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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549

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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, 2003

Commission file number 000-25128

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MAIN STREET BANKS, INC.(Exact name of registrant as specified in its charter)

|Georgia(State of Incorporation)                                         |  | 58-2104977(I.R.S. Employer Identification No.)
|----------------------------------------------------------------------- |  | ----------------------------------------------
|676 Chastain Road, Kennesaw, GA(Address of principal executive offices) |  | 30144(Zip Code)                               

770-422-2888(Registrant's telephone number)

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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
ý    No o

Indicate
by check whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes
ý    No o

As
of July 31, 2003 registrant had outstanding 18,900,697 shares of common stock.

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MAIN STREET BANKS, INC.  TABLE OF CONTENTS

PagePART I. FINANCIAL INFORMATIONItem 1.

Financial Statements (unaudited)Condensed Consolidated Balance Sheets
        June 30, 2003, December 31, 2002 and June 30, 2002

3Condensed Consolidated Statements of Income (unaudited)
        Three Months Ended June 30, 2003 and 2002 and
        Six Months Ended June 30, 2003 and 2002

4Condensed Consolidated Statements of Comprehensive Income (unaudited)
        Three Months Ended June 30, 2003 and 2002 and
        Six Months Ended June 30, 2003 and 2002

5Condensed Consolidated Statements of Cash Flows (unaudited)
        Six Months Ended June 30, 2003 and 2002

6Notes to Condensed Consolidated Financial
        Statements (unaudited)

7Item 2.

Management's Discussion and Analysis of
    Financial Condition and Results of Operations

12Item 3.

Quantitative and Qualitative Disclosures about Market
    Risk (included in Item 2)

12Item 4.

Controls and Procedures

21PART II. OTHER INFORMATIONItem 5.

Exhibits and Reports on Form 8-K

22Signatures

24Exhibit 31.1 Certification of CEO

25Exhibit 31.2 Certification of CFO

26Exhibit 32.1

27Exhibit 32.2

28


2

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PART I.FINANCIAL INFORMATION  ITEM 1. FINANCIAL STATEMENTS

MAIN STREET BANKS, INC.
CONSOLIDATED BALANCE SHEETS

|                                                                                                                                                                                                |                                          | Unaudited
June 30,
2003 |               | December 31,
2002 |   | Unaudited
June 30,
2002 |            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------- | ----------------------- | ------------- | ----------------- | - | ----------------------- | -----------
|Assets                                                                                                                                                                                          |                                          |                         |               |                   |   |                         |            
|Cash and due from banks                                                                                                                                                                         |                                          | $                       | 43,328,652    |                   | $ | 43,195,653              |            
|Interest-bearing deposits in banks                                                                                                                                                              |                                          |                         | 1,437,383     |                   |   | 1,782,121               |            
|Federal funds sold and securities purchased under agreements to resell                                                                                                                          |                                          |                         | 6,452,619     |                   |   | 54,656,351              |            
|Investment securities available for sale (costs of $282,928,000, $201,404,160, and $222,811,000 at June 30, 2003, December 31, 2002 and June 30, 2002, respectively)                            |                                          |                         | 290,425,026   |                   |   | 208,455,409             |            
|Investment securities held to maturity (fair value of $752,076, $754,704, and $741,739 at June 30, 2003, December 31, 2002 and June 30, 2002, respectively)                                     |                                          |                         | 687,849       |                   |   | 687,562                 |            
|Other investments                                                                                                                                                                               |                                          |                         | 9,139,759     |                   |   | 3,699,368               |            
|Mortgage loans held for sale                                                                                                                                                                    |                                          |                         | 6,926,692     |                   |   | 8,175,522               |            
|Loans, net of unearned income                                                                                                                                                                   |                                          |                         | 1,382,761,970 |                   |   | 982,486,447             |            
|Allowance for loan losses                                                                                                                                                                       |                                          |                         | (20,272,465   | )                 |   | (14,588,582             | )          
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            
|Loans, net                                                                                                                                                                                      |                                          |                         | 1,362,489,505 |                   |   | 967,897,865             |            
|Premises and equipment, net                                                                                                                                                                     |                                          |                         | 38,466,608    |                   |   | 31,534,604              |            
|Other real estate                                                                                                                                                                               |                                          |                         | 1,065,064     |                   |   | 815,880                 |            
|Accrued interest receivable                                                                                                                                                                     |                                          |                         | 8,116,249     |                   |   | 6,437,290               |            
|Goodwill and other intangible assets                                                                                                                                                            |                                          |                         | 94,826,459    |                   |   | 16,512,087              |            
|Bank owned life insurance                                                                                                                                                                       |                                          |                         | 34,526,510    |                   |   | 30,904,434              |            
|Other assets                                                                                                                                                                                    |                                          |                         | 8,311,873     |                   |   | 6,719,791               |            
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            
|Total assets                                                                                                                                                                                    |                                          | $                       | 1,906,200,247 |                   | $ | 1,381,473,936           |            
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            
|Liabilities                                                                                                                                                                                     |                                          |                         |               |                   |   |                         |            
|Deposits:                                                                                                                                                                                       |                                          |                         |               |                   |   |                         |            
|                                                                                                                                                                                                | Noninterest-bearing demand               |                         | $             | 214,557,428       |   | $                       | 184,130,490
|                                                                                                                                                                                                | Interest-bearing demand and money market |                         |               | 460,163,117       |   |                         | 330,230,983
|                                                                                                                                                                                                | Savings                                  |                         |               | 46,434,216        |   |                         | 47,261,815 
|                                                                                                                                                                                                | Time deposits of $100,000 or more        |                         |               | 256,907,401       |   |                         | 197,098,700
|                                                                                                                                                                                                | Other time deposits                      |                         |               | 427,527,732       |   |                         | 370,205,897
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            
|Total deposits                                                                                                                                                                                  |                                          |                         | 1,405,589,895 |                   |   | 1,128,927,885           |            
|Accrued interest payable                                                                                                                                                                        |                                          |                         | 3,445,084     |                   |   | 3,723,167               |            
|Federal Home Loan Bank advances                                                                                                                                                                 |                                          |                         | 167,872,846   |                   |   | 50,000,000              |            
|Federal funds purchased and securities sold under repurchase agreements                                                                                                                         |                                          |                         | 39,814,872    |                   |   | 47,896,841              |            
|Subordinated debentures                                                                                                                                                                         |                                          |                         | 50,000,000    |                   |   | 5,155,000               |            
|Other liabilities                                                                                                                                                                               |                                          |                         | 48,782,257    |                   |   | 14,114,174              |            
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            
|Total liabilities                                                                                                                                                                               |                                          |                         | 1,715,504,953 |                   |   | 1,249,817,067           |            
|Shareholders' equity                                                                                                                                                                            |                                          |                         |               |                   |   |                         |            
|Common stock-no par value per share; 50,000,000 shares authorized; 16,173,647, 16,242,498 and 15,879,397 shares outstanding at June 30, 2003, December 31, 2002 and June 30, 2002, respectively |                                          |                         | 99,007,084    |                   |   | 46,912,168              |            
|Retained earnings                                                                                                                                                                               |                                          |                         | 94,282,108    |                   |   | 86,041,957              |            
|Accumulated other comprehensive income, net of tax                                                                                                                                              |                                          |                         | 6,193,192     |                   |   | 5,561,196               |            
|Treasury stock, at cost, 564,082, 464,082 and 169,082 shares at June 30, 2003, December 31, 2003 and June 30, 2002, respectively                                                                |                                          |                         | (8,787,089    | )                 |   | (6,858,452              | )          
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            
|Total shareholders' equity                                                                                                                                                                      |                                          |                         | 190,695,294   |                   |   | 131,656,869             |            
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            
|Total liabilities and shareholders' equity                                                                                                                                                      |                                          | $                       | 1,906,200,247 |                   | $ | 1,381,473,936           |            
|                                                                                                                                                                                                |                                          |                         |               |                   |   |                         |            

See accompanying notes to condensed consolidated financial statements.

