Midwest Banc Holdings, Inc. Reports First Quarter Operating Earnings of $.17 per Share Before Previously Announced OTTI Charge

MELROSE PARK, IL -- (MARKET WIRE) -- 04/29/08 -- Midwest Banc Holdings, Inc. (NASDAQ: MBHI) reported a loss of $.22 per share after the previously announced non-cash $.40 per share impairment charge. Earnings excluding the first quarter non-cash, non-operating impairment charge on the government sponsored entity (GSE) securities would have been $.17 per share. This $.17 is not comparable to prior periods because of previously announced significant transactions which are discussed below.

Overview

"We made a number of changes this quarter to our leadership and financial position which we feel will positively impact Midwest," stated James J. Giancola, CEO. "We strengthened our team with the addition of our new CFO, JoAnn Lilek. JoAnn has extensive experience in banking having served 23 years at ABNAmro North America and most recently as the CFO for DSC Logistics, a Chicago-based national supply chain management firm. Dan Kadolph, our former CFO, has focused his attention on Risk Management, Audit, Human Resources and Compliance as our newly appointed Chief Administrative Officer. We also announced several significant transactions occurring late this quarter which should positively impact operating results and provide for more normalized reporting going forward. Including the sale of our Bucktown property, the balance sheet repositioning and the additional provision to our reserve we would report $.17 diluted EPS in the first quarter. The non-cash, non-operating impairment charge in our securities portfolio equating to an after-tax cost of $.40 per share result in a reported diluted loss per share of $.22. The recently announced impairment charge required under GAAP on our highest yielding investment-grade GSE securities did not impact our capital position nor will it impact our ability to pay dividends."

Specifically, Midwest announced these noteworthy items in the first quarter.

-- Appointed JoAnn Sannasardo Lilek to Chief Financial Officer. -- Appointed Daniel R. Kadolph to Chief Administrative Officer. -- Sold the Bucktown property for $18.4 million resulting in pre-tax gain of $15.2 million. -- Prepaid $130.0 million of FHLB advances with a weighted average rate of 4.9%; Midwest expects the replacement borrowings will cost approximately 2.5% with a 10 year term and callable within one to two years. The penalty associated with this prepayment was $7.1 million pre-tax. -- Charged-off $10.8 million relating to the LPC, eliminating a substantial portion of the specific allowance associated with this credit. Several positive court findings and a settlement agreement with a municipality provided additional clarity on collateral values related to this credit. -- Recorded a provision for loan losses of $5.4 million; March 31, 2008 allowance for loan losses to loans was .82%. -- Reduced $70 million term loan to $55 million by converting $15 million of this senior credit facility into subordinated debt; March 31, 2008 risk based capital ratio of 10.6% -- Recognized a non-cash, non-operating impairment charge of $17.6 million pre-tax for the impairment of certain Fannie Mae ("FNMA") and Freddie Mac ("FHLMC") preferred securities. -- Joined the STAR Allpoint/STARsf network providing Midwest customers access to 32,000 surcharge-free ATMs nationwide and over 1,000 ATMs in the Chicagoland area.

The carrying cost of the previously disclosed Large Problem Credit continues to have a substantial negative impact on earnings, reducing net income by approximately $.05 per diluted share in the first quarter of 2008. Adjusting for non-recurring items Midwest estimates run-rate earnings per share going into the second quarter 2008 to be $.10 to $.12. This estimate will increase or decrease based primarily on loan and deposit growth and spread.

Loan Portfolio

Average loans increased by $7 million, from the fourth quarter of 2007 to the first quarter of 2008. There were approximately $42 million of pay-offs in the commercial real estate (CRE) portfolio. Midwest also sold approximately $14 million of loans, net, in order to maintain internal lending limits of $25 million and to help manage its overall credit risk. In addition, loans were reduced by the $10.8 million charge-off related to the LPC.

Through the two recent acquisitions of Royal American and Northwest Suburban, Midwest has significantly changed the mix of its loan portfolio. At December 31, 2004, the loan portfolio was approximately 25% construction and 17% commercial. At March 31, 2008, construction represented approximately 18% of the portfolio while commercial loans have increased to approximately 19%. When owner-occupied CRE loans are added to the commercial loan total, the concentration of commercial loans in 2008 increased to 42%.

