DCB Financial Corp Announces Fourth Quarter 2005 Earnings and Quarterly Dividend.

LEWIS CENTER, Ohio -- DCB Financial Corp, (OTCBB:DCBF) announced earnings of $2.06 million, or $0.54 per basic and diluted share for the three months ended December 31, 2005. This represents a $0.13, or 32% increase from the $0.41 basic and diluted earnings per share reported for the fourth quarter of 2004. Return on assets for the fourth quarter improved to 1.20% from 1.05% reported for the same period in 2004, while return on equity was 14.6%, a 23% increase from the same period in 2004. Strong loan growth, stable credit trends and increased efficiency have all contributed to the continued improvement in core earnings. For the year ending December 31, 2005, earnings per basic and diluted share totaled $1.94, compared to $1.77 for the same period in 2004, a $0.17, or 10%, increase.

President and Chief Executive Officer Jeffrey T. Benton commented, "We are pleased with the fourth quarter 2005 results, putting together another strong quarter to finish a solid earnings performance in 2005. The Company is well positioned for 2006 and has exciting plans for the upcoming year."

At year-end, total loans reached $553 million, an increase of $69.7 million or 14% from year ending December 31, 2004. The commercial and commercial real estate loan portfolios continue to grow, reflective of the growth in our primary market, Delaware County, Ohio. The Company has also seen good loan growth in its retail products, particularly in credit cards and home equity products. The overall credit quality of the Company improved on a year-to-year basis. Credit quality trends improved, as management continues to actively address loan quality. Non-accrual loans decreased to $1.23 million at December 31, 2005 from $1.88 million at December 31, 2004, while delinquencies to total loans ended 2005 at 1.31% compared to 1.59% at December 31, 2004. Non-performing loans to total loans totaled .22% of loans at December 31, 2005, compared to .39% at December 31, 2004. For the quarter, net charge-offs as a percentage of average loans increased to 0.42% from 0.18% during the same period in 2004, primarily as a result of retail loan losses. The allowance for loan and lease losses was 1.00% of total loans at the end of 2005 and 2004.

Net interest income was $5.8 million for the three months ended December 31, 2005, compared to $5.4 million for the same period in 2004. The $422 thousand increase is mainly attributable to increased loan balances, as average-earning assets increased by $79 million from the fourth quarter 2004. The Company's fourth quarter net interest margin decreased to 3.64% on a fully tax equivalent basis, from 3.87% during the fourth quarter 2004. The decline is primarily attributed to funding continued loan growth through higher cost borrowings and deposits associated with the current interest rate environment. 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. Funding costs may further negatively impact the net interest margin in future periods if the current competitive and rising interest rate environments remain in effect.

Non-interest expense decreased $146 thousand on a quarter-to-quarter basis, which is mainly attributed to lower occupancy and other expenses, partially offset by increased salary and employee benefits costs. The Company's quarterly efficiency ratio improved to 52.4% in the fourth quarter 2005 from 60.1% for the same period in 2004. This reflects the Company's increased revenue growth, as well as stringent control on non-interest expense.

The Board of Directors declared a dividend of $0.13 per share payable February 13, 2006, to shareholders of record as of January 31, 2006.