3

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MAIN STREET BANKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

|                                                    |                                                     | Three Months Ended
June 30, |            | Six Months Ended
June 30, |          
|--------------------------------------------------- | --------------------------------------------------- | --------------------------- | ---------- | ------------------------- | ---------
|
|Interest income:                                    |                                                     |                             |            |                           |          
|                                                    | Loans, including fees                               |                             | $          | 21,418,754                |          
|                                                    | Investment securities:                              |                             |            |                           |          
|                                                    |                                                     | Taxable                     |            |                           | 2,144,684
|                                                    |                                                     | Non-taxable                 |            |                           | 441,624  
|                                                    | Federal funds sold and other short-term investments |                             |            | 10,340                    |          
|                                                    | Interest-bearing deposits in banks                  |                             |            | 5,653                     |          
|                                                    | Other investments                                   |                             |            | 110,900                   |          
|                                                    |                                                     |                             |            |                           |          
|Total interest income                               |                                                     |                             | 24,131,955 |                           |          
|Interest expense:                                   |                                                     |                             |            |                           |          
|                                                    | Interest-bearing demand and money market            |                             |            | 1,527,968                 |          
|                                                    | Savings                                             |                             |            | 88,382                    |          
|                                                    | Time deposits of $100,000 or more                   |                             |            | 1,536,385                 |          
|                                                    | Other time deposits                                 |                             |            | 1,617,040                 |          
|                                                    | Federal funds purchased                             |                             |            | 7,496                     |          
|                                                    | Federal Home Loan Bank advances                     |                             |            | 564,029                   |          
|                                                    | Trust preferred securities                          |                             |            | 237,006                   |          
|                                                    | Other interest expense                              |                             |            | 364,401                   |          
|                                                    |                                                     |                             |            |                           |          
|Total interest expense                              |                                                     |                             | 5,942,707  |                           |          
|                                                    |                                                     |                             |            |                           |          
|Net interest income                                 |                                                     |                             | 18,189,248 |                           |          
|Provision for loan losses                           |                                                     |                             | (1,801,000 | )                         |          
|                                                    |                                                     |                             |            |                           |          
|Net interest income after provision for loan losses |                                                     |                             | 16,388,248 |                           |          
|Noninterest income:                                 |                                                     |                             |            |                           |          
|                                                    | Service charges on deposit accounts                 |                             |            | 1,857,289                 |          
|                                                    | Other customer service fees                         |                             |            | 395,227                   |          
|                                                    | Mortgage banking income                             |                             |            | 865,347                   |          
|                                                    | Investment agency commissions                       |                             |            | 60,433                    |          
|                                                    | Insurance agency income                             |                             |            | 1,235,868                 |          
|                                                    | Income from SBA lending                             |                             |            | 504,925                   |          
|                                                    | Income on bank owned life insurance                 |                             |            | 461,531                   |          
|                                                    | Other income                                        |                             |            | 205,460                   |          
|                                                    | Gain (loss) on sales of premises and equipment      |                             |            | (83,143                   | )        
|                                                    | Investment securities gains                         |                             |            | 131,933                   |          
|                                                    |                                                     |                             |            |                           |          
|Total noninterest income                            |                                                     |                             | 5,634,871  |                           |          
|Noninterest expense:                                |                                                     |                             |            |                           |          
|                                                    | Salaries and other compensation                     |                             |            | 6,203,214                 |          
|                                                    | Employee benefits                                   |                             |            | 1,049,294                 |          
|                                                    | Net occupancy and equipment expense                 |                             |            | 1,528,317                 |          
|                                                    | Data processing fees                                |                             |            | 442,383                   |          
|                                                    | Professional services                               |                             |            | 585,609                   |          
|                                                    | Communications & supplies                           |                             |            | 756,953                   |          
|                                                    | Marketing expense                                   |                             |            | 426,926                   |          
|                                                    | Regulatory agency assessments                       |                             |            | 106,105                   |          
|                                                    | Amortization of intangible assets                   |                             |            | 91,112                    |          
|                                                    | Other expense                                       |                             |            | 1,640,430                 |          
|                                                    |                                                     |                             |            |                           |          
|Total noninterest expense                           |                                                     |                             | 12,830,345 |                           |          
|                                                    |                                                     |                             |            |                           |          
|Income before income taxes                          |                                                     |                             | 9,192,774  |                           |          
|Income tax expense                                  |                                                     |                             | 2,808,785  |                           |          
|                                                    |                                                     |                             |            |                           |          
|Net income                                          |                                                     | $                           | 6,383,989  |                           | $        
|                                                    |                                                     |                             |            |                           |          
|Earnings per share:                                 |                                                     |                             |            |                           |          
|                                                    | Basic                                               |                             | $          | 0.37                      |          
|                                                    | Diluted                                             |                             | $          | 0.35                      |          
|Dividends declared per share                        |                                                     | $                           | 0.120      |                           | $        
|Weighted average common shares outstanding:         |                                                     |                             |            |                           |          
|                                                    | Basic                                               |                             |            | 17,374,719                |          
|                                                    | Diluted                                             |                             |            | 18,059,948                |          

See accompanying notes to condensed consolidated financial statements.

4

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MAIN STREET BANKS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended
June 30,

Six Months Ended
June 30,2003

2002

2003

2002Net income

$
6,383,989

$
5,006,393

$
12,134,468

$
9,775,999Other comprehensive income (loss), net of tax:Unrealized gains on securities available for sale


1,160,537


2,003,211


412,363


1,471,893Unrealized gains on derivative contracts


281,683


543,121


219,633


525,463Less reclassification adjustment for net (gains) included in net income


(72,625
)

(31,603
)

(268,423
)

(52,715
)Comprehensive income

$
7,753,584

$
7,521,122

$
12,498,040

$
11,720,640


See accompanying notes to condensed consolidated financial statements.

5

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MAIN STREET BANKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

