##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20429
 FORM
10-Q
  þ
    
    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2006
 o
    
    TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
 For the Transition Period from  to
 Commission File No. 000-52212
 MID-AMERICA BANCSHARES, INC.
 
   
   
   
   
  
   þ o
  o þ o
  o þ




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##### 



TABLE OF CONTENTS
 PART I  FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsThe unaudited consolidated financial statements of the registrant, Mid-America Bancshares, Inc. (the Company) are as follows:Consolidated Balance Sheets  September 30, 2006 and December 31, 2005.Consolidated Statements of Earnings  For the three months and nine months ended September 30, 2006 and 2005.Consolidated Statements of Changes in Stockholders Equity  For the nine months ended September 30, 2006 and 2005.Consolidated Statements of Comprehensive Earnings  For the three months and nine months ended September 30, 2006 and 2005.Consolidated Statements of Cash Flows  For the nine months ended September 30, 2006 and 2005.Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of OperationsItem 3.
    
    Quantitative and Qualitative Disclosures About Market RiskItem 4.
    
    Controls and ProceduresPART II  OTHER INFORMATIONItem 1.
    
    Legal ProceedingsItem 1A.
    
    Risk Factors.Item 2.
    
    Unregistered Sales of Equity securities and Use of Proceeds.Item 3.
    
    Defaults Upon Senior Securities.Item 4.
    
    Submission of Matters to a Vote of Security Holders.Item 5.
    
    Other Information.Item 6.
    
    Exhibits.SIGNATURESCERTIFICATIONSEx-31.1 Section 302 CertificationEx-31.2 Section 302 CertificationEx-32   Section 906 Certification
  2




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 
 Consolidated Balance Sheets
 September 30, 2006 and December 31, 2005
 (Unaudited)
 September 30,
    
    
    December 31,2006
    
    
    2005(In Thousands)AssetsLoans, less allowance for loan losses of $7,066,000
and $3,649,000, respectively
    
    $
    639,463
    
    
    $
    301,878Securities:Available-for-sale, at market (amortized cost  $168,614,000 and
$65,335,000, respectively)
    
    
    167,108
    
    
    
    64,035Held-to-maturity, at amortized cost (market value  $9,774,000
in 2006)
    
    
    9,740
    
    
    
    Total securities
    
    
    176,848
    
    
    
    64,035Restricted equity securities
    
    
    2,145
    
    
    
    1,046Federal funds sold
    
    
    7,156
    
    
    
    26,459Interest-bearing deposits in financial institutions
    
    
    2,140
    
    
    
    Loans held for sale
    
    
    4,989
    
    
    
    2,196Total earning assets
    
    
    832,741
    
    
    
    395,614Cash and due from banks
    
    
    23,908
    
    
    
    6,675Bank premises and equipment, net of accumulated depreciation
    
    
    33,215
    
    
    
    12,808Accrued interest receivable
    
    
    5,167
    
    
    
    2,114Other real estate
    
    
    218
    
    
    
    444Deferred tax asset
    
    
    
    
    
    
    717Intangible assets, net
    
    
    4,910
    
    
    
    Goodwill
    
    
    19,147
    
    
    
    Other assets
    
    
    2,087
    
    
    
    930Total assets
    
    $
    921,393
    
    
    $
    419,302Liabilities and Stockholders EquityDeposits
    
    $
    778,910
    
    
    $
    359,037Securities sold under repurchase agreements
    
    
    9,168
    
    
    
    621Deferred tax liability
    
    
    482
    
    
    
    Accrued interest and other liabilities
    
    
    4,979
    
    
    
    2,823Advances from Federal Home Loan Bank
    
    
    25,819
    
    
    
    18,409Total liabilities
    
    
    819,358
    
    
    
    380,890Stockholders equity:Preferred stock, no par value, authorized 25,000,000 and 1,000,000,
respectively
    
    
    
    
    
    
    Common stock, $1 par value; authorized 75,000,000 shares, issued
13,910,919 and 3,398,069 shares issued and outstanding, respectively
    
    
    13,911
    
    
    
    3,398Additional paid-in capital
    
    
    87,489
    
    
    
    36,799Retained earnings (deficit)
    
    
    1,564
    
    
    
    (338
    )Net unrealized losses on available-for-sale securities, net of
income taxes of $577,000 in 2006
    
    
    (929
    )
    
    
    (1,300
    )102,035
    
    
    
    38,559Less cost of treasury stock of 9,833 shares in 2005
    
    
    
    
    
    
    (147
    )Total stockholders equity
    
    
    102,035
    
    
    
    38,412Total liabilities and stockholders equity
    
    $
    921,393
    
    
    $
    419,302
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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 
 Consolidated Statements of Earnings
 Three Months and Nine Months Ended September 30, 2006 and 2005
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In Thousands, Except Per Share Amounts)Interest income:Interest and fees on loans
    
    $
    9,094
    
    
    
    5,189
    
    
    $
    21,912
    
    
    
    13,630Interest and dividends on taxable securities
    
    
    1,179
    
    
    
    435
    
    
    
    2,597
    
    
    
    1,237Interest and dividends on non-taxable securities
    
    
    278
    
    
    
    5
    
    
    
    545
    
    
    
    5Interest on Federal funds sold
    
    
    80
    
    
    
    129
    
    
    
    467
    
    
    
    230Interest on loans held for sale
    
    
    30
    
    
    
    26
    
    
    
    85
    
    
    
    68Interest and dividends on restricted equity securities
    
    
    35
    
    
    
    17
    
    
    
    68
    
    
    
    33Interest on interest-bearing deposit in financial institution
    
    
    86
    
    
    
    
    
    
    
    200
    
    
    
    Other interest income
    
    
    3
    
    
    
    
    
    
    
    3
    
    
    
    Total interest income
    
    
    10,785
    
    
    
    5,801
    
    
    
    25,877
    
    
    
    15,203Interest expense:Interest on negotiable order of withdrawal accounts
    
    
    239
    
    
    
    39
    
    
    
    452
    
    
    
    105Interest on money market and savings accounts
    
    
    680
    
    
    
    484
    
    
    
    1,659
    
    
    
    1,377Interest on certificates of deposit over $100,000
    
    
    2,773
    
    
    
    1,014
    
    
    
    6,509
    
    
    
