# UNITED STATESSECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549

# Form 10-KSB

|(Mark One) | 
|---------- | 

| | ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
| | ------------------------------------------------------------------------------

| | For the Fiscal Year Ended:   December 31, 2006.
| | -----------------------------------------------

| | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
| | ----------------------------------------------------------------------------------
| | For the transition period from __________ to ________                             

Commission file number
333-127409

BankGreenville Financial Corporation
(Name of small business issuer in its charter)

|South Carolina          |  | 20-2645711                          
|----------------------- |  | ------------------------------------
|(State of Incorpoation) |  | (I.R.S. Employer Identification No.)

|499 Woodruff Road                        |  |           
|---------------------------------------- |  | ----------
|Greenville, South Carolina               |  | 29607     
|(Address of Principal Executive Offices) |  | (Zip Code)

Issuers telephone
number: (864) 335-2200

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:  None

Check whether the issuer (1) filed
all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the
past 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 past 90 days.     Yes          
No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to the best of
registrants knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.

Indicate by check mark whether the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
     Yes        
No

State issuers revenues for its
most recent fiscal year. $1,203,199.

The estimated aggregate market value of
the Common Stock held by non-affiliates (shareholders holding less than 5% of an
outstanding class of stock, excluding directors and executive officers) of the Company on
March 9, 2007 was $9,566,400. This calculation is based upon an estimate of the
fair market value of the Common Stock of $9.60 per share, which was the price of the last
trade of which management is aware prior to this date.

The number of shares outstanding of
the issuers one class of common equity was 1,180,000 shares at March 9, 2007.

# DOCUMENTS INCORPORATED
BY REFERENCE

None.

Transitional Small Business Disclosure Format (Check one):
     Yes        
No

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|         | 
|-------- | 
|PART I   | 
|         | 
|Item 1   | 
|Item 2   | 
|Item 3   | 
|Item 4   | 
|Item 5   | 
|Item 6   | 
|Item 7   | 
|Item 8   | 
|Item 8A  | 
|         | 
|PART III | 
|         | 
|Item 9   | 
|Item 10  | 
|Item 11  | 
|Item 12  | 
|Item 13  | 
|Item 14  | 

|               | 
|-------------- | 
|SIGNATURES     | 
|               | 
|EXHIBIT INDEX  | 
|               | 
|EX-21 (033007) | 
|               | 
|EX-23 (033007) | 
|               | 
|EX-31 (033007) | 
|               | 
|EX-31 (033007) | 
|               | 
|EX-32 (033007) | 

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# Part I Item 1.   
Description of Business

This
Report contains statements which constitute forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. These statements are based on many assumptions and estimates and are not
guarantees of future performance. Our actual results may differ materially from those
projected in any forward-looking statements, as they will depend on many factors about
which we are unsure, including many factors which are beyond our control. The words
may, would, could, will,
expect, anticipate, believe, intend,
plan, and estimate, as well as similar expressions, are meant to
identify such forward-looking statements. Potential risks and uncertainties include, but
are not limited to, those described below under Risk Factors as well as the
following:

| |  | significant increases in competitive pressure in the banking and financial services
industries;
| | - | -----------------------------------------------------------------------------------------------

| |  | changes in the interest rate environment which could reduce anticipated or
actual margins;
| | - | ------------------------------------------------------------------------------------------

| |  | changes in political conditions or the legislative or regulatory
environment;
| | - | -----------------------------------------------------------------------------

| |  | general economic conditions, national, regional and in our primary service
area, which may become less favorable than expected resulting in, among other things, a deterioration in credit quality;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | changes occurring in business conditions or inflation;
| | - | ------------------------------------------------------

| |  | changes in technology;
| | - | ----------------------

| |  | changes in monetary and tax policies;
| | - | -------------------------------------

| |  | the level of allowance for loan losses;
| | - | ---------------------------------------

| |  | the rate of delinquencies and amounts of charge-offs;
| | - | -----------------------------------------------------

| |  | the rate of loan growth;
| | - | ------------------------

| |  | adverse changes in asset quality and resulting credit risk-related losses;
| | - | --------------------------------------------------------------------------

| |  | loss of consumer confidence and economic disruptions resulting in terrorist activities;
| | - | ---------------------------------------------------------------------------------------

| |  | changes in the securities market; and
| | - | -------------------------------------

| |  | other risks and uncertainties detailed from time to time in our filings with
the Securities and Exchange Commission.
| | - | --------------------------------------------------------------------------------------------------------------------

# General

BankGreenville
Financial Corporation was incorporated in South Carolina on March 18, 2005 for purposes of
operating as a bank holding company pursuant to the South Carolina Bank Holding Company
Act, and to own and control all of the capital stock of BankGreenville, a state-chartered
bank. BankGreenville commenced business on January 30, 2006, and is primarily engaged in
the business of accepting savings, demand, and time deposits and providing mortgage,
consumer and commercial loans to the general public. Since our inception in March 2005 and
before opening the bank, we engaged in organizational and pre-opening activities necessary
to obtain regulatory approvals and to prepare our subsidiary bank to commence business.

# Marketing Focus and
service area

Our
service area is Greenville County, with a primary focus on Greater Greenville, including
the City of Greenville and the surrounding bedroom communities of Mauldin, Simpsonville,
Greer and Taylors. Our office is located at a centrally located site near the intersection
of Woodruff Road and Laurens Road within the Greenville city limits. This site sits on the
edge of the recently announced 1,100-acre Verdae master planned development. Woodruff Road
is a well traveled thoroughfare with reasonable traffic counts and excellent accessibility
but this new development effort is expected to enhance the quality of this already
excellent site. We are temporarily located in a modular facility on a site adjacent to our
future bank permanent headquarters, under construction. We anticipate moving into our
permanent headquarters building in Spring 2007. We do not currently have plans to
establish branch offices in the next three years. We plan to take advantage of existing
contacts and relationships with individuals and companies in this area to more effectively
market the services of the bank.

We
focus on providing high quality, consultative service to small-to-medium-sized businesses
and the professional segment of the growing Greenville area market and offer a full
complement of business and consumer services while placing particular emphasis on that
portion of the market that values small business expertise and relationship-oriented
service.

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The
Greenville banking market has seen a significant amount of consolidation as larger
out-of-market institutions have acquired local community banks. While larger banks may
target the small-and-medium-sized business market, we believe that through more
personalized client service and local decision making, we can effectively source loan and
deposit business from these clients, even without a large operational infrastructure. We
are targeting businesses with less than $15 million in annual revenues as well as
their related owners and employees. Through our relationships and contacts in and around
Greenville, we believe that we can attract business and consumer banking clients who
desire consistent and personal banking relationships.

# Location

Our
permanent headquarters site is located at the corner of Woodruff Road and Rocky Slope Road
near Laurens Road and the 1,100-acre Verdae master planned development. We purchased
approximately 1.23 acres on January 30, 2006, and our headquarters building will be
approximately 10,700 square feet. We expect to complete construction and move to this
building in Spring 2007. We opened on January 30, 2006 and are currently in a temporary
full-service banking facility on a site adjacent to the permanent headquarters building.

# Lending Activities

General.
          We emphasize a range of lending services, including real estate, commercial,
          home equity lines and consumer loans to individuals, small-to-medium-sized
          businesses, and professional concerns that are located in or conduct a
          substantial portion of their business in the banks market area.

Lending
Limits. The banks lending activities are subject to a variety of lending limits
imposed by state law. In general, the bank is subject to a legal limit on loans to a
single borrower equal to 15% of the banks capital and unimpaired surplus. Different
limits may apply based on the type of loan or the nature of the borrower, including the
borrowers relationship to the bank. These limits will increase or decrease as the
banks capital increases or decreases. For larger dollar loans, we can sell
participations to other financial institutions, which allow us to manage the risk
associated with these loans and meet the lending needs of credit-worthy clients.

Loan
Approval and Review. Our loan approval policies provide for various levels of officer
lending authority. When the amount of aggregate loans to a single borrower exceeds that
individual officers lending authority, the loan request is considered and approved
by an officer with a higher lending limit or the board of directors loan committee.
We do not make any loans to any director of the bank unless the loan is approved by the
board of directors of the bank and is made on terms not more favorable to the person than
would be available to a person not affiliated with the bank. The bank currently adheres to
Federal National Mortgage Association and Federal Home Loan Mortgage Corporation
guidelines in its mortgage loan review process, but may choose to alter this policy in the
future.

Credit
Risk. The principal credit risk associated with each category of loans is the
creditworthiness of the borrower. Borrower creditworthiness is affected by general
economic conditions and the strength of the manufacturing, services, and retail market
segments. General economic factors affecting a borrowers ability to repay include
interest, inflation, employment rates, and the strength of local and national economy, as
well as other factors affecting a borrowers clients, suppliers, and employees.

Allowance
for Loan Losses. We maintain an allowance for loan losses, which we have established
through a provision for loan losses charged against income. We charge loans against this
allowance when we believe that the collectibility of the principal is unlikely. The
allowance is an estimated amount that we believe will be adequate to absorb losses
inherent in the loan portfolio based on evaluations of its collectibility. Due to our lack
of history in our loan portfolio, our allowance for loan losses is initially approximately
1.50% of the average outstanding balance of our loans, based on our consideration of
several factors, including regulatory guidelines, mix of our loan portfolio, and
evaluations of local economic conditions as well as peer data. Over time, we will
periodically determine the amount of the allowance based on our consideration of several
factors, including:

  an ongoing review of the
quality, mix, and size of our overall loan portfolio;   our historical loan loss
experience;   evaluation of economic conditions;

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  specific problem loans and
commitments that may affect the borrowers ability to pay;
   regular reviews of loan delinquencies and loan portfolio quality by our internal auditors and our bank
regulators;  the amount and quality of collateral, including guarantees, securing the loans.

Real
Estate Loans. Loans secured by first or second mortgages on real estate make up
approximately 66% of the banks loan portfolio. These loans generally include
commercial real estate loans, construction and development loans, and residential real
estate loans secured by first or second mortgages on real estate. Each of these categories
is discussed in more detail below, including their specific risks. Interest rates for all
categories may be fixed or adjustable, and are more likely to be fixed for shorter-term
loans. The bank generally charges an origination fee on each loan.

Real
estate loans are subject to the same general risks as other loans. Real estate loans are
also sensitive to fluctuations in the value of the real estate securing the loan. On first
and second mortgage loans we do not advance more than regulatory limits. We require a
valid mortgage lien on all real property loans along with a title policy or
attorneys opinion which insures the validity and priority of the lien. We also
require borrowers to obtain hazard insurance policies and flood insurance if applicable.
Additionally, certain types of real estate loans have specific risk characteristics that
vary according to the collateral type securing the loan and the terms and repayment
sources for the loan.

We
have the ability to originate real estate loans for sale into the secondary market. We can
limit our interest rate and credit risk on these loans by locking the interest rate for
each loan with the secondary investor and receiving the investors underwriting
approval prior to originating the loan.

| |   Commercial Real Estate Loans. Commercial real estate loans generally have terms of
five years or less, although payments may be structured on a longer amortization basis.
Inherent in commercial real estate loans credit risk is the risk that the primary
source of repayment, the operating companys cash flow or the cash flow from the real
estate, will be insufficient to service the debt. If a real estate loan is in default, we
also run the risk that the value of a commercial real estate loans secured real
estate will decrease, and thereby be insufficient to satisfy the loan. To mitigate these
risks, we evaluate each borrower on an individual basis and attempt to determine its
business risks and credit profile. We attempt to reduce credit risk in the commercial real
estate portfolio by emphasizing loans on owner-occupied office and retail buildings where
the loan-to-value ratio is established by independent appraisals. We typically review the
personal financial statements of the principal owners and require their personal
guarantees. These reviews often reveal secondary sources of payment and liquidity to
support a loan request. Risks associated with commercial real estate loans include
fluctuations in the value of the real estate, new job creation trends, tenant vacancy
rates, and the quality of the borrowers management. We seek to limit risk by
analyzing borrowers cash flow and collateral value on an ongoing basis.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   Construction and Development Real Estate Loans. We offer adjustable and fixed rate
residential and commercial construction loans to builders and developers and to consumers
who wish to build their own home. The term of construction and development loans is
generally limited to 18 months, although payments may be structured on a longer
amortization basis. Most loans mature and require payment in full upon the sale or
completion of the property. Loan proceeds are typically disbursed based on the percentage
of completion and only after the project has been inspected by an experienced construction
lender or independent appraiser. Construction and development loans generally carry a
higher degree of risk than long term financing of existing properties. Repayment usually
depends on the ultimate completion of the project within cost estimates and on the sale of
the property. Risks associated with construction loans include fluctuations in the value
of real estate, mismanaged construction, rising interest rates which may prevent sale of
the property, and failure to sell completed projects in a timely manner.
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | We attempt to reduce risk by obtaining personal guarantees where possible, and by keeping the
loan-to-value ratio of the completed project below specified percentages. We may also
reduce risk by selling participations in larger loans to other institutions when possible.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   
Residential Real Estate Loans. These loans generally have longer terms, up to
30 years. We offer fixed and adjustable rate mortgages, and we act as brokers and
receive a brokerage fee, for most or all of the long-term first mortgage residential real
estate loans that we generate in the secondary market. We do not intend to retain
servicing rights for these loans. Inherent in residential real estate loans credit
risk is the risk that the primary source of repayment, the residential borrowers
cash flow, will be insufficient to service the debt. If a real estate
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| | loan is in default, we also run the risk that the value of a residential real estate
loans secured real estate will decrease, and thereby be insufficient to satisfy the
loan. To mitigate these risks, we evaluate each borrower on an individual basis and
attempt to determine its credit profile. By selling these loans in the secondary market,
we can significantly reduce our exposure to credit risk because the loans will be
underwritten through a third party agent without any recourse against the bank.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Commercial
Loans. The bank makes loans for commercial purposes in various lines of businesses. We
generally focus our efforts on commercial loans of $1,000,000 or less. The terms of these
loans vary by purpose and by type of underlying collateral.

| |   
Equipment Loans. We typically make equipment loans for a term of five years or less
at fixed or variable rates, with the loan fully amortized over the term and secured by the
financed equipment. We expect that with appropriate loan-to-value ratios there will be
sufficient collateral to compensate for fluctuations in the market value of the collateral
and will minimize losses that result from poor maintenance or the introduction of updated
equipment models into the market.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |   Working Capital Loans. Loans to support working capital typically have terms not
exceeding one year and are usually secured by accounts receivable, inventory, or personal
guarantees of the principals of the business. For loans secured by accounts receivable or
inventory, principal will typically be repaid as the assets securing the loan are
converted into cash, and in other cases principal will typically be due at maturity. The
quality of the commercial borrowers management and its ability to both properly
evaluate changes in the supply and demand characteristics affecting its markets for
products and services and to effectively respond to such charges are significant factors
in a commercial borrowers creditworthiness. General risks affecting a commercial
borrowers ability to repay include demand for the borrowers products and
services and changes in the local economy or industry in which the borrower operates.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We
also offer small business loans utilizing government enhancements such as the Small
Business Administrations 7(a) program and SBAs 504 and LowDoc
programs. These loans are typically partially guaranteed by the government which may help
to reduce the banks risk. Government guarantees of SBA loans will not exceed 80% of
the loan value, and will generally be less.

Consumer
Loans. The bank makes a variety of loans to individuals for personal and household
purposes, including secured and unsecured installment loans and revolving lines of credit
such as credit cards. Installment loans typically carry balances of less than $50,000 and
are amortized over periods up to 60 or more months. Consumer loans may be offered on a
single maturity basis where a specific source of repayment is available. Revolving loan
products typically require monthly payments of interest and a portion of the principal.

We
also offer home equity lines of credit. Our underwriting criteria for and the risks
associated with home equity lines of credit are generally the same as those for first
mortgage loans. Home equity lines of credit typically have terms of 15 years or less,
carry balances less than $125,000, and may extend up to 90% of the available equity of
each property.

Consumer
loans are generally considered to have greater risk than first or second mortgages on real
estate because the value of the secured property may depreciate rapidly, they are often
dependent on the borrowers employment status as the sole source of repayment, and
some of them are unsecured. To mitigate these risks, we analyze selective underwriting
criteria for each prospective borrower, which may include the borrowers employment
history, income history, credit bureau reports, or debt to income ratios. If the consumer
loan is secured by property, such as an automobile loan, we attempt to offset the risk of
rapid depreciation of the collateral with a shorter loan amortization period. Despite
these efforts to mitigate our risks, consumer loans have a higher rate of default than
real estate loans. For this reason, we attempt to reduce our loss exposure to these types
of loans by limiting their sizes relative to other types of loans.

Relative
Risks of Loans. Each category of loan has a different level of credit risk. Real
estate loans are generally safer than loans secured by other assets because the value of
the underlying security, real estate, is generally ascertainable and does not fluctuate as
much as some other assets. Certain real estate loans are less risky than others.
Residential real estate loans are generally the least risky type of real estate loan,
followed by commercial real estate loans

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and construction and development
loans. Commercial loans, which can be secured by real estate or other assets, or which can
be unsecured, are generally more risky than real estate loans, but less risky than
consumer loans. Finally, consumer loans, which can also be secured by real estate or other
assets, or which can also be unsecured, are generally considered to be the most risky of
these categories of loans. Any type of loan which is unsecured is generally more risky
than secured loans.

These levels of risk are general in
nature, and many factors including the creditworthiness of the borrower or the particular
nature of the secured asset may cause any type of loan to be more or less risky than
another. Additionally, these levels of risk are limited to an analysis of credit risk, and
they do not take into account other risk factors associated with making loans such as the
interest rate risk inherent in long-term, fixed-rate loans.

# Deposit Services

We
offer a full range of deposit services that are typically available in most banks and
savings and loan associations. These services include checking accounts, commercial
accounts, savings accounts, and other time deposits of various types, ranging from daily
money market accounts to longer-term certificates of deposit. The transaction accounts and
time certificates are tailored to our principal market area at rates competitive to those
offered in the Greenville area. In addition, we offer IRAs. We solicit these accounts from
individuals, businesses, and other organizations. We obtain these deposits through
personal solicitation by our officers and directors, direct mail solicitations, and
advertisements published in the local media. Additionally, we can solicit brokered
deposits.

# Other Banking Services

We
offer cashiers checks, banking by mail, direct deposit of payroll and social
security checks, United States Savings Bonds, and travelers checks.  The bank is
associated with the STAR and Cirrus ATM networks, which allow the banks clients to
use other bank and third-party ATMs throughout the country as well as internationally. We
also waive our clients foreign ATM charges for a certain number of monthly ATM
transactions at third-party ATMs. We offer debit card and credit card services through a
correspondent bank as an agent for the bank. Additionally, we offer lines of credit,
24-hour telephone banking, personal and corporate on-line banking and corporate cash
management services.

