SOURCE: Midwest Banc Holdings, Inc.

October 23, 2007 21:00 ET

Midwest Banc (MBHI) 3Q07 EPS $.20

MELROSE PARK, IL--(Marketwire - October 23, 2007) - Midwest Banc Holdings, Inc. (NASDAQ: MBHI) today reported diluted earnings per share of $.20 for the third quarter compared to $.21 in the second quarter.

Overview

Midwest's performance during the third quarter reflected several positive developments:

-- Net interest margin expanded to 3.10%, despite the Large Problem
   Credit's continued negative impact on earnings and the net
   interest margin
-- Continued progress on credit quality initiatives
   -- Enhanced early detection of borrower weaknesses
   -- Consumer loan risk-based pricing
   -- Reduction in exposure related to customer concentration risk
-- Reduced total noninterest expenses for the second consecutive quarter
-- Northwest Suburban acquisition completed as of October 1, with
   integration plans fully in place

Net income was $4.8 million for the quarter compared with $5.1 million in the second quarter and $4.4 million in the first quarter. Compared to the second quarter, the net interest margin expanded, average loans and earning assets increased, net interest income increased and noninterest expenses decreased. Noninterest income decreased marginally in the current quarter, primarily because of a lower level of residential mortgage loan sales than in the prior quarter. The provision for loan losses increased $764,000, even though net chargeoffs were down, due to updated assessments of impaired loans, the overall growth in the loan portfolio, weakening economic trends and the increasingly challenging environment for real estate related businesses. The larger provision helped to strengthen our balance sheet, as reflected by the resulting increase in the allowance as a percentage of loans and in the nonaccrual coverage ratio. Loan delinquencies were down from the prior quarter.

The carrying cost of the previously disclosed Large Problem Credit continues to have a substantial negative impact on earnings, reducing net income by approximately $.11 per share on an annualized basis.

On October 1, Midwest completed its acquisition of Northwest Suburban Bancorp, Inc. (Northwest Suburban). With approximately $550 million in assets, Northwest Suburban operated five banking offices in complementary locations to our existing franchise. Signs have been changed, the technology conversion will be completed October 27 and all key sales professionals have been retained.

Loan Growth

Average loans increased by $27.7 million, or 5.6% on an annualized basis, from second to third quarter. This was in spite of selling $9.1 million of commercial loan participations during the quarter, as compared with $3.9 million in second quarter. Had we not sold loan participations in the third quarter, the annualized loan growth rate in the quarter would have been 6.8%.

"Our strategy behind selling loan participations in a period of modest loan growth is to diversify the mix in our portfolio and to reduce the risk and exposure to our largest credits," stated CEO Jim Giancola.

We announced last quarter that we had outsourced our residential mortgage origination operations. This was done to eliminate the fixed costs associated with this very cyclical business, while also enabling us to offer our customers an even broader array of residential mortgage products.

Net Interest Margin Expansion

The net interest margin increased to 3.10% in the third quarter compared to 3.05% in the second quarter and 3.01% in the first quarter. Yields on average loans and securities increased by 5 and 14 basis points, respectively. Rates paid on interest-bearing liabilities remained flat during the quarter.

The securities portfolio has a low degree of inherent credit risk. Approximately 87% of the portfolio is rated AAA, 12% is rated AA and 1% is rated A. No securities are rated below A. In addition, the securities portfolio does not contain any sub-prime or Alt-A mortgage-backed securities.

Loan Quality Stable

Loan balances for the Large Problem Credit have remained at $28.9 million and represent 65% of our nonaccrual loans. The borrower's corporate entities have filed for protection under chapter 11 of the Bankruptcy Code. Midwest continues to aggressively pursue collection through the court system and the liquidation of collateral to pay down these loans. While we believe that the current carrying value of these loans at September 30 reflects management's best current estimate of net realizable value, there can be no assurance that additional losses may not be incurred.

The quality of the loan portfolio remained stable. Nonaccrual loans excluding the Large Problem Credit were .80% of loans, up from .75% at June 30 but down from the December 31 level of .89%. There were no loans over 90 days past due but accruing at September 30. Foreclosed properties decreased slightly from $2.3 million at June 30 to $2.2 million. There have been no additions to foreclosed properties in 2007. Loan delinquencies 30-89 days were .49% of loans at September 30, down from .63% at June 30. Total nonperforming assets, excluding the Large Problem Credit, were up 6% from June 30, and down 8% compared to December 31.

The allowance for loan losses grew by $1.2 million to 1.24% during the quarter from 1.20% of loans outstanding at June 30. The allowance for loan losses to nonaccrual loans increased to 56% at September 30 from 54% at both June 30 and December 31. Net chargeoffs for the quarter were $645,000 or .13% of average loans, down from $1.3 million or .27% of loans in the second quarter. Net chargeoffs were $1.8 million or .12% of average loans for the nine months of 2007. The provision for loan losses for the quarter was $1.8 million compared to $1.0 million in the June quarter. The provision for loan losses was $3.5 million for the nine months of 2007.

Given current market conditions, Midwest has further enhanced its process to detect early stage credit deterioration in the loan portfolio and address any such problems timely and aggressively. When significant stress or weaknesses are identified in a particular loan, Midwest takes a proactive approach to manage the associated risks. The actions taken might include, for example, seeking additional collateral and/or pursuing an early exit strategy whereby the borrower is encouraged to seek alternative financing arrangements.

Noninterest Income

Noninterest income decreased during the third quarter by $196,000 to $3.7 million compared to the prior quarter. As anticipated, gains on sales of residential mortgage loans decreased as a result of outsourcing the residential mortgage origination operations. Insurance and brokerage commissions increased by 27% during the quarter which was driven by higher variable rate annuity sales.

During the quarter, we launched an enhanced sales initiative aimed at increasing cross-selling to both new and existing customers. It has already begun to show positive results. Additional initiatives planned for the fourth quarter include a marketing campaign aimed at our community bank brand and risk-based pricing for consumer loans.

