MSBK Main Street Banks (MM)

ATLANTA, Jan. 17 /PRNewswire-FirstCall/ -- Main Street Banks, Inc. (NASDAQ:MSBK) reported net income of $6.9 million for the three months ended December 31, 2005 compared to $7.7 million for the same period of 2004. Diluted earnings per share for the fourth quarter of 2005 were $0.32 versus $0.38 for the fourth quarter of 2004. Net income for the twelve months ended December 31, 2005 was $29.4 million compared to $31.0 million for the same period of 2004. Diluted earnings per share for the twelve months ended December 31, 2005 were $1.35 versus $1.54 for the twelve months ended December 31, 2004. Return on average assets was 1.14 percent for the fourth quarter of 2005 and return on average shareholders' equity was 9.34 percent. For the twelve months ended December 31, 2005, return on average assets was 1.24 percent and return on average shareholders' equity was 10.23 percent compared to 1.45 percent and 14.15 percent for 2004. Fourth quarter results were impacted by merger related expenses of $0.3 million or $0.01 per share incurred in connection with the previously announced pending merger with BB&T Corporation, as well as securities losses of $2.0 million or $0.06 per share that were recognized in the investment portfolio to enhance liquidity. Net interest income improved over the third quarter and the net interest margin widened to 4.43% from 4.26%. Net charge- offs were 0.23% annualized, well within management's expected range of 0.20% to 0.30%. Delinquent and nonperforming loans increased marginally; however, this increase was largely due to SBA loans, which are backed by the Small Business Administration and have exhibited low losses historically. The methodology the company uses to determine loan loss reserve requirements continues to indicate a loan loss reserve equal to 1.40% of loans. Noninterest income was weaker than expected at $6.8 million before the investment portfolio loss of $2.0 million pre-tax, compared to $7.3 million in the third quarter of 2005, due to a decline in mortgage revenue and lower SBA revenues as the company re-staffed its SBA function during the quarter. Relative to historic levels, the company's pipeline for SBA loans and revenues appears strong moving into 2006. Noninterest expense for the fourth quarter of 2005 was $17.9 million compared to $16.9 million in the third quarter of 2005, with increased professional fees related to the pending merger with BB&T Corporation. The increase in expenses was also due to the recognition of supplemental retirement agreements unrelated to the pending merger. In commenting on the quarter, president and chief executive officer, Samuel B. Hay III, said, "We are pleased with the underlying strength of our earnings and our overall operating performance and believe that Main Street is poised to return to stronger growth in 2006. While nonperforming loans increased somewhat, we believe our asset quality remains sound since most of the increase was in government backed loans in our SBA portfolio, which has historically incurred low loan losses. The Atlanta market is strong and we believe we are well positioned to grow on pace with our markets in 2006. In 2005, we cleared out problem loans, added a new banking center, recognized sizable investment portfolio losses and significantly increased personnel in the last half of the year. Even with this degree of change, we posted a return on assets of 1.24% and cash return on tangible equity of 16.07% for the year. We are excited about our pending merger with BB&T and look forward to increased opportunities in 2006 for our clients and our teammates through this new partnership." Credit Quality Remains Positive As previously mentioned, annualized net charge-offs for the fourth quarter were 0.23% of average loans, compared to 0.48% in the fourth quarter of 2004 and 0.21% in the third quarter of 2005. The company still expects loan losses to be between 0.20% and 0.30% on an annualized basis in the future. Loans past due 90 days or more and still accruing increased to 0.44% of loans in the fourth quarter from 0.20% in the third quarter of 2005, caused primarily by two residential builder credits which management believe to be adequately secured. Nonperforming assets as a percent of loans plus foreclosed property increased from 0.94% at September 30, 2005 to 0.98% at December 31, 2005, which is at the upper end of the company's historical range. Most of the increase in nonperforming assets occurred in the SBA portfolio. Nonaccruing SBA loans totaled $6.0 million, representing 45% of the company's total nonaccruals, as of December 31, 2005. The allowance for loan losses at December 31, 2005 was $25.2 million and represented 1.40% of loans outstanding at the end of the period, compared to $25.2 million and 1.48% at December 31, 2004. Balance Sheet Composition Improves The composition of the balance sheet continued to improve as deposits grew more than loans and wholesale funding was reduced due to sales of investment securities. Average loans grew 4.7% annualized in the fourth quarter of 2005 versus the third quarter of 2005, with deposits growing 10.7% in the same time period. The net interest margin expanded to 4.43% in the fourth quarter, as assets re-priced faster than liabilities and lower yielding investment securities were sold. As loan growth continues to improve and all liabilities are re-priced in the first quarter, the company expects the net interest margin to again contract back to the 4.20% to 4.30% range. Noninterest Income Lower Due to Decline in Mortgage and SBA Revenue Noninterest income was $4.8 million in the fourth quarter of 2005 compared to $7.3 million in the third quarter of 2005 and $7.5 million in the fourth quarter of 2004. The primary cause of this reduction was securities losses recognized in the quarter of $2.0 million. Deposit service charges and customer service fees were