BRIDGEVIEW, Ill., July 28 /PRNewswire-FirstCall/ -- Midland Capital Holdings Corporation (OTC:MCPH) (BULLETIN BOARD: MCPH) (the "Company") the holding company for Midland Federal Savings and Loan Association ("Midland Federal") today announced that net income for the quarter ended June 30, 2006 totaled $261,000, or $0.70 per diluted share, compared to net income of $479,000, or $1.28 per diluted share, for the quarter ended June 30, 2005. Net income for the fiscal year ended June 30, 2006 totaled $1.0 million, or $2.71 per diluted share, compared to net income totaling $1.2 million, or $3.23 per diluted share for the fiscal year ended June 30, 2005. The Company also announced a 9% increase in its quarterly cash dividend to $0.24 per share for the quarter ended June 30, 2006, from $0.22 per share. The dividend will be paid on August 17, 2006 to shareholders of record as of August 7, 2006. Net income in both periods was increased by gains on the sale of Midland Federal's investment in Intrieve, Incorporated ("Intrieve"), Midland Federal's data processing provider. Net income in the current quarter included a $12,000 gain, net of income taxes, from the Intrieve sale compared with a $217,000 gain, net of income taxes, realized in the prior year quarter from the Intrieve sale. Net income in the current fiscal year included a $23,000 gain, net of income taxes, on the Intrieve sale, compared with the $217,000 gain, net of income taxes, realized in the prior fiscal year. Annualized return on average assets and annualized return on average equity during the quarter ended June 30, 2006 were .79% and 7.89%, respectively compared to 1.36% and 15.19%, respectively, for the comparable prior year quarter. For the fiscal year ended June 30, 2006, annualized return on average assets was .76% and annualized return on average equity was 7.78%, compared to .83% and 9.89%, respectively, for the fiscal year ended June 30, 2005. Net interest income decreased $37,000 to $1.28 million in the quarter ended June 30, 2006 compared to the prior year quarter. The decrease in net interest income was the result of a decrease in the average balance of interest earning assets offset by an increase in interest rate spread. The average balance of interest earning assets decreased to $124.4 million for the quarter ended June 30, 2006 compared to $134.7 million for the prior year quarter while interest rate spread increased to 3.79% for the quarter ended June 30, 2006 compared to 3.71% in the prior year quarter. For the fiscal year ended June 30, 2006 net interest income increased $35,000 to $5.17 million. The increase in net interest income in the current fiscal year was primarily the result of an increase in interest rate spread to 3.80% compared to 3.55% in the prior fiscal year. Non-interest income decreased $301,000 to $233,000 in the quarter ended June 30, 2006 from $534,000 in the quarter ended June 30, 2005. Non-interest income in both periods included gains realized on the sale of Midland Federal's investment in Intrieve, discussed above. Non-interest income in the current quarter included an $18,000 gain from the Intrieve sale compared with a $329,000 gain realized from the Intrieve sale in the prior year quarter. Non-interest income in the current quarter was increased by a $22,000 increase in profit on the sale of loans which offset a $10,000 decrease in loan fees and service charges and a $4,000 decrease in commission income. For the fiscal year ended June 30, 2006 non-interest income decreased $245,000 to $899,000 compared to the prior year. Non-interest income in both periods included gains realized on the sale of Midland Federal's investment in Intrieve, discussed above. Non-interest income in the current year included a $35,000 gain from the Intrieve sale compared with a $329,000 gain realized from the Intrieve sale in the prior year. Non-interest income in the current fiscal year was increased by a $39,000 increase in profit on the sale of loans, an $11,000 increase in loan fees and service charges and a $14,000 increase in deposit related fees offset by a $5,000 decrease in commission income. Non-interest expense increased $3,000 to $1.12 million in the quarter ended June 30, 2006 compared to the prior year quarter. The increase in non- interest expense is primarily the result of a $14,000 increase in staffing costs and a $10,000 increase in office occupancy expense offset by an $18,000 decrease in computer software and support expense. The increase in staffing costs was primarily attributed to a $13,000 increase in employee medical and pension benefits. For the fiscal year ended June 30, 2006 non-interest expense increased $90,000 to $4.54 million compared to the prior year. The primary factors for the increase in non-interest expense in the current fiscal year were a $35,000 increase in staffing costs, a $33,000 increase in computer software and support expense, a $19,000 increase in office occupancy expense and a $5,000 increase in professional fees offset by a $6,000 decrease in data processing fees. The increase in staffing costs is primarily attributed to a $21,000 increase in costs for employee medical and pension benefits. The increase in computer software and support expense was primarily attributed to the installation of new computer servers. Non-performing assets were .25% of total assets at June 30, 2006 and consisted of $327,000 in non-performing loans. The allowance for loan losses decreased by $41,000 to $416,000, or .45% of total loans, at June 30, 2006 as a result of net loan charge offs. The Company made no loan loss provisions during the fiscal year ended June 30, 2006. At June 30, 2006 the Company's ratio of allowance for loan losses to non-performing loans was 127.27% compared to 120.06% at June 30, 2005. At June 30, 2006 the Company's assets totaled $130.8 million, compared to total assets of $139.0 million at June 30, 2005. Net loans receivable decreased $2.3 million to $92.5 million at June 30, 2006. Total deposits decreased $8.8 million to $116.0 million at June 30, 2006 from $124.8 million at June 30, 2005. The decrease in savings deposits is primarily attributed to increased competition for deposit liabilities in a rising interest rate environment. Stockholders' equity in the Company totaled $13.3 million at June 30, 2006 resulting in a book value per common share of $35.68 based upon 372,600 shares outstanding. At June 30, 2006 Midland Federal's capital ratios exceeded all of its regulatory capital requirements with both tangible and core capital ratios of 8.52% and a risk-based capital ratio of 19.58%. Midland Federal's deposits are insured up to applicable limits by the Federal Deposit Insurance Corporation. Midland Federal operates four banking offices located in Chicago, Homer Glen and Bridgeview, Illinois. (Selected Consolidated Financial Information follows) FINANCIAL HIGHLIGHTS Unaudited SELECTED FINANCIAL CONDITION DATA: June 30, 2006 June 30, 2005 Total assets $130,817,349 138,978,770 Loans receivable, net 92,544,573 94,829,310 Mortgage-backed securities 1,684,228 1,920,221 Cash and cash equivalents 11,259,904 36,709,593 Investment securities 21,021,975 1,310,937 Deposits 115,971,229 124,836,132 Stockholders' equity 13,296,084 12,696,682 PER SHARE DATA: Book value per common share at period end $35.68 34.08 SELECTED ASSET QUALITY RATIOS: Non-performing loans to loans receivable, net .35% .40% Non-performing assets to total assets .25% .27% Allowance for loan losses to non-performing loans 127.27% 120.06% Allowance for loan losses to total loans .45% .48% SELECTED OPERATIONS DATA: Three Months Ended Twelve Months Ended June 30, June 30, 2006 2005 2006 2005 Total interest income $1,738,509 1,672,650 6,820,757 6,505,721 Total interest expense 457,844 355,340 1,650,610 1,370,963 Net interest income 1,280,665 1,317,310 5,170,147 5,134,758 Provision for loan losses 0 0 0 0 Net interest income after provision for loan losses 1,280,665 1,317,310 5,170,147 5,134,758 Non-interest income 232,686 533,573 899,309 1,144,097 Non-interest expense 1,123,546 1,120,910 4,542,438 4,452,192 Income before income taxes 389,805 729,973 1,527,018 1,826,663 Income tax expense 129,070 251,213 515,722 624,114 Net income 260,735 478,760 1,011,296 1,202,549 PER SHARE DATA: Earnings per basic share $.70 1.28 2.71 3.23 Earnings per diluted share $.70 1.28 2.71 3.23 Dividends declared per common share $.22 .20 .88 .80 SELECTED OPERATING RATIOS: Annualized return on average assets .79% 1.36% .76% .83% Annualized return on average equity 7.89% 15.19% 7.78% 9.89% Annualized operating expenses to average total assets 3.42% 3.19% 3.41% 3.07% Interest rate spread during the period 3.79% 3.71% 3.80% 3.55% Net interest margin 4.09% 3.91% 4.06% 3.71% Average interest-earning assets to average interest-bearing liabilities 120.03% 119.17% 119.67% 116.91% DATASOURCE: Midland Capital Holdings Corporation CONTACT: Paul Zogas, President of Midland Capital Holdings Corporation, +1-708-598-9400 Web site: http://www.midlandfederal.com/

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