Press Release

Exhibit 99.1

BSB

BANCORP, INC.

Earnings Release

58-68 Exchange St. Binghamton, New York 13901
		For Further Information, Contact: Rexford C. Decker Senior Vice President & CFO (607) 779-2320 Website: www.bsbbank.com

BSB Bancorp, Inc. Announces Fourth Quarter Net Income of $4.0 Million

And Annual Net Income of $1.8 Million

BINGHAMTON, N.Y.—January 23, 2003—BSB Bancorp, Inc. (NASDAQ/NMS:BSBN), the bank holding company for BSB Bank & Trust Company (“BSB”), a diversified financial services organization serving Central New York with total assets of approximately $2.0 billion, today announced financial results for the fourth quarter and full-year 2002.

Highlights: Quarter Ended December 31, 2002

Residential mortgage loan originations increased to $97.6 million for the fourth quarter of 2002 compared to $31.4 million for the third quarter of 2002

Net interest income increased approximately $500,000 over third quarter of 2002

Allowance to non-performing loans ratio increased to 125.0 percent from 114.4 percent at September 30, 2002 and 97.0 percent at December 31, 2001

BSB’s net income for the quarter ended December 31, 2002 was $4.0 million or $0.41 per diluted share, compared to $3.9 million or $0.41 per diluted share for the third quarter of 2002 and $4.9 million or $0.49 per diluted share for the fourth quarter of 2001.

BSB had another strong quarter of residential loan growth, as the total residential portfolio grew to $330.3 million at December 31, 2002, an increase of $69.8 million or 26.8 percent from $260.6 million at September 30, 2002. The total residential loan portfolio at December 31, 2002 was up by $109.4 million or 49.5 percent from $220.9 million at December 31, 2001.

Commercial and industrial (“C&I”) loans at December 31, 2002 totaled $492.2 million or 36.5 percent of the total loan portfolio, compared to $557.5 million or 42.4 percent of the total portfolio at September 30, 2002. The portfolio was $750.6 million or 50.6 percent of the total portfolio at December 31, 2001.

Howard W. Sharp, President and Chief Executive Officer, stated, “We continue to be successful in our strategic initiative of shifting our mix of loans, most notably growing our residential real estate and commercial real estate portfolios and reducing our C&I loans. Residential mortgage loan originations grew to $97.6 million in the fourth quarter of 2002, from $31.4 million in the third quarter of 2002. Originations for the full-year 2002 were a record $200.5 million, compared to $90.6 million for the full-year 2001. While we were clearly helped by the interest rate environment during 2002, our success is also owed to the priority we have placed on being the leader in that business in our primary markets and the improved efficiencies of our new BSB Mortgage Corporation facility.

Almost 31 percent of our new mortgage customers also opened a BSB checking account and we are quite pleased with our results in building those core customer relationships.”

Mr. Sharp continued, “We also were successful in growing our commercial real estate portfolio, which increased to $147.0 million at the end of the fourth quarter of 2002, up 20.3 percent compared to $122.1 million at the end of the third quarter of 2002.”

Net interest income increased from $18.8 million in the third quarter of 2002 to $19.3 million in the fourth quarter of 2002 as average earning assets increased $22.4 million from the third quarter of 2002 to the fourth quarter of 2002. Contributing to the increase in net interest income was an increase in the net interest margin, which increased to 3.86 percent in the fourth quarter of 2002 from 3.80 percent in the third quarter of 2002. The increase in earning assets provided approximately $200,000 of the increase in net interest income from the third quarter of 2002 to the fourth quarter of 2002, with changes in interest rates accounting for the remainder of the increase. Especially significant was the decline in the cost of retail certificates of deposit in the fourth quarter of 2002 by 34 basis points from the third quarter 2002, which contributed to a drop in the total cost of funds to 2.71 percent for the fourth quarter from 2.95 percent for the third quarter of 2002.

Non-interest income for the fourth quarter of 2002 increased to $6.6 million from $3.1 million in the third quarter of 2002. Included in the fourth quarter 2002 total was a net gain of approximately $3.1 million from the sale of two branches in the Elmira area. Also included in non-interest income for the fourth quarter was approximately $636,000 of net gains from the repurchase of BSB Capital Trust I Preferred Securities.

