MSBK Main Street Banks (MM)

Main Street Banks Reports 17 Percent Increase in Net Income ATLANTA, Oct. 19 /PRNewswire-FirstCall/ -- Main Street Banks, Inc. (NASDAQ:MSBK) reported net income of $8.3 million for the three months ended September 30, 2004 compared to $7.1 million in the third quarter of 2003, an increase of 16.9 percent. Diluted earnings per share for the third quarter of 2004 were $0.41 versus $0.36 for the third quarter of 2003, a 13.9 percent increase. Net income for the nine months ended September 30, 2004 was $23.3 million, a 20.7 percent increase over the $19.3 million reported in the same period of 2003. Diluted earnings per share for the nine months ended September 30, 2004 were $1.16 versus $1.06 per share for the nine months ended September 30, 2003, a 9.4 percent increase. Return on average assets was 1.52 percent for the third quarter of 2004 and return on average shareholder's equity was 15.2 percent. For the first nine months of 2004, return on average assets was 1.51 percent and return on average shareholder's equity was 14.6 percent. "The third quarter of 2004 was another quarter of solid operating performance for Main Street Banks," said Edward C. Milligan, chairman and chief executive officer. "Our performance was driven by strong loan and deposit growth, solid and improving asset quality and increased efficiency, resulting from superior growth in both net interest income and non-interest income." Milligan continued, "Strong organic growth in loans and deposits, combined with superior asset quality, have been hallmarks of Main Street's historical operating performance, and we are pleased to see these trends continue in the third quarter." Strong Loan Growth Combined With Solid Credit Quality As of September 30, 2004, Main Street Banks' loans outstanding were $1.654 billion, reflecting an increase of $242 million or 17.1 percent, compared to the same period last year. Annualized net charge-offs decreased to 0.11 percent of average loans for the third quarter of 2004 from 0.19 percent in the third quarter of 2003. Non-performing assets decreased in the third quarter to 0.26 percent from 0.64 percent of assets at September 30, 2003. The allowance for loan losses at September 30, 2004 was $24.3 million and represented 1.47 percent of loans outstanding at the end of the period compared to $20.8 million and 1.47 percent of loans outstanding in the third quarter of 2003. Positive Trends in Transaction Deposits As of September 30, 2004, Main Street Banks' total deposits were $1.630 billion, reflecting an increase of $192 million, or 13.4 percent, compared to the same period last year. The Company's deposit mix continued to improve as low cost core deposits grew 17.8 percent over the same period from September 30, 2003, while reliance on higher cost certificates of deposit was reduced through the company's disciplined pricing structure. Low cost core deposits totaled $868 million at September 30, 2004 compared to $737 million at the end of the third quarter of 2003, an increase of $131 million. Net Interest Margin Declines but Remains Healthy The company's net interest margin was 4.32 percent for the third quarter of 2004, down from 4.55 percent in the comparable period last year. The reduction in margin over 2003 was primarily the result of interest earning asset yields declining from 6.35% in the third quarter of 2003 to 6.12% in the third quarter of 2004. The largest component of this decline was loan yields declining 15 basis points during this period. Main Street's fully taxable equivalent net interest income totaled $21.1 million for the third quarter of 2004, an increase of $2.1 million or 11.1 percent, compared to the third quarter of 2003. Noninterest Income Up 20.0% Over Previous Year Compared to the third quarter of 2003, noninterest income grew at a healthy pace in the third quarter of 2004. The company reported total noninterest income of $7.8 million for the third quarter, an increase of 20.0 percent or $1.3 million over the third quarter of 2003. Solid growth in income from insurance agency commissions and income from SBA lending contributed to this increase. Insurance agency revenue totaled $2.5 million for the third quarter of 2004, an increase of 108.3 percent or $1.3 million compared to the third quarter last year. Income from SBA lending totaled $1.3 million for the third quarter of 2004, an increase of 225.0% or $0.9 million compared to the third quarter last year. Efficiency Improves Main Street Bank's efficiency ratio for the third quarter of 2004 was 54.1 percent versus 56.8 percent for the third quarter of 2003. Noninterest expense for the third quarter of 2004 was $15.5 million, an increase of 7.6 percent compared to noninterest expense in the third