Related Party Transactions and Outside Related Director Information

Midwest Banc Holdings, Inc. (MBHI)

4/3/2006 Proxy Information

Some of the Company’s executive officers and directors are, and have been during the preceding year, clients of the Company’s subsidiary banks, and some of the Company’s executive officers and directors are direct or indirect owners of 10% or more of the stock of corporations which are, or have been in the past, clients of the Company’s subsidiary banks. As such clients, they have had transactions in the ordinary course of business of the banks, including borrowings, all of which transactions are or were on substantially the same terms (including interest rates and collateral on loans) as those prevailing at the time for comparable transactions with nonaffiliated persons. At December 31, 2005, the Company’s directors, executive officers, and their business interests had loans outstanding, whose individual aggregate indebtedness to the Company’s subsidiary banks exceeded $60,000, totaling approximately $46.6 million in the aggregate, which represented 21.6% of total stockholders’ equity as of that date. Such loans were made by the Company in the ordinary course of business, were not made with favorable terms, and, in the opinion of management, did not involve more than the normal risk of collectibility or present other unfavorable features.

During 2005, the Company incurred board minute preparation fees for services provided by the Secretary to the Board, Daniel Nagle, in the amount of approximately $3,750. During 2005, the Company paid $4,000 for subscription to an economic service provided by Dr. Robert J. Genetski.

The Company made payments totaling $317,070 in 2005 to DiPaolo Company, a company controlled by Angelo DiPaolo, a director of the Company, for construction services (representing less than 2.1% of the consolidated revenues of the DiPaolo Company). On December 29, 2005, the Bank entered into a lease for a branch office in Franklin Park, Illinois with Crossings Commercial, LLC, an entity controlled by Angelo DiPaolo. The lease is for fifteen years and provides for annual rental payments of $41,106 (on a triple net basis). However, if another tenant enters into a lease at this facility for a square foot rental less than what the Bank is paying, the annual rental for the Bank will be reduced to this amount.

The Company also made payments totaling $42,198 for the purchase of bank-owned vehicles from (and services on bank owned vehicles performed by) Joe Rizza Acura and Joe Rizza Ford, all companies controlled by Joseph Rizza, a director of the Company (which represented less than 1% of the consolidated gross revenues of these entities). The Company also made payments totaling $194,057 to a security systems company owned by the son-in-law of LeRoy Rosasco, a director who retired from the Board in May of 2005, who owns 6.80% of the Company’s common stock.