# Competition and market
share

The
Greenville market is highly competitive, with all of the largest banks in the state, as
well as super regional banks, represented. The competition among the various financial
institutions is based upon a variety of factors, including interest rates offered on
deposit accounts, interest rates charged on loans as well as legal lending limits to any
one borrower, credit and service charges, the quality of services rendered, and the
convenience of banking facilities. In addition to banks and savings associations, we
compete with other financial institutions including securities firms, insurance companies,
credit unions, leasing companies and finance companies. Size gives larger banks certain
advantages in competing for business from large corporations. These advantages include
higher lending limits and the ability to offer services on a statewide basis. We generally
do not attempt to compete for the banking relationships of large corporations, but
concentrate our efforts on small- to medium-sized businesses and individuals. We believe
we compete effectively in this market by offering relationship banking and high quality
service.

According
to FDIC data at June 2006, the deposit base in Greenville County amounted to approximately
$10.4 billion. At December 31, 2006, we believe the banks deposits represented
approximately .18% of this market share.

# Employees

As
of March 9, 2007, we had 11 full-time employees and no part-time employees.

# Risk Factors

# We expect to incur losses
for at least our first two years, and there is a risk we may never become profitable.

Our
bank is a de novo bank that began operations in January 2006. As is typical with most new
banks, we incurred substantial start-up expenses and are still operating with an
accumulated deficit. In order for us to become profitable, we will need to attract a large
number of clients to deposit and borrow money. Our future profitability is also dependent
on numerous other factors including the continued success of the economy of the community
and

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favorable government regulation.
While the economy in this area has been strong in recent years, an economic downturn in
the area would hurt our business. We are also a highly regulated institution. Our ability
to grow and achieve profitability may be adversely affected by state and federal
regulations that limit a banks right to make loans and purchase securities. Although
we expect to become profitable in our third year of operation, there is a risk that a
deterioration of the local economy or adverse government regulation could affect our
plans. If this happens, we may never become profitable and you will lose part or all of
your investment.

# Our decisions regarding
credit risk and reserves for loan losses may materially and adversely affect our business.

Making
loans and other extensions of credit is an essential element of our business. Although we
seek to mitigate risks inherent in lending by adhering to specific underwriting practices,
our loans and other extensions of credit may not be repaid. The risk of nonpayment is
affected by a number of factors, including:

| |  | the duration of the credit;
| | - | ---------------------------

| |  | credit risks of a particular client;
| | - | ------------------------------------

| |  | changes in economic and industry conditions; and
| | - | ------------------------------------------------

| |  | in the case of a collateralized loan, risks resulting from uncertainties about the future
value of the collateral.
| | - | ------------------------------------------------------------------------------------------------------------------

We
attempt to maintain an appropriate allowance for loan losses to provide for potential
losses in our loan portfolio. We periodically determine the amount of the allowance based
on consideration of several factors, including:

| |  | an ongoing review of the quality, mix, and size of our overall loan portfolio;
| | - | ------------------------------------------------------------------------------

| |  | our historical loan loss experience;
| | - | ------------------------------------

| |  | evaluation of economic conditions;
| | - | ----------------------------------

| |  | regular reviews of loan delinquencies and loan portfolio quality; and
| | - | ---------------------------------------------------------------------

| |  | the amount and quality of collateral, including guarantees, securing the loans.
| | - | -------------------------------------------------------------------------------

There
is no precise method of predicting credit losses; therefore, we face the risk that
charge-offs in future periods will exceed our allowance for loan losses and that
additional increases in the allowance for loan losses will be required. Additions to the
allowance for loan losses would result in a decrease of our net income, and possibly our
capital.

# We are dependent on Russ
Williams, Paula King and our initial organizing directors and the loss of one or more of
these key individuals could curtail our growth and adversely affect our prospects.

Our
growth and development will largely be the result of the contributions of our chief
executive officer, Russ Williams, and our chief financial officer, Paula King. The
performance of community banks, like BankGreenville, is often dependent upon the ability
of executive officers to promote the bank in the local market area. Mr. Williams and Ms.
King have extensive and long-standing ties within our primary service areas and provide us
with an important medium through which to market our products and services. If we lose the
services of Mr. Williams or Ms. King, they would be difficult to replace and our business
and development could be materially and adversely affected. We have employment agreements
with Mr. Williams and Ms. King and carry $500,000 of life insurance on each of these
officers, payable to the bank.

Additionally,
our directors community involvement, diverse backgrounds, and extensive local
business relationships are important to our success. If any of our directors discontinues
his or her relationship with us, or if the composition of our board of directors changes
materially, our growth could be adversely affected. One of our organizers and directors,
Robert L. Kunz, passed away in February 2007. We have not decided whether or when to fill
his vacancy on the board, and for the time being we have reduced the size of the board
from 11 to 10 directors.

# Lack of seasoning of our
loan portfolio may increase the risk of credit defaults in the future.

Due
to our short operating history, the loans in our loan portfolio and our lending
relationships are of relatively recent origin. In general, loans do not begin to show
signs of credit deterioration or default until they have been outstanding for some period
of time, a process we refer to as seasoning. As a result, a portfolio of older
loans

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will usually behave more predictably
than a newer portfolio. Because our loan portfolio is new, the current level of
delinquencies and defaults may not be representative of the level that will prevail when
the portfolio becomes more seasoned, which may be higher than current levels. If
delinquencies and defaults increase, we may be required to increase our provision for loan
losses, which would adversely affect our results of operations and financial condition.

# We
face strong competition for clients, which could prevent us from obtaining clients and
may cause us to pay higher interest rates to attract clients.

The
banking business is highly competitive, and we experience competition in our market from
many other financial institutions. We compete with commercial banks, credit unions,
savings and loan associations, mortgage banking firms, consumer finance companies,
securities brokerage firms, insurance companies, money market funds, and other mutual
funds, as well as other super-regional, national, and international financial institutions
that operate offices in our primary market areas and elsewhere. We compete with these
institutions both in attracting deposits and in making loans. In addition, we have to
attract our client base from other existing financial institutions and from new residents.
Many of our competitors are well-established, larger financial institutions. These
institutions offer some services, such as extensive and established branch networks, that
we do not currently provide. There is a risk that we will not be able to compete
successfully with other financial institutions in our market, and that we may have to pay
higher interest rates to attract deposits, resulting in reduced profitability. In
addition, competitors that are not depository institutions are generally not subject to
the extensive regulations that apply to us.

# We are subject to
extensive regulation that could limit or restrict our activities. This regulation is for
protection of the banks depositors and not for the investors.

We
operate in a highly regulated industry and are subject to examination, supervision, and
comprehensive regulation by various regulatory agencies. Our compliance with these
regulations is costly and restricts certain of our activities, including payment of
dividends, mergers and acquisitions, investments, loans and interest rates charged,
interest rates paid on deposits, and locations of offices. We are also subject to
capitalization guidelines established by our regulators, which require us to maintain
adequate capital to support our growth.

The
laws and regulations applicable to the banking industry could change at any time, and we
cannot predict the effects of these changes on our business and profitability. Because
government regulation greatly affects the business and financial results of all commercial
banks and bank holding companies, our cost of compliance could adversely affect our
ability to operate profitably.

Although
we are subject to extensive and comprehensive regulation by various banking regulatory
agencies such as the FDIC and the South Carolina Board of Financial Institutions, the
purpose of these banking regulatory agencies is to protect and insure the interests and
deposits of our banks depositors. These agencies do not consider preserving or
maximizing the investment made by the companys investors when regulating the
banks activities.

The
Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the
Securities and Exchange Commission that are now applicable to us, have increased the
scope, complexity, and cost of corporate governance, reporting, and disclosure practices.
We have experienced, and we expect to continue to experience, greater compliance costs,
including costs related to internal controls, as a result of the Sarbanes-Oxley Act.

We
are in the process of evaluating our internal controls to allow management to report on
our internal control for our fiscal year 2007, and for our independent
registered public accounting firm to attest to our internal controls for fiscal year
2008.  We are performing the system and process evaluation and testing (and any
necessary remediation) required to comply with the management certification and auditor
attestation requirements of Section 404 of the Sarbanes-Oxley Act. While we currently
anticipate that we will be able to fully implement the requirements relating to internal
controls and all other aspects of Section 404 in a timely manner, as required by Section
404 and the SECs related regulations, we could identify deficiencies that we
may not be able to remediate in time to meet this deadline. If we are not able to
implement or maintain the requirements of Section 404 in a timely manner or with adequate
compliance, we could be subject to scrutiny by regulatory authorities and the trading
price of our stock could decline.  Moreover, effective internal
controls are necessary for us to produce reliable financial reports and are important
to helping prevent financial fraud. If we cannot provide reliable financial reports or
prevent fraud, our business and operating results could be harmed, investors and
regulators could lose confidence in our reported financial information,

8

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and the trading price of our stock
could drop significantly.   We currently anticipate that we will fully
implement the requirements relating to internal controls and all other aspects of Section
404 within the required time frames.

# We face risks with
respect to future expansion and acquisitions or mergers.

Although
we do not have any current plans to do so, we may seek to acquire other financial
institutions or parts of those institutions. We may also expand into new markets or lines
of business or offer new products or services. These activities would involve a number of
risks, including:

| |  | additional time and expense associated with identifying and evaluating potential
acquisitions and merger partners;
| | - | ------------------------------------------------------------------------------------------------------------------

| |  | inaccurate estimates and judgments to evaluate credit, operations, management, and market
risks with respect to the target institution or assets;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------

| |  | dilution of our existing shareholders in an acquisition;
| | - | --------------------------------------------------------

| |  | additional time and expense associated with evaluating new markets for expansion, hiring
experienced local management, and opening new offices, as there may be a substantial time
lag between these activities before we generate sufficient assets and deposits to support
the costs of the expansion;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | a significant amount of time negotiating a transaction or working on expansion plans,
resulting in managements attention being diverted from the operation of our existing
business;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | time and expense integrating the operations and personnel of the combined businesses;
| | - | -------------------------------------------------------------------------------------

| |  | the potential for an adverse short-term effect on our results of operations; and
| | - | --------------------------------------------------------------------------------

| |  | loss of key employees and clients as a result of an acquisition that is poorly received.
| | - | ----------------------------------------------------------------------------------------

We
have never acquired another institution before, so we lack experience in handling any of
these risks. There is also a risk that any expansion effort will not be successful.

# The costs of being an SEC
registered company are proportionately higher for small companies such as
BankGreenville Financial Corporation because of the requirements imposed
by the Sarbanes-Oxley Act.

The
Sarbanes-Oxley Act of 2002 and the related rules and regulations promulgated by the
Securities and Exchange Commission have increased the scope, complexity, and cost of
corporate governance, reporting, and disclosure practices. These regulations are
applicable to our company. We expect to experience increasing compliance costs, including
costs related to internal controls, as a result of the Sarbanes-Oxley Act. These necessary
costs are proportionately higher for a company of our size and will affect our
profitability more than that of some of our larger competitors.

# An economic downturn,
especially one affecting Greenville County, could reduce our client base, our level of deposits,
and demand for financial products such as loans.

Our
success significantly depends upon the growth in population, income levels, deposits, and
housing starts in our market and the surrounding communities. If the community in which we
operate does not grow or if prevailing economic conditions locally or nationally are
unfavorable, our business may not succeed. An economic downturn would likely contribute to
the deterioration of the quality of our loan portfolio and reduce our level of deposits,
which in turn would hurt our business. If an economic downturn occurs in the economy as a
whole, or in our primary market, borrowers may be less likely to repay their loans as
scheduled. Moreover, the value of real estate or other collateral that may secure our
loans could be adversely affected. Unlike many larger institutions, we are not able to
spread the risks of unfavorable local economic conditions across a large number of
diversified economies. An economic downturn could, therefore, result in losses that
materially and adversely affect our business.

# Changes in prevailing
interest rates may reduce our profitability.

Our
results of operations depend in large part upon the level of our net interest income,
which is the difference between interest income from interest-earning assets, such as
loans and investment securities, and interest expense on interest-bearing liabilities,
such as deposits and other borrowings. Depending on the terms and maturities of our assets
and liabilities, a significant change in interest rates could have a material adverse
effect on our

9

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profitability. Many factors cause changes in interest rates, including governmental monetary
          policies and domestic and international economic and political conditions. While
          we intend to manage the effects of changes in interest rates by adjusting the
          terms, maturities, and pricing of our assets and liabilities, our efforts may
          not be effective and our financial condition and results of operations could
          suffer.

# Our pace of growth may
require us to raise additional capital in the future, and that capital may not be available
when it is needed.

We
are required by our regulators to maintain adequate levels of capital to support our
operations. To support continued growth, we may need to raise additional capital in the
future. Our ability to raise additional capital, if needed, will depend in part on
conditions in the capital markets at that time, which are beyond our control. We cannot
make assurances as to our ability to raise additional capital, if needed, on terms
acceptable to us. If we cannot raise additional capital when needed, our ability to expand
our operations through internal growth and acquisitions could be materially affected. In
addition, if we decide to raise additional capital, your interest could be diluted.

# A significant portion of our loan
portfolio is secured by real estate, and events that negatively impact the real estate
market could hurt our business.

A significant portion of our loan
portfolio is secured by real estate. As of December 31, 2006, approximately 66% of our
loans had real estate as a primary or secondary component of collateral. The real estate
collateral in each case provides an alternate source of repayment in the event of default
by the borrower and may deteriorate in value during the time the credit is extended. A
weakening of the real estate market in our primary market area could result in an increase
in the number of borrowers who default on their loans and a reduction in the value of the
collateral securing their loans, which in turn could have an adverse effect on our
profitability and asset quality. If we are required to liquidate the collateral securing a
loan to satisfy the debt during a period of reduced real estate values, our earnings and
capital could be adversely affected. Acts of nature, including hurricanes, tornados,
earthquakes, fires and floods, which may cause uninsured damage and other loss of value to
real estate that secures these loans, may also negatively impact our financial condition.

# SUPERVISION AND
REGULATION

Both
BankGreenville Financial Corporation and BankGreenville are subject to extensive state and
federal banking regulations that impose restrictions on and provide for general regulatory
oversight of their operations. These laws generally are intended to protect depositors and
not shareholders. The following summary is qualified by reference to the statutory and
regulatory provisions discussed. Changes in applicable laws or regulations may have a
material effect on our business and prospects. Our operations may be affected by
legislative changes and the policies of various regulatory authorities. We cannot predict
the effect that fiscal or monetary policies, economic control, or new federal or state
legislation may have on our business and earnings in the future.

The
following discussion is not intended to be a complete list of all the activities regulated
by the banking laws or of the impact of such laws and regulations on our operations. It is
intended only to briefly summarize some material provisions.

# BankGreenville Financial
Corporation.

We
own 100% of the outstanding capital stock of the bank, and therefore we are considered to
be a bank holding company under the federal Bank Holding Company Act of 1956 (the
Bank Holding Company Act). As a result, we are primarily subject to the
supervision, examination and reporting requirements of the Board of Governors of the
Federal Reserve (the Federal Reserve) under the Bank Holding Company Act and
its regulations promulgated thereunder. As a bank holding company located in South
Carolina, the South Carolina Board of Financial Institutions also regulates and monitors
all significant aspects of our operations.

Permitted
Activities. Under the Bank Holding Company Act, a bank holding company is
generally permitted to engage in, or acquire direct or indirect control of more than 5% of
the voting shares of any company engaged in, the following activities:

10

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| |  | banking or managing or controlling banks; and
| | - | ---------------------------------------------

| |  | furnishing services to or performing services for our subsidiaries; and
| | - | -----------------------------------------------------------------------

| |  | any activity that the Federal Reserve determines to be so closely related to banking as to
be a proper incident to the business of banking.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------

Activities
that the Federal Reserve has found to be so closely related to banking as to be a proper
incident to the business of banking include:

| |  | factoring accounts receivable;
| | - | ------------------------------

| |  | making, acquiring, brokering or servicing loans and usual related activities;
| | - | -----------------------------------------------------------------------------

| |  | leasing personal or real property;
| | - | ----------------------------------

| |  | operating a non-bank depository institution, such as a savings association;
| | - | ---------------------------------------------------------------------------

| |  | trust company functions;
| | - | ------------------------

| |  | financial and investment advisory activities;
| | - | ---------------------------------------------

| |  | conducting discount securities brokerage activities;
| | - | ----------------------------------------------------

| |  | underwriting and dealing in government obligations and money market instruments;
| | - | --------------------------------------------------------------------------------

| |  | providing specified management consulting and counseling activities;
| | - | --------------------------------------------------------------------

| |  | performing selected data processing services and support services;
| | - | ------------------------------------------------------------------

| |  | acting as agent or broker in selling credit life insurance and other types of insurance in connection
with credit transactions; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------

| |  | performing selected insurance underwriting activities.
| | - | ------------------------------------------------------

As
a bank holding company we also can elect to be treated as a financial holding
company, which would allow us engage in a broader array of activities. In sum, a
financial holding company can engage in activities that are financial in nature or
incidental or complementary to financial activities, including insurance underwriting,
sales and brokerage activities, providing financial and investment advisory services,
underwriting services and limited merchant banking activities. We have not sought
financial holding company status, but may elect such status in the future as our business
matures. If we were to elect in writing for financial holding company status, each insured
depository institution we control would have to be well capitalized, well managed and have
at least a satisfactory rating under the CRA (discussed below).

The
Federal Reserve has the authority to order a bank holding company or its subsidiaries to
terminate any of these activities or to terminate its ownership or control of any
subsidiary when it has reasonable cause to believe that the bank holding companys
continued ownership, activity or control constitutes a serious risk to the financial
safety, soundness or stability of it or any of its bank subsidiaries.

Change
in Control.In addition, and subject to certain exceptions, the Bank
Holding Company Act and the Change in Bank Control Act, together with regulations
promulgated there under, require Federal Reserve approval prior to any person or company
acquiring control of a bank holding company. Moreover, the South Carolina
Board of Financial Institutions also must approve an acquisition of a South Carolina bank
holding company. Control is conclusively presumed to exist if an individual or company
acquires 25% or more of any class of voting securities of a bank holding company. Control
is rebuttably presumed to exist if a person acquires 10% or more, but less than 25%, of
any class of voting securities and either:

11

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| |  | the company has registered securities under Section 12 of the Securities Exchange Act of 1934; or
| | - | -------------------------------------------------------------------------------------------------

| |  | no other person owns a greater percentage of that class of voting securities immediately
after the transaction.
| | - | ---------------------------------------------------------------------------------------------------------------

Our
common stock is not registered under Section 12 of the Securities Exchange Act of 1934. If
we have more than 500 shareholders of record on December 31 of any year, we will be
required to register our common stock under Section 12 of the Securities Exchange Act
during the first 120 days of the following year. Any shareholder of 10% or more but less
than 25% of any class of our voting securities would be required to either file as a
controlling shareholder of the company or rebut the presumption of control in accordance
with Federal Reserve regulations. The regulations provide a procedure for rebutting
control when ownership of any class of voting securities is below 25%.