    2,659Interest on certificates of deposit  other
    
    
    1,732
    
    
    
    750
    
    
    
    4,030
    
    
    
    1,812Interest on securities sold under repurchase agreements
    
    
    77
    
    
    
    5
    
    
    
    128
    
    
    
    10Interest on Federal funds purchased and other borrowed funds
    
    
    27
    
    
    
    
    
    
    
    27
    
    
    
    2Interest on advances from the Federal Home Loan Bank
    
    
    197
    
    
    
    163
    
    
    
    555
    
    
    
    290Total interest expense
    
    
    5,725
    
    
    
    2,455
    
    
    
    13,360
    
    
    
    6,255Net interest income
    
    
    5,060
    
    
    
    3,346
    
    
    
    12,517
    
    
    
    8,948Provision for loan losses
    
    
    (83
    )
    
    
    (390
    )
    
    
    (247
    )
    
    
    (811
    )Net interest income after provision for loan losses
    
    
    4,977
    
    
    
    2,956
    
    
    
    12,270
    
    
    
    8,137Other income:Service charges on deposit accounts
    
    
    315
    
    
    
    203
    
    
    
    729
    
    
    
    565Investment banking fees and commissions, net
    
    
    339
    
    
    
    284
    
    
    
    1,007
    
    
    
    831Mortgage broker fees and fees on mortgage originations
    
    
    431
    
    
    
    343
    
    
    
    1,056
    
    
    
    923Gain on sale of securities, net
    
    
    6
    
    
    
    
    
    
    
    
    
    
    
    Gain on sale of SBA loans
    
    
    39
    
    
    
    
    
    
    
    128
    
    
    
    49Title company income
    
    
    68
    
    
    
    84
    
    
    
    199
    
    
    
    192Other fees and commissions
    
    
    157
    
    
    
    151
    
    
    
    411
    
    
    
    297Total other income
    
    
    1,355
    
    
    
    1,065
    
    
    
    3,530
    
    
    
    2,857Other expenses:Salaries and employee benefits
    
    
    2,990
    
    
    
    1,937
    
    
    
    7,729
    
    
    
    5,375Occupancy expenses, net
    
    
    469
    
    
    
    220
    
    
    
    1,201
    
    
    
    664Furniture and equipment expense
    
    
    422
    
    
    
    280
    
    
    
    1,078
    
    
    
    803Data processing expense
    
    
    281
    
    
    
    164
    
    
    
    635
    
    
    
    439Advertising and marketing
    
    
    128
    
    
    
    115
    
    
    
    380
    
    
    
    303Printing, stationary and supplies
    
    
    119
    
    
    
    101
    
    
    
    340
    
    
    
    287Amortization of intangible assets
    
    
    65
    
    
    
    
    
    
    
    65
    
    
    
    Loss on sale of securities, net
    
    
    
    
    
    
    
    
    
    
    139
    
    
    
    Other operating expenses
    
    
    733
    
    
    
    481
    
    
    
    1,633
    
    
    
    1,346Loss and expense related to sale of other real estate
    
    
    13
    
    
    
    
    
    
    
    13
    
    
    
    Loss on disposal of fixed assets
    
    
    2
    
    
    
    4
    
    
    
    2
    
    
    
    21Total other expenses
    
    
    5,222
    
    
    
    3,302
    
    
    
    13,215
    
    
    
    9,238Earnings before income taxes
    
    
    1,110
    
    
    
    719
    
    
    
    2,585
    
    
    
    1,756Income taxes
    
    
    345
    
    
    
    
    
    
    
    683
    
    
    
    24Net earnings
    
    
    765
    
    
    
    719
    
    
    
    1,902
    
    
    
    1,732Accretion related to redemption of preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )Earnings applicable to common stockholders
    
    $
    765
    
    
    
    719
    
    
    $
    1,902
    
    
    
    1,657Basic earnings per common share
    
    $
    .08
    
    
    
    .13
    
    
    $
    .25
    
    
    
    .29Diluted earnings per common share
    
    $
    .08
    
    
    
    .13
    
    
    $
    .25
    
    
    
    .29
  4




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MID-AMERICA BANCSHARES, INC.
 
 Consolidated Statements of Comprehensive Earnings
 Three and Nine Months Ended September 30, 2006 and 2005
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2006
    
    
    2005
    
    
    2006
    
    
    2005(In Thousands)Net earnings
    
    $
    765
    
    
    
    719
    
    
    $
    1,902
    
    
    
    1,732Other comprehensive earnings (loss):Unrealized gains (losses) on available-for-sale
securities arising during period, net of taxes of
$432,000, $0, $177,000 and $0, respectively
    
    
    696
    
    
    
    (198
    )
    
    
    285
    
    
    
    (342
    )Reclassification adjustment for (gains) losses included
in earnings, net of taxes of $2,000, $0, $53,000
and $0, respectively
    
    
    (4
    )
    
    
    
    
    
    
    86
    
    
    
    Other comprehensive earnings (loss)
    
    
    692
    
    
    
    (198
    )
    
    
    371
    
    
    
    (342
    )Comprehensive earnings
    
    $
    1,457
    
    
    
    521
    
    
    $
    2,273
    
    
    
    1,390
  5




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 
 Consolidated Statements of Stockholders Equity
 For the Nine Months Ended September 30, 2006 and 2005
 (Unaudited)
 NetUnrealizedGain (Loss)Additional
    
    
    on Available-
    
    
    RetainedCommon
    
    
    Paid-In
    
    
    For-Sale
    
    
    Earnings
    
    
    TreasuryStock
    
    
    Capital
    
    
    Securities
    
    
    (Deficit)
    
    
    Stock
    
    
    TotalBalances, December 31, 2004, as restated
    
    $
    2,275
    
    
    
    21,334
    
    
    
    (507
    )
    
    
    (2,944
    )
    
    
    
    
    
    
    20,158Issuance of 1,053,451 shares of common
stock
    
    
    1,053
    
    
    
    14,716
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,769Accretion related to increase in redemption
value of Series A Preferred Stock
    
    
    
    
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )Purchase of 6,500 shares of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )
    
    
    (97
    )Net change in unrealized loss in available-for-
sale securities during the period
    
    
    
    
    
    
    
    
    
    
    (342
    )
    
    
    
    
    
    
    
    
    
    
    (342
    )Earnings for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,732
    
    
    
