Mid-State Bancshares Reports Earnings of $0.39 Per Share for Second Quarter of 2006.

ARROYO GRANDE, Calif. -- Mid-State Bancshares (the Company) (NASDAQ: MDST), the holding company for Mid-State Bank & Trust (the Bank), reported diluted earnings of $0.39 per share for the second quarter of 2006 on net income of $8.9 million. Results in the quarter were impacted by a $2.4 million increase in non-interest expense reflecting, primarily, increases in staffing for growth and compliance, benefit cost increases and adoption of Statement of Financial Accounting Standards (SFAS) No. 123R, "Share-Based Payment", which changes the method of accounting for costs of stock options and other equity compensation. The adoption of the new accounting statement alone reduced earnings by approximately $408,000 after tax, or $0.02 per share. Net income for the second quarter of 2005 was $9.5 million, or $0.41 per share.

For the first six months of 2006, net income was $17.7 million, or $0.78 per share, compared to $18.6 million and $0.79 per share for the first six months of 2005. Adoption of the new statement reduced 2006 earnings by approximately $805,000 for the first six months, or $0.04 per share.

In the wake of increases in short term interest rates throughout 2005 and early 2006, the Company's net interest margin improved to 5.61% (6.01% on a taxable equivalent basis) for the first half of 2006, up from the 2005 period's level of 5.30% (5.72% on a taxable equivalent basis). "The Company's net interest margin, which had generally been increasing in the rising rate environment of 2005, has flattened out in 2006 in the wake of intense deposit competition and has meant relatively flat net interest income for the Company in recent quarters," said James G. Stathos, executive vice president and chief financial officer. "Average loans in the second quarter of 2006 were 2.7% ahead of the first quarter of this year but deposits decreased. Securing deposits at a reasonable cost to fund loan growth is an ongoing challenge. The Company has promotions planned during the balance of the year to bolster deposit growth."

"Despite current challenges, earnings and key financial ratios were slightly improved in the second quarter of 2006 compared to the first quarter of this year," said James W. Lokey, president and chief executive officer. "Net income increased to just over $8.9 million from slightly less than $8.8 million in the prior quarter. Additionally, the Company's return on assets improved to 1.52% from 1.50% in the prior quarter and the Company's return on equity increased to 13.17% from 12.77% in the first quarter. We are also pleased to be opening our new Westlake Village office in the Ventura County market very soon, where we believe business opportunities are significant."

The loan portfolio reached $1.56 billion at June 30, 2006, compared to $1.49 billion one year ago. The Company saw growth in its loan portfolio in both the residential and non-residential real estate sectors. Real estate secured loans, excluding construction and land development loans and home equity credit lines, total approximately $846 million or 54% of the loan portfolio. Management believes that with increased interest rates and more intense pricing pressure affecting competition, the growth rates enjoyed in this sector of the loan portfolio are likely to slow. Therefore, additional emphasis in 2006 is being placed on growing the Company's commercial and industrial loans.

Non-performing asset levels are negligible, having fallen to $261,000 at period-end from $5.2 million one year earlier. The Company's allowances for losses to loans was 0.9% of total gross loans compared to 1.0% one year earlier. Management believes the Company's allowances are appropriate to cover the losses inherent in the loan portfolio at the current time.

Total assets of the Company decreased 1.0% to $2.33 billion at quarter-end, down from $2.35 billion one year earlier. Deposits decreased 1.9% to $1.99 billion at quarter-end, down from $2.03 billion one year earlier. Demand deposits decreased to $521.5 million, down from $561.4 million one year earlier. Time deposits increased to $466.3 million from $415.2 million. Other interest bearing deposit categories including NOW, money market and savings declined by $50.7 million compared to the year earlier period.

Total non-interest income for the quarter increased to $6.0 million from $5.4 million in the comparable 2005 period. For the full 6 months, non-interest income was $10.9 million in 2006 compared to $10.8 million in 2005. The 2005 results were bolstered by a $330,000 gain on a life insurance policy in the first quarter of that year which did not recur in 2006. 2006 results benefited from a $325,000 gain in the second quarter representing the Company's proportional interest in a sold merchant processing business in which it had an interest. The Company also benefited from increases in service charges and fees, primarily the result of increased NSF fees, in the 2006 periods compared to the like 2005 periods. These were partially offset by declines in net gains on sale of securities and sale of loans held for sale.