Source
of Strength. In accordance with Federal Reserve Board policy, we are
expected to act as a source of financial strength to the bank and to commit resources to
support the bank in circumstances in which we might not otherwise do so. Under the bank
Holding Company Act, the Federal Reserve Board may require a bank holding company to
terminate any activity or relinquish control of a nonbank subsidiary, other than a nonbank
subsidiary of a bank, upon the Federal Reserve Boards determination that such
activity or control constitutes a serious risk to the financial soundness or stability of
any depository institution subsidiary of the bank holding company. Further, federal bank
regulatory authorities have additional discretion to require a bank holding company to
divest itself of any bank or nonbank subsidiaries if the agency determines that
divestiture may aid the depository institutions financial condition.

Capital
Requirements. The Federal Reserve Board imposes certain capital
requirements on the bank holding company under the bank Holding Company Act, including a
minimum leverage ratio and a minimum ratio of qualifying capital to
risk-weighted assets. These requirements are described below under BankGreenville
 Capital Regulations. Subject to our capital requirements and certain other
restrictions, we are able to borrow money to make a capital contribution to the bank, and
these loans may be repaid from dividends paid from the bank to the Company. Our ability to
pay dividends is subject to regulatory restrictions as described below in
BankGreenville Dividends. We are also able to raise capital for
contribution to the bank by issuing securities without having to receive regulatory
approval, subject to compliance with federal and state securities laws.

South
Carolina State Regulation. As a South Carolina bank holding company under
the South Carolina Banking and Branching Efficiency Act, we are subject to limitations on
sale or merger and to regulation by the South Carolina Board of Financial Institutions. We
are not required to obtain the approval of the S.C. Board prior to acquiring the capital
stock of a national bank, but we must notify them at least 15 days prior to doing so. We
must receive the Boards approval prior to engaging in the acquisition of a South
Carolina state chartered bank or another South Carolina bank holding company.

# BankGreenville

The
bank operates as a state bank incorporated under the laws of the State of South Carolina
and is subject to examination by the South Carolina Board of Financial Institutions.

The
South Carolina Board of Financial Institutions and the FDIC regulate or monitor virtually
all areas of the banks operations, including:

| |  | security devices and procedures;
| | - | --------------------------------

| |  | adequacy of capitalization and loss reserves;
| | - | ---------------------------------------------

| |  | loans;
| | - | ------

| |  | investments;
| | - | ------------

| |  | borrowings;
| | - | -----------

12

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| |  | deposits;
| | - | ---------

| |  | mergers;
| | - | --------

| |  | issuances of securities;
| | - | ------------------------

| |  | payment of dividends;
| | - | ---------------------

| |  | interest rates payable on deposits;
| | - | -----------------------------------

| |  | interest rates or fees chargeable on loans;
| | - | -------------------------------------------

| |  | establishment of branches;
| | - | --------------------------

| |  | corporate reorganizations;
| | - | --------------------------

| |  | maintenance of books and records; and
| | - | -------------------------------------

| |  | adequacy of staff training to carry on safe lending and deposit gathering practices.
| | - | ------------------------------------------------------------------------------------

The
South Carolina Board of Financial Institutions requires the bank to maintain specified
capital ratios and imposes limitations on the banks aggregate investment in real
estate, bank premises, and furniture and fixtures. The South Carolina Board of Financial
Institutions also requires the bank to prepare quarterly reports on the banks
financial condition in compliance with its minimum standards and procedures.

All
insured institutions must undergo regular on site examinations by their appropriate
banking agency. The cost of examinations of insured depository institutions and any
affiliates may be assessed by the appropriate agency against each institution or affiliate
as it deems necessary or appropriate. Insured institutions are required to submit annual
reports to the FDIC, their federal regulatory agency, and their state supervisor when
applicable. The FDIC has developed a method for insured depository institutions to provide
supplemental disclosure of the estimated fair market value of assets and liabilities, to
the extent feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. The FDIC Improvement
Act also requires the federal banking regulatory agencies to prescribe, by regulation,
standards for all insured depository institutions and depository institution holding
companies relating, among other things, to the following:

| |  | internal controls;
| | - | ------------------

| |  | information systems and audit systems;
| | - | --------------------------------------

| |  | loan documentation;
| | - | -------------------

| |  | credit underwriting;
| | - | --------------------

| |  | interest rate risk exposure; and
| | - | --------------------------------

| |  | asset quality.
| | - | --------------

Prompt
Corrective Action.As an insured depository institution, the bank is
required to comply with the capital requirements promulgated under the Federal Deposit
Insurance Act and the regulations thereunder, which set forthfive capital
categories, each with specific regulatory consequences. Under these regulations, the
categories are:

| |  | Well Capitalized  The institution exceeds the required minimum level for each
relevant capital measure. A well capitalized institution is one (i) having a total
capital ratio of 10% or greater, (ii) having a tier 1 capital ratio of 6% or greater,
(iii) having a leverage capital ratio of 5% or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

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| |  | greater and (iv) that is not subject to any order or written directive to meet and maintain a
specific capital level for any capital measure.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------

| |  | Adequately Capitalized  The institution meets the required minimum level for each
relevant capital measure. No capital distribution may be made that would result in the
institution becoming undercapitalized. An adequately capitalized institution is one
(i) having a total capital ratio of 8% or greater, (ii) having a tier 1 capital
ratio of 4% or greater and (iii) having a leverage capital ratio of 4% or greater or
a leverage capital ratio of 3% or greater if the institution is rated composite 1 under
the CAMELS (Capital, Assets, Management, Earnings, Liquidity and Sensitivity to market
risk) rating system.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Undercapitalized  The institution fails to meet the required minimum level for any
relevant capital measure. An undercapitalized institution is one (i) having a total
capital ratio of less than 8% or (ii) having a tier 1 capital ratio of less than 4%
or (iii) having a leverage capital ratio of less than 4%, or if the institution is rated a
composite 1 under the CAMELS rating system, a leverage capital ratio of less than 3%.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Significantly Undercapitalized  The institution is significantly below the required
minimum level for any relevant capital measure. A significantly undercapitalized
institution is one (i) having a total capital ratio of less than 6% or
(ii) having a tier 1 capital ratio of less than 3% or (iii) having a leverage
capital ratio of less than 3%.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | Critically Undercapitalized  The institution fails to meet a critical capital level
set by the appropriate federal banking agency. A critically undercapitalized institution
is one having a ratio of tangible equity to total assets that is equal to or less than 2%.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

If
the FDIC determines, after notice and an opportunity for hearing, that the bank is in an
unsafe or unsound condition, the regulator is authorized to reclassify the bank to the
next lower capital category (other than critically undercapitalized) and require the
submission of a plan to correct the unsafe or unsound condition.

If
the bank is not well capitalized, it cannot accept brokered deposits without prior FDIC
approval and, if approval is granted, cannot offer an effective yield in excess of 75
basis points on interests paid on deposits of comparable size and maturity in such
institutions normal market area for deposits accepted from within its normal market
area, or national rate paid on deposits of comparable size and maturity for deposits
accepted outside the banks normal market area. Moreover, if the bank becomes less
than adequately capitalized, it must adopt a capital restoration plan acceptable to the
FDIC. The bank also would become subject to increased regulatory oversight, and is
increasingly restricted in the scope of its permissible activities. Each company having
control over an undercapitalized institution also must provide a limited guarantee that
the institution will comply with its capital restoration plan. Except under limited
circumstances consistent with an accepted capital restoration plan, an undercapitalized
institution may not grow. An undercapitalized institution may not acquire another
institution, establish additional branch offices or engage in any new line of business
unless determined by the appropriate Federal banking agency to be consistent with an
accepted capital restoration plan, or unless the FDIC determines that the proposed action
will further the purpose of prompt corrective action. The appropriate federal banking
agency may take any action authorized for a significantly undercapitalized institution if
an undercapitalized institution fails to submit an acceptable capital restoration plan or
fails in any material respect to implement a plan accepted by the agency. A critically
undercapitalized institution is subject to having a receiver or conservator appointed to
manage its affairs and for loss of its charter to conduct banking activities.

An
insured depository institution may not pay a management fee to a bank holding company
controlling that institution or any other person having control of the institution if,
after making the payment, the institution, would be undercapitalized. In addition, an
institution cannot make a capital distribution, such as a dividend or other distribution
that is in substance a distribution of capital to the owners of the institution if
following such a distribution the institution would be undercapitalized. Thus, if payment
of such a management fee or the making of such would cause the bank to become
undercapitalized, it could not pay a management fee or dividend to us.

As
of December 31, 2006, the bank was deemed to be well capitalized.

14

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FDIC
Assessments. Deposits at the bank are insured by the Deposit Insurance
Fund (the DIF) as administered by the FDIC, up to the applicable limits
established by law  generally $100,000 per accountholder and $250,000 for certain
retirement accountholders. In accordance with regulations adopted to implement the Federal
Deposit Insurance Reform Act of 2005 (FDIRA), deposit insurance premium
assessments are based upon perceived risks to the DIF, by evaluating an institutions
supervisory ratios and other financial ratios and then determining insurance premiums
based upon the likelihood an institution could be downgraded to a CAMELS 3 or worse in the
succeeding year. As a result, institutions deemed to pose less risk, pay lower premiums
than those institutions deemed to pose more risk, which pay more.

FDIRA
caps the amount of the DIF at 1.50% of domestic deposits. The FDIC must issue cash
dividends, awarded on a historical basis, for the amount of the DIF over the 1.50% ratio.
Additionally, if the DIF exceeds 1.35% of domestic deposits at year-end, the FDIC is
required to issue cash dividends, awarded on a historical basis, for half of the amount of
the excess. Pursuant to the FDIRA, the FDIC will begin indexing deposit insurance coverage
levels for inflation beginning in 2012. Moreover, if we become undercapitalized we cannot
accept employee benefit plan deposits.

Transactions
with Affiliates and Insiders. The bank is subject to the provisions of
Section 23A of the Federal Reserve Act, which places limits on the amount of loans or
extensions of credit to, or investments in, or certain other transactions with, affiliates
and on the amount of advances to third parties collateralized by the securities or
obligations of affiliates. The aggregate of all covered transactions is limited in amount,
as to any one affiliate, to 10% of the banks capital and surplus and, as to all
affiliates combined, to 20% of the banks capital and surplus. Furthermore, within
the foregoing limitations as to amount, each covered transaction must meet specified
collateral requirements. Compliance is also required with certain provisions designed to
avoid the taking of low quality assets.

The
bank also is subject to the provisions of Section 23B of the Federal Reserve Act which,
among other things, prohibits an institution from engaging in certain transactions with
certain affiliates unless the transactions are on terms substantially the same, or at
least as favorable to such institution or its subsidiaries, as those prevailing at the
time for comparable transactions with nonaffiliated companies. The bank is subject to
certain restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit (i) must be
made on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with third parties and (ii) must not
involve more than the normal risk of repayment or present other unfavorable features.

The
Federal Reserve Board has issued Regulation W, which codifies prior regulations under
Sections 23A and 23B of the Federal Reserve Act and interpretative guidance with respect
to affiliate transactions. Regulation W incorporates the exemption from the affiliate
transaction rules but expands the exemption to cover the purchase of any type of loan or
extension of credit from an affiliate. In addition, under Regulation W:

| |  | a bank and its subsidiaries may not purchase a low-quality asset from an affiliate;
| | - | -----------------------------------------------------------------------------------

| |  | covered transactions and other specified transactions between a bank or its subsidiaries
and an affiliate must be on terms and conditions that are consistent with safe and sound
banking practices; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | with some exceptions, each loan or extension of credit by a bank to an affiliate must be
secured by collateral with a market value ranging from 100% to 130%, depending on the type
of collateral, of the amount of the loan or extension of credit.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regulation
W generally excludes all non-bank and non-savings association subsidiaries of banks from
treatment as affiliates, except to the extent that the Federal Reserve Board decides to
treat these subsidiaries as affiliates. The regulation also limits the amount of loans
that can be purchased by a bank from an affiliate to not more than 100% of the banks
capital and surplus.

Branching.
          Under current South Carolina law, we may open branch offices throughout South
          Carolina with the prior approval of the South Carolina Board of Financial
          Institutions. In addition, with prior regulatory approval,

15

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the bank will be able to acquire
existing banking operations in South Carolina. Furthermore, federal legislation has been
passed that permits interstate branching by banks if allowed by state law, and interstate
merging by banks.

Community
Reinvestment Act. The Community Reinvestment Act requires that, in
connection with examinations of financial institutions within their respective
jurisdictions, a financial institutions primary regulator, which is the FDIC for the
bank, shall evaluate the record of each financial institution in meeting the credit needs
of its local community, including low and moderate income neighborhoods. These factors are
also considered in evaluating mergers, acquisitions, and applications to open a branch or
facility. Failure to adequately meet these criteria could impose additional requirements
and limitations on our bank. Additionally, we must publicly disclose the terms of various
Community Reinvestment Act-related agreements. We anticipate our first CRA examination in
2008.

Finance
Subsidiaries. Under the Gramm-Leach-Bliley Act (the GLBA),
subject to certain conditions imposed by their respective banking regulators, national and
state-chartered banks are permitted to form financial subsidiaries that may
conduct financial or incidental activities, thereby permitting bank subsidiaries to engage
in certain activities that previously were impermissible. The GLBA imposes several
safeguards and restrictions on financial subsidiaries, including that the parent
banks equity investment in the financial subsidiary be deducted from the banks
assets and tangible equity for purposes of calculating the banks capital adequacy.
In addition, the GLBA imposes new restrictions on transactions between a bank and its
financial subsidiaries similar to restrictions applicable to transactions between banks
and non-bank affiliates.

Other
Regulations. Interest and other charges collected or contracted for by the
bank are subject to state usury laws and federal laws concerning interest rates. The
banks loan operations are also subject to federal laws applicable to credit
transactions, such as the:

| |  | The federal Truth-In-Lending Act, governing disclosures of credit terms to consumer
borrowers;
| | - | ----------------------------------------------------------------------------------------------

| |  | The Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide
information to enable the public and public officials to determine whether a financial
institution is fulfilling its obligation to help meet the housing needs of the community
it serves;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed
or other prohibited factors in extending credit;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------

| |  | The Fair Credit Reporting Act of 1978, as amended by the Fair and Accurate Credit
Transactions Act, governing the use and provision of information to credit reporting
agencies, certain identity theft protections and certain credit and other disclosures;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | The Fair Debt Collection Act, governing the manner in which consumer debts may be
collected by collection agencies; and
| | - | -----------------------------------------------------------------------------------------------------------------------

| |  | The Rules and regulations of the various federal agencies charged with the responsibility
of implementing these federal laws.
| | - | -----------------------------------------------------------------------------------------------------------------------------

The
deposit operations of the bank also are subject to:

| |  | the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with administrative
subpoenas of financial records; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to
implement that Act, which governs automatic deposits to and withdrawals from deposit
accounts and customers rights and liabilities arising from the use of automated
teller machines and other electronic banking services.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Enforcement
Powers. The bank and its institution-affiliated parties,
including its management, employees, agents, independent contractors, and consultants such
as attorneys and accountants and others who participate in the

16

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conduct of the financial
institutions affairs, are subject to potential civil and criminal penalties for
violations of law, regulations or written orders of a government agency. These practices
can include the failure of an institution to timely file required reports or the filing of
false or misleading information or the submission of inaccurate reports. Civil penalties
may be as high as $1,000,000 a day for such violations. Criminal penalties for some
financial institution crimes have been increased to twenty years. In addition, regulators
are provided with greater flexibility to commence enforcement actions against institutions
and institution-affiliated parties. Possible enforcement actions include the termination
of deposit insurance. Furthermore, banking agencies power to issue cease-and-desist
orders were expanded. Such orders may, among other things, require affirmative action to
correct any harm resulting from a violation or practice, including restitution,
reimbursement, indemnifications or guarantees against loss. A financial institution may
also be ordered to restrict its growth, dispose of certain assets, rescind agreements or
contracts, or take other actions as determined by the ordering agency to be appropriate.

USA
PATRIOT Act.The USA PATRIOT Act became effective on
October 26, 2001, amended, in part, the bank Secrecy Act, and provides, in part, for
the facilitation of information sharing among governmental entities and financial
institutions for the purpose of combating terrorism and money laundering by enhancing
anti-money laundering and financial transparency laws, as well as enhanced information
collection tools and enforcement mechanics for the U.S. government, including:
(i) requiring standards for verifying customer identification at account opening;
(ii) rules to promote cooperation among financial institutions, regulators, and law
enforcement entities in identifying parties that may be involved in terrorism or money
laundering; (iii) reports by nonfinancial trades and businesses filed with the
Treasury Departments Financial Crimes Enforcement Network for transactions exceeding
$10,000; and (iv) filing suspicious activities reports by brokers and dealers if they
believe a customer may be violating U.S. laws and regulations and requires enhanced due
diligence requirements for financial institutions that administer, maintain, or manage
private bank accounts or correspondent accounts for non-U.S. persons.

Under
the USA PATRIOT Act, the FBI can send our banking regulatory agencies lists of the names
of persons suspected of involvement in terrorist activities. The bank can be requested, to
search its records for any relationships or transactions with persons on those lists. If
the bank finds any relationships or transactions, it must file a suspicious activity
report and contact the FBI.

The
Office of Foreign Assets Control (OFAC), which is a division of the U.S.
Department of the Treasury, is responsible for helping to insure that United States
entities do not engage in transactions with enemies of the United States, as
defined by various Executive Orders and Acts of Congress. OFAC has sent, and will send,
our banking regulatory agencies lists of names of persons and organizations suspected of
aiding, harboring or engaging in terrorist acts. If the bank finds a name on any
transaction, account or wire transfer that is on an OFAC list, it must freeze such
account, file a suspicious activity report and notify the FBI. The bank has appointed an
OFAC compliance officer to oversee the inspection of its accounts and the filing of any
notifications. The bank actively checks high-risk OFAC areas such as new accounts, wire
transfers and customer files. The bank performs these checks utilizing software, which is
updated each time a modification is made to the lists provided by OFAC and other agencies
of Specially Designated Nationals and Blocked Persons.

Privacy
and Credit Reporting.Financial institutions are required to disclose their
policies for collecting and protecting confidential information. Customers generally may
prevent financial institutions from sharing nonpublic personal financial information with
nonaffiliated third parties except under narrow circumstances, such as the processing of
transactions requested by the consumer or when the financial institution is jointly
sponsoring a product or service with a nonaffiliated third party. Additionally, financial
institutions generally may not disclose consumer account numbers to any nonaffiliated
third party for use in telemarketing, direct mail marketing or other marketing to
consumers. It is the banks policy not to disclose any personal information unless
required by law.

Like
other lending institutions, the bank utilizes credit bureau data in its underwriting
activities. Use of such data is regulated under the Federal Credit Reporting Act on a
uniform, nationwide basis, including credit reporting, prescreening, sharing of
information between affiliates, and the use of credit data. The Fair and Accurate Credit
Transactions Act of 2003 (the FACT Act) authorizes states to enact identity
theft laws that are not inconsistent with the conduct required by the provisions of the
FACT Act.

