MSBK Main Street Banks (MM)

ATLANTA, Oct. 14 /PRNewswire-FirstCall/ -- Main Street Banks, Inc. (NASDAQ:MSBK) reported net income of $8.5 million for the three months ended September 30, 2005 compared to $8.3 million in the third quarter of 2004. Diluted earnings per share for the third quarter of 2005 were $0.39 versus $0.41 for the third quarter of 2004. Net income for the nine months ended September 30, 2005 was $22.5 million compared to $23.3 million in the same period of 2004. Diluted earnings per share for the nine months ended September 30, 2005 were $1.03 versus $1.16 for the nine months ended September 30, 2004. Return on average assets was 1.42 percent for the third quarter of 2005 and return on average shareholders equity was 11.8 percent. For the nine months ended September 30, 2005, return on average assets was 1.27 percent and return on average shareholders equity was 10.5 percent. Third quarter results exhibited strong underlying fundamentals compared to both the prior quarter and previous year. Interest income increased with business volumes, and as management expected, interest expense rose more than interest income, causing the net interest margin to decline to 4.26%. The company returned to its historic credit quality standards as net charge-offs declined sharply to the lower end of management's expectations at 0.21% on an annualized basis. The methodology the company uses to determine loan loss reserve requirements also indicated a level of reserves that caused the loan loss reserve to decline to 1.40% of loans. Noninterest income exhibited positive growth. Small Business Administration (SBA) loan income was down due to the recurring sale of SBA 504 loans in the second quarter of 2005 and the third quarter of 2004, but still showed strong results from ongoing sales of SBA 7(a) loans. Other income included securities losses of $0.3 million compared to securities gains of $0.3 million in the third quarter of 2004. Non-interest expense declined $0.4 million as expected in the quarter. In commenting on the quarter, president and chief executive officer, Samuel B. Hay III, said, "We are pleased by the strength of our earnings and by our progress during the third quarter in all facets of our business. We are proud that loan losses have returned to historic norms for our company and grateful to our team for their efforts on asset quality. The Atlanta market continues to provide us with attractive opportunities for growing our traditional banking business and we are taking advantage of those opportunities through new facilities and banking personnel. Our business model has proven to be highly successful and we believe that our growth is on track based on results during the quarter. We have also added significantly to the depth of our organization with the addition of key production, financial and support personnel." Loan Growth Continues On September 30, 2005, Main Street Banks' loans outstanding, net of unearned income, were $1.79 billion, reflecting an increase of $140 million, or 8.5 percent, compared to the same period last year. Compared to the second quarter of 2005, annualized growth in loans outstanding was 6.4 percent. As the company's balanced pricing and staffing initiatives took hold, loan production returned to expected levels during the quarter. The company considers its current loan pipeline to be healthy compared to historic levels. Loan Losses Sharply Reduced As expected, Main Street's loan losses declined significantly in the third quarter of 2005. Annualized net charge-offs for the third quarter were 0.21% of average loans, compared to 0.11% in the third quarter of 2004 and 0.86% in the second quarter of 2005. All asset quality indicators are stable or improving and the company expects loan losses to be between 0.20% and 0.30% on an annualized basis in the future. Nonperforming Assets Rise Slightly Nonperforming assets rose from 0.66% of assets at June 30, 2005 to 0.69% of assets at September 30, 2005. Non-accrual loans declined from $11.5 million at June 30, 2005 to $11.1 million at September 30, 2005. Foreclosed real estate increased from $4.1 million to $5.9 million during this period. Management is actively marketing these properties and anticipates that nonperforming assets will trend downward in future quarters as foreclosed property returns to normal levels. Of the Bank's $17.0 million in nonperforming assets, $4.7 million or 27% are associated with loans backed by the SBA 7(a) and 504 programs and therefore have greatly mitigated loss exposure. Management believes that the remaining nonperforming assets are well-secured, adequately covered by specific reserves or have been written down to realizable value. The allowance for loan losses at September 30, 2005 was $25.1 million and represented 1.40% of loans outstanding at the end of the period, compared to $24.3 million and 1.47% at September 30, 2004. Delinquent loans as a percentage of loans outstanding reached a three year low for the company at the end of the third quarter. Due to these factors, Main Street maintains a favorable outlook on asset quality for the fourth quarter of 2005. Emphasis on Transaction Deposits Continues In keeping with its historic growth of transaction accounts and its pricing discipline on time deposits, Main Street continued to emphasize checking account products during the third quarter. The company's free consumer checking program, High Performance Checking, was launched in March 2005 and continues to enhance the company's sales of checking products, growth in related balances and other customer fees. With heavy investment in periodic mail marketing campaigns, the company is continuing to experience account openings of approximately 2.4 times last year's openings. Main Street is now launching a similar program for businesses with the cornerstone account being free and allowing up to 1,000 items per month with no fee. Total deposits at September 30, 2005 were $1.77 billion compared to $1.63 billion as of September 30, 2004, representing an increase of 8.6%. Over the same period, total checking deposits grew from $446.0 million to $469.7 million or 5.3%. Since the beginning of High Performance Checking earlier this year, Main Street's growth in checking deposits has been enhanced. Checking balances rose from $413.4 million at the end of the second quarter to $469.7 million on September 30, 2005. Main Street intends to continue emphasizing transaction accounts and related relationships rather than single product time or money market deposit relationships which are rate sensitive. Net