flat in the fourth quarter of 2005 compared to the third quarter of 2005. Insurance revenues met company expectations, but were down slightly from the third quarter of 2005. Mortgage revenue was down $0.2 million due to slowing origination levels nationally (the Market Composite Index published by the Mortgage Bankers Association as an indicator of mortgage applications was down 19.1% from year ago levels in early January 2006). SBA revenue was down $0.8 million from the third quarter of 2005 as the company re-staffed its SBA function. This decline was somewhat offset by lower SBA commission expense in the quarter. The SBA lending function is now fully staffed and the revenue and loan pipeline appears strong for 2006. The company also received a BOLI death benefit of $0.6 million in the quarter which was largely offset by the recognition of BOLI-funded supplemental retirement agreement expenses of $0.7 million. About Main Street Main Street Banks, Inc., a $2.4 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 nineteen of Georgia's fastest growing communities. Main Street is the largest community banking organization in the Atlanta metropolitan area. On December 15, 2005, Main Street announced that it had entered into a definitive agreement to merge with BB&T Corporation of Winston-Salem, North Carolina in a tax-free exchange of common stock. The transaction is subject to regulatory approval and the approval of Main Street's shareholders and is expected to close in the second quarter of 2006. The foregoing may be deemed to be offering materials of BB&T Corporation in connection with BB&T's proposed acquisition of Main Street Banks Inc., on the terms and subject to the conditions in the Agreement and Plan of Reorganization, dated Dec. 14, 2005, between BB&T and Main Street. This disclosure is being made in connection with Regulation of Takeovers and Security Holder Communications (Release Nos. 33-7760 and 34-42055) adopted by the Securities and Exchange Commission ("SEC").BB&T and Main Street shareholders and other investors are urged to read the joint proxy statement/prospectus that will be included in the registration statement on Form S-4, which BB&T will file with the SEC in connection with the proposed merger because it will contain important information about BB&T, Main Street, the merger, the persons soliciting proxies in the merger and their interests in the merger and related matters. The respective directors and executive officers of BB&T and Main Street and other persons may be deemed to be participants in the solicitation of proxies with respect to the proposed transaction. Information regarding BB&T's directors and executive officers is available in its proxy statement filed with the SEC by BB&T on March 25, 2005, and information regarding Main Street's directors and executive officers is available in its proxy statement filed with the SEC by Main Street on April 22, 2005. Other information regarding the participants in the solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available. The press release does not constitute an offer to sell, or a solicitation of an offer to buy, shares of BB&T common stock, or the solicitation of any proxies from Main Street's shareholders. After it is filed with the SEC, the joint proxy statement/prospectus will be available for free, both on the SEC web site (http://www.sec.gov/) and from BB&T and Main Street as follows: Alan W. Greer, Shareholder Reporting, BB&T Corporation, P.O. Box 1290, Winston-Salem, NC 27102. Telephone: (336) 733-3021. David W. Brooks II, Chief Financial Officer, Main Street Banks, Inc., 3500 Lenox Road, Atlanta, GA 30326. Telephone: (770) 786-3441. In addition to the proposed registration statement and joint proxy statement/prospectus, BB&T and Main Street file annual, quarterly and special reports, proxy statements and other information with the SEC. You may read and copy any reports, statements or other information filed by either company at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 or at the SEC's other public reference rooms in New York and Chicago. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. BB&T and Main Street filings with the SEC are also available to the public from commercial document-retrieval services and on the SEC's web site at http://www.sec.gov/. 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 increase in SBA pipeline and strength of revenues from SBA lending in 2006, the expected overall growth of Main Street in 2006, and the expected annualized loan losses for Main Street in the future. 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 creditworthiness 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 fourth 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 1-800-925-9941. MAIN STREET BANKS, INC. FINANCIAL HIGHLIGHTS (Unaudited) Fourth First Second Quarter Quarter Quarter 2004 2005 2005 RESULTS OF OPERATIONS Net interest income (tax equivalent)$21,612,019 $21,785,822 $23,155,302 Provision for loan losses 2,956,380 2,208,555 4,050,000 Non-interest income 7,541,744 8,086,847 7,938,573 Non-interest expense 15,410,405 15,664,167 17,477,512 Income tax expense 2,907,090 3,642,140 3,585,379 Net income 7,698,582 8,182,758 5,806,166 PERFORMANCE Earnings per share - Basic $0.39 $0.38 $0.27 Earnings per share - Diluted $0.38 $0.38 $0.27 Return on average assets 1.36% 1.40% 0.99% Return on average equity 13.12% 11.66% 8.17% Cash return on tangible equity 23.66% 18.53% 12.94% Efficiency ratio 53.19% 52.75% 56.53% NET INTEREST MARGIN Interest earning assets 6.22% 6.42% 6.80% Cost of funds 2.29% 2.57% 2.77% Net interest spread 3.93% 3.86% 4.03% Net interest margin 4.23% 4.18% 4.42% CAPITAL Cash dividend per share $0.1350 $0.1525 $0.1525 Dividend payout ratio 35.72% 40.66% 57.52% Average equity to average assets 10.34% 12.02% 12.06% Average tangible equity to average tangible assets 6.06% 7.99% 8.07% Tier 1 risk-based