Loan Composition - Collateral-Based Method 12/31/2004 3/31/2008 ----------------------- ----------------------- ($ in 000s) % of Total ($ in 000s) % of Total ----------- ----------- ----------- ----------- 1-4 Family Loans $ 126,047 11.5 $ 270,203 10.9 Commercial & Multifamily Real Estate Loans 411,535 37.5 1,096,342 44.5* ----------- ----------- ----------- -----------Real Estate Loans 537,582 49.0 1,366,545 55.4 Construction & Development Loans 270,836 24.7 435,748 17.7 Home Equity Loans 100,322 9.1 196,109 7.9 Other Consumer Loans 4,377 0.4 9,521 0.4 ----------- ----------- ----------- -----------Consumer Loans 104,699 9.5 205,630 8.3 Commercial Loans 184,558 16.8 460,085 18.6 ----------- ----------- ----------- ----------- Total Gross Loans ($000) $ 1,097,675 100.0 $ 2,468,008 100.0 =========== =========== =========== ==========* $576 million, or 53%, of the CRE portfolio is owner-occupied. The Bank did not monitor the owner-occupied portion of CRE in 2004, but it was estimated to be a small portion of the total in 2004. The largest portion of loans in this category was acquired in the Royal American and Northwest Suburban acquisitions.

Net Interest Margin

Midwest experienced continued downward pressure on its net interest margin which declined 11 basis points from the prior quarter to 2.82% on a fully taxable equivalent basis. The average prime rate decreased 1.32% during the quarter. Approximately 26% of Midwest's earning assets, mainly loans tied to the prime rate, re-price immediately when interest rates change while only 9% of the interest bearing liabilities reset immediately. The latter figure does not include core deposits which can be re-priced at management's discretion. Therefore, in a falling rate environment Midwest's margin comes under pressure. As rates continued to decline in the first quarter, Midwest's earning asset yield fell .53% while the interest bearing fund costs declined .45%. The repositioning of the FHLB advances will have a positive impact on margin in the second quarter.

Loan Quality

Midwest made the determination, effective March 31, 2008, to charge-off $10.8 million relating to the LPC. This charge-off had the effect of eliminating a substantial portion of the specific loan loss allowance previously allocated to this credit. Net outstandings for the LPC are $18.2 million and represent 39% of our total nonaccrual loans at March 31, 2008. As previously reported, 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. Recent developments have confirmed Midwest's valuation estimates. Midwest expects to see a reduction of approximately $5 to $8 million in the remaining $18.2 million outstanding during the second quarter.

Total nonaccrual loans to total loans declined from 1.99% at the end of the fourth quarter to 1.90% at March 31 mostly due to the charge-off of $10.8 million related to the LPC. Excluding the LPC, nonaccrual loans increased by approximately $7.5 million. A majority of the increase to nonaccrual loans was due to a participated loan to a developer for a condominium development of which approximately one-third of the units have been sold and closed. Additional closings are expected in the second quarter. There were no loans over 90 days past due but accruing at March 31, 2008. Other real estate owned (OREO) increased slightly from year end. Loan delinquencies 30-89 days were .82% of loans at March 31, 2008 up from .48% at December 31, 2007. Approximately half the increase were administrative and not credit related issues. Total nonperforming assets to loan-related assets, were 2.00% at quarter-end compared to 2.08% at year end and 2.26% at March 31, 2007.

The allowance for loan losses declined by $6.4 million in the first quarter of 2008 and was .82% of loans outstanding at quarter end compared to 1.08% of loans outstanding at year end. Net charge-offs for the first quarter of 2008 were $11.8 million or 1.93% of average loans, up from $2.3 million or .37% of loans in the fourth quarter. Charge-offs excluding the LPC were $1.0 million or 0.17% of loans. The LPC charge-off was already in the specific reserve. The first quarter 2008 provision for loan losses was $5.4 million, reflecting management's updated assessments of impaired loans and concerns about continued deterioration of economic conditions.

Noninterest Income

Noninterest income on a linked quarter basis was flat excluding the sale of the Bucktown property and the impairment charge. Excluding these two items noninterest income for March 31, 2008 would have been $4.2 million, approximately the same as the previous quarter. While average deposits declined by 3%, or $65 million, service charges on deposits increased slightly from the previous quarter. Trust income decreased by 12% during the quarter, while insurance and brokerage commissions increased by 15%.

Noninterest Expense

On a linked-quarter basis, noninterest expenses in the first quarter of 2008 were up by $7.2 million. This increase was largely attributed to the prepayment penalty of $7.1 million related to the FHLB advances. Absent the prepayment penalty and merger related charges, noninterest expense in the first quarter would have been $21.4 million compared to $20.1 million in the fourth quarter, or up 6.4%. The 12% increase in salaries and benefits includes an increase of $350 thousand in first quarter payroll taxes, $91 thousand in severance payments and $224 thousand in non-recurring charges.

Midwest's projected effective tax rate for 2008 is 25-27%.

Securities Portfolio and Balance Sheet Management

Midwest's $770 million investment securities portfolio is held primarily to assist with liquidity management and is an important component of its interest rate risk management. In managing the securities portfolio Midwest does not take credit risk or invest in exotic investment products. Midwest has no sub-prime or Alt-A mortgage backed securities. All of the $329.3 million in mortgage-backed securities are agency issued, AAA-rated, and are either pass-throughs or CMOs. At March 31, 2008, the ratings of Midwest's securities portfolio were: AAA 85%; AA 13%; and A 2%.

