Exhibit 99.1

MASSBANK CORP.	October 19, 2005
Reading, MA

FOR IMMEDIATE RELEASE

MASSBANK CORP. REPORTS 7.5% INCREASE IN EARNINGS PER SHARE

FOR THE THIRD QUARTER 2005

MASSBANK Corp. (NASDAQ – MASB), the Holding Company for MASSBANK, today reported net income of $1,884,000 or $0.43 in diluted earnings per share for the third quarter 2005, compared with net income of $1,811,000 or $0.40 in diluted earnings per share in the third quarter of 2004. Basic earnings per share in the recent quarter were $0.43 per share compared to $0.41 per share in the third quarter of last year. This is the Company’s second consecutive quarter of year-over-year earnings per share increases.

For the nine months ended September 30, 2005, the Company reported net income of $5,435,000 or $1.22 in diluted earnings per share ($1.24 in basic earnings per share) compared to $5,494,000 or $1.22 in diluted earnings per share ($1.24 in basic earnings per share) for the same period in 2004.

Income Statement

Net interest income, the Company’s core earnings, totaled $5,468,000 for the third quarter of 2005, up $257,000 or 4.9% from the same quarter in 2004. This is the fourth consecutive quarter that the Company has reported a year-over-year improvement in net interest income. The net interest margin in the recent quarter improved 24 basis points to 2.44% from 2.20% in the third quarter of 2004. This is an increase of 10.9% over the same quarter last year. The Company continues to benefit from rising short-term interest rates. The Federal Reserve Bank Board’s Federal Open Market Committee (FOMC) has raised the target rate for Federal Funds by 25 basis points eight times since the end of September 2004, increasing the rate from 1.75% to 3.75%.

Return on average assets and return on average equity for the third quarter 2005 were 0.82% and 7.06%, respectively, up from 0.74% and 6.67% for the comparable quarter in 2004.

Balance Sheet

The Company’s total assets decreased $57.6 million to $920.4 million at September 30, 2005 from $978.0 million at September 30, 2004. Deposits decreased $50.5 million or 5.9% year-over-year from $853.0 million at September 30, 2004 to $802.6 million at September 30, 2005. Stockholders’ equity was $105.3 million at September 30, 2005, representing a book value of $24.38 per share. This compares to $110.6 million at September 30, 2004, representing a book value of $25.13 per share.

October 19, 2005

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The Company’s non-accrual loans remain low totaling $267,000 at September 30, 2005, representing 0.12% of total loans. This compares to $182,000 representing 0.08% of total loans at September 30, 2004. At September 30, 2005, the Bank’s allowance for loan losses totaled $1.253 million representing 0.54% of total loans compared to $1.363 million representing 0.57% of total loans at September 30, 2004. In addition, the Bank’s allowance for loan losses on off-balance sheet credit exposures totaled $588,000 at September 30, 2005 compared to $616,000 a year earlier. This is intended to protect the bank against losses on loan commitments made to customers that have not yet been drawn down.

MASSBANK Corp. is the holding company for MASSBANK, a Massachusetts chartered savings bank. The Bank operates fifteen banking offices in Reading, Chelmsford, Dracut, Everett, Lowell, Medford, Melrose, Stoneham, Tewksbury, Westford and Wilmington, providing a variety of deposit, lending and trust services.

Cautionary Statement

This press release may contain forward-looking information, including information concerning the Company’s expectations of future business prospects. These forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results or performance to be materially different from the results and performance expressed or implied by the forward-looking statements. Forward looking statements include, but are not limited to, statements concerning the Company’s belief, expectations or intentions concerning the Company’s future performance, the financial outlook of the markets it serves and the performance and activities of its competitors. These statements reflect the Company’s current views. They are based on numerous assumptions and are subject to numerous risks and uncertainties, including the strength of the local economy and the U.S. economy in general, unexpected fluctuations in market interest rates, unexpected fluctuations in the markets for equities, bonds, federal funds and other financial instruments, an increase in the level of non-performing assets, an increase in competitive pricing pressures within the Company’s market, adverse legislative or regulatory developments, a significant decline in residential real estate values in the Company’s market area, adverse impacts resulting from the continuing war on terrorism, an increase in other employee-related costs, the impact of deflation or inflation, and other factors described in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission for the year ended December 31, 2004.