Total operating expense for the fourth quarter of 2002 was $11.7 million, an increase of $511,000 compared to the third quarter of 2002 and $661,000 compared to the fourth quarter of 2001. The increase in total operating expense in the fourth quarter of 2002 compared to the third quarter of 2002 was largely due to increases in professional fees of approximately $232,000 and salaries and benefits increases of approximately $175,000. The legal costs associated with the resolution of problem loans continues to keep professional fees high. When comparing the increase in expenses from the fourth quarter of 2002 to the fourth quarter of 2001, the increase in salaries and benefits amounted to $531,000. Salary increases were the result of merit increases effective at the beginning of 2002 and additional staff. In addition, benefit costs rose as a result of higher health care and pension costs.

The provision for loan losses for the fourth quarter of 2002 was $9.8 million compared to $4.5 million for both the third quarter of 2002 and the fourth quarter of 2001. The increased provision for loan losses was primarily due to increased net loan charge-offs, continued high levels of problematic loans, discussed below, as well as the continued economic sluggishness and uncertainty that BSB sees in its primary markets. Fourth quarter net charge-offs were $6.3 million compared to $1.7 million in the third quarter of 2002 and $2.6 million for the fourth quarter of 2001.

Mr. Sharp also stated, “Risk management and asset quality continue to be the focus at BSB and I am pleased to be able to report a decrease in non-performing loans. Non-performing loans at December 31, 2002 were $50.6 million or 3.76 percent of total gross loans outstanding, compared to $52.2 million or 3.98 percent of total gross loans outstanding at September 30, 2002 and $60.7 million or 4.09 percent of total gross loans outstanding at December 31, 2001. Loan loss reserve coverage of non-performing loans also improved, rising to 125.0 percent of non-performing loans from 114.4 percent coverage at September 30, 2002 and 97.0 percent coverage at December 31, 2001. In addition, the reserve to total loans is now at 4.69 percent as compared to 4.55 percent at September 30, 2002 and 3.96 percent at December 31, 2001.”

Other asset quality ratios improved also with performing loans past due 30-89 days declining to $6.1 million at December 31, 2002 from $8.1 million at September 30, 2002, and performing substandard loans dropping to $78.2 million ($12.2 million of which are accruing troubled debt restructured loans) at December 31, 2002 compared to $83.9 million ($5.1 million of which are accruing troubled debt restructured loans) at September 30, 2002. The loan mix continued to get closer to our targets as we ended the year with 36.5 percent C&I loans, 24.5 percent residential mortgage loans, 28.1 percent consumer loans and 10.9 percent commercial real estate.

Highlights: Year Ended December 31, 2002

Real estate loans grew $121.5 million and C&I loans declined $258.4 million during 2002

Indirect auto originations up 72.5 percent for 2002 compared to 2001

Successful Proof of Deposit conversion and seamless sale of branches and credit card portfolio sale accomplished

For the twelve months ended December 31, 2002, BSB had net income of $1.8 million or $0.18 per diluted share, compared to net income of $20.5 million or $2.02 per diluted share for the twelve months ended December 31, 2001, attributed primarily to the increases in the provision for loan losses and operating expenses. The provision for loan losses for the twelve months ended December 31, 2002 was $46.2 million compared to $18.2 million for the comparable period in 2001. A substantial portion of the 2002 provision, $26.7 million, was recorded during the second quarter of 2002 primarily due to specific circumstances affecting individual borrowers and our analysis during the second quarter of other borrowers whose reported financial results revealed deterioration of collateral and repayment ability.

Net interest income for the twelve months ended December 31, 2002 was $78.3 million, compared to $81.3 million during the same period in 2001. While net interest margin for the year 2002 increased slightly to 3.92 percent compared to 3.87 percent for the year 2001, the increase was more than offset by declines in the average balance of earning assets. Average earning asset balances declined 5.2 percent from $2,102.9 million for 2001 to $1,994.5 million for 2002.

Non-interest income for the twelve months ended December 31, 2002 was $17.8 million compared to $13.5 million in 2001, and includes a net gain of approximately $1.8 million on the sale of the Bank’s credit card portfolio that was completed in the first quarter, a net gain of $3.1 million from the sale of two Elmira, New York branches and approximately $726,000 of net gains from the repurchase of $7.0 million of BSB’s Capital Trust I Preferred Securities.