Noninterest Expense Control

On a linked-quarter basis, noninterest expenses were down by $399,000. This decrease was mainly attributed to the decrease of salaries and benefits expense, which was partly offset by increases in occupancy and equipment expense and professional services fees. The decrease in salaries and benefits expense is a result of outsourcing the residential mortgage origination operations and janitorial services as well as a reduction in incentive compensation. An adjustment related to Midwest's recently filed 2006 income tax returns increased third quarter income tax expense by $159,000. Midwest's effective tax rate increased to 19.4% in the third quarter from 17.4% in the second quarter. The core efficiency ratio modestly improved to 64% during the quarter compared to 66% from the prior quarter.

Northwest Suburban Merger Closed

On October 1, we completed the merger of Northwest Suburban; in addition, Mount Prospect National Bank, Northwest Suburban's bank subsidiary, was merged into Midwest Bank and Trust Company, creating a 29-office bank with approximately $3.6 billion in assets. The overall mix of consideration paid for all outstanding shares of Northwest Suburban common stock was fixed so that 55% of the Northwest common stock was converted into cash and 45% of the Northwest common stock was converted into 3.8 million shares of our common stock. Total deal value was $135.4 million.

Based on deposits, the acquisition made Midwest Bank the 17th largest bank in the Chicago area. Northwest Suburban's five offices in Des Plaines, Lakemoor, Lake Zurich, Mount Prospect and North Barrington, located in Cook, Lake and McHenry counties, complement Midwest Bank's offices in northwest Cook and McHenry counties.

John Eilering, Chairman and CEO of Northwest Suburban, has become Area President -- Northwest of Midwest Bank and Stephen Markovits, President of Northwest Suburban, has become an executive vice president of Midwest Bank. Dennis O'Hara, CPA, a partner in the accounting firm, Clifton Gunderson, LLP, and a director of Northwest Suburban, has joined the boards of both Midwest Banc Holdings and Midwest Bank.

"We have changed the signs and systems conversions are scheduled for the weekend of October 27. Completing the operational merger soon after the legal merger is absolutely the best way to go," said Jim Giancola. "That brings our team closer together; makes the convenience of all our products, offices and ATMs available to all customers, and enables us to begin realizing planned efficiencies."

Following the merger, key balance sheet statistics for MBHI were approximately (dollar amounts in millions, subject to purchase accounting adjustments):

                                Pro Forma
                                ----------
Loans                           $    2,450
Earning assets                       3,250
Deposits                             2,460
Total assets                         3,580

Shares outstanding              28,160,000


Financial Highlights

On July 1, 2006 Midwest Banc acquired Royal American Corporation. There were special merger-related charges incurred in the third quarter 2006. Therefore, comparisons involving prior periods may be affected by this merger and these merger-related charges.

Earnings

-- Diluted earnings per share was $.20 for  third quarter and $.58 for
   nine months 2007
   -- Compared to $.24 for third quarter 2006, a 16.7% decrease
   -- Compared to $.21 for second quarter 2007, a 4.8% decrease
   -- Compared to $.64 for nine months 2006, a 9.4% decrease

-- Net income was $4.8 million for third quarter and $14.4 million for
   nine months 2007
   -- Compared to $6.0 million for third quarter 2006, a 19.2% decrease
   -- Compared to $5.1 million for second quarter 2007, a 5.3% decrease
   -- Compared to $14.8 million for nine months 2006, a 3.1% decrease

-- Core return on average assets was .64% for third quarter and .64%
   for nine months 2007
   -- Compared to .93% for third quarter 2006
   -- Compared to .68% for second quarter 2007
   -- Compared to .83% for nine months 2006

-- Core return on average equity was 6.75% for third quarter and 6.67%
   for nine months 2007
   -- Compared to 9.79% for third quarter 2006
   -- Compared to 7.07% for second quarter 2007
   -- Compared to 8.81% for nine months 2006

-- Net interest margin was 3.10% for third quarter and 3.05% for nine
   months 2007
   -- Compared to 3.40% for third quarter 2006
   -- Compared to 3.05% for second quarter 2007
   -- Compared to 3.41% for nine months 2006

-- Top line revenue increased
   -- $182,000 compared to second quarter 2007, a 3.1% annualized rate
   -- $3.8 million compared to nine months 2006

-- Core efficiency ratio was 64% for third quarter and 66% for
   nine months 2007
   -- Compared to 56% for third quarter 2006
   -- Compared to 66% for second quarter 2007
   -- Compared to 56% for nine months 2006

Loans and Loan Quality

-- Loans in third quarter increased
   -- $27.7 million on an average balance basis compared to second
      quarter 2007, a 5.6% annualized rate
   -- $24.8 million at September 30 compared to June 30, a 5.0%
      annualized rate

-- Annualized net charge-off rate was .13% for third quarter and .12 %
   for nine months 2007
   -- Compared to .03% for third quarter 2006
   -- Compared to .17% for nine months 2006

-- Nonaccrual loans at September 30 were $44.7 million or 2.23% of loans
   -- Compared to $43.6 million, or 2.20% at June 30
   -- Compared to $21.6 million, or 1.13% at September 30, 2006

-- Nonaccrual loans (excluding Large Problem Credit) at September 30
   were $15.8 million or .80% of loans
   -- Compared to $14.7 million, or .75% at June 30
   -- Compared to $10.3 million, or .55% at September 30, 2006

-- Nonperforming assets at September 30 were $46.9 million, or 2.34% of
   loan-related assets
   -- Compared to $45.9 million, or 2.31% at June 30
   -- Compared to $24.4 million, or 1.28% at September 30, 2006

-- Nonperforming assets (excluding Large Problem Credit) at September
   30 were $18.0 million, or .91% of loan-related assets
   -- Compared to $17.0 million, or .87% at June 30
   -- Compared to $13.2 million, or .70% at September 30, 2006

-- Allowance for loan losses at September 30 was 1.24% of loans
   -- Compared to 1.20% at June 30
   -- Compared to 1.34% at September 30, 2006

-- Allowance for loan losses to nonaccrual loans was 56% at September 30
  -- Compared to 54% at June 30
  -- Compared to 118% at September 30, 2006

-- Delinquencies 30-89 days to loans were .49% at September 30
   -- Compared to .63% at June 30
   -- Compared to 1.98% at September 30, 2006

Capital Ratios

-- Capital ratios at September 30
       -- Tier 1 risk-based       11.42%
       -- Total risk-based        12.51%
       -- Tier 1 leverage         8.99%
       -- Equity to assets        9.41%

Additional financial data are contained in the accompanying statements, tables and schedules.