For further information contact Reginald E. Cormier, Senior Vice President, Treasurer and CFO at (781) 942-8192.

October 19, 2005

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MASSBANK CORP.

FINANCIAL HIGHLIGHTS

($ in thousands except share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2005			2004			2005			2004
For the Period Ended
Total interest and dividend income	$	9,346		$	8,436		$	27,180		$	24,902
Total interest expense		3,878			3,225			11,013			9,425
Net interest income		5,468			5,211			16,167			15,477
Provision (credit) for loan losses		—			(74	)		(53	)		(187	)
Net interest income after provision (credit) for loan losses		5,468			5,285			16,220			15,664
Gains on securities, net		238			182			426			942
Other non-interest income		316			267			910			896
Non-interest expense		3,176			2,978			9,379			9,102
Income tax expense		962			945			2,742			2,906
Net income	$	1,884		$	1,811		$	5,435		$	5,494
Weighted Average Common Shares Outstanding
Basic		4,342,872			4,398,346			4,377,372			4,413,910
Diluted		4,397,998			4,482,585			4,440,659			4,509,796
Per Common Share
Earnings:
Basic	$	0.43		$	0.41		$	1.24		$	1.24
Diluted		0.43			0.40			1.22			1.22
Cash dividends paid		0.26			0.25			0.78			0.75
Book value (period end)								24.38			25.13
Ratios (1)
Return on average assets		0.82	%		0.74	%		0.77	%		0.75	%
Return on average equity		7.06			6.67			6.72			6.66
Net interest margin		2.44			2.20			2.36			2.16
Total equity to assets (period end)								11.44			11.31

	At September 30,
	2005			2004
At Period End
Assets	$	920,429		$	978,016
Deposits		802,597			853,049
Total loans		231,073			237,621
Stockholders’ equity	$	105,340		$	110,604
Common shares outstanding		4,321,367			4,401,050
Asset Quality
Non-accrual loans	$	267		$	182
Real estate acquired through foreclosure		—			—
Total non-performing assets	$	267		$	182
Allowance for loan losses	$	1,253		$	1,363
Non-accrual loans to total loans		0.12	%		0.08	%

(1) Ratios are presented on an annualized basis with the exception of equity to assets.

October 19, 2005

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MASSBANK CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

(Unaudited)

($ in thousands except share data)

	At September 30, 2005			At September 30, 2004
Assets:
Cash and due from banks	$	10,441		$	9,842
Interest-bearing deposits in banks		1,115			4,633
Federal funds sold		196,737			186,765
Short-term investments		—			990
Debt securities available for sale:
Mortgage-backed securities		128,262			120,403
Other securities		294,284			323,088
Equity securities available for sale		7,481			8,785
Mortgage-backed securities held-to-maturity		4,577			4,894
Trading securities		22,803			55,782
Loans:
Mortgage loans		220,722			227,233
Other loans		10,351			10,388
Total loans		231,073			237,621
Allowance for loan losses		(1,253	)		(1,363	)
Net loans		229,820			236,258
Premises and equipment		6,182			6,596
Accrued interest receivable		4,268			4,378
Goodwill		1,090			1,090
Current income tax asset, net		45			42
Deferred income tax asset, net		2,762			376
Other assets		10,562			14,094
Total assets	$	920,429		$	978,016
Liabilities and Stockholders’ Equity:
Deposits:
Demand and NOW	$	87,810		$	85,363
Savings		471,054			570,358
Time certificates of deposit		243,733			197,328
Total deposits		802,597			853,049
Escrow deposits of borrowers		1,009			1,037
Allowance for loan losses on off-balance sheet credit exposures		588			616
Other liabilities		10,895			12,710
Total liabilities		815,089			867,412
Stockholders’ equity:
Preferred stock, par value $1.00 per share; 2,000,000 shares authorized, none issued		—			—
Common stock, par value $1.00 per share; 10,000,000 shares authorized, 7,793,930 and 7,724,930 shares issued, respectively		7,794			7,725
Additional paid-in capital		56,670			55,053
Retained earnings		104,025			101,217
		168,489			163,995
Treasury stock at cost 3,472,563 and 3,323,880 shares, respectively		(60,932	)		(55,650	)
Accumulated other comprehensive income (loss):
Net unrealized gains (losses) on securities available for sale, net of tax effect		(2,217	)		2,259
Shares held in rabbi trust at cost 15,144 and 25,304 shares, respectively		(335	)		(534	)
Deferred compensation obligation		335			534
Total stockholders’ equity		105,340			110,604
Total liabilities and stockholders’ equity	$	920,429		$	978,016

