Midcarolina Financial (MCFI) 8-K MidCarolina Financial Corporation Announces 23% Increase in 4th Quarter Net Income and 22% Increase for 2005

Exhibit 99.1

Press Release

Source: MidCarolina Financial Corporation

MidCarolina Financial Corporation Announces 23% Increase in 4^th Quarter Net Income and 22% Increase for 2005

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, 2005. MidCarolina reported net income of $705,000 for the quarter ended December 31, 2005, an increase of 23% when compared to the $574,000 reported for the fourth quarter of 2004. Diluted earnings per common share increased to $0.19 for fourth quarter 2005, compared to $0.17 in 2004.

For the twelve month period ended December 31, 2005, net income was $2.368 million, a 22% increase compared to net income of $1.942 million reported for 2004. Diluted earnings per share increased to $0.67 for 2005, compared to $0.58 for the twelve months ended December 31, 2004.

MidCarolina reported total assets of $370.0 million at December 31, 2005, an increase of $85.1 million, or 30%, when compared to the $284.9 million reported at December 31, 2004. Total loans, net of mortgage loans held-for-sale, were $280.0 million at December 31, 2005, an increase of $62.3 million, or 29%, from levels a year ago. Deposit totals at the end of the year were $300.3 million, an increase of $83.5 million, or 39%, when compared to 2004 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 2005 year and fourth quarter. We are very proud of the growth MidCarolina achieved in our existing markets of Alamance and Guilford Counties. We are excited about our new full service branch scheduled to open in the 1^st quarter of 2006, located on Friendly Avenue in the Guilford College area of Greensboro, North Carolina. Our client base continues to expand as commercial and retail businesses choose MidCarolina as their financial partner.”

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 Bank, a wholly owned subsidiary of MidCarolina Financial Corporation, also provides the Bank’s markets with personalized full brokerage services for 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. For further information and other factors which could affect the accuracy of forward-looking statements, please see MidCarolina’s reports filed with the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934 which are available at the SEC’s website (www.sec.gov) or MidCarolina’s website (www.midcarolinabank.com). Readers are cautioned not to place undue reliance on theses forward-looking statements, which reflect management’s judgments only as of the date hereof. 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, 2005			December 31, 2004
SUMMARY STATEMENTS OF OPERATIONS
Interest income	$	5,740		$	3,556		61.4	%
Interest expense		2,665			1,334		99.8	%
Net interest income		3,075			2,222		38.4	%
Provision for loan losses		310			318		-2.5	%
Net interest income after provision for loan losses		2,765			1,904		45.2	%
Noninterest income		519			986		-47.4	%
Noninterest expense		2,163			2,027		6.7	%
Income before income tax expense		1,121			863		29.9	%
Provision for income taxes		416			289		43.9	%
NET INCOME		705			574		22.8	%
Less preferred Dividends		(51	)		—
NET INCOME AVAILABLE TO COMMON SHARES	$	654		$	574		13.9	%
PER SHARE DATA
Earnings per share, basic	$	0.21		$	0.18		14.1	%
Earnings per share, diluted		0.19			0.17		13.1	%
Weighted average number of common shares outstanding, basic		3,129,289			3,126,588
PERFORMANCE RATIOS
Return on average assets		0.77	%		0.81	%
Return on average common equity		12.28	%		13.89	%
Efficiency ratio		60.18	%		63.19	%
Average total equity to average total assets		6.24	%		5.77	%

ANNUAL PERFORMANCE SUMMARY

MIDCAROLINA FINANCIAL CORPORATION

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

	As of / For the Year Ended						% Change
	December 31, 2005			December 31, 2004
SUMMARY STATEMENTS OF OPERATIONS
Interest income	$	19,216		$	12,174		57.8	%
Interest expense		8,327			4,384		89.9	%
Net interest income		10,889			7,791		39.8	%
Provision for loan losses		1,373			1,030		33.3	%
Net interest income after provision for loan losses		9,516			6,761		40.7	%
Noninterest income		2,675			4,141		-35.4	%
Noninterest expense		8,546			8,010		6.7	%
Income before income tax expense		3,645			2,892		26.0	%
Provision for income taxes		1,277			950		34.4	%
NET INCOME		2,368			1,942		21.9	%
Less preferred Dividends		(104	)		—
NET INCOME AVAILABLE TO COMMON SHARES	$	2,264		$	1,942		16.6	%
PER SHARE DATA
Earnings per share, basic	$	0.72		$	0.62		15.4	%
Earnings per share, diluted		0.67			0.58		16.3	%
Weighted average number of common shares outstanding, basic		3,126,925			3,119,564
PERFORMANCE AND ASSET QUALITY RATIOS
Return on average assets		0.72	%		0.77	%
Return on average common equity		12.64	%		12.54	%
Net yield on earning assets (taxable equivalent)		3.51	%		3.22	%
Efficiency ratio		63.01	%		67.13	%
Average equity to average assets		6.00	%		6.12	%
Allowance for loan losses as a % of total loans, end of year		1.46	%		1.32	%
Non-performing assets to total assets, end of year		0.79	%		0.80	%
Ratio of net charge-offs to average loans outstanding		0.05	%		0.35	%

ANNUAL PERFORMANCE SUMMARY

MIDCAROLINA FINANCIAL CORPORATION

(Dollars in thousands)

	As of				% Change
	December 31, 2005		December 31, 2004
SELECTED BALANCE SHEET DATA
End of year balances
Total loans	$	279,962	$	217,683	28.6	%
Allowance for loan losses		4,090		2,865	42.8	%
Loans, net of allowance for loan losses		275,208		214,818	28.1	%
Securities, available for sale		58,373		35,912	62.5	%
Total Assets		369,961		284,888	29.9	%
Deposits:
Noninterest-bearing deposits		31,544		23,667	33.3	%
Interest-bearing demand and savings		70,586		59,010	19.6	%
CD’s and other time deposits		198,132		134,114	47.7	%
Total Deposits		300,262		216,791	38.5	%
Short term debt		10,000		15,500	-35.5	%
Long term debt		34,764		34,764	0.0	%
Total interest-bearing liabilities		313,482		243,388	28.8	%
Shareholders’ Common Equity		18,274		16,424	11.3	%
Shareholder Preferred Equity		4,819		—
Total Shareholders’ Equity		23,093		16,424	40.6	%