SOURCE: Midwest Banc Holdings, Inc.

July 21, 2005 08:00 ET

Midwest Banc Holdings, Inc. Reports Second Quarter Results

Previously Announced Charges Lead to Loss for Quarter, Six Months

Loans Increase 21% From Prior Year

Financial Results Reflect Pending Sale of Western Illinois Bank

MELROSE PARK, IL -- (MARKET WIRE) -- July 21, 2005 -- Consistent with the June 29, 2005 announcement of the completion of the financial repositioning of the company's balance sheet, Midwest Banc Holdings, Inc. (NASDAQ: MBHI) announced today a loss for the second quarter and for the first half of 2005. The net loss of $16.4 million ($0.90 per diluted share) in the second quarter compared with a profit of $3.2 million ($0.17 per diluted share) in the prior year, while the six-month loss of $12.3 million ($0.67 per diluted share) compared with prior-year earnings of $8.0 million ($0.44 per diluted share).

Amid this repositioning, our core operations, especially the lending programs, continued to improve at the company's primary subsidiary, Midwest Bank and Trust Company. For example, average loans during the quarter increased $60.2 million, or 21% annualized, compared to the first quarter with net interest income increasing by 6% compared to the first quarter. Average investment securities also increased, driving growth in average total earning assets of $71.5 million in the second quarter, compared to the first quarter.

Due to the pending divestiture of Midwest Bank of Western Illinois, which was announced on May 31, 2005, the accompanying financial data reports that bank as a discontinued operation. Therefore, the detailed line items in the balance sheet and income statement primarily reflect the results of Midwest Bank and Trust Company, the remaining bank subsidiary of the company.

"We're making solid progress in our banking business," said James J. Giancola, president and chief executive officer. "Second quarter growth in loans and net interest income is evidence of both the opportunities available to us in the Chicago area and the commitment of our people to our core growth strategies."

The net charge-off rate for the quarter was 0.13% and 0.07% for the six months. At June 30, 2005 nonaccruing loans were $6.6 million, $2.2 million less than at March 31. At June 30, the allowance for loan losses was 1.43% of loans and 263% of nonaccruing loans, which is a substantial increase of the coverage ratio of 193% at March 31, 2005. At June 30, nonperforming assets were $18.0 million or 1.46% of loan-related assets. This was an increase of $532,000 from March 31, primarily due to a foreclosure in the second quarter on a $3.8 million loan which was made in 1999.

"At the same time that we are increasingly aggressive at developing bankable lending relationships, we are doubling our efforts to be effective managers of credit risk," said Giancola.

Deposit generation continues to be a challenge as average deposits during the quarter decreased $1.1 million compared to the first quarter. The growth in earning assets during the quarter was funded by an increase in borrowings to $420.0 million. The ratio of loans to deposits at June 30, 2005 increased to 81% from 77% at the end of the first quarter. The net interest margin for the second quarter increased to 3.08% from 3.01% for the first quarter. The net interest margin of 3.05% for the six months represents a 35 basis point increase from 2.70% in the first half of 2004. This margin expansion is a result of the balance sheet repositioning and expanded lending programs that began in the fourth quarter of 2004.

Core revenue (net interest income plus noninterest income, excluding securities transactions) in the quarter increased by $1.3 million, or 32% annualized, compared to the first quarter.