Payment
of Dividends. A South Carolina state bank may not pay dividends from its
capital. All dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad

17

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debts.    
          The bank is authorized to pay cash dividends up to 100% of net income in any
          calendar year without obtaining the prior approval of the South Carolina Board
          of Financial Institutions, provided that the bank received a composite rating of
          one or two at the last federal or state regulatory examination. The bank must
          obtain approval from the South Carolina Board of Financial Institutions prior to
          the payment of any other cash dividends. In addition, under the FDICIA, the bank
          may not pay a dividend if, after paying the dividend, the bank would be
          undercapitalized.

Check
21. The Check Clearing for the 21st Century Act gives substitute
checks, such as a digital image of a check and copies made from that image, the same
legal standing as the original paper check. Some of the major provisions include:

| |  | allowing check truncation without making it mandatory;
| | - | ------------------------------------------------------

| |  | demanding that every financial institution communicate to accountholders in writing a
description of its substitute check processing program and their rights under the law;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | legalizing substitutions for and replacements of paper checks without agreement from consumers;
| | - | -----------------------------------------------------------------------------------------------

| |  | retaining in place the previously mandated electronic collection and return of checks
between financial institutions only when individual agreements are in place;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | requiring that when accountholders request verification, financial institutions produce
the original check (or a copy that accurately represents the original) and demonstrate
that the account debit was accurate and valid; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |  | requiring the re-crediting of funds to an individuals account on the next business
day after a consumer proves that the financial institution has erred.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------

Effect
of Governmental Monetary Policies. Our earnings are affected by domestic economic
conditions and the monetary and fiscal policies of the United States government and its
agencies. The Federal Reserve banks monetary policies have had, and are likely to
continue to have, an important impact on the operating results of commercial banks through
its power to implement national monetary policy in order, among other things, to curb
inflation or combat a recession. The monetary policies of the Federal Reserve Board have
major effects upon the levels of bank loans, investments and deposits through its open
market operations in United States government securities and through its regulation of the
discount rate on borrowings of member banks and the reserve requirements against member
bank deposits. It is not possible to predict the nature or impact of future changes in
monetary and fiscal policies.

Proposed
Legislation and Regulatory Action. New regulations and statutes are regularly
proposed that contain wide-ranging proposals for altering the structures, regulations, and
competitive relationships of the nations financial institutions. We cannot predict
whether or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.

# Item 2.   Description of
Property

Our
permanent headquarters building is located at the corner of Woodruff Road and Rocky Slope
Road near Laurens Road, at 499 Woodruff Road, Greenville, South Carolina 29607, and is
scheduled for completion in Spring 2007. Currently, we are located in a full-service
temporary banking facility on a site adjacent to our permanent headquarters. The temporary
facility as well as the site on which the facility is located, are leased were leased for
an initial six-month lease term. Both leases were extended upon expiration of the initial
terms. Lease payments total $2,600 and $1,250 per month on the temporary facility and
land, respectively.

18

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# Item 3.   Legal
Proceedings.

We
are not a party to, nor are any of our properties subject to, any material legal
proceedings, other than routine litigation incidental to our business.

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

No
matter was submitted to a vote of security holders during the fourth quarter of the fiscal
year covered by this report.

# Part II.

# Item 5.   
Market for Common Equity and Related Stockholder Matters.

We
are currently quoted on the OTC Bulletin Board under the symbol BGVF and have
a sponsoring broker-dealer to match buy and sell orders for our common stock. Although we
are quoted on the OTC Bulletin Board, the trading markets on the OTC Bulletin Board lack
the depth, liquidity, and orderliness necessary to maintain a liquid market. We have no
current plans to seek listing on any stock exchange, and we do not expect to qualify for
listing on NASDAQ or any other exchange for at least several years. The OTC Bulletin Board
prices are quotations, which reflect inter-dealer prices, without retail mark-up, markdown
or commissions and may not represent actual transactions.

As
of March 9, 2007, there were 1,180,000 shares of common stock outstanding held by 143
shareholders of record. All of our currently issued and outstanding common stock was
issued in our initial public offering which was completed in December 2005. The price per
share in our initial public offering was $10.00. The following table shows the reported
high and low bid information as quoted on the OTC Bulletin Board since our common stock
began trading publicly:

|                    | High | Low
|------------------- | ---- | ---
|First quarter 2006  |      |    
|Second quarter 2006 |      |    
|Third quarter 2006  |      |    
|Fourth quarter 2006 |      |    

We
have not declared or paid any cash dividends on our common stock since our inception. For
the foreseeable future we do not intend to declare cash dividends. We intend to retain
earnings to grow our business and strengthen our capital base. Our ability to pay
dividends depends on the ability of our subsidiary, BankGreenville, to pay dividends to
us. As a South Carolina state bank, BankGreenville may only pay dividends out of its net
profits, after deducting expenses, including losses and bad debts. In addition, the bank
is prohibited from declaring a dividend on its shares of common stock until its surplus
equals its stated capital.

19

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# Item 6.   
Managements Discussion and Analysis or Plan of Operation.

# General

Our
bank opened for business on January 30, 2006. Therefore, a comparison of the years ended
December 31, 2006 and December 31, 2005 is not meaningful. Until January 2006, our
principal activities related to our organization, the conducting of our initial public
offering, the pursuit of approvals from the FDIC and South Carolina Board of Financial
Institutions for our application to charter the bank and the pursuit of approvals from the
Federal Reserve to become a bank holding company. The organizational costs incurred during
the period from our inception on March 18, 2005 through December 31, 2005 related
primarily to salaries, legal fees, and charter application fees and the loss associated
with these organizational activities totaled $241,907. We completed our stock offering in
December 2005 and issued 1,180,000 shares at $10.00 per share. Proceeds, net of offering
costs, totaled approximately $11.04 million and we capitalized the bank with $11 million
of the proceeds from the stock offering.

Like
most community banks, we derive most of our income from interest we receive on our loans
and investments. Our primary source of funds for making these loans and investments is our
deposits, on which we pay interest. Consequently, one of the key measures of our success
is our amount of net interest income, or the difference between the income on our
interest-earning assets, such as loans and investments, and the expense on our
interest-bearing liabilities, such as deposits, also known as net interest margin. Another
key measure is the spread between the yield we earn on these interest-earning assets and
the rate we pay on our interest-bearing liabilities, which is referred to as net interest
spread.

There
are risks inherent in all loans, so we maintain an allowance for loan losses to absorb
probable losses on existing loans that may become uncollectible. We establish and maintain
this allowance by charging a provision for loan losses against our operating earnings. In
the following section we have included a detailed discussion of this process.

In
addition to earning interest on our loans and investments, we earn income through fees and
other expenses we charge to our clients. We describe the various components of this
non-interest income, as well as our non-interest expense, in the following discussion.

The
following discussion and analysis also identifies significant factors that have affected
our financial position and operating results during the periods included in the
accompanying financial statements. We encourage you to read this discussion and analysis
in conjunction with our financial statements and the other statistical information
included in this report.

# CRITICAL ACCOUNTING
POLICIES

We
have adopted various accounting policies that govern the application of accounting
principles generally accepted in the United States and with general practices within the
banking industry in the preparation of our financial statements. Our significant
accounting policies are described in footnote 1 to our audited consolidated financial
statements as of December 31, 2006, included herein.

Certain
accounting policies involve significant judgments and assumptions by us that have a
material impact on the carrying value of certain assets and liabilities. We consider these
accounting policies to be critical accounting policies. The judgment and assumptions we
use are based on historical experience and other factors, which we believe to be
reasonable under the circumstances. Because of the nature of the judgment and assumptions
we make, actual results could differ from these judgments and estimates that could have a
material impact on the carrying values of our assets and liabilities and our results of
operations.

# Allowance for Loan Losses

We
believe the allowance for loan losses is the critical accounting policy that requires the
most significant judgment and estimates used in preparation of our consolidated financial
statements. Some of the more critical judgments supporting the amount of our allowance for
loan losses include judgments about the creditworthiness of borrowers, the estimated value
of the underlying collateral, the assumptions about cash flow, determination of loss
factors for estimating credit losses, the impact of current events, and conditions, and
other factors impacting the level of probable inherent losses. Under different conditions
or using different assumptions, the actual amount of credit losses

20

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incurred by us may be different from
managements estimates provided in our consolidated financial statements. Refer to
the portion of this discussion that addresses our allowance for loan losses for a more
complete discussion of our processes and methodology for determining our allowance for
loan losses.

# Income Taxes

We
use assumptions and estimates in determining income taxes payable or refundable for the
current year, deferred income tax liabilities and assets for events recognized differently
in our financial statements and income tax returns, and income tax expense. Determining
these amounts requires analysis of certain transactions and interpretation of tax laws and
regulations. Management exercises judgment in evaluating the amount and timing of
recognition of resulting tax liabilities and assets. These judgments and estimates are
reevaluated on a continual basis as regulatory and business factors change. No assurance
can be given that either the tax returns submitted by us or the income tax reported on the
financial statements will not be adjusted by either adverse rulings by the United States
Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service.
We are subject to potential adverse adjustments, including, but not limited to, an
increase in the statutory federal or state income tax rates, the permanent
nondeductibility of amounts currently considered deductible either now or in future
periods, and the dependency on the generation of future taxable income, including capital
gains, in order to ultimately realize deferred income tax assets.

# Results of Operations

General

Our
net loss was $785,385, or $0.67 per share, for the year ended December 31, 2006. Included
in our net loss for the year ended December 31, 2006 was $48,502 in pre-opening expenses
for the period January 1, 2006 to January 30, 2006. Our bank opened for business on
January 30, 2006. From our inception on March 18, 2005 through December 31, 2005, we
incurred a net loss of $241,907 from our organizational and pre-opening activities. From
inception on March 18, 2005 to the banks opening date of January 30, 2006,
organizational and preopening costs less net interest income totaled $290,409. Our
organizational costs were expensed when incurred in accordance with FASB Statement of
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities.

Net Interest Income

Our
primary source of revenue is net interest income. Net interest income is the difference
between income earned on interest-bearing assets and interest paid on deposits and
borrowings used to support such assets. The level of net interest income is determined by
the balances of interest-earning assets and interest-bearing liabilities and corresponding
interest rates earned and paid on those assets and liabilities, respectively. In addition
to the volume of and corresponding interest rates associated with these interest-earning
assets and interest-bearing liabilities, net interest income is affected by the timing of
the repricing of these interest-earning assets and interest-bearing liabilities.

Net
interest income was $790,766 for the year ended December 31, 2006. Interest income totaled
$1,176,183. Loan interest income was $553,556 for the year ended December 31, 2006.
Interest income on investment securities and federal funds sold totaled $276,941 and
$345,686, respectively. Interest expense on deposits was $385,417.

The
following table sets forth information related to our average balance sheet, average
yields on assets, and average costs of liabilities. We derived these yields by dividing
income or expense by the average balance of the corresponding assets or liabilities. We
derived average balances from the daily balances throughout the periods indicated. The net
of capitalized loan fees are amortized into interest income on loans.

21

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# Average Balances,
Income and Expenses, and Rates For the Year Ended December 31, 2006

|                                | Average | Income/expense |  
|------------------------------- | ------- | -------------- | -
|
|Interest-earning assets:        |         |                |  
|Federal funds sold              |         |                | $
|Investment securities           |         |                |  
|Loans                           |         |                |  
|                                |         |                |  
|Total interest-earning  assets  |         |                |  
|Non-earning assets              |         |                |  
|                                |         |                |  
|Total assets                    |         |                | $
|                                |         |                |  
|Interest-bearing deposits:      |         |                |  
|Interest checking               |         |                | $
|Savings and money market        |         |                |  
|Time deposits                   |         |                |  
|                                |         |                |  
|Total interest-bearing deposits |         |                |  
|Noninterest bearing liabilities |         |                |  
|Shareholders equity            |         |                |  
|                                |         |                |  
|Total liabilities and           |         |                |  
|shareholders equity            |         |                | $
|                                |         |                |  
|Net interest spread             |         |                |  
|                                |         |                |  
|Net interest income/margin      |         |                |  
|                                |         |                |  

Our
consolidated net interest margin for the year ended December 31, 2006 was 4.22%, and our
earning assets averaged $18.7 million. The net interest margin is calculated by dividing
net interest income by year-to-date average earning assets. Our net interest spread, the
difference between the yield we earn on our interest-earning assets and the rate we pay on
our interest-bearing liabilities was 1.89% for the year ended December 31, 2006. In
pricing deposits, we consider our liquidity needs, the direction and levels of interest
rates and local market conditions. As such, higher rates have been paid initially to
attract deposits.

Rate/Volume Analysis

Net
interest income can be analyzed in terms of the impact of changing interest rates and
changing volume. As this was the first year of operations for the bank, all interest
income and expense is attributable to volume and therefore we have omitted the table
analyzing the changes in net interest income as it would not be meaningful.

Provision for Loan Losses

We
have established an allowance for loan losses through a provision for loan losses charged
as a non-cash expense to our statement of operations. We review our loan portfolio
periodically to evaluate our outstanding loans and to measure both the performance of the
portfolio and the adequacy of the allowance for loan losses. Please see the discussion
below under Provision and Allowance for Loan Losses for a description of the
factors we consider in determining the amount of the provision we expense each period to
maintain this allowance.

Our
provision for loan losses was $210,379, or 1.50% of outstanding loans, for the year ended
December 31, 2006. Management continues to review and evaluate the adequacy of the reserve
for possible loan losses given the size, mix, and quality of the current loan portfolio.

Noninterest Income

Noninterest
income for the year ended December 31, 2006 was $27,016. Mortgage loan origination fees
were $19,620 and service charges and other fees on deposits totaled $7,396.

22

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Noninterest Expenses

The
following table sets forth information related to our noninterest expenses for the year
ended December 31, 2006.

|                                                 | 
|------------------------------------------------ | 
|Compensation and benefits                        | 
|Occupancy and equipment                          | 
|Data processing and related costs                | 
|Marketing, advertising and shareholder relations | 
|Legal and audit                                  | 
|Supplies, postage and telephone                  | 
|Insurance                                        | 
|Credit related expenses                          | 
|Courier and armored carrier service              | 
|Other                                            | 
|                                                 | 
|Total noninterest expense                        | 
|                                                 | 

The
most significant component of noninterest expense is compensation and benefits, which
totaled $759,828 for the year ended December 31, 2006. Occupancy and equipment of $250,008
included $107,902 in site preparation costs associated with preparing the site for the
placement of our temporary modular facility. A significant portion of these costs was
dictated by requirements imposed by the City of Greenville. Data processing and related
expense of $103,374 primarily consisted of costs associated with our core data processing
provider and with the security monitoring of our computer systems and website. Legal and
audit of $67,757 primarily consisted of fees related to the review of our quarterly and
annual SEC filings as well as our annual audit. The majority of our credit related
expenses consisted of payment of closing costs on loans originated. Included in total
noninterest expenses was $48,502 in pre-opening expenses from January 1, 2006 to the
banks opening date of January 30, 2006.

Income Tax Benefit

The Company had no currently taxable income for the period from March 18, 2005 (inception)
to December 31, 2005 or for the year ended December 31, 2006. The Company has recorded a
valuation allowance equal to the net deferred tax asset as the realization of this asset
is dependent on the Companys ability to generate future taxable income during the
periods in which temporary differences become deductible.

# Balance Sheet Review

General

At
December 31, 2006, we had total assets of $31.7 million. Interest-earning assets comprised
approximately 91% of total assets and consisted of gross loans of $14.0 million,
investment securities of $9.8 million and federal funds sold of $5.0 million. Construction
in progress associated with our permanent headquarters building amounted to $1.3 million
at December 31, 2006. Deposits totaled $20.9 million, while shareholders equity was
$10.1 million at December 31, 2006.

Investments

At
December 31, 2006, our investment securities portfolio was $9.8 million and represented
approximately 31.0% of our total assets. Our portfolio consisted of U.S. government
sponsored agencies of $6.9 million and mortgage-backed agencies of $2.9 million. All of
our investment securities are classified available for sale.

Contractual
maturities and yields on our investment securities available for sale at December 31, 2006
are shown in the following table. Expected maturities may differ from contractual
maturities because issuers may have the right to call or prepay obligations with or
without call or prepayment penalties.

23

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|                   | Less than | One year to | Five years |   |  |  |  
|------------------ | --------- | ----------- | ---------- | - |  |  | -
|
|
|
|U.S. government    |           |             |            |   |  |  |  
|sponsored agencies |           |             |            | - |  |  | -
|Mortgage-backed    |           |             |            |   |  |  |  
|agencies           |           |             |            | - |  |  | -
|                   |           |             |            |   |  |  |  
|Total              |           |             |            | - |  |  | -
|                   |           |             |            |   |  |  |  

The
amortized costs and the fair value of our investment securities at December 31, 2006 are
shown in the following table.

|                                   | Amortized | Fair
|---------------------------------- | --------- | ----
|
|Available for Sale                 |           |     
|U.S. Government sponsored agencies |           |     
|Mortgage-backed agencies           |           |     
|                                   |           |     
|Total                              |           |     
|                                   |           |     

We believe, based on industry analyst reports and credit ratings, that the deterioration in fair values
of individual investment securities available for sale is attributed to changes in market interest rates and
not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary.
The company has the ability and intent to hold these securities until such time as the value recovers or the
securities mature.

At December 31, 2006, approximately $1.0 million of investment securities were pledged as collateral to
secure public entity deposits.  We had no sales of investment securities in 2006.

Loans

Since loans typically provide higher interest yields than other interest-earning assets, it is our goal
to ensure that the highest percentage of our earning assets is invested in our loan portfolio. Gross loans
outstanding at December 31, 2006 were $14.0 million and represented approximately 49% and 44% of
interest-earning and total assets, respectively.

Loans secured by real estate mortgages comprised approximately 66% of loans outstanding. Most of our
real estate loans are secured by residential and commercial properties. We do not generally originate
traditional long term residential mortgages, but we do issue traditional second mortgage residential real
estate loans and home equity lines of credit. We obtain a security interest in real estate whenever possible,
in addition to any other available collateral. This collateral is taken to increase the likelihood of the
ultimate repayment of the loan. Generally, we limit the loan-to-value ratio on loans we make to 80%.

Commercial loans and lines of credit represented approximately 34% our loan portfolio at year-end. Due
to the short time our portfolio has existed, the loan mix shown below may not be indicative of the ongoing
portfolio mix. We attempt to maintain a relatively diversified loan portfolio to help reduce the risk inherent
in concentration of certain types of collateral.