capital (1) 12.33% 12.26% 12.29% Total risk-based capital (1) 13.59% 13.51% 13.54% Leverage ratio (1) 10.49% 10.47% 10.51% AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,670,976 1,731,089 1,759,766 Investment securities 293,933 316,742 309,483 Earning assets 2,030,527 2,092,064 2,100,824 Total assets 2,271,783 2,335,055 2,357,624 Deposits 1,687,864 1,709,580 1,722,226 Long-term debt 257,319 250,670 259,626 Shareholders' equity 234,796 280,723 284,355 GROWTH RATES - Period-to-Period Average loan growth, annualized 12.4% 14.6% 6.6% Average deposit growth, annualized 25.9% 5.2% 3.0% End of period loan growth, annualized 10.9% 10.6% 4.6% End of period deposit growth, annualized 19.5% 8.6% -15.8% STOCK PERFORMANCE Market Price: Closing $34.93 $26.45 $25.46 High close $34.93 $35.34 $26.46 Low close $28.55 $26.35 $22.58 Daily average trading volume 45,216 69,525 59,756 Price to trailing twelve months earnings 22.6 17.2 17.8 Book value per share at end of period $13.14 $13.16 $13.42 Price to book value 2.66 2.01 1.90 ASSET QUALITY Total non-performing loans $12,254,820 $19,036,696 $11,543,140 Loans 90 days past due and still accruing $5,657,986 $4,222,658 $2,367,863 Non-performing loans as a percentage of loans 0.72% 1.09% 0.65% Non-performing assets as a percentage of loans plus OREO 0.85% 1.21% 0.88% ALLL to non-performing loans (multiple) 2.06 1.31 2.19 ALLL plus equity to non-performing assets (multiple) 21.09 14.52 20.00 Annualized Net charge-offs to loans 0.48% 0.56% 0.86% ALLL as a percentage of loans, at end of period 1.48% 1.43% 1.43% OTHER INFORMATION Average loans as percentage of average deposits 99.00% 101.26% 102.18% Non-interest income ratio 26.03% 27.23% 25.68% End of period shares outstanding 21,229,545 21,315,955 21,415,607 Weighted average shares outstanding Basic 19,756,947 21,277,737 21,375,087 Diluted 20,372,205 21,818,118 21,899,426 Full-time equivalent employees 518 517 508 (1) Capital ratios for the current period are estimated MAIN STREET BANKS, INC. FINANCIAL HIGHLIGHTS (Unaudited) Third Fourth Quarter Quarter 2005 2005 RESULTS OF OPERATIONS Net interest income (tax equivalent) $22,924,516 $23,968,707 Provision for loan losses 790,000 1,170,000 Non-interest income 7,337,635 4,803,016 Non-interest expense 16,882,905 17,860,745 Income tax expense 3,865,415 2,707,088 Net income 8,538,129 6,867,840 PERFORMANCE Earnings per share - Basic $0.40 $0.32 Earnings per share - Diluted $0.39 $0.32 Return on average assets 1.42% 1.14% Return on average equity 11.79% 9.34% Cash return on tangible equity 18.40% 14.48% Efficiency ratio 56.13% 62.44% NET INTEREST MARGIN Interest earning assets 6.85% 7.19% Cost of funds 3.02% 3.23% Net interest spread 3.83% 3.95% Net interest margin 4.26% 4.43% CAPITAL Cash dividend per share $0.1525 $0.1525 Dividend payout ratio 39.24% 48.29% Average equity to average assets 12.08% 12.18% Average tangible equity to average tangible assets 8.17% 8.31% Tier 1 risk-based capital (1) 12.02% 12.54% Total risk-based capital (1) 13.26% 13.79% Leverage ratio (1) 10.58% 10.69% AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,767,745 1,788,900 Investment securities 333,343 309,843 Earning assets 2,136,601 2,145,532 Total assets 2,397,790 2,414,072 Deposits 1,704,822 1,750,705 Long-term debt 253,000 249,118 Shareholders' equity 289,697 294,115 GROWTH RATES - Period-to-Period Average loan growth, annualized 1.8% 4.7% Average deposit growth, annualized -4.0% 10.7% End of period loan growth, annualized 6.4% 2.3% End of period deposit growth, annualized 21.8% -8.6% STOCK PERFORMANCE Market Price: Closing $26.80 $27.23 High close $28.48 $29.01 Low close $25.27 $25.00 Daily average trading volume 43,580 43,767 Price to trailing twelve months earnings 19.1 20.3 Book value per share at end of period $13.60 $13.73 Price to book value 1.97 1.98 ASSET QUALITY Total non-performing loans $11,064,707 $13,394,279 Loans 90 days past due and still accruing $3,512,535 $7,885,282 Non-performing loans as a percentage of loans 0.62% 0.74% Non-performing assets as a percentage of loans plus OREO 0.94% 0.98% ALLL to non-performing loans (multiple) 2.27 1.88 ALLL plus equity to non-performing assets (multiple) 18.69 18.11 Annualized Net charge-offs to loans 0.21% 0.23% ALLL as a percentage of loans, at end of period 1.40% 1.40% OTHER INFORMATION Average loans as percentage of average deposits 103.69% 102.18% Non-interest income ratio 24.40% 16.79% End of period shares outstanding 21,465,563 21,502,227 Weighted average shares outstanding Basic 21,431,761 21,484,257 Diluted 21,970,403 21,748,191 Full-time equivalent employees 528 549 (1) Capital ratios for the current period are estimated MAIN STREET BANKS, INC. FINANCIAL HIGHLIGHTS (Unaudited) Twelve months ended December 31, 2005 2004 RESULTS OF OPERATIONS Net interest income (tax equivalent) $91,834,347 $83,194,172 Provision for loan losses 8,218,555 7,429,880 Non-interest income 28,166,071 30,622,032 Non-interest expense 67,885,329 62,617,731 Income tax expense 13,800,022 12,033,483 Net income 29,394,893 30,950,260 PERFORMANCE Earnings per share - Basic $1.37 $1.59 Earnings per share - Diluted $1.35 $1.54 Return on average assets 1.24% 1.45% Return on average equity 10.23% 14.15% Cash return on tangible equity 16.07% 26.87% Efficiency ratio 56.90% 55.40% NET INTEREST MARGIN Interest earning assets 6.80% 6.32% Cost of funds 2.90% 2.12% Net interest spread 3.90% 4.20% Net interest margin 4.33% 4.38% CAPITAL Cash dividend per share $0.6100 $0.5400 Dividend payout ratio 45.04% 35.03% Average equity to average assets 12.09% 10.25% Average tangible equity to average tangible assets 8.14% 5.73% Tier 1 risk-based capital (1) 12.54% 12.33% Total risk-based capital (1) 13.79% 13.59% Leverage ratio (1) 10.69% 10.49% AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,762,050 1,578,622 Investment securities 317,377 281,573 Earning assets 2,118,520 1,901,159 Total assets 2,376,411 