|                                                                                  |                                                         | Six Months Ended
June 30, |             
|--------------------------------------------------------------------------------- | ------------------------------------------------------- | ------------------------- | ------------
|
|Operating activities                                                              |                                                         |                           |             
|Net income                                                                        |                                                         | $                         | 12,134,468  
|Adjustments to reconcile net income to net cash provided by operating activities: |                                                         |                           |             
|                                                                                  | Provision for loan losses                               |                           |             
|                                                                                  | Depreciation and amortization of premises and equipment |                           |             
|                                                                                  | Amortization of intangible assets                       |                           |             
|                                                                                  | (Gain) loss on sales of other real estate               |                           |             
|                                                                                  | Investment securities gains                             |                           |             
|                                                                                  | Net amortization of investment securities               |                           |             
|                                                                                  | Net accretion of loans purchased                        |                           |             
|                                                                                  | (Gain) loss on sales of premises and equipment          |                           |             
|                                                                                  | Net decrease in mortgage loans held for sale            |                           |             
|                                                                                  | Income from mortgage banking operations                 |                           |             
|                                                                                  | Gains on sales of SBA loans                             |                           |             
|                                                                                  | Deferred income tax (benefit) provision                 |                           |             
|                                                                                  | Deferred net loan fees(cost amortization)               |                           |             
|                                                                                  | Vesting in restricted stock award plan                  |                           |             
|Changes in operating assets and liabilities:                                      |                                                         |                           |             
|                                                                                  | (Increase) decrease in accrued interest receivable      |                           |             
|                                                                                  | (Decrease) in accrued interest payable                  |                           |             
|                                                                                  | Other                                                   |                           |             
|                                                                                  |                                                         |                           |             
|Net cash provided by operating activities                                         |                                                         |                           | 17,234,443  
|Investing activities                                                              |                                                         |                           |             
|Purchases of investment securities available for sale                             |                                                         |                           | (78,581,436 
|Purchases of other investments                                                    |                                                         |                           | (5,440,390  
|Maturities and calls of investment securities available for sale                  |                                                         |                           | 8,512,000   
|Proceeds from sales of investment securities available for sale                   |                                                         |                           | 15,387,181  
|Net increase in loans funded                                                      |                                                         |                           | (107,522,777
|Purchases of premises and equipment                                               |                                                         |                           | (6,383,779  
|Proceeds from sales of premises and equipment                                     |                                                         |                           | 7,507       
|Proceeds from sales of other real estate                                          |                                                         |                           | 2,145,484   
|Improvements to other real estate                                                 |                                                         |                           | (169,472    
|Net cash paid for acquisitions                                                    |                                                         |                           | (46,330,000 
|                                                                                  |                                                         |                           |             
|Net cash used in investing activities                                             |                                                         |                           | (218,375,682
|Financing activities                                                              |                                                         |                           |             
|Net (decrease) increase in demand and savings accounts                            |                                                         |                           | 54,633,299  
|Increase in time deposits                                                         |                                                         |                           | (14,999,463 
|Increase (decrease) in federal funds purchased                                    |                                                         |                           | (8,081,969  
|Net increase in Federal Home Loan Bank advances                                   |                                                         |                           | 102,872,846 
|Dividends paid                                                                    |                                                         |                           | (3,816,636  
|Payments to repurchase common stock                                               |                                                         |                           | (1,928,637  
|                                                                                  |                                                         |                           |             
|Net cash provided by (used in) financing activities                               |                                                         |                           | 128,679,440 
|Net decrease in cash and cash equivalents                                         |                                                         |                           | (72,461,799 
|Cash Assumed in First Colony Bank acquisition                                     |                                                         |                           | 24,046,328  
|                                                                                  |                                                         |                           |             
|Cash and cash equivalents at beginning of period                                  |                                                         |                           | 99,634,124  
|                                                                                  |                                                         |                           |             
|Cash and cash equivalents at end of period                                        |                                                         | $                         | 51,218,653  
|                                                                                  |                                                         |                           |             
|Supplemental disclosures of cash flow information                                 |                                                         |                           |             
|Cash paid during the period for:                                                  |                                                         |                           |             
|                                                                                  | Interest                                                |                           | $           
|                                                                                  | Income taxes, net                                       |                           |             
|Supplemental disclosures of noncash transactions                                  |                                                         |                           |             
|Loans transferred to other real estate acquired through foreclosure               |                                                         | $                         | 2,387,899   

See accompanying notes to condensed consolidated financial statements.

6

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MAIN STREET BANKS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
June 30, 2003



The accompanying unaudited condensed consolidated financial statements for Main Street Banks, Inc. (the "Company") have been prepared in accordance with
accounting principles generally accepted in the United States followed within the financial services industry for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required for complete financial statement
presentation. In the opinion of management all adjustments (consisting solely of normal recurring adjustments) considered necessary for a fair presentation of the financial position and results of
operations for interim periods have been included.

The
results of operations for the six-month period ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending
December 31, 2003. These financial statements and related "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the
consolidated financial statements and notes thereto for the year ended December 31, 2002, included in the Company's Annual Report on Form 10-K.

Certain
previously reported amounts have been reclassified to conform to current financial statement presentation. These reclassifications had no effect on net income or stockholders'
equity.



On December 11, 2002, the Company completed a business combination with First National Bank of Johns Creek of Suwanee, Georgia ("FNB Johns Creek"). The
$26.2 million merger was based on Main Street's closing stock price of $20.48 per share on July 17, 2002. Main Street issued 647,510 shares of its common stock and $10.7 million
in cash in exchange for all outstanding shares of FNB Johns Creek. The transaction was accounted for as a purchase business combination and accordingly, the results of operations of FNB Johns Creek
are included from the acquisition date. Goodwill and Intangible Assets of $16,422,000 was created as a result of the transaction.

On
May 22, 2003, the Company completed its acquisition of First Colony Bancshares, parent of First Colony Bank, a $320 million asset bank headquartered in Alpharetta,
Georgia. The transaction was accounted for as a purchase business combination and accordingly, the results of operations of First Colony Bank are included from the acquisition date. Main Street issued
2.6 million shares of its common stock and $45 million in cash in exchange for all outstanding shares of First Colony Bancshares. The merger consideration was based on Main Street's
average closing price of $21.28 for the 30-day period immediately prior to the closing. The cash for the transaction was generated by the sale of $45,000,000 of Main Street Banks Statutory
Trust II floating rate trust preferred securities ("Capital Securities") with a maturity date of June 30, 2033 and a stated liquidation amount of $1,000 per Capital Security. Interest on the
Capital Securities is to be paid on the last day of each March, June, September, and December and is reset quarterly based on the three month London interbank offered rate ("3-Month
LIBOR") plus 325 basis points at the end of the preceding quarter, provided, however, that prior to May 22, 2008, the 3-Month LIBOR shall not exceed 8.75%. Goodwill and Intangible
Assets of $74,839,000 was recorded as a result of the transaction.

The
acquisition of First Colony Bancshares was accounted for as a purchase therefore the consolidated financial statements include results of operations since the purchase date only. In
accordance with FAS 141 the following tables present unaudited summary information on a pro forma basis as if the acquisition had occurred as of the beginning of each of the periods presented.
The pro

7

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forma
information does not necessarily reflect the results of operations that would have occurred if the acquisitions had occurred at the beginning of the periods presented or of any results which may
be expected to occur in the future.

Unaudited
June 30,
2003

Unaudited
June 30,
2002AssetsCash and due from depository institutions

$
44,766,035

$
38,117,435Securities


306,705,253


271,941,365Other investments





13,448,600Loans


1,369,416,197


1,095,383,760Other assets


185,312,762


79,056,047Total assets

$
1,906,200,247

$
1,497,947,207LiabilitiesTotal deposits


1,405,589,895


1,188,607,602Other liabilities


309,915,058


175,825,307Total liabilities


1,715,504,953


1,364,432,909Shareholders' equityTotal shareholders' equity


190,695,294


133,514,298Total liabilities and shareholders' equity

$
1,906,200,247

$
1,497,947,207


Unaudited
Six months ended
June 30,
2003

Unaudited
Six months ended
June 30,
2002Interest Income

$
45,676,818

$
47,495,350Interest Expense


12,412,541


16,075,740Loan Loss Provision


2,848,000


2,259,000Noninterest Income


10,911,570


9,815,957Noninterest Expense


29,193,380


26,966,568Net Income

$
12,134,467

$
12,009,999




In June 2002, the FASB issued FASB Statement No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". This Statement requires
that a liability for costs associated with exit or disposition activities be recognized when the liability is incurred and be measured at fair value and adjusted for changes in estimated cash flows.
Prior guidance provided for the recognition of such costs at the date of management's commitment to an exit plan. Under Statement No. 146, management's commitment to an exit plan would not be
sufficient, by itself, to recognize a liability. The Statement is effective for exit or disposal activities initiated after December 31, 2002 and is not expected to have a material impact on
the results of operations or financial condition of the Company.

In
November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), "Guarantees, Including Indirect Guarantees of Indebtedness of Others," to clarify accounting and
disclosure requirements relating to a guarantor's issuance of certain types of guarantees. FIN 45 requires entities to disclose additional information about certain guarantees, or groups of similar
guarantees, even if the likelihood of the guarantor's having to make any payments under the guarantee is remote. The disclosure provisions were effective for financial statements for fiscal years
ended after December 15, 2002. For certain guarantees the interpretation also requires that guarantors recognize a liability equal to the fair

8

---

value
of the guarantee upon its issuance. The initial recognition and measurement provision is to be applied only on a prospective basis to guarantees issues or modified after December 31,
2002. The adoption of this Interpretation did not have a material impact on the Company's financial statements.