Total non-interest expense was $21.6 million in the second quarter of 2006 compared to $19.2 million in the like 2005 period. Year-to-date, non-interest expense increased from $37.5 million in 2005 to $42.6 million this year. Approximately $473,000 of the increase for the quarter and $913,000 of the year-to-date increase relates to the aforementioned expense of adopting SFAS No. 123R. An additional $1.2 million of the increase across the two quarters, and $1.3 million across the two six-month periods, represents higher salary expense relating to a combination of hiring additional personnel to staff up for the soon-to-be-opened Westlake Village branch, increasing staff for compliance purposes (especially as it relates to Bank Secrecy Act and U.S.A. Patriot Act provisions) and regular salary increases across the Company. Benefit costs also increased $299,000 and $811,000 in comparing the three-month and six-month periods ending June 30, respectively, primarily for increased group insurance costs and incentive programs. Professional services increased $103,000 across the comparable quarters and between the two six-month periods, were up $882,000, primarily for increased consulting services and accounting services. The balance of the increases across the time periods consisted of a number of smaller increases over several line items.

On June 15, 2005 the Board authorized the repurchase of up to five percent of its outstanding shares, or up to 1,141,373 additional shares of the Company's common stock. This authorization does not have an expiration date. The Company repurchased 308,251 and 524,082 shares of its common stock for the three-month and six-month periods ended June 30, 2006, respectively, at an average price of $27.52 and $27.92 per share, respectively. As of June 30, 2006, the Company is continuing the program and can repurchase up to 292,593 additional shares under the current authorization. For the three months and six months ended June 30, 2005, 315,787 and 509,557 shares were repurchased, respectively, at an average price of $26.06 and $26.52, respectively.

In other matters concerning capital, the Board of Directors approved a quarterly cash dividend of $0.18 per share in the second quarter of 2006, identical to its first quarter 2006 level. The rate was $0.16 per share in each of the like 2005 periods.

Mid-State Bancshares is a $2.3 billion holding company for Mid-State Bank & Trust, an independent, community bank serving California's San Luis Obispo, Santa Barbara, and Ventura Counties. Since opening its doors in 1961, the Bank has grown to 40 offices serving more than 100,000 households.

This Press Release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act. All of the statements contained in the Press Release, other than statements of historical fact, should be considered forward-looking statements, including, but not limited to, those concerning (i) the Company's strategies, objectives and plans for expansion of its operations, products and services, and growth of its portfolio of loans, investments and deposits, (ii) the Company's beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of its operation and interest rates, (iii) the Company's beliefs as to the adequacy of its existing and anticipated allowances for loan and real estate losses, (iv) the Company's beliefs and expectations concerning future operating results, (v) the growth of its loan portfolio and its net interest margin and (vi) the strength of the economy in its service area. Although the Company believes the expectations reflected in those forward-looking statements are reasonable, it can give no assurance that those expectations will prove to have been correct. All subsequent written and oral forward-looking statements by or attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this qualification. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are not intended to give any assurance as to future results. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Note: The financial information presented in this news release represents preliminary financial results.

Consolidated Financial Data  -  Mid-State Bancshares
(Unaudited)                 Quarter Ended            Year-to-Date
 --------------------------------------------------------------------
(In thousands)           June 30,    June 30,    June 30,    June 30,
                           2006        2005        2006        2005
 --------------------------------------------------------------------
 Interest Income (not
  taxable equivalent)    $36,030     $31,654     $70,765     $61,136
 Interest Expense          6,578       3,694      11,844       6,407
 --------------------------------------------------------------------
 Net Interest Income      29,452      27,960      58,921      54,729
 (Benefit)/Provision for
  Loan Losses                  -           -           -           -
 --------------------------------------------------------------------
 Net Interest Income after
  provision for loan
  losses                  29,452      27,960      58,921      54,729
 Non-interest income       5,959       5,378      10,939      10,773
 Non-interest expense     21,589      19,211      42,551      37,546
 --------------------------------------------------------------------
 Income before income
  taxes                   13,822      14,127      27,309      27,956
 Provision for income
  taxes                    4,899       4,615       9,612       9,354
 -------------------------------------------------------------------
 Net Income               $8,923      $9,512     $17,697     $18,602
 ===================================================================