24

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The following table summarizes the composition of our loan portfolio as of December 31, 2006.

|                                          |  | Percentage of
|----------------------------------------- |  | -------------
|
|Real Estate:                              |  |              
|Construction and development and land     |  |              
|Commercial                                |  |              
|Residential mortgages                     |  |              
|Home equity lines                         |  |              
|                                          |  |              
|Total real estate                         |  |              
|                                          |  |              
|Commercial                                |  |              
|Consumer - other than real estate secured |  |              
|Deferred origination fees, net            |  |              
|                                          |  |              
|Gross loans                               |  |              
|                                          |  |              
|Less allowance for loan losses            |  |              
|                                          |  |              
|Total loans, net                          |  |              
|                                          |  |              

Maturities and Sensitivity of Loans to
Changes in Interest Rates

The information in the following tables is based on the contractual maturities of individual loans,
including loans which may be subject to renewal at their contractual maturity. Renewal of such loans is subject
to review and credit approval, as well as modification of terms upon maturity. Actual repayments of loans may
differ from the maturities reflected below because borrowers have the right to prepay obligations with or
without prepayment penalties.

The following table summarizes the loan maturity distribution by composition and interest rate types at
December 31, 2006.

|                                    |  | After one |   |          
|----------------------------------- |  | --------- | - | ---------
|
|
|Real estate - mortgage              |  |           | $ | 1,382,146
|Real estate - construction          |  |           |   | 1,249,706
|                                    |  |           |   |          
|Total real estate                   |  |           |   | 2,631,852
|                                    |  |           |   |          
|Commercial                          |  |           |   | 1,573,545
|Consumer - other                    |  |           |   | 70,526   
|                                    |  |           |   |          
|Gross loans                         |  |           | $ | 4,275,923
|                                    |  |           |   |          
|Deferred origination fees, net      |  |           |   |          
|                                    |  |           |   |          
|Gross loans, net of deferred fees   |  |           |   |          
|                                    |  |           |   |          
|Loans maturing- after one year with |  |           |   |          
|Fixed interest rates                |  |           |   |          
|                                    |  |           |   |          
|Floating interest rates             |  |           |   |          
|                                    |  |           |   |          

Provision and Allowance
for Loan Losses

We
have established an allowance for loan losses through a provision for loan losses charged
to expense on our consolidated statement of operations. The allowance for loan losses was
$210,379 as of December 31, 2006 and equaled the provision charged during 2006, as the
bank had no charge-offs or recoveries on loans in 2006. The allowance for loan losses
represents an amount which we believe will be adequate to absorb probable losses on
existing loans that may become uncollectible. Our judgment as to the adequacy of the
allowance for loan losses is based on a number of assumptions about future events, which
we believe to be reasonable, but which may or may not prove to be accurate. Our
determination of the allowance for loan losses is based on evaluations of the
collectibility of loans, including consideration of factors such as the balance of
impaired loans, the quality, mix, and size of our overall loan portfolio, economic
conditions that may affect the borrowers ability to repay, the amount and quality of
collateral securing the

25

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loans, our historical loan loss
experience, and a review of specific problem loans. We will also consider subjective
issues such as changes in the lending policies and procedures, changes in the
local/national economy, changes in volume or type of credits, changes in volume/severity
of problem loans, quality of loan review and board of director oversight, concentrations
of credit, and peer group comparisons. Due to our limited operating history, to date the
provision for loan losses has been made primarily as a result of our assessment of general
loan loss risk compared to banks of similar size and maturity. Due to our short operating
history, the loans in our loan portfolio and our lending relationships are of very recent
origin. In general, loans do not begin to show signs of credit deterioration or default
until they have been outstanding for some period of time, a process known as seasoning. As
a result, a portfolio of older loans will usually behave more predictably than a newer
portfolio. Because our loan portfolio is new, the current level of delinquencies and
defaults may not be representative of the level that will prevail when the portfolio
becomes more seasoned, which may be higher than current levels. If delinquencies and
defaults increase, we may be required to increase our provision for loan losses, which
would adversely affect our results of operations and financial condition. Periodically, we
will adjust the amount of the allowance based on changing circumstances. We will charge
recognized losses to the allowance and add subsequent recoveries back to the allowance for
loan losses. There can be no assurance that charge-offs of loans in future periods will
not exceed the allowance for loan losses as estimated at any point in time or that
provisions for loan losses will not be significant to a particular accounting period.

Because
of our short operating history and the lack of seasoning of our loan portfolio, we do not
allocate the allowance for loan losses to specific categories of loans. Instead, we
evaluate the adequacy of the allowance for loan losses on an overall portfolio basis
utilizing our credit grading system which we apply to each loan. We have retained an
independent consultant to review the loan files on a test basis to confirm the grading of
samples of loans.

The
bank has not charged off any loans since commencing operations. There were no nonaccrual
or nonperforming loans at December 31, 2005, and no accruing loans which were
contractually past due 90 days or more as to principal or interest payments. Generally, a
loan will be placed on nonaccrual status when it becomes 90 days past due as to principal
or interest, or when management believes, after considering economic and business
conditions and collection efforts, that the borrowers financial condition is such
that collection of the loan is doubtful. A payment of interest on a loan that is
classified as nonaccrual will be recognized as income when received.

Deposits

During
2006, our funding source for loans and investments was our deposits. Deposits totaled
$20.9 million at December 31, 2006. The following table shows the balance outstanding and
the average rates paid on deposits during 2006.

|                                     | Amount | Rate
|------------------------------------ | ------ | ----
|Non-interest bearing demand deposits |        |     
|Interest bearing checking            |        |     
|Money market and savings             |        |     
|Time deposits less than $100,000     |        |     
|Time deposits $100,000 and over      |        |     
|                                     |        |     
|Total                                |        |     
|                                     |        |     

Core
deposits, which exclude time deposits of $100,000 or more and brokered certificates of
deposit, provide a relatively stable funding source for our loan portfolio and other
earning assets. Our core deposits were $13.9 million at December 31, 2006. Our
loan-to-deposit ratio was 67.0% at December 31, 2006. Brokered certificates of deposit
purchased outside our primary market totaled $2.0 million at December 31, 2006. All of our
time deposits are certificates of deposits.

The
maturity distribution of our time deposits of $100,000 or more at December 31, 2006 was as
follows:

|                               | 
|------------------------------ | 
|Three months or less           | 
|Over three through six months  | 
|Over six through twelve months | 
|Over twelve months             | 
|                               | 
|Total                          | 
|                               | 

26

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Borrowings and lines of
credit

At
December 31, 2006, the bank had a short-term line of credit with a correspondent bank to
purchase a maximum of $3,900,000 in unsecured federal funds. The interest rate on
borrowings under this line is the prevailing market rate for federal funds purchased. This
accommodation line of credit is renewable annually, expires on January 1, 2008, and may be
terminated at any time at the correspondent banks sole discretion. No amounts were
outstanding at December 31, 2006 and 2005.

# Capital Resources

Total
shareholders equity was $10.1 million at December 31, 2006. Shareholders
equity consisted of common stock of $11,084,562, which represented net proceeds of
$11,035,287 from the sale of stock in the initial public offering and stock compensation
expense of $49,275 accrued during 2006. This amount was reduced by our retained deficit of
$241,907 from our inception on March 18, 2005 through December 31, 2005 and our net loss
of $785,385 for the year ended December 31, 2006. Unrealized gains of $9,562 on investment
securities available for sale increased shareholders equity.

The
Federal Reserve and bank regulatory agencies require bank holding companies and financial
institutions to maintain capital at adequate levels based on a percentage of assets and
off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%. The
Federal Reserve guidelines contain an exemption from the capital requirements for
small bank holding companies. Prior to March 2006, all bank holding companies
with less than $150 million in total assets, including the company, qualified for this
exemption. On March 30, 2006, the Federal Reserve adopted a new rule expanding the
definition of a small bank holding company. The new definition includes bank
holding companies with less than $500 million in total assets. However, bank holding
companies will not qualify under the new definition if they (i) are engaged in significant
nonbanking activities either directly or indirectly through a subsidiary, (ii) conduct
significant off-balance sheet activities, including securitizations or managing or
administering assets for third parties, or (iii) have a material amount of debt or equity
securities (including trust preferred securities) outstanding that are registered with the
SEC. The Federal Reserves use of the phrase material amount of . . . equity
securities . . . registered with the SEC created uncertainty, as the SEC
registration requirements apply to classes of securities, not to a portion of the shares
in a class. According to the Federal Reserve Board, the revision of the criterion to
exclude any bank holding company that has outstanding a material amount of SEC-registered
debt or equity securities reflects the fact that SEC registrants typically exhibit a
degree of complexity of operations and access to multiple funding sources that warrants
excluding them from the new policy statement and subjecting them to the capital
guidelines. In the adopting release for the new rule, the Federal Reserve Board stated
that what constitutes a material amount of SEC-registered debt or equity for a
particular bank holding company depends on the size, activities and condition of the
relevant bank holding company. In lieu of using fixed measurable parameters of materiality
across all institutions, the rule provides the Federal Reserve with supervisory
flexibility in determining, on a case-by-case basis, the significance or materiality of
activities or securities outstanding such that a bank holding company should be excluded
from the policy statement and subject to the capital guidelines. Based on informal
discussions with staff members of the Federal Reserve, we believe the new Federal Reserve
rule is intended to exclude companies whose stock is listed on a stock exchange and is
actively traded. Since our stock is not registered under the Securities Exchange Act,
listed on an exchange, or actively traded, we believe the company qualifies as a small
bank holding company and is exempt from the capital requirements. Nevertheless, until the
Federal Reserve provides further guidance on the new rules, it will be unclear whether our
holding company will be subject to the exemption from the capital requirements for small
bank holding companies. Regardless, our bank is subject to these minimum capital
requirements as set per bank regulatory agencies.

Under
the capital adequacy guidelines, regulatory capital is classified into two tiers. These
guidelines require an institution to maintain a certain level of Tier 1 and Tier 2 capital
to risk-weighted assets. Tier 1 capital consists of common shareholders equity,
excluding the unrealized gain or loss on securities available for sale, minus certain
intangible assets. In determining the amount of risk-weighted assets, all assets,
including certain off-balance sheet assets, are multiplied by a risk-weight factor of 0%
to 100% based on the risks believed to be inherent in the type of asset. Tier 2 capital
consists of Tier 1 capital plus the general reserve for loan losses, subject to certain
limitations. We are also required to maintain capital at a minimum level based on total
average assets, which is known as the Tier 1 leverage ratio.

At
the bank level, we are subject to various regulatory capital requirements administered by
the federal banking agencies. To be considered adequately capitalized under
these capital guidelines, we must maintain a minimum total

27

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risk-based capital of 8%, with at
least 4% being Tier 1 capital. In addition, we must maintain a minimum Tier 1 leverage
ratio of at least 4%. To be considered well-capitalized, we must maintain
total risk-based capital of at least 10%, Tier 1 capital of at least 6%, and a leverage
ratio of at least 5%.

The
following table sets forth the holding company and the bank capital ratios at December 31,
2006. For all periods, the bank was considered well capitalized.

|                          | Holding | 
|------------------------- | ------- | 
|
|Total risk-based capital  |         | 
|Tier 1 risk-based capital |         | 
|Leverage capital          |         | 

We
believe that our capital is sufficient to fund the activities of the bank in its initial
stages of operation and that the rate of asset growth will not negatively impact the
capital base. As of December 31, 2006 commitments for capital expenditures included
approximately $318,000 remaining to be paid on our permanent building construction
contract, which has a guaranteed maximum cost not to exceed $1,645,164. Additionally, we
have entered into agreements with vendors to provide furniture and equipment for our
permanent headquarters building. Commitments associated with these agreements totaled
approximately $100,000 at December 31, 2006. We anticipate all outstanding commitments
associated with our headquarters to be paid by April 30, 2007.

# Return on Equity and
Assets

The
following table shows the return on average assets (net income divided by average total
assets), return on average equity (net income divided by average equity), and equity to
assets ratio (average equity divided by average total assets) for the year ended December
31, 2006. Since our inception, we have not paid cash dividends.

| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 
| |  | 

# Effect of Inflation and
Changing Prices

The
effect of relative purchasing power over time due to inflation has not been taken into
account in our consolidated financial statements. Rather, our financial statements have
been prepared on an historical cost basis in accordance with accounting principles
generally accepted in the United States of America.

Unlike
most industrial companies, our assets and liabilities are primarily monetary in nature.
Therefore, the effect of changes in interest rates will have a more significant impact on
our performance than will the effect of changing prices and inflation in general. In
addition, interest rates may generally increase as the rate of inflation increases,
although not necessarily in the same magnitude. We attempt to manage the relationships
between interest-sensitive assets and liabilities in order to protect against wide rate
fluctuations, including those resulting from inflation.

# Off-Balance Sheet Risk

Through
the bank, we have made contractual commitments to extend credit in the ordinary course of
its business activities. These commitments are legally binding agreements to lend money to
our clients at predetermined interest rates for a specified period of time. We evaluate
each clients creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by us upon extension of credit, is based on our credit
evaluation of the borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, commercial and residential real estate. We
manage the credit risk on these commitments by subjecting them to normal underwriting and
risk management processes. At December 31, 2006, the bank had issued commitments to extend
credit of $3,140,862 through various types of lending arrangements. Of this amount, fixed
rate commitments were $115,518 and variable rate commitments were $3,025,344.

28

---

Commitments
generally have fixed expiration dates or other termination clauses and may require the
payment of a fee. A significant portion of the unfunded commitments relate to consumer
equity lines of credit and commercial lines of credit. Based on historical experience, we
anticipate that a portion of these lines of credit will not be funded.

Except
as disclosed in this document, we are not involved in off-balance sheet contractual
relationships, unconsolidated related entities that have off-balance sheet arrangements or
transactions that could result in liquidity needs or other commitments that significantly
impact earnings.

# Liquidity

Liquidity
represents the ability of a company to convert assets into cash or cash equivalents
without significant loss, and the ability to raise additional funds by increasing
liabilities. Liquidity management involves monitoring our sources and uses of funds in
order to meet our day-to-day cash flow requirements while maximizing profits. Liquidity
management is made more complicated because different balance sheet components are subject
to varying degrees of management control. For example, the timing of maturities of our
investment portfolio is fairly predictable and subject to a high degree of control at the
time investment decisions are made. However, net deposit inflows and outflows are far less
predictable and are not subject to the same degree of control.

At
December 31, 2006, our liquid assets, consisting of cash and due from banks and federal
funds sold, amounted to $5.5 million, or approximately 17.5% of total assets. Our
investment securities available for sale at December 31, 2006 amounted to $9.8 million or
approximately 31.0% of total assets. Unpledged investment securities traditionally provide
a secondary source of liquidity since they can be converted into cash in a timely manner.
At December 31, 2006, $1,000,000 of our investment securities was pledged to secure public
entity deposits.

Our
ability to maintain and expand our deposit base and borrowing capabilities serves as our
primary source of liquidity. We plan to meet our future cash needs through the liquidation
of temporary investments and the generation of deposits. In addition, we will receive cash
upon the maturities and sales of loans and maturities, calls and prepayments on investment
securities. We also maintain a federal funds purchased line of credit with a correspondent
bank totaling $3.9 million. We believe that our existing stable base of core deposits
along with continued growth in this deposit base will enable us to successfully meet our
long term liquidity needs.

# Market Risk

Market
risk is the risk of loss from adverse changes in market prices and rates, which
principally arises from interest rate risk inherent in our lending, investing, deposit
gathering, and borrowing activities. Other types of market risks, such as foreign currency
exchange rate risk and commodity price risk, do not generally arise in the normal course
of our business.

We
actively monitor and manage our interest rate risk exposure principally by measuring our
interest sensitivity gap, which is the positive or negative dollar difference
between assets and liabilities that are subject to interest rate repricing within a given
period of time. Interest rate sensitivity can be managed by repricing assets or
liabilities, selling securities available for sale, replacing an asset or liability at
maturity, or adjusting the interest rate during the life of an asset or liability.
Managing the amount of assets and liabilities repricing in this same time interval helps
to hedge the risk and minimize the impact on net interest income of rising or falling
interest rates. We generally would benefit from increasing market rates of interest when
we have an asset-sensitive gap position and generally would benefit from decreasing market
rates of interest when we are liability-sensitive.

The
analysis presents only a static view of the timing of maturities and repricing
opportunities, without taking into consideration that changes in interest rates do not
affect all assets and liabilities equally. For example, rates paid on a substantial
portion of core deposits may change contractually within a relatively short time frame,
but those rates are viewed by us as significantly less interest-sensitive than
market-based rates such as those paid on noncore deposits. Net interest income may be
affected by other significant factors in a given interest rate environment, including
changes in the volume and mix of interest-earning assets and interest-bearing liabilities.

29

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# Interest Rate Sensitivity

Asset-liability
management is the process by which we monitor and control the mix and maturities of our
assets and liabilities. The essential purposes of asset-liability management are to ensure
adequate liquidity and to maintain an appropriate balance between interest sensitive
assets and liabilities in order to minimize potentially adverse impacts on earnings from
changes in market interest rates. Our asset-liability management committee monitors and
considers methods of managing exposure to interest rate risk. The asset-liability
management committee is responsible for maintaining the level of interest rate sensitivity
of our interest sensitive assets and liabilities within board-approved limits.

The
following table sets forth information regarding our rate sensitivity, as of December 31,
2006, at each of the time intervals. The information in the table may not be indicative of
our rate sensitivity position at other points in time. In addition, the maturity
distribution indicated in the table may differ from the contractual maturities of the
interest-earning assets and interest-bearing liabilities presented due to consideration of
prepayment speeds under various interest rate change scenarios in the application of the
interest rate sensitivity methods described above.

|                                 |  | After three | After one but |            |  
|-------------------------------- |  | ----------- | ------------- | ---------- | -
|
|
|Interest-earning assets:         |  |             |               |            |  
|Federal funds sold               |  |             | $             | 4,991,000  |  
|Investment securities            |  |             |               | -          |  
|Loans                            |  |             |               | 10,021,962 |  
|                                 |  |             |               |            |  
|Total interest-earning assets    |  |             | $             | 15,012,962 |  
|                                 |  |             |               |            |  
|Interest-bearing liabilities:    |  |             |               |            |  
|Interest-bearing checking        |  |             | $             | 1,132,144  |  
|Money market and savings         |  |             |               | 8,672,490  |  
|Time deposits                    |  |             |               | 650,000    |  
|                                 |  |             |               |            |  
|Total interest-bearing           |  |             |               |            |  
|Liabilities                      |  |             | $             | 10,454,634 |  
|                                 |  |             |               |            |  
|Period gap                       |  |             | $             | 4,558,328  |  
|Cumulative gap                   |  |             |               | 4,558,328  |  
|                                 |  |             |               |            |  
|Ratio of cumulative gap to total |  |             |               |            |  
|interest-earning assets          |  |             |               | 15.8       | %

# Recently issued
accounting standards

The
following is a summary of recent authoritative pronouncements that could impact the
accounting, reporting and/or disclosure of financial information by the company.

In
February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instrumentsan amendment of FASB Statements No. 133 and 140. This Statement
amends SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, and SFAS No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. This Statement resolves issues
addressed in SFAS No. 133 Implementation Issue No. D1, Application of Statement 133
to Beneficial Interests in Securitized Financial Assets. SFAS No. 155 is effective
for all financial instruments acquired or issued after the beginning of an entitys
first fiscal year that begins after September 15, 2006. Management does not believe that
the adoption of SFAS No. 155 will have an impact on its financial position, results of
operations and cash flows.

