DCB Financial (DCBF) 8-K Results of Operations and Financial Condition

EXHIBIT 99

FOR IMMEDIATE RELEASE	CONTACT:
Thursday October 18, 2007	John A. Ustaszewski Chief Financial Officer (740) 657-7000

DCB FINANCIAL CORP ANNOUNCES
THIRD QUARTER 2007 EARNINGS AND
INCREASED DIVIDEND

LEWIS CENTER, Ohio, October 18, 2007 — DCB Financial Corp, (OTC Bulletin Board DCBF) announced earnings of $1.08 million, or $0.29 per basic and diluted share for the three months ended September 30, 2007. The Corporation also reported earnings of $3.79 million, or $1.01 per basic and diluted share for the nine months ended September 30, 2007. Return on assets for the third quarter 2007 was 0.64%, while return on equity was 7.10%.

The Board of Directors also approved an increase in the regular quarterly dividend to $0.16 per share, payable November 15, 2007 to shareholders of record as of October 31, 2007. The Board voted to increase the dividend to distribute more earnings during a slower period of balance sheet growth.

President and Chief Executive Officer Jeffrey T. Benton commented, “Despite the challenging economy, we’ve had some successes growing our non-interest revenue and stabilizing our margin. We also recently opened two new branches and expect to have two more open by early 2008. But during the third quarter, like the second, we continued to focus on credit concerns related to our investment real estate loan portfolio from the Columbus market. We’ve significantly increased our reserves and continue to aggressively work through those issues.”

Net Income

The decrease in net income was caused by several factors, including a reduction in net interest income due to slower growth in loans because of the slowdown in the economy, pricing competition and a reduction in interest income due to non-accrual loans. Credit costs related to the Corporation’s investment property portfolio caused an increase in the provision for loan losses. The opening of two additional branch locations increased expenses due to added staffing and facility costs.

Net Interest Income

Net interest income was $5.4 million for the three months ended September 30, 2007, compared to $5.8 million for the same period in 2006. The $423 thousand decrease in the third quarter 2007 compared to 2006 was mainly attributed to a decrease in loan balances due to an exit from the indirect lending program, higher rate driven loan payoffs and slower economic activity. Strong pricing competition and lack of loan growth has continued to pressure the net interest margin. The third quarter’s margin declined slightly to 3.48% on a fully tax equivalent basis, from 3.56% during the same quarter in 2006. The decline is mainly due to reduction in interest income from a reversal of interest to account for non-accruing loans. The Bank has seen deposit growth primarily in products such as time deposits and money market accounts, which generally carry higher costs compared to checking and savings products, but was able to reduce funding costs by paying back a substantial amount of brokered CDs. Increased funding costs may further negatively impact the net interest margin in future periods if the current competitive environment remains in effect.

Noninterest Income

Total noninterest income increased $285 thousand, or 20%, for the three months ended September 30, 2007, compared to the same period in 2006. The Bank’s products and services generated revenues of $1.71 MM for the third quarter ending September 30, 2007 compared to $1.43MM for the same period in 2007. The change in non-interest revenues from period to period is mainly attributed to increases in trust revenues, data processing services and the revaluation of an investment in an unconsolidated affiliate, offset by losses on the disposal of other real estate owned (OREO) property. There has been an increase in revenues from newer products such as

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the wholly-owned title agency and wealth management products. These and other new revenue sources to enhance noninterest income continue to be actively pursued, while management remains vigilant to contain operating expenses in this challenging and competitive period.

Noninterest Expense

Total noninterest expense increased $395 thousand, or 9.6%, for the three months ended September 30, 2007, compared to the same period in 2006. The increase was attributable to salary and employee benefits expenses, occupancy expenses and other administrative expenses, primarily the result of the Corporation’s branch expansion. The branch expansion program remains critical to the Corporation’s long term success in our growing market.

Analysis of Selected Financial Condition (Dollars in thousands)

The Corporation’s assets totaled $681,199 at September 30, 2007, compared to $684,004 at December 31, 2006, a decrease of $2,805, or 0.4%. The decrease in assets was mainly attributed to slower loan growth.