quarter of 2003. "We are gratified by our improved efficiency in the third quarter as we continue to invest heavily in our business in order to maximize our strong growth opportunities in the dynamic Atlanta market," Milligan concluded. Anticipated Common Stock Offering On October 1, 2004, the company announced its plans to offer for sale in an underwritten public offering approximately $50 million of its common stock within the next 90 days pursuant to its effective universal shelf registration statement. This offering will be led by Raymond James & Associates, Inc., with SunTrust Capital Markets, Inc. as co-manager. Any offerings of securities covered by the shelf registration statement will be made only by means of the prospectus supplement and prospectus. This press release does not constitute an offer to sell, and is not a solicitation of an offer to buy any securities, nor shall there be any offer or sale of securities in any state or jurisdiction in which such offer or sale would be unlawful. About Main Street Main Street Banks, Inc., a $2.3 billion asset, community-banking organization based in metropolitan Atlanta, provides a broad range of banking, brokerage, insurance, and mortgage products and services through its 22 banking centers located in eighteen of Georgia's fastest growing communities. 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 company's plans to sell common stock and the amount and timing of the proposed offering. Such statements involve risks and uncertainties that may cause results to differ materially from those set forth in these statements. Main Street cautions readers that results and events subject to forward-looking statements could differ materially due to the following factors: possible changes in market and economic and business conditions; the ability of Main Street to integrate recent acquisitions and 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; the cost and other effects of legal and administrative cases; 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 filings with the Securities and Exchange Commission. This press release contains financial information determined by methods other than in accordance with Generally Accepted Accounting Principles ("GAAP"). Main Street Banks, Inc.'s management uses these non-GAAP measures in their analysis of the Company's performance. These measures adjust GAAP performance to exclude the effects of the amortization of intangibles in the determination of "cash basis" performance measures. These non-GAAP measures may also exclude other significant gains, losses or expenses that are unusual in nature and not expected to recur. Since these items and their effects on Main Street's performance are difficult to predict, management believes presentations of financial measures excluding the effects of these items provide useful supplemental information that is important to a proper understanding of the operating results of Main Street's core businesses. These disclosures should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. 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. today, please visit our web site at http://www.mainstreetbank.com/ . Replays of the conference call will be available through our web site until 5 p.m. (EDT) October 30. MAIN STREET BANKS, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 ASSETS Cash and due from banks $39,565,158 $38,220,151 $37,174,008 Interest-bearing deposits in banks 662,555 660,111 206,921 Federal funds sold and securities purchased under agreements to resell 1,037,646 357,846 13,733,915 Investment securities available for sale 276,497,775 270,851,196 249,633,094 Investment securities held to maturity 11,945,588 11,998,340 11,233,274 Other investments 24,140,813 21,352,832 20,172,234 Mortgage loans held for sale 5,954,007 7,860,559 4,685,417 Loans, net of unearned income 1,620,436,393 1,551,258,388 1,470,876,346 Allowance for loan losses (23,402,241) (22,505,292) (21,409,245) Loans, net 1,597,034,152 1,528,753,096 1,449,467,101 Premises and equipment, net 50,125,904 46,440,339 43,622,711 Other real estate 1,914,645 2,584,703 2,813,337 Accrued interest receivable 9,058,791 7,874,920 7,614,443 Goodwill and other intangible assets 103,470,116 103,445,869 98,655,805 Bank owned life insurance 41,191,340 41,471,029 37,904,493 Other assets 14,198,902 14,863,167 10,054,978 Total assets $2,176,797,392 $2,096,734,158 $1,986,971,731 LIABILITIES Total deposits $1,584,818,716 $1,547,738,831 $1,466,086,785 Accrued interest payable 3,312,458 3,129,282 3,023,843 Federal Home Loan Bank advances 158,242,407 148,344,127 147,072,474 Federal funds purchased and securities sold under repurchase agreements 153,386,148 126,594,813 110,799,890 Trust preferred securities - - - Subordinated debt 51,547,000 51,547,000 50,000,000 Other liabilities 7,432,893 4,329,275 4,717,074 Total liabilities 1,958,739,621 1,881,683,328 1,781,700,066 SHAREHOLDERS' EQUITY Common stock - no par value per share 107,626,919 107,346,374 102,361,167 Retained earnings 120,402,848 114,838,884 107,198,497 Accumulated other comprehensive income (1,182,407) 1,655,161 4,501,139 Treasury stock (8,789,589) (8,789,589) (8,789,138) Total shareholders' equity 218,057,771 215,050,830 205,271,665 Total liabilities and shareholders' equity $2,176,797,392 $2,096,734,158 $1,986,971,731 MAIN STREET BANKS, INC. AND SUBSIDIARIES AVERAGE BALANCE SHEET (Unaudited) Fourth Third Quarter Quarter 2003 2003 ASSETS Cash and due from banks $38,074,607 $39,800,995 Interest-bearing deposits in banks 1,037,948 1,166,343 Federal funds sold and securities purchased under agreements to resell 35,288,778 1,812,613 Investment securities available for sale 248,724,785 248,487,509 Investment securities held to maturity 3,382,680 687,918 Other investments 18,799,718 14,659,477 Mortgage loans held for sale 3,841,104 7,258,692 Loans, net of unearned income 1,424,858,073 1,389,998,248 Allowance for loan losses (20,816,925) (20,335,059) Loans, net 1,404,041,148 1,369,663,189 Premises and equipment, net 42,801,524 39,815,150 Other real estate 1,941,348 1,332,024 Accrued interest receivable 7,407,238 7,440,913 Goodwill and other intangible assets 95,040,910 94,944,727 Bank owned life insurance 35,462,722 34,875,340 Other assets 10,291,118 7,814,168 Total assets $1,946,135,628 $1,869,759,058 LIABILITIES Total deposits $1,452,073,218 $1,423,029,046 Accrued interest payable 3,133,317 3,245,698 Federal Home Loan Bank advances 191,157,159 149,870,653 Federal funds purchased and securities sold under repurchase agreements 47,439,961 42,395,574 Trust preferred securities 50,000,000 50,000,000 Subordinated debt - - Other liabilities 5,956,643 11,626,540 Total liabilities 1,749,760,298 1,680,167,511 SHAREHOLDERS' EQUITY Common stock-no par value per share 99,587,649 97,619,793 Retained earnings 101,961,196 97,314,015 Accumulated other comprehensive income 3,615,380 3,445,861 Treasury stock (8,788,895) (8,788,122) Total shareholders' equity 196,375,330 189,591,547 Total liabilities and shareholders' equity $1,946,135,628 $1,869,759,058 MAIN STREET BANKS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 ASSETS Cash and due from banks $55,719,486 $42,090,671 $31,901,310 Interest-bearing deposits in banks 1,058,235 1,078,334 588,694 Federal funds sold and securities purchased under agreements to resell 24,410,000 713,000 5,644,000 Investment securities available for sale 282,814,235 272,596,604 263,304,831 Investment securities held to maturity 11,835,353 11,998,436 11,998,297 Other investments 23,040,424 23,876,638 19,205,358 Mortgage loans held for sale 6,931,843 6,221,181 7,208,105 Loans, net of unearned income 1,653,615,534 1,594,290,721 1,511,436,809 Allowance for loan losses (24,256,034) (23,118,946) (22,150,651) Loans, net 1,629,359,500 1,571,171,775 1,489,286,158 Premises and equipment, net 52,504,434 48,391,110 45,167,765 Other real estate 1,082,267 1,914,985 2,255,553 Accrued interest receivable 9,243,097 9,060,367 8,293,918 Goodwill and other intangible assets 103,392,163 103,514,753 103,381,314 Bank owned life insurance 41,528,162 41,006,405 41,595,547 Other assets 15,473,682 13,530,493 15,801,590 Total assets $2,258,392,881 $2,147,164,752 $2,045,632,440 LIABILITIES Total deposits $1,630,286,409 $1,566,290,310 $1,530,979,973 Accrued interest payable 3,488,406 3,284,308 3,210,642 Federal Home Loan Bank advances 226,203,972 166,337,747 156,471,522 Federal funds purchased and securities sold under repurchase agreements 115,191,909 142,324,882 83,930,239 Trust preferred securities - - - Subordinated debt 51,547,000 51,547,000 51,547,000 Other liabilities 9,353,208 5,413,930 4,116,702 Total liabilities 2,036,070,904 1,935,198,177 1,830,256,078 SHAREHOLDERS' EQUITY Common stock-no par value per share 108,197,312 107,446,736 109,117,216 Retained earnings 121,717,798 116,073,951 109,299,987 Accumulated other comprehensive income 1,196,456 (2,764,523) 5,748,748 Treasury stock (8,789,589) (8,789,589) (8,789,589) Total shareholders' equity 222,321,977 211,966,575 215,376,362 Total liabilities and shareholders' equity $2,258,392,881 $2,147,164,752 $2,045,632,440 MAIN STREET BANKS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (Unaudited) Fourth Third Quarter Quarter 2003 2003 ASSETS Cash and due from banks $39,839,060 $39,559,729 Interest-bearing deposits in banks 1,021,288 693,409 Federal funds sold and securities purchased under agreements to resell 31,819,619 15,919,619 Investment securities available for sale 247,391,640 247,867,031 Investment