    
    
    
    
    1,732Balances, September 30, 2005
    
    $
    3,328
    
    
    
    35,975
    
    
    
    (849
    )
    
    
    (1,212
    )
    
    
    (97
    )
    
    
    37,145Balances, December 31, 2005
    
    $
    3,398
    
    
    
    36,799
    
    
    
    (1,300
    )
    
    
    (338
    )
    
    
    (147
    )
    
    
    38,412Issuance of 332,440 shares of common stock,
pursuant to exercise of stock options
    
    
    332
    
    
    
    1,290
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,6222-for-1 stock split
    
    
    3,408
    
    
    
    (3,408
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Acquisition of Bank of the South
    
    
    6,793
    
    
    
    53,276
    
    
    
    (553
    )
    
    
    
    
    
    
    
    
    
    
    59,516Retirement of treasury stock
    
    
    (19
    )
    
    
    (128
    )
    
    
    
    
    
    
    
    
    
    
    147
    
    
    
    Tax benefit related to exercise of non-qualified
stock options
    
    
    
    
    
    
    152
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    152Cash payment of fractional shares pursuant to
acquisition of Bank of the South
    
    
    (1
    )
    
    
    (10
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11
    )Cost incurred in connection with the
acquisition of Bank of the South
net of deferred taxes
    
    
    
    
    
    
    (512
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (512
    )Stock based compensation expense
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30Net change in unrealized loss on available-for
sale securities
    
    
    
    
    
    
    
    
    
    
    924
    
    
    
    
    
    
    
    
    
    
    
    924Earning for the period
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,902
    
    
    
    
    
    
    
    1,902Balances, September 30, 2006
    
    $
    13,911
    
    
    
    87,489
    
    
    
    (929
    )
    
    
    1,564
    
    
    
    
    
    
    
    102,035
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MID-AMERICA BANCSHARES, INC.
 
 Consolidated Statements of Cash Flows
 Nine Months Ended September 30, 2006 and 2005
 Increase (Decrease) in Cash and Cash Equivalents
 (Unaudited)
 2006
    
    
    2005(In Thousands)Cash flows from operating activities:Interest received
    
    $
    25,104
    
    
    $
    14,615Fees and commissions received
    
    
    2,474
    
    
    
    1,934Interest paid
    
    
    (12,796
    )
    
    
    (5,920
    )Cash paid to suppliers and employees
    
    
    (11,885
    )
    
    
    (8,129
    )Origination of loans held for sale
    
    
    (48,158
    )
    
    
    (39,089
    )Proceeds from loan sales
    
    
    49,889
    
    
    
    39,345Income taxes paid
    
    
    (1,988
    )
    
    
    (24
    )Net cash provided by operating activities
    
    
    2,640
    
    
    
    2,732Cash flows from investing activities:Proceeds from paydowns of available-for-sale securities
    
    
    7,167
    
    
    
    6,422Purchase of available-for-sale securities
    
    
    (59,820
    )
    
    
    (17,461
    )Proceeds from sale of available-for-sale securities
    
    
    11,022
    
    
    
    Purchase of
other real estate
    
    
    (208
    )
    
    
    Purchase of restricted stock
    
    
    (183
    )
    
    
    (360
    )Loans made to customers, net of repayments
    
    
    (56,090
    )
    
    
    (72,778
    )Purchase of premises and equipment
    
    
    (2,900
    )
    
    
    (2,296
    )Proceeds from sale of fixed assets
    
    
    
    
    
    
    48Proceeds from sale of other real estate
    
    
    668
    
    
    
    Increase in interest-bearing deposits in
financial institutions
    
    
    (2,109
    )
    
    
    (960
    )Cash and
cash equivalents acquired in acquisition of Bank of the South
    
    
    15,292
    
    
    
    Net cash used in investing activities
    
    
    (87,161
    )
    
    
    (87,385
    )Cash flows from financing activities:Net increase in non-interest bearing, savings and NOW deposit
accounts
    
    
    24,605
    
    
    
    10,032Net increase in time deposits
    
    
    48,208
    
    
    
    62,779Cash payment
for fractional shares
    
    
    (11
    )
    
    
    Cash expense
in conjunction with acquisition
    
    
    (829
    )
    
    
    Redemption of preferred stock
    
    
    
    
    
    
    (4,200
    )Proceeds from sale of common stock
    
    
    1,622
    
    
    
    15,769Payments to acquire treasury stock
    
    
    
    
    
    
    (97
    )Increase in securities sold under repurchase agreements
    
    
    5,946
    
    
    
    205Proceeds
from Federal Home Loan Bank advances, net
    
    
    2,910
    
    
    
    12,602Net cash provided by financing activities
    
    
    82,451
    
    
    
    97,090Net increase in cash and cash equivalents
    
    
    (2,070
    )
    
    
    12,437Cash and cash equivalents at beginning of period
    
    
    33,134
    
    
    
    9,859Cash and cash equivalents at end of period
    
    $
    31,064
    
    
    $
    22,296
  7




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Consolidated Statements of Cash Flows, Continued
 Nine Months Ended September 30, 2006 and 2005
 Increase (Decrease) in Cash and Cash Equivalents
 (Unaudited)
 2006
    
    
    2005(In Thousands)Reconciliation of net earnings to net cash provided by operating
activities:Net earnings
    
    $
    1,902
    
    
    $
    1,732Adjustments
to reconcile net earnings to net cash provided by operating activities:Depreciation, amortization and accretion
    
    
    1,161
    
    
    
    836Amortization of intangible assets
    
    
    37
    
    
    
    Provision for loan losses
    
    
    247
    
    
    
    811Loss on sale of securities, net
    
    
    139Loss on disposal of premises and equipment
    
    
    2
    
    
    
    21Loss on sale of other real estate
    
    
    8
    
    
    
    FHLB stock dividends
    
    
    (55
    )
    
    
    (24
    )(Increase) decrease in loans held for sale
    
    
    675
    
    
    
    (667
    )Increase in interest receivable
    
    
    (706
    )
    
    
    (698
    )Increase in accrued interest payable
    
    
    541
    
    
    
    335Increase
(decrease) in other liabilities
    
    
    (1,271
    )
    
    
    392Increase in other assets
    
    
    (40
    )
    
    
    (6
    )Total adjustments
    
    
    738
    
    
    
