MAIN STREET BANKS INC /NEW/ - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

For the quarter ended June 30, 2004

Commission file number 000-25128

MAIN STREET BANKS, INC.

(Exact name of registrant as specified in its charter)


Georgia		58-2104977
(State of Incorporation)		(I.R.S. Employer Identification No.)


676 Chastain Road, Kennesaw, GA		30144
(Address of principal executive offices)		(Zip Code)

770-422-2888

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes x No ¨

As of July 30^th registrant had outstanding 19,409,884 shares of common stock.

MAIN STREET BANKS, INC.

TABLE OF CONTENTS

FORM 10-Q

June 30, 2004


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements

	Consolidated Balance Sheets June 30, 2004 (unaudited), December 31, 2003 and June 30, 2003 (unaudited)	2

	Consolidated Statements of Income (unaudited) Three and Six Months Ended June 30, 2004 and 2003	3

	Consolidated Statements of Comprehensive Income (unaudited) Three and Six Months Ended June 30, 2004 and 2003	4

	Consolidated Statements of Cash Flows (unaudited) Six Months ended June 30, 2004 and 2003	5

	Notes to Consolidated Financial Statements (unaudited)	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	22

Item 4.	Controls and Procedures	22

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	23

Item 2.	Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities	23

Item 3.	Defaults Upon Senior Securities	23

Item 4.	Submission of Matters to a Vote of Security Holders	23

Item 5.	Other Information	23

Item 6.	Exhibits and Reports on Form 8-K	24

	Signatures	25

	Exhibits:

	Exhibit 31.1 Certification of Chief Executive Officer

	Exhibit 31.2 Certification of Chief Financial Officer

	Exhibit 32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act

	Exhibit 32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act

	Exhibit 99.1 Comments Concerning Forward Looking Statements

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Main Street Banks, Inc.

Consolidated Balance Sheets

(dollars in thousands)


	(Unaudited) June 30, 2004			December 31, 2003			(Unaudited) June 30, 2003
Assets
Cash and due from banks	$	42,091		$	39,839		$	43,329
Interest-bearing deposits in banks		1,078			1,021			1,437
Federal funds sold and securities purchased under agreements to resell		713			31,820			6,453
Investment securities available for sale (amortized cost of $274,994, $242,872, and $282,928 at June 30, 2004, December 31, 2003 and June 30, 2003, respectively)		272,597			247,392			290,424
Investment securities held to maturity (fair value of $11,701, $10,800, and $752 at June 30, 2004, December 31, 2003 and June 30, 2003, respectively)		11,998			10,788			688
Other investments		23,877			19,651			9,140
Mortgage loans held for sale		6,221			5,671			6,927
Loans, net of unearned income		1,594,291			1,443,326			1,382,762
Allowance for loan losses		(23,119	)		(21,152	)		(20,272	)

Loans, net		1,571,172			1,422,174			1,362,490
Premises and equipment, net		48,391			42,761			38,467
Other real estate		1,915			1,845			1,065
Accrued interest receivable		9,060			8,181			8,116
Goodwill and other intangible assets		103,515			96,237			94,826
Bank owned life insurance		41,006			35,773			34,527
Other assets		13,531			8,612			8,311

Total assets	$	2,147,165		$	1,971,765		$	1,906,200

Liabilities
Deposits:
Noninterest-bearing demand	$	232,319		$	228,610		$	214,558
Interest-bearing demand and money market		540,654			482,775			460,163
Savings		46,656			49,832			46,434
Time deposits of $100,000 or more		288,267			254,422			256,907
Other time deposits		458,394			442,764			427,528

Total deposits		1,566,290			1,458,403			1,405,590
Accrued interest payable		3,284			3,020			3,445
Federal Home Loan Bank advances		166,338			210,605			167,873
Federal funds purchased and securities sold under repurchase agreements		142,325			43,859			39,815
Subordinated debentures		51,547			—			—
Trust preferred securities		—			50,000			50,000
Other liabilities		5,414			5,335			48,782

Total liabilities		1,935,198			1,771,222			1,715,505
Shareholders’ Equity
Common stock-no par value per share; 50,000,000 shares authorized; 19,381,000, 18,981,340 and 18,888,732 shares outstanding at June 30, 2004, December 31, 2003 and June 30, 2003, respectively		107,447			100,876			99,007
Retained earnings		116,073			104,539			94,282
Accumulated other comprehensive income, net of tax		(2,764	)		3,917			6,193
Treasury stock, at cost, 564,082 shares at June 30, 2004, December 31, 2003 and June 30, 2003, respectively		(8,789	)		(8,789	)		(8,787	)

Total shareholders’ equity		211,967			200,543			190,695

Total liabilities and shareholders’ equity	$	2,147,165		$	1,971,765		$	1,906,200

See accompanying notes to consolidated financial statements

Main Street Banks, Inc.

Consolidated Statements of Income (Unaudited)

(dollars in thousands except per share data)


	Three months ended June 30,				Six months ended June 30,
	2004		2003		2004		2003
	(unaudited)				(unaudited)
Interest income:
Loans, including fees	$	25,474	$	21,419	$	50,256	$	40,353
Investment securities:
Taxable		2,362		2,145		4,609		4,220
Non-taxable		389		442		806		880
Federal funds sold and other short-term investments		3		10		34		66
Interest-bearing deposits in banks		5		5		10		15
Other investments		237		111		443		143

Total interest income		28,470		24,132		56,158		45,677
Interest expense:
Interest-bearing demand and money market		1,829		1,528		3,151		2,914
Savings		74		88		162		178
Time deposits		4,471		3,068		8,934		7,251
Other time deposits		64		86		120		185
Federal funds purchased		333		8		368		21
Federal Home Loan Bank advances		664		564		1,530		794
Interest expense on subordined debentures		575		237		1,150		292
Other interest expense		241		364		597		778

Total interest expense		8,251		5,943		16,012		12,413

Net interest income		20,219		18,189		40,146		33,264
Provision for loan losses		1,310		1,801		2,871		2,848

Net interest income after provision for loan losses		18,909		16,388		37,275		30,416
Non-interest income:
Service charges on deposit accounts		2,023		1,857		3,904		3,598
Other customer service fees		352		395		709		760
Mortgage banking income		860		865		1,743		1,512
Investment agency commissions		185		61		500		144
Insurance agency income		2,371		1,236		5,142		2,416
Income from SBA lending		368		505		854		884
Income on bank owned life insurance		559		462		1,381		924
Investment securities gains		549		132		853		316
Other income		152		122		173		357

Total non-interest income		7,419		5,635		15,259		10,911
Non-interest expense:
Salaries and other compensation		7,688		6,203		15,730		11,818
Employee benefits		1,520		1,049		3,160		2,253
Net occupancy and equipment expense		2,208		1,528		4,068		2,884
Data processing fees		224		442		781		752
Professional services		583		586		1,022		962
Communications & supplies		1,028		757		2,079		1,584
Marketing expense		357		427		727		446
Regulatory agency assessments		101		106		192		167
Amortization of intangible assets		122		91		262		151
Other expense		2,303		1,641		3,693		2,921

Table of Contents

Table of Contents

Table of Contents

Table of Contents