securities held to maturity 10,788,146 688,005 Other investments 19,651,370 17,081,869 Mortgage loans held for sale 5,670,625 6,490,437 Loans, net of unearned income 1,443,325,787 1,411,950,618 Allowance for loan losses (21,151,987) (20,765,377) Loans, net 1,422,173,800 1,391,185,241 Premises and equipment, net 42,760,918 41,726,221 Other real estate 1,844,869 1,366,820 Accrued interest receivable 8,181,579 8,069,190 Goodwill and other intangible assets 96,237,492 94,919,932 Bank owned life insurance 35,773,237 35,274,639 Other assets 8,611,815 10,275,483 Total assets $1,971,765,458 $1,911,117,625 LIABILITIES Total deposits $1,458,403,096 $1,437,640,769 Accrued interest payable 3,020,265 3,343,309 Federal Home Loan Bank advances 210,605,296 159,739,071 Federal funds purchased and securities sold under repurchase agreements 43,859,277 61,575,200 Trust preferred securities 50,000,000 50,000,000 Subordinated debt - - Other liabilities 5,334,408 4,753,559 Total liabilities 1,771,222,342 1,717,051,908 SHAREHOLDERS' EQUITY Common stock-no par value per share 100,875,984 99,454,457 Retained earnings 104,539,042 99,132,523 Accumulated other comprehensive income 3,917,179 4,267,326 Treasury stock (8,789,089) (8,788,589) Total shareholders' equity 200,543,116 194,065,717 Total liabilities and shareholders' equity $1,971,765,458 $1,911,117,625 MAIN STREET BANKS, INC. AND SUBSIDIARIES LOAN AND DEPOSIT STRATIFICATION (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 LOAN PORTFOLIO Real estate: Residential Mortgage $284,647,539 $282,754,653 $280,453,804 Construction 379,468,496 348,685,270 314,171,269 Commercial real estate 826,434,480 795,114,435 762,815,561 Commercial and Industrial 129,790,889 132,379,349 116,735,287 Consumer 35,901,922 37,602,059 39,063,480 Unearned income (2,627,791) (2,245,045) (1,802,592) Total loans $1,653,615,534 $1,594,290,721 $1,511,436,809 Loan growth 3.7% 5.5% 4.7% Loan growth, annualized 14.8% 22.0% 19.0% DEPOSITS Non-interest bearing demand $236,808,861 $232,319,420 $227,159,637 Interest bearing demand 111,972,487 109,183,366 112,043,973 Money Market 346,698,652 347,395,886 313,554,963 Savings 40,705,887 40,307,875 40,074,116 Total transaction accounts 736,185,886 729,206,548 692,832,689 Public funds - transaction 132,267,045 90,423,130 101,844,740 Total low cost core deposits 868,452,931 819,629,677 794,677,429 Time deposits - public funds 14,012,373 15,991,062 17,565,349 Time deposits 747,821,105 730,669,570 718,737,195 Total deposits $1,630,286,409 $1,566,290,310 $1,530,979,973 Deposit growth 4.1% 2.3% 5.0% Percentage low cost core to total deposits 53.3% 52.3% 51.9% Percentage growth of low cost core deposits 6.0% 3.1% 4.4% Annualized growth of low cost core deposits 23.7% 12.6% 17.5% *The acquisition of First Colony Bank was completed in the May of 2003 MAIN STREET BANKS, INC. AND SUBSIDIARIES LOAN AND DEPOSIT STRATIFICATION (Unaudited) Fourth Third Quarter Quarter 2003 2003 LOAN PORTFOLIO Real estate: Residential Mortgage $269,357,951 $262,686,049 Construction 304,045,641 332,971,587 Commercial real estate 711,208,711 654,262,301 Commercial and Industrial 118,242,893 120,508,759 Consumer 41,649,590 42,206,090 Unearned income (1,178,999) (684,168) Total loans $1,443,325,787 $1,411,950,618 Loan growth 2.2% 2.1% * Loan growth, annualized 8.9% 8.5% * DEPOSITS Non-interest bearing demand $222,595,661 $218,655,715 Interest bearing demand 116,749,330 106,886,881 Money Market 266,913,040 287,898,967 Savings 40,000,806 39,182,173 Total transaction accounts 646,258,837 652,623,736 Public funds - transaction 115,258,296 84,061,089 Total low cost core deposits 761,517,133 736,684,825 Time deposits - public funds 10,741,662 21,788,712 Time deposits 686,444,301 679,167,232 Total deposits $1,458,703,096 $1,437,640,769 Deposit growth 1.5% 2.3% Percentage low cost core to total deposits 52.2% 51.2% Percentage growth of low cost core deposits 3.4% 2.2% * Annualized growth of low cost core deposits 13.6% 8.7% * *The acquisition of First Colony Bank was completed in the May of 2003 MAIN STREET BANKS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 NET INTEREST INCOME Loan, including fees $26,735,589 $25,473,584 $24,781,842 Interest on investment securities: Taxable 2,497,815 2,362,075 2,247,038 Non-taxable 365,183 388,746 417,657 Federal funds sold and repurchase agreements 8,657 3,751 30,399 Interest bearing deposits in banks 6,545 3,724 5,223 Interest on other investments 238,073 238,518 205,662 Total interest income 29,851,862 28,470,398 27,687,821 INTEREST EXPENSE Interest-bearing demand and money market 1,764,824 1,828,848 1,322,218 Savings 61,766 73,775 88,707 Time deposits 4,756,612 4,470,715 4,463,088 Other time deposits 184,717 64,462 55,813 Federal funds purchased 561,511 