    1,000Net cash provided by operating activities
    
    $
    2,640
    
    
    $
    2,732Supplemental Schedule of Non-Cash Activities:Increase
(decrease) in unrealized gains in value of securities available-for-sale
    
    $
    371
    
    
    $
    (342
    )Net non-cash transfer from other real estate to loans (loans to
other real estate), net
    
    $
    (210
    )
    
    $
    390Accretion related to increase in redemption value of Series A
Preferred Stock
    
    $
    
    
    
    $
    75Acquisition of Bank of the South effective August 31, 2006 (See
note 2 to consolidated financial statements related to share
exchange)
    
    $
    59,516
    
    
    
    
  8




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 (Unaudited)
 (1) Basis of Presentation
    9




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 (Unaudited)
 (2) Share Exchange
  (In Thousands)Assets and liabilities of Bank of the South:Cash and Federal funds
    
    $
    15,323Loans, net
    
    
    287,950Securities
    
    
    71,532Fixed assets
    
    
    14,316Other assets
    
    
    4,137Deposits
    
    
    (350,164
    )Other liabilities
    
    
    (7,203
    )Net book value
    
    
    35,891Value of stock issued
    
    
    59,516Excess purchase price
    
    $
    23,625Allocation of excess purchase price:Premium on purchased deposits
    
    $
    4,720Market value adjustment to buildings
    
    
    4,315Loan discounts
    
    
    (2,581
    )Deposit discounts
    
    
    5266,980Deferred taxes at 38.29%
    
    
    (2,673
    )4,307Initial goodwill
    
    
    19,318Total allocation of excess purchase price
    
    $
    23,625
 10




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements
 (Unaudited)
 (3) Allowance for Loan Losses
  Nine Months EndedSeptember 30,(In Thousands)2006
    
    
    2005Balance, January 1, 2006 and 2005, respectively
    
    $
    3,649
    
    
    $
    2,891Add (deduct):Losses charged to allowance
    
    
    (151
    )
    
    
    (269
    )Recoveries credited to allowance
    
    
    119
    
    
    
    9Provision for loan losses
    
    
    247
    
    
    
    811Allowance acquired in acquisition of
Bank of the South
    
    
    3,202
    
    
    
    Balance, September 30, 2006 and 2005,
respectively
    
    $
    7,066
    
    
    $
    3,442
   11




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 Allowance for Loan Losses, Continued
 (4) Earnings Per Share
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(In Thousands, except share amounts)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Basic EPS Computation:Numerator
 net earnings
    
    $
    765
    
    
    $
    719
    
    
    $
    1,902
    
    
    $
    1,732Less: Accretion in redemption value of Series A
Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )Net earnings available to common stockholders
    
    
    765
    
    
    
    719
    
    
    
    1,902
    
    
    
    1,657Denominator  weighted average number of
common shares outstanding
    
    
    9,136,015
    
    
    
    5,675,390
    
    
    
    7,568,689
    
    
    
    5,637,266Basic earnings per common share
    
    $
    .08
    
    
    $
    .13
    
    
    $
    .25
    
    
    $
    .29Diluted EPS Computation:Numerator  net earnings
    
    $
    765
    
    
    $
    719
    
    
    $
    1,902
    
    
    $
    1,732Less: Accretion in redemption value of Series A
Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75
    )Earnings available to common stockholder
    
    
    765
    
    
    
    719
    
    
    
    1,902
    
    
    
    1,657Denominator:Weighted average number of common shares
outstanding
    
    
    9,136,015
    
    
    
    5,675,390
    
    
    
    7,568,689
    
    
    
    5,637,266Dilutive effect of stock options
    
    
    113,757
    
    
    
    73,688
    
    
    
    113,757
    
    
    
    73,6889,249,772
    
    
    
    5,749,078
    
    
    
    7,682,446
    
    
    
    5,710,954Diluted earnings per common share
    
    $
    .08
    
    
    $
    .13
    
    
    $
    .25
    
    
    $
    .29
 12




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (5) Stock Option Plans
       13




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (5) Stock Option Plans, Continued
   StockAppreciation
    
    
    Stock
    
    
    RestrictedRights
    
    
    Options
    
    
    Stock
    
    
    TotalOutstanding at December 31, 2005
    
    
    
    
    
    
    522,884
    (1)
    
    
    
    
    
    
    522,884Additional stock option grants
resulting from assumption of the
Bank of the South stock options
    
    
    
    
    
    
    505,257
    
    
    
    
    
    
    
    505,257Granted under 2006 Omnibus
Equity Incentive Plan
    
    
    35,750
    
    
    
    515,000
    
    
    
    260,000
    
    
    
    810,750Exercised
    
    
    
    
    
    
    (341,609
    )
    
    
    
    
    
    
    (341,609
    )Forfeited
    
    
    
    
    
    
    (1,600
    )
    
    
    
    
    
    
    (1,600
    )Outstanding at September 30, 2006
    
    
    35,750
    
    
    
    1,199,932
    
    
    
    260,000
    
    
    
    1,495,682Exercisable at September 30, 2006
    
    
    
    
    
    
    684,932
    
    
    
    
 
 (1)
    
    December 31, 2005 options outstanding adjusted for 2.000 for 1 exchange ratio. 14




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (5) Stock Option Plans, Continued
   Totals(In Thousands)Stock-based compensation expense
    
    $
    30Deferred income tax benefit
    
    
    (11
    )Impact of stock-based compensation expense,
after tax effect
    
    $
    19
   15




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (5) Stock Option Plans, Continued
  In Thousands,Except Per Share AmountsThree Months
    
    Nine MonthsEnded
    
    EndedSeptember 30,
    
    September 30,2005
    
    2005Net earnings
    
    As Reported
    
    $
    719
    
    
    $
    1,732Proforma
    
    $
    688
    
    
    $
    1,701Basic earnings per
    
    As Reported
    
    $
    .13
    
    
    $
    .29common share
    
    Proforma
    
    $
    .12
    
    
    $
    .28Diluted earnings per
    
    As Reported
    
    $
    .13
    
    
    $
    .29common share
    
    Proforma
    
    $
    .12
    
    
    $
    .28
 (6) Acquisition
   16




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (6) Acquisition, Continued
  
    
    The transaction effectively increases the market-area served by each bank.
    