Interest Margin Contracts as Expected Main Street's net interest margin was 4.26% for the third quarter of 2005, down from 4.42% for the second quarter of 2005 and 4.31% in the third quarter of 2004. The company previously announced that it expected the net interest margin to stabilize in a range of 4.20% to 4.30% after diligent pricing efforts increased the margin 24 basis points in the second quarter. The company is still comfortable with the previously communicated 4.20% to 4.30% range for net interest margin. Noninterest Income Up 15.2 % Excluding Bond and SBA 504 Activity Noninterest income was strong at $7.3 million in the third quarter of 2005, considering bond losses incurred and the lack of gains on SBA 504 loan sales. Noninterest income was $7.8 million in the third quarter of 2004 and included gains on sales of bonds and SBA 504 loans. Deposit service charges and customer fees were up $0.2 million compared to the prior year. The checking account marketing program is a key contributor to the enhancement in service charge income, with service charges on deposit accounts growing 14% on an annualized basis over second quarter 2005. Insurance revenues increased $0.1 million or 4.5% over the prior year. On a linked quarter basis, insurance revenue increased $0.3 million compared to the second quarter of 2005. The third quarter of 2004 had gains from the sale of SBA 504 loans of $0.9 million and investment portfolio gains of $0.3 million, compared to no SBA 504 loan sales and investment portfolio losses of $0.3 million in the third quarter of 2005. Noninterest Expenses Decline Noninterest expenses totaled $16.9 million in the third quarter, decreasing $0.4 million or 2.3% from second quarter 2005 and increasing 9.0% over the level for third quarter 2004. Main Street had forecast this quarter- to-quarter reduction based on certain expense items in the second quarter of 2005 versus planned increases in expenses for staffing additions and a new banking center to be opened during the third quarter. The second quarter of 2005 had $0.4 million in losses from the write-off of assets in a loan settlement services subsidiary, higher professional expenses and commissions from the sale of SBA 504 loans. Key Management Positions Added During the third quarter, Main Street added key positions to its accounting and treasury functions, created a management reporting function with an internal promotion and created a position to coordinate all banking fee businesses. The company named William P. O'Halloran as Interim Controller, Bob D. Doby, Jr. as Senior Vice President and Treasurer and David D. Duncan as Senior Vice President, Management Reporting. O'Halloran served 25 years as Controller for SunTrust Banks and its predecessor companies in Atlanta and recently retired from that position. O'Halloran will fill the controller position for Main Street until a permanent controller is named. Doby most recently served as Director of Funds Management for First Charter Corporation in Charlotte, NC and has 27 years experience in bank treasury and balance sheet management. Duncan previously served as Controller and as Financial Reporting Manager for Main Street. Based on this progress and the depth of experience now represented in the company's financial management functions, Main Street believes that it has made substantial progress toward alleviating the internal control weakness it cited previously this year due to inadequate staffing and expertise in its financial functions. The company expects to make a final assessment of this issue at December 31, 2005. Main Street also named Terence L. Lewis as Executive Vice President, Banking Fee Income, with responsibility for all banking fee businesses including Small Business Administration lending, payroll services, investment brokerage, and corporate services (electronic delivery). Lewis has already made significant progress toward improving the execution and coordination of all banking fee business opportunities. Prior to this position, Lewis served as the company's banking executive for Gwinnett and DeKalb counties. Continued Investment in Facilities, Staff and Products After significant internal focus in the first half of 2005, Main Street has a renewed focus on growth and investment in the future. The company opened its new Galleria Banking Center in late September and now has 24 banking centers in total. The Galleria complex is located at the intersection of Interstate 75 and Interstate 285 northwest of downtown Atlanta and is the largest commercial office development in Atlanta, housing 24 million square feet of class A office space and approximately 13,000 hotel rooms and related convention space. The company expects to open its new Suwanee Banking Center in the second quarter of 2006 and has begun initial plans for its Windward Parkway Banking Center just off Georgia 400 north of Alpharetta. The company also added to its staffing depth in the third quarter, increasing its full- time equivalent staff from 508 to 528. The staff additions represented 17 FTEs in banking sales and service functions and 3 FTEs in support and administrative roles, all to serve as the foundation for future growth and new banking centers and products. With further comments on the quarter, Hay said, "We are gratified by our execution and renewed focus during the third quarter, especially in asset quality, profitability and plans for future growth. We are also excited to welcome Bill O'Halloran and Bob Doby in our accounting and treasury functions and are grateful to Terence Lewis and David Duncan for accepting promotions to new positions for our company. They all bring outstanding experience and ability to our company leadership. We believe that the additions to our financial management team will contribute to the correction of the staffing deficiencies which led to our material weakness in internal controls earlier this year. After spending significant energy and resources internally focused in the first half of this year, we are pleased to have turned our attention to growth, hiring, and new products and facilities. We look forward to a successful fourth quarter and full year in 2006." About Main Street Main Street Banks, Inc., a $2.5 billion asset, community-banking organization based in metropolitan Atlanta, provides a broad range of banking, brokerage, insurance, mortgage and payroll products and services through its 24 banking centers located in eighteen of Georgia's fastest growing communities. Main Street is the largest community banking organization in the Atlanta metropolitan area. Safe Harbor Statements made in this press release, other than those containing historical information, are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Act of 1995. The forward looking statements herein include, but are not limited to, the expected growth of our traditional banking business through new facilities in high growth locations in the Atlanta market and through new banking personnel, the expected forecast for loan losses, nonperforming assets and net interest margin for the remainder of 2005, the future growth of business lines, the expected improvement in asset quality in the remainder of 2005, expected loan and deposit growth, expected fee income growth, the expected success of the High Performance Checking program, and the expected effect of an enhanced management team with recent additions and promotions. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth herein, including: possible reversals in market, economic and business conditions; the prospects and performance of loans and borrowers; the ability to attract new customers; possible changes in monetary and fiscal policies, laws and regulations; the effects of easing of restrictions on participants in the financial services industry; possible changes in the credit worthiness of customers and the possible impairment of loans; the effects of changing interest rates and other risks and factors identified in the Company's annual report on Form 10-K for the year ended December 31, 2004 and other filings with the Securities and Exchange Commission. Main Street undertakes no obligation to update these statements following the date of this press release. In addition, Main Street, through its senior management, may from time to time make forward-looking public statements concerning the matters described herein. Such forward-looking statements are necessarily estimates reflecting the judgment of Main Street's senior management based upon current information and involve a number of risks and uncertainties. There can be no assurance that such factors or other factors will not affect the accuracy of such forward-looking statements. For additional information about Main Street Banks, Inc.'s financial performance, products and services, please visit our web site at http://www.mainstreetbank.com/. To hear a live webcast of Main Street Banks, Inc.'s third quarter earnings conference call at 10 a.m. (ET) today, please visit our web site at http://www.mainstreetbank.com/. Shortly following the conference call and for a limited time thereafter, listeners may access archived versions of the presentation via the website or at 1-800-688-7339. MAIN STREET BANKS, INC. FINANCIAL HIGHLIGHTS (Unaudited) Third Fourth Quarter Quarter 2004 2004 RESULTS OF OPERATIONS Net interest income (tax equivalent) $21,021,094 $21,612,019 Provision for loan losses 1,602,500 2,956,380 Non-interest income 7,821,682 7,541,744 Non-interest expense 15,494,210 15,410,405 Income tax expense 3,294,026 2,907,090 Net income 8,263,915 7,698,582 PERFORMANCE Earnings per share - Basic $0.43 $0.39 Earnings per share - Diluted $0.41 $0.38 Return on average assets 1.52% 1.36% Return on average equity 15.16% 13.12% Cash return on tangible equity 29.13% 23.66% Efficiency ratio 54.07% 53.19% NET INTEREST MARGIN Interest earning assets 6.17% 6.22% Cost of funds 2.11% 2.29% Net interest spread 4.07% 3.93% Net interest margin 4.31% 4.23% CAPITAL Cash dividend per share 0.1350 0.1350 Dividend payout ratio 32.70% 35.72% Average equity to average assets 10.02% 10.34% Average tangible equity to average tangible assets 5.53% 6.06% Tier 1 risk-based capital (1) 8.62% 12.33% Total risk-based capital (1) 11.06% 13.59% Leverage ratio (1) 7.26% 10.49% AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,620,436 1,670,976 Investment securities 288,443 293,933 Earning assets 1,940,675 2,030,527 Total assets 2,176,797 2,271,783 Deposits 1,584,819 1,687,864 Long-term debt 209,789 257,319 Shareholders' equity 218,058 234,796 GROWTH RATES - Period-to-Period Average loan growth, annualized 17.0% 12.0% Average deposit growth, annualized 9.5% 25.9% End of period loan growth, annualized 14.8% 10.9% End of period deposit growth, annualized 16.3% 19.5% STOCK PERFORMANCE Market Price: Closing $30.60 $34.93 High close $30.60 $34.93 Low close $26.46 $28.55 Daily average trading volume 27,428 45,216 Price to trailing twelve months earnings 19.8 22.6 Book value per share at end of period $11.43 $13.10 Price to book value 2.68 2.67 ASSET QUALITY Total non-performing loans $4,712,752 $12,254,820 Loans 90 days past due and still accruing $2,062,584 $5,657,986 Non-performing loans as a percentage of loans 0.28% 0.72% Non-performing assets as a percentage of loans plus OREO 0.35% 0.85% ALLL to non-performing loans (multiple) 5.15 2.06 ALLL plus equity to non-performing assets (multiple) 42.19 21.03 Annualized Net charge-offs to loans 0.11% 0.48% ALLL as a percentage of loans, at end of period 1.47% 1.48% OTHER INFORMATION Average loans as percentage of average deposits 102.25% 99.00% Non-interest income ratio 27.30% 26.03% End of period shares outstanding 19,457,741 21,229,545 Weighted average shares outstanding Basic 19,428,145 19,756,947 Diluted 20,015,560 20,372,205 Full-time equivalent employees 501 518 (1) Capital ratios for the current period are estimated MAIN STREET BANKS, INC. FINANCIAL HIGHLIGHTS (Unaudited) First Second Third Quarter Quarter Quarter 2005 2005 2005 RESULTS OF OPERATIONS Net interest income (tax equivalent) $21,785,622 $23,155,302 $22,924,516 Provision for loan losses 2,208,555 4,050,000 790,000 Non-interest income 7,926,280 7,746,402 7,337,635 Non-interest expense 15,503,167 17,285,512 16,882,905 Income tax expense 3,642,140 3,585,379 3,865,415 Net income 8,182,991 5,805,995 8,538,129 PERFORMANCE Earnings per share - Basic $0.38 $0.27 $0.40 Earnings per share - Diluted $0.38 $0.27 $0.39 Return on average assets 1.40% 0.99% 1.42% Return on average equity 11.66% 8.17% 11.79% Cash return on tangible equity 18.54% 12.94% 18.40% Efficiency ratio 52.49% 56.26% 56.13% NET INTEREST MARGIN Interest earning assets 6.42% 6.80% 6.85% Cost of funds 2.56% 2.77% 3.02% Net interest spread 3.87% 4.03% 3.83% Net interest margin 4.18% 4.42% 4.26% CAPITAL Cash dividend per share 0.1525 0.1525 0.1525 Dividend payout ratio 40.66% 57.52% 39.24% Average equity to average assets 12.02% 12.06% 12.08% Average tangible equity to average tangible assets 7.99% 8.07% 8.17% Tier 1 risk-based capital (1) 12.26% 12.29% 12.02% Total risk-based capital (1) 13.51% 13.54% 13.26% Leverage ratio (1) 10.47% 10.51% 