333,018 34,701 Federal Home Loan Bank advances 876,478 663,793 866,258 Interest expense on junior subordinated debentures 637,085 574,946 574,946 Other 175,900 241,599 355,692 Total interest expense 9,018,893 8,251,156 7,761,423 Net interest income 20,832,969 20,219,242 19,926,398 Provision for loan losses 1,602,500 1,310,000 1,561,000 Net interest income after provision for loan losses 19,230,469 18,909,242 18,365,398 NON-INTEREST INCOME Service charges on deposit accounts 2,165,224 2,023,191 1,880,521 Other customer service fees 276,909 352,392 356,795 Mortgage banking revenue 809,807 859,631 883,128 Investment brokerage revenue 133,479 185,330 315,080 Insurance agency revenue 2,514,479 2,370,375 2,771,701 Income from SBA lending 1,270,397 367,859 485,918 Other income 651,387 1,259,930 1,146,755 Total non-interest income 7,821,682 7,418,708 7,839,898 NON-INTEREST EXPENSE Salaries and other compensation 7,999,790 7,688,444 8,041,199 Employee benefits 1,170,201 1,519,972 1,640,263 Net occupancy and equipment expense 2,090,931 2,208,378 1,859,695 Data processing fees 325,617 223,450 557,301 Professional services 911,953 583,177 438,395 Communications and supplies 1,027,203 1,027,631 1,050,888 Regulatory agency assessments 196,164 95,841 91,126 Amortization of intangible assets 122,591 121,758 140,644 Other expense 1,649,760 2,665,430 1,759,524 Total non-interest expense 15,494,210 16,134,081 15,579,035 Income before income taxes 11,557,941 10,193,869 10,626,261 Income tax expense 3,294,026 2,802,851 3,029,516 Net income $8,263,915 $7,391,018 $7,596,745 EARNINGS PER SHARE Basic $0.43 $0.38 $0.39 Diluted $0.41 $0.37 $0.38 WEIGHTED AVERAGE SHARES OUTSTANDING Basic 19,428,145 19,351,343 19,280,882 Diluted 20,015,560 19,974,058 19,910,810 CASH DIVIDENDS PER SHARE $0.135 $0.135 $0.135 MAIN STREET BANKS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (Unaudited) Fourth Third Nine Months Ended Quarter Quarter September 30, 2003 2003 2004 2003 NET INTEREST INCOME Loan, including fees $24,045,242 $23,774,469 $76,991,015 $64,127,176 Interest on investment securities: Taxable 2,136,462 1,952,469 7,106,928 6,172,267 Non-taxable 376,992 413,969 1,171,586 1,294,256 Federal funds sold and repurchase agreements 75,418 3,982 42,807 70,502 Interest bearing deposits in banks 9,114 4,700 15,492 19,566 Interest on other investments 204,453 160,278 682,253 302,919 Total interest income 26,847,681 26,309,867 86,010,081 71,986,686 INTEREST EXPENSE Interest-bearing demand and money market 1,288,087 1,533,317 4,915,890 4,447,123 Savings 89,583 80,733 224,248 258,919 Time deposits 4,261,858 4,179,155 13,690,415 11,429,801 Other time deposits 85,577 110,249 304,992 294,812 Federal funds purchased 36,153 19,308 929,230 40,037 Federal Home Loan Bank advances 795,729 679,715 2,406,529 1,473,855 Interest expense on junior subordinated debentures 580,102 580,096 1,786,977 872,504 Other 370,193 362,259 773,191 1,140,323 Total interest expense 7,507,282 7,544,832 25,031,472 19,957,374 Net interest income 19,340,399 18,765,035 60,978,609 52,029,312 Provision for loan losses 1,241,000 1,146,000 4,473,500 3,994,000 Net interest income after provision for loan losses 18,099,399 17,619,035 56,505,109 48,035,312 NON-INTEREST INCOME Service charges on deposit accounts 2,069,881 2,092,139 6,068,936 5,690,302 Other customer service fees 396,098 388,960 986,096 1,148,287 Mortgage banking revenue 711,660 1,118,464 2,552,566 2,630,186 Investment brokerage revenue 30,758 88,616 633,889 232,719 Insurance agency revenue 1,252,337 1,188,538 7,656,555 3,604,646 Income from SBA lending 434,799 405,936 2,124,174 1,290,115 Other income 2,000,907 1,253,128 3,058,072 2,851,096 Total non-interest income 6,896,440 6,535,781 23,080,288 17,447,351 NON-INTEREST EXPENSE Salaries and other compensation 6,956,283 6,799,573 23,729,433 18,617,678 Employee benefits 1,213,020 1,283,603 4,330,436 3,536,489 Net occupancy and equipment expense 2,003,525 1,772,929 6,159,004 4,657,344 Data processing fees 481,895 449,812 1,106,368 1,201,930 Professional services 363,319 824,785 1,933,525 1,786,574 Communications and supplies 1,168,727 983,575 3,105,722 2,567,578 Regulatory agency assessments 81,388 73,557 383,131 240,877 Amortization of intangible assets 106,800 106,750 384,993 257,699 Other expense 2,261,412 2,073,520 6,074,714 5,440,007 Total non-interest expense 14,636,369 14,368,104 47,207,326 38,306,176 Income before income taxes 10,359,470 9,786,712 32,378,071 27,176,487 Income tax expense 2,912,764 2,668,556 9,126,393 7,923,863 Net income $7,446,706 $7,118,156 $23,251,678 $19,252,624 EARNINGS PER SHARE Basic $0.39 $0.38 $1.20 $1.10 Diluted $0.38 $0.36 $1.16 $1.06 WEIGHTED AVERAGE SHARES OUTSTANDING Basic 18,951,688 18,913,088 19,353,729 17,512,489 Diluted 