    The transaction is expected to enable each bank to expand and improve customer service
and access to banking facilities while retaining local decision-making.
    
    The transaction is projected to allow the banks to make and participate in larger
loans.
    
    It is anticipated that the combined company will achieve cost savings through combining
selective administrative functions such as loan review, regulatory compliance, internal
audit, and comfortable matters.
    
    The transaction is expected to help the banks to attain cost savings in handling future
growth.
   September 30, 2006Mid-Bank of the
    
    
    America
    
    
    
    
    
    Pro FormaSouth
    
    
    Bancshares
    
    
    Pro Forma Adjustments

    
    
    Combined(6)
    
    
    (7)
    
    
    Dr.
    
    
    Cr.(In Thousands)Interest income
    
    $
    16,864
    
    
    
    25,877
    
    
    
    
    
    
    
    410
    (1)
    
    
    43,151Interest expense
    
    
    7,833
    
    
    
    13,360
    
    
    
    155
    (2)
    
    
    
    
    
    
    21,348Net interest income
    
    
    9,031
    
    
    
    12,517
    
    
    
    
    
    
    
    
    
    
    
    21,803Provision for loan losses
    
    
    (184
    )
    
    
    (247
    )
    
    
    
    
    
    
    
    
    
    
    (431
    )Net interest income after
provision for loan losses
    
    
    8,847
    
    
    
    12,270
    
    
    
    
    
    
    
    
    
    
    
    21,372Non-interest income
    
    
    1,828
    
    
    
    3,530
    
    
    
    
    
    
    
    
    
    
    
    5,358Non-interest expense
    
    
    7,551
    
    
    
    13,215
    
    
    
    450
    (3)72
    (4)
    
    
    
    
    
    
    21,288Income before income
taxes
    
    
    3,124
    
    
    
    2,585
    
    
    
    
    
    
    
    
    
    
    
    5,442Income tax expense
    
    
    1,093
    
    
    
    683
    
    
    
    
    
    
    
    102
    (5)
    
    
    1,674Net income
    
    $
    2,031
    
    
    
    1,902
    
    
    
    
    
    
    
    
    
    
    
    3,768Proforma per share information:Basic earnings per common
share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    .28Diluted earnings per common
share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    .27Weighted average share
outstanding:Basic
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,618,229Diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,731,986
 
 (1)
    
    Amortization of loan discount for 8 months ($2,581,000 over 4.2 years).(2)
    
    Amortization of certificate of deposit discount for 8 months ($526,000 in various amounts
over 4 years).(3)
    
    Amortization of core deposits - base premium for 8 months ($4,720,000 over 7 years).(4)
    
    Additional depreciation of step-up of fixed asset for 8 months.(5)
    
    Income tax benefit related to amortization of intangible assets for 8 months.(6)
    
    Actual Bank of the South results for the 8 months ended August 31, 2006.(7)
    
    Actual results for the nine months ended September 30, 2006, including all activity relating
to the Bank of the South assets and liabilities assumed in the merger subsequent to August 31,
2006. 17




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (6) Acquisition, Continued
 September 30, 2005Bank of the
    
    
    PrimeTrust
    
    
    Pro Forma Adjustments

    
    
    Pro FormaSouth (13)
    
    
    Bank
    
    
    Dr.
    
    
    Cr.
    
    
    Combined(In Thousands)Interest income
    
    $
    13,295
    
    
    
    15,203
    
    
    
    
    
    
    
    461
    (8)
    
    
    28,959Interest expense
    
    
    4,739
    
    
    
    6,255
    
    
    
    174
    (9)
    
    
    
    
    
    
    11,202Net interest income
    
    
    8,556
    
    
    
    8,948
    
    
    
    
    
    
    
    
    
    
    
    17,757Provision for loan losses
    
    
    (275
    )
    
    
    (811
    )
    
    
    
    
    
    
    
    
    
    
    (1,086
    )Net interest income after
provision for loan losses
    
    
    8,281
    
    
    
    8,137
    
    
    
    
    
    
    
    
    
    
    
    16,671Non-interest income
    
    
    1,682
    
    
    
    2,857
    
    
    
    
    
    
    
    
    
    
    
    4,539Non-interest expense
    
    
    7,234
    
    
    
    9,238
    
    
    
    506
    (10)81
    (11)
    
    
    
    
    
    
    17,059Income before income
taxes
    
    
    2,729
    
    
    
    1,756
    
    
    
    
    
    
    
    
    
    
    
    4,151Income tax expense
    
    
    849
    
    
    
    24
    
    
    
    
    
    
    
    115
    (12)
    
    
    745Net income
    
    $
    1,880
    
    
    
    1,732
    
    
    
    
    
    
    
    
    
    
    
    3,406Accretion related to redemption
value of preferred stock
    
    
    
    
    
    
    (75
    )
    
    
    
    
    
    
    
    
    
    
    (75
    )Earnings applicable to common
shareholders
    
    $
    1,880
    
    
    
    1,657
    
    
    
    
    
    
    
    
    
    
    
    3,331Proforma per share information:Basic earnings per common
share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    .27Diluted earnings per common
share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    .27Weighted average shares
outstanding:Basic
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,430,104Diluted
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,503,792
 
 (8)
    
    Amortization of loan discount for 9 months ($2,581,000 over 4.2 years).(9)
    
    Amortization of certificate of deposit discount for 9 months ($526,000 in various amounts over
4 years).(10)
    
    Amortization of core deposits - base premium for 9 months ($4,720,000 over 7 years).(11)
    
    Additional depreciation of step-up of fixed asset for 9 months.(12)
    
    Income tax benefit related to amortization of intangible assets for 9 months.(13)
    
    Includes Academy Bank acquisition on May 31, 2005. 18




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (7) Acquired Intangible Assets and Goodwill
  In ThousandsIntangibles:Deposit base premium
    
    $
    4,720Accumulated amortization as of September 30, 2006
    
    $
    56Amortization expense for the nine months ended
September 30, 2006
    
    $
    56Estimated amortization expense:Remaining for 2006
    
    $
    169For year ended 2007
    
    
    674For year ended 2008
    
    
    674For year ended 2009
    
    
    674For year ended 2010
    
    
    674For year ended 2011
    
    
    674
  In ThousandsGoodwill:Balance January 1, 2006
    
    $
    Goodwill acquired during 2006
    
    
    19,318Tax benefit of exercise of options granted pre-acquisition
but exercised post acquisition by acquired Bank
    