The charges associated with the repositioning of the company's balance sheet as well as the employment severance charges, which are described below, were $20.6 million after taxes or $1.13 per diluted share. Excluding the effect of these charges, the company earned $4.3 million or $0.23 per diluted share in the second quarter. Excluding the special charges recorded in the second quarter, the company earned $8.4 million or $0.45 per diluted share in the first half of 2005. The charges included:

--  Sale of $294.6 million of U.S. Agency debt securities with a book
    yield of 3.52% and remaining maturity of approximately eight years,
    creating an after-tax loss of $10.6 million.  The company has or intends to
    replace the securities with a combination of hybrid adjustable rate
    mortgage-backed securities, 15-year fixed rate mortgage-backed securities
    and municipal securities -- with a weighted average yield of approximately
    4.80% and a duration of approximately 4.9 years.
--  Prepayment of $121.5 million of Federal Home Loan Bank advances with a
    current yield of 5.27%, generating an after-tax prepayment charge of $5.9
    million.  New advances have replaced the prepaid ones with a weighted
    average interest rate of approximately 3.48% and a duration of
    approximately 1.6 years.
--  Unwinding of $121.5 million of interest rate swaps, yielding an after-
    tax charge of $2.2 million.
--  Entry into a bulk sale contract, expected to close in the third
    quarter, of a foreclosed townhouse development.  This foreclosed property
    was written down by $2.4 million ($1.5 million after-tax) in anticipation
    of the proceeds from the sale.  If completed, this sale will reduce other
    real estate owned by $7.6 million or 67% and reduce the proforma ratio of
    nonperforming assets to loan-related assets to 0.85% versus the 1.46%
    reported at June 30.
--  An after-tax charge of $318,000 for the redemption of $20.0 million of
    trust preferred securities.
--  Employment severance charges of $123,000, after-tax.
    
The company's capital ratios at June 30, 2005 were as follows: risk-based -- 12.3%, risk-based tier 1 -- 11.1%, and leverage -- 8.1%. All of these ratios are within the regulatory guidelines for being considered "Well Capitalized."

Because of the pending settlements of the securities transactions described above, the company's balance sheet includes $324.0 million "due from broker" and $116.4 million "due to broker" at June 30, 2005.

Midwest Bank of Western Illinois, which is classified on the income statement as discontinued operations, posted net income of $799,000 in the second quarter, up from $776,000 a year ago, and $1.9 million for the first six months of 2005, up from $1.4 million a year earlier. On the balance sheet, the subsidiary is recognized as $282.5 million of "assets held for sale" and $255.7 million of "liabilities held for sale."

"Our financial reports have been somewhat complex as we have repositioned the company. However, our core strategy is simple: grow the core community bank with solid, predictable earnings," Giancola said. "We're achieving measurable, sustained progress in practically all areas, and we are driven to make continued improvements in the quarters to come."

Midwest Banc Holdings, Inc. to Present at KBW Bank Conference

Management of Midwest Banc Holdings, Inc. will present the company's investment message to investors at The KBW Honor Roll & Sixth Annual Community Bank Investor Conference on Wednesday, July 27, 2005, in New York. James J. Giancola, president and chief executive officer; and Daniel R. Kadolph, chief financial officer, are scheduled to deliver their presentation at 1:30 p.m. Eastern Daylight Time. The presentation will be available by webcast at http://www.kbw.com/communitybank.htm. A copy of the company's investor presentation will be posted to the Midwest Banc website at http://www.midwestbanc.com.

Information on MBHI is available on the Internet at www.midwestbanc.com.

Midwest Banc Holdings, Inc. provides a wide range of retail and commercial lending services, personal and corporate trust services, residential mortgage origination, and securities and insurance brokerage activities throughout the greater Chicago metropolitan area and Western Illinois. The Company's principal operating subsidiaries are: Midwest Bank and Trust Company, Midwest Bank of Western Illinois, Midwest Financial and Investment Services, Inc., and Midwest Bank Insurance Services, L.L.C. Midwest Bank and Trust Company has 17 banking offices and operates 21 ATMs in Cook, McHenry, DuPage, and Lake counties.

This press release contains certain "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 forth certain risks and uncertainties related to the Company's business which should be considered in evaluating "Forward-Looking Statements."