In
March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial
Assetsan amendment of FASB Statement No. 140. This Statement amends FASB No.
140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, with respect to the accounting for separately recognized servicing
assets and servicing liabilities. SFAS No. 156 requires an entity to recognize a servicing
asset or

30

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servicing liability each time it
undertakes an obligation to service a financial asset by entering into a servicing
contract; requires all separately recognized servicing assets and servicing liabilities to
be initially measured at fair value, if practicable; permits an entity to choose its
subsequent measurement methods for each class of separately recognized servicing assets
and servicing liabilities; at its initial adoption, permits a one-time reclassification of
available for sale securities to trading securities by entities with recognized servicing
rights, without calling into question the treatment of other available for sale securities
under Statement 115, provided that the available for sale securities are identified in
some manner as offsetting the entitys exposure to changes in fair value of servicing
assets or servicing liabilities that a servicer elects to subsequently measure at fair
value; and requires separate presentation of servicing assets and servicing liabilities
subsequently measured at fair value in the statement of financial position and additional
disclosures for all separately recognized servicing assets and servicing liabilities. An
entity should adopt SFAS No. 156 as of the beginning of its first fiscal year that begins
after September 15, 2006. Management does not believe the adoption of SFAS No. 156 will
have an impact on its financial position, results of operations and cash flows.

In
July 2006, the FASB issued FASB Interpretation No. 48 (FIN 48),
Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the accounting
for uncertainty in income taxes recognized in an enterprises financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48
prescribes a recognition threshold and measurement attributable for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a
tax return.

FIN
48 also provides guidance on derecognition, classification, interest and penalties,
accounting in interim periods, disclosures and transitions. FIN 48 is effective for fiscal
years beginning after December 15, 2006. Management is currently analyzing the effects of
FIN 48.

In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
157 defines fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value measurements.
SFAS 157 is effective for the company on January 1, 2008 and is not expected to have a
significant impact on the companys financial statements.

On
September 13, 2006, the SEC issued Staff Accounting Bulleting No. 108 (SAB
108). SAB 108 provides interpretive guidance on how the effects of the carryover or
reversal of prior year misstatements should be considered in quantifying a potential
current year misstatement. Prior to SAB 108, Companies might evaluate the materiality of
financial statement misstatements using either the income statement or balance sheet
approach, with the income statement approach focusing on new misstatements added in the
current year, and the balance sheet approach focusing on the cumulative amount of
misstatement present in a companys balance sheet. Misstatements that would be
material under one approach could be viewed as immaterial under another approach, and not
be corrected. SAB 108 now requires that companies view financial statement misstatements
as material if they are material according to either the income statement or balance sheet
approach. Management has analyzed SAB 108 and determined that upon adoption it will have
no impact on the reported results of operations or financial conditions.

In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities  Including an amendment of FASB Statement No.
115. This statement permits, but does not require, entities to measure many
financial instruments at fair value. The objective is to provide entities with an
opportunity to mitigate volatility in reported earnings caused by measuring related assets
and liabilities differently without having to apply complex hedge accounting provisions.
Entities electing this option will apply it when the entity first recognizes an eligible
instrument and will report unrealized gains and losses on such instruments in current
earnings. This statement 1) applies to all entities, 2) specifies certain election dates,
3) can be applied on an instrument-by-instrument basis with some exceptions, 4) is
irrevocable and 5) applies only to entire instruments. One exception is demand deposit
liabilities which are explicitly excluded as qualifying for fair value. With respect to
SFAS 115, available for sale and held to maturity securities at the effective date are
eligible for the fair value option at that date. If the fair value option is elected for
those securities at the effective date, cumulative unrealized gains and losses at that
date shall be included in the cumulative-effect adjustment and thereafter, such securities
will be accounted for as trading securities. SFAS 159 is effective for the company on
January 1, 2008. Earlier adoption is permitted in 2007 if the company also elects to apply
the provisions of SFAS 157, Fair Value Measurement. The company is currently
analyzing the fair value option provided under SFAS 159.

Other
accounting standards that have been issued or proposed by the PCAOB or other
standards-setting bodies are not expected to have a material impact on the companys
financial position, results of operations and cash flows.

31

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# Item 7.   Financial
Statements

# INDEX TO FINANCIAL
STATEMENTS

# FOR THE YEAR ENDED DECEMBER
31, 2006 AND THE PERIOD FROM MARCH 18, 2005 (INCEPTION) TO DECEMBER 31, 2005

|                                                                                  | 
|--------------------------------------------------------------------------------- | 
|Report of Independent Registered Public Accounting Firm                           | 
|                                                                                  | 
|Consolidated Financial Statements:                                                | 
|Consolidated Balance Sheets                                                       | 
|Consolidated Statements of Operations                                             | 
|Consolidated Statements of Changes in Shareholders' Equity and Comprehensive Loss | 
|Consolidated Statements of Cash Flows                                             | 
|                                                                                  | 
|Notes to Consolidated Financial Statements                                        | 

32

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# REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
BankGreenville Financial Corporation and SubsidiaryGreenville, South Carolina

We
have audited the accompanying consolidated balance sheets of BankGreenville Financial
Corporation and Subsidiary (the Company) as of December 31, 2006 and 2005, and
the related consolidated statements of operations, changes in shareholders equity
and comprehensive income, and cash flows for the year ended December 31, 2006 and the
period from March 18, 2005 (inception) through December 31, 2005. These consolidated
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these consolidated financial statements based
on our audits.

We
conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.

In
our opinion, the consolidated financial statements referred to above present fairly, in
all material respects, the financial position of BankGreenville Financial Corporation and
Subsidiary as of December 31, 2006 and 2005 and the results of their operations and their
cash flows for the year ended December 31, 2006 and the period from March 18, 2005
(inception) through December 31, 2005 in conformity with accounting principles generally
accepted in the United States of America.

/s/ Elliott Davis, LLC

Elliott Davis, LLC
Greenville, South Carolina March 21, 2007

33

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# BANKGREENVILLE
FINANCIAL CORPORATION CONSOLIDATED BALANCE SHEETS

|                                                       | December 31
|------------------------------------------------------ | -----------
|
|
|
|
|Assets                                                 |            
|Cash and due from banks                                |            
|Federal funds sold                                     |            
|                                                       |            
|Total cash and cash equivalents                        |            
|Investment securities available for sale               |            
|Loans, net                                             |            
|Property and equipment, net                            |            
|Deposits on bank equipment and computer systems        |            
|Building construction in progress                      |            
|Earnest money deposit on land                          |            
|Accrued interest receivable                            |            
|Other assets                                           |            
|                                                       |            
|Total assets                                           |            
|                                                       |            
|Liabilities and Shareholders Equity                   |            
|Liabilities                                            |            
|Deposits                                               |            
|Non-interest bearing                                   |            
|Interest bearing                                       |            
|                                                       |            
|Total deposits                                         |            
|Accrued interest on deposits                           |            
|Accounts payable and accrued liabilities               |            
|                                                       |            
|Total liabilities                                      |            
|                                                       |            
|Commitments and contingencies - notes 10 and 11        |            
|                                                       |            
|Shareholders Equity                                   |            
|Preferred stock, no par value; 10,000,000 shares       |            
|authorized; none issued and outstanding                |            
|Common stock, no par value; 10,000,000 shares          |            
|authorized; 1,180,000 shares issued and outstanding at |            
|December 31, 2006 and 2005                             |            
|Accumulated other comprehensive income                 |            
|Retained deficit                                       |            
|                                                       |            
|Total shareholders equity                             |            
|                                                       |            
|Total liabilities and shareholders equity             |            
|                                                       |            

The accompanying notes are an integral part of these financial statements.

34

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# BANKGREENVILLE
FINANCIAL CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS

|                                                             |  | For the period
|------------------------------------------------------------ |  | --------------
|
|
|
|
|
|
|Interest income                                              |  |               
|Loans and fees                                               |  |               
|Investment securities                                        |  |               
|Federal funds sold                                           |  |               
|                                                             |  |               
|Total interest income                                        |  |               
|                                                             |  |               
|Interest expense                                             |  |               
|Deposits                                                     |  |               
|Other                                                        |  |               
|                                                             |  |               
|Total interest expense                                       |  |               
|                                                             |  |               
|Net interest income                                          |  |               
|                                                             |  |               
|Provision for loan loss                                      |  |               
|                                                             |  |               
|Net interest income after provision for loan losses          |  |               
|                                                             |  |               
|Noninterest income                                           |  |               
|                                                             |  |               
|Noninterest expense                                          |  |               
|Compensation and employee benefits                           |  |               
|Occupancy and equipment                                      |  |               
|Data processing and related costs                            |  |               
|Marketing, advertising and shareholder communications        |  |               
|Legal and audit                                              |  |               
|Supplies, postage and telephone                              |  |               
|Insurance                                                    |  |               
|Credit related expenses                                      |  |               
|Courier and armored carrier service                          |  |               
|Other                                                        |  |               
|                                                             |  |               
|Total noninterest expense                                    |  |               
|                                                             |  |               
|Loss before income tax benefit                               |  |               
|                                                             |  |               
|Income tax provision                                         |  |               
|                                                             |  |               
|Net loss                                                     |  |               
|                                                             |  |               
|Basic and diluted loss per common share                      |  |               
|                                                             |  |               
|Weighted average common shares outstanding-basic and diluted |  |               
|                                                             |  |               

The
accompanying notes are an integral part of these financial statements.

35

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# BANKGREENVILLE
FINANCIAL CORPORATIONCONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS EQUITY
AND COMPREHENSIVE INCOME (LOSS)For the year ended December 31, 2006 and the period
from March 18, 2005 (inception) through December 31, 2005

|                                 |  |  | Accumulated |           | 
|-------------------------------- |  |  | ----------- | --------- | 
|
|
|
|
|Net proceeds from the sale of    |  |  |             |           | 
|stock (less brokerage commission |  |  |             |           | 
|and offering costs of $764,987)  |  |  |             | 1,180,000 | 
|                                 |  |  |             |           | 
|Net loss                         |  |  |             | -         | 
|                                 |  |  |             |           | 
|Balance, December 31, 2005       |  |  |             |           | 
|(Development stage enterprise)   |  |  |             | 1,180,000 | 
|                                 |  |  |             |           | 
|Adjustment of 2005 accrued       |  |  |             |           | 
|offering expenses to actual      |  |  |             | -         | 
|                                 |  |  |             |           | 
|Stock compensation expense       |  |  |             | -         | 
|                                 |  |  |             |           | 
|Comprehensive loss:              |  |  |             |           | 
|                                 |  |  |             |           | 
|Net loss                         |  |  |             | -         | 
|                                 |  |  |             |           | 
|Unrealized gains on investment   |  |  |             |           | 
|securities available for sale,   |  |  |             |           | 
|no tax effect                    |  |  |             | -         | 
|                                 |  |  |             |           | 
|                                 |  |  |             |           | 
|Total comprehensive loss         |  |  |             | -         | 
|                                 |  |  |             |           | 
|Balance, December 31, 2006       |  |  |             | 1,180,000 | 
|                                 |  |  |             |           | 

The accompanying notes are an integral part of these financial statements.

36

---

# BANKGREENVILLE
FINANCIAL CORPORATION STATEMENT OF CASH FLOWS

|                                                               |  | For the period
|-------------------------------------------------------------- |  | --------------
|
|
|
|
|
|Operating activities                                           |  |               
|Net loss                                                       |  |               
|Provision for loan losses                                      |  |               
|Stock compensation expense                                     |  |               
|Deferred income taxes                                          |  |               
|Depreciation                                                   |  |               
|Accretion of discounts on investment securities                |  |               
|Amortization of land improvements                              |  |               
|Earnest money deposit on land                                  |  |               
|Increase in interest receivable                                |  |               
|Decrease in other assets                                       |  |               
|Increase in accrued interest payable on deposits               |  |               
|Increase in accounts payable and accrued liabilities           |  |               
|                                                               |  |               
|Net cash used in operating activities                          |  |               
|                                                               |  |               
|Investing activities                                           |  |               
|Increase in loans, net                                         |  |               
|Purchase of investment securities available for sale           |  |               
|Proceeds from calls of investment securities                   |  |               
|Proceeds from principal paydowns on mortgage-backed securities |  |               
|Purchase of property and equipment                             |  |               
|Equipment and data processing systems deposits                 |  |               
|Building construction in progress                              |  |               
|                                                               |  |               
|Net cash used for investing activities                         |  |               
|                                                               |  |               
|Financing activities                                           |  |               
|Increase in deposits, net                                      |  |               
|Net proceeds from sale of stock                                |  |               
|Proceeds from organizers' contribution deposits                |  |               
|Repayment of organizers' contribution deposits                 |  |               
|Proceeds from organizational line of credit                    |  |               
|Repayment of organizational line of credit                     |  |               
|                                                               |  |               
|Net cash provided by financing activities                      |  |               
|                                                               |  |               
|Net increase (decrease) in cash and cash equivalents           |  |               
|                                                               |  |               
|Cash and cash equivalents, beginning of year                   |  |               
|                                                               |  |               
|Cash and cash equivalents, end of year                         |  |               
|                                                               |  |               
|Supplemental information                                       |  |               
|Cash paid for:                                                 |  |               
|Interest                                                       |  |               
|                                                               |  |               
|Schedule of non-cash transactions:                             |  |               
|Unrealized gains on investment securities, no income tax       |  |               
|                                                               |  |               

The accompanying notes are an integral part of this financial statement.

37

---

# BANKGREENVILLE
FINANCIAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES

BankGreenville
Financial Corporation (the Company) is a South Carolina corporation organized
to operate as a bank holding company pursuant to the Federal Bank Holding Company Act of
1956 and the South Carolina Bank Holding Company Act, and to own and control all of the
capital stock of BankGreenville (the Bank). The Bank is a state chartered
institution organized under the laws of South Carolina to conduct general banking business
in Greenville, South Carolina. From our inception on March 18, 2005 and before opening the
Bank for business on January 30, 2006, we engaged in organizational and pre-opening
activities necessary to obtain regulatory approvals and to prepare our subsidiary, the
Bank, to commence business as a financial institution. The Company sold 1,180,000 shares
of its common stock at $10.00 per share and raised $11.8 million in its initial public
offering. Proceeds, net of brokerage commissions and other offering costs totaled
approximately $11.04 million and the Bank was capitalized with $11 million of the net
proceeds. The Bank is primarily engaged in the business of accepting deposits, insured by
the FDIC, and providing commercial, consumer and mortgage loans to the general public in
Greenville County, South Carolina.

The
following is a description of the more significant accounting and reporting policies that
the Company follows in preparing and presenting consolidated financial statements.

# Basis of presentation

The
accompanying consolidated financial statements include the accounts of the Company and its
wholly owned subsidiary, the Bank. In consolidation, all significant intercompany
transactions have been eliminated. The accounting and reporting policies conform to
accounting principles generally accepted in the United States of America and to general
practices in the banking industry. The Company uses the accrual basis of accounting.

During
the period of organization from March 18, 2005 (inception) until May 19, 2005, the Company
operated as NGCB, Inc. All activity and agreements of NGCB, Inc. were assigned to the
Company at the time of the filing of an amendment to change the name of the entity. All
transactions of the organizing entity are included in the financial statements of the
Company.

Until
the Bank opened for business on January 30, 2006, the Company was accounted for as a
development stage enterprise as defined by Statement of Financial Accounting Standards
(SFAS) No. 7, Accounting and Reporting by Development Stage
Enterprises, as the Company devoted substantially all of its efforts to establishing
a new business. When the Bank opened, certain reclassifications and adjustments were made
to the financial statements to reflect that the Company is now accounted for as an
operating company. Such adjustments are included in the financial statements.

# Managements
estimates

The
preparation of consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure
of contingent assets and liabilities as of the date of the consolidated financial
statements and the reported amount of income and expenses during the reporting periods.
Actual results could differ from those estimates.

Material
estimates that are particularly susceptible to significant change include the
determination of the allowance for losses on loans, including valuation allowances for
impaired loans, and the valuation of real estate acquired in connection with foreclosures
or in satisfaction of loans.

In
connection with the determination of the allowances for losses on loans and valuation of
foreclosed real estate, management obtains independent appraisals for significant
properties. Management must also make estimates in determining the estimated useful lives
and methods for depreciating premises and equipment.

38

---

# NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, continued

While
management uses available information to recognize losses on loans and foreclosed real
estate, changes in local economic conditions as well as a variety of other factors may
require additions to the allowance. In addition, as an integral part of their examination
process, regulatory agencies periodically review the Companys allowances for losses
on loans and foreclosed real estate. Such agencies may require the Company to recognize
additions to the allowances based on their judgments about information available to them
at the time of their examination. Because of these factors, it is reasonably possible that
the allowances for losses on loans and foreclosed real estate may change materially in the
near term.

# Risks and uncertainties

In
the normal course of its business the Company encounters two significant types of risks:
economic and regulatory. There are three main components of economic risk: interest rate
risk, credit risk and market risk. The Company is subject to interest rate risk to the
degree that its interest-bearing liabilities mature or reprice at different speeds, or on
different bases, than its interest-earning assets. Credit risk is the risk of default
within the Companys loan portfolio that results from borrowers inability or
unwillingness to make contractually required payments. Market risk reflects changes in the
value of collateral underlying loans receivable and the valuation of real estate held by
the Company.

The
Company is subject to the regulations of various governmental agencies. These regulations
can and do change significantly from period to period. The Company also undergoes periodic
examinations by the regulatory agencies, which may subject it to changes with respect to
valuation of assets, amount of required loss allowance and operating restrictions
resulting from the regulators judgments based on information available to them at
the time of their examinations. The Bank makes loans to individuals and businesses in and
around Greenville County, South Carolina for various consumer and commercial purposes. The
Bank has a diversified loan portfolio. Borrowers ability to repay their loans is not
dependent upon any specific economic sector.

# Investment securities

Investment
securities are accounted for in accordance with SFAS No. 115, Accounting for Certain
Investments in Debt and Equity Securities.  Management classifies securities at
the time of purchase into securities held to maturity, trading securities and securities
available for sale. Securities held to maturity are securities which the Company has the
positive intent and ability to hold to maturity, and are reported at amortized cost.
Trading securities are purchased and held principally for the purpose of selling them in
the near future and are reported at fair value with unrealized gains and losses included
in earnings. Securities available for sale are securities that may be sold under certain
conditions, and are reported at fair value, with unrealized gains and losses excluded from
earnings and reported as a separate component of shareholders equity as accumulated
other comprehensive income (loss). At December 31, 2006, the Companys investment
securities were classified available for sale. The amortization of premiums and accretion
of discounts on investment securities are recorded as adjustments to interest income.
Gains or losses on sales of investment securities are based on the net proceeds and the
adjusted carrying amount of the securities sold, using the specific identification method.
Unrealized losses on securities, reflecting a decline in value or impairment judged by the
Company to be other than temporary, are charged to earnings in the consolidated statements
of operations.