Hosting a Conference Call

Management will host a conference call and webcast to discuss earnings results on October 24 at 11:00 am eastern/10:00 am central. We will provide a brief discussion of results and trends followed by responding to questions from investors and analysts who call in.

To participate in the call, dial 877-407-0778 or 201-689-8565 for international callers. Alternatively, participants can listen by going to our web site www.midwestbank.com.

Replays will be available on the web site through January 24. The audio replay can be accessed through November 1 at 877-660-6853 or 201-612-7415 for international callers. Use account number 286 and conference ID number 257541.

Franchise

Midwest Banc Holdings, Inc., headquartered in Melrose Park, IL, provides a wide range of retail and commercial banking services, personal and corporate trust services, securities services and insurance brokerage services in the greater Chicago area. We have 29 banking offices and operate 32 ATMs. Our principal operating subsidiaries are Midwest Bank and Trust Company, Midwest Financial and Investment Services, Inc., and Midwest Insurance Services, LLC.

Information on our products and services and locations is available at www.midwestbank.com.

Forward-Looking Statements

This news release contains "Forward-Looking Statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and should be reviewed in conjunction with the company's Annual Report on Form 10-K and other publicly available information regarding the company, copies of which are available from the company upon request. Such publicly available information sets for the certain risks and uncertainties related to the company's business, which should be considered in evaluating "Forward-Looking Statements."

                              Financial Highlights
                           Midwest Banc Holdings, Inc.
                                 (In thousands)

                                    Three Months Ended
                ----------------------------------------------------------
                September      June       March      December   September
                 30, 2007    30, 2007    31, 2007    31, 2006    30, 2006
                ----------  ----------  ----------  ----------  ----------
Income
 Statement
 Data:
  Net
   income       $    4,836  $    5,107  $    4,412  $    2,933  $    5,982
  Core net
   income(1)         4,836       5,107       4,412       2,933       6,943

Per Share Data:
  Basic and
   diluted
   earnings     $      .20  $      .21  $      .18  $      .12  $      .24
  Cash
   dividends
   declared            .13         .13         .13         .13         .13
  Book value         11.69       11.55       11.76       11.65       11.67
  Tangible book
   value(2)           8.02        7.91        8.12        7.97        8.03
  Stock price
   at period
   end               14.77       14.50       17.71       23.75       24.42
  Average stock
   price             14.54       16.35       20.25       23.66       23.03

Selected
 Financial
 Ratios:
  Return on
   average
   assets              .64%        .68%        .60%        .39%        .80%
  Core return
   on average
   assets(1)           .64         .68         .60         .39         .93
  Return on
   average
   equity             6.75        7.07        6.20        4.01        8.43
  Core return
   on average
   equity(1)          6.75        7.07        6.20        4.01        9.79
  Net interest
   margin (tax
   equivalent)        3.10        3.05        3.01        3.08        3.40
  Core
   efficiency
   ratio(1)(3)
   (4)                  64          66          70          66          56
  Dividend
   payout               67          64          74         111          55
  Loans to
   deposits at
   period end          101          96          97          99          94
  Loans to
   assets at
   period end           66          66          65          66          65
  Average
   equity to
   average
   assets             9.41        9.62        9.74        9.84        9.48
  Equity to
   assets at
   period end         9.41        9.38        9.75        9.76        9.84
  Tangible
   equity to
   tangible
   assets at
   period
   end(2)(5)          6.65        6.62        6.94        6.89        6.99
  Tier 1
   capital to
   risk-weight-
   ed assets         11.42       11.76       12.02       11.92       12.64
  Total capital
   to
   risk-weight-
   ed assets         12.51       12.81       13.10       12.97       13.84
  Tier 1
   leverage
   ratio              8.99        9.13        9.38        9.34        9.38

Full time
 equivalent
 employees             460         489         491         494         498

Balance Sheet
 Data:
  Total earning
   assets       $2,750,334  $2,698,762  $2,685,977  $2,617,894  $2,628,847
  Average
   earning
   assets        2,736,154   2,731,527   2,665,044   2,645,898   2,659,420
  Average
   assets        3,020,254   3,013,039   2,966,039   2,946,366   2,967,572
  Average loans  1,989,119   1,961,437   1,946,460   1,918,376   1,918,941
  Average
   securities      698,541     726,534     677,001     697,577     703,922
  Average
   deposits      2,022,709   2,021,256   1,995,721   1,996,864   2,062,014
  Tangible
   shareholders’
   equity(2)       195,790     194,138     200,711     196,481     199,233
  Average
   equity          284,231     289,760     288,783     289,864     281,367

Share Data:
  Common shares
   outstanding
   - at period
   end              24,406      24,547      24,705      24,663      24,796
  Basic -
   average          24,454      24,638      24,693      24,725      24,811
  Diluted -
   average          24,647      24,828      24,950      25,083      25,176

See footnotes at end of statements, tables and schedules.