At March 31, 2008, Midwest recognized a previously announced other-than-temporary impairment (OTTI) of certain FNMA and FHLMC preferred securities, with a cost basis of $85.1 million which resulted in a pre-tax, non-cash charge of $17.6 million. Previously, Midwest recognized the decline in market value of these GSE securities directly in shareholders' equity, through comprehensive income. Accordingly, the current charge reclassifies the amount to the statement of income. Shareholders' equity is unchanged. This OTTI charge conforms with accounting guidance established by the FASB and the SEC. The securities, however, are considered investment grade and are rated AA by S&P and Moodys. Midwest continues to maintain a high-quality investment securities portfolio, and it has no direct exposure to the risks arising from the effects of the current sub-prime mortgage crisis.

Midwest has a portfolio of bank owned life insurance that had a cash surrender value (CSV) of $82 million at March 31, 2008. The income from increases in CSV was $858,000 in the first quarter of 2008.

At March 31, 2008, Midwest had $906.5 million of funding from various borrowing sources to complement its $2.4 billion in deposits. Overall, the issues of "tight credit" and liquidity concerns that have challenged some financial institutions have not been a significant issue for Midwest.

Midwest has an aggressive program of modeling the interest rate risk inherent in its balance sheet including simulating various scenarios of market rate changes. At March 31, 2008, Midwest's position is slightly asset sensitive due to a concentration of prime-based commercial loans. Over a 12-month period, however, the impact to earnings from changes in interest rates, either up or down, is minimal.

Financial Highlights

On October 1, 2007, Midwest Banc Holdings, Inc. acquired Northwest Suburban Bancorp, Inc. Special merger-related charges were $1.3 million in the fourth quarter 2007 and $114,000 in the first quarter of 2008. Therefore, comparisons involving prior periods may be affected by these merger-related charges.

Earnings

-- Diluted earnings (loss) per share was ($.22) for first quarter 2008 -- Compared to $.14 for fourth quarter 2007 -- Compared to $.18 for first quarter 2007

-- Net income (loss) was ($5.4) million for first quarter 2008 -- Compared to $4.2 million for fourth quarter 2007 -- Compared to $4.4 million for first quarter 2007

-- Net interest margin was 2.82% for first quarter 2008 -- Compared to 2.93% for fourth quarter 2007 -- Compared to 3.01% for first quarter 2007

-- Top line revenue was $24.0 million for first quarter 2008 -- Compared to $27.4 million for fourth quarter 2007 -- Compared to $22.8 million for to first quarter 2007

-- Efficiency ratio was 66% for first quarter 2008 -- Compared to 73% for fourth quarter 2007 -- Compared to 70% for first quarter 2007

Loans and Loan Quality

-- Loans in first quarter increased -- $7 million on an average balance basis compared to fourth quarter 2007

-- Annualized net charge-off rate was 1.92% for first quarter 2008 -- Compared to .37% for fourth quarter 2007 -- Compared to (.03%) for first quarter 2007

-- Annualized net charge-off rate excluding the LPC was 0.17% for first quarter 2008 -- Compared to .37% for fourth quarter 2007 -- Compared to (.03%) for first quarter 2007

-- Nonaccrual loans at March 31, 2008 were $46.9 million or 1.90% of loans -- Compared to 1.99% at December 31, 2007 -- Compared to 2.14% at March 31, 2007

-- Nonperforming assets at March 31, 2008 were $49.4 million, or 2.00% of loan-related assets -- Compared to 2.08% at December 31, 2007 -- Compared to 2.26% at March 31, 2007

-- Allowance for loan losses at March 31, 2008 was .82% of loans -- Compared to 1.08% at December 31, 2007 -- Compared to 1.23% at March 31, 2007

-- Allowance for loan losses to nonaccrual loans was 43% at March 31, 2008 -- Compared to 54% at December 31, 2007 -- Compared to 58% at March 31, 2007

-- Delinquencies 30-89 days to loans were .82% at March 31, 2008 -- Compared to .48% at December 31, 2007 -- Compared to .48% at March 31, 2007

Capital Ratios

-- Capital ratios at March 31, 2008 -- Tier 1 risk-based 9.33% -- Total risk-based 10.61% -- Tier 1 leverage 7.47% -- Equity to assets 10.22%

Performance Metrics

-- Performance metrics before OTTI & Merger-related charges for first quarter 2008 -- Diluted earnings per share $.17 -- Net income $5.6 million -- Return on average assets .61% -- Return on average equity 5.90%

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

Hosting a Conference Call

Midwest will conduct a conference call to discuss these results on April 30, 2008, at 11:00 A.M. eastern/10:00 A.M. central.

The webcast and call will be hosted by members of management. A brief discussion of quarterly results and trends will be followed by questions from investors and analysts invited to participate in the interactive portion of the discussion.