Operating expense for the twelve months of 2002 was $48.3 million, compared to $43.6 million for the same period in 2001. The increase was primarily the result of an increase in salary, pensions and other employee benefit costs of $2.9 million and an increase in professional fees of $684,000. Increases in salary costs for 2002 compared to 2001 consisted of both merit increases and an increase in staffing levels during 2001. The increase in benefit costs related primarily to increased health care and pension costs. Professional fees rose 31 percent mainly attributable to non-performing loan actions.

Stock Repurchase Program

Through its repurchase programs, the Company repurchased 167,070 shares and 315,496 shares of the Company’s currently issued and outstanding shares of common stock during the fourth quarter and twelve months ended December 31, 2002, respectively. Howard W. Sharp, stated, “The Board of Directors adopted the repurchase program because it continues to consider BSB Bancorp’s stock to be an attractive investment.” Mr. Sharp noted that “a principal effect of the repurchase program will be to increase the earnings per share of those shares of BSB Bancorp stock that remain outstanding after the repurchases.”

Elmira Branch Sale

On December 13, 2002, BSB Bank & Trust Company completed the sale of its two Elmira branch offices which had approximately $44.2 million in deposits. There was a net gain of $3.1 million from this transaction.

BSB Capital Trust III

During the fourth quarter, BSB Bancorp, Inc. formed the subsidiary BSB Capital Trust III, for the purpose of issuing preferred securities. The trust issued $15.0 million of floating-rate, non-voting, preferred securities, maturing in 2033. The entire net proceeds to the Trust from the offering were invested in junior subordinated obligations of the Company, which are the sole assets of the Trust. Proceeds from the issuance of these securities will be used for general corporate purposes.

Bank Owned Life Insurance (“BOLI”)

The Bank purchased $20 million of bank owned life insurance during December 2002. This will provide tax-exempt income from increases in the cash surrender value of life insurance policies.

Forward-Looking Statements

This news release contains forward-looking statements, including those regarding the projected performance of BSB Bancorp, Inc. These statements constitute forward-looking information, within the meaning of the Private Securities Litigation Reform Act of 1995, which involve significant risks and uncertainties. Actual results may differ materially from any forward-looking information discussed in this news release.

Factors that might cause such differences include, but are not limited to: fluctuations in interest rates, government regulations and economic conditions and competition in the geographic and business areas in which BSB conducts its operations, as well as unanticipated loan losses and other similar conditions affecting the Company’s operations, pricing, products, and services.

Except as required by law, BSB disclaims any obligation to update any such factors or to publicly announce the result of any revisions to any of the forward-looking statements in this news release to reflect future events or developments.

For additional information regarding BSB, including a discussion of related risk factors, please refer to BSB’s public filings with the Securities and Exchange Commission which are available online at http://www.sec.gov.

Profile

Headquartered in Binghamton, New York, BSB Bancorp, Inc. provides a broad range of deposit, loan, trust and financial management services to business and consumers in Broome, Onondaga, Tioga and Chenango counties through its subsidiary, BSB Bank & Trust Company. The Bank serves its customers from 20 full-service banking offices, 26 branch-based and 27 off-premise automatic teller machines, and at 12 proprietary banking service locations (StoreTeller^®) situated in a large area supermarket chain. In Broome County, the Bank is the leader in total deposits with 37 percent. More information about BSB can be obtained on the Internet at www.bsbbank.com.

###

BSB BANCORP, INC. – CONSOLIDATED

(Dollars in Thousands, Except Share and Per Share Data)

FINANCIAL HIGHLIGHTS (unaudited)


	Quarters Ended						Twelve Months Ended
	December 31,		September 30,		December 31,		December 31,

OPERATIONS DATA	2002		2002		2001		2002		2001

Total interest income	$31,085		$31,511		$35,219		$129,488		$163,494
Total interest expense	11,779		12,679		15,326		51,219		82,167
Net interest income	19,306		18,832		19,893		78,269		81,327
Provision for loan losses	9,750		4,500		4,500		46,170		18,224
Non-interest income	6,618		3,124		3,407		17,763		13,532
Operating expense	11,723		11,212		11,062		48,333		43,603
Income tax expense (benefit)	480		2,318		2,874		(254	)	12,572
Net income	3,971		3,926		4,864		1,783		20,460