                         Financial Highlights
                      Midwest Banc Holdings, Inc.
                           (In thousands)

                                                      Nine Months Ended
                                                  ------------------------
                                                   September    September
                                                   30,  2007    30,  2006
                                                  -----------  -----------
Income Statement Data:
  Net income                                      $    14,355  $    14,813
  Core net income(1)                                   14,355       15,774

Per Share Data:
  Basic earnings                                  $       .58  $       .65
  Diluted earnings                                        .58          .64
  Cash dividends declared                                 .39          .38
  Book value                                            11.69        11.67
  Tangible book value(2)                                 8.02         8.51
  Stock price at period end                             14.77        24.42
  Average stock price                                   17.01        23.37

Selected Financial Ratios:
  Return on average assets                                .64%         .78%
  Core return on average assets(1)                        .64          .83
  Return on average equity                               6.67         8.27
  Core return on average equity(1)                       6.67         8.81
  Net interest margin (tax equivalent)                   3.05         3.41
  Core efficiency ratio(1)(3)(4)                           66           56
  Dividend payout                                          68           59
  Loans to deposits at period end                         101           94
  Loans to assets at period end                            66           65
  Average equity to average assets                       9.59         9.46
  Equity to assets at period end                         9.41         9.84
  Tangible capital to tangible assets
    at period end(2)(5)                                  6.65         7.17
  Tier 1 capital to risk-weighted assets                11.42        12.64
  Total capital to risk-weighted assets                 12.51        13.84
  Tier 1 leverage ratio                                  8.99         9.38

Full time equivalent employees                            460          498

Balance Sheet Data:
  Total earning assets                            $ 2,750,334  $ 2,628,847
  Average earning assets                            2,711,169    2,311,644
  Average assets                                    2,999,877    2,532,571
  Average loans                                     1,965,828    1,571,484
  Average securities                                  700,778      709,951
  Average deposits                                  2,013,327    1,741,389
  Tangible shareholders’ equity(2)                    195,790      210,910
  Average equity                                      287,575      239,476

Share Data:
  Common shares outstanding - at period end            24,406       24,796
  Basic - average                                      24,594       22,886
  Diluted - average                                    24,821       23,279

See footnotes at end of statements, tables and schedules.


                         Statement of Income
                      Midwest Banc Holdings, Inc.
                           (In thousands)

                                       Three Months Ended
                     -----------------------------------------------------
                     September                        December   September
                        30,     June 30,   March 31,     31,        30,
                       2007       2007       2007       2006       2006
                     ---------  ---------  ---------  ---------  ---------
Interest Income
 Loans               $  37,566  $  36,822  $  36,058  $  35,970  $  36,874
 Loans held for
  sale                      11         48         30         41         44
 Securities
    Taxable              8,611      8,729      7,563      7,450      7,673
    Exempt from fed
     income taxes          462        462        700        962        956
  Dividends from FRB
   and FHLB stock          227        226        228        218        199
  Short-term
   investments             297        205        187         69        157
                     ---------  ---------  ---------  ---------  ---------
    Total interest
     income             47,174     46,492     44,766     44,710     45,903
                     ---------  ---------  ---------  ---------  ---------
Interest Expense
  Deposits              18,634     18,582     17,899     17,495     16,963
  Federal funds
   purchased                64        393        699        776        352
  Securities sold
   under repurchase
   agreements            3,137      2,563      2,159      2,651      2,857
  Advances from the
   FHLB                  3,640      3,670      3,648      3,286      3,001
  Junior
   subordinated
   debentures            1,334      1,315      1,301      1,327      1,337
  Note payable              18         --         --         --         --
                     ---------  ---------  ---------  ---------  ---------
    Total interest
     expense            26,827     26,523     25,706     25,535     24,510
                     ---------  ---------  ---------  ---------  ---------
Net interest income     20,347     19,969     19,060     19,175     21,393
                     ---------  ---------  ---------  ---------  ---------
Provision for loan
 losses                  1,800      1,036        645      5,500      1,550
                     ---------  ---------  ---------  ---------  ---------
Net interest income
 after provision for
 loan losses            18,547     18,933     18,415     13,675     19,843
Noninterest Income
  Service charges on
   deposit accounts      1,535      1,575      1,634      1,572      1,543
  Gains (losses) on
   securities
   transactions              6         31        (14)        42         --
  Net trading
   profits                  --         --         --         --        624
  Gains on sale of
   loans                    41        225        176        270        194
  Insurance and
   brokerage
   commissions             685        541        573        514        478
  Trust                    453        503        393        399        357
  Increase in CSV of
   life insurance          736        703        753        694        676
  Gain on
   extinguishment of
   debt                     --         --         --         --         --
  Other                    244        318        205        299        275
                     ---------  ---------  ---------  ---------  ---------
    Total
     noninterest
     income              3,700      3,896      3,720      3,790      4,147
                     ---------  ---------  ---------  ---------  ---------
Noninterest Expenses
  Salaries and
   employee benefits     9,740     10,363     10,447     10,058      9,318
  Occupancy and
   equipment             2,362      2,190      2,190      2,088      1,885
  Professional
   services              1,297      1,087      1,208      1,172      1,452
  Marketing                538        478        679        591        418
  Foreclosed
   properties                4          7         25         75         47
  Amortization of
   intangible assets       409        409        456        461        461
  Merger related
   charges                  --         --         --         --      1,595
  Other                  1,896      2,110      2,076      2,050      2,018
                     ---------  ---------  ---------  ---------  ---------
    Total
     noninterest
     expenses           16,245     16,644     17,081     16,495     17,194
                     ---------  ---------  ---------  ---------  ---------
Income before income
 taxes                   6,002      6,185      5,054        970      6,796
Provision (benefit)
 for income taxes        1,166      1,078        642     (1,963)       814
                     ---------  ---------  ---------  ---------  ---------
Net Income           $   4,836  $   5,107  $   4,412  $   2,933  $   5,982
                     =========  =========  =========  =========  =========

Basic and diluted
 earnings per share  $     .20  $     .21  $     .18  $     .12  $     .24
                     =========  =========  =========  =========  =========
Cash dividends
 declared per share  $     .13  $     .13  $     .13  $     .13  $     .13
                     =========  =========  =========  =========  =========

Top line revenue (6) $  24,047  $  23,865  $  22,780  $  22,965  $  25,540
Noninterest income
 to top line revenue        15%        16%        16%        17%        16%





                         Statement of Income
                      Midwest Banc Holdings, Inc.
                           (In thousands)