2,133,741 Deposits 1,721,900 1,571,723 Long-term debt 253,099 216,140 Shareholders' equity 287,266 218,680 GROWTH RATES - Period-to-Period Average loan growth, annualized 11.6% 10.6% Average deposit growth, annualized 9.6% 9.0% End of period loan growth, annualized 6.1% 17.7% End of period deposit growth, annualized 1.2% 17.3% STOCK PERFORMANCE Market Price: Closing $27.23 $34.93 High close $35.34 $34.93 Low close $22.58 $24.90 Daily average trading volume 54,015 33,186 Price to trailing twelve months earnings 20.3 22.7 Book value per share at end of period $13.73 $13.14 Price to book value 1.98 2.66 ASSET QUALITY Total non-performing loans $13,394,279 $12,254,820 Loans 90 days past due and still accruing 7,885,282 5,657,986 Non-performing loans as a percentage of loans 0.74% 0.72% Non-performing assets as a percentage of loans plus OREO 0.98% 0.85% ALLL to non-performing loans (multiple) 1.88 2.06 ALLL plus equity to non-performing assets (multiple) 18.11 22.22 Annualized Net charge-offs to loans 0.51% 0.21% ALLL as a percentage of loans, at end of period 1.40% 1.48% OTHER INFORMATION Average loans as percentage of average deposits 102.33% 100.44% Non-interest income ratio 23.61% 27.09% End of period shares outstanding 21,502,227 21,229,545 Weighted average shares outstanding Basic 21,392,885 19,455,084 Diluted 21,701,905 20,076,687 Full-time equivalent employees 549 518 (1) Capital ratios for the current period are estimated MAIN STREET BANKS, INC. CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited) Fourth First Second Quarter Quarter Quarter 2004 2005 2005 ASSETS Cash and due from banks $40,385,275 $38,413,540 $38,036,348 Interest-bearing deposits in banks 1,427,186 1,659,848 (256,503) Federal funds sold and securities purchased under agreements to resell 34,911,021 11,609,722 1,283,154 Investment securities held to maturity: State and political subdivisions 11,733,821 11,556,504 11,329,939 Total investment securities held to maturity 11,733,821 11,556,504 11,329,939 Investment securities available for sale: U.S Treasury securities 15,261,042 3,027,511 - U.S. Government agencies and corporations 97,424,247 121,172,362 123,859,984 Mortgage-backed securities 143,355,713 155,869,947 149,647,693 State and Political subdivisions 26,157,871 25,115,286 24,644,992 Total investment securities available for sale 282,198,873 305,185,107 298,152,668 Total investment securities 293,932,694 316,741,611 309,482,607 Other investments 21,866,256 26,130,642 25,327,171 Mortgage loans held for sale 7,413,513 4,833,054 5,221,734 Loans: Commercial and industrial 128,991,523 130,172,235 132,200,777 Real estate - construction 391,920,774 423,305,704 445,263,060 Real estate mortgage 281,462,005 292,858,471 294,195,800 Real estate commercial 830,254,990 849,083,205 850,921,595 Consumer and other 41,144,935 38,727,904 40,522,214 Unearned income and deferred fees (2,798,009) (3,058,779) (3,337,453) Total loans, net of unearned income 1,670,976,218 1,731,088,740 1,759,765,993 Allowance for loan losses (24,559,019) (25,278,951) (24,995,678) Loans, net 1,646,417,199 1,705,809,789 1,734,770,315 Premises and equipment, net 52,672,981 53,664,240 53,253,079 Other real estate 1,868,635 2,254,889 2,620,025 Accrued interest receivable 9,091,675 9,721,005 9,761,184 Goodwill and other intangible assets 103,299,382 102,295,536 102,240,940 Bank owned life insurance 41,722,058 44,896,055 57,846,281 Other assets 16,774,679 17,025,196 18,037,492 Total assets $2,271,782,554 $2,335,055,127 $2,357,623,827 LIABILITIES Deposits: Noninterest-bearing demand $245,681,543 $243,495,320 $255,525,455 Interest-bearing demand 198,460,058 169,481,955 168,479,244 Money market 414,855,999 477,088,537 473,397,861 Savings 48,753,889 46,219,821 45,192,412 Time deposits 780,112,817 773,294,733 779,630,663 Total deposits 1,687,864,307 1,709,580,366 1,722,225,635 Accrued interest payable 3,678,457 3,873,319 4,305,048 Federal Home Loan Bank advances 205,771,676 199,122,844 208,078,853 Federal funds purchased and securities sold under repurchase agreements 80,364,169 82,413,785 83,251,628 Subordinated debt 51,547,000 51,547,000 51,547,000 Other liabilities 7,761,366 7,795,279 3,860,957 Total liabilities 2,036,986,975 2,054,332,593 2,073,269,121 SHAREHOLDERS' EQUITY Common stock-no par value per share 116,719,468 161,945,001 162,787,929 Retained earnings 126,192,533 128,537,617 133,235,732 Accumulated other comprehensive income 673,167 (970,495) (2,879,366) Treasury stock (8,789,589) (8,789,589) (8,789,589) Total shareholders' equity 234,795,579 280,722,534 284,354,706 Total liabilities and shareholders' equity $2,271,782,554 $2,335,055,127 $2,357,623,827 MAIN STREET BANKS, INC. CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited) Third Fourth Quarter Quarter 2005 2005 ASSETS Cash and due from banks $39,319,511 $44,909,408 Interest-bearing deposits in banks 714,597 674,539 Federal funds sold and securities purchased under agreements to resell 799,271 13,878,761 Investment securities held to maturity: State and political subdivisions 14,153,617 9,996,851 Total investment securities held to maturity 14,153,617 9,996,851 Investment securities available for sale: U.S Treasury securities - - U.S. Government agencies and corporations 140,289,099 126,920,967 Mortgage-backed securities 154,442,218 148,906,106 State and Political subdivisions 24,457,705 24,019,180 Total investment securities available for sale 319,189,022 299,846,253 Total investment securities 333,342,639 309,843,104 Other investments 27,448,453 26,824,863 Mortgage loans held for sale 6,550,562 5,410,596 Loans: Commercial and industrial 127,320,807 124,557,183 Real estate - construction 451,484,586 455,015,468 Real estate mortgage 287,971,894 285,380,322 Real estate commercial 866,431,816 888,885,716 Consumer and other 37,887,196 38,472,888 Unearned income and deferred fees (3,350,978) (3,411,326) Total loans, net of unearned