Midcarolina Financial (MCFI) 8-K MidCarolina Financial Corporation Announces 34% Increase in 4th Quarter Net Income

Exhibit 99.1

Press Release

Source: MidCarolina Financial Corporation

MidCarolina Financial Corporation Announces 34% Increase in 4^th Quarter Net Income

BURLINGTON, N.C., /PRNewswire-FirstCall/ — MidCarolina Financial Corporation (OTC Bulletin Board:MCFI -News) today reported record operating results for the fourth quarter ended December 31, 2004. MidCarolina reported net income of $574,000 for the quarter ended December 31, 2004, an increase of 34% when compared to the $429,000 reported for the fourth quarter of 2003. Diluted earnings per share increased to $0.21 for fourth quarter 2004, compared to $0.16 in 2003.

For the twelve month period ended December 31, 2004, net income was $1.942 million, a 17% increase compared to net income of $1.663 million reported for 2003. Diluted earnings per share increased to $0.72 for the 2004, compared to $0.63 for the twelve months ended December 31, 2003.

MidCarolina reported total assets of $284.9 million at December 31, 2004, an increase of $72.3 million, or 34%, when compared to the $212.6 million reported at December 31, 2003. Total loans, net of mortgage loans held-for-sale, were $216.9 million at December 31, 2004, an increase of $38.0 million, or 21%, from levels a year ago. Deposit totals at the end of the year were $216.8 million, an increase of $64.8 million, or 43%, when compared to 2003 year-end balances.

Commenting on these results, Randolph J. Cary, Jr., President and CEO, said, “The Board of Directors and management are very pleased to report record operating results for the 2004 year and fourth quarter. We are very proud of the growth MidCarolina achieved in our existing markets of Alamance, Guilford and Wake counties. We are particularly pleased with our expanded operations at our Lake Point Building, located on Green Valley Road in Greensboro, North Carolina, where we converted a loan production office to a full service banking operation. This facility has exceeded our expectations. Our client base continues to expand as commercial and retail businesses choose MidCarolina as their financial partner.”

With total assets of $284.9 million, MidCarolina Bank provides a complete line of banking services to individuals and businesses through its four full-service banking offices and two limited-service offices located in the cities of Burlington, Graham and Greensboro, North Carolina. MidCarolina operates a mortgage loan origination facility in Raleigh, North Carolina. MidCarolina Bank is a wholly owned subsidiary of MidCarolina Financial Corporation. MidCarolina Investments, Inc. a wholly owned subsidiary of MidCarolina Bank serves the bank’s markets with personalized dedication as a full service broker of stocks, bonds, mutual funds and an array of insurance products.

MidCarolina Bank is insured by the FDIC and is an equal housing lender.

This press release contains forward-looking statements as defined by federal securities laws. These statements may address issues that involve significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections. Please refer to MidCarolina’s filings with the Securities and Exchange Commission for a summary of important factors that could affect MidCarolina Financial Corporation’s forward-looking statements. MidCarolina Financial Corporation undertakes no obligation to revise these statements following the date of this press release.

QUARTERLY PERFORMANCE SUMMARY

MIDCAROLINA FINANCIAL CORPORATION

(Dollars in thousands, except per share and share data)

	For the Three Months Ended						% Change
	December 31, 2004			December 31, 2003
SUMMARY STATEMENTS OF OPERATIONS
Interest income	$	3,556		$	2,510		41.7	%
Interest expense		1,334			803		66.1	%
Net interest income		2,222			1,707		30.2	%
Provision for loan losses		318			156		103.8	%
Net interest income after provision for loan losses		1,904			1,551		22.8	%
Noninterest income		986			757		30.3	%
Noninterest expense		2,027			1,606		26.2	%
Income before income tax expense		863			702		22.9	%
Provision for income taxes		289			273		5.9	%
Net income		574			429		33.8	%
PER SHARE DATA
Earnings per share, basic	$	0.23		$	0.18		27.8	%
Earnings per share, diluted		0.21			0.16		31.3	%
Weighted average number of common shares outstanding, basic		2,501,270			2,476,937
PERFORMANCE RATIOS
Return on average assets		0.82	%		0.85	%
Return on average equity		14.04	%		12.08	%
Efficiency ratio		63.19	%		65.18	%
Average equity to average assets		5.81	%		7.04	%
ANNUAL PERFORMANCE SUMMARY MIDCAROLINA FINANCIAL CORPORATION (Dollars in thousands, except per share and share data)
	As of / For the Year Ended						% Change
	December 31, 2004			December 31, 2003
SUMMARY STATEMENTS OF OPERATIONS
Interest income	$	12,174		$	9,652		26.1	%
Interest expense		4,384			3,298		32.9	%
Net interest income		7,790			6,354		22.6	%
Provision for loan losses		1,030			586		75.8	%
Net interest income after provision for loan losses		6,760			5,768		17.2	%
Noninterest income		4,141			3,575		15.8	%
Noninterest expense		8,009			6,845		17.0	%
Income before income tax expense		2,892			2,498		15.8	%
Provision for income taxes		950			835		13.8	%
Net income		1,942			1,663		16.8	%
PER SHARE DATA
Earnings per share, basic	$	0.78		$	0.68		14.7	%
Earnings per share, diluted		0.72			0.63		14.3	%
Weighted average number of common shares outstanding, basic		2,495,651			2,463,359
PERFORMANCE AND ASSET QUALITY RATIOS
Return on average assets		0.77	%		0.86	%
Return on average equity		12.54	%		12.17	%
Net yield on earning assets (taxable equivalent)		2.99	%		3.57	%
Efficiency ratio		67.13	%		68.94	%
Average equity to average assets		6.12	%		7.09	%
Allowance for loan losses as a % of total loans, end of year		1.32	%		1.41	%
Non-performing assets to total assets, end of year		0.95	%		0.29	%
Ratio of net charge-offs to average loans outstanding		0.35	%		0.09	%

ANNUAL PERFORMANCE SUMMARY

MIDCAROLINA FINANCIAL CORPORATION

(Dollars in thousands)

	As of				% Change
	December 31, 2004		December 31, 2003
SELECTED BALANCE SHEET DATA
End of year balances
Total loans	$	216,863	$	178,913	21.2	%
Allowance for loan losses		2,865		2,522	13.6	%
Loans, net of allowance for loan losses		213,998		176,391	21.3	%
Securities, available for sale		35,912		7,734	364.3	%
Total Assets		284,888		212,561	34.0	%
Deposits:
Noninterest-bearing deposits		23,667		18,877	25.4	%
Interest-bearing demand and savings		59,010		38,623	52.8	%
CD’s and other time deposits		134,114		94,482	41.9	%
Short term debt		15,500		18,500	-16.2	%
Long term debt		34,764		26,500	31.2	%
Total interest-bearing liabilities		243,388		178,105	36.7	%
Shareholders’ Equity		16,424		14,411	14.0	%