# Loans receivable

Loans
are stated at their unpaid principal balance. Interest income is computed using the simple
interest method and is recorded in the period earned. Fees earned on loans are amortized
over the life of the loan.

When
serious doubt exists as to the collectibility of a loan or when a loan becomes
contractually 90 days past due as to principal or interest, interest income is generally
discontinued unless the estimated net realizable value of collateral exceeds the principal
balance and accrued interest. When interest accruals are discontinued, income earned but
not collected is reversed. The Company identifies impaired loans through its normal
internal loan review process.

39

---

# NOTE 1  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, continued

Loans
on the Companys problem loan watch list are considered potentially impaired loans.
These loans are evaluated in determining whether all outstanding principal and interest
are expected to be collected in accordance with the contractual terms. Loans are not
considered impaired if a minimal payment delay occurs and all amounts due, including
accrued interest at the contractual interest rate for the period of delay, are expected to
be collected. At December 31, 2006, management has determined that the Company had no
impaired loans.

# Allowance for loan losses

An
allowance for loan losses is maintained at a level deemed appropriate by management to
provide adequately for known and inherent losses in the loan portfolio. The determination
of the allowance for loan losses is based on evaluations of the collectibility of loans,
including consideration of factors such as the balance of impaired loans, the quality,
mix, and size of the overall loan portfolio, economic conditions that may affect the
borrowers ability to repay, the amount and quality of collateral securing the loans,
historical loan loss experience, and a review of specific problem loans. Management also
considers subjective issues such as changes in lending policies and procedures, changes in
the local/national economy, changes in volume or type of credits, changes in
volume/severity of problem loans, quality of loan review and board of director oversight,
concentrations of credit, and peer group comparisons. Due to the Companys limited
operating history, to date the provision for loan losses has been made primarily as a
result of the assessment of general loan loss risk compared to banks of similar size and
maturity. Due to the Companys short operating history, the loans in the loan
portfolio and the lending relationships are of very recent origin. In general, loans do
not begin to show signs of credit deterioration or default until they have been
outstanding for some period of time, a process known as seasoning. As a result, a
portfolio of older loans will usually behave more predictably than a newer portfolio.
Because the loan portfolio is new, the current level of delinquencies and defaults may not
be representative of the level that will prevail when the portfolio becomes more seasoned,
which may be higher than current levels. Management evaluates current and future
anticipated economic conditions which may affect borrowers ability to pay and the
underlying collateral value of the loans in determining the estimate of the allowance for
loan losses. Loans which are deemed to be uncollectible are charged off and deducted from
the allowance. The provision for loan losses and recoveries of loans previously charged
off are added to the allowance.

# Property and equipment

Property
and equipment are stated at cost, less accumulated depreciation. The provision for
depreciation is computed by the straight-line method, based on the estimated useful lives
for buildings of 40 years and for furniture and equipment of 5 to 10 years. Leasehold
improvements are amortized over the life of the lease. The cost of assets sold or
otherwise disposed of and the related allowance for depreciation are eliminated from the
accounts and the resulting gains or losses are reflected in the statement of operations
when incurred. Maintenance and repairs are charged to current expense. The costs of major
renewals and improvements are capitalized.

# Building construction in
progress

Building
construction in progress includes architectural and construction costs for our permanent
headquarters building. Building completion is scheduled during the first quarter of 2007,
at which time these costs will be reclassified to premises, furniture and equipment.

# Residential loan
origination fees

The
Company offers residential loan origination services to its clients. The loans are offered
on terms and prices offered by the Companys correspondents and are closed in the
name of the correspondents. The Company receives fees for services it provides in
conjunction with the origination services it provides. The fees are recognized at the time
the loans are closed by the Companys correspondent.

40

---

# NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, continued

# Income taxes

Income
taxes are accounted for in accordance with SFAS No. 109, Accounting for Income
Taxes. Under the asset and liability method of SFAS No. 109, deferred tax assets and
liabilities are recognized for the future tax consequences attributable to differences
between the financial statement carrying amounts of existing assets andliabilities
and their respective tax bases. Deferred tax assets and liabilities are measured using the
enacted rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. Under SFAS No. 109, the effect on
deferred tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date. Valuation allowances are established to
reduce deferred tax assets if it is determined to be more likely than not that all or some
portion of the potential deferred tax asset will not be realized.

# Advertising and marketing

Marketing,
promotional and other advertising costs generally are expensed when incurred.

# Net loss per share

Basic
loss per share represents net loss available to shareholders divided by the
weighted-average number of common shares outstanding during the period. Potential common
shares that may be issued by the Company relate to outstanding stock options and warrants,
and are determined using the treasury stock method. For the year ended December 31, 2006,
the stock options and warrants were not in-the-money. The exercise price of
the stock options and warrants exceeded the weighted average fair market value of the
common stock. The outstanding stock options and warrants were anti-dilutive, and basic and
dilutive shares and loss per common share, respectively, were the same.

# Stock compensation plans

Upon
completion of the offering, the Company issued stock warrants to the organizing directors
for the purchase of three shares of common stock at $10.00 per share for every four shares
purchased in the stock offering, up to a maximum of 10,000 warrants per director. The
Company issued a total of 107,500 warrants, all of which immediately vested upon
completion of the offering. The average fair value per share of warrants as of December
31, 2006 amounted to approximately $1.83.  The fair value of each warrant granted was
estimated on the date of grant using the Black-Scholes pricing model with the following
assumptions used for grants:  expected volatility of 6%, risk-free interest rate of
4.0% and expected lives of five years. Under SFAS No. 123(R), the effect on net loss for
the period March 18, 2005 (inception) through December 31, 2005 would be additional
expense of $196,725, for a pro forma net loss of $438,632, or $0.37 per share.

In
addition, the Company has adopted a stock option plan. 212,400 shares are authorized under
the plan. 100,650 options to purchase common stock at $10.00 per share were granted in
2006 and 99,400 were outstanding at December 31, 2006. Shares forfeited totaled 1,250 in
2006. The options vest over a five year period from the date of grant and have a
contractual term of ten years.

On
January 1, 2006, the Company adopted the fair value recognition provisions of Financial
Accounting Standards Board (FASB) SFAS No. 123(R), Accounting for
Stock-Based Compensation, to account for compensation costs under its stock option
plan. Previously, stock option plans were accounted for using the intrinsic value method
under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (as amended) (APB 25). Under the intrinsic value method
prescribed by APB 25, the Company would not have recognized compensation cost for stock
options because the option exercise price in its plan equals the market price on the date
of grant. In adopting SFAS No. 123, the Company elected to use the modified prospective
method to account for the transition from the intrinsic value method to the fair value
recognition method. Under the modified prospective method, compensation cost is recognized
from the grant date for all new stock options granted and for any outstanding unvested
awards, applying the fair value method to those awards as of the date of grant, and is
expensed over the employees requisite service period.

41

---

# NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, continued

There
were no options outstanding at December 31, 2005. At December 31, 2006, 99,400 options
were outstanding at $10.00 per share. Of this total, none were vested as of December 31,
2006. The options have a weighted average remaining contractual term of approximately 9
years. Total unrecognized compensation cost related to non-vested options granted as of
December 31, 2006 was $231,307, and is expected to be expensed ratably over the remaining
vesting periods of the stock options. Net loss, as reported, included stock-based employee
compensation expense of $49,275 for the year ended December 31, 2006. The exercise or
conversion ratio of all stock options granted was 1:1 and the aggregate intrinsic value of
the stock options was zero at December 31, 2006.

The
weighted average fair value per share of options granted as of December 31, 2006 amounted
to $2.82.  The fair value of each option granted was estimated on the date of grant
using the Black-Scholes option pricing model with the following assumptions used for
grants:  expected volatility of 6%, risk-free interest rate of 4.45% and expected
lives of seven and a half years.

# Statement of cash flows

For
purposes of reporting cash flows, cash equivalents include amounts due from banks and
federal funds sold. Generally, federal funds are sold for one-day periods.

# Reclassifications

Certain amounts previously reported, have been reclassified to state all periods on a
comparable basis. These reclassified amounts had no impact on the Companys retained
deficit or net loss.

# Recently issued
accounting standards

The
following is a summary of recent authoritative pronouncements that could impact the
accounting, reporting and/or disclosure of financial information by the Company.

In
February 2006, the FASB issued SFAS No. 155, Accounting for Certain Hybrid Financial
Instrumentsan amendment of FASB Statements No. 133 and 140. This Statement
amends SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, and SFAS No. 140, Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities. This Statement resolves issues
addressed in SFAS No. 133 Implementation Issue No. D1, Application of Statement 133
to Beneficial Interests in Securitized Financial Assets. SFAS No. 155 is effective
for all financial instruments acquired or issued after the beginning of an entitys
first fiscal year that begins after September 15, 2006. Management does not believe that
the adoption of SFAS No. 155 will have an impact on its financial position, results of
operations and cash flows.

In
March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial
Assetsan amendment of FASB Statement No. 140. This Statement amends FASB No.
140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities, with respect to the accounting for separately recognized servicing
assets and servicing liabilities. SFAS No. 156 requires an entity to recognize a servicing
asset or servicing liability each time it undertakes an obligation to service a financial
asset by entering into a servicing contract; requires all separately recognized servicing
assets and servicing liabilities to be initially measured at fair value, if practicable;
permits an entity to choose its subsequent measurement methods for each class of
separately recognized servicing assets and servicing liabilities; at its initial adoption,
permits a one-time reclassification of available for sale securities to trading securities
by entities with recognized servicing rights, without calling into question the treatment
of other available for sale securities under Statement 115, provided that the available
for sale securities are identified in some manner as offsetting the entitys exposure
to changes in fair value of servicing assets or servicing liabilities that a servicer
elects to subsequently measure at fair value; and requires separate presentation of
servicing assets and servicing liabilities subsequently measured at fair value in the
statement of financial position and additional disclosures for all separately recognized
servicing assets and servicing liabilities. An entity should adopt SFAS No. 156 as of the
beginning of its first fiscal year that begins after September 15, 2006. Management does
not believe the adoption of SFAS No. 156 will have an impact on its financial position,
results of operations and cash flows.

42

---

# NOTE 1  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES, continued

In
July 2006, the FASB issued FASB Interpretation No. 48 (FIN 48),
Accounting for Uncertainty in Income Taxes. FIN 48 clarifies the accounting
for uncertainty in income taxes recognized in an enterprises financial statements in
accordance with FASB Statement No. 109, Accounting for Income Taxes. FIN 48
prescribes a recognition threshold and measurement attributable for the financial
statement recognition and measurement of a tax position taken or expected to be taken in a
tax return. FIN 48 also provides guidance on derecognition, classification, interest and
penalties, accounting in interim periods, disclosures and transitions. FIN 48 is effective
for fiscal years beginning after December 15, 2006. Management is currently analyzing the
effects of FIN 48.

In
September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. SFAS
157 defines fair value, establishes a framework for measuring fair value in generally
accepted accounting principles, and expands disclosures about fair value measurements.
SFAS 157 is effective for the Company on January 1, 2008 and is not expected to have a
significant impact on the Companys financial statements.

On
September 13, 2006, the SEC issued Staff Accounting Bulleting No. 108 (SAB
108). SAB 108 provides interpretive guidance on how the effects of the carryover or
reversal of prior year misstatements should be considered in quantifying a potential
current year misstatement. Prior to SAB 108, Companies might evaluate the materiality of
financial statement misstatements using either the income statement or balance sheet
approach, with the income statement approach focusing on new misstatements added in the
current year, and the balance sheet approach focusing on the cumulative amount of
misstatement present in a companys balance sheet. Misstatements that would be
material under one approach could be viewed as immaterial under another approach, and not
be corrected. SAB 108 now requires that companies view financial statement misstatements
as material if they are material according to either the income statement or balance sheet
approach. Management has analyzed SAB 108 and determined that upon adoption it will have
no impact on the reported results of operations or financial conditions.

In
February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities  Including an amendment of FASB Statement No.
115. This statement permits, but does not require, entities to measure many
financial instruments at fair value. The objective is to provide entities with an
opportunity to mitigate volatility in reported earnings caused by measuring related assets
and liabilities differently without having to apply complex hedge accounting provisions.
Entities electing this option will apply it when the entity first recognizes an eligible
instrument and will report unrealized gains and losses on such instruments in current
earnings. This statement 1) applies to all entities, 2) specifies certain election dates,
3) can be applied on an instrument-by-instrument basis with some exceptions, 4) is
irrevocable and 5) applies only to entire instruments. One exception is demand deposit
liabilities which are explicitly excluded as qualifying for fair value. With respect to
SFAS 115, available for sale and held to maturity securities at the effective date are
eligible for the fair value option at that date. If the fair value option is elected for
those securities at the effective date, cumulative unrealized gains and losses at that
date shall be included in the cumulative-effect adjustment and thereafter, such securities
will be accounted for as trading securities. SFAS 159 is effective for the Company on
January 1, 2008. Earlier adoption is permitted in 2007 if the Company also elects to apply
the provisions of SFAS 157, Fair Value Measurement. The Company is currently
analyzing the fair value option provided under SFAS 159.

Other
accounting standards that have been issued or proposed by the PCAOB or other
standards-setting bodies are not expected to have a material impact on the Companys
financial position, results of operations and cash flows.

# NOTE 2  INVESTMENT
SECURITIES

The amortized costs and fair values of investment securities available for sale were
as follows at December 31, 2006.

|                   | Gross Unrealized
|------------------ | ----------------
|
|U. S. Government   |                 
|sponsored agencies |                 
|Mortgage-backed    |                 
|agencies           |                 
|                   |                 
|Total              |                 
|                   |                 

43

---

# NOTE 2  INVESTMENT
SECURITIES, continued

The
Company believes, based on industry analyst reports and credit ratings that the
deterioration in fair value of individual investment securities available for sale is
attributed to changes in market interest rates and not in the credit quality of the issuer
and therefore, these losses are not considered other-than-temporary. All investment
securities in an unrealized loss position have been held by the Company for a period of
less than twelve months. The Company has the ability and intent to hold these securities
until such time as the value recovers or the securities mature.

The
amortized costs and fair values of investment securities available for sale at December
31, 2006, by contractual maturity, are shown below. Expected maturities may differ from
contractual maturities because issuers have the right to prepay the obligations.

|                                      | Amortized | 
|------------------------------------- | --------- | 
|
|Due after three but within five years |           | 
|Due after five but within ten years   |           | 
|Due after ten years                   |           | 
|                                      |           | 
|Total                                 |           | 
|                                      |           | 

The
Company sold no investments in 2006. Accordingly, no gains or losses were recorded. At
December 31, 2006, approximately $1,000,000 of investment securities were pledged as
collateral to secure public entity deposits with the Bank. There were no investment
securities at December 31, 2005.

# NOTE 3  LOANS

Major
loan categories and corresponding amounts outstanding at December 31, 2006 were as
follows.

|                                      | 
|------------------------------------- | 
|Real estate:                          | 
|Construction and development and land | 
|Commercial                            | 
|Residential mortgages                 | 
|Home equity lines                     | 
|                                      | 
|Total real estate secured loans       | 
|                                      | 
|Commercial                            | 
|Consumer                              | 
|Deferred origination fees, net        | 
|                                      | 
|Gross loans                           | 
|Less allowance for loan losses        | 
|                                      | 
|Loans, net                            | 
|                                      | 

At
December 31, 2006, the Company had no non-accrual loans or loans past-due 90 days or more.
For the year ended December 31, 2006, there was no forgone interest income on non-accrual
loans. At December 31, 2006, there were no loans considered impaired. At December 31,
2005, there were no loans outstanding.

The
Bank makes loans to individuals and small to medium sized businesses for various personal
and commercial purposes primarily in Greenville County, South Carolina. The Company has a
diversified loan portfolio and the portfolio is not dependent on any specific economic
segment or industry. The Company regularly monitors credit concentration based on loan
purpose, collateral type, industry type and loan amounts outstanding to any one borrower.
At December 31, 2006, there were no material concentrations of credit risk within the
Companys loan portfolio.

44

---

# NOTE 3  LOANS,
continued

Directors,
executive officers and related parties of these groups are clients of and have
transactions with the Bank in the ordinary course of business. Included in these
transactions are outstanding loans and commitments, all of which are made under
substantially the same credit terms, including interest rates charged and collateral
requirements, as those prevailing at the time for comparable transactions with unrelated
parties and do not involve more than the normal risk of collectibility.

Related
party loan activity for the year ended December 31, 2006 is shown below. Amounts are
approximate.

|                                                   | 
|-------------------------------------------------- | 
|Loans outstanding, beginning of year               | 
|New loans and advances on lines of credit          | 
|Repayments on loans                                | 
|                                                   | 
|Related party loans outstanding, December 31, 2006 | 
|                                                   | 

At
December 31, 2006, there were commitments to extend credit of approximately $247,000 to
related parties.

The
amounts of fixed and variable rate loans included in the loan portfolio at December 31,
2006 were as follows.

|                    | 
|------------------- | 
|Variable rate loans | 
|Fixed rate loans    | 
|                    | 
|Gross loans         | 
|                    | 

The
allowance for loan losses is available to absorb future loan charge-offs. The allowance is
increased by the provision charged to operating income and by recoveries on loans
previously charged-off, and is decreased by loans deemed uncollectible and charged-off.
There were no charge-offs or recoveries in 2006. The provision for loan losses was
$210,379 for the year ended December 31, 2006 and -0- at December 31, 2005 as there were
no loans outstanding.

# NOTE 4  PROPERTY
AND EQUIPMENT

Property and equipment are stated at cost less accumulated depreciation. Components of
property and equipment are shown below at December 31, 2006 and 2005.

|                                | 2006 | 2005
|------------------------------- | ---- | ----
|Land and land improvements      |      |     
|Equipment                       |      |     
|                                |      |     
|Total property and equipment    |      |     
|Less:  accumulated depreciation |      |     
|                                |      |     
|Property and equipment, net     |      |     
|                                |      |     

Depreciation
expense for the years ended December 31, 2006 and 2005 was $32,555 and $1,331,
respectively.

Land
and land improvements totaled $654,610 at December 31, 2006 and consisted of $645,558 in
land costs associated with the Companys purchase of approximately 1.23 acres, on
which to build our permanent bank headquarters, as well as $9,052 in unamortized land
improvement costs associated with our temporary facility site. Land improvement costs are
being expensed over the Companys temporary facility lease term.

# NOTE 5  DEPOSITS

The
following shows the components of deposit accounts at December 31, 2006. There were no
deposits outstanding at December 31, 2005.