                                              Nine Months Ended
                                  -----------------------------------------
                                  September 30, September 30,   Increase
                                      2007          2006       (Decrease)
                                  ------------- ------------  ------------
Interest Income
  Loans                           $     110,447 $     87,884  $     22,563
  Loans held for sale                        89           84             5
  Securities
    Taxable                              24,903       23,064         1,839
    Exempt from federal income
     taxes                                1,624        2,608          (984)
  Dividends from Fed Res and FHLB
   stock                                    681          475           206
  Short-term investments                    688          437           251
                                  ------------- ------------  ------------
    Total interest income               138,432      114,552        23,880
                                  ------------- ------------  ------------
Interest Expense
  Deposits                               55,115       40,023        15,092
  Federal funds purchased                 1,156          750           406
  Securities sold under
   repurchase agreements                  7,859        7,736           123
  Advances from the FHLB                 10,958        6,522         4,436
  Junior subordinated debentures          3,950        3,414           536
  Note payable                               18           --            18
                                  ------------- ------------  ------------
    Total interest expense               79,056       58,445        20,611
                                  ------------- ------------  ------------
Net interest income                      59,376       56,107         3,269
Provision for loan losses                 3,481        6,550        (3,069)
                                  ------------- ------------  ------------
Net interest income after
 provision for loan losses               55,895       49,557         6,338
Noninterest Income
  Service charges on deposit
   accounts                               4,744        4,161           583
  Gains (losses) on securities
   transactions                              23         (195)          218
  Net trading profits                        --          624          (624)
  Gains on sale of loans                    441          490           (49)
  Insurance and brokerage
   commissions                            1,799        1,476           323
  Trust                                   1,349          520           829
  Increase in CSV of life
   insurance                              2,192        1,700           492
  Gain on extinguishment of debt             --        1,250        (1,250)
  Other                                     768          735           (33)
                                  ------------- ------------  ------------
    Total noninterest income             11,316       10,761           555
                                  ------------- ------------  ------------
Noninterest Expenses
  Salaries and employee benefits         30,550       24,418         6,132
  Occupancy and equipment                 6,741        4,988         1,753
  Professional services                   3,591        3,799          (208)
  Marketing                               1,696        1,459           237
  Foreclosed properties                      36          237          (201)
  Amortization of intangible
   assets                                 1,273          762           511
  Merger related charges                     --        1,595        (1,595)
  Other                                   6,083        4,862         1,221
                                  ------------- ------------  ------------
    Total noninterest expenses           49,970       42,120         7,850
                                  ------------- ------------  ------------
Income before income taxes               17,241       18,198          (957)
Provision for income taxes                2,886        3,385          (499)
                                  ------------- ------------  ------------
Net Income                        $      14,355 $     14,813  $       (458)
                                  ============= ============  ============

Basic earnings per share          $         .58 $        .65  $       (.07)
                                  ============= ============  ============
Diluted earnings per share        $         .58 $        .64  $       (.06)
                                  ============= ============  ============
Cash dividends declared per share $         .39 $        .38  $        .01
                                  ============= ============  ============





                               Balance Sheet
                         Midwest Banc Holdings, Inc.
                               (In thousands)


                September                            December   September
                    30,      June 30,   March 31,       31,         30,
                   2007        2007        2007        2006        2006
                ----------  ----------  ----------  ----------  ----------
Assets
  Cash          $   46,963  $   53,832  $   64,153  $   91,630  $   70,004
  Short-term
   investments      17,241       8,861      24,485       8,902       2,647
  Securities
   available-
   for-sale        660,986     639,087     639,985     589,981     642,188
  Securities
   held-to-
   maturity         40,978      42,110      43,562      45,931      50,688
                ----------  ----------  ----------  ----------  ----------
    Total
     securities    701,964     681,197     683,547     635,912     692,876
  Fed Res and
   FHLB stock,
   at cost          23,683      23,683      23,592      23,592      20,977
  Loans held
   for sale             --       2,349       3,740       2,672       3,321
  Loans          2,007,446   1,982,672   1,950,613   1,946,816   1,909,026
  Allowance for
   loan losses     (24,879)    (23,724)    (24,028)    (23,229)    (25,542)
                ----------  ----------  ----------  ----------  ----------
    Net loans    1,982,567   1,958,948   1,926,585   1,923,587   1,883,484
  Cash value of
   life
   insurance        67,412      66,676      65,973      65,220      64,526
  Premises and
   equipment        22,468      22,489      22,282      21,960      20,993
  Foreclosed
   properties        2,246       2,312       2,403       2,640       2,864
  Goodwill and
   other
   intangibles      89,443      89,437      89,788      90,761      90,244
  Other             78,578     112,510      74,083      75,170      90,365
                ----------  ----------  ----------  ----------  ----------
      Total
       assets   $3,032,565  $3,022,294  $2,980,631  $2,942,046  $2,942,301
                ==========  ==========  ==========  ==========  ==========

Liabilities and
 Shareholders'
 Equity

Liabilities
  Deposits
    Noninterest-
     bearing    $  246,153  $  256,152  $  247,548  $  276,381  $  272,442
    Interest-
     bearing     1,748,774   1,801,690   1,759,452   1,681,429   1,754,394
                ----------  ----------  ----------  ----------  ----------
      Total
       deposits  1,994,927   2,057,842   2,007,000   1,957,810   2,026,836
  Federal funds
   purchased        12,000      29,000       7,000      66,000      34,000
  Securities
   sold under
   repurchase
   agreements      317,118     282,037     251,070     201,079     229,676
  FHLB advances    319,925     269,911     319,897     319,883     254,869
  Junior
   subordinated
   debentures       65,861      65,845      65,828      65,812      65,800
  Note payable       2,500          --          --          --          --
  Other             35,001      34,084      39,337      44,220      41,643
                ----------  ----------  ----------  ----------  ----------
    Total
     liabilities 2,747,332   2,738,719   2,690,132   2,654,804   2,652,824
                ----------  ----------  ----------  ----------  ----------