10.58% AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,731,089 1,759,766 1,767,745 Investment securities 316,742 309,483 333,343 Earning assets 2,092,064 2,100,824 2,136,601 Total assets 2,335,055 2,357,624 2,397,790 Deposits 1,709,580 1,722,226 1,704,822 Long-term debt 250,670 259,626 253,000 Shareholders' equity 280,723 284,355 289,697 GROWTH RATES - Period-to-Period Average loan growth, annualized 14.1% 6.5% 1.8% Average deposit growth, annualized 5.2% 3.0% -4.0% End of period loan growth, annualized 10.6% 4.6% 6.4% End of period deposit growth, annualized 8.6% -15.8% 21.8% STOCK PERFORMANCE Market Price: Closing $26.45 $25.46 $26.80 High close $35.34 $26.46 $28.48 Low close $26.35 $22.58 $25.27 Daily average trading volume 69,525 59,756 43,580 Price to trailing twelve months earnings 17.2 17.8 19.0 Book value per share at end of period $13.16 $13.42 $13.60 Price to book value 2.01 1.90 1.97 ASSET QUALITY Total non-performing loans $19,036,696 $11,543,140 $11,064,707 Loans 90 days past due and still accruing $4,222,658 $2,367,863 $3,512,535 Non-performing loans as a percentage of loans 1.09% 0.65% 0.62% Non-performing assets as a percentage of loans plus OREO 1.21% 0.88% 0.94% ALLL to non-performing loans (multiple) 1.31 2.19 2.27 ALLL plus equity to non-performing assets (multiple) 14.52 20.00 18.69 Annualized Net charge-offs to loans 0.56% 0.86% 0.21% ALLL as a percentage of loans, at end of period 1.43% 1.43% 1.40% OTHER INFORMATION Average loans as percentage of average deposits 101.26% 102.18% 103.69% Non-interest income ratio 26.84% 25.21% 24.40% End of period shares outstanding 21,315,955 21,415,607 21,465,563 Weighted average shares outstanding Basic 21,277,737 21,375,087 21,431,761 Diluted 21,818,118 21,899,426 21,970,403 Full-time equivalent employees 517 508 528 (1) Capital ratios for the current period are estimated MAIN STREET BANKS, INC. FINANCIAL HIGHLIGHTS (Unaudited) Nine months ended September 30, 2005 2004 RESULTS OF OPERATIONS Net interest income (tax equivalent) $67,865,440 $61,582,153 Provision for loan losses 7,048,555 4,473,500 Non-interest income 23,010,317 23,080,288 Non-interest expense 49,671,584 47,207,326 Income tax expense 11,092,934 9,126,393 Net income 22,527,115 23,251,678 PERFORMANCE Earnings per share - Basic $1.05 $1.20 Earnings per share - Diluted $1.03 $1.16 Return on average assets 1.27% 1.48% Return on average equity 10.51% 14.74% Cash return on tangible equity 16.59% 28.98% Efficiency ratio 54.98% 56.16% NET INTEREST MARGIN Interest earning assets 6.69% 6.25% Cost of funds 2.78% 2.05% Net interest spread 3.91% 4.20% Net interest margin 4.30% 4.42% CAPITAL Cash dividend per share $0.4575 $0.4050 Dividend payout ratio 44.28% 34.79% Average equity to average assets 12.06% 10.05% Average tangible equity to average tangible assets 8.08% 5.43% Tier 1 risk-based capital (1) 12.02% NA Total risk-based capital (1) 13.26% NA Leverage ratio (1) 10.58% NA AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,753,001 1,547,612 Investment securities 319,916 277,423 Earning assets 2,109,418 1,860,006 Total assets 2,363,720 2,086,868 Deposits 1,712,192 1,532,726 Long-term debt 254,440 202,821 Shareholders' equity 284,957 209,739 GROWTH RATES - Period-to-Period Average loan growth, annualized 6.6% 11.5% Average deposit growth, annualized 1.9% 7.4% End of period loan growth, annualized 7.3% 19.5% End of period deposit growth, annualized 4.7% 15.7% STOCK PERFORMANCE Market Price: Closing $26.80 $30.60 High close $35.34 $30.60 Low close $22.58 $24.90 Daily average trading volume 57,431 29,091 Price to trailing twelve months earnings 19.0 19.9 Book value per share at end of period $13.60 $11.43 Price to book value 1.97 2.68 ASSET QUALITY Total non-performing loans $11,064,707 $4,712,752 Loans 90 days past due and still accruing 3,512,535 6,719,204 Non-performing loans as a percentage of loans 0.62% 0.28% Non-performing assets as a percentage of loans plus OREO 0.94% 0.35% ALLL to non-performing loans (multiple) 2.27 5.15 ALLL plus equity to non-performing assets (multiple) 1.48 14.59 Annualized Net charge-offs to loans 0.54% 0.12% ALLL as a percentage of loans, at end of period 1.40% 1.47% OTHER INFORMATION Average loans as percentage of average deposits 102.38% 100.97% Non-interest income ratio 25.47% 27.46% End of period shares outstanding 21,465,563 20,021,823 Weighted average shares outstanding Basic 21,362,093 19,353,729 Diluted 21,800,884 19,972,391 Full-time equivalent employees 528 501 (1) Capital ratios for the current period are estimated MAIN STREET BANKS, INC. CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited) Third Fourth Quarter Quarter 2004 2004 ASSETS Cash and due from banks $39,565,158 $40,385,275 Interest-bearing deposits in banks 810,886 1,427,186 Federal funds sold and securities purchased under agreements to resell 889,315 34,911,021 Investment securities held to maturity: State and political subdivisions 11,945,588 11,733,821 Total investment securities held to maturity 11,945,588 11,733,821 Investment securities available for sale: U.S. Treasury securities 13,703,533 15,261,042 U.S. Government agencies and corporations 95,048,258 97,424,247 Mortgage-backed securities 140,729,985 143,355,713 State and Political subdivisions 27,016,001 26,157,871 Total investment securities available for sale 276,497,775 282,198,873 Total investment securities 288,443,364 293,932,694 Other investments 24,140,813 21,866,256 Mortgage loans held for sale 5,954,007 7,413,513 Loans: Commercial and industrial 132,863,667 128,991,523 Real estate - construction 363,078,743 391,920,774 Real estate mortgage 273,432,769 281,462,005 Real estate commercial 810,360,972 830,254,990 Consumer and other 43,192,305 41,144,935 Unearned income and deferred fees (2,492,063) (2,798,009) Total loans, net of unearned income 1,620,436,393 1,670,976,218 Allowance for loan losses (23,402,241) (24,559,019) Loans, net 1,597,034,152 1,646,417,199 Premises and equipment, net 50,125,904 52,672,981 Other real estate 1,914,645 1,868,635 Accrued interest receivable 9,058,791 9,091,675 Goodwill and other intangible assets 103,470,116 103,299,382 Bank owned life insurance 41,191,340 41,722,058 Other assets 14,198,902 16,774,679 Total assets $2,176,797,392 $2,271,782,554 LIABILITIES Deposits: Noninterest-bearing demand $243,941,352 $245,681,543 Interest-bearing demand 154,405,000 198,460,058 Money market 380,679,636 414,855,999 Savings 46,985,070 48,753,889 Time deposits 758,807,658 780,112,817 Total deposits 1,584,818,716 1,687,864,307 Accrued interest payable 3,312,458 3,678,457 Federal Home Loan Bank