income 1,767,745,321 1,788,900,251 Allowance for loan losses (25,265,757) (25,038,639) Loans, net 1,742,479,564 1,763,861,612 Premises and equipment, net 53,259,729 52,667,185 Other real estate 6,222,444 5,716,336 Accrued interest receivable 10,504,398 10,736,408 Goodwill and other intangible assets 102,187,089 102,059,483 Bank owned life insurance 58,526,165 59,651,852 Other assets 16,435,850 17,837,402 Total assets $2,397,790,272 $2,414,071,549 LIABILITIES Deposits: Noninterest-bearing demand $250,462,090 $256,324,466 Interest-bearing demand 161,163,084 194,857,284 Money market 452,612,826 442,972,793 Savings 43,566,716 44,841,420 Time deposits 797,016,812 811,708,985 Total deposits 1,704,821,528 1,750,704,948 Accrued interest payable 4,495,683 5,513,895 Federal Home Loan Bank advances 201,452,946 197,570,625 Federal funds purchased and securities sold under repurchase agreements 139,394,921 105,562,731 Subordinated debt 51,547,000 51,547,000 Other liabilities 6,381,594 9,057,219 Total liabilities 2,108,093,672 2,119,956,418 SHAREHOLDERS' EQUITY Common stock-no par value per share 163,231,281 163,923,116 Retained earnings 137,974,536 143,588,433 Accumulated other comprehensive income (2,719,628) (4,606,829) Treasury stock (8,789,589) (8,789,589) Total shareholders' equity 289,696,600 294,115,131 Total liabilities and shareholders' equity $2,397,790,272 $2,414,071,549 MAIN STREET BANKS, INC. CONSOLIDATED AVERAGE BALANCE SHEET (Unaudited) Twelve months ended December 31, 2005 2004 ASSETS Cash and due from banks $40,185,169 $38,506,380 Interest-bearing deposits in banks 659,926 447,627 Federal funds sold and securities purchased under agreements to resell 6,917,789 12,867,486 Investment securities held to maturity: State and political subdivisions 11,761,514 11,730,116 Total investment securities held to maturity 11,761,514 11,730,116 Investment securities available for sale: U.S Treasury securities 746,510 12,446,913 U.S. Government agencies and corporations 128,109,856 90,375,771 Mortgage-backed securities 152,203,510 138,578,992 State and Political subdivisions 24,556,009 28,441,021 Total investment securities available for sale 305,615,885 269,842,697 Total investment securities 317,377,399 281,572,813 Other investments 26,007,372 21,169,539 Mortgage loans held for sale 5,508,436 6,479,814 Loans: Commercial and industrial 127,213,209 124,932,747 Real estate - construction 443,875,224 348,230,910 Real estate mortgage 290,075,299 278,950,858 Real estate commercial 863,946,758 786,390,666 Consumer and other 40,229,824 42,435,078 Unearned income and deferred fees (3,290,767) (2,318,481) Total loans, net of unearned income 1,762,049,547 1,578,621,778 Allowance for loan losses (25,144,429) (22,974,340) Loans, net 1,736,905,118 1,555,647,438 Premises and equipment, net 53,208,459 48,235,152 Other real estate 4,218,438 2,296,443 Accrued interest receivable 10,184,417 8,413,813 Goodwill and other intangible assets 102,195,092 102,236,584 Bank owned life insurance 55,279,545 40,582,967 Other assets 17,763,849 15,285,106 Total assets $2,376,411,009 $2,133,741,162 LIABILITIES Deposits: Noninterest-bearing demand $251,485,152 $238,922,748 Interest-bearing demand 173,531,126 169,883,644 Money market 461,400,139 364,450,959 Savings 44,947,512 49,035,468 Time deposits 790,536,136 749,429,953 Total deposits 1,721,900,065 1,571,722,772 Accrued interest payable 4,551,341 3,296,143 Federal Home Loan Bank advances 201,551,781 164,973,073 Federal funds purchased and securities sold under repurchase agreements 102,819,843 117,731,224 Subordinated debt 51,547,000 51,166,590 Other liabilities 6,775,263 6,171,166 Total liabilities 2,089,145,293 1,915,060,968 SHAREHOLDERS' EQUITY Common stock-no par value per share 162,977,962 108,531,170 Retained earnings 135,881,181 117,570,598 Accumulated other comprehensive income (2,803,838) 1,367,903 Treasury stock (8,789,589) (8,789,477) Total shareholders' equity 287,265,716 218,680,194 Total liabilities and shareholders' equity $2,376,411,009 $2,133,741,162 MAIN STREET BANKS, INC. CONSOLIDATED END OF PERIOD BALANCE SHEET (Unaudited) Fourth First Second Quarter Quarter Quarter 2004 2005 2005 ASSETS Cash and due from banks $35,090,563 $37,016,874 $35,632,553 Interest-bearing deposits in banks 1,880,902 1,186,211 480,264 Federal funds sold and securities purchased under agreements to resell 34,250,000 200,000 - Investment securities held to maturity: State and political subdivisions 11,715,948 11,510,170 13,110,149 Total investment securities held to maturity 11,715,948 11,510,170 13,110,149 Investment securities available for sale: U.S Treasury securities 15,155,469 - - U.S. Government agencies and corporations 113,335,222 113,565,637 130,405,877 Mortgage-backed securities 161,522,584 149,937,275 148,882,044 State and Political subdivisions 25,507,497 24,654,818 24,743,140 Total investment securities available for sale 315,520,771 288,157,730 304,031,061 Total investment securities 327,236,719 299,667,900 317,141,210 Other investments 23,781,977 24,726,119 27,847,954 Mortgage loans held for sale 4,562,962 5,915,770 8,633,024 Loans: Commercial and industrial 126,515,437 129,883,107 125,803,180 Real estate - construction 401,815,256 441,950,621 447,201,398 Real estate mortgage 288,703,328 292,668,159 292,857,591 Real estate commercial 846,945,431 839,695,408 861,872,172 Consumer and other 38,035,210 42,463,091 39,423,520 Unearned income and deferred fees (2,979,090) (3,071,179) (3,376,982) Total loans, net of unearned income 1,699,035,573 1,743,589,208 1,763,780,880 Allowance for loan losses (25,191,175) (24,983,997) (25,242,328) Loans, net 1,673,844,398 1,718,605,211 1,738,538,552 Premises and equipment, net 53,469,516 53,248,494 53,101,387 Other real estate 2,141,040 1,888,882 4,094,710 Accrued interest receivable 9,762,826 9,577,443 10,012,138 Goodwill and other intangible assets 102,169,572 102,294,796 102,234,740 Bank