Interested parties wishing to participate in the interactive portion of the call can dial in to 800-860-2442 or +1 412-858-4600 for international calls. The live webcast can be accessed at www.midwestbanc.com and will be available for replay on that website. The audio replay may be accessed through May 7, 2008 at 877-344-7529 or +1 412-317-0088. The replay passcode is 418074.

Franchise

Midwest Banc Holdings, Inc., with $3.7 billion in assets, 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. Midwest has 29 banking offices and operates 31 ATMs. On January 1, 2008, Midwest joined the STAR Allpoint/STARsf network. Midwest customers now have access to 32,000 surcharge-free Allpoint/STARsf ATMs nationwide, with over 1,000 ATMs in the Chicagoland area. The principal operating subsidiaries of Midwest Banc Holdings, Inc. are Midwest Bank and Trust Company and Midwest Financial and Investment Services, Inc.

Information on Midwest's products and services and locations is available at: www.midwestbanc.com

Forward-Looking Statements

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."

Financial Highlights Midwest Banc Holdings, Inc. (In thousands, except per share data)

Three Months Ended ------------------------------------------------------ December September March 31, 31, 30, June 30, March 31, 2008 2007 2007 2007 2007 ---------- ---------- ---------- ---------- ----------Income Statement Data: Net income $ (5,416) $ 4,222 $ 4,836 $ 5,107 $ 4,412

Per Share Data: Basic and diluted earnings $ (.22) $ .14 $ .20 $ .21 $ .18 Cash dividends declared .13 .13 .13 .13 .13 Book value 12.14 11.94 11.69 11.55 11.76 "If converted" book value(10) 12.41 12.23 11.69 11.55 11.76 Tangible book value(1) 5.79 5.56 8.02 7.91 8.12 "If converted" tangible book value(1)(10) 6.65 6.44 8.02 7.91 8.12 Stock price at period end 12.78 12.42 14.77 14.50 17.71 Average stock price 11.17 13.34 14.54 16.35 20.25

Share Data: Common shares outstanding - at period end 27,839 27,804 24,406 24,547 24,705 Basic - average 27,838 27,895 24,454 24,638 24,693 Diluted - average 27,838 28,043 24,647 24,828 24,950

Selected Financial Ratios: Return on average assets (.59)% .45% .64% .68% .60% Return on average equity (5.69) 4.80 6.75 7.07 6.20 Net interest margin (tax equivalent) 2.82 2.93 3.10 3.05 3.01 Efficiency ratio(2)(3) 66 73 64 66 70 Dividend payout ratio N/M 91 67 64 74 Loans to deposits at period end 103 101 101 96 97 Loans to assets at period end 66 67 66 66 65 Equity to assets at period end 10.22 10.16 9.41 9.38 9.75 Tangible equity to tangible assets at period end(1)(4) 5.75 5.62 6.65 6.62 6.94 Tier 1 capital to risk-weighted assets 9.33 9.21 11.42 11.76 12.02 Total capital to risk-weighted assets 10.61 10.17 12.52 12.81 13.10 Tier 1 leverage ratio 7.47 7.33 8.99 9.13 9.38

Full time equivalent employees 543 539 460 489 491

Balance Sheet Data: Total earning assets $3,298,143 $3,266,461 $2,750,334 $2,698,762 $2,685,977 Average earning assets 3,276,965 3,301,501 2,736,154 2,731,527 2,665,044 Average assets 3,686,269 3,721,444 3,020,254 3,013,039 2,966,039 Average loans 2,459,830 2,453,292 1,989,119 1,961,437 1,946,460 Average securities 765,966 808,774 698,541 726,534 677,001 Average deposits 2,415,385 2,480,831 2,022,709 2,021,256 1,995,721 Tangible shareholders' equity(1) 204,295 197,713 195,790 194,138 200,711 Average equity 382,603 348,639 284,231 289,760 288,783

See footnotes at end of statements, tables and schedules.

Statement of Income Midwest Banc Holdings, Inc. (In thousands, except per share data)

Three Months Ended ----------------------------------------------------- March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 --------- --------- --------- --------- ---------Interest Income