19,645,157 19,602,219 19,972,391 18,186,159 CASH DIVIDENDS PER SHARE $0.120 $0.120 $0.405 $0.360 MAIN STREET BANKS, INC. AND SUBSIDIARIES SUMMARY OF INTEREST RATES (TAX-EQUIVALENT*) (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 EARNING ASSETS Total interest earning assets (in thousands) $1,940,675 $1,864,339 $1,770,541 Loans 6.55% 6.58% 6.68% Investment securities 4.21% 4.20% 4.49% Federal funds sold 1.18% 1.12% 1.01% Loans held for sale 4.93% 4.57% 5.25% FHLB stock & other 3.92% 4.43% 4.03% Total interest earning assets 6.12% 6.14% 6.29% INTEREST-BEARING LIABILITIES Total interest-bearing liabilities (in thousands) $1,947,994 $1,874,225 $1,773,959 Demand deposits 0.92% 0.92% 0.72% Demand deposits - public funds 0.61% 1.05% 1.07% Time deposits 2.59% 2.49% 2.49% Retail repurchases 1.62% 1.69% 1.69% Federal funds purchased 1.68% 1.37% 1.24% Federal Home Loan bank advances 2.20% 1.80% 1.77% Securities sold under agreement to repurchase 4.53% 4.57% 4.09% Junior Subordinated debentures 4.92% 4.49% 4.55% Net Cost of Funds 1.84% 1.77% 1.76% NET INTEREST SPREAD Interest earning assets less interest-bearing liabilities (in thousands) $(7,319) $(9,885) $(3,418) Yield on earning assets less cost of interest-bearing liabilities 4.28% 4.37% 4.53% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.32% 4.42% 4.59% * To make pre-tax income and resultant yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed using a federal income tax rate of 34%. MAIN STREET BANKS, INC. AND SUBSIDIARIES SUMMARY OF INTEREST RATES (TAX-EQUIVALENT*) (Unaudited) Fourth Third Nine Months Ended Quarter Quarter September 30, 2003 2003 2004 2003 EARNING ASSETS Total interest earning assets (in thousands) $1,730,110 $1,660,522 $1,862,913 $1,466,854 Loans 6.61% 6.70% 6.63% 7.00% Investment securities 4.36% 4.11% 4.28% 4.61% Federal funds sold 0.91% 1.14% 1.14% 1.26% Loans held for sale 5.50% 5.66% 4.88% 5.97% FHLB stock & other 4.36% 4.17% 3.51% 6.41% Total interest earning assets 6.21% 6.35% 6.17% 6.64% INTEREST-BEARING LIABILITIES Total interest-bearing liabilities (in thousands) $1,739,771 $1,664,361 $1,865,292 $1,450,294 Demand deposits 0.68% 0.90% 0.85% 0.99% Demand deposits - public funds 0.95% 0.73% 0.94% 0.88% Time deposits 2.47% 2.44% 2.53% 2.52% Retail repurchases 1.71% 1.90% 1.67% 1.88% Federal funds purchased 1.25% 1.69% 1.24% 1.75% Federal Home Loan bank advances 1.78% 1.81% 2.12% 1.76% Securities sold under agreement to repurchase 4.09% 4.09% 4.35% 3.91% Junior Subordinated debentures 4.54% 4.54% 4.63% 4.47% Net Cost of Funds 1.71% 1.80% 1.79% 1.84% NET INTEREST SPREAD Interest earning assets less interest-bearing liabilities (in thousands) $(9,661) $(3,839) $(2,379) $16,559 Yield on earning assets less cost of interest- bearing liabilities 4.50% 4.55% 4.37% 4.80% NET INTEREST MARGIN Net interest income (tax equivalent) as a percentage of average earning assets 4.49% 4.55% 4.43% 4.82% * To make pre-tax income and resultant yields on tax-exempt investments comparable to those on taxable investments, a tax-equivalent adjustment has been computed using a federal income tax rate of 34%. MAIN STREET BANKS, INC. AND SUBSIDIARIES LOAN QUALITY (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 RESERVE FOR POSSIBLE LOAN LOSSES Reserve for loan losses at beginning of period $23,118,946 $22,150,651 $21,151,987 Reserves acquired through acquisition - - - Provision for loan losses 1,602,500 1,310,000 1,561,000 Loans charged-off during the period (1,103,582) (657,213) (650,138) Recoveries on loans previously charged-off 638,170 315,508 87,802 Net loans (charged-off) recovered during period (465,412) (341,705) (562,336) Reserve for loan losses at end of period $24,256,034 $23,118,946 $22,150,651 Net charge-offs to average loans, annualized 0.11% 0.09% 0.15% Gross charge-offs to average loans, annualized 0.27% 0.17% 0.18% Recoveries as a percentage of gross charge-offs 57.83% 48.01% 13.51% Reserve for loan losses as a percentage of loans, at end of period 1.47% 1.45% 1.47% NON-PERFORMING ASSETS Loans accounted for on a non- accrual basis $4,712,752 $5,179,265 $4,822,135 Restructured loans - - - Total non-performing loans 4,712,752 5,179,265 4,822,135 Foreclosed assets 1,132,377 3,730,693 2,255,553 Total non-performing assets $5,845,129 $8,909,958 $7,077,688 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 0.35% 0.56% 0.47% Non-performing assets as a percentage of total assets, at end of period 0.26% 0.41% 0.35% Reserve for loan losses as a percentage of non-performing assets, at end of period 414.98% 259.47% 312.96% Loans 90 days past due $6,719,204 $6,296,329 $9,492,293 Loans 90 days past due as a percentage of loans, at end of period 0.41% 0.39% 0.63% MAIN STREET BANKS, INC. AND SUBSIDIARIES LOAN QUALITY (Unaudited) Fourth