    
    (171
    )Balance September 30, 2006
    
    $
    19,147
   19




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 Notes to Consolidated Financial Statements, Continued
 (Unaudited)
 (7) Acquired Intangible Assets and Goodwill, Continued
  Real Estate
    
    TimeLoan
    
    Discount
    
    DepositDiscount
    
    Adjustment
    

DiscountAmortization/Depreciation Period
    
    4.2 Years
    
    40 years
    
    VariousRemaining for 2006
    
    
    (154
    )
    
    
    27
    
    
    
    69Year ended 2007
    
    
    (615
    )
    
    
    108
    
    
    
    219Year ended 2008
    
    
    (615
    )
    
    
    108
    
    
    
    102Year ended 2009
    
    
    (615
    )
    
    
    108
    
    
    
    85Year ended 2010
    
    
    (533
    )
    
    
    108
    
    
    
    28Year ended 2011
    
    
    
    
    
    
    108
    
    
    
    
 20




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q
 
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of
Operations
 General
        21




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q, CONTINUED
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 General, Continued
   Critical Accounting Policies
     22




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q, CONTINUED
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Critical Accounting Policies, Continued
  Forward-Looking Statements
  
 23




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of
Operations, Continued
 Results of Operations
  Net Interest Income
  Provision for Loan Losses
  24




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Provision for Loan Losses, Continued
  Non-Interest Income
  Non-Interest Expense
  25




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Income Taxes
   Financial Condition
 Balance Sheet Summary
   Loans
  September 30,
    
    
    December 31,2006
    
    
    2005(In Thousands)Commercial, financial and agricultural
    
    $
    296,676
    
    
    $
    147,474Installment
    
    
    22,549
    
    
    
    11,871Real estate  mortgage
    
    
    172,925
    
    
    
    62,802Real estate  construction
    
    
    152,277
    
    
    
    80,963Lease financing
    
    
    2,102
    
    
    
    2,417Total
    
    $
    646,529
    
    
    $
    305,527
 26




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Financial Condition, Continued
 Loans, Continued
      27




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Financial Condition, Continued
 Loans, Continued
      28




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Financial Condition, Continued
 Loans, Continued
  September 30, 2006
    
    
    December 31, 2005Past Due
    
    
    
    
    
    
    Past Due90 Days
    
    
    Non-Accrual
    
    
    90 Days
    
    
    Non-Accrual(In Thousands)
    
    
    (In Thousands)Commercial, financial
and agricultural
    
    $
    134
    
    
    
    937
    
    
    $
    94
    
    
    
    485Installment loans
    
    
    16
    
    
    
    86
    
    
    
    
    
    
    
    69Real estate mortgage
    
    
    23
    
    
    
    921
    
    
    
    15
    
    
    
    20Real estate -
construction
    
    
    94
    
    
    
    19
    
    
    
    
    
    
    
    Lease financing
    
    
    77
    
    
    
    
    
    
    
    
    
    
    
    $
    344
    
    
    
    1,963
    
    
    $
    109
    
    
    
    574Renegotiated loans
    
    $
    
    
    
    
    
    
    
    $
    
  (In Thousands)
    
    
    SpecialSeptember 30, 2006
    
    Total
    
    
    Mention
    
    
    Substandard
    
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    5,445
    
    
    
    1,716
    
    
    
    3,729
    
    
    
    Real estate mortgage
    
    
    1,958
    
    
    
    471
    
    
    
    1,487
    
    
    
    Real estate construction
    
    
    201
    
    
    
    19
    
    
    
    182
    
    
    
    Installment
    
    
    262
    
    
    
    85
    
    
    
    162
    
    
    
    15Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    7,866
    
    
    
    2,291
    
    
    
    5,560
    
    
    
    15
 (In Thousands)
    
    
    SpecialDecember 31, 2005
    
    Total
    
    
    Mention
    
    
    Substandard
    
    
    DoubtfulCommercial, financial and
agricultural
    
    $
    2,014
    
    
    
    1,077
    
    
    
    937
    
    
    
    Real estate mortgage
    
    
    490
    
    
    
    
    
    
    
    490
    
    
    
    Real estate construction
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Installment
    
    
    36
    
    
    
    6
    
    
    
    30
    
    
    
    Lease financing
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    2,540
    
    
    
    1,083
    
    
    
    1,457
    
    
    
    
 29




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of
Operations, Continued
 Financial Condition, Continued
 Loans, Continued
   September 30, 2006
    
    
    December 31, 2005Percent of
    
    
    
    
    
    
    Percent ofLoans In
    
    
    
    
    
    
    Loans InIn
    
    
    Each Category
    
    
    In
    
    
    Each CategoryThousands
    
    
    To Total Loans
    
    
    Thousands
    
    
    To Total LoansCommercial, financial and
agricultural
    
    $
    4,451
    
    
    
    45.9
    %
    
    $
    2,319
    
    
    
    48.3
    %Real estate construction
    
    
    1,905
    
    
    
    23.6
    
    
    
    1,012
    
    
    
    26.5Real estate mortgage
    
    
    445
    
    
    
    26.7
    
    
    
    157
    
    
    
    20.5Installment
    
    
    229
    
    
    
    3.5
    
    
    
    119
    
    
    
    3.9Lease financing
    
    
    36
    
    
    
    .3
    
    
    
    42
    
    
    
    .8$
    7,066
    
    
    
    100.0
    %
    
    $
    3,649
    
    
    
    100.0
    %
   30




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##### Table of Contents



September 30, 2006
    
    
    December 31, 2005Commercial,Financial,
    
    
    
    
    
    
    Real
    
    
    Real
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Allowanceand
    
    
    
    
    
    
    Estate -
    
    
    Estate -
    
    
    Lease
    
    
    
    
    
    
    
    
    
    
    Total
    
    
    
    
    
    
    
    
    
    
    for Loan(In Thousands)
    
    Agricultural
    
    
    Installment
    
    
    Mortgage
    
    
    Construction
    
    
    Financing
    
    
    Totals
    
    
    % of Total
    
    
    Allowance
    
    
    Total
    
    
    % of Total
    
    
    LossInternal Grade**1
    
    $
    4,159
    
    
    