In
December 2002, the FASB issued Statement No. 148 ("SFAS 148"), "Accounting for Stock-Based CompensationTransition and Disclosure," an amendment of
Statement of Financial Accounting Standards No. 123. SFAS 148 provides alternative methods of transition for a voluntary change to the fair value based method of accounting for
stock-based employee compensation. In addition SFAS 148 is effective for fiscal years ended after December 15, 2002. The Company plans to continue to account for stock-based employee
compensation under the intrinsic value based method and to provide disclosure of the impact of the fair value based method on reported income. Employee stock options have characteristics that are
significantly different from those of traded options, including vesting provisions and trading limitations that impact their liquidity. Therefore, the existing option pricing models, such as
Black-Scholes, do not necessarily provide a reliable measure of the fair value of employee stock options. Refer to Note 6 for pro forma disclosure of the impact of stock options utilizing the
Black-Scholes valuation method. The adoption of this statement did not have a material impact on the financial condition or operating results of the Company.

In
January 2003, the FASB issued FASB Interpretation No. 46 ("FIN No. 46") "Consolidation of Variable Interest Entities" which addresses consolidation by business
enterprises of variable interest entities. FIN No. 46 clarifies the application of Accounting Research Bulletin No. 51 ("ARB No. 51"), Consolidated Financial Statements, to
certain entities in which equity investors do not have the characteristics of a controlling financial interest or do not have the sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties. FIN No. 46 applies immediately to variable interest entities created after January 31, 2003, and to variable
interest entities in which an enterprise obtains an interest after that date. It applies in the fiscal year or interim period beginning after June 15, 2003 to variable interest entities in
which an enterprise holds a variable interest that it acquired before February 1, 2003.

We
are currently evaluating the impact of FIN 46. The impact of FIN 46 on the treatment of the trust preferred securities we have issued is currently being evaluated by the accounting
community. Under one potential interpretation of FIN 46, the trusts which have issued our trust preferred securities would no longer be consolidated. Conversely, SFAS No. 150 requires the
consolidation of these subsidiaries and the presentation of the related debt instruments as a liability. The accounting community is currently working to resolve this contradictory guidance. Our
current presentation has consolidated the trust that issued the preferred securities. One potential impact of not including these trusts in our
consolidated liabilities is that the trust preferred securities may no longer count towards Tier 1 capital. The Federal Reserve has issued regulations which allow for the inclusion of these
instruments in Tier 1 capital regardless of the FIN 46 interpretation, although such a determination could potentially be changed at a later date. We do not expect the adoption of FIN 46 to have any
additional material impact on our financial condition or operating results.

In
April 2003, the FASB issued Statement of Financial Accounting Standards ("SFAS") No. 149,Amendment of Statement 133 on Derivative Instruments
and Hedging Activities("SFAS No. 149") which is effective for hedging relationships entered into or modified after June 30, 2003. SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments including certain derivative instruments embedded in other contracts and for hedging activities. Management does not anticipate
a material impact on the Company's financial statements from the adoption of this pronouncement.

In
May 2003, the FASB issued SFAS No. 150,Accounting for Certain Financial Instruments with Characteristics of both Liabilities and
Equity("SFAS No. 150"). SFAS No. 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both
liabilities and equity in its balance sheet. SFAS No. 150 becomes effective in the third quarter of 2003. Management does not anticipate a material impact on the Company's financial statements
from the adoption of this pronouncement.

9

---





The computation of diluted earnings per share is as follows:

|                                 |                            | Three Months Ended
June 30, |            | Six Months Ended
June 30,
|-------------------------------- | -------------------------- | --------------------------- | ---------- | -------------------------
|
|Basic and diluted net income     |                            | $                           | 6,383,989  |                          
|                                 | Basic earnings per share   |                             | $          | 0.37                     
|                                 | Diluted earnings per share |                             | $          | 0.35                     
|Dividends declared per share     |                            | $                           | 0.120      |                          
|Basic weighted average shares    |                            |                             | 17,374,719 |                          
|Effect of Employee Stock Options |                            |                             | 685,229    |                          
|                                 |                            |                             |            |                          
|Diluted weighted average shares  |                            |                             | 18,059,948 |                          
|                                 |                            |                             |            |                          



Loans are stated at unpaid principal balances, net of unearned income and deferred loan fees. Interest is accrued only if deemed collectible. The following table
represents the composition of the Company's loan portfolio:

June 30,
2003

December 31,
2002

June 30,
2002LoansCommercial and industrial

$
120,771,227

$
104,061,368

$
70,166,364Real estate construction


349,508,658


238,415,023


199,055,570Residential mortgage


254,249,140


198,400,329


171,771,264Real estateother


612,342,600


404,630,039


383,862,156Consumer and other


46,178,523


38,386,805


37,910,012Total loans receivable


1,383,050,148


983,893,564


862,765,368Less:Purchase discount


(90,562
)

(109,273
)

(148,446
)Deferred net loan fees


(136,075
)

(1,233,812
)

(1,268,771
)Unearned income


(61,541
)

(64,032
)

(112,456
)Allowance for loan losses


(20,272,465
)

(14,588,582
)

(12,746,608
)Loans, net

$
1,362,489,505

$
967,897,865

$
848,489,087Mortgage loans held for sale

$
6,926,692

$
8,175,522

$
4,144,673Commercial and industrial


8.73
%

10.58
%

8.13
%Real estate construction


25.27
%

24.23
%

23.07
%Residential mortgage


18.38
%

20.16
%

19.91
%Real estateother


44.27
%

41.13
%

44.49
%Consumer and other


3.34
%

3.90
%

4.39
%Total loans receivable


100.00
%

100.00
%

100.00
%




The Company has elected to follow Accounting Principles Board Opinion No. 25 "Accounting for Stock issued to Employees" (APB 25) and related
interpretations in accounting for its employee stock

10

---

options.
Under APB 25, because the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized.

Statement
of Financial Accounting Standards (SFAS) No. 123, "Accounting for Stock-Based Compensation", as amended by SFAS No.148, requires pro forma disclosures of net income and
earnings per share for companies not adopting its fair value accounting method for stock-based employee compensation. The pro-forma disclosure below uses the fair value method of
SFAS 123 to measure compensation expense for stock-based employee compensation plans. Because the Company's employee stock options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing model does not necessarily provide a
reliable single measure of the fair value of its employee stock options.

Three months ended
June 30, 2003

Six months ended
June 30, 2003Net Income

$
6,383,989

$
12,134,468EPSbasic


0.37


0.72EPSDiluted


0.35


0.70Compensation costFV


240,192


479,194Less: Tax Effect


(81,671
)

(162,937
)Net compensation costFV


158,521


316,257Net Income, Pro-forma


6,225,468


11,818,211EPSBasic


0.36


0.70EPSDiluted


0.34


0.68


11

---





The following is management's discussion and analysis of certain significant factors which have affected the Company's financial position at June 30, 2003
as compared to December 31, 2002 and operating results for the three and six month periods ended June 30, 2003 as compared to the three and six month periods ended June 30, 2002.
These comments should be read in conjunction with the Company's unaudited condensed consolidated financial statements and accompanying notes appearing elsewhere herein.