Cash and cash equivalents increased $9,776 from December 31, 2006 to September 30, 2007, driven by an increase in overnight funds. Management classifies the entire securities portfolio as available for sale to provide the Corporation with the flexibility to move funds into loans as demand warrants. Total securities increased from $88,071 at December 31, 2006 to $89,776 at September 30, 2007. The mortgage-backed securities portfolio, totaling $32,395 at September 30, 2007, provides the Corporation with a constant cash flow stream from principal and interest payments.

Total loans, including loans held for sale, decreased $25,559, or 4.6%, from $553,918 at December 31, 2006 to $528,359 at September 30, 2007. While business loan and commercial real estate activity remains good within the local market, the Bank has experienced a decline in loan balances due to unscheduled payoffs in the commercial portfolio because of intense competitive pricing and a significant reduction in investment property and indirect auto lending activities. Retail loan production including credit card and home equity loans remained steady.

Total deposits decreased $8,314, or 1.6%, from $524,094 at December 31, 2006 to $515,780 at September 30, 2007. Reflecting the continued shift from low cost to higher rate deposits and intense competitive pricing, non-interest bearing deposit accounts declined $18,000 from December 31, 2006 to September 30, 2007, while interest bearing deposits increased $9,686 during the same time period. The new CDARS program introduced last year has grown to $61,785 in deposits at September 30, 2007. The growth in CDARS and money market balances has been offset by declines in brokered deposit balances.

Total overall long term FHLB debt decreased $6,489 from $93,736 at December 31, 2006 to $87,247 at September 30, 2007. Continued reliance on outside funding rather than lower cost deposits could increase the Corporation’s overall cost of funds.

Provision and Allowance for Loan Losses

The provision for loan losses totaled $1.1 million for the three months ended September 30, 2007, compared to $390 thousand for the same period in 2006. The increase in the provision is to account for the potential losses within the investment property real estate portfolio. DCB maintains an allowance for loan losses at a level to absorb management’s estimate of probable inherent credit losses in its portfolio. Non-accrual loans at September 30, 2007 were $7.729 million compared to $2.091 million for the same period in 2006. The majority of non-accrual balances are attributed to loans in the investment real estate sector that were not generating sufficient cash flow to service the debt. Net charge-offs for the three months ended September 30, 2007 were $385 thousand, compared to $615 thousand for the three months ended September 30, 2006. Annualized net charge-offs for the three months ended September 30, 2007 were 0.29% compared to 0.44% at September 30, 2006. Delinquent loans over thirty days from period to period increased to 3.95% at September 30, 2007 from 1.98% at September 30, 2006. Non-performing loans to total loans increased to 1.48% of loans at September 30, 2007, from .38% at September 30, 2006. Management analysis of market trends indicates that most real estate values are presently stable in the primary lending area. Management will continue to monitor the credit

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quality of the lending portfolio and will recognize additional provisions in the future to maintain the allowance for loan losses at an appropriate level. Management will continue to focus on activities related to monitoring, collection and workout of delinquent loans. In addition, management will continue to monitor exposure related to industry segments, in order to adequately diversify the loan portfolio. The balance of the allowance for loan losses was $6,038, or 1.14% of total loans at September 30, 2007, compared to $5,567, or 1.00% of total loans at September 30, 2006.

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SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)

October 18, 2007 Press Release

DCB FINANCIAL CORP
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)