                             MIDWEST BANC HOLDINGS, INC.
                          CONSOLIDATED FINANCIAL HIGHLIGHTS

*  Diluted net loss per share was $0.67 for six months and $0.90 for
   second quarter 2005
   -- Compared to net income of $0.44 per share for six months 2004
   -- Compared to net income of $0.17 per share for second quarter 2004
   -- Compared to net income of $0.22 per share for first quarter 2005

*  Net loss was $16.4 million for three months and $12.3 million for six
   months 2005
   -- Compared to net income of $8.0 million for six months 2004
   -- Compared to net income of $3.2 million for second quarter 2004
   -- Compared to net income of $4.1 million for first quarter 2005

*  Core net income (1) was $4.3 million for three months and $8.4
   million for six months 2005
   -- Compared to net income of $8.0 million for six months 2004
   -- Compared to net income of $3.2 million for second quarter 2004
   -- Compared to net income of $4.1 million for first quarter 2005

*  Net interest margin was  3.05% for six months and 3.08% for second
   quarter 2005
   -- Compared to 2.70% for six months 2004
   -- Compared to 2.59% for second quarter 2004
   -- Compared to 3.01% for first quarter 2005

*  Average loans for the quarter grew $224.9 million, or 23% from the
   2004 second quarter and $60.2 million, or  21% annualized, from
   first quarter to second quarter 2005

*  Nonaccruing loans were $6.6 million at June 30 or 0.54% of loans
   -- Compared to $9.3 million or 0.85% at December 31, 2004
   -- Compared to $8.8 million or 0.77% at March 31, 2005

*  Net charge-off rate was 0.13% for the second quarter and  0.07% for
   six months 2005
   -- Compared to 0.01% for first quarter 2005

*  Allowance for loan losses of  $17.4 million at June 30 was
   1.43% of loans
   -- Compared to $16.2 million or 1.48% at December 31, 2004 and $17.0
      million or 1.47% of loans at March 31, 2005
   -- Equaled 2.63 times nonaccruing loans at June 30, 2005 compared to
      1.74 times at December 31, 2004 and 1.93 times at March 31, 2005

*  Core efficiency ratio (1) was 65% for six months and 64% for second
   quarter 2005
   -- Compared to 67% for six months and 65% for second quarter 2004
   -- Compared to 65% for first quarter 2005

* Capital ratios at June 30, 2005
  -- Risk-based Tier 1             11.1%
  -- Risk based Total              12.3%
  -- Leverage                       8.1%
  -- Equity-to-assets at period end 5.6%

* Book value per share at June 30 was $7.65
  -- Compared to $7.82 at June 30, 2004
  -- Compared to $7.66 at December 31, 2004
  -- Compared to $7.44 at March 31, 2005


                     MIDWEST BANC HOLDINGS, INC.
                 CONSOLIDATED FINANCIAL HIGHLIGHTS
                   CONSOLIDATED BALANCE SHEETS
                         (In thousands)

                                                (Unaudited)
                                                 June 30,      December 31,
                                                   2005            2004
                                               ----------      ----------

ASSETS
Cash                                           $   44,902      $   49,245
Federal funds sold and other
 short-term investments                             9,294         169,779
Securities available-for-sale                     443,233         437,050
Securities held-to-maturity
 (fair value: $74,807 at June 30, 2005
 and $89,010 at December 31, 2004)                 75,012          88,958
Federal Reserve and Federal Home
 Loan Bank stock, at cost                          13,974          13,830
Loans                                           1,219,026       1,097,992
Allowance for loan losses                         (17,419)        (16,217)
                                               ----------      ----------
  Net loans                                     1,201,607       1,081,775
Cash value of life insurance                       44,117          43,229
Premises and equipment, net                        22,700          23,515
Other real estate                                  11,399           8,064
Core deposit and other
 intangibles, net                                   2,002           2,217
Goodwill                                              891             891
Due from broker                                   324,043               -
Assets held for sale                              282,495         274,023
Other assets                                       50,494          44,237
                                               ----------      ----------
  Total assets                                 $2,526,163      $2,236,813
                                               ==========      ==========

LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits
  Non-interest-bearing                         $  157,055      $  162,610
  Interest-bearing                              1,345,153       1,339,036
                                               ----------      ----------
    Total deposits                              1,502,208       1,501,646
Federal funds purchased                            73,000               -
Securities sold under agreements
 to repurchase                                    202,647         146,885
Advances from the Federal
 Home Loan Bank                                   150,000         118,079
Junior subordinated debt owed
 to unconsolidated trusts                          55,672          55,672
Due to broker                                     116,419               -
Liabilities held for sale                         255,728         250,456
Other liabilities                                  30,390          26,652
                                               ----------      ----------
  Total liabilities                             2,386,064       2,099,390
                                               ----------      ----------

STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value,
 1,000,000 shares authorized;
 none issued                                            -               -
Common stock, $.01 par value,
 32,000,000 shares authorized;
 18,668,140 issued                                    187             187
Surplus                                            66,114          65,781
Retained earnings                                  79,182          95,829
Unearned stock-based compensation                  (2,605)         (2,642)
Accumulated other comprehensive loss               (1,676)        (16,457)
Treasury stock, at cost (345,921
 shares at June 30, 2005 and 586,413
 shares at December 31, 2004)                      (1,103)         (5,275)
                                               ----------      ----------
  Total stockholders' equity                      140,099         137,423
                                               ----------      ----------
    Total liabilities and
     stockholders' equity                      $2,526,163      $2,236,813
                                               ==========      ==========


                        MIDWEST BANC HOLDINGS, INC.
                     CONSOLIDATED FINANCIAL HIGHLIGHTS
               CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
                   (In thousands, except per share data)

                                Three Months Ended      Six Months Ended
                              June 30,       March 31,      June 30,
                           2005      2004      2005      2005      2004
                         --------  --------  --------  --------  --------
Interest Income
  Loans                  $ 18,897  $ 14,250  $ 17,242  $ 36,139  $ 28,720
  Securities
    Taxable                 7,349     6,293     6,714    14,063    13,564
    Exempt from federal
     income taxes             145       130        94       239       371
  Trading securities          124       318        66       190       318
  Dividend income from
   Federal Reserve and
   Federal Home Loan
   Bank stock                 192       278       195       387       574
  Federal funds sold and
   other short-term
   investments                 24       468       221       245       908
                         --------  --------  --------  --------  --------
    Total interest
     income                26,731    21,737    24,532    51,263    44,455
Interest Expense
  Deposits                  8,323     6,522     7,753    16,076    12,964
  Federal funds
   purchased                  236         1        51       287         1
  Securities sold under
   agreement to
   repurchase               1,529     1,011     1,064     2,593     2,091
  Advances from the
   Federal Home Loan
   Bank                     1,594     2,065     1,432     3,026     4,131
  Junior subordinated
   debt owed to
   unconsolidated trusts      979       859       985     1,964     1,712
  Notes payable                 -         -         9         9        21
                         --------  --------  --------  --------  --------
    Total interest
     expense               12,661    10,458    11,294    23,955    20,920
                         --------  --------  --------  --------  --------