owned life insurance 42,056,525 57,586,480 58,271,098 Other assets 16,194,895 16,324,474 15,435,181 Total assets $2,326,441,895 $2,328,238,654 $2,371,422,811 LIABILITIES Deposits: Noninterest-bearing demand $230,578,226 $254,241,688 $245,913,330 Interest-bearing demand 200,534,606 167,756,729 167,512,066 Money market 451,933,070 492,647,663 459,498,228 Savings 46,998,483 43,846,151 43,765,494 Time deposits 780,165,528 787,946,139 761,161,025 Total deposits 1,710,209,913 1,746,438,371 1,677,850,143 Accrued interest payable 3,955,183 4,365,986 4,714,122 Federal Home Loan Bank advances 201,070,198 185,936,423 203,302,648 Federal funds purchased and securities sold under repurchase agreements 73,367,456 56,563,910 135,722,681 Subordinated debt 51,547,000 51,547,000 51,547,000 Other liabilities 7,329,069 2,897,625 10,803,254 Total liabilities 2,047,478,819 2,047,749,315 2,083,939,848 SHAREHOLDERS' EQUITY Common stock-no par value per share 161,516,536 162,418,990 163,109,671 Retained earnings 126,449,247 131,273,960 135,005,706 Accumulated other comprehensive income (213,118) (4,414,022) (1,842,825) Treasury stock (8,789,589) (8,789,589) (8,789,589) Total shareholders' equity 278,963,076 280,489,339 287,482,963 Total liabilities and shareholders' equity $2,326,441,895 $2,328,238,654 $2,371,422,811 MAIN STREET BANKS, INC. CONSOLIDATED END OF PERIOD BALANCE SHEET (Unaudited) Third Fourth Quarter Quarter 2005 2005 ASSETS Cash and due from banks $50,441,361 $45,579,416 Interest-bearing deposits in banks 648,989 470,450 Federal funds sold and securities purchased under agreements to resell 33,250,000 12,400,700 Investment securities held to maturity: State and political subdivisions 15,110,124 8,190,102 Total investment securities held to maturity 15,110,124 8,190,102 Investment securities available for sale: U.S Treasury securities - - U.S. Government agencies and corporations 129,225,237 114,247,947 Mortgage-backed securities 158,143,133 91,025,335 State and Political subdivisions 24,409,116 23,409,985 Total investment securities available for sale 311,777,486 228,683,267 Total investment securities 326,887,610 236,873,369 Other investments 26,695,169 23,663,950 Mortgage loans held for sale 7,118,578 8,071,615 Loans: Commercial and industrial 128,192,735 124,124,306 Real estate - construction 459,581,570 454,805,585 Real estate mortgage 286,918,491 291,156,184 Real estate commercial 881,887,107 896,473,387 Consumer and other 39,125,308 39,311,727 Unearned income and deferred fees (3,436,778) (3,359,182) Total loans, net of unearned income 1,792,268,433 1,802,512,007 Allowance for loan losses (25,118,586) (25,238,773) Loans, net 1,767,149,847 1,777,273,234 Premises and equipment, net 52,627,336 52,392,011 Other real estate 5,897,650 4,302,162 Accrued interest receivable 10,149,747 10,759,620 Goodwill and other intangible assets 102,107,348 101,979,907 Bank owned life insurance 58,976,076 60,284,007 Other assets 31,617,840 16,465,896 Total assets $2,473,567,551 $2,350,516,337 LIABILITIES Deposits: Noninterest-bearing demand $256,516,602 $251,966,698 Interest-bearing demand 213,197,572 175,777,841 Money market 441,399,397 430,959,142 Savings 41,349,073 43,702,478 Time deposits 817,497,176 829,076,676 Total deposits 1,769,959,820 1,731,482,835 Accrued interest payable 5,152,688 6,082,107 Federal Home Loan Bank advances 198,168,873 188,035,099 Federal funds purchased and securities sold under repurchase agreements 147,189,088 70,883,326 Subordinated debt 51,547,000 51,547,000 Other liabilities 9,699,590 7,237,514 Total liabilities 2,181,717,059 2,055,267,881 SHAREHOLDERS' EQUITY Common stock-no par value per share 163,656,862 164,093,773 Retained earnings 140,394,815 144,053,057 Accumulated other comprehensive income (3,411,596) (4,108,785) Treasury stock (8,789,589) (8,789,589) Total shareholders' equity 291,850,492 295,248,456 Total liabilities and shareholders' equity $2,473,567,551 $2,350,516,337 MAIN STREET BANKS, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) Fourth First Second Quarter Quarter Quarter 2004 2005 2005 NET INTEREST INCOME Loans, including fees $28,519,255 $29,590,608 $32,116,060 Interest on investment securities: Taxable 2,518,397 2,761,476 2,748,206 Non-taxable 351,946 339,801 339,353 Federal funds sold and resale agreements 147,716 66,071 8,697 Interest bearing deposits in banks 7,495 12,052 12,168 Interest on other investments 122,662 224,575 236,682 Total interest income 31,667,471 32,994,583 35,461,166 INTEREST EXPENSE Interest-bearing demand 256,236 258,015 311,534 Money market 2,249,205 3,242,650 3,331,506 Savings 64,185 62,247 66,256 Time deposits 5,183,179 5,236,410 5,788,591 Federal funds purchased and repurchase agreements 531,927 657,224 701,159 Federal Home Loan Bank advances 1,227,700 1,178,544 1,455,212 Interest expense on subordinated debentures 724,326 748,720 826,424 Total interest expense 10,236,758 11,383,810 12,480,682 Net interest income 21,430,713 21,610,773 22,980,484 Provision for loan losses 2,956,380 2,208,555 4,050,000 Net interest income after provision for loan losses 18,474,333 19,402,218 18,930,484 NON-INTEREST INCOME Service charges on deposit accounts 2,047,804 1,896,864 2,152,332 Other customer service fees 375,445 340,037 362,387 Mortgage banking revenue 721,363 692,322 680,997 Investment brokerage revenue 194,241 400,504 148,419 Insurance agency revenue 2,393,185 3,173,741 2,349,254 Income from SBA lending 946,164 829,381 1,538,549 Other income 863,542 753,998 706,635 Total non-interest income 7,541,744 8,086,847 7,938,573 NON-INTEREST EXPENSE Salaries and other compensation 8,208,721 7,933,171 8,578,707 Employee benefits 1,195,115 1,620,366 1,298,090 Net occupancy and equipment expense 2,079,450 2,051,501 2,114,375 Data processing fees 554,645 510,076 495,055 Professional services 506,351 468,973 828,967 Communications and supplies 893,426 962,022 987,939 Amortization of intangible