Third Nine Months Ended Quarter Quarter September 30, 2003 2003 2004 2003 RESERVE FOR POSSIBLE LOAN LOSSES Reserve for loan losses at beginning of period $20,765,377 $20,272,465 $21,151,987 $14,588,582 Reserves acquired through acquisition - - - 4,252,018 Provision for loan losses 1,241,000 1,146,000 4,473,500 3,994,000 Loans charged-off during the period (958,275) (784,950) (2,410,933) (2,377,763) Recoveries on loans previously charged-off 103,885 131,862 1,041,480 308,540 Net loans (charged-off) recovered during period (854,390) (653,088) (1,369,453) (2,069,223) Reserve for loan losses at end of period $21,151,987 $20,765,377 $24,256,034 $20,765,377 Net charge-offs to average loans, annualized 0.24% 0.19% 0.12% 0.23% Gross charge-offs to average loans, annualized 0.27% 0.23% 0.21% 0.26% Recoveries as a percentage of gross charge-offs 10.84% 16.80% 43.20% 10.04% Reserve for loan losses as a percentage of loans, at end of period 1.47% 1.47% 1.47% 1.47% NON-PERFORMING ASSETS Loans accounted for on a non-accrual basis $11,548,489 $10,854,580 $4,712,752 $10,854,580 Restructured loans - - - - Total non-performing loans 11,548,489 10,854,580 4,712,752 10,854,580 Foreclosed assets 1,844,869 1,366,820 1,132,377 1,366,820 Total non-performing assets $13,393,358 $12,221,400 $5,845,129 $12,221,400 Non-performing assets as a percentage of loans plus foreclosed assets, at end of period 0.93% 0.86% 0.35% 0.86% Non-performing assets as a percentage of total assets, at end of period 0.68% 0.64% 0.26% 0.64% Reserve for loan losses as a percentage of non-performing assets, at end of period 157.93% 169.91% 414.98% 169.91% Loans 90 days past due $11,028,256 $10,867,283 $6,719,204 $10,867,283 Loans 90 days past due as a percentage of loans, at end of period 0.76% 0.77% 0.41% 0.77% MAIN STREET BANKS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 RESULTS OF OPERATIONS Net interest income $20,832,969 $20,219,242 $19,926,398 Net interest income (tax equivalent) 21,076,546 20,487,674 20,204,931 Provision for loan losses 1,602,500 1,310,000 1,561,000 Non-interest income 7,821,682 7,418,708 7,839,898 Non-interest expense 15,494,210 16,134,081 15,579,035 Net income 8,263,915 7,391,018 7,596,745 AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,620,436 1,551,258 1,470,876 Investment securities 288,443 282,850 260,866 Earning assets 1,940,675 1,864,339 1,770,541 Total assets 2,176,797 2,096,734 1,986,972 Deposits 1,584,819 1,547,739 1,466,087 Shareholders' equity 218,058 215,051 205,272 PER COMMON SHARE Earnings per share - Basic $0.43 $0.38 $0.39 Earnings per share - Diluted $0.41 $0.37 $0.38 Book value per share as end of period $11.10 $10.94 $11.14 End of period shares outstanding 20,021,823 19,381,000 19,340,676 Weighted average shares outstanding Basic 19,428,145 19,351,343 19,280,882 Diluted 20,015,560 19,974,058 19,910,810 STOCK PERFORMANCE Market Price: Closing $30.60 $28.10 $27.34 High $30.60 $28.82 $27.50 Low $26.46 $25.62 $24.90 Trading volume 1,755,400 2,010,000 1,703,700 Cash dividend per share 0.135 0.135 0.135 Dividend payout ratio 32.70% 36.48% 35.38% Price to earnings 18.63 18.88 17.82 Price to book value 2.76 2.57 2.46 PERFORMANCE RATIOS Return on average assets 1.52% 1.41% 1.53% Return on average equity 15.16% 13.75% 14.80% Average earning assets to average total assets 89.15% 88.92% 89.11% Average loans as percentage of average deposits 102.25% 100.23% 100.33% Net interest margin (tax equivalent) 4.32% 4.42% 4.59% Average equity to average assets 10.02% 10.26% 10.33% Non-interest income ratio 27.30% 26.84% 28.24% Efficiency ratio 54.07% 58.38% 56.11% ASSET QUALITY Total non-performing assets $5,845,129 $8,909,958 $7,077,688 Non-performing assets as a percentage of loans plus foreclosed assets 0.35% 0.56% 0.47% Net annualized (charge-offs) recoveries as a percentage of average assets 0.11% 0.09% 0.15% Reserve for loan losses as a percentage of loans, at end of period 1.47% 1.45% 1.47% MAIN STREET BANKS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) Fourth Third Nine months ended Quarter Quarter September 30, 2003 2003 2004 2003 RESULTS OF OPERATIONS Net interest income $19,340,399 $18,765,035 $60,978,609 $52,029,312 Net interest income (tax equivalent) 19,591,290 19,036,194 61,769,151 52,874,238 Provision for loan losses 1,241,000 1,146,000 4,473,500 3,994,000 Non-interest income 6,896,440 6,535,781 23,080,288 17,447,351 Non-interest expense 14,636,369 14,368,104 47,207,326 38,306,176 Net income 7,446,706 7,118,156 23,251,678 19,252,624 AVERAGE BALANCE SHEET DATA (in thousands) Loans, net of unearned income 1,424,858 1,389,998 1,547,700 1,204,568 Investment securities 252,107 249,175 277,423 241,351 Earning assets 1,730,110 1,660,522 1,862,913 1,467,296 Total assets 1,946,136 1,869,759 