SELECTED FINANCIAL DATA
Yield on earning assets (1)	6.21	%	6.37	%	7.13	%	6.49	%	7.77	%
Costs of funds (1)	2.71		2.95		3.62		2.97		4.49
Interest rate spread (1)	3.50		3.42		3.51		3.52		3.28
Interest rate margin (1)	3.86		3.80		4.03		3.92		3.87
Return on average assets (1)	0.77		0.77		0.96		0.09		0.95
Return on average equity (1)	10.52		10.50		11.97		1.15		12.87
Equity to assets (2)	7.32		7.33		7.55		7.32		7.55
Operating expenses to average assets (1)	2.27		2.20		2.18		2.34		2.02
Efficiency ratio	51.28		51.07		47.48		52.59		46.11

PER SHARE DATA
Basic earnings	$0.42		$0.41		$0.50		$0.19		$2.05
Diluted earnings	$0.41		$ 0.41		$0.49		$0.18		$2.02
Book value	$15.78		$15.78		$16.19		$15.78		$16.19
Dividends paid	$0.25		$0.25		$0.25		$1.00		$1.00
Dividend payout ratio	60.57	%	61.04	%	50.46	%	539.88	%	48.83	%
(1) Annualized (2) At period ended


	At December 31, 2002		September 30, 2002		December 31, 2001		December 31,
FINANCIAL CONDITION DATA	At December 31, 2002		September 30, 2002		December 31, 2001		2002		2001

Assets	$2,034,667		$2,065,009		$2,062,937		$2,034,667		$2,062,937
Earning assets	1,952,148		1,988,381		2,007,700		1,952,148		2,007,700
Gross loans	1,347,431		1,313,734		1,484,707		1,347,431		1,484,707
Allowance for loan losses	(63,250	)	(59,754	)	(58,829	)	(63,250	)	(58,829	)
Gross investment securities	598,853		673,215		512,208		598,853		512,208
Unrealized appreciation in AFS securities	14,999		16,488		4,322		14,999		4,322
Interest-bearing deposits	1,287,998		1,319,251		1,337,841		1,287,998		1,337,841
Non-interest-bearing deposits	154,758		161,384		159,096		154,758		159,096
Borrowings	378,118		377,876		360,251		378,118		360,251
Capital securities	48,000		39,000		30,000		48,000		30,000
Shareholders’ equity	148,926		151,296		155,825		148,926		155,825
Non-peforming loans	50,615		52,223		60,675		50,615		60,675
Performing loans, 30-89 days past due	6,120		8,136		18,111		6,120		18,111
Other real estate owned	1,532		4,488		710		1,532		710
Repossessed assets	1,577		492		1,324		1,577		1,324
Trust assets	261,689		244,769		317,940		261,689		317,940
Serviced loans	366,020		407,444		460,874		366,020		460,874

AVERAGE BALANCES
Assets	$2,062,783		$2,036,738		$2,029,009		$2,047,768		$2,156,559
Earning assets	2,002,529		1,980,159		1,974,535		1,994,546		2,102,931
Gross loans	1,331,955		1,307,398		1,502,098		1,359,891		1,657,154
Allowance for loan losses	(59,309	)	(58,395	)	(57,447	)	(57,666	)	(59,092	)
Gross investment securities	665,756		661,306		421,989		613,761		408,944
Unrealized appreciation in AFS securities	15,249		14,135		10,238		10,612		4,006
Interest-bearing deposits	1,301,042		1,347,559		1,390,387		1,345,866		1,524,027
Non-interest-bearing deposits	156,870		154,778		152,306		150,483		146,492
Borrowings	402,786		330,620		272,993		345,138		274,071
Capital securities	35,946		39,000		30,000		35,786		30,000
Shareholders’ equity	151,006		149,515		162,493		154,472		158,928
Shares outstanding	9,514,115		9,584,896		9,771,603		9,589,361		9,958,952
Diluted shares outstanding	9,611,592		9,692,658		9,980,098		9,740,263		10,114,197

BSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF CONDITION (unaudited)

(In Thousands, Except Share and Per Share Data)	December 31, 2002			September 30, 2002			December 31, 2001

ASSETS
Cash and due from banks	$	46,912		$	53,144		$	56,272
Investment securities available for sale, at fair value		538,545			638,458			487,685
Investment securities held to maturity		55,373			34,346			13,774
Federal Home Loan Bank of New York stock		19,934			16,899			15,071
Loans held for sale		4,001			236			9,860
Loans:
Commercial		492,171			557,495			750,552
Consumer		377,961			373,513			378,354
Residential real estate		330,344			260,578			220,935
Commercial real estate		146,955			122,148			134,866

Total loans		1,347,431			1,313,734			1,484,707
Net deferred costs		1,863			1,196			802
Allowance for loan losses		(63,250	)		(59,754	)		(58,829	)

Net loans		1,286,044			1,255,176			1,426,680

Bank premises and equipment		14,545			15,025			14,879
Accrued interest receivable		9,875			10,472			10,502
Other real estate owned and repossessed assets		3,109			4,980			2,034
Bank owned life insurance		20,032			0			0
Other assets		36,297			36,273			26,180

	$	2,034,667		$	2,065,009		$	2,062,937

LIABILITIES AND SHAREHOLDERS’ EQUITY
Due to depositors	$	1,442,756		$	1,480,635		$	1,496,937
Borrowings		378,118			377,876			360,251
Other liabilities		16,867			16,202			19,924
Company obligated mandatorily redeemable preferred securities of subsidiaries, holding solely junior subordinated debentures of the Company		48,000			39,000			30,000

Total liabilities		1,885,741			1,913,713			1,907,112

Shareholders’ Equity:
Preferred stock, par value $.01 per share; 2,500,000 shares authorized; none issued Common stock, par value $.01 per share; 30,000,000 shares authorized; 11,660,726, 11,642,301 and 11,535,500 shares issued		117			116			115
Additional paid-in capital		41,704			41,113			39,331
Undivided profits		134,903			133,337			142,748
Accumulated other comprehensive income		8,970			9,861			2,520
Treasury stock, at cost; 2,223,430, 2,056,360 and 1,907,934 shares		(36,768	)		(33,131	)		(28,889	)

Total shareholders’ equity		148,926			151,296			155,825

	$	2,034,667		$	2,065,009		$	2,062,937

BSB BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

	Quarters Ended				Years Ended Dec. 31,
	Dec. 31,	Sept. 30,	Dec. 31,		Years Ended Dec. 31,
(In Thousands, Except Per Share Data)	2002	2002	2001		2002		2001

Interest income:
Interest and fees on loans	$22,718	$22,973	$28,502		$96,346		$137,196
Interest on federal funds sold	3	42	292		287		1,101
Interest on investment securities	8,329	8,477	6,333		32,622		25,008
Interest on loans held for sale	35	19	92		233		189

Total interest income	31,085	31,511	35,219		129,488		163,494

Interest expense:
Interest on savings deposits	573	668	823		2,551		4,092
Interest on time accounts	5,680	6,422	9,072		26,401		48,878
Interest on money market deposit accounts	1,166	1,439	1,588		5,667		11,500
Interest on NOW accounts	82	146	378		710		1,522
Interest on borrowed funds	3,630	3,261	2,856		13,162		13,738
Interest on mandatorily redeemable preferred securities of subsidiaries	648	743	609		2,728		2,437

Total interest expense	11,779	12,679	15,326		51,219		82,167

Net interest income	19,306	18,832	19,893		78,269		81,327
Provision for loan losses	9,750	4,500	4,500		46,170		18,224

Net interest income after provision for loan losses	9,556	14,332	15,393		32,099		63,103

Non-interest income:
Service charges on deposit accounts	1,341	1,348	1,323		5,176		5,226
Checkcard interchange fees	388	352	354		1,422		1,284
Mortgage servicing fees	122	252	269		832		1,125
Fees and commissions-brokerage services	168	168	178		886		698
Trust fees	329	260	300		1,308		1,618
Gains on sale of securities, net	22	95	230		292		379
Gain on sale of branch offices, net	3,063	0	0		3,063		299
Gain on sale of credit card portfolio, net	0	0	0		1,806		0
Other income	1,185	649	753		2,978		2,903