Loans $ 40,806 $ 44,598 $ 37,566 $ 36,822 $ 36,058 Loans held for sale -- -- 11 48 30 Securities Taxable 9,060 9,886 8,611 8,729 7,563 Exempt from fed income taxes 598 645 462 462 700 Dividends from FRB and FHLB stock 183 158 227 226 228 Short-term investments 148 150 297 205 187 --------- --------- --------- --------- --------- Total interest income 50,795 55,437 47,174 46,492 44,766 --------- --------- --------- --------- ---------Interest Expense Deposits 19,089 21,577 18,634 18,582 17,899 Federal funds purchased 815 673 64 393 699 Securities sold under repurchase agreements 3,178 3,443 3,137 2,563 2,159 Advances from the FHLB 3,482 3,811 3,640 3,670 3,648 Junior subordinated debentures 1,045 1,325 1,334 1,315 1,301 Notes payable 970 1,352 18 -- -- --------- --------- --------- --------- --------- Total interest expense 28,579 32,181 26,827 26,523 25,706 --------- --------- --------- --------- ---------Net interest income 22,216 23,256 20,347 19,969 19,060 Provision for loan losses 5,400 1,410 1,800 1,036 645 --------- --------- --------- --------- ---------Net interest income after provision for loan losses 16,816 21,846 18,547 18,933 18,415 Noninterest Income Service charges on deposit accounts 1,963 1,953 1,535 1,575 1,634 Gains (losses) on securities transactions 12 9 6 31 (14) Impairment charge on securities (17,586) -- -- -- -- Gains on sale of loans -- 1 41 225 176 Insurance and brokerage commissions 560 488 685 541 573 Trust 449 508 453 503 393 Increase in CSV of life insurance 858 871 736 703 753 Gain on sale of property 15,196 -- -- -- -- Other 338 331 244 318 205 --------- --------- --------- --------- --------- Total noninterest income 1,790 4,161 3,700 3,896 3,720 --------- --------- --------- --------- ---------Noninterest Expenses Salaries and employee benefits 13,040 11,665 9,740 10,363 10,447 Occupancy and equipment 2,899 2,740 2,362 2,190 2,190 Professional services 1,538 1,857 1,297 1,108 1,208 Marketing 576 614 538 478 679 Foreclosed properties 5 (2) 4 7 25 Loss on extinguishment of debt 7,121 -- -- -- -- Amortization of intangible assets 625 644 409 409 456 Merger related charges 114 1,333 -- (21) -- Other 2,691 2,574 1,895 2,110 2,076 --------- --------- --------- --------- --------- Total noninterest expenses 28,609 21,425 16,245 16,644 17,081 --------- --------- --------- --------- ---------Income before income taxes (10,003) 4,582 6,002 6,185 5,054 Provision (benefit) for income taxes (4,587) 360 1,166 1,078 642 --------- --------- --------- --------- ---------Net Income $ (5,416) $ 4,222 $ 4,836 $ 5,107 $ 4,412 ========= ========= ========= ========= ======== Net Income available to common shareholders $ (6,251) $ 4,018 $ 4,836 $ 5,107 $ 4,412

Basic and diluted earnings per share $ (.22) $ .14 $ .20 $ .21 $ .18 ========= ========= ========= ========= ========Cash dividends declared per share $ .13 $ .13 $ .13 $ .13 $ .13 ========= ========= ========= ========= ======== Top line revenue (5) $ 24,006 $ 27,417 $ 24,047 $ 23,865 $ 22,780 Noninterest income to top line revenue 7% 15% 15% 16% 16%

See footnotes at end of statements, tables and schedules.

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

March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 ---------- ---------- ---------- ---------- ----------Assets Cash $ 71,080 $ 70,111 $ 46,963 $ 53,832 $ 64,153 Short-term investments 31,415 14,388 17,241 8,861 24,485 Securities available-for- sale 737,089 710,881 660,986 639,087 639,985 Securities held-to-maturity 32,674 37,601 40,978 42,110 43,562 ---------- ---------- ---------- ---------- ---------- Total securities 769,763 748,482 701,964 681,197 683,547 Federal Reserve and FHLB stock, at cost 29,264 29,264 23,683 23,683 23,592 Loans held for sale -- -- -- 2,349 3,740 Loans 2,467,701 2,474,327 2,007,446 1,982,672 1,950,613 Allowance for loan losses (20,344) (26,748) (24,879) (23,724) (24,028) ---------- ---------- ---------- ---------- ---------- Net loans 2,447,357 2,447,579 1,982,567 1,961,298 1,926,585 Cash value of life insurance 82,024 81,166 67,412 66,676 65,973 Premises and equipment 38,232 41,821 22,468 22,489 22,282 Other real estate owned 2,527 2,220 2,246 2,312 2,403 Goodwill and other intangibles 176,861 177,451 89,443 89,437 89,788 Other 81,923 80,300 78,578 112,510 74,083 ---------- ---------- ---------- ---------- ---------- Total assets $3,730,446 $3,692,782 $3,032,565 $3,022,294 $2,980,631 ========== ========== ========== ========== ========= Liabilities and Shareholders'Equity