assets 122,591 128,750 130,764 Other expense 1,850,106 1,989,308 3,043,615 Total non-interest expense 15,410,405 15,664,167 17,477,512 Income before income taxes 10,605,672 11,824,898 9,391,545 Income tax expense 2,907,090 3,642,140 3,585,379 Net income $7,698,582 $8,182,758 $5,806,166 MAIN STREET BANKS, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) Third Fourth Quarter Quarter 2005 2005 NET INTEREST INCOME Loans, including fees $33,102,250 $35,210,339 Interest on investment securities: Taxable 2,995,662 2,871,169 Non-taxable 360,480 322,333 Federal funds sold and resale agreements 3,813 143,450 Interest bearing deposits in banks 18,235 25,766 Interest on other investments 297,905 304,687 Total interest income 36,778,345 38,877,744 INTEREST EXPENSE Interest-bearing demand 317,575 499,527 Money market 3,258,419 3,502,770 Savings 68,930 113,458 Time deposits 6,648,942 7,437,440 Federal funds purchased and repurchase agreements 1,289,450 1,127,519 Federal Home Loan Bank advances 1,568,347 1,436,637 Interest expense on subordinated debentures 887,868 957,736 Total interest expense 14,039,531 15,075,087 Net interest income 22,738,814 23,802,657 Provision for loan losses 790,000 1,170,000 Net interest income after provision for loan losses 21,948,814 22,632,657 NON-INTEREST INCOME Service charges on deposit accounts 2,228,637 2,226,849 Other customer service fees 404,941 389,306 Mortgage banking revenue 705,627 464,445 Investment brokerage revenue 67,788 138,994 Insurance agency revenue 2,628,244 2,475,522 Income from SBA lending 1,038,836 215,173 Other income 263,562 (1,107,273) Total non-interest income 7,337,635 4,803,016 NON-INTEREST EXPENSE Salaries and other compensation 8,856,397 8,702,170 Employee benefits 1,393,958 1,427,377 Net occupancy and equipment expense 2,089,117 2,161,161 Data processing fees 545,572 513,870 Professional services 689,991 846,997 Communications and supplies 958,388 996,002 Amortization of intangible assets 130,764 130,859 Other expense 2,218,718 3,082,309 Total non-interest expense 16,882,905 17,860,745 Income before income taxes 12,403,544 9,574,928 Income tax expense 3,865,415 2,707,088 Net income $8,538,129 $6,867,840 MAIN STREET BANKS, INC. CONSOLIDATED STATEMENT OF INCOME (Unaudited) Twelve months ended December 31, 2005 2004 NET INTEREST INCOME Loans, including fees $130,019,257 $105,584,050 Interest on investment securities: Taxable 11,376,513 9,555,946 Non-taxable 1,361,967 1,523,532 Federal funds sold and resale agreements 222,031 183,977 Interest bearing deposits in banks 68,221 22,987 Interest on other investments 1,063,849 807,060 Total interest income 144,111,838 117,677,552 INTEREST EXPENSE Interest-bearing demand 1,386,652 882,770 Money market 13,335,344 6,658,836 Savings 310,891 288,433 Time deposits 25,111,383 19,058,311 Federal funds purchased and repurchase agreements 3,775,352 2,234,348 Federal Home Loan Bank advances 5,638,740 3,634,229 Interest expense on subordinated debentures 3,420,748 2,511,303 Total interest expense 52,979,110 35,268,230 Net interest income 91,132,728 82,409,322 Provision for loan losses 8,218,555 7,429,880 Net interest income after provision for loan losses 82,914,173 74,979,442 NON-INTEREST INCOME Service charges on deposit accounts 8,504,682 8,116,740 Other customer service fees 1,496,671 1,361,541 Mortgage banking revenue 2,543,391 3,273,929 Investment brokerage revenue 755,705 828,130 Insurance agency revenue 10,626,761 10,049,740 Income from SBA lending 3,621,939 3,070,338 Other income 616,922 3,921,614 Total non-interest income 28,166,071 30,622,032 NON-INTEREST EXPENSE Salaries and other compensation 34,070,445 31,938,154 Employee benefits 5,739,791 5,525,551 Net occupancy and equipment expense 8,416,154 8,238,454 Data processing fees 2,064,573 1,661,013 Professional services 2,834,928 2,243,712 Communications and supplies 3,904,351 3,999,148 Amortization of intangible assets 521,137 507,584 Other expense 10,333,950 8,504,115 Total non-interest expense 67,885,329 62,617,731 Income before income taxes 43,194,915 42,983,743 Income tax expense 13,800,022 12,033,483 Net income $29,394,893 $30,950,260 MAIN STREET BANKS, INC. SUMMARY OF INTEREST RATES (TAX-EQUIVALENT) (Unaudited) Fourth First Second Quarter Quarter Quarter 2004 2005 2005 EARNING ASSETS Total average interest earning assets (in thousands) $2,030,527 $2,092,064 $2,100,824 Loans 6.76% 6.92% 7.30% Investment securities 4.09% 4.15% 4.19% Federal funds sold 1.68% 2.31% 2.72% Mortgage loans held for sale 4.65% 5.94% 6.08% FHLB stock & other 1.69% 3.28% 3.93% Total interest earning assets 6.22% 6.42% 6.80% INTEREST-BEARING LIABILITIES Total average interest-bearing liabilities (in thousands) $1,779,866 $1,799,169 $1,809,578 Interest-bearing demand 0.51% 0.62% 0.74% Money market 2.16% 2.76% 2.82% Savings 0.52% 0.55% 0.59% Time deposits 2.64% 2.75% 2.98% Federal funds purchased and repurchase agreements 2.63% 3.23% 3.38% Federal Home Loan Bank advances 2.37% 2.40% 2.81% Subordinated debentures 5.59% 5.89% 6.43% Rate on interest bearing liabilities 2.29% 2.57% 2.77% NET INTEREST SPREAD Interest earning assets less interest- bearing liabilities (in thousands) $250,661 $292,895 $291,246 Yield on earning assets less cost of interest-bearing liabilities 3.93% 3.86% 4.03% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.23% 4.18% 4.42% MAIN STREET BANKS, INC. SUMMARY OF INTEREST RATES (TAX-EQUIVALENT) (Unaudited) Third Fourth Quarter Quarter 2005 2005 EARNING ASSETS Total average interest earning assets (in thousands) $2,136,601 $2,145,532 Loans 7.41% 7.90% Investment securities 4.17% 4.09% Federal funds sold 1.89% 4.10% Mortgage loans held for sale 5.56% 4.85% FHLB stock & other 3.90% 4.77% Total interest earning assets 6.85% 7.19% INTEREST-BEARING LIABILITIES Total average interest-bearing liabilities (in thousands) $1,846,754 $1,849,061 Interest-bearing demand 0.78% 1.02% Money market 2.86% 