Net interest income        14,070    11,279    13,238    27,308    23,535
Provision for loan
 losses                       813       600       814     1,627     1,200
                         --------  --------  --------  --------  --------
Net interest income
 after provision for
 loan losses               13,257    10,679    12,424    25,681    22,335
Noninterest Income
  Service charges on
   deposit accounts         1,305     1,369     1,226     2,531     2,643
  Net gains (losses) on
   securities
   transactions           (17,184)     (978)     (256)  (17,440)    1,870
  Net trading profits         118       952        13       131      (913)
  Gains on sale of
   loans                       76       169        62       138       330
  Insurance and
   brokerage
   commissions                381       326       385       766       708
  Trust income                 77        84        67       144       162
  Increase in cash
   surrender value of
   life insurance             542       234       346       888       679
  Other                       259       180       238       497       369
                         --------  --------  --------  --------  --------
    Total noninterest
     income               (14,426)    2,336     2,081   (12,345)    5,848
Noninterest Expenses
  Salaries and employee
   benefits                 6,846     5,743     6,511    13,357    11,404
  Occupancy and
   equipment                1,538     1,455     1,477     3,015     2,920
  Professional services     1,188     1,033     1,151     2,339     1,863
  Loss on extinguishment
   of debt                 13,125         -         -    13,125         -
  Other                     4,973     1,819     1,577     6,550     3,563
                         --------  --------  --------  --------  --------
    Total noninterest
     expenses              27,670    10,050    10,716    38,386    19,750
                         --------  --------  --------  --------  --------
Income (loss) before
 income taxes             (28,839)    2,965     3,789   (25,050)    8,433
Provision for income
 taxes                    (11,690)      557       812   (10,878)    1,855
                         --------  --------  --------  --------  --------
Income (loss) from
 continuing operations    (17,149)    2,408     2,977   (14,172)    6,578
                         --------  --------  --------  --------  --------
Discontinued operations
  Income from
   discontinued
   operations before
   income taxes             1,050     1,062     1,632     2,682     1,907
Provision for income
 taxes                        251       286       527       778       476
                         --------  --------  --------  --------  --------
  Income from
   discontinued
   operations                 799       776     1,105     1,904     1,431
                         --------  --------  --------  --------  --------
Net Income (Loss)        $(16,350) $  3,184  $  4,082  $(12,268) $  8,009
                         ========  ========  ========  ========  ========
Basic earnings per
 share from continuing
 operations              $  (0.94) $   0.14  $   0.16  $  (0.78) $   0.37
                         ========  ========  ========  ========  ========
Basic earnings per
 share from
 discontinued
 operations              $   0.04  $   0.04  $   0.06  $   0.11  $   0.08
                         ========  ========  ========  ========  ========
Basic earnings per
 share                   $  (0.90) $   0.18  $   0.22  $  (0.67) $   0.45
                         ========  ========  ========  ========  ========
Diluted earnings per
 share from continuing
 operations              $  (0.94) $   0.13  $   0.16  $  (0.78) $   0.36
                         ========  ========  ========  ========  ========
Diluted earnings per
 share from
 discontinued
 operations              $   0.04  $   0.04  $   0.06  $   0.11  $   0.08
                         ========  ========  ========  ========  ========
Diluted earnings per
 share                   $  (0.90) $   0.17  $   0.22  $  (0.67) $   0.44
                         ========  ========  ========  ========  ========
Cash dividends per
 common share            $   0.12  $   0.12  $   0.12  $   0.24  $   0.24
                         ========  ========  ========  ========  ========

Average common shares
 outstanding
Basic                      18,245    17,880    18,147    18,196    17,873
Diluted                    18,245    18,327    18,439    18,196    18,328


                        MIDWEST BANC HOLDINGS, INC.
                     CONSOLIDATED FINANCIAL HIGHLIGHTS
                   (In thousands, except per share data)

                                Three Months Ended     Six Months Ended
                              June 30,       March 31,      June 30,
                           2005      2004      2005      2005      2004
                         --------  --------  --------  --------  --------
Income Statement Data:
  Net income (loss)      $(16,350) $  3,184  $  4,082  $(12,268) $  8,009
  Core net income (1)       4,280     3,774     4,236     8,362     6,881
  Core efficiency
   ratio (1) (2) (3) (7)    63.89     64.50     65.47     64.65     66.81