Liabilities Deposits Noninterest- bearing $ 313,727 $ 321,317 $ 246,153 $ 256,152 $ 247,548 Interest-bearing 2,090,985 2,136,831 1,748,774 1,801,690 1,759,452 ---------- ---------- ---------- ---------- ---------- Total deposits 2,404,712 2,458,148 1,994,927 2,057,842 2,007,000 Federal funds purchased 184,500 81,000 12,000 29,000 7,000 Securities sold under repurchase agreements 394,764 283,400 317,118 282,037 251,070 FHLB advances 190,000 323,439 319,925 269,911 319,897 Junior subordinated debentures 60,741 60,724 65,861 65,845 65,828 Notes payable 76,500 72,500 2,500 -- -- Other 38,073 38,407 35,001 34,084 39,337 ---------- ---------- ---------- ---------- ---------- Total liabilities 3,349,290 3,317,618 2,747,332 2,738,719 2,690,132 ---------- ---------- ---------- ---------- ---------- Shareholders' Equity

Preferred equity 43,125 43,125 -- -- -- Common equity 336,877 345,956 295,807 295,436 295,614 Accumulated other comprehensive income (loss) 1,154 (13,917) (10,574) (11,861) (5,115) ---------- ---------- ---------- ---------- ---------- Total shareholders' equity 381,156 375,164 285,233 283,575 290,499 ---------- ---------- ---------- ---------- ---------- Total liabilities and shareholders' equity $3,730,446 $3,692,782 $3,032,565 $3,022,294 $2,980,631 ========== ========== ========== ========== ========= Loan Portfolio Composition - Source of Repayment

March 31, 2008 December 31, 2007* -------------------------- -------------------------- ($ in millions) % of Total ($ in millions) % of Total --------------- ---------- --------------- ----------Commercial $ 1,060 43 $ 1,080 44 Construction 448 18 464 19 Commercial real estate 658 27 628 25 Consumer 157 6 153 6 Residential mortgage 145 6 150 6 --------------- ---------- --------------- ----------Total loans, gross $ 2,468 100 $ 2,475 100 =============== ========== =============== ========= *Amounts have been reclassified to conform to current period presentation.

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

The following table sets forth the changes in the balance sheet at March 31, 2008 compared to March 31, 2007 excluding the Northwest Suburban acquisition on October 1, 2007.

Excluding Northwest Suburban Northwest Acquisition March 31, Suburban -------------- ---------------------- Acquisi- % 2008 2007 $ Change tion(a) $ Change Change ---------- ---------- -------- -------- -------- ---- (Dollars in thousands) Assets Cash and cash equivalents(b) $ 102,495 $ 88,638 $ 13,857 $ 3,342 $ 10,515 12% Securities available-for sale 737,089 639,985 97,104 57,597 39,507 6 Securities held-to- maturity 32,674 43,562 (10,888) -- (10,888) (25) ---------- ---------- -------- -------- -------- ---- Total securities 769,763 683,547 82,216 57,597 28,619 4 Fed Res and FHLB stock, at cost 29,264 23,592 5,672 1,503 4,169 18 Loans held for sale -- 3,740 (3,740) -- (3,740) (100) Loans 2,467,701 1,950,613 517,088 439,249 77,839 4 Allowance for loan loss (20,344) (24,028) 3,684 (2,767) 6,451 (27) ---------- ---------- -------- -------- -------- ----Net loans 2,447,357 1,926,585 520,772 436,482 84,290 4 Cash surrender value of life insurance 82,024 65,973 16,051 12,884 3,167 5 Premises and equipment 38,232 22,282 15,950 19,279 (3,329) (15) Foreclosed properties 2,527 2,403 124 -- 124 5 Core deposit and other intangibles, net 16,454 10,163 6,291 8,061 (1,770) (17) Goodwill 160,407 79,625 80,782 80,550 232 --Other 81,923 74,083 7,840 7,914 (74) -- ---------- ---------- -------- -------- -------- ---- Total assets $3,730,446 $2,980,631 $749,815 $627,612 $122,203 4% ========== ========== ======== ======== ======== === Liabilities and Shareholders' Equity

Liabilities Noninterest- bearing $ 313,727 $ 247,548 $ 66,179 $ 65,299 $ 880 --% Interest- bearing 2,090,985 1,759,452 331,533 405,361 (73,828) (4) ---------- ---------- -------- -------- -------- ----Total deposits 2,404,712 2,007,000 397,712 470,660 (72,948) (4) Federal funds purchased 184,500 7,000 177,500 6,170 171,330 2,448 Securities sold under agreements to repurchase 394,764 251,070 143,694 -- 143,694 57 FHLB advances 190,000 319,897 (129,897) 3,500 (133,397) (42) Junior subordinated debentures 60,741 65,828 (5,087) 10,310 (15,397) (23) Notes payable 76,500 -- 76,500 75,000 1,500 100 Other 38,073 39,337 (1,264) 6,982 (8,246) (21) ---------- ---------- -------- -------- -------- ----Total liabilities 3,349,290 2,690,132 659,158 572,622 85,536 3

Shareholders' Equity

Preferred equity 43,125 -- 43,125 -- 43,125 100 Common equity 336,877 295,614 41,263 54,990 (13,727) (5) Accumulated other comprehensive income (loss) 1,154 (5,115) 6,269 -- 6,269 123 ---------- ---------- -------- -------- -------- ----Total shareholders' equity 381,156 290,499 90,657 54,990 35,667 12 ---------- ---------- -------- -------- -------- ---- Total liabilities and shareholders' equity $3,730,446 $2,980,631 $749,815 $627,612 $122,203 4% ========== ========== ======== ======== ======== === (a) Includes fair value adjustments.