3.14% Savings 0.63% 1.00% Time deposits 3.31% 3.64% Federal funds purchased and repurchase agreements 3.67% 4.24% Federal Home Loan Bank advances 3.09% 2.88% Subordinated debentures 6.83% 7.37% Rate on interest bearing liabilities 3.02% 3.23% NET INTEREST SPREAD Interest earning assets less interest-bearing liabilities (in thousands) $289,847 $296,471 Yield on earning assets less cost of interest-bearing liabilities 3.83% 3.95% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.26% 4.43% MAIN STREET BANKS, INC. SUMMARY OF INTEREST RATES (TAX-EQUIVALENT) (Unaudited) Twelve months ended December 31, 2005 2004 EARNING ASSETS Total average interest earning assets (in thousands) $2,118,520 $1,901,159 Loans 7.47% 6.67% Investment securities 4.01% 4.21% Federal funds sold 3.21% 1.40% Mortgage loans held for sale 5.59% 4.81% FHLB stock & other 4.25% 3.88% Total interest earning assets 6.80% 6.32% INTEREST-BEARING LIABILITIES Total average interest-bearing liabilities (in thousands) $1,826,334 $1,666,671 Interest-bearing demand 0.80% 0.52% Money market 2.89% 1.83% Savings 0.69% 0.59% Time deposits 3.18% 2.54% Federal funds purchased and repurchase agreements 3.67% 1.89% Federal Home Loan Bank advances 2.80% 2.20% Subordinated debentures 6.64% 4.91% Rate on interest bearing liabilities 2.90% 2.12% NET INTEREST SPREAD Interest earning assets less interest-bearing liabilities (in thousands) $292,187 $234,488 Yield on earning assets less cost of interest-bearing liabilities 3.90% 4.20% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.33% 4.38% MAIN STREET BANKS, INC. LOAN QUALITY (Unaudited) Fourth First Second Quarter Quarter Quarter 2004 2005 2005 RESERVE FOR POSSIBLE LOAN LOSSES Reserve for loan losses at beginning of period $24,256,034 $25,191,175 $24,983,997 Reserves acquired through acquisition - - - Provision for loan losses 2,956,380 2,208,555 4,050,000 Loans charged-off during the period (2,289,524) (3,553,825) (4,188,669) Recoveries on loans previously charged-off 268,285 1,138,092 397,000 Net loans (charged-off) recovered during period (2,021,239) (2,415,733) (3,791,669) Reserve for loan losses at end of period $25,191,175 $24,983,997 $25,242,328 Net charge-offs to average loans, annualized 0.48% 0.56% 0.86% Reserve for loan losses as a percentage of loans, at end of period 1.48% 1.43% 1.43% NON-PERFORMING ASSETS Loans accounted for on a non- accrual basis $12,254,820 $19,036,696 $11,543,140 Restructured loans - - - Total non-performing loans 12,254,820 19,036,696 11,543,140 Foreclosed assets 2,165,914 2,006,494 4,094,710 Total non-performing assets $14,420,734 $21,043,190 $15,637,850 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 0.85% 1.21% 0.88% Non-performing assets as a percentage of total assets, at end of period 0.62% 0.90% 0.66% Reserve for loan losses as a percentage of non-performing loans, at end of period 205.56% 131.24% 218.68% Loans 90 days past due and still accruing $5,657,986 $4,222,658 $2,367,863 Loans 90 days past due and still accruing as a percentage of loans, at end of period 0.33% 0.24% 0.13% MAIN STREET BANKS, INC. LOAN QUALITY (Unaudited) Third Fourth Quarter Quarter 2005 2005 RESERVE FOR POSSIBLE LOAN LOSSES Reserve for loan losses at beginning of period $25,242,328 $25,118,586 Reserves acquired through acquisition - - Provision for loan losses 790,000 1,170,000 Loans charged-off during the period (1,137,276) (1,159,386) Recoveries on loans previously charged-off 223,534 109,573 Net loans (charged-off) recovered during period (913,742) (1,049,813) Reserve for loan losses at end of period $25,118,586 $25,238,773 Net charge-offs to average loans, annualized 0.21% 0.23% Reserve for loan losses as a percentage of loans, at end of period 1.40% 1.40% NON-PERFORMING ASSETS Loans accounted for on a non-accrual basis $11,064,707 $13,394,279 Restructured loans - - Total non-performing loans 11,064,707 13,394,279 Foreclosed assets 5,897,650 4,302,162 Total non-performing assets $16,962,357 $17,696,441 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 0.94% 0.98% Non-performing assets as a percentage of total assets, at end of period 0.69% 0.75% Reserve for loan losses as a percentage of non-performing loans, at end of period 227.02% 188.43% Loans 90 days past due and still accruing $3,512,535 $7,885,282 Loans 90 days past due and still accruing as a percentage of loans, at end of period 0.20% 0.44% MAIN STREET BANKS, INC. LOAN QUALITY (Unaudited) Twelve months ended December 31, 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 8,218,555 7,429,880 Loans charged-off during the period (10,039,156) (4,700,457) Recoveries on loans previously charged-off 1,868,199 1,309,765 Net loans (charged-off) recovered during period (8,170,957) (3,390,692) Reserve for loan losses at end of period $25,238,773 $25,191,175 Net charge-offs to average loans, annualized 0.51% 0.21% Reserve for loan losses as a percentage of loans, at end of period 1.40% 1.48% NON-PERFORMING ASSETS Loans accounted for on a non-accrual basis $13,394,279 $12,254,820 Restructured loans - - Total non-performing loans 13,394,279 12,254,820 Foreclosed assets 4,302,162 2,165,914 Total non-performing assets $17,696,441 $14,420,734 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 0.98% 0.85% Non-performing assets as a percentage of total assets, at end of period 0.75% 0.62% Reserve for loan losses as a percentage of non-performing loans, at end of period 188.43% 205.56% Loans 90 days past due and still accruing $7,885,282 $5,657,986 Loans 90 days past due and still accruing as a percentage of loans, at end of period 0.44% 0.33% First Call Analyst: FCMN Contact: DATASOURCE: Main Street Banks, Inc. CONTACT: Samuel B. Hay III, President and CEO, +1-770-786-3441, or David W. Brooks II, Executive Vice President and CFO, +1-770-786-3441, both of Main Street Banks Web site: http://www.mainstreetbank.com/

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