The foregoing materials and management's discussion of them may contain, among other things, certain forward-looking statements with respect to Main Street
Banks, Inc. ("Main Street"), as well as the goals, plans, objectives, intentions, expectations, financial condition, results of operations, future performance and business of Main Street,
including, without limitation, (i) statements relating to certain of Main Street's goals and expectations with respect to earnings, earnings per share, revenue, expenses, and the growth rate in
such items, as well as other measures of economic performance, including statements relating to estimates of credit quality trends, (ii) statements relating to the benefits of the merger
between the former First Colony Bancshares, Inc. and Main Street (the "Merger"), completed on May 22, 2003, including future financial and operating results, cost savings, enhanced
revenues and the accretion of reported earnings that may be realized from the Merger, and (iii) statements preceded by, followed by or that include the words "may," "could," would," "should,"
"believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "probably," "potentially," "projects," "outlook" or similar expressions. These forward-looking statements involve
certain risks and uncertainties that are subject to change based on various factors (many of which are beyond Main Street's control). The following factors, among others, could cause Main Street's
financial performance to differ materially from the goals, plans, objectives, intentions and expectations expressed in such forward-looking statements: (1) the risk that the businesses involved
in the Merger will not be integrated successfully or such integration may be more difficult, time-consuming or costly than expected; (2) expected revenue synergies and cost savings
from the Merger may not be fully realized or realized within the expected time frame; (3) revenues following the Merger may be lower than expected; (4) deposit attrition, operating
costs, customer loss and business disruption following the Merger, including, without limitation, difficulties in maintaining relationships with employees, may be greater than expected; (5) the
strength of the United States economy in general and the strength of the local economies in which Main Street conducts operations may be different than expected resulting in, among other things, a
deterioration in credit quality or a reduced demand for credit, including the
resultant effect on Main Street's loan portfolio and allowance for loan losses; (6) the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate
policies of the Board of Governors of the Federal Reserve System; (7) inflation, interest rate, market and monetary fluctuations; (8) adverse changes in the financial performance and/or
condition of Main Street's borrowers which could impact the repayment of such borrowers' outstanding loans; and (9) the impact on Main Street's businesses, as well as on the risks set forth
above, of various domestic or international military or terrorists activities or conflicts. Additional information with respect to factors that may cause actual results to differ materially from those
contemplated by such forward-looking statements is included in the reports filed by Main Street with the Securities and Exchange Commission.

Main
Street cautions that the foregoing list of factors is not exclusive. All subsequent written and oral forward-looking statements concerning the Merger or other matters and
attributable to Main Street or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. Main Street does not undertake any obligation to update any
forward-looking statement, whether written or oral.

12

---

This
Form 10-Q contains financial information determined by methods other than in accordance with Generally Accepted Accounting Principles ("GAAP"). Main Street's management uses
these non-GAAP measures in their analysis of Main Street's performance. These measures adjust GAAP performance to exclude the effects of the amortization of intangibles. 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 impact on Main Street's
performance are difficult to predict, management believes presentations of financial measures excluding the impact 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.



The Company's total assets increased $524.7 million or 37.98% since December 2002, due primarily to the acquisition of First Colony as noted in
Note 2 above. Federal funds sold decreased $48.2 million primarily due to an increase in loan demand. Loans increased 40.77% or $394.6 million since December 2002, while
the investment portfolio increased $82.0 million. Both increases are due primarily to the First Colony acquisition. Goodwill increased by $78.3 million, primarily as a result of the
First Colony acquisition. Total deposits increased by 24.51% or $276.7 million due primarily to the First Colony acquisition, an ongoing deposit campaign, limited use of brokered and national
deposits, and seasonal public funds.

Return
on average equity for the three and six months ended June 30, 2003 was 16.54% on average equity of $154.8 million, and 16.80% on average equity of
$145.4 million, respectively. This compares to 18.54% on average equity of $108.3 million, and 18.40% on average equity of $107.3 million for the same periods in 2002.

Return
on average assets for the three and six months ended June 30, 2003 was 1.58% and 1.63%, respectively. This compares to 1.71% and 1.72% for the same periods in 2002.

MAIN STREET BANKS, INC. AND SUBSIDIARIES
OPERATING INCOME CALCULATION
(Unaudited)

Three months ended
June 30,

Six months ended
June 30,2003

2002

2003

2002Net Income

$
6,383,989

$
5,006,393

$
12,134,468

$
9,775,999Amortization of intangible assets (net)


87,750


33,600


144,225


67,200Operating Income

$
6,471,739


5,039,993


12,278,693


9,843,199Basic

$
0.37

$
0.32

$
0.73

$
0.63Diluted

$
0.36

$
0.31

$
0.71

$
0.61Average tangible assets

$
1,580,794,368

$
1,172,539,379

$
1,471,253,785

$
1,143,182,382Average tangible equity

$
112,974,786

$
107,580,030

$
116,132,743

$
106,563,649Operating return on average tangible assets


1.64
%

1.72
%

1.68
%

1.74
%Operating return on average tangible equity


22.98
%

18.79
%

21.32
%

18.63
%


13

---



|                                                                           |         | Three months ended
June 30, |            | Six months ended
June 30, |  
|-------------------------------------------------------------------------- | ------- | --------------------------- | ---------- | ------------------------- | -
|
|
|Net interest income                                                        |         |                             | 18,189,248 |                           |  
|Net interest income (tax equivalent)                                       |         |                             | 18,474,237 |                           |  
|Provision for loan losses                                                  |         |                             | 1,801,000  |                           |  
|Non-interest income                                                        |         |                             | 5,634,871  |                           |  
|Non-interest expense                                                       |         |                             | 12,830,345 |                           |  
|Net Income                                                                 |         |                             | 6,383,989  |                           |  
|
|Loans, net of unearned income                                              |         | $                           | 1,204,483  |                           | $
|Investment securities                                                      |         |                             | 262,180    |                           |  
|Total assets                                                               |         |                             | 1,622,600  |                           |  
|Deposits                                                                   |         |                             | 1,252,649  |                           |  
|Shareholders' equity                                                       |         |                             | 154,818    |                           |  
|
|Earnings per shareBasic                                                   |         | $                           | 0.37       |                           | $
|Earnings per shareDiluted                                                 |         | $                           | 0.35       |                           | $
|Book value per share at end of period                                      |         | $                           | 10.10      |                           | $
|End of period shares outstanding                                           |         |                             | 18,888,732 |                           |  
|Weighted average shares outstanding                                        |         |                             |            |                           |  
|                                                                           | Basic   |                             |            | 17,374,719                |  
|                                                                           | Diluted |                             |            | 18,059,948                |  
|
|Market Price:                                                              |         |                             |            |                           |  
|                                                                           | Closing |                             | $          | 24.94                     |  
|                                                                           | High    |                             |            | 25.40                     |  
|                                                                           | Low     |                             |            | 18.48                     |  
|Trading volume                                                             |         |                             | 1,270,800  |                           |  
|Cash dividends per share                                                   |         | $                           | 0.120      |                           | $
|Dividend payout ratio                                                      |         |                             | 33.95      | %                         |  
|Price to earnings                                                          |         |                             | 17.59      |                           |  
|Price to book value                                                        |         |                             | 2.47       |                           |  
|
|Return on average assets                                                   |         |                             | 1.58       | %                         |  
|Return on average equity                                                   |         |                             | 16.54      | %                         |  
|Average loans as percentage of average deposits                            |         |                             | 96         | %                         |  
|Net interest margin (tax equivalent)                                       |         |                             | 5.02       | %                         |  
|Average equity to average assets                                           |         |                             | 9.54       | %                         |  
|Efficiency ratio                                                           |         |                             | 53.85      | %                         |  
|
|Total non-performing assets                                                |         |                             | 7,189,862  |                           |  
|Non-performing assets as a percentage of loans plus foreclosed assets      |         |                             | 0.52       | %                         |  
|Net annualized charges-offs (recoveries) as a percentage of average loans. |         |                             | 0.40       | %                         |  
|Reserve for loan losses as a percentage of loans, at end of period         |         |                             | 1.47       | %                         |  

14

---

Capital

At June 30, 2003, the capital ratios of the Company and Main Street Bank (the "Bank") exceeded regulatory minimum capital requirements. The minimum capital
requirements for banks and bank holding companies require a leverage capital to total assets ratio of at least 4%, core capital to risk-weighted assets ratio of at least 4% and total
capital to risk-weighted assets of 8%. The following table reflects the Company's and the Bank's compliance with regulatory capital requirements at June 30, 2003.