October 19, 2005

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MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

($ in thousands except share data)

	Three Months Ended
	September 30, 2005		September 30, 2004
Interest and dividend income:
Mortgage loans	$	2,998	$	3,342
Other loans		181		167
Securities available for sale:
Mortgage-backed securities		1,737		1,712
Other securities		2,450		2,199
Mortgage-backed securities held-to-maturity		59		63
Trading securities		187		301
Federal funds sold		1,722		615
Other investments		12		37
Total interest and dividend income		9,346		8,436
Interest expense:
Deposits		3,878		3,225
Total interest expense		3,878		3,225
Net interest income		5,468		5,211
Provision (credit) for loan losses		—		(74	)
Net interest income after provision (credit) for loan losses		5,468		5,285
Non-interest income:
Deposit account service fees		100		109
Gains on securities available for sale, net		177		113
Gains on trading securities, net		61		69
Deferred compensation plan income (loss)		49		(10	)
Other		167		168
Total non-interest income		554		449
Non-interest expense:
Salaries and employee benefits		1,877		1,778
Deferred compensation plan expense		71		5
Occupancy and equipment		521		524
Data processing		137		131
Professional services		115		143
Advertising and marketing		44		31
Deposit Insurance		35		39
Other		376		327
Total non-interest expense		3,176		2,978
Income before income taxes		2,846		2,756
Income tax expense		962		945
Net income	$	1,884	$	1,811
Weighted average common shares outstanding:
Basic		4,342,872		4,398,346
Diluted		4,397,998		4,482,585
Earnings per share (in dollars):
Basic	$	0.43	$	0.41
Diluted		0.43		0.40

October 19, 2005

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MASSBANK CORP. AND SUBSIDIARIES

Consolidated Statements of Income

($ in thousands except share data)

	Nine Months Ended
	September 30, 2005			September 30, 2004
Interest and dividend income:
Mortgage loans	$	9,148		$	10,369
Other loans		507			502
Securities available for sale:
Mortgage-backed securities		5,211			4,689
Other securities		7,158			6,587
Mortgage-backed securities held-to-maturity		181			111
Trading securities		620			895
Federal funds sold		4,310			1,540
Other investments		45			209
Total interest and dividend income		27,180			24,902
Interest expense:
Deposits		11,013			9,425
Total interest expense		11,013			9,425
Net interest income		16,167			15,477
Provision (credit) for loan losses		(53	)		(187	)
Net interest income after provision (credit) for loan losses		16,220			15,664
Non-interest income:
Deposit account service fees		301			342
Gains on securities available for sale, net 307 1,156 Gains (losses) on trading securities, net		119			(214	)
Deferred compensation plan income		59			24
Other		550			530
Total non-interest income		1,336			1,838
Non-interest expense:
Salaries and employee benefits		5,572			5,443
Deferred compensation plan expense		125			68
Occupancy and equipment		1,649			1,644
Data processing		404			391
Professional services		380			383
Advertising and marketing		104			79
Deposit Insurance		110			122
Other		1,035			972
Total non-interest expense		9,379			9,102
Income before income taxes		8,177			8,400
Income tax expense		2,742			2,906
Net income	$	5,435		$	5,494
Weighted average common shares outstanding:
Basic		4,377,372			4,413,910
Diluted		4,440,659			4,509,796
Earnings per share (in dollars):
Basic	$	1.24		$	1.24
Diluted		1.22			1.22