    1,968
    
    
    
    300
    
    
    
    
    
    
    
    
    
    
    
    6,427
    
    
    
    1
    %
    
    
    49
    
    
    
    1,230
    
    
    
    0
    %
    
    
    22
    
    
    7,868
    
    
    
    1,673
    
    
    
    7,870
    
    
    
    1,365
    
    
    
    
    
    
    
    18,776
    
    
    
    3
    
    
    
    103
    
    
    
    26,069
    
    
    
    9
    
    
    
    1303
    
    
    270,353
    
    
    
    18,413
    
    
    
    156,421
    
    
    
    148,715
    
    
    
    2,043
    
    
    
    595,945
    
    
    
    91
    
    
    
    5,834
    
    
    
    260,377
    
    
    
    86
    
    
    
    3,0104
    
    
    2,055
    
    
    
    189
    
    
    
    2,564
    
    
    
    634
    
    
    
    
    
    
    
    5,442
    
    
    
    1
    
    
    
    52
    
    
    
    
    
    
    
    5
    
    
    
    5
    
    
    8,503
    
    
    
    537
    
    
    
    3,359
    
    
    
    2,142
    
    
    
    59
    
    
    
    14,600
    
    
    
    2
    
    
    
    306
    
    
    
    15,310
    
    
    
    0
    
    
    
    3066
    
    
    7
    
    
    
    85
    
    
    
    1,295
    
    
    
    20
    
    
    
    
    
    
    
    1,407
    
    
    
    0
    
    
    
    102
    
    
    
    1,083
    
    
    
    0
    
    
    
    547
    
    
    1,781
    
    
    
    162
    
    
    
    1,126
    
    
    
    182
    
    
    
    
    
    
    
    3,251
    
    
    
    1
    
    
    
    233
    
    
    
    905
    
    
    
    0
    
    
    
    928
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    0
    
    
    
    7
    
    
    
    
    
    
    
    0
    
    
    
    9
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    
    
    
    
    
    
    
    
    0
    
    
    
    294,726
    
    
    
    23,042
    
    
    
    172,935
    
    
    
    153,058
    
    
    
    2,102
    
    
    
    645,863
    
    
    
    99
    
    
    
    6,686
    
    
    
    304,974
    
    
    
    100
    
    
    
    3,594Impaired past due
    
    
    906
    
    
    
    
    
    
    
    235
    
    
    
    
    
    
    
    
    
    
    
    1,141
    
    
    
    0
    
    
    
    115
    
    
    
    512
    
    
    
    0
    
    
    
    51Impaired current
    
    
    1,928
    
    
    
    
    
    
    
    127
    
    
    
    
    
    
    
    
    
    
    
    2,055
    
    
    
    1
    
    
    
    265
    
    
    
    41
    
    
    
    0
    
    
    
    4Subtotal
    
    $
    297,560
    
    
    
    23,042
    
    
    
    173,297
    
    
    
    153,058
    
    
    
    2,102
    
    
    
    649,059
    
    
    
    100
    %
    
    
    7,066
    
    
    
    305,527
    
    
    
    100
    %
    
    
    3,649Discount
    
    $
    (884
    )
    
    
    (493
    )
    
    
    (372
    )
    
    
    (781
    )
    
    
    
    
    
    
    (2,530
    )
    
    
    
    
    
    
    7,066
    
    
    
    
    
    
    
    
    %
    
    
    Totals
    
    $
    296,676
    
    
    
    22,549
    
    
    
    172,925
    
    
    
    152,277
    
    
    
    2,102
    
    
    
    646,529
    
    
    
    
    
    
    
    
    
    
    
    305,527
    
    
    
    100
    %
    
    
    3,649ORE
    
    $
    
    
    
    
    
    
    
    
    186
    
    
    
    32
    
    
    
    
    
    
    
    218
    
    
    
    
    
    
    
    
    
    
    
    444
    
    
    
    
    %
    
    
    
 31




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##### Table of Contents



RISK RATINGS SUMMARY
 1.
    
    Superior.Loans of this grade are the highest quality credits in the Companys portfolio.
These credits exceed all the Companys underwriting criteria. Credit risk is considered to be
negligible. These type loans will primarily be
collateralized by cash or other highly liquid collateral, where such collateral is held by Bank of
the South or PrimeTrust Bank.2.
    
    Good.Assets of this grade conform to all the Companys underwriting criteria and evidence a
below-average level of credit risk. Borrowers paying capacity is strong, with stable trends. If
the borrower is a company, its earnings,
liquidity and capitalization compare favorably to typical companies in its industry. Secondary
sources of repayment are considered to be good. Borrowers repayment capacity is good and borrower
consistently complies with
all major covenants.3.
    
    Satisfactory.Assets of this grade conform to substantially all the Companys underwriting
criteria and evidence an average level of credit risk. However, such assets display more
susceptibility to economic, technological or
political changes since they lack the above-average financial strength of credits rated Good.
Borrowers repayment capacity is considered to be above average. Credit is appropriately
structured and serviced; payment history
is satisfactory.4.
    
    Acceptable.Assets of this grade conform to most of the Companys underwriting criteria and
evidence an acceptable, though higher than average, level of credit risk. Loans is this category
require an above-average level of servicing
and show more reliance on collateral and guaranties to preclude a loss to the Company, should
adverse trends develop. If the borrower is a company, its earnings, liquidity and capitalization
are slightly below average, when compared
to its peers. Borrowers repayment capacity is considered to be adequate.5.
    
    Pass.Pass loans generally have the same credit risk characteristics as to assets in the
previous category Acceptable. The distinguishing characteristic that causes a loan to be
considered a Passloan would be a major
occurrence or condition, either actual or anticipated, the consequences of which are not yet
evident, which would material increase the level of credit risk. In either case, the loan warrants
closer monitoring by the loan officer
than an Acceptable loan. In addition, loans in this category require a more pro-active stance on
the part of the loan officer in order to shore up the credits weaknesses, and thus prevent the
level of credit risk from increasing
to a point where the loan becomes a SM loan.6.
    
    Special Mention.Assets included in this category are currently protected but are potentially
weak. These assets constitute an undue and unwarranted credit risk but do not presently expose the
Company to a sufficient degree to risk
to warrant adverse classification. Close management attention is required. New loans should not
be made which will immediately be in this category. Loans in this category will require a loan
loss reserve factor or 10% of the loan
amount when determining the general valuation reserve.7.
    