	September 30,			December 31,
	2007			2006
	(unaudited)
ASSETS
Cash and due from financial institutions	$	14,870		$	15,894
Federal funds sold		10,800			—
Total cash and cash equivalents		25,670			15,894
Securities available for sale		89,776			88,071
Loans held for sale		749			1,455
Loans		527,610			552,463
Less allowance for loan losses		(6,038	)		(5,442	)
Net loans		521,572			547,021
Real estate owned		857			—
Investment in FHLB stock		3,670			3,604
Premises and equipment, net		12,320			9,468
Investment in unconsolidated affiliates		1,302			968
Bank owned life insurance		14,743			9,396
Accrued interest receivable and other assets		10,540			8,127
Total assets	$	681,199		$	684,004
LIABILITIES
Deposits
Noninterest-bearing	$	52,428		$	70,428
Interest-bearing		463,352			453,666
Total deposits		515,780			524,094
Federal funds purchased and other short-term borrowings		14,100			1,776
Federal Home Loan Bank advances		87,247			93,736
Accrued interest payable and other liabilities		2,753			2,999
Total liabilities		619,880			622,605
SHAREHOLDERS’ EQUITY
Common stock, no par value, 7,500,000 shares authorized, 4,273,908 issued at September 30, 2007 and 4,273,750 issued at December 31, 2006		3,780			3,780
Retained earnings		70,936			68,807
Treasury stock, at cost, 542,943 and 458,786 shares at September 30, 2007 and December 31, 2006		(13,189	)		(10,841	)
Accumulated other comprehensive loss		(208	)		(347	)
Total shareholders’ equity		61,319			61,399
Total liabilities and shareholders’ equity	$	681,199		$	684,004

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DCB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)

	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2007			2006		2007			2006
Interest and dividend income
Loans	$	9,765		$	10,399	$	29,763		$	29,759
Taxable securities		891			860		2,655			2,585
Tax-exempt securities		224			238		678			708
Federal funds sold and other		79			71		274			149
Total interest income		10,959			11,568		33,370			33,201
Interest expense
Deposits		4,500			4,633		13,972			12,520
Borrowings		1,045			1,098		3,057			3,171
Total interest expense		5,545			5,731		17,029			15,691
Net interest income		5,414			5,837		16,341			17,510
Provision for loan losses		1,100			390		2,784			1,370
Net interest income after provision for loan losses		4,314			5,447		13,557			16,140
Noninterest income
Service charges on deposit accounts		674			691		1,983			1,990
Trust department income		241			165		690			575
Net loss on sale of assets		(123	)		1		(195	)		(9	)
Gains on sale of loans		63			80		269			255
Treasury management fees		148			132		405			447
Data processing servicing fees		103			92		308			260
Earnings on bank owned life insurance		150			120		402			368
Other		456			146		775			399
		1,712			1,427		4,637			4,285
Noninterest expense
Salaries and other employee benefits		2,455			2,262		7,196			6,773
Occupancy and equipment		934			801		2,637			2,403
Professional services		107			118		335			390
Advertising		105			111		305			304
Postage, freight and courier		62			66		205			267
Supplies		54			70		211			202
State franchise taxes		106			136		395			399
Other		688			552		1,927			1,595
		4,511			4,116		13,211			12,333
Income before income taxes		1,515			2,758		4,983			8,092
Federal income tax expense		432			823		1,193			2,403
Net income	$	1,083		$	1,935	$	3,790		$	5,689
Basic and diluted earnings per common share	$	0.29		$	0.51	$	1.01		$	1.49
Dividends per share	$	0.15		$	0.14	$	0.44		$	0.41

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DCB FINANCIAL CORP

Selected Key Ratios and Other Financial Data
(Unaudited)
(Dollars in thousands, except per share data)

	Three Months Ended				Nine Months Ended
	9/30/07		9/30/06		9/30/07		9/30/06
Key Financial Information
Net interest income	$	5,414	$	5,837	$	16,341	$	17,510
Provision for loan and lease losses	$	1,100	$	390	$	2,784	$	1,370
Non-interest income	$	1,712	$	1,427	$	4,637	$	4,285
Non-interest expense	$	4,511	$	4,116	$	13,211	$	12,333
Net income	$	1,083	$	1,935	$	3,790	$	5,689
Loan balances (average)	$	532,192	$	561,771	$	542,666	$	563,881
Deposit balances (average)	$	508,494	$	533,626	$	512,187	$	535,240
Non-accrual loans	$	7,729	$	2,091	$	7,729	$	2,091
Loans 90 days past due and accruing	$	7,927	$	3,816	$	7,927	$	3,816
Basic earnings per common share	$	0.29	$	0.51	$	1.01	$	1.49
Diluted earnings per common share	$	0.29	$	0.51	$	1.01	$	1.49
Weighted Average Shares Outstanding (000):
Basic		3,730		3,815		3,751		3,817
Diluted		3,731		3,821		3,757		3,823

