April 6, 2005



[IBSM LETTERHEAD]
















October 31, 2006



Mr. David L. Hatfield

President and CEO

MainStreet Financial Corporation

629 W. State Street

Hastings, Michigan 49058




     Re:     Loan Facility from Independent Bank South Michigan (the "Bank")

Dear Mr. Hatfield:



This letter (the "Letter Agreement") pertains to the credit facility outstanding from the
Bank to MainStreet Financial Corporation (the "Borrower") pursuant to a certain Business Loan
Agreement, Promissory Note, Pledge Agreement and Irrevocable Proxy, and other related
documents and agreements dated June 30, 2005 by and between the parties (collectively, the
"Loan Documents"), which facility involves a line of credit in the principal amount of $2,000,000,
all of which has been advanced to the Borrower in accordance with the terms of said facility (the
"Loan").





As of the date hereof, an event of default has occurred with respect to the Loan and the
Bank has been advised by the Borrower that other events of default are likely to occur.
Specifically, the Borrower: 


	has failed to achieve a consolidated return on assets greater than 0.00%, as
required the Loan Documents;




	has filed a registration statement (the "Registration Statement") with the Securities
and Exchange Commission ("SEC") for the purpose of registering the sale of up to
47% of the common stock of the Borrower (the "Offering"), which, in the event
the Offering results in a change in ownership of 25% or more of the common stock
of the Borrower, will constitute a violation of the Loan Documents; and




	has stated in the Registration Statement that the capitalization of MainStreet
Savings Bank, FSB, the wholly-owned subsidiary of the Borrower, may change
from "well capitalized" to "adequately capitalized" during the Offering, which, if
not cured within six months thereafter, will constitute a violation of the Loan
Documents.






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Mainstreet Financial Corporation

October 31, 2006

Page 2





The foregoing enumeration of defaults and probable defaults is without prejudice to the
rights of the Bank to identify further defaults and events of default, whether now existing or
hereafter arising, as and when said defaults become known to the Bank.





As a result of the default described in paragraph (i) above, the Loan is due and payable in
full and the Bank is entitled to exercise the remedies available to it under the Loan Documents and
applicable law.  In addition and independent from the default described in paragraph (i) above,
upon the occurrence of either of the defaults described in paragraphs (ii) and (iii) above, the Loan
will be due and payable in full, giving the Bank the right to exercise all of such remedies.





The Bank hereby agrees to refrain and forbear from taking any action to enforce its
remedies with respect to any of the defaults or events described in paragraphs (i), (ii), and (iii)
above, upon the following conditions:




		(a)	The Borrower must remain, in all respects and at all times, in full compliance with this Letter Agreement;




		(b)	Except for the events and circumstances specifically described in paragraphs (i), (ii), and (iii) above, the Borrower must remain, in all respects and at all times, in full compliance with each of the Loan Documents, including (without limitation) the obligation to make all periodic payments on the Loan as and when due;




		(c)	The Borrower must diligently proceed with the Offering and, once commenced,
may not abandon or terminate the Offering prior to the expiration date set forth in
the Registration Statement, and neither the SEC nor any state agency or authority
shall have issued any stop order or other order or directive that prohibits the
continuance of the Offering under the terms described in the Registration
Statement; and




		(d)	The Borrower must use a portion of the proceeds from the Offering to make a
payment on the Loan, as follows:  (x) if at least 319,600 shares are sold, but fewer
than 432,400 shares, then the Borrower shall make a payment of at least
$1,268,000 on the Loan, and (y) if at least 432,400 shares are sold, then the
Borrower shall make a payment of at least $1,600,000 on the Loan.






If any of the above conditions are not met at any time and for any reason, this Letter
Agreement and the Bank's forbearance hereunder shall automatically terminate, without notice to
Borrower and without prejudice to any rights of the Bank.  Without limiting the generality of the
foregoing, in such event, the Bank shall be entitled to claim and collect damages from the
Borrower with respect to all periods in which any default or event of default existed pursuant to
any of the Loan Documents, including at all times from and after the date of this Letter
Agreement.






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Mainstreet Financial Corporation

October 31, 2006

Page 3





Notwithstanding the foregoing or anything to the contrary in this Letter Agreement, this
Letter Agreement and the Bank's forbearance hereunder shall expire automatically and without
notice upon the earlier of: (i) January 31, 2007; or (ii) the occurrence of any default or event of
default under any of the Loan Documents, except for the events of default specifically described in
paragraphs (i), (ii), and (iii) of this Letter Agreement.  Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be construed so as to imply any commitment by the
Bank to forbear in any respect regarding any of the Loan Documents at any time on or after
January 31, 2007.





The Bank's agreement to forbear hereunder shall be effective only upon the acceptance
and execution of this Letter Agreement on the part of the Borrower, which must occur by 5:00
p.m. (EDT) on Tuesday, October 31, 2006, or this Letter Agreement will be null and void and of
no force or effect.  The Borrower's execution of this Letter Agreement shall constitute the
Borrower's acknowledgement of the defaults described in paragraph (i) above and the Bank's
rights and remedies resulting therefrom, and shall further constitute the Borrower's acceptance of
and agreement to all of the terms and provisions of this Letter Agreement.





In consideration of the Bank's agreements set forth in this Letter Agreement, the
Borrower hereby:  (i) releases, quits and forever discharges the Bank and its affiliates, officers,
directors, agents (including, without limitation, its legal representatives), successors and assigns
(collectively, the "Bank Affiliates") of and from any and all actions, causes of action, claims,
demands, damages and liabilities of whatever kind and nature, known and unknown, which the
Borrower now has, claims or asserts, or might or could hereafter have, claim or assert, against the
Bank or any of the Bank Affiliates, arising or alleged to arise from any act, omission or neglect of
the Bank or any Bank Affiliate up to and including the date of this Letter Agreement, with respect
to the Loan, the Loan Documents or any transaction related thereto; and (ii) waives any and all
defenses, setoffs or counterclaims, of whatever kind and nature, known and unknown, under or
with respect to the Loan, the Loan Documents or any transaction related thereto and based upon
any act, omission or neglect of the Bank or any Bank affiliate up to and including the date of this
Letter Agreement.  The Borrower acknowledges that this paragraph, together with all other
provisions of this Letter Agreement, is freely and voluntarily made, without any duress or
coercion and after careful review, with the assistance of legal counsel, of all of the terms and
provisions hereof, and further acknowledges and agrees that the release and waiver stated in this
paragraph shall have been fully earned upon the Bank's execution of this Letter Agreement, shall
not be subject to rescission or nullification at any time hereafter due to the occurrence or
nonoccurrence of any subsequent event, and (notwithstanding anything in this Letter Agreement
to the contrary) shall survive the termination of this Letter Agreement and the termination of the
Bank's forbearance hereunder.




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Mainstreet Financial Corporation

October 31, 2006

Page 4





INDEPENDENT BANK SOUTH MICHIGAN




By:  /s/ Cheryl Bartholic                


Name:  Cheryl Bartholic                


Its:  Senior Vice President              



AGREED AND ACCEPTED:



MAINSTREET FINANCIAL CORPORATION



By:  /s/ David L. Hatfield                 


Name:  David L. Hatfield                 


Its:  President