    Substandard.Substandard assets are inadequately protected by the current net worth and
financial capacity of the borrower or of the collateral pledged, if any. Assets so classified must
have well-defined weakness or weaknesses
that jeopardize the liquidation of the debt. They are characterized by the distinct possibility
that the Company will sustain some loss if the deficiencies are not corrected. Loss potential,
while existing in the aggregate amount of
Substandard assets, does not have to exist in individual assets classified as Substandard.8.
    
    Doubtful.Assets classified Doubtful have all the weaknesses inherent in those classified
Substandard, with the added characteristic that the weaknesses make collection in full, on the
basis of currently existing facts, conditions
and values, highly questionable and improbable.Probability of loss is extremely high, but because of certain important and reasonably specific
pending factors which may work to strengthen (or weaken) the assets, its classification as an
estimated loss is deferred until its more exact
status may be determined. Pending factors that may necessitate a Doubtful classification included
proposed merger, acquisition, or liquidation procedures, capital injection, perfecting liens on
additional collateral and refinancing plans.
These loans will have reserves of 50% or more and require strict management attention.9.
    
    Loss.These assets are considered uncollectible and of such little value that their
continuance as assets is not warranted. This classification does not mean that an asset has
absolutely no recovery or salvage value, but rather
it is not practical or desirable to defer writing off a basically worthless assets even though
partial recovery may be effected in the future. Losses should be taken in the period in which they
are identified as uncollectible.
 
 32




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result
of Operations, Continued
 Financial Condition, Continued
 Securities
  
    
    Debt securities for which the enterprise has the positive intent and ability to hold to
maturity are classified as held-to-maturity securities and reported at amortized costs.
 
    
    Debt and equity securities that are bought and held principally for the purpose of
selling them in the near term are classified as trading securities and reported at fair
value, with unrealized gains and losses included in earnings.
 
    
    Debt and equity securities not classified as either held-to-maturity securities or
trading securities are classified as available-for-sale securities and reported at fair
value, with unrealized gains and losses excluded from earnings and reported in a separate
component of stockholders equity.
  Available-for-SaleSeptember 30, 2006
    
    
    December 31, 2005(In Thousands)Estimated
    
    
    
    
    
    
    EstimatedAmortized
    
    
    Market
    
    
    Amortized
    
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    
    ValueU.S. Treasury and other U.S.
Government
agencies and corporations
    
    $
    60,153
    
    
    
    59,752
    
    
    $
    29,634
    
    
    
    29,054Mortgage-backed securities
    
    
    76,742
    
    
    
    75,393
    
    
    
    29,589
    
    
    
    28,930Obligations of states and political
subdivisions
    
    
    30,219
    
    
    
    30,472
    
    
    
    5,212
    
    
    
    5,151Corporate bonds
    
    
    900
    
    
    
    891
    
    
    
    900
    
    
    
    900Equity investment
    
    
    600
    
    
    
    600
    
    
    
    
    
    
    
    $
    168,614
    
    
    
    167,108
    
    
    $
    65,335
    
    
    
    64,035
 33




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of
Operations, Continued
 Financial Condition, Continued
 Securities, Continued
 Held-to-MaturitySeptember 30, 2006
    
    
    December 31, 2005(In Thousands)Estimated
    
    
    EstimatedAmortized
    
    
    Market
    
    
    Amortized
    
    MarketCost
    
    
    Value
    
    
    Cost
    
    ValueObligation of states and political
subdivisions
    
    $
    9,740
    
    
    
    9,774
    
    
    $
    
    
    
    
    $
    9,740
    
    
    
    9,774
    
    
    $
    
    
    
    
    
  Deposits
   Liquidity and Asset Management
  34




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Financial Condition, Continued
 Liquidity and Asset Management, Continued
      35




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Financial Condition, Continued
 Capital Position and Dividends
     36




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Financial Condition, Continued
 Capital Position and Dividends, Continued
   Off Balance Sheet Arrangements
   2006
    
    $
    603,0002007
    
    
    679,0002008
    
    
    688,0002009
    
    
    698,0002010
    
    
    600,000Thereafter
    
    
    2,646,000Total
    
    $
    5,914,000
 37




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Result of Operations,
Continued
 Impact of Inflation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
 Item 4.
    
    Controls and Procedures
  38




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##### Table of Contents



MID-AMERICA BANCSHARES, INC.
 FORM 10-Q,
 Item 4.
    
    Controls and Procedures, Continued
  39




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1.
    
    LEGAL PROCEEDINGS
  
 Item 1A.
    
    RISK FACTORS
  
 Item 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 (a)
    
    None(b)
    
    Not Applicable.(c)
    
    No repurchases for our securities were made during the quarter ended
September 30, 2006. The only restrictions on working capital and/or dividends are
those reported in Part I of this Quarterly Report on Form 10Q, as well as those
discussed with respect to dividends with respect to subsidiary banks securities as
discussed in the registration statement on Form S-4 (Commissions file No.
333-134247, as amended) particularly in the section Supervision and Regulation and
in the discussion of the common stocks of the respective subsidiary banks.
 
 Item 3.
    
    DEFAULTS UPON SENIOR SECURITIES
 (a)
    
    None(b)
    
    None
 40




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 4.
    
    SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 (a)
    
    Not applicable.(b)
    
    Not applicable.(c)
    
    Not applicable.(d)
    
    Not applicable.
 
 Item 5.
    
    OTHER INFORMATION
 (a)
    
    None(b)
    
    Not applicable.
 
 Item 6.
    
    EXHIBITS
 (a)
    
    Rule 13a-14(a) Certifications.Section 1350 Certifications. Any certification furnished pursuant to this Item will
not be deemed filed for purposes of Section 18 of the Securities Exchange Act (15
U.S.C. 78r), or otherwise subject to the liability of that section.(b)
    
    None.
 41




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##### Table of Contents



SIGNATURES
  MID-AMERICA BANCSHARES, INC.
                     (Registrant)DATE: November 9, 2006
    /s/ Gary L. ScottGary L. Scott, Chairman andChief Executive Officer DATE: November 9, 2006
    /s/ Jason WestJason West, Chief Financial Officer 42