Company

Bank

Minimum
Required

Well
CapitalizedLeverage ratio

7.92
%
8.89
%
4.00
%
5.00
%Risk based capital ratios:Tier 1 risk based capital

8.24
%
9.23
%
4.00
%
6.00
%Risk-based capital

10.83
%
10.48
%
8.00
%
10.00
%


Loans and Allowance for Loan Losses

At June 30, 2003, loans, net of unearned income, were $1.362 million, an increase of $394.6 million or 40.77% over net loans at
December 31, 2002 of $967.9 million. The growth in the loan portfolio was attributable to the impact of the First Colony acquisition as well as a consistent focus on quality loan
production and strong loan markets in the state. Other real estate loans increased $207.7 million or 51.33% from December 31, 2002 while real estate construction loans increased
$111.1 million or 46.60%
over the same period. The Company continues to monitor the composition of the loan portfolio to ensure that the market risk to the balance sheet is not adversely affected by the impact of changes in
the economic environment on any one segment of the portfolio.

The
Company primarily focuses on the following loan categories: (1) commercial and industrial, (2) real estate construction, (3) residential mortgage,
(4) commercial real estate, and (5) consumer loans. The Company's management has strategically located its branches in high growth markets and has taken advantage of a surge in
residential and industrial growth in northeastern Georgia.

The
allowance for loan losses is a reserve established through charges to earnings in the form of a provision for loan losses. The allowance for loan losses is based on management's
evaluation of the size and composition of the loan portfolio, the level of non-performing and past due loans, historical trends of charged-off loans and recoveries, prevailing
economic conditions and other factors management deems appropriate. The Company's management has established an allowance for loan losses which it believes is adequate for probable losses in the loan
portfolio. Based on a credit evaluation of the loan portfolio, management presents a quarterly review of the allowance for loan losses to the Company's Board of Directors. The review that management
has developed primarily focuses on risk by evaluating the level of loans in certain risk categories. These categories have been established by management and take the form of loan grades. These loan
grades closely mirror regulatory classification guidelines and include pass loan categories 1 through 4 and special mention, substandard, doubtful, and loss categories of 5 through 8, respectively. By
grading the loan portfolio in this manner the Company's management is able to effectively evaluate the portfolio by risk, which management believes is the most effective way to analyze the loan
portfolio and thus analyze the adequacy of the allowance for loan losses. Management also reviews charge-offs and recoveries on a quarterly basis to identify trends.

The
Company's risk management processes include a loan review program to evaluate the credit risk in the loan portfolio. The credit review department is independent of the loan function
and reports to the Executive Vice President of Risk Management. Through the loan review process, the Company maintains an internally criticized classified loan watch list which, along with the
delinquency report of loans, serves as a tool to assist management in assessing the overall quality of the loan portfolio and the adequacy of the allowance for loan losses. Loans classified as
"substandard" are those loans with

15

---

clear
and defined weaknesses such as a highly leveraged position, unfavorable financial ratios, uncertain financial ratios, uncertain repayment sources, deterioration in underlying collateral values,
or poor financial condition which may jeopardize recoverability of the debt. Loans classified as "doubtful" are those loans that have characteristics similar to substandard loans but have an increased
risk of loss, or at least a portion of the loan may require being charged-off. Loans classified as "loss" are those loans that are in the process of being charged-off.

For
the six month period ending June 30, 2003, net charge-offs totaled $1,416,135 or .26% (annualized) of average loans outstanding for the period, net of unearned
income, compared to
$1,329,840 or .32% in net charge-offs for the same period in 2002. The provision for loan losses for the six months ended June 30, 2003 was $2,848,000 compared to $2,059,000 for the
same period in 2002. The allowance for loan losses totaled $20,272,465 or 1.47% of total loans, net of unearned income at June 30, 2003, compared to $14,588,582 or 1.48% of total loans at
December 31, 2002.

The
following table presents an analysis of the allowance for loan losses for the six-month periods ended June 30, 2003 and 2002:

Six Months Ended
June 30,2003

2002Balance of allowance for loan losses at beginning of period

$
14,731,047

$
12,017,448Provision charged to operating expense


2,848,000


2,059,000Additional reserves assumed in First Colony acquisition


4,109,553Charge-offs:Commercial, financial and agricultural


790,135


578,957Real estateconstruction and land development


135,816


134,941Real estatemortgage


Installment and other consumer


666,862


752,727Total charge-offs


1,592,813


1,466,625Recoveries:Commercial, financial and agricultural


26,183


8,584Real estateconstruction and land development


1,210


2,929Real estatemortgageInstallment and other consumer


149,285


125,272Total recoveries


176,678


136,785Net charge-offs


1,416,135


1,329,840Balance of allowance for loan losses at end of period

$
20,272,465

$
12,746,608


Interest Rate Sensitivity and Liquidity



The Company's primary market risk exposures are credit (as discussed previously), interest rate risk and to a lesser degree, liquidity risk. The Bank operates
under an Asset Liability and Risk Management policy approved by the Board of Directors of the Bank through the Asset and Liability Committee ("ALCO"). The policy outlines limits on interest rate risk
in terms of changes in net interest income and changes in the net market values of assets and liabilities over certain changes in interest rate environments. These measurements are made through a
simulation model which projects the impact of changes in interest rates on the Bank's assets and liabilities. The policy also outlines responsibility for monitoring interest rate risk, and the process
for the approval, implementation and monitoring of interest rate risk strategies to achieve the Bank's interest rate risk objectives.

16

---

The
Bank's ALCO is comprised of senior officers of the Bank. The ALCO makes all tactical and strategic decisions with respect to the sources and uses of funds that may affect net
interest income, including net interest spread and net interest margin. The ALCO's decisions are based upon policies established by the Bank's Board of Directors, which are designed to meet three
goals: manage interest rate risk, improve interest rate spread and maintain adequate liquidity.

The
ALCO has developed a program of action which includes, among other things, the following: (i) selling substantially all conforming, long-term, fixed rate mortgage
originations, (ii) originating and retaining for the portfolio shorter term, higher yielding loan products which meet the Company's underwriting criteria; and (iii) actively managing the
Company's interest rate risk exposure.



The normal course of business activity exposes the Company to interest rate risk. Interest rate risk is managed within an overall asset and liability framework
for the Company. The principal objectives of asset and liability management are to guide the sensitivity of net interest spreads to potential changes in interest rates and enhance profitability in
ways that promise sufficient reward for recognized and controlled risk. Funding positions are kept within predetermined limits designed to ensure that risk-taking is not excessive and that
liquidity is properly managed. The Company employs sensitivity analysis in the form of a net interest income simulation to help characterize the market risk arising from changes in interest rates. In
addition, fluctuations in interest rates usually result in changes in the fair market value of the Company's financial instruments, cash flows and net interest income. The Company's interest rate risk
position is managed by ALCO. ALCO's objective is to optimize the Company's financial position, liquidity and net interest income, while remaining within the Board of Director's approved limits.

The
Company uses a simulation modeling process to measure interest rate risk and evaluate potential strategies. The Company's net interest income simulation includes all financial assets
and liabilities. This simulation measures both the term risk and basis risk in the Company's assets and liabilities. The simulation also captures the option characteristics of products, such as caps
and floors on floating rate loans, the right to pre-pay mortgage loans without penalty and the ability of customers to withdraw deposits on demand. These options are modeled through the
use of primarily historical customer behavior and statistical analysis. These simulations incorporate assumptions regarding balance sheet growth, asset and liability mix, pricing and maturity
characteristics of the existing and projected balance sheets. Other interest rate-related risks such as prepayment, basis and option risk are also considered. Simulation results quantify
interest risk under various interest rate scenarios. Management then develops and implements appropriate strategies. The Board of Directors regularly reviews the overall rate risk position and asset
and liability management strategies.