2,089,597 1,623,571 Deposits 1,452,073 1,423,029 1,532,726 1,267,826 Shareholders' equity 196,375 189,592 214,903 159,203 PER COMMON SHARE Earnings per share - Basic $0.39 $0.38 $1.20 $1.10 Earnings per share - Diluted $0.38 $0.36 $1.16 $1.06 Book value per share as end of period $10.57 $10.25 $10.94 $10.25 End of period shares outstanding 18,981,340 18,933,178 19,381,000 18,933,178 Weighted average shares outstanding Basic 18,951,688 18,913,088 19,353,729 17,512,489 Diluted 19,645,157 19,602,219 19,972,391 18,186,159 STOCK PERFORMANCE Market Price: Closing $26.52 $25.02 $30.60 $25.02 High $27.92 $26.00 $30.60 $26.00 Low $25.00 $23.37 $24.90 $18.45 Trading volume 1,630,300 1,022,400 5,469,100 3,529,200 Cash dividend per share 0.120 0.120 0.405 0.360 Dividend payout ratio 31.66% 33.05% 34.79% 34.01% Price to earnings 17.63 17.37 19.68 17.68 Price to book value 2.51 2.44 2.80 2.44 PERFORMANCE RATIOS Return on average assets 1.53% 1.52% 1.51% 1.59% Return on average equity 15.17% 15.02% 14.56% 16.20% Average earning assets to average total assets 89.20% 89.00% 88.95% 90.40% Average loans as percentage of average deposits 98.13% 97.68% 100.31% 95.00% Net interest margin (tax equivalent) 4.49% 4.55% 4.43% 4.82% Average equity to average assets 10.09% 10.14% 10.28% 9.81% Non-interest income ratio 26.29% 25.83% 27.46% 25.11% Efficiency ratio 55.79% 56.79% 56.16% 55.14% ASSET QUALITY Total non-performing assets $13,393,358 $12,221,400 $5,845,129 $12,221,400 Non-performing assets as a percentage of loans plus foreclosed assets 0.93% 0.86% 0.35% 0.86% Net annualized (charge-offs) recoveries as a percentage of average assets 0.24% 0.19% 0.12% 0.23% Reserve for loan losses as a percentage of loans, at end of period 1.47% 1.47% 1.47% 1.47% MAIN STREET BANKS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) Third Second First Quarter Quarter Quarter 2004 2004 2004 OPERATING EARNINGS - NON-GAAP Net income $8,263,915 $7,391,018 $7,596,745 Amortization of intangible assets, net 88,266 87,666 101,264 Job reductions - 231,845 - Contract buyout, net - 172,366 - Systems write-offs, net - 342,104 - Operating income $8,352,181 $8,224,998 $7,698,009 Operating earnings per share Basic $0.43 $0.43 $0.40 Diluted $0.42 $0.41 $0.39 Average tangible assets (in thousands) $2,073,327 $1,993,288 $1,888,316 Average tangible equity (in thousands) 114,588 111,605 106,616 Operating return on average tangible assets 1.61% 1.65% 1.63% Operating return on average tangible equity 29.16% 29.48% 28.88% Non-interest expense 15,494,210 16,134,081 15,579,035 Net interest income 20,832,969 20,219,242 19,926,398 Non-interest income 7,821,682 7,418,708 7,839,898 Efficiency Ratio 54.07% 58.38% 56.11% OPERATING BASIS Non-interest expense 15,360,474 14,870,474 15,425,605 Net interest income 20,832,969 20,219,242 19,926,398 Non-interest income 7,821,682 7,418,708 7,839,898 Efficiency Ratio 53.61% 53.80% 55.56% One-time Expenses (after tax) 88,266 833,980 101,264 One-time Expenses (pre-tax) 133,736 1,263,607 153,430 MAIN STREET BANKS, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS (Unaudited) OPERATING EARNINGS - Fourth Third Nine months ended NON-GAAP Quarter Quarter September 30, 2003 2003 2004 2003 Net income $7,446,706 $7,118,156 $23,251,678 $19,252,624 Amortization of intangible assets, net 76,896 76,860 277,195 185,543 Job reductions - - 231,845 - Contract buyout, net - - 172,366 - Systems write-offs, net - - 342,104 - Operating income $7,523,602 $7,195,016 $24,275,188 $19,438,167 Operating earnings per share Basic $0.40 $0.38 $1.25 $1.11 Diluted $0.38 $0.37 $1.22 $1.07 Average tangible assets (in thousands) $1,851,095 $1,774,814 $1,942,071 $1,572,290 Average tangible equity (in thousands) 101,334 94,647 111,385 107,922 Operating return on average tangible assets 1.63% 1.62% 1.66% 1.65% Operating return on average tangible equity 29.70% 30.41% 28.99% 24.06% Non-interest expense 14,636,369 14,368,104 47,207,326 38,306,176 Net interest income 19,340,399 18,765,035 60,978,609 52,029,312 Non-interest income 6,896,440 6,535,781 23,080,288 17,447,351 Efficiency Ratio 55.79% 56.79% 56.16% 55.14% OPERATING BASIS Non-interest expense 14,519,860 14,251,649 45,656,554 38,025,050 Net interest income 19,340,399 18,765,035 60,978,609 52,029,312 Non-interest income 6,896,440 6,535,781 23,080,288 17,447,351 Efficiency Ratio 55.34% 56.33% 54.31% 54.73% One-time Expenses (after tax) 76,896 76,860 1,023,510 185,543 One-time Expenses (pre-tax) 116,509 116,455 1,550,772 281,126 DATASOURCE: Main Street Banks, Inc. CONTACT: Edward C. Milligan, Chairman & CEO, +1-770-422-2888, or Samuel B. Hay III, President & COO, +1-770-385-2424, both of Main Street Banks Web site: http://www.mainstreetbank.com/

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