advances 158,242,407 205,771,676 Federal funds purchased and securities sold under repurchase agreements 153,386,148 80,364,169 Subordinated debt 51,547,000 51,547,000 Other liabilities 7,432,893 7,761,366 Total liabilities 1,958,739,622 2,036,986,975 SHAREHOLDERS' EQUITY Common stock-no par value per share 107,626,919 116,719,468 Retained earnings 120,402,848 126,192,533 Accumulated other comprehensive income (1,182,407) 673,167 Treasury stock (8,789,589) (8,789,589) Total shareholders' equity 218,057,771 234,795,579 Total liabilities and shareholders' equity $2,176,797,392 $2,271,782,554 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited) First Second Third Quarter Quarter Quarter 2005 2005 2005 ASSETS Cash and due from banks $38,413,540 $38,036,348 $39,319,511 Interest-bearing deposits in banks 1,659,848 (256,503) 714,597 Federal funds sold and securities purchased under agreements to resell 11,609,722 1,283,154 799,271 Investment securities held to maturity: State and political subdivisions 11,556,504 11,329,939 14,153,617 Total investment securities held to maturity 11,556,504 11,329,939 14,153,617 Investment securities available for sale: U.S. Treasury securities 3,027,511 - - U.S. Government agencies and corporations 121,172,362 123,859,984 140,289,099 Mortgage-backed securities 155,869,947 149,647,693 154,442,218 State and Political subdivisions 25,115,286 24,644,992 24,457,705 Total investment securities available for sale 305,185,107 298,152,668 319,189,022 Total investment securities 316,741,611 309,482,607 333,342,639 Other investments 26,130,642 25,327,171 27,448,453 Mortgage loans held for sale 4,833,054 5,221,734 6,550,562 Loans: Commercial and industrial 130,172,235 132,200,777 127,320,807 Real estate - construction 423,305,704 445,263,060 451,484,586 Real estate mortgage 292,858,471 294,195,800 287,971,894 Real estate commercial 849,083,205 850,921,595 866,431,816 Consumer and other 38,727,904 40,522,214 37,887,196 Unearned income and deferred fees (3,058,779) (3,337,453) (3,350,978) Total loans, net of unearned income 1,731,088,740 1,759,765,993 1,767,745,321 Allowance for loan losses (25,278,951) (24,995,678) (25,265,757) Loans, net 1,705,809,789 1,734,770,315 1,742,479,564 Premises and equipment, net 53,664,240 53,253,079 53,259,729 Other real estate 2,254,889 2,620,025 6,222,444 Accrued interest receivable 9,721,005 9,761,184 10,504,398 Goodwill and other intangible assets 102,295,536 102,240,940 102,187,089 Bank owned life insurance 44,896,055 57,846,281 58,526,165 Other assets 17,025,196 18,037,492 16,435,850 Total assets $2,335,055,127 $2,357,623,827 $2,397,790,272 LIABILITIES Deposits: Noninterest-bearing demand $243,495,320 $255,525,455 $250,462,090 Interest-bearing demand 169,481,955 168,479,244 161,163,084 Money market 477,088,537 473,397,861 452,612,826 Savings 46,219,821 45,192,412 43,566,716 Time deposits 773,294,733 779,630,663 797,016,812 Total deposits 1,709,580,366 1,722,225,635 1,704,821,528 Accrued interest payable 3,873,319 4,305,048 4,495,683 Federal Home Loan Bank advances 199,122,844 208,078,853 201,452,946 Federal funds purchased and securities sold under repurchase agreements 82,413,785 83,251,628 139,394,921 Subordinated debt 51,547,000 51,547,000 51,547,000 Other liabilities 7,795,279 3,860,957 6,381,594 Total liabilities 2,054,332,593 2,073,269,121 2,108,093,672 SHAREHOLDERS' EQUITY Common stock-no par value per share 161,945,001 162,787,929 163,231,281 Retained earnings 128,537,617 133,235,732 137,974,536 Accumulated other comprehensive income (970,495) (2,879,366) (2,719,628) Treasury stock (8,789,589) (8,789,589) (8,789,589) Total shareholders' equity 280,722,534 284,354,706 289,696,600 Total liabilities and shareholders' equity $2,335,055,127 $2,357,623,827 $2,397,790,272 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited) Nine months ended September 30, 2005 2004 ASSETS Cash and due from banks $38,593,118 $37,875,510 Interest-bearing deposits in banks 702,518 548,289 Federal funds sold and securities purchased under agreements to resell 4,524,450 5,036,442 Investment securities held to maturity: State and political subdivisions 12,356,200 11,728,872 Total investment securities held to maturity 12,356,200 11,728,872 Investment securities available for sale: U.S. Treasury securities 998,081 11,502,022 U.S. Government agencies and corporations 128,510,506 88,009,129 Mortgage-backed securities 153,314,723 136,975,130 State and Political subdivisions 24,736,919 29,207,627 Total investment securities available for sale 307,560,229 265,693,908 Total investment securities 319,916,429 277,422,780 Other investments 25,731,881 23,219,795 Mortgage loans held for sale 5,541,408 6,166,309 Loans: Commercial and industrial 128,108,281 123,976,814 Real estate - construction 440,121,003 333,561,321 Real estate mortgage 291,657,489 278,107,699 Real estate commercial 855,542,420 771,697,911 Consumer and other 40,821,906 42,425,985 Unearned income and deferred fees (3,250,140) (2,157,470) Total loans, net of unearned income 1,753,000,959 1,547,612,260 Allowance for loan losses (25,180,080) (22,442,259) Loans, net 1,727,820,879 1,525,170,001 Premises and equipment, net 53,390,867 46,745,079 Other real estate 3,713,652 2,440,087 Accrued interest receivable 9,998,398 8,186,210 Goodwill and other intangible assets 102,240,791 101,879,732 Bank owned life insurance 53,806,094 40,200,499 Other assets 17,739,059 11,977,725 Total assets $2,363,719,544 $2,086,868,458 LIABILITIES Deposits: Noninterest-bearing demand $249,853,142 $236,653,370 Interest-bearing demand 166,344,289 160,288,644 Money market 467,610,087 347,526,640 Savings 44,983,265 49,130,013 Time deposits 783,400,963 739,127,677 Total deposits 1,712,191,746 1,532,726,344 Accrued interest payable 4,226,963 3,167,775 Federal Home Loan Bank advances 202,893,416 151,274,272 Federal funds purchased and securities sold under repurchase agreements 101,895,500 130,277,826 Subordinated debt 51,547,000 51,547,000 Other liabilities 6,007,431 8,136,495 Total liabilities 2,078,762,056 1,877,129,712 SHAREHOLDERS' EQUITY Common stock-no par value per share 162,659,449 105,781,814 Retained earnings 133,283,865 111,145,199 Accumulated other comprehensive income (2,196,237) 1,601,173 Treasury stock (8,789,589) (8,789,440) Total shareholders' equity 284,957,488 209,738,746 Total liabilities and shareholders' equity $2,363,719,544 $2,086,868,458 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. CONSOLIDATED END OF PERIOD BALANCE SHEET (Unaudited) Third Fourth Quarter Quarter 2004 2004 ASSETS Cash and due from banks $55,719,486 $35,090,563 Interest-bearing deposits in banks 1,255,477 1,880,902 Federal funds sold and securities purchased under agreements to resell 24,212,758 34,250,000 Investment securities held to maturity: State and political subdivisions 11,835,353 11,715,948 Total investment securities held to maturity 11,835,353 11,715,948 Investment securities available for sale: U.S. Treasury securities 15,338,281 15,155,469 U.S. Government agencies and corporations 96,133,559 113,335,222 Mortgage-backed securities 144,628,202 161,522,584 State and Political subdivisions 26,714,192 25,507,497 Total investment securities available for sale 282,814,235 315,520,771 Total investment securities 294,649,588 327,236,719 Other investments 23,040,424 23,781,977 Mortgage loans held for sale 6,931,843 4,562,962 Loans: Commercial and industrial 129,878,674 126,515,437 Real estate - construction 379,468,496 401,815,256 Real estate mortgage 276,983,118 288,703,328 Real estate commercial 824,758,151 846,945,431 Consumer and other 45,242,671 38,035,210 Unearned income and deferred fees (2,715,576) (2,979,090) Total loans, net of unearned income 1,653,615,534 1,699,035,573 Allowance for loan losses (24,256,034) (25,191,175) Loans, net 1,629,359,500 1,673,844,398 Premises and equipment, net 52,504,434 53,469,516 Other real estate 1,082,267 2,141,040 Accrued interest receivable 9,243,097 9,762,826 Goodwill and other intangible assets 103,392,163 102,169,572 Bank owned life insurance 41,528,162 42,056,525 Other assets 15,473,682 16,286,895 Total assets $2,258,392,881 $2,326,533,895 LIABILITIES Deposits: Noninterest-bearing demand $243,388,441 $230,578,226 Interest-bearing demand 202,591,958 200,534,606 Money market 375,825,433 451,933,070 Savings 46,647,100 46,998,483 Time deposits 761,833,478 780,165,528 Total deposits 1,630,286,409 1,710,209,913 Accrued interest payable 3,488,406 3,955,183 Federal Home Loan Bank advances 226,203,972 201,070,198 Federal funds purchased and securities sold under repurchase agreements 115,191,909 73,367,456 Subordinated debt 51,547,000 51,547,000 Other liabilities 9,353,208 8,300,069 Total liabilities 2,036,070,904 2,048,449,819 SHAREHOLDERS' EQUITY Common stock-no par value per share 108,197,312 159,520,536 Retained earnings 121,717,798 127,566,247 Accumulated other comprehensive income 1,196,456 (213,118) Treasury stock (8,789,589) (8,789,589) Total shareholders' equity 222,321,977 278,084,076 Total liabilities and shareholders' equity $2,258,392,881 $2,326,533,895 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. CONSOLIDATED END OF PERIOD BALANCE SHEET (Unaudited) First Second Third Quarter Quarter Quarter 2005 2005 2005 ASSETS Cash and due from banks $37,016,874 $35,632,553 $50,441,361 Interest-bearing deposits in banks 1,186,211 480,264 648,989 Federal funds sold and securities purchased under agreements to resell 200,000 - 33,250,000 Investment securities held to maturity: State and political subdivisions 11,510,170 13,110,149 15,110,124 Total investment securities held to maturity 11,510,170 13,110,149 15,110,124 Investment securities available for sale: U.S. Treasury securities - - - U.S. Government agencies and corporations 113,565,637 130,405,877 129,225,237 Mortgage-backed securities 149,937,275 148,882,044 158,143,133 State and Political subdivisions 24,654,818 24,743,140 24,409,116 Total investment securities available for sale 288,157,730 304,031,061 311,777,486 Total investment securities 299,667,900 317,141,210 326,887,610 Other investments 22,378,119 26,073,954 26,695,169 Mortgage loans held for sale 5,915,770 8,633,024 7,118,578 Loans: Commercial and industrial 129,883,107 125,803,180 128,192,735 Real estate - construction 441,950,621 447,201,398 459,581,570 Real estate mortgage 292,668,159 292,857,591 286,918,491 Real estate commercial 839,695,408 861,872,172 881,887,107 Consumer and other 42,463,091 39,423,520 39,125,308 Unearned income and deferred fees (3,071,179) (3,376,982) (3,436,778) Total loans, net of unearned income 1,743,589,208 1,763,780,880 1,792,268,433 Allowance for loan losses (24,983,997) (25,242,328) (25,118,586) Loans, net 1,718,605,211 1,738,538,552 1,767,149,847 Premises and equipment, net 53,248,494 53,101,387 52,627,336 Other real estate 1,888,882 4,094,710 5,897,650 Accrued interest receivable 9,577,443 10,012,138 10,149,747 Goodwill and other intangible assets 102,294,796 102,234,740 102,107,348 Bank owned life insurance 57,586,480 58,271,098 58,976,076 Other assets 18,672,474 17,209,181 31,617,840 Total assets $2,328,238,654 $2,371,422,811 $2,473,567,551 LIABILITIES Deposits: Noninterest-bearing demand $254,241,688 $245,913,330 $256,516,602 Interest-bearing demand 167,756,729 167,512,066 213,197,572 Money market 492,647,663 459,498,228 441,399,397 Savings 43,846,151 43,765,494 41,349,073 Time deposits 787,946,139 761,161,025 817,497,176 Total deposits 1,746,438,371 1,677,850,143 1,769,959,820 Accrued interest payable 4,365,986 4,714,122 5,152,688 Federal Home Loan Bank advances 185,936,423 203,302,648 198,168,873 Federal funds purchased and securities sold under repurchase agreements 56,563,910 135,722,681 147,189,088 Subordinated debt 51,547,000 51,547,000 51,547,000 Other liabilities 2,897,625 10,803,254 9,699,590 Total liabilities 2,047,749,315 2,083,939,848 2,181,717,059 SHAREHOLDERS' EQUITY Common stock-no par value per share 162,418,990 163,109,671 163,656,862 Retained earnings 131,273,960 135,005,706 140,394,815 Accumulated other comprehensive income (4,414,022) (1,842,825) (3,411,596) Treasury stock (8,789,589) (8,789,589) (8,789,589) Total shareholders' equity 280,489,339 287,482,963 291,850,492 Total liabilities and shareholders' equity $2,328,238,654 $2,371,422,811 $2,473,567,551 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) Third Fourth Quarter Quarter 2004 2004 NET INTEREST INCOME Loans, including fees $26,809,369 $28,519,255 Interest on investment securities: Taxable 2,428,436 2,518,397 Non-taxable 365,183 351,946 Federal funds sold and resale agreements 2,111 147,716 Interest bearing deposits in banks 6,545 7,495 Interest on other investments 240,218 122,662 Total interest income 29,851,862 31,667,471 INTEREST EXPENSE Interest-bearing demand 134,604 256,236 Money market 1,750,495 2,249,205 Savings 61,766 64,185 Time deposits 4,821,054 5,183,179 Federal funds purchased and repurchase agreements 737,411 531,927 Federal Home Loan Bank advances 876,478 1,227,700 Interest expense on subordinated debentures 637,085 724,326 Total interest expense 9,018,893 10,236,758 Net interest income 20,832,969 21,430,713 Provision for loan