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DCB FINANCIAL CORP

Selected Consolidated Financial Information
(Unaudited)
(Dollars in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	9/30/07			9/30/06			9/30/07			9/30/06
Key ratios
Return on average assets		0.64	%		1.10	%		0.74	%		1.09	%
Return on average shareholders’ equity		7.1	%		13.0	%		8.4	%		13.2	%
Annualized non-interest expense to average assets		2.65	%		2.34	%		2.59	%		2.36	%
Efficiency ratio		63.3	%		56.7	%		63.0	%		56.6	%
Net interest margin		3.48	%		3.56	%		3.49	%		3.60	%
Equity to assets at period end		9.00	%		8.68	%		9.00	%		8.68	%
Allowance for loan losses as a percentage of period-end loans		1.14	%		1.00	%		1.14	%		1.00	%
Total allowance for losses on loans to non-accrual loans		78	%		266	%		78	%		266	%
Net charge-offs (annualized) as a percent of average loans		0.29	%		0.43	%		0.54	%		0.32	%
Non-accrual loans to total loans (net)		1.48	%		0.38	%		1.48	%		0.38	%
Delinquent loans (30+ days)		3.95	%		1.98	%		3.95	%		1.98	%

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Business of DCB Financial Corp

DCB Financial Corp (the “Corporation”) is a financial holding company formed under the laws of the State of Ohio. The Corporation is the parent of The Delaware County Bank & Trust Company, (the “Bank”) a state-chartered commercial bank. The Bank conducts business from its main offices at 110 Riverbend Avenue in Lewis Center, Ohio, and through its 16 full-service branch offices located in Delaware County, Ohio and surrounding communities. The Bank provides customary retail and commercial banking services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, real estate mortgage loans, night depository facilities and trust and personalized wealth management services. The Bank also provides cash management, bond registrar and payment services. The Bank offers data processing services to other financial institutions; however such services are not a significant part of its current operations or revenues.

Application of Critical Accounting Policies

DCB’s consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and follow general practices within the financial services industry. The application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; as this information changes, the financial statements could reflect different estimates, assumptions, and judgments.

The most significant accounting policies followed by the Corporation are presented in Note 1 of the audited consolidated financial statements contained in the Corporation’s 2005 Annual Report to Shareholders. These policies, along with the disclosures presented in the other financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined.

Forward-Looking Statements

Certain statements in this report constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to the financial condition and prospects, lending risks, plans for future business development and marketing activities, capital spending and financing sources, capital structure, the effects of regulation and competition, and the prospective business of both the Corporation and its wholly-owned subsidiary The Delaware County Bank & Trust Company (the “Bank”). Where used in this report, the word “anticipate,” “believe,” “estimate,” “expect,” “intend,” and similar words and expressions, as they relate to the Corporation or the Bank or their respective management, identify forward-looking statements. Such forward-looking statements reflect the current views of the Corporation and are based on information currently available to the management of the Corporation and the Bank and upon current expectations, estimates, and projections about the Corporation and its industry, management’s belief with respect thereto, and certain assumptions made by management. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to: (i) significant increases in competitive pressure in the banking and financial services industries; (ii) changes in the interest rate environment which could reduce anticipated or actual margins; (iii) changes in political conditions or the legislative or regulatory environment; (iv) general economic conditions, either nationally or regionally (especially in central Ohio), becoming less favorable than expected resulting in, among other things, a deterioration in credit quality of assets; (v) changes occurring in business conditions and inflation; (vi) changes in technology; (vii) changes in monetary and tax policies; (viii) changes in the securities markets; and (ix) other risks and uncertainties detailed from time to time in the filings of the Corporation with the Commission.

The Corporation does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

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