Per Share Data and Other:
  Basic earnings per
   share from continuing
   operations            $  (0.94) $   0.14  $   0.16  $  (0.78) $   0.37
  Basic earnings per
   share from
   discontinued
   operations                0.04      0.14      0.06      0.11      0.08
  Basic earnings per
   share                    (0.90)     0.18      0.22     (0.67)     0.45
  Diluted earnings per
   share from continuing
   operations               (0.94)     0.13      0.16     (0.78)     0.38
  Diluted earnings per
   share from
   discontinued
   operations                0.04      0.04      0.06      0.11      0.08
  Diluted earnings per
   share                    (0.90)     0.17      0.22     (0.67)     0.44
  Cash dividends
   declared                  0.12      0.12      0.12      0.24      0.24
  Book value at end
   of period                 7.65      7.82      7.44      7.65      7.82
  Tangible book value
   at end of period          7.60      7.77      7.40      7.60      7.77
  Stock price at end
   of period                19.29     22.30     19.91     19.29     22.30
  Average stock price       19.37     22.83     21.20     20.26     23.27
  Full time equivalent
   employees               378.00    369.00    380.00    378.00    369.00

Selected Financial
 Ratios:
  Return on average
   assets from
   continuing
   operations (4)           -2.95%     0.43%     0.54%    -1.25%     0.58%
  Core return on
   average assets from
   continuing
   operations (1) (4)        0.60      0.43      0.54      0.57      0.58
  Return on average
   equity from
   continuing
   operations (5)          -48.38      6.88      8.54    -20.16      9.28
  Core return on average
   equity from
   continuing
   operations (1) (4)        9.82      6.88      8.54      9.19      9.28
  Dividend payout from
   continuing operations      n/a     89.10     73.53       n/a     65.21
  Loans to deposits at
   end of period            81.15     70.65     77.05     81.15     70.65
  Average equity to
   average assets            6.09      6.21      6.28      6.18      6.27
  Equity to assets at
   end of period             5.55      6.13      5.94      5.55      6.13
  Tangible capital to
   assets at end of
   period                    5.51      6.09      5.90      5.51      6.09
  Tier I capital to
   risk-weighted assets     11.10     12.88     13.02     11.10     12.88
  Total capital to
   risk-weighted assets     12.30     14.04     14.27     12.30     14.04
  Net interest margin
   (tax equivalent)
   (6) (7)                   3.08      2.59      3.01      3.05      2.70
  Allowance for loan
   losses to total loans
   at the end of period      1.43      1.46      1.47      1.43      1.46
  Net loans charged off
   to average loans          0.13      0.23      0.01      0.07      0.20
  Nonaccruing loans to
   loans at the end of
   period                    0.54      1.19      0.77      0.54      1.19
  Nonperforming assets
   to loan-related
   assets (8)                1.46      1.80      1.51      1.46      1.80
  Allowance to
   nonaccruing loans         2.63x     1.23x     1.93x     2.63x     1.23x


                                June 30,          March 31,
                            2005        2004        2005
                         ----------  ----------  ----------
Balance Sheet Data:
  Total assets           $2,526,163  $2,283,083  $2,287,753
  Total earning assets    1,760,538   1,688,143   1,852,757
  Average earning assets
   (quarter-to-date)      1,900,377   1,824,850   1,828,834
  Average earning assets
   (year-to-date)         1,864,803   1,836,685   1,828,834
  Average assets
   (quarter-to-date)      2,334,909   2,268,287   2,249,926
  Average assets
   (year-to-date)         2,292,653   2,273,241   2,249,926
  Total loans             1,219,026   1,008,340   1,153,395
  Average loans
   (quarter-to-date)      1,185,697     960,808   1,125,469
  Average loans
   (year-to-date)         1,155,749     953,400   1,125,469
  Total securities          518,245     656,837     681,434
  Average securities
   (quarter-to-date)        697,963     662,754     646,890
  Average securities
   (year-to-date)           672,570     682,628     646,890
  Allowance for loan
   losses                    17,419      14,733      17,002
  Total deposits          1,502,208   1,427,192   1,496,964
  Average deposits
   (quarter-to-date)      1,491,456   1,414,495   1,492,575
  Average deposits
   (year-to-date)         1,492,013   1,421,949   1,492,575
  Borrowings                481,319     415,236     369,408
  Stockholders' equity      140,099     139,966     135,792
  Tangible stockholders'
   equity (9)               139,208     139,075     134,901
  Average equity
   (quarter-to-date)        142,187     140,777     141,343
  Average equity
   (year-to-date)           141,767     142,505     141,343