losses 1,602,500 2,956,380 Net interest income after provision for loan losses 19,230,469 18,474,333 NON-INTEREST INCOME Service charges on deposit accounts 2,165,224 2,047,804 Other customer service fees 276,909 375,445 Mortgage banking revenue 809,807 721,363 Investment brokerage revenue 133,479 194,241 Insurance agency revenue 2,514,479 2,393,185 Income from SBA lending 1,270,397 946,164 Other income 651,387 863,542 Total non-interest income 7,821,682 7,541,744 NON-INTEREST EXPENSE Salaries and other compensation 7,999,790 8,208,721 Employee benefits 1,170,201 1,195,115 Net occupancy and equipment expense 2,090,931 2,079,450 Data processing fees 325,617 554,645 Professional services 715,789 506,351 Communications and supplies 1,027,203 893,426 Amortization of intangible assets 122,591 122,591 Other expense 2,042,088 1,850,106 Total non-interest expense 15,494,210 15,410,405 Income before income taxes 11,557,941 10,605,672 Income tax expense 3,294,026 2,907,090 Net income $8,263,915 $7,698,582 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) First Second Third Quarter Quarter Quarter 2005 2005 2005 NET INTEREST INCOME Loans, including fees $29,590,608 $32,116,060 $33,102,250 Interest on investment securities: Taxable 2,761,476 2,748,206 2,995,662 Non-taxable 339,801 339,353 360,480 Federal funds sold and resale agreements 66,071 8,697 3,813 Interest bearing deposits in banks 12,052 12,168 18,235 Interest on other investments 189,875 236,682 297,905 Total interest income 32,959,883 35,461,166 36,778,345 INTEREST EXPENSE Interest-bearing demand 258,015 311,534 317,575 Money market 3,242,650 3,331,506 3,258,419 Savings 62,247 66,256 68,930 Time deposits 5,236,410 5,788,591 6,648,942 Federal funds purchased and repurchase agreements 622,724 701,159 1,289,450 Federal Home Loan Bank advances 1,178,544 1,455,212 1,568,347 Interest expense on subordinated debentures 748,720 826,424 887,868 Total interest expense 11,349,310 12,480,682 14,039,531 Net interest income 21,610,573 22,980,484 22,738,814 Provision for loan losses 2,208,555 4,050,000 790,000 Net interest income after provision for loan losses 19,402,018 18,930,484 21,948,814 NON-INTEREST INCOME Service charges on deposit accounts 1,896,864 2,152,332 2,228,637 Other customer service fees 340,037 362,387 404,941 Mortgage banking revenue 692,322 680,997 705,627 Investment brokerage revenue 400,504 148,419 67,788 Insurance agency revenue 3,173,741 2,349,254 2,628,244 Income from SBA lending 829,381 1,538,549 1,038,836 Other income 593,431 514,464 263,562 Total non-interest income 7,926,280 7,746,402 7,337,635 NON-INTEREST EXPENSE Salaries and other compensation 7,932,171 8,578,707 8,856,397 Employee benefits 1,620,366 1,298,090 1,393,958 Net occupancy and equipment expense 2,051,501 2,114,375 2,089,117 Data processing fees 510,076 495,055 545,572 Professional services 468,973 828,967 689,991 Communications and supplies 962,022 987,939 958,388 Amortization of intangible assets 128,750 130,764 130,764 Other expense 1,829,308 2,851,615 2,218,718 Total non-interest expense 15,503,167 17,285,512 16,882,905 Income before income taxes 11,825,131 9,391,374 12,403,544 Income tax expense 3,642,140 3,585,379 3,865,415 Net income $8,182,991 $5,805,995 $8,538,129 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) Nine months ended September 30, 2005 2004 NET INTEREST INCOME Loans, including fees $94,808,918 $76,991,015 Interest on investment securities: Taxable 8,505,344 7,106,928 Non-taxable 1,039,634 1,171,586 Federal funds sold and resale agreements 78,581 42,807 Interest bearing deposits in banks 42,455 15,492 Interest on other investments 724,462 682,253 Total interest income 105,199,394 86,010,081 INTEREST EXPENSE Interest-bearing demand 887,125 506,260 Money market 9,832,574 4,409,630 Savings 197,433 224,248 Time deposits 17,673,943 13,995,407 Federal funds purchased and repurchase agreements 2,613,333 1,702,421 Federal Home Loan Bank advances 4,202,103 2,406,529 Interest expense on subordinated debentures 2,463,012 1,786,977 Total interest expense 37,869,523 25,031,472 Net interest income 67,329,871 60,978,609 Provision for loan losses 7,048,555 4,473,500 Net interest income after provision for loan losses 60,281,316 56,505,109 NON-INTEREST INCOME Service charges on deposit accounts 6,277,833 6,068,936 Other customer service fees 1,107,365 986,096 Mortgage banking revenue 2,078,946 2,552,566 Investment brokerage revenue 616,711 633,889 Insurance agency revenue 8,151,239 7,656,555 Income from SBA lending 3,406,766 2,124,174 Other income 1,371,457 3,058,072 Total non-interest income 23,010,317 23,080,288 NON-INTEREST EXPENSE Salaries and other compensation 25,367,275 23,729,433 Employee benefits 4,312,414 4,330,436 Net occupancy and equipment expense 6,254,993 6,159,004 Data processing fees 1,550,703 1,106,368 Professional services 1,987,931 1,933,525 Communications and supplies 2,908,349 3,105,722 Amortization of intangible assets 390,278 384,993 Other expense 6,899,641 6,457,845 Total non-interest expense 49,671,584 47,207,326 Income before income taxes 33,620,049 32,378,071 Income tax expense 11,092,934 9,126,393 Net income $22,527,115 $23,251,678 Annualized Net charge-offs to loans MAIN STREET BANKS, INC. SUMMARY OF INTEREST RATES (TAX-EQUIVALENT) (Unaudited) Third Fourth Quarter Quarter 2004 2004 EARNING ASSETS Total average interest earning assets (in thousands) $1,940,675 $2,030,527 Loans 6.59% 6.76% Investment securities 4.07% 4.09% Federal funds sold 0.81% 1.68% Mortgage loans held for sale 4.93% 4.65% FHLB stock & other 3.67% 1.69% Total interest earning assets 6.17% 6.22% INTEREST-BEARING LIABILITIES Total average interest-bearing liabilities (in thousands) $1,704,053 $1,779,866 Interest-bearing demand 0.35% 0.51% Money market 1.83% 2.16% Savings 0.52% 0.52% Time deposits 2.53% 2.64% Federal funds purchased and repurchase agreements 1.91% 2.63% Federal Home Loan Bank advances 2.20% 2.37% Subordinated debentures 4.92% 5.59% Rate on interest bearing liabilities 2.11% 2.29% NET INTEREST SPREAD Interest earning assets less interest-bearing liabilities (in thousands) $236,622 $250,661 Yield on earning assets less cost of interest-bearing liabilities 4.07% 3.93% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.31% 4.23% Annualized Net charge-offs to loans MAIN STREET BANKS, INC. SUMMARY OF INTEREST RATES (TAX-EQUIVALENT) (Unaudited) First Second Third Quarter Quarter Quarter 2005 2005 2005 EARNING ASSETS Total average interest earning assets (in thousands) $2,092,064 $2,100,824 $2,136,601 Loans 6.92% 7.30% 7.41% Investment securities 4.15% 