Shareholders’
 Equity

Common equity      295,807     295,436     295,614     293,515     296,038
Accumulated
 other
 comprehensive
 loss              (10,574)    (11,861)     (5,115)     (6,273)     (6,561)
                ----------  ----------  ----------  ----------  ----------
  Total
   shareholders'
   equity          285,233     283,575     290,499     287,242     289,477
                ----------  ----------  ----------  ----------  ----------
    Total
     liabilities
     and
     share-
     holders'
     equity     $3,032,565  $3,022,294  $2,980,631  $2,942,046  $2,942,301
                ==========  ==========  ==========  ==========  ==========




                             Net Interest Margin
                         Midwest Banc Holdings, Inc.
                               (In thousands)


                                For the Three Months Ended
                ----------------------------------------------------------
                September 30, 2007    June 30, 2007     September 30, 2006
                ------------------  ------------------  ------------------
                 Average   Average   Average    Average  Average   Average
                  Balance    Rate     Balance    Rate     Balance    Rate
                -----------  -----  -----------  -----  -----------  -----
Interest-
 Earning
 Assets:
Short-term
 investments    $    23,996   4.95% $    16,857   4.86% $    13,057   4.81%
Securities:
  Taxable(7)        650,776   5.61      678,766   5.46      604,176   5.48
  Exempt from
   federal
   income
   taxes(7)          47,765   5.95       47,768   5.95       99,746   5.90
                -----------  -----  -----------  -----  -----------  -----
Total
 securities         698,541   5.63      726,534   5.49      703,922   5.52
FRB and FHLB
 stock               23,683   3.83       23,688   3.82       20,914   3.81
Loans held for
 sale                   815   5.40        3,011   6.38        2,586   6.81
Loans: (8)
  Commercial
   loans            426,366   7.94      413,416   7.87      406,046   8.12
  Commercial
   real estate
   loans(7)(9)
   (10)           1,272,773   7.63    1,257,438   7.56    1,241,622   7.71
  Agricultural
   loans              3,172   8.07        3,538   8.14        2,701   8.00
  Consumer real
   estate
   loans(7)(9)
   (10)             277,164   6.68      277,562   6.82      255,003   7.04
  Consumer
   installment
   loans              9,644   7.76        9,483   7.76       13,569   7.28
                -----------  -----  -----------  -----  -----------  -----
Total loans       1,989,119   7.57    1,961,437   7.52    1,918,941   7.72
                -----------  -----  -----------  -----  -----------  -----
Total
 interest-
 earning
 assets         $ 2,736,154   7.00% $ 2,731,527   6.92% $ 2,659,420   7.08%

Noninterest-
 Earning
 Assets:
Cash            $    51,487         $    49,301         $    78,241
Premises and
 equipment           22,404              22,279              21,084
Allowance for
 loan losses        (24,255)            (23,807)            (26,727)
Other               234,464             233,739             235,554
                -----------         -----------         -----------
Total
 noninterest-
 earning
 assets             284,100             281,512             308,152
                -----------         -----------         -----------
Total assets    $ 3,020,254         $ 3,013,039         $ 2,967,572

Interest-
 Bearing
 Liabilities:
Deposits:
Interest-
 bearing demand
 deposits       $   175,582   1.96% $   171,671   1.85% $   165,672   1.37%
Money-market
 demand and
 savings
 account            365,985   2.62      362,692   2.62      413,626   2.50
Time deposits
 less than
 $100,000           750,642   4.86      736,665   4.84      748,929   4.34
Time deposits
 of $100,000 or
 more               474,194   5.28      495,549   5.24      417,731   5.23
Public funds             --     --           --     --       19,397   4.68
                -----------  -----  -----------  -----  -----------  -----
Total
 interest-
 bearing
 deposits         1,766,403   4.22    1,766,577   4.21    1,765,355   3.84
Borrowings:
Fed funds purch
 & repurchase
 agreements         307,843   4.16      283,571   4.17      255,718   5.02
FHLB advances       307,418   4.74      318,256   4.61      254,862   4.71
Notes payable
 and other
 borrowings          67,294   8.04       65,837   7.99       65,788   8.13
                -----------  -----  -----------  -----  -----------  -----
Total
 borrowings         682,555   4.80      667,664   4.76      576,368   5.24
                -----------  -----  -----------  -----  -----------  -----
Total
 interest-
 bearing
 liabilities    $ 2,448,958   4.40% $ 2,434,241   4.36% $ 2,341,723   4.20%

Noninterest-
 Bearing
 Liabilities:
Noninterest-
 bearing demand
 deposits       $   256,306         $   254,679         $   296,659
Other
 liabilities         30,759              34,359              47,823
Total
 interest-
 bearing
 liabilities        287,065             289,038             344,482
Shareholders’
 equity             284,231             289,760             281,367
                -----------         -----------         -----------
Total
 liabilities
 and
 shareholders’
 equity         $ 3,020,254         $ 3,013,039         $ 2,967,572

Net interest
 margin (tax
 equivalent)
 (7)(11)                      3.10%               3.05%               3.40%



See footnotes at end of statements, tables and schedules.


                            Net Interest Margin
                        Midwest Banc Holdings, Inc.
                              (In thousands)


                                          For the Nine Months Ended
                                  ----------------------------------------
                                  September 30, 2007   September 30, 2006
                                  -------------------  -------------------
                                    Average    Average   Average    Average
                                    Balance     Rate     Balance     Rate
                                  -----------  ------  -----------  ------
Interest-Earning Assets:
Short-term investments            $    18,976    4.83% $    11,621    5.01%
Securities:
   Taxable(7)                         644,567    5.48      618,985    5.28
   Exempt from federal income
    taxes(7)                           56,211    5.93       90,966    5.88
                                  -----------  ------  -----------  ------
Total securities                      700,778    5.52      709,951    5.36
FRB and FHLB stock                     23,648    3.84       16,832    3.76
Loans held for sale                     1,939    6.12        1,756    6.38
Loans:(8)
   Commercial loans                   411,034    7.87      270,941    7.93
   Commercial real estate
    loans(7)(9)(10)                 1,264,709    7.55    1,057,020    7.54
   Agricultural loans                   3,187    7.99        2,419    7.72
   Consumer real estate
    loans(7)(9)(10)                   277,092    6.75      233,548    6.67
   Consumer installment loans           9,806    7.60        7,556    7.41
                                  -----------  ------  -----------  ------
Total loans                         1,965,828    7.50    1,571,484    7.48
                                  -----------  ------  -----------  ------
Total interest-earning assets     $ 2,711,169    6.93% $ 2,311,644    6.79%