(b) Northwest Suburban Acquisition column includes cash and cash equivalents acquired through Northwest Suburban of $10,066 less cash paid for acquisition of $81,163, capitalized costs of $414, costs relating to the registration statement of $147, and $75,000 borrowing.

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

For the Three Months Ended ---------------------------------------------------------- March 31, 2008 December 31, 2007 March 31, 2007 ------------------ ------------------ ------------------ Average Average Average Average Average Average Balance Balance Balance Rate Balance Rate ---------- ------ ---------- ------ ---------- ------Interest- Earning Assets: Short-term investments $ 21,939 2.70% $ 11,627 5.19% $ 15,987 4.68% Securities: Taxable(6) 704,119 5.43 742,114 5.61 603,622 5.37 Exempt from federal income taxes(6) 61,847 5.95 66,660 5.96 73,379 5.87 ---------- ------ ---------- ------ ---------- ------Total securities 765,966 5.48 808,774 5.64 677,001 5.44 FRB and FHLB stock 29,230 2.50 27,808 2.27 23,592 3.87 Loans held for sale -- -- -- -- 2,004 5.99 Loans (6)(8)(9) 2,459,830 6.65 2,453,292 7.29 1,946,460 7.44 ---------- ------ ---------- ------ ---------- ------Total interest- earning assets $3,276,965 6.31% $3,301,501 6.84% $2,665,044 6.88%

Noninterest- Earning Assets: Cash $ 55,634 $ 57,080 $ 71,088 Premises and equipment 41,325 41,521 22,004 Allowance for loan losses (27,287) (26,924) (24,907) Other 339,632 348,266 232,810 ---------- ---------- ----------Total noninterest- earning assets 409,304 419,943 300,995 ---------- ---------- ----------Total assets $3,686,269 $3,721,444 $2,966,039 ========== ========== ========= Interest-Bearing Liabilities: Deposits: Interest- bearing demand deposits $ 217,515 1.37% $ 218,213 1.80% $ 163,108 1.79% Money-market demand and savings account 411,091 1.78 439,720 2.48 378,039 2.59 Time deposits less than $100,000 847,467 4.36 827,332 5.05 731,217 4.73 Time deposits of $100,000 or more 622,805 4.68 664,327 4.47 466,924 5.21 Public funds -- -- -- -- -- -- ---------- ------ ---------- ------ ---------- ------Total interest- bearing deposits 2,098,878 3.64 2,149,592 4.02 1,739,288 4.12 Borrowings: Fed funds purch & repurchase agreements 402,774 3.97 368,073 4.47 256,322 4.46 FHLB advances 315,158 4.42 323,433 4.71 319,890 4.56 Junior subordinated debentures 60,733 6.88 66,935 7.92 65,820 7.91 Notes payable 76,368 5.08 82,717 6.54 -- -- ---------- ------ ---------- ------ ---------- ------Total borrowings 855,033 4.44 841,158 5.04 642,032 4.88 ---------- ------ ---------- ------ ---------- ------Total interest- bearing liabilities $2,953,911 3.87% $2,990,750 4.32% $2,381,320 4.32%

Noninterest- Bearing Liabilities: Noninterest- bearing demand deposits $ 316,507 $ 331,239 $ 256,433 Other liabilities 33,248 50,816 39,503 ---------- ---------- ----------Total noninterest- bearing liabilities 349,755 382,055 295,936 ---------- ---------- ----------Shareholders' equity 382,603 348,639 288,783 ---------- ---------- ----------Total liabilities and shareholders' equity $3,686,269 $3,721,444 $2,966,039 ========== ========== ========= Net interest margin (tax equivalent) (6)(10) 2.82% 2.93% 3.01%

See footnoes at end of statements, tables and schedules.