                             Quarter Ended           Year-to-Date
---------------------------------------------------------------------
(In thousands, except    June 30,    June 30,     June 30,   June 30,
  per share data)          2006        2005         2006       2005
---------------------------------------------------------------------
Per share:
Net Income - basic         $0.40       $0.42       $0.79       $0.81
Net Income - diluted       $0.39       $0.41       $0.78       $0.79
Weighted average shares
 used in Basic E.P.S.
 calculation              22,246      22,884      22,344      22,951
Weighted average shares
 used in Diluted E.P.S.
 calculation              22,706      23,381      22,828      23,468
Cash dividends             $0.18       $0.16       $0.36       $0.32
Book value at
 period-end                                       $12.08      $12.04
Tangible book value
 at period end                                     $9.64       $9.63
Ending Shares                                     22,121      22,810

Financial Ratios
Return on assets            1.52%       1.63%       1.51%       1.61%
Return on tangible assets   1.56%       1.67%       1.55%       1.65%
Return on equity           13.17%      13.87%      12.97%      13.60%
Return on tangible equity  16.44%      17.34%      16.14%      17.00%
Net interest margin (not
 taxable equivalent)        5.61%       5.37%       5.61%       5.30%
Net interest margin
 (taxable equivalent yield) 6.00%       5.79%       6.01%       5.72%
Net loan (recoveries)
 losses to avg. loans       0.02%       0.06%       0.01%       0.06%
Efficiency ratio            61.0%       57.6%       60.9%       57.3%

Period Averages
Total Assets          $2,347,097  $2,339,887  $2,361,014  $2,323,193
Total Tangible
 Assets                2,293,114   2,284,853   2,306,924   2,267,989
Total Loans (includes
 loans held for sale)  1,560,602   1,460,506   1,540,413   1,447,401
Total Earning Assets   2,107,590   2,088,566   2,118,473   2,084,110
Total Deposits         1,998,463   2,022,691   2,014,818   2,007,110
Common Equity            271,704     275,100     275,179     275,842
Common Tangible
 Equity                  217,721     220,067     221,089     220,638

Balance Sheet - At Period-End
Cash and due from banks                          $97,563    $116,891
Investments and Fed Funds Sold                   522,091     606,462
Loans held for sale                                8,933      10,871
Loans, net of deferred fees, before allowance
 for loan losses                               1,564,169   1,490,366
Allowance for Loan Losses                        (11,855)    (13,403)
Goodwill and core deposit intangibles             53,887      54,885
Other assets                                      92,872      85,024
---------------------------------------------------------------------
     Total Assets                             $2,327,660  $2,351,096
=====================================================================

Non-interest bearing deposits                   $521,469    $561,435
Interest bearing deposits                      1,464,783   1,464,293
Other borrowings                                  49,726      25,331
Allowance for losses - unfunded commitments        1,880       1,759
Other liabilities                                 22,693      23,623
Shareholders' equity                             267,109     274,655
---------------------------------------------------------------------
     Total Liabilities
      and Shareholders' Equity                $2,327,660  $2,351,096
=====================================================================

Asset Quality & Capital - At Period- End
Non-accrual loans                                   $261      $5,152
Loans past due 90 days or more                         -           -
Other real estate owned                                -           -
---------------------------------------------------------------------
     Total non performing assets                    $261      $5,152
=====================================================================

Allowance for losses to loans, gross (1)             0.9%        1.0%
Non-accrual loans to total loans, gross              0.0%        0.3%
Non performing assets to total assets                0.0%        0.2%
Allowance for losses to non performing loans (1)  5262.5%      294.3%

Equity to average assets (leverage ratio)            9.4%        9.4%
Tier One capital to risk-adjusted assets            11.2%       11.6%
Total capital to risk-adjusted assets               11.9%       12.5%

(1) Includes allowance for loan losses and allowance for losses -
    unfunded commitments