Noninterest-Earning Assets:
Cash                              $    57,220          $    59,617
Premises and equipment, net            22,231               21,869
Allowance for loan losses             (24,321)             (20,895)
Other assets                          233,578              160,336
                                  -----------          -----------
Total noninterest-earning assets      288,708              220,927
                                  -----------          -----------
Total assets                      $ 2,999,877          $ 2,532,571
                                  ===========          ===========

Interest-Bearing Liabilities:
Deposits:
Interest-bearing demand deposits  $   170,166    1.87% $   148,869    1.00%
Money-market demand and savings
 accounts                             368,861    2.61      328,388    2.01
Time deposits less than $100,000      739,579    4.81      756,544    4.03
Time deposits of $100,000 or more     478,916    5.24      289,399    4.86
Public funds                               --      --       15,288    4.52
                                  -----------  ------  -----------  ------
Total interest-bearing deposits     1,757,522    4.18    1,538,488    3.47
Borrowings:
Fed funds purch & repurchase
 agreements                           282,768    4.25      249,151    4.54
FHLB advances                         215,142    4.64      210,979    4.12
Notes payable and other
 borrowings                            66,322    7.98       59,081    7.70
                                  -----------  ------  -----------  ------
Total borrowings                      664,232    4.81      519,211    4.73
                                  -----------  ------  -----------  ------
Total interest-bearing
 liabilities                      $ 2,421,754    4.35% $ 2,057,699    3.79%

Noninterest-Bearing Liabilities:
Noninterest-bearing demand
 deposits                         $   255,805          $   202,901
Other liabilities                      34,743               32,495
                                  -----------          -----------
Total interest-bearing
 liabilities                          290,548              235,396
Shareholders' equity                  287,575              239,476
                                  -----------          -----------
Total liabilities and
 shareholders' equity             $ 2,999,877          $ 2,532,571
                                  ===========          ===========

Net interest margin (tax
 equivalent)(7)(11)                              3.05%                3.41%


See footnotes at end of statements, tables and schedules.


                          Credit Risk Management
                        Midwest Banc Holdings, Inc.
                              (In thousands)


                                     Three Months Ended
                   -------------------------------------------------------
                   September                          December  September
                       30,     June 30,   March 31,      31,        30,
                      2007       2007        2007       2006       2006
                   ---------- ---------- ----------  ---------- ----------
Loan Quality
  Nonaccrual loans
    Large Problem
     Credit        $   28,886 $   28,909 $   26,845  $   25,825 $   11,252
    From remainder
     of portfolio      15,795     14,679     14,834      17,001     10,303
                   ---------- ---------- ----------  ---------- ----------
      Total
       nonaccrual
       loans       $   44,681 $   43,588 $   41,679  $   42,826 $   21,555
                   ========== ========== ==========  ========== ==========

  Foreclosed
   properties      $    2,246 $    2,312 $    2,403  $    2,640 $    2,864
                   ========== ========== ==========  ========== ==========

  Nonperforming assets
    Large Problem
     Credit        $   28,886 $   28,909 $   26,845  $   25,825 $   11,252
    From remainder
     of portfolio      18,041     16,991     17,237      19,641     13,167
                   ---------- ---------- ----------  ---------- ----------
    Total
     nonperforming
     assets        $   46,927 $   45,900 $   44,082  $   45,466 $   24,419
                   ========== ========== ==========  ========== ==========

  90+ days past due
   and accruing    $       -- $      608 $       25  $       34 $       29


  Loans
    Large Problem
     Credit        $   28,886 $   28,909 $   28,884  $   27,902 $   34,489
    Remainder of
     portfolio      1,978,560  1,953,763  1,921,729   1,918,914  1,874,537
                   ---------- ---------- ----------  ---------- ----------
      Total loans  $2,007,446 $1,982,672 $1,950,613  $1,946,816 $1,909,026
                   ========== ========== ==========  ========== ==========

  Foreclosed
   properties      $    2,246 $    2,312 $    2,403  $    2,640 $    2,864
                   ========== ========== ==========  ========== ==========

  Loan-related
   assets
    Large Problem
     Credit        $   28,886 $   28,909 $   28,884  $   27,902 $   34,489
    Remainder of
     portfolio      1,980,806  1,956,075  1,924,132   1,921,554  1,877,401
                   ---------- ---------- ----------  ---------- ----------

      Total
       loan-related
       assets      $2,009,692 $1,984,984 $1,953,016  $1,949,456 $1,911,890
                   ========== ========== ==========  ========== ==========

  Nonaccrual loans to
   loans
    Total                2.23%      2.20%      2.14 %      2.20%      1.13%
    Without Large
     Problem Credit       .80        .75        .77         .89        .55
  Nonperforming assets
   to loan-related
   assets
    Total                2.34%      2.31%      2.26 %     2.33 %      1.28%
    Without Large
     Problem Credit       .91        .87        .90        1.02       0.70

Allowance for Loan Losses
  Beginning balance$   23,724 $   24,028 $   23,229  $   25,542 $   20,874
    Balance at bank
     acquisition           --         --         --          --      3,244
    Provision for
     loan losses        1,800      1,036        645       5,500      1,550
    Net chargeoffs
     (recoveries)
      Large Problem
       Credit              --         --         --       7,500         --
      From remainder
       of portfolio       645      1,340       (154)        313        126
                   ---------- ---------- ----------  ---------- ----------
                          645      1,340       (154)      7,813        126
                   ---------- ---------- ----------  ---------- ----------
  Ending balance   $   24,879 $   23,724 $   24,028  $   23,229 $   25,542
                   ========== ========== ==========  ========== ==========