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

Three Months Ended ------------------------------------------------------- March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 ---------- ---------- ---------- ---------- ----------Loan Quality

Nonaccrual loans $ 46,916 $ 49,173 $ 44,681 $ 43,588 $ 41,679

Foreclosed properties $ 2,527 $ 2,220 $ 2,246 $ 2,312 $ 2,403

Nonperforming assets $ 49,443 $ 51,393 $ 46,927 $ 45,900 $ 44,082

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

Loans $2,467,701 $2,474,327 $2,007,446 $1,982,672 $1,950,613

Loan-related assets $2,470,228 $2,476,547 $2,009,692 $1,984,984 $1,953,016

Nonaccrual loans to loans 1.90% 1.99% 2.23% 2.20% 2.14%

Nonperforming assets to loan-related assets 2.00% 2.08% 2.34% 2.31% 2.26%

Allowance for Loan Losses Beginning Balance $ 26,748 $ 24,879 $ 23,724 $ 24,028 $ 23,229 Bank acquisition -- 2,767 -- -- -- Provision for loan losses 5,400 1,410 1,800 1,036 645 Net chargeoffs (recoveries) Large Problem Credit 10,774 -- -- -- -- From remainder of portfolio 1,030 2,308 645 1,340 (154) ---------- ---------- ---------- ---------- ---------- 11,804 2,308 645 1,340 (154) ---------- ---------- ---------- ---------- ---------- Ending balance $ 20,344 $ 26,748 $ 24,879 $ 23,724 $ 24,028 ========== ========== ========== ========== ========= Net chargeoffs (recoveries) to average loans Total 1.93% .37% .13% .27% (.03)% Without Large Problem Credit .17% .37% .13% .27% (.03)%

Delinquencies 30 - 89 days to average loans .82% .48% .49% .63% .48 %

Allowance for loan losses to Loans at period end .82% 1.08% 1.24% 1.20% 1.23 % Nonaccrual loans 43% 54% 56% 54% 58 %

Footnotes Midwest Banc Holdings, Inc. (In thousands)

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

March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 --------- --------- --------- --------- --------- Shareholders' equity $ 381,156 $ 375,164 $ 285,233 $ 283,575 $ 290,499 Core deposit intangible and other intangibles 16,454 17,044 9,586 9,812 10,163 Goodwill 160,407 160,407 79,857 79,625 79,625 --------- --------- --------- --------- ---------Tangible shareholders' equity $ 204,295 $ 197,713 $ 195,790 $ 194,138 $ 200,711 ========= ========= ========= ========= ======== (2) Excludes net gains or losses on securities transactions.

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

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

March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 ----------- ----------- ----------- ----------- ----------- Total assets $ 3,730,446 $ 3,692,782 $ 3,032,565 $ 3,022,294 $ 2,980,631 Core deposit intangible and other intangibles 16,454 17,044 9,586 9,812 10,163 Goodwill 160,407 160,407 79,857 79,625 79,625 ----------- ----------- ----------- ----------- -----------Tangible assets $ 3,553,585 $ 3,515,331 $ 2,943,122 $ 2,932,857 $ 2,890,843 =========== =========== =========== =========== ========== (5) Includes net interest income and noninterest income.

(6) Adjusted for 35% tax rate and adjusted for the dividends-received deduction where applicable.

(7) Nonaccrual loans are included in the average balance; however, these loans are not earning any interest.

(8) Includes loan fees.

(9) Reconciliation of reported net interest income to tax equivalent net interest income.

For the Three Months Ended, ------------------------------------- March 31, December 31, March 31, 2008 2007 2007 ----------- ------------- ----------- Net interest income $ 22,216 $ 23,256 $ 19,060 Tax equivalent adjustment to net interest income 892 960 979 ----------- ------------- -----------Net interest income, tax equivalent basis $ 23,108 $ 24,216 $ 20,039 =========== ============= ========== (10) Reconciliation of common equity to shareholders' equity.

March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 --------- --------- --------- --------- --------- Preferred equity $ 43,125 $ 43,125 $ -- $ -- $ --Common equity 338,031 332,039 285,233 283,575 290,499 --------- --------- --------- --------- ---------Shareholders' equity $ 381,156 $ 375,164 $ 285,233 $ 283,575 $ 290,499 ========= ========= ========= ========= ======== Reconciliation of tangible common equity to tangible shareholders' equity.

March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 --------- --------- --------- --------- --------- Preferred equity $ 43,125 $ 43,125 $ -- $ -- $ --Tangible common equity 161,170 154,588 195,790 194,138 200,711 --------- --------- --------- --------- ---------Tangible shareholders' equity $ 204,295 $ 197,713 $ 195,790 $ 194,138 $ 200,711 ========= ========= ========= ========= ======== Reconciliation of common shares outstanding at period end to "if converted" shares outstanding.

March December September June March 31, 31, 30, 30, 31, 2008 2007 2007 2007 2007 --------- --------- --------- --------- --------- Common shares outstanding 27,839 27,804 24,406 24,547 24,705 Resulting common shares ifpreferred shares were converted 2,875 2,875 -- -- -- --------- --------- --------- --------- ---------"If converted" shares outstanding 30,714 30,679 24,406 24,547 24,705 ========= ========= ========= ========= ========

For further information: John B. Pelling, III Vice President - Investor Relations (708) 498-2013 IR@midwestbank.com

2008-04-29 22:01:16 0348494 MARKETWIRE