3 million during the quarter to $619.3 million at March 31, 2006. At March 31, 2006, book value and tangible book value per common share were $12.84 and $10.85, respectively, and tier 1 leverage and total risk-based capital ratios were 6.77% and 13.17%, respectively. Return on average shareholders' equity was 17% for the first quarter of 2006 versus 16% for the first quarter of 2005. Francis J. Wiatr, NewMil's Chairman, President and CEO noted, "Given the continued compression of net interest margin due to the current flat interest rate environment, we are pleased with our results for the quarter. Our commercial lending business was solid during the quarter and we continued to build market share with this important segment of our business. Recently released statistics by the U.S. Small Business Administration rank NewMil Bank as one of the top originators in the State of Connecticut for 504 loans. "Our retail banking programs also continued to grow during the quarter, even as we faced an ever more competitive market. Sales of our highly competitive Health Savings Account (HSA) product were particularly successful during the quarter, and we attracted many new accounts as a result of targeted marketing programs to benefits brokers. The Board of Directors also announced a quarterly dividend of $0.22 per common share, payable on May 17, 2006 to shareholders of record on May 3, 2006. NewMil Bancorp is the parent company of NewMil Bank, which has served western Connecticut since 1858, and operates 20 full-service banking offices. Please also refer to Webster Financial Corporation's (NYSE: WBS) press release of April 25, 2006, which announced that the Board of Directors of NewMil has entered into a definitive agreement with Webster for Webster to acquire NewMil. 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) Three month period ended March 31 STATEMENT OF INCOME 2006 2005 Interest and dividend income $11,256 $9,279 Interest expense 4,972 2,719 Net interest income 6,284 6,560 Provision for loan losses - - Non-interest income Service fees on deposit accounts 656 702 Gains on sales of mortgage loans 11 52 Gain on sale of OREO 200 - Other non-interest income 198 193 Total non-interest income 1,065 947 Non-interest expense Compensation 2,419 2,312 Occupancy and equipment 791 787 Postage and telecommunication 145 133 Professional services, collection & OREO 182 226 Printing and office supplies 97 104 Marketing 67 67 Service bureau EDP 92 93 Amortization of intangible assets 25 37 Other 489 496 Total non-interest expense 4,307 4,255 Income before income taxes 3,042 3,252 Provision for income taxes 824 1,017 Net income $ 2,218 $ 2,235 Per common share Diluted earnings $ 0.54 $ 0.52 Basic earnings 0.54 0.53 Cash dividends 0.22 0.20 Statistical data Net interest margin, (fully tax equivalent) 3.19% 3.71% Efficiency ratio 58.61 56.68 Return on average assets 1.02 1.19 Return on average common shareholders' equity 16.81 16.08 Weighted average equivalent common shares outstanding, diluted 4,141 4,309 NewMil Bancorp, Inc. SELECTED CONSOLIDATED FINANCIAL DATA (in thousands except ratios and per share amounts) March 31, March 31, December 31, 2006 2005 2005 FINANCIAL CONDITION Total assets $877,774 $789,800 $872,991 Loans, net 511,265 476,772 492,763 Allowance for loan losses 4,941 5,001 4,949 Securities 306,264 258,079 322,343 Cash and cash equivalents 23,235 20,664 22,564 Intangible assets 8,069 8,203 8,093 Deposits 619,251 604,284 615,995 Federal Home Loan Bank advances 180,299 98,663 174,266 Repurchase agreements 11,806 14,186 15,491 Long term debt 9,881 9,821 9,866 Shareholders' equity 52,272 54,582 53,016 Non-performing assets 2,041 476 1,590 Deposits Demand (non-interest bearing) $ 79,818 $ 71,039 $ 77,383 NOW accounts 79,475 84,766 82,400 Money market 138,401 151,220 146,007 Savings and other 90,658 87,130 88,142 Certificates of deposit 230,899 210,129 222,063 Total deposits 619,251 604,284 615,995 Per common share Book value $ 12.84 $ 12.96 $ 12.98 Tangible book value 10.85 11.01 10.99 Statistical data Non-performing assets to total assets 0.23% 0.06% 0.18% Allowance for loan losses to total loans 0.96 1.04 0.99 Allowance for loan losses to non-performing loans 242.09 1,240.94 311.26 Common shareholders' equity to assets 5.96 6.91 6.07 Tangible common shareholders' equity to assets 5.04 5.87 5.15 Tier 1 leverage capital 6.77 7.75 6.81 Total risk-based capital 13.17 14.23 13.09 Common shares outstanding, net (period end) 4,073 4,211 4,086 *T