Consolidated Financial Data  -  Mid-State Bancshares
(Unaudited)                                 Quarter Ended
---------------------------------------------------------------------
(In thousands, except                June 30,    Mar. 31,    Dec. 31,
 per share data)                       2006        2006        2005
---------------------------------------------------------------------
Interest Income (not taxable
 equivalent)                         $36,030     $34,735     $34,267
Interest Expense                       6,578       5,266       4,772
---------------------------------------------------------------------
Net Interest Income                   29,452      29,469      29,495
(Benefit)/Provision for Loan
 Losses                                    -           -           -
---------------------------------------------------------------------
Net Interest Income after
 provision for loan losses            29,452      29,469      29,495
Non-interest income                    5,959       4,980       5,397
Non-interest expense                  21,589      20,962      20,655
---------------------------------------------------------------------
Income before income taxes            13,822      13,487      14,237
Provision for income taxes             4,899       4,713       4,840
---------------------------------------------------------------------
Net Income                            $8,923      $8,774      $9,397
=====================================================================

Per share:
Net Income - basic                     $0.40       $0.39       $0.42
Net Income - diluted                   $0.39       $0.38       $0.41
Weighted average shares used in
 Basic E.P.S. calculation             22,246      22,444      22,546
Weighted average shares used in
 Diluted E.P.S. calculation           22,706      22,951      23,038
Cash dividends                         $0.18       $0.18       $0.18
Book value at period-end              $12.08      $12.12      $12.10
Tangible book value at period end      $9.64       $9.71       $9.69
Ending Shares                         22,121      22,378      22,520

Financial Ratios
Return on assets                        1.52%       1.50%       1.54%
Return on tangible assets               1.56%       1.53%       1.58%
Return on equity                       13.17%      12.77%      13.41%
Return on tangible equity              16.44%      15.85%      16.67%
Net interest margin (not taxable
 equivalent)                            5.61%       5.61%       5.47%
Net interest margin (taxable
 equivalent yield)                      6.00%       6.02%       5.88%
Net loan losses (recoveries) to
 average loans                          0.02%     (0.01%)     (0.10%)
Efficiency ratio                        61.0%       60.8%       59.2%

Period Averages
Total Assets                      $2,347,097  $2,375,086  $2,421,219
Total Tangible Assets              2,293,114   2,320,887   2,366,807
Total Loans (includes loans held
 for sale)                         1,560,602   1,520,000   1,478,550
Total Earning Assets               2,107,590   2,129,477   2,138,788
Total Deposits                     1,998,463   2,031,355   2,099,061
Common Equity                        271,704     278,693     278,092
Common Tangible Equity               217,721     224,494     223,679

Balance Sheet - At Period-End
Cash and due from banks              $97,563    $113,461    $109,791
Investments and Fed Funds Sold       522,091     590,191     619,332
Loans held for sale                    8,933       8,683      10,176
Loans, net of deferred fees,
 before allowance for loan losses  1,564,169   1,546,323   1,519,014
Allowance for Loan Losses            (11,855)    (11,931)    (11,896)
Goodwill and other intangibles
 (excl OMSR's)                        53,887      54,105      54,323
Other assets (incl OMSR's)            92,872      92,609      90,759
---------------------------------------------------------------------
     Total Assets                 $2,327,660  $2,393,441  $2,391,499
=====================================================================

Non-interest bearing deposits       $521,469    $535,538    $567,782
Interest bearing deposits          1,464,783   1,515,374   1,501,824
Other borrowings                      49,726      47,159      25,903
Allowance for losses - unfunded
 commitments                           1,880       1,696       1,761
Other liabilities                     22,693      22,366      21,667
Shareholders' equity                 267,109     271,308     272,562
---------------------------------------------------------------------
     Total Liabilities and
      Shareholders' equity        $2,327,660  $2,393,441  $2,391,499
=====================================================================

Asset Quality & Capital - At Period-End
Non-accrual loans                       $261      $1,701      $2,463
Loans past due 90 days or more             -           -           -
Other real estate owned                    -           -           -
---------------------------------------------------------------------
Total non performing assets             $261      $1,701      $2,463
=====================================================================

Allowance for losses to loans,
 gross (1)                               0.9%        0.9%        0.9%
Non-accrual loans to total loans,
 gross                                   0.0%        0.1%        0.2%
Non performing assets to total
 assets                                  0.0%        0.1%        0.1%
Allowance for losses to non
 performing loans (1)                 5262.5%      801.1%      554.5%