  Net chargeoffs
   (recoveries) to
   average loans
    Total                 .13%       .27%      (.03)%      1.62%       .03%
    Without Large
     Problem Credit       .13        .27       (.03)        .06        .03
  Delinquencies 30
   - 89 days
    Total                 .49%       .63%       .48 %       .33%      1.98%
    Without Large
     Problem Credit       .49        .63        .48         .33        .76
  Allowance for loan
   losses to
    Loans at period
     end                 1.24%      1.20%      1.23 %      1.19%      1.34%
    Nonaccrual loans       56%        54%        58 %        54%       118%


                                Footnotes
                        Midwest Banc Holdings, Inc.
                              (In thousands)


(1)  Core net income is net income excluding merger related charges.
     Management believes that core net income is a more useful measure of
     operating performance since it excludes items that are not recurring
     in nature.  In addition, management believes core net income is more
     reflective of current trends.  The following table reconciles reported
     net income to core net income for the periods presented:


                                         Three Months Ended
                          -------------------------------------------------
                          Sept 30,  June 30,  March 31,  Dec 31,   Sept 30,
                            2007      2007      2007      2006      2006
                          --------- --------- --------- --------- ---------

Net Income                $   4,836 $   5,107 $   4,412 $   2,933 $   5,982
Merger related charges,
 net of tax                      --        --        --        --       961
                          --------- --------- --------- --------- ---------
Core net income           $   4,836 $   5,107 $   4,412 $   2,933 $   6,943
                          ========= ========= ========= ========= =========


                              Nine Months Ended
                         -------------------------
                         September 30, September 30,
                             2007         2006
                         ------------ ------------

Net Income               $     14,355 $     14,813
Merger related charges,
 net of tax                        --          961
                         ------------ ------------
Core net income          $     14,355 $     15,774
                         ============ ============


     Core return on average assets is core net income, reconciled above,
     divided by average assets for that period.  Core return on average
     equity is core net income, reconciled above, divided by average equity
     for that period.  Management believes that core return on average
     assets and average equity are more useful measures of operating
     performance since it excludes items that are not recurring in nature
     and are more reflective of current trends.


(2)  Shareholders' equity less goodwill and net core deposit intangible and
     other intangibles.

                        Sept 30,  June 30,  March 31,  Dec 31,    Sept 30,
                          2007       2007      2007      2006       2006
                       ---------- --------- --------- ---------- ----------

Shareholders' equity   $  285,233 $ 283,575 $ 290,499 $  287,242 $  289,477
Core deposit
 intangible and
 other intangibles          9,586     9,812    10,163     11,273     11,677
Goodwill                   79,857    79,625    79,625     79,488     78,567
                       ---------- --------- --------- ---------- ----------
Tangible shareholders'
 equity                $  195,790 $ 194,138 $ 200,711 $  196,481 $  199,233
                       ========== ========= ========= ========== ==========


(3)  Excludes net gains or losses on securities transactions.

(4)  Noninterest expense less amortization and foreclosed properties
     expenses divided by the sum of net interest income (tax equivalent)
     plus noninterest income.

     Core efficiency ratio excludes merger related charges.  Management
     believes that the core efficiency ratio is a more useful measure since
     it excludes items that are not recurring in nature and is more
     reflective of current trends.  The following tables reconcile reported
     noninterest expense to core noninterest expenses for the periods
     presented:


                                         Three Months Ended
                          -------------------------------------------------
                          Sept 30,  June 30,  March 31,  Dec 31,  Sept 30,
                            2007      2007      2007      2006      2006
                          --------- --------- --------- --------- --------

Noninterest expenses      $  16,245 $  16,644 $  17,081 $  16,495 $ 17,194
Merger related charges           --        --        --        --   (1,595)
                          --------- --------- --------- --------- --------
Core noninterest expenses $  16,245 $  16,644 $  17,081 $  16,495 $ 15,599
                          ========= ========= ========= ========= ========

                           Nine Months Ended
                          -------------------
                          September September
                             30,        30,
                            2007       2007
                          --------- ---------
Noninterest expenses      $  49,970 $  42,120
Merger related charges           --    (1,595)
                          --------- ---------
Core noninterest expenses $  49,970 $  40,525
                          ========= =========

(5)  Total assets less goodwill and net core deposit intangible and other
     intangibles.


                      Sept 30,   June 30,   March 31,   Dec 31,   Sept 30,
                        2007       2007       2007       2006       2006
                     ---------- ---------- ---------- ---------- ----------

Total assets         $3,032,565 $3,022,294 $2,980,631 $2,942,046 $2,942,301
Core deposit
 intangible and
 other intangibles        9,586      9,812     10,163     11,273     11,677
Goodwill                 79,857     79,625     79,625     79,488     78,567
                     ---------- ---------- ---------- ---------- ----------
Tangible assets      $2,943,122 $2,932,857 $2,890,843 $2,851,285 $2,852,057
                     ========== ========== ========== ========== ==========


(6)  Includes net interest income and noninterest income.
(7)  Adjusted for 35% tax rate and adjusted for the dividends-received
     deduction where applicable.
(8)  Nonaccrual loans are included in the average balance; however, these
     loans are not earning any interest.
(9)  Includes loan fees.
(10) Includes construction loans.
(11) Reconciliation of reported net interest income to tax equivalent net
     interest income.

                                                          For the Nine
                        For the Three Months Ended,       Months Ended,
                       ------------------------------ ---------------------
                        Sept 30,   June 30,  Sept 30,   Sept 30,   Sept 30,
                          2007       2007      2006      2007       2006
                       ---------- --------- --------- ---------- ----------

Net interest income    $   20,347 $  19,969 $  21,393 $   59,376 $   56,107
Tax equivalent
 adjustment to net
 interest income              837       836     1,194      2,652      3,066
                       ---------- --------- --------- ---------- ----------
Net interest income,
 tax equivalent basis  $   21,184 $  20,805 $  22,587 $   62,028 $   59,173
                       ========== ========= ========= ========== ==========

Contact Information

  • For further information:
    Daniel R. Kadolph
    Chief Financial Officer
    708-450-6759
    Email Contact