Statement of Financial Accounting Standards No. 133,Accounting for Derivative Instruments and Hedging
Activities(SFAS 133) and SFAS 149, as amended and interpreted, establishes accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts and for hedging activities. As required by SFAS 133, the Company records all derivatives on the balance sheet at fair value. The accounting
for changes in the fair value of derivatives depends on the intended use of the derivative and the resulting designation. Derivatives used to hedge the exposure
to changes in the fair value of an asset, liability, or firm commitment attributable to a particular risk, such as interest rate risk, are considered fair value hedges. Derivatives used to hedge the
exposure to variability in expected future cash flows or other types of forecasted transactions are considered cash flow hedges.

17

---



The Company's objective in using derivatives is to add stability to interest income and/or interest expense and to manage its exposure to interest rate movements or other identified
risks. To accomplish this objective the Company primarily uses interest rate swaps as part of its cash flow hedging strategy. Interest rate swaps designated as cash flow hedges involve the receipt of
fixed-rate amounts in exchange for variable-rate payments over the life of the agreements without exchange of the underlying principal amount. For more details on the
derivative instruments utilized by the Company, please refer to the December 31, 2002 10-K.

As
of December 31, 2002, no derivatives were designated as fair value hedges. Additionally, the Company does not use derivatives for trading or speculative purposes and currently
does not have any derivatives that are not designated as hedges. At December 31, 2002, derivatives with a fair value of $1.4 million were included in other assets. The change in net
unrealized gains/losses of $865,000 at December 31, 2001 (after-tax) for derivatives designated as cash flow hedges is separately disclosed in the statement of changes in
shareholders' equity and comprehensive income. No hedge ineffectiveness on cash flow hedges was recognized during 2002.

Main Street Bank
Derivative Positions
As of June 30, 2003

Interest Rate Swaps

|Type                                 |                            | Transaction
Date |  | Term
Date |  | Notional |            | Pay
Rate   |      | Receive
Rate |      | Current
Spread |      | Market
Value
|------------------------------------ | -------------------------- | ---------------- |  | --------- |  | -------- | ---------- | ---------- | ---- | ------------ | ---- | -------------- | ---- | ------------
|Received Fixed Prime Swapamortizing |                            | Apr-02           |  | Apr-04    |  | $        | 15,000,000 |            | 4.00 | %            | 6.63 | %              | 2.63 | %           
|                                     |                            | Apr-02           |  | Apr-04    |  | $        | 20,000,000 |            |      |              |      |                |      |             
|Received Fixed Prime Swap            |                            | Mar-03           |  | Mar-06    |  | $        | 50,000,000 |            | 4.00 | %            | 5.26 | %              | 1.26 | %           
|                                     |                            |                  |  |           |  |          |            |            |      |              |      |                |      |             
|                                     | Total Received Fixed Swaps |                  |  |           |  |          | $          | 85,000,000 |      |              |      |                |      |             

Interest Rate Floors

|Type                       |                            | Transaction
Date |  | Term
Date |  | Notional |             | Strike
Price |      | Current
Rate |      | Current
Spread |       | Market
Value
|-------------------------- | -------------------------- | ---------------- |  | --------- |  | -------- | ----------- | ------------ | ---- | ------------ | ---- | -------------- | ----- | ------------
|Prime based Floor          |                            | Jun-03           |  | Jun-05    |  | $        | 100,000,000 |              | 3.75 | %            | 4.00 | %              | (0.25 | )%          
|                           |                            |                  |  |           |  |          |             |              |      |              |      |                |       |             
|                           | Total Interest Rate Floors |                  |  |           |  |          | $           | 100,000,000  |      |              |      |                |       |             
|                           |                            |                  |  |           |  |          |             |              |      |              |      |                |       |             
|Total Derivative Positions |                            |                  |  |           |  | $        | 185,000,000 |              |      |              |      |                |       |             
|                           |                            |                  |  |           |  |          |             |              |      |              |      |                |       |             



Liquidity involves the Company's ability to raise funds to support asset growth or reduce assets to meet deposit withdrawals and other payment obligations, to
maintain reserve requirements and otherwise to operate on an ongoing basis. During the past three years the Company's liquidity needs have primarily been met by growth in core deposits, advances from
the Federal Home Loan Bank and raising capital. The Company's cash and Federal funds sold and cash flows from amortizing investment and loan portfolios have generally created an adequate liquidity
position. Executive management reviews liquidity monthly. This review is from a regulatory as well as static and a four-quarter forecasted standpoint.

Management
believes the Company has sufficient liquidity to meet all reasonable borrower, depositor, and creditor needs in the present economic environment. In addition, the Bank has
access to the Atlanta FHLB for borrowing purposes. The Company has not received any recommendations from regulatory authorities that would materially affect liquidity, capital resources or operations.

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On
May 22, 2003, Main Street Banks, Inc. completed the sale of $45,000,000 of Main Street Banks Statutory Trust II floating rate trust preferred securities ("Capital
Securities") with a maturity date of June 30, 2033 and a stated liquidation amount of $1,000 per Capital Security. Interest on the Capital Securities is to be paid on the last day of each
March, June, September, and December and is reset quarterly based on the three month London interbank offered rate ("3-Month LIBOR") plus 325 basis points at the end of the preceding
quarter, provided, however, that prior to May 22, 2008, the 3-Month LIBOR shall not exceed 8.75%. Main Street Banks, Inc. used the proceeds from this offering to fund a
portion of the price paid to acquire First Colony Bancshares, Inc., Alpharetta, Georgia.

Results of Operations for the Three Months Ended June 30, 2003 and 2002



Interest income for the three months ended June 30, 2003 was $24.1 million, an increase of $4.4 million, or 22.41% compared to
$19.7 million for the same period in 2002. The increase is mainly attributable to loan growth of $514 million from June 30, 2002 to June 30, 2003. Interest on federal funds
sold decreased $110,000, due to the Company's decision to use the funds to purchase investment securities to earn a higher yield. Average earning assets for the three month period increased
$394.4 million to $1.477 billion as of June 30, 2003 compared to $1.083 billion as of June 30, 2002.



Interest expense on deposits and other borrowings for the three months ended June 30, 2003 was $5.9 million, a $0.2 million, or 4.71%
decrease from June 30, 2002. While average interest bearing liabilities increased $391million to $1.45 billion for the three months ended June 30, 2003 compared to
$1.06 billion for the three months ended June 30, 2002, the yield on average interest bearing liabilities decreased 28 basis points to 2.08% from 2.36% as of June 30, 2003 and
2002, respectively.



Net interest income for the three months ended June 30, 2003 increased $4.7 million, or 34.95% to $18.2 million compared to
$13.5 million for the same period ending June 30, 2002. The increase was mainly attributable to the acquisition of First Colony in May 2003, as well as the Company's ability to
manage the effects of the Federal Reserve's rate reductions. The Company's net interest margin decreased to 5.02% for the three months ended June 30, 2003 compared to 5.08% as of
June 30, 2002.



The provision for loan losses was $1.8 million for the three months ended June 30, 2003 as compared to $1.4 million for the three months
ended June 30, 2002. The increase in the provision for loan losses was attributable to loan growth. Management believes that the present allowance for loan losses is adequate.