Equity to average assets (leverage
 ratio)                                  9.4%        9.4%        9.2%
Tier One capital to risk-adjusted
 assets                                 11.2%       11.4%       11.6%
Total capital to risk-adjusted
 assets                                 11.9%       12.2%       12.3%


Consolidated Financial Data  -  Mid-State Bancshares
(Unaudited)                                         Quarter  Ended
----------------------------------------------------------------------
(In thousands, except                           Sept. 30,    June 30,
  per share data)                                 2005         2005
----------------------------------------------------------------------
Interest Income (not taxable equivalent)         $32,923     $31,654
Interest Expense                                   4,324       3,694
----------------------------------------------------------------------
Net Interest Income                               28,599      27,960
(Benefit)/Provision for Loan Losses                    -           -
----------------------------------------------------------------------
Net Interest Income after provision for loan
 losses                                           28,599      27,960
Non-interest income                                5,271       5,378
Non-interest expense                              19,473      19,211
----------------------------------------------------------------------
Income before income taxes                        14,397      14,127
Provision for income taxes                         4,905       4,615
----------------------------------------------------------------------
Net Income                                        $9,492      $9,512
======================================================================

Per share:
Net Income - basic                                 $0.42       $0.42
Net Income - diluted                               $0.41       $0.41
Weighted average shares used in Basic E.P.S.
 calculation                                      22,709      22,884
Weighted average shares used in Diluted E.P.S.
 calculation                                      23,231      23,381
Cash dividends                                     $0.16       $0.16
Book value at period-end                          $12.01      $12.04
Tangible book value at period end                  $9.60       $9.63
Ending Shares                                     22,623      22,810

Financial Ratios
Return on assets                                    1.57%       1.63%
Return on tangible assets                           1.60%       1.67%
Return on equity                                   13.65%      13.87%
Return on tangible equity                          17.03%      17.34%
Net interest margin (not taxable equivalent)        5.22%       5.37%
Net interest margin (taxable equivalent yield)      5.63%       5.79%
Net loan losses (recoveries) to average loans       0.49%       0.06%
Efficiency ratio                                    57.5%       57.6%

Period Averages
Total Assets                                  $2,401,998  $2,339,887
Total Tangible Assets                          2,347,308   2,284,853
Total Loans (includes loans held for sale)     1,517,357   1,460,506
Total Earning Assets                           2,172,310   2,088,566
Total Deposits                                 2,082,464   2,022,691
Common Equity                                    275,854     275,100
Common Tangible Equity                           221,164     220,067

Balance Sheet - At Period-End
Cash and due from banks                         $130,602    $116,891
Investments and Fed Funds Sold                   649,815     606,462
Loans held for sale                               10,391      10,871
Loans, net of deferred fees, before allowance
 for loan losses                               1,497,704   1,490,366
Allowance for Loan Losses                        (11,532)    (13,403)
Goodwill and other intangibles (excl OMSR's)      54,541      54,885
Other assets (incl OMSR's)                        90,852      85,024
----------------------------------------------------------------------
     Total Assets                             $2,422,373  $2,351,096
======================================================================

Non-interest bearing deposits                   $589,601    $561,435
Interest bearing deposits                      1,516,361   1,464,293
Other borrowings                                  23,680      25,331
Allowance for losses - unfunded commitments        1,839       1,759
Other liabilities                                 19,206      23,623
Shareholders' equity                             271,686     274,655
----------------------------------------------------------------------
     Total Liabilities and Shareholders'
      equity                                  $2,422,373  $2,351,096
======================================================================

Asset Quality & Capital - At Period-End
Non-accrual loans                                 $8,323      $5,152
Loans past due 90 days or more                         -           -
Other real estate owned                                -           -
----------------------------------------------------------------------
Total non performing assets                       $8,323      $5,152
======================================================================

Allowance for losses to loans, gross (1)             0.9%        1.0%
Non-accrual loans to total loans, gross              0.6%        0.3%
Non performing assets to total assets                0.3%        0.2%
Allowance for losses to non performing loans (1)   160.7%      294.3%

Equity to average assets (leverage ratio)            9.2%        9.4%
Tier One capital to risk-adjusted assets            11.5%       11.6%
Total capital to risk-adjusted assets               12.2%       12.5%

(1) Includes allowance for loan losses and allowance for losses  -
    unfunded commitments