4.19% 4.17% Federal funds sold 2.31% 2.72% 1.89% Mortgage loans held for sale 5.94% 6.08% 5.56% FHLB stock & other 3.28% 3.93% 3.90% Total interest earning assets 6.42% 6.80% 6.85% INTEREST-BEARING LIABILITIES Total average interest-bearing liabilities (in thousands) $1,799,169 $1,809,578 $1,846,754 Interest-bearing demand 0.62% 0.74% 0.78% Money market 2.76% 2.82% 2.86% Savings 0.55% 0.59% 0.63% Time deposits 2.75% 2.98% 3.31% Federal funds purchased and repurchase agreements 3.06% 3.38% 3.67% Federal Home Loan Bank advances 2.40% 2.81% 3.09% Subordinated debentures 5.89% 6.43% 6.83% Rate on interest bearing liabilities 2.56% 2.77% 3.02% NET INTEREST SPREAD Interest earning assets less interest- bearing liabilities (in thousands) $292,895 $291,246 $289,847 Yield on earning assets less cost of interest-bearing liabilities 3.87% 4.03% 3.83% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.18% 4.42% 4.26% Annualized Net charge-offs to loans MAIN STREET BANKS, INC. SUMMARY OF INTEREST RATES (TAX-EQUIVALENT) (Unaudited) Nine months ended September 30, 2005 2004 EARNING ASSETS Total average interest earning assets (in thousands) $2,109,418 $1,860,006 Loans 7.21% 6.68% Investment securities 4.17% 4.20% Federal funds sold 2.32% 0.89% Mortgage loans held for sale 5.83% 4.90% FHLB stock & other 3.72% 3.43% Total interest earning assets 6.69% 6.25% INTEREST-BEARING LIABILITIES Total average interest-bearing liabilities (in thousands) $1,818,675 $1,629,172 Interest-bearing demand 0.71% 0.42% Money market 2.81% 1.69% Savings 0.59% 0.61% Time deposits 3.02% 2.53% Federal funds purchased and repurchase agreements 3.43% 1.74% Federal Home Loan Bank advances 2.77% 2.12% Subordinated debentures 6.39% 4.63% Rate on interest bearing liabilities 2.78% 2.05% NET INTEREST SPREAD Interest earning assets less interest-bearing liabilities (in thousands) $290,743 $230,834 Yield on earning assets less cost of interest-bearing liabilities 3.91% 4.20% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.30% 4.42% Annualized Net charge-offs to loans MAIN STREET BANKS, INC. LOAN QUALITY (Unaudited) Third Fourth Quarter Quarter 2004 2004 RESERVE FOR POSSIBLE LOAN LOSSES Reserve for loan losses at beginning of period $23,118,946 $24,256,034 Reserves acquired through acquisition - - Provision for loan losses 1,602,500 2,956,380 Loans charged-off during the period (1,103,582) (2,289,524) Recoveries on loans previously charged-off 638,170 268,285 Net loans (charged-off) recovered during period (465,412) (2,021,239) Reserve for loan losses at end of period $24,256,034 $25,191,175 Net charge-offs to average loans, annualized 0.11% 0.48% Reserve for loan losses as a percentage of loans, at end of period 1.47% 1.48% NON-PERFORMING ASSETS Loans accounted for on a non-accrual basis $4,712,752 $12,254,820 Restructured loans - - Total non-performing loans 4,712,752 12,254,820 Foreclosed assets 1,132,377 2,165,914 Total non-performing assets $5,845,129 $14,420,734 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 0.35% 0.85% Non-performing assets as a percentage of total assets, at end of period 0.26% 0.62% Reserve for loan losses as a percentage of non-performing loans, at end of period 514.69% 205.56% Loans 90 days past due and still accruing $2,062,584 $5,657,986 Loans 90 days past due and still accruing as a percentage of loans, at end of period 0.12% 0.33% Annualized Net charge-offs to loans MAIN STREET BANKS, INC. LOAN QUALITY (Unaudited) First Second Third Quarter Quarter Quarter 2005 2005 2005 RESERVE FOR POSSIBLE LOAN LOSSES Reserve for loan losses at beginning of period $25,191,175 $24,983,997 $25,242,328 Reserves acquired through acquisition - - - Provision for loan losses 2,208,555 4,050,000 790,000 Loans charged-off during the period (3,553,825) (4,188,669) (1,137,276) Recoveries on loans previously charged-off 1,138,092 397,000 223,534 Net loans (charged-off) recovered during period (2,415,733) (3,791,669) (913,742) Reserve for loan losses at end of period $24,983,997 $25,242,328 $25,118,586 Net charge-offs to average loans, annualized 0.56% 0.86% 0.21% Reserve for loan losses as a percentage of loans, at end of period 1.43% 1.43% 1.40% NON-PERFORMING ASSETS Loans accounted for on a non- accrual basis $19,036,696 $11,543,140 $11,064,707 Restructured loans - - - Total non-performing loans 19,036,696 11,543,140 11,064,707 Foreclosed assets 2,006,494 4,094,710 5,897,650 Total non-performing assets $21,043,190 $15,637,850 $16,962,357 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 1.21% 0.88% 0.94% Non-performing assets as a percentage of total assets, at end of period 0.90% 0.66% 0.69% Reserve for loan losses as a percentage of non-performing loans, at end of period 131.24% 218.68% 227.02% Loans 90 days past due and still accruing $4,222,658 $2,367,863 $3,512,535 Loans 90 days past due and still accruing as a percentage of loans, at end of period 0.24% 0.13% 0.20% Annualized Net charge-offs to loans MAIN STREET BANKS, INC. LOAN QUALITY (Unaudited) Nine months ended September 30, 2005 2004 RESERVE FOR POSSIBLE LOAN LOSSES Reserve for loan losses at beginning of period $25,191,175 $21,151,987 Reserves acquired through acquisition - - Provision for loan losses 7,048,555 4,473,500 Loans charged-off during the period (8,879,770) (2,410,933) Recoveries on loans previously charged-off 1,758,626 1,041,480 Net loans (charged-off) recovered during period (7,121,144) (1,369,453) Reserve for loan losses at end of period $25,118,586 $24,256,034 Net charge-offs to average loans, annualized 0.54% 0.12% Reserve for loan losses as a percentage of loans, at end of period 1.40% 1.47% NON-PERFORMING ASSETS Loans accounted for on a non-accrual basis $11,064,707 $4,712,752 Restructured loans - - Total non-performing loans 11,064,707 4,712,752 Foreclosed assets 5,897,650 1,132,377 Total non-performing assets $16,962,357 $5,845,129 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 0.94% 0.35% Non-performing assets as a percentage of total assets, at end of period 0.69% 0.26% Reserve for loan losses as a percentage of non-performing loans, at end of period 227.02% 514.69% Loans 90 days past due and still accruing $3,512,535 $6,719,204 Loans 90 days past due and still accruing as a percentage of loans, at end of period 0.20% 0.41% Annualized Net charge-offs to loans DATASOURCE: Main Street Banks, Inc. CONTACT: Samuel B. Hay III, President and CEO, or David W. Brooks II, Executive Vice President and CFO of Main Street Banks, Inc., +1-770-786-3441 Web site: http://www.mainstreetbank.com/

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