Non-interest income was $5.6 million for the three months ended June 30, 2003 an increase of $1.0 million, or 22.40% compared to
$4.6 million for the three months ended June 30, 2002. The major components of the increase were insurance agency income, income from SBA lending, and mortgage banking income. Insurance
agency income increased $0.4 million, or 44.24% to $1.2 million from $0.9 million for the three months ended June 30, 2003 and 2002, respectively. Income from SBA lending
increased $0.3 million, or 208.93% to $0.5 million from $0.2 million for the three months ended June 30, 2003 and 2002, respectively. Mortgage banking income increased
$0.3 million, or 47.46% to $0.9 million from $0.6 million for the three months ended June 30, 2003 and 2002, respectively.

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Non-interest expense increased $3.5 million or 36.89% to $12.8 million from $9.4 million for the three months ended
June 30, 2003 and 2002, respectively. The increase was attributable to the impact of the First Colony acquisition as well as to additional personnel required to accommodate the Company's
growth. Salaries were $6.2 million, an increase of $1.4 million, or 30.50% from the three months ended June 30, 2002. The Company's efficiency ratio was 53.9% for the three months
ended June 30, 2003 compared to 51.8% for the three months ended June 30, 2002.



The amount of income tax expense is influenced by the amount of taxable income, the amount of tax-exempt income, the amount of nondeductible interest
expense, and the amount of other nondeductible expenses. For the three months ended June 30, 2003, the provision for taxes was $2.8 million, an increase of $0.5 million from the
$2.3 million provided for in the same period in 2002. The effective tax rate for the three months ended June 30, 2003 was 30.55% compared to 31.18% for the same period in 2002.

Results of Operations for the Six Months Ended June 30, 2003 and 2002



Interest income for the six months ended June 30, 2003 was $45.7 million, an increase of $7.4 million, or 19.27% compared to
$38.3 million for the six months ended June 30, 2002. Interest and fees on loans increased $6.8 million to $40.4 million for the six months ended June 30, 2003
compared to $33.6 million for the same period in 2001. Interest on investment securities increased $0.9 million to $5.1 million from $4.2 million for the six months ended
June 30, 2003 and 2002, respectively. These increases are due to increased asset balances, mainly attributable to the First Colony acquisition. Average earning assets increased
$316 million to $1.37 billion for the six months ended June 30, 2003 compared to $1.05 billion for the same period ended June 30, 2002. Yield on average earning
assets decreased 65 basis points to 6.82% from 7.47% for the six months ended June 30, 2003 and 2002, respectively.



Interest expense on deposits and other borrowings for the six months ended June 30, 2003 was $12.4 million, a $0.1 million, or 1.00% decrease
from the same period ending June 30, 2002. The decrease was attributable to the yield on average interest bearing liabilities decreasing 30 basis points to 2.15% from 2.45% for the six months
ended June 30, 2003 and June 30, 2002, respectively. Average interest bearing liabilities increased $314 million to $1.34 billion for the six months ended June 30,
2003 compared to $1.03 billion for the six months ended June 30, 2002.



Net interest income for the six months ended June 30, 2003 increased $7.5 million, or 29.13% to $33.3 million compared to
$25.8 million for the same period ending June 30, 2002. The increase was mainly attributable to the Company's ability to manage the effects of the Federal Reserve's aggressive rate
reductions. The Company's net interest margin decreased to 4.99% for the six months ended June 30, 2003 compared to 5.03% as of June 30, 2002.



The provision for loan losses was $2.8 million for the six months ended June 30, 2003 as compared to $2.1 million for the same period ending
June 30, 2002. The increase in the provision for loan losses

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was
attributable to loan growth. Management believes that the present allowance for loan losses is adequate considering the Company's historical loss experience.



Noninterest income was $10.9 million for the six months ended June 30, 2003, an increase of $2.1 million, or 23.84% compared to
$8.8 million for the six months ended June 30, 2002. The components of the increase were insurance agency income, mortgage banking income, income from SBA lending, and investment
securities gains. Insurance agency income increased $0.7 million, or 44.13% to $2.4 million from $1.7 million for the six months ended June 30, 2003 and 2002, respectively.
Mortgage banking
income increased $0.5 million, or 45.11% to $1.5 million from $1.0 million for the six months ended June 30, 2003 and 2002, respectively. Income from SBA lending increased
$0.4 million, or 86.09% to $0.9 million from $0.5 million for the six months ended June 30, 2003 and 2002, respectively. Gains on sales of investment securities of
$0.3 million were recognized for the six months ended June 30, 2003, compared to none for the six month period ended June 30, 2002.



Noninterest expense increased $5.5 million or 29.85% to $23.9 million from $18.4 million for the six months ended June 30, 2003 and
2002, respectively. The increase was attributable to the impact of the First Colony acquisition as well as to additional personnel required to accommodate the Company's growth. Salaries and other
compensation were $11.8 million, an increase of $2.6 million, or 27.56% from the six months ended June 30, 2002. The Company's efficiency ratio was 54.2% for the six months ended
June 30, 2003 compared to 53.3% for the six months ended June 30, 2002.



The amount of income tax expense is influenced by the amount of taxable income, the amount of tax-exempt income, the amount of nondeductible interest
expense, and the amount of other nondeductible expenses. For the six months ended June 30, 2003, the provision for taxes was $5.3 million, an increase of $1.0 million from the
$4.3 million provided for in the same period in 2002. The effective tax rate for the six months ended June 30, 2003 was 30.22% compared to 30.55% for the same period in 2002.

ITEM 4. CONTROLS AND PROCEDURES

Our Chief Executive Officer and Chief Financial Officer have evaluated the Company's disclosure controls and procedures as of the end of the quarterly period
covered by this Form 10-Q and have concluded that the Company's disclosure controls and procedures are effective. During the second quarter of 2003 there were no changes in the
Company's internal control over financial reporting that may have materially affected, or that are reasonably likely to materially affect, the Company's internal control over financial reporting.

21

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PART II.OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The Company held its Annual Meeting of Shareholders on May 21, 2003. The following matters were voted on at the Annual Meeting:



Votes For

Votes Against

Votes WithheldP. Harris Hines

13,378,799

204,627

0Harry L. Hudson, Jr.

13,378,799

204,627

0Edward C. Milligan

13,378,799

204,627

0




| |  | Exhibit
No. |  | Description                                                                                                                                                                                                                                                                           
| |  | ----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 3.1         |  | Articles of Incorporation of Main Street Bank, Inc. (incorporated by reference to Exhibit 3.1 to Registration Statement No. 33-78046 on Form S-4) as amended by Certificate of Merger and Name Change (incorporated by
reference to Exhibit 3.1 of the December 31, 1996, Form 10-KSB)
| |  | 3.2         |  | Bylaws of Main Street Bank, Inc. (incorporated by reference to Exhibit 3.2 to Registration Statement No. 33-78046 on Form S-4)                                                                                                                                                        
| |  | 31.1        |  | Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                      
| |  | 31.2        |  | Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                      
| |  | 32.1        |  | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                    
| |  | 32.2        |  | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                    

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| |  | April 16, 2003 |  | Press release announcing the results of the first quarter of 2003.                                                                
| |  | -------------- |  | ----------------------------------------------------------------------------------------------------------------------------------
| |  | May 23, 2003   |  | Press release announcing the completion of the Company's acquisition of First Colony Bancshares.                                  
| |  | May 30, 2003   |  | Press release announcing the sale of $45,000,000 of Main Street Banks Statutory Trust II floating rate trust preferred securities.
| |  | July 3, 2003   |  | Press release announcing the date of the Company's conference call to release the results of the second quarter of 2003.          
| |  | July 10, 2003  |  | Press release announcing a dividend declaration.                                                                                  
| |  | July 16, 2003  |  | Press release announcing the results of the second quarter of 2003.                                                               
| |  | July 31, 2003  |  | Presentation of the text of slides provided to the investment community.                                                          

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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

|      |  |                 |  | MAIN STREET BANKS, INC.
|----- |  | --------------- |  | -----------------------
|Date: |  | August 14, 2003 |  | By:                    
|Date: |  | August 14, 2003 |  | By:                    

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