Total non-interest income	6,618	3,124	3,407		17,763		13,532

Operating expense:
Salaries, pensions and other employee benefits	6,098	5,923	5,567		24,769		21,828
Building occupancy	1,067	1,056	1,087		4,259		4,304
Advertising and promotion	259	267	298		1,293		931
Professional fees	873	641	704		2,890		2,206
Data processing costs	1,280	1,253	1,312		5,534		5,213
Services	784	647	644		2,905		2,951
Conversion expenses	0	0	0		387		0
Other real estate owned and repossessed asset expenses, net	42	33	(29	)	688		211
Other expenses	1,320	1,392	1,479		5,608		5,959

Total operating expense	11,723	11,212	11,062		48,333		43,603

Income before income taxes	4,451	6,244	7,738		1,529		33,032
Income tax expense (benefit)	480	2,318	2,874		(254	)	12,572

NET INCOME	$3,971	$3,926	$4,864		$1,783		$20,460

Earnings per share:
Basic	$0.42	$0.41	$0.50		$0.19		$2.05
Diluted	$0.41	$0.41	$0.49		$0.18		$2.02

BSB BANCORP, INC.

NON-PERFORMING ASSETS (unaudited)

	December 31,		September 30,		June 30,		March 31,		December 31,
(Dollars in Thousands)	2002		2002		2002		2002		2001

Non-accrual loans:
Commercial loans	$34,614		$40,447		$39,420		$31,813		$42,424
Residential real estate loans	616		755		722		842		882
Commercial real estate loans	2,647		4,080		1,219		4,342		4,235
Consumer loans	288		365		438		0		0
Troubled debt-restructured loans	12,172		6,219		11,915		19,402		12,255

Total non-accrual loans	50,337		51,866		53,714		56,399		59,796
Accruing loans with principal or interest payments 90 days or more overdue	278		357		374		736		879

Total non-performing loans	50,615		52,223		54,088		57,135		60,675

Other real estate owned and repossessed assets	3,109		4,980		4,872		1,972		2,034

Total non-performing assets	$53,724		$57,203		$58,960		$59,107		$62,709

Total non-performing loans to total loans	3.76	%	3.98	%	4.10	%	4.15	%	4.09	%

Total non-performing assets to total assets	2.64	%	2.77	%	2.86	%	2.87	%	3.04	%

Note: Accruing loans classified as troubled debt restructured loans totaled: $13,792,000, $5,052,000, $4,925,000, $7,578,000, and $8,751,000 at December 31, 2002, September 30, 2002, June 30, 2002, March 31, 2002, and December 31, 2001, respectively. The Bank does not consider these loans to be non-performing.

ALLOWANCE AND NET CHARGE-OFFS PER QUARTER (unaudited)

	Quarters ended
(Dollars in Thousands)	December 31, 2002		September 30, 2002		June 30, 2002		March 31, 2002		December 31, 2001


Average gross loans outstanding	$1,331,955		$1,307,398		$1,365,925		$1,436,007		$1,502,098


Allowance at beginning of period	$59,754		$56,988		$52,785		$58,829		$56,905

Charge-offs:
Commercial loans	7,271		2,285		23,052		10,326		1,686
Consumer loans	967		1,359		432		1,664		2,501
Residential real estate loans	17		16		40		15		29
Commercial real estate loans	0		0		1,112		0		0

Total loans charge-offs	8,255		3,660		24,636		12,005		4,216
Recoveries	2,001		1,926		2,119		761		1,640

Net charge-offs	6,254		1,734		22,517		11,244		2,576

Provision for loan losses	9,750		4,500		26,720		5,200		4,500

Allowance at end of period	$63,250		$59,754		$56,988		$52,785		$58,829


Ratio of net charge-offs to:
Average gross loans outstanding (annualized)	1.88	%	0.53	%	6.59	%	3.13	%	0.69	%
Ratio of allowance to:
Non-performing loans	124.96	%	114.42	%	105.36	%	92.39	%	96.96	%
Period-end loans outstanding	4.69	%	4.55	%	4.32	%	3.83	%	3.96	%