Common Shares
 Outstanding                 18,322      17,897      18,241
Average Shares
 Outstanding
 (quarter-to-date)           18,245      17,880      18,147
Average Shares
 Outstanding
 (year-to-date)              18,196      17,873      18,147


(1) Core net income is net income excluding the balance sheet
    repositioning and severance charges. The following table reconciles
    reported net income to core net income for the periods presented:

                                                     QTD         YTD
                                                     2Q05        2Q05
    Net loss                                       $(16,350)   $(12,268)
    Loss on U.S. Agency debt securities, net
     of tax                                          10,595      10,595
    Charge from prepayment of FHLB advances,
     net of tax                                       5,886       5,886
    Charge from unwinding of swaps, net of tax        2,206       2,206
    Write down on other real estate owned,
     net of tax                                       1,502       1,502
    Charge from redemption of trust preferred
     securities, net of tax                             318         318
    Employment severance charges, net of tax            123         123
                                                   --------    --------
    Core net income                                $  4,280    $  8,362
                                                   --------    --------

                                                     QTD         YTD
                                                     2Q05        2Q05
    Net loss from continuing operations            $(17,149)   $(14,172)
    Loss on U.S. Agency debt securities,
     net of tax                                      10,595      10,595
    Charge from prepayment of FHLB advances,
     net of tax                                       5,886       5,886
    Charge from unwinding of swaps, net of tax        2,206       2,206
    Write down on other real estate owned,
     net of tax                                       1,502       1,502
    Charge from redemption of trust preferred
     securities, net of tax                             318         318
    Employment severance charges, net of tax            123         123
                                                   --------    --------
    Core net income from continuing operations     $  3,481    $  6,458
                                                   --------    --------

(2) Excludes net gains or losses on securities transactions.
(3) Noninterest expense less amortization and other real estate expenses
    divided by the sum of net interest income (tax equivalent) plus
    noninterest income.
(4) Net income divided by average assets for the period.
(5) Net income divided by average equity for the period.
(6) Net interest income, on a tax equivalent basis, divided by average
    interest earning assets for the period.
(7) The following table reconciles reported net interest income on a tax
    equivalent basis for the periods presented:

    QTD                                     2Q05       2Q04       1Q05
    Net interest income                   $ 14,070   $ 11,279   $ 13,238
    Tax equivalent adjustment to net
     interest income                           568        529        521
                                          --------   --------   --------
    Net interest income, tax equivalent
     basis                                $ 14,638   $ 11,808   $ 13,759
                                          --------   --------   --------

    YTD                                     2Q05       2Q04
    Net interest income                   $ 27,308   $ 23,535
    Tax equivalent adjustment to net
     interest income                         1,089      1,274
                                          --------   --------
    Net interest income, tax
     equivalent basis                     $ 28,397   $ 24,809
                                          --------   --------

(8) Includes total nonaccrual loans and other real estate owned.
(9) Stockholders' equity less goodwill.  The following table reconciles
    reported stockholders' equity to tangible stockholders' equity for
    the periods presented:
                                            2Q05       2Q04       1Q05
    Stockholders' equity                  $140,099   $139,966   $135,792
    Goodwill                                   891        891        891
                                          --------   --------   --------
    Tangible stockholders' equity         $139,208   $139,075   $134,901
                                          --------   --------   --------

Contact Information

  • For further information, please contact:
    Daniel R. Kadolph
    Senior Vice President and Chief Financial Officer
    708-450-6759