NewMil Bancorp Reports 28% Increase in Net Income for First Quarter 2002; Announces $0.125 Quarterly Dividend.

Business Editors

NEW MILFORD, Conn.--(BUSINESS WIRE)--April 17, 2002

The Board of Directors of NewMil Bancorp, Inc. (Nasdaq/NM:NMIL) today announced results of its first quarter ended March 31, 2002.

Diluted earnings per share increased 27.6% to 37 cents for the first quarter ended March 31, 2002 from 29 cents for the quarter ended March 31, 2001. Diluted cash earnings per share (excluding amortization of intangible assets, net of applicable taxes) increased 18.8% to 38 cents for the first quarter of 2002 from 32 cents for the quarter ended March 31, 2001.

Net income increased 27.7% to $1,717,000 for the first quarter of 2002, compared with $1,345,000 for the quarter ended March 31, 2001. The increase in net income was achieved through growth in net interest income and non-interest income, offset by increased non-interest expense. Net interest income increased $1.2 million, or 23.9%, in 2002. This resulted from a $73.2 million increase in average earning assets and a 31 basis point increase in the net interest margin to 4.30%. The increase in earning assets is due to internal growth. The increase in the net interest margin is due mostly to the effects of lower market interest rates in 2002 as compared with 2001 and to changes in deposit pricing and deposit mix. Non-interest income increased $204,000, or 29.8%, for the first quarter of 2002, primarily due to increased gains from sales of residential mortgage loans, and increased service fee and other income. Non-interest expense increased $939,000, or 27.4%, for the first quarter of 2002, primarily due to increased compensation, marketing and other operating expenses.

Francis J. Wiatr, NewMil's Chairman, President and CEO, noted "Our strong performance for the quarter is a result of several continuing positive trends in the company. Deposit growth is up another 4% after a 9% increase for all of 2001. Loan demand in residential lending has been steady, reflecting a strong housing market in Fairfield and Litchfield counties and a favorable interest rate climate. Commercial loan demand has been softer over the past several months due to a slower economy but is showing some improvement as we move to the second quarter. Importantly, our non-performing assets represent only 24 basis points of total assets."

"We continue to grow market share in all of our primary markets and expect this trend to continue. We remain optimistic about future earnings prospects and our strong position in Connecticut's very attractive Litchfield and Northern Fairfield County marketplaces."

At March 31, 2002 NewMil had total assets of $613.6 million, up $6.6 million since December 31, 2001. During the quarter deposits grew $19.2 million, or 4.0%, to $495.3 million. At March 31, 2002 book value and tangible book value per common share were $11.55 and $9.44, respectively, and tier 1 leverage and total risk-based capital ratios were 6.61% and 12.46%, respectively.

The Board also announced a quarterly dividend of 12.5 cents per common share payable on May 17, 2002 to shareholders of record on May 7, 2002.

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. and Subsidiary
                 SELECTED CONSOLIDATED FINANCIAL DATA
          (in thousands except ratios and per share amounts)

                                                  Three month
                                                 period ended
                                                   March 31
STATEMENT OF INCOME                            2002          2001
                                               ----          ----

Interest and dividend income                 $9,444        $9,349
Interest expense                              3,435         4,501
Net interest income                           6,009         4,848
Provision for loan losses                         -             -
Non-interest income
   Service fees on deposit accounts             537           484
   Gains on sales of mortgage loans             161            59
   Other non-interest income                    190           141
   Total non-interest income                    888           684
Non-interest expense
   Compensation                               2,259         1,695
   Occupancy and equipment                      653           659
   Postage and telecommunication                146           123
   Professional services                        249           149
   Printing and office supplies                 156           101
   Marketing                                    158            74
   Amortization of intangible assets             72           163
   Other                                        676           466
   Total non-interest expense                 4,369         3,430
Income before income taxes                    2,528         2,102
Provision for income taxes                      811           757
Net income                                    1,717         1,345

Per common share
Diluted earnings                              $0.37         $0.29
Diluted cash earnings(1)                       0.38          0.32
Basic earnings                                 0.39          0.30
Cash dividends                                0.125         0.110

Statistical data
Net interest margin                            4.30%         3.99%
Efficiency ratio                              63.35         62.00
Return on average assets                       1.13          1.04
Return on average common
   shareholders' equity                       13.40         11.25
Weighted average equivalent
   common shares outstanding, diluted         4,597         4,707


(1) Excludes amortization of intangible assets, net of applicable
    taxes.

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

                                    March 31,   March 31, December 31,
FINANCIAL CONDITION                   2002        2001        2001
                                      ----        ----        ----

Total assets                        $613,666    $535,821     $607,026
Loans, net                           331,732     334,432      340,368
Allowance for loan losses              5,488       5,454        5,502
Securities                           214,785     151,382      212,408
Cash and cash equivalents             35,924      27,845       26,194
Intangible assets                      9,233       9,381        9,305
Deposits                             495,342     460,282      476,116
Federal Home Loan Bank advances       51,049      13,500       67,540
Repurchase agreements                  9,482       6,056        5,783
Shareholders' equity                  50,614      48,333       50,594
Non-performing assets                  1,500       1,536        1,861
Deposits
   Demand (non-interest bearing)    $ 38,554    $ 34,790      $39,898
   NOW accounts                       67,892      56,574       63,415
   Money market                      132,001     124,279      120,888
   Savings and other                  73,179      66,175       70,001
   Certificates of deposit           183,716     178,464      181,914
   Total deposits                    495,342     460,282      476,116

Per common share
Book value                            $11.55      $10.73       $11.52
Tangible book value                     9.44        8.65         9.40


Statistical data
Non-performing assets
 to total assets                        0.24%       0.29%        0.31%
Allowance for loan losses
 to total loans                         1.63        1.60         1.59
Allowance for loan losses
 to non-performing loans              396.53      377.70       315.30
Common shareholders'
 equity to assets                       8.25        9.02         8.33
Tangible common shareholders'
 equity to assets                       6.74        7.27         6.80
Tier 1 leverage capital                 6.61        7.21         6.56
Total risk-based capital               12.46       12.59        12.18
Common shares
 outstanding, net
 (period end)                          4,382       4,503        4,391