45

---

# NOTE 5  DEPOSITS,
continued

|                                     | 
|------------------------------------ | 
|Non-interest bearing demand deposits | 
|Interest bearing checking            | 
|Money market and savings             | 
|Time deposits, less than $100,000    | 
|Time deposits, $100,000 and over     | 
|                                     | 
|Total deposits                       | 
|                                     | 

At
December 31, 2006, the Bank had $2,026,000 in brokered time deposits outside its primary
market. Interest expense on time deposits greater than $100,000 was $124,704 for the year
ended December 31, 2006. Related party deposits totaled approximately $4,850,000 at
December 31, 2006.

At December 31, 2006, the scheduled maturities of certificates of deposit were as
follows.

|                    | 
|------------------- | 
|2007                | 
|2008                | 
|2009                | 
|2010 and thereafter | 
|                    | 
|Total               | 
|                    | 

# NOTE 6  BORROWINGS
AND UNUSED LINES OF CREDIT

At
December 31, 2006, the Bank had a short-term line of credit with a correspondent bank to
purchase a maximum of $3,900,000 in unsecured federal funds. The interest rate on
borrowings under this line is the prevailing market rate for federal funds purchased. This
accommodation line of credit is renewable annually, expires on January 1, 2008, and may be
terminated at any time at the correspondent banks sole discretion. No amounts were
outstanding at December 31, 2006 and 2005.

# NOTE 7  LEASES

The
Company has entered into a lease agreement on its temporary banking facility as well as a
ground lease agreement on the temporary site location of this facility. The monthly rent
under these lease agreements is $2,619 and $1,250, respectively. The original lease term
on our temporary banking facility expired on September 30, 2006, and we elected to
exercise the month-to-month option in the original lease agreement. The ground lease
agreement expired on July 31, 2006, and in July 2006, the Company exercised its right to
extend the ground lease for one nine-month term. The Company leases its modular facility
furniture at a monthly rental of $2,405.

# NOTE 8  INCOME TAXES

Income
tax expense for the year ended December 31, 2006 and the period March 18, 2005 (inception)
through December 31, 2005 is summarized as follows:

|                              | 2006 | 2005
|----------------------------- | ---- | ----
|Current portion               |      |     
|Federal                       |      |     
|State                         |      |     
|                              |      |     
|Total current expense         |      |     
|Deferred expense (benefit)    |      |     
|                              |      |     
|Change in valuation allowance |      |     
|Income tax expense            |      |     
|                              |      |     

46

---

# NOTE 8  INCOME
TAXES, continued

The
gross amounts of deferred tax assets and deferred tax liabilities are as follows:

|                                     | December 31,
|------------------------------------ | ------------
|
|Deferred tax assets                  |             
|Allowance for loan losses            |             
|Organization and start-up costs      |             
|Net operating loss carryforward      |             
|                                     |             
|Total deferred tax assets            |             
|Less valuation allowance             |             
|                                     |             
|                                     |             
|                                     |             
|Deferred tax liabilities             |             
|Accrual to cash method of accounting |             
|Other                                |             
|                                     |             
|Total deferred tax liabilities       |             
|                                     |             
|Net deferred tax asset               |             
|                                     |             

Deferred
tax assets represent the future tax benefit of deductible differences and, if it is more
likely than not that a tax asset will not be realized, a valuation allowance is required
to reduce the recorded deferred tax assets to net realizable value. As of December 31,
2006 and 2005, in consideration of the lack of an established earnings history, management
has provided valuation allowances of 100% and 100%, respectively, to reflect its estimate
of net realizable value. The net tax asset is included in the caption other
assets on the balance sheet.

A
reconciliation between the income tax expense and the amount computed by applying the
Federal statutory rate of 34% for 2006 and 2005 to income before income taxes follows:

|                              | 2006 | 2005
|----------------------------- | ---- | ----
|
|Tax benefit at statutory rate |      |     
|Valuation allowance           |      |     
|Other                         |      |     
|                              |      |     
|Income tax expense            |      |     
|                              |      |     

# NOTE 9  RELATED
PARTY TRANSACTIONS

On
January 30, 2006, the Company purchased approximately 1.23 acres on which to build its
headquarters building, at the corner of Woodruff Road and Rocky Slope Road. A family
partnership of one of our directors was a one-third partner in an entity which owned fifty
percent of the site. The cost of the site was $614,238. Additionally, the Company incurred
$31,320 for its portion of the maintenance costs of a shared storm water retention system.
This same family partnership is a one-third partner in the entity which owns 100 percent
of our temporary facility site. The Company leases this temporary site under a ground
lease agreement for a monthly rental of $1,250.

The
law firm in which our chairman of the board is a shareholder assisted in the negotiation
and preparation of our land purchase agreement and the closing of the headquarters site,
as well as the negotiation of the ground lease agreement for our temporary facility site.
The fees for these services totaled $6,918 for the year ended December 31, 2006.

In
the ordinary course of business, the Bank transacts loan and deposit business with
directors and executive officers as well as their immediate families and business
interests. This business with related parties is conducted on substantially the same
terms, including interest rates and credit requirements, as those prevailing at the time
for comparable transactions with unrelated parties and do not involve more than normal
risk. Refer to Notes 3 and 5 for related party loans and deposits, respectively.

47

---

# NOTE 10 
COMMITMENTS AND CONTINGENCIES

On
July 13, 2006, the Company entered into an agreement with a contractor to build the
Banks permanent headquarters building, adjacent to our temporary banking facility
site. The agreement is in the form of cost plus a fee with a negotiated guaranteed maximum
price not to exceed $1,645,164. At December 31, 2006, the Company had incurred $1,327,968.
The headquarters building is expected to be completed during the first quarter of 2007.

The
Bank has entered into an agreement with a core data processing provider to provide item
and core processing services. The agreement has a remaining term of fifty-five months. The
monthly cost of this service is based on account and activity volumes, but is expected to
be no less than $10,000 per month.

The
Bank has entered into agreements with vendors to provide furniture and equipment for our
permanent headquarters building. The cost of this furniture and equipment is approximately
$140,000. At December 31, 2006, the Company had incurred $40,000.

The
Board of Directors has approved employment agreements with the president and chief
executive officer and the executive vice president and chief financial officer. These
agreements include provisions regarding term, compensation, benefits, incentive programs,
stock option plans and severance and non-compete provisions.

The
Bank may become a party to litigation and claims in the normal course of business. At
December 31, 2006, management believes there is no material litigation pending.

# NOTE 11  FINANCIAL
INSTRUMENTS WITH OFF-BALANCE SHEET RISK

The
Bank has made contractual commitments to extend credit in the ordinary course of its
business activities. These commitments are legally binding agreements to lend money to our
clients at predetermined interest rates for a specified period of time. We evaluate each
clients credit worthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by us upon extension of credit, is based on our credit
evaluation of the borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, commercial and residential real estate. We
manage the credit risk on these commitments by subjecting them to normal underwriting and
risk management processes. At December 31, 2006, the Bank had issued commitments to extend
credit of $3,140,862 through various types of lending arrangements. Of this amount, fixed
rate commitments were $115,518 and variable rate commitments were $3,025,344.

# NOTE 12  STOCK
COMPENSATION PLANS

On February 14, 2006, the Company adopted a stock option plan for the benefit of
officers and employees. The Board of Directors may grant up to 212,400 options at an
option price per share not less than the fair market value of the stock on the date of
grant. The options granted to officers and employees vest over five years and expire 10
years from the date of grant. A summary of the status of the plan and changes for the year
ended December 31, 2006 is shown below. There were no outstanding stock options at
December 31, 2005.

|                                         |  | Weighted
|---------------------------------------- |  | --------
|
|
|Outstanding, beginning of year           |  |         
|Granted                                  |  |         
|Exercised                                |  |         
|Forfeited                                |  |         
|                                         |  |         
|Options outstanding at December 31, 2006 |  |         
|                                         |  |         
|Options exercisable at December 31, 2006 |  |         
|                                         |  |         
|Shares available for grant               |  |         

48

---

# NOTE 12  STOCK COMPENSATION PLANS, continued

Upon completion
of the stock offering, the Company issued warrants to each of its organizing directors to
purchase up to an additional total of 107,500 shares of common stock at $10.00 per share.
These warrants were immediately vested and exercisable and expire in 2015.

# NOTE 13  REGULATORY
MATTERS

The
Bank is subject to various regulatory capital requirements administered by the federal
banking agencies. Failure to meet minimum capital requirements can initiate certain
mandatory, and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material impact on the Banks financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve quantitative measures
of the Banks assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. The Banks capital amounts and classification
are also subject to qualitative judgments by the regulators about components, risk
weighting, and other factors.

Quantitative
measures established by regulation to ensure capital adequacy require the Bank to maintain
minimum ratios of Tier 1 and total capital as a percentage of assets and off-balance-sheet
exposures, adjusted for risk weights ranging from 0% to 100%. Tier 1 capital consists of
common shareholders equity, excluding the unrealized gain or loss on securities
available for sale, minus certain intangible assets. Tier 2 capital consists of the
allowance for loan losses subject to certain limitations. Total regulatory minimum
requirements are 4% for Tier 1 and 8% for total risk-based capital.

The
Bank is also required to maintain capital at a minimum level based on average assets,
which is known as the leverage ratio. Banks are to maintain capital at the minimum
requirement of 4%.

As
of December 31, 2006, the most recent notification from the Banks primary regulator
categorized the Bank as well-capitalized under the regulatory framework for prompt
corrective action. There are no conditions or events that management believes have changed
the Banks category. The following table summarizes the capital amounts and ratios of
the Bank and the regulatory minimum requirements at December 31, 2006.

|                          |  |  | To be well capitalized
|------------------------- |  |  | ----------------------
|
|
|
|
|
|Total capital to risk     |  |  |                       
|weighted assets           |  |  | $                     
|Tier 1 capital to risk    |  |  |                       
|weighted assets           |  |  |                       
|Tier 1 capital to average |  |  |                       
|assets (leverage ratio)   |  |  |                       

The
Federal Reserve Board has similar requirements for bank holding companies. The Company is
currently not subject to these requirements because the Federal Reserve guidelines contain
an exemption for bank holding companies of less than $150,000,000 in consolidated assets.

# NOTE 14 
RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS, OR ADVANCES

The
ability of the Company to pay cash dividends is dependent upon receiving cash in the form
of dividends from the Bank. However, certain restrictions exist regarding the ability of
the subsidiary to transfer funds to the Company in the form of cash dividends, loans, or
advances. As a South Carolina state bank, the Bank may not pay dividends from its capital.
All dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts.

49

---

# NOTE 14 
RESTRICTIONS ON SUBSIDIARY DIVIDENDS, LOANS, OR ADVANCES, continued

The
bank is authorized to pay cash dividends up to 100% of net income in any calendar year
without obtaining the prior approval of the South Carolina Board of Financial
Institutions, provided that the bank received a composite rating of one or two at the last
federal or state regulatory examination. The bank must obtain approval from the South
Carolina Board of Financial Institutions prior to the payment of any other cash dividends.

# NOTE 15  FAIR VALUE
OF FINANCIAL INSTRUMENTS

SFAS
No. 107, Disclosures about Fair Value of Financial Instruments requires
disclosure of fair value information, whether or not recognized in the consolidated
balance sheets, when it is practical to estimate the fair value. SFAS No. 107 defines a
financial instrument as cash, evidence of an ownership interest in an entity or
contractual obligations which require the exchange of cash or other financial instruments.
Certain items are specifically excluded from the disclosure requirements, including the
Companys common stock, property and equipment and other assets and liabilities.

Fair
value approximates carrying value for cash and due from banks and federal funds sold due
to the short-term nature of the instrument. Investment securities are valued at fair
market values.

Fair
value for variable rate loans that reprice frequently and for loans that mature in less
than one year is based on the carrying value. Fair value for fixed rate mortgage loans,
personal loans and all other loans maturing after one year is based on the discounted
present value of the estimated future cash flows. Discount rates used in these
computations approximate the rates currently offered for similar loans of comparable terms
and credit quality.

Fair
value for demand deposit accounts and interest-bearing accounts with no fixed maturity
date is equal to the carrying value. Certificate of deposit accounts with a maturity
within one year are valued at their carrying value. The fair value of certificate of
deposit accounts with a maturity after one year are estimated by discounting cash flows
from expected maturities using current interest rates on similar instruments.

The
Company has used managements best estimate of fair value based on the above
assumptions. Thus, the fair values presented may not be the amounts that could be realized
in an immediate sale or settlement of the instrument. In addition, any income taxes or
other expenses, which would be incurred in an actual sale or settlement, are not taken
into consideration in the fair value presented.

The
estimated fair values of the Companys financial instruments at December 31, 2006 and
2005 were as follows:

|                                         | 2006 | 2005
|---------------------------------------- | ---- | ----
|
|
|Financial assets:                        |      |     
|Cash and due from banks                  |      |     
|Federal funds sold                       |      |     
|Investment securities available for sale |      |     
|Loans, net                               |      |     
|                                         |      |     
|Financial liabilities:                   |      |     
|Deposits                                 |      |     

# NOTE 16  PARENT
COMPANY FINANCIAL INFORMATION

Following
is condensed financial information of BankGreenville Financial Corporation (parent company
only). 2005 is not presented as the consolidated financial statements at December 31, 2005
and for the period then ended equaled the parent only:

50

---

# NOTE 16  PARENT
COMPANY FINANCIAL INFORMATION, continued

# Condensed Balance Sheet 
December 31, 2006

|                                      | 
|------------------------------------- | 
|Assets:                               | 
|Cash and cash equivalents             | 
|Investment in subsidiary bank         | 
|Due from subsidiary bank              | 
|                                      | 
|Total assets                          | 
|                                      | 
|Liabilities and shareholders' equity: | 
|Shareholders' equity                  | 
|                                      | 

# Condensed Statement of
OperationsFor the year ended December 31, 2006

|                                                      | 
|----------------------------------------------------- | 
|Payment from subsidiary bank for organizational costs | 
|                                                      | 
|Equity in undistributed net loss of subsidiary bank   | 
|                                                      | 
|Net loss                                              | 
|                                                      | 

# Condensed Statement of
Cash Flows For the year ended December 31, 2006

|                                                 | 
|------------------------------------------------ | 
|Operating activities                             | 
|Net loss                                         | 
|Adjustments to reconcile net loss to net cash    | 
|provided by operating activities                 | 
|Equity in undistributed net loss of              | 
|subsidiary bank                                  | 
|Decrease in other assets                         | 
|Decrease in accrued expenses                     | 
|                                                 | 
|Net cash provided by operating activities        | 
|                                                 | 
|Investing activities                             | 
|Investment in subsidiary bank                    | 
|Due from subsidiary bank                         | 
|                                                 | 
|Net cash used in investing activities            | 
|                                                 | 
|Financing activities                             | 
|Increase in net proceeds from offering           | 
|due to adjustment of stock offering costs        | 
|Stock based compensation                         | 
|                                                 | 
|Net cash provided by financing activities        | 
|                                                 | 
|Decrease in cash and cash equivalents            | 
|Cash and cash equivalents, beginning of          | 
|year                                             | 
|                                                 | 
|Cash and cash equivalents, end of year           | 
|                                                 | 
|Schedule of non-cash transactions                | 
|Unrealized gain on investment securities, no tax | 
|                                                 | 

51

---

# Item 8.   Changes in and
Disagreements with Accountants on Accounting and Financial Disclosure

None.

# Item 8A.   Controls and
Procedures

As
of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as defined in Exchange Act Rule 15d-15(e). Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our current
disclosure controls and procedures are effective as of December 31, 2006. There have been
no significant changes in our internal controls over financial reporting during the fourth
fiscal quarter ended December 31, 2006 that have materially affected, or are reasonably
likely to materially affect, our internal controls over financial reporting.

The
design of any system of controls and procedures is based in part upon certain assumptions
about the likelihood of future events. There can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions, regardless of
how remote.

# Item 8B.   Other
Information

None.

52

---

# Part III

# Item 9.   Directors,
Executive Officers, Promoters, Control Persons, and Corporate Governance; Compliance with
Section 16(a) of the Exchange Act

The
following sets forth information regarding our executive officers and directors. Our
bylaws provide for a classified board of directors, so that, as nearly as possible,
one-third of the directors are elected each year to serve three-year terms. The terms of
office of the classes of directors expire as follows: Class II at the 2007 annual meeting
of shareholders, Class III at the 2008 annual meeting of shareholders and Class I at the
2009 annual meeting of shareholders. Our executive officers serve at the discretion of our
board of directors.

|                     |  | Year First |  |   
|-------------------- |  | ---------- |  | --
|
|
|
|Jeffrey L. Dezen     |  |            |  | 51
|Roger H. Gower       |  |            |  | 55
|Frank B. Halter, Jr  |  |            |  | 51
|R. Bruce Harman      |  |            |  | 52
|Arthur L. Howson, Jr |  |            |  | 55
|Paula S. King        |  |            |  | 46
|Jonathan T. McClure  |  |            |  | 47
|David A. Merline, Jr |  |            |  | 48
|William H. Pelham    |  |            |  | 52
|Russel T. Williams   |  |            |  | 46

Jeffrey
L. Dezen, 51, Class I director,has been president of Jeff Dezen Public
Relations, a marketing and communications consulting firm in Greenville, South Carolina
which provides public relations counsel to a diverse group of national and regional
corporations, since 1991. Mr. Dezens experience includes sports and manufacturing
sectors, professional services, the health care, not-for-profit and hospitality markets,
as well as retail and business-to-business channels. He earned a B.A. from Dickinson
College and a Masters degree in English at Pennsylvania State University. In addition to
having held faculty positions at several universities, including Clemson University and
Frostburg State University, Mr. Dezen serves on the board of directors of The Alliance for
Quality Education, the Greater Greenville YMCA board and serves on the Greenville
Technical College Marketing Advisory board. He is past-president of Greenville High
Schools Parent-Teacher Association. Mr. Dezen has been a Greenville resident since
1985.

Roger
H. Gower,55,Class I director,is a fifth generation native
Greenvillian who returned to Greenville to join Greenville Ob-Gyn Associates in 1982 after
graduating from Emory University with a B.A. in chemistry in 1973 and a medical degree
from the Medical University of South Carolina in 1977. Dr. Gower was certified by the
American College of Ob-Gyn in 1982 and has been annually recertified since 1999. He has
been active in medical staff services with the Greenville Hospital System as chairman of
planning, medical staff president and chairman of credentialing, as well as serving on the
boards of the Greenville Health Corporation and the Physician Hospital Organization.
Professionally, he is a fellow of the American College of Ob-Gyn, a member of the American
Medical Association, South Carolina and Greenville County medical societies and the South
Atlantic Society of Ob-Gyn. He serves as the physician manager of Greenville Ob-Gyn
Associates, an eight-doctor group. In the community, he has been involved with the Rotary
Club, Westminster Presbyterian Church, the United Way, the American Red Cross and the
Greenville County Historical Society, serving on the latter two boards.

Frank
B. Halter, Jr., 51, Class I director, a third-generation Greenvillian and
Realtor, has served as president of Coldwell Banker Caine Residential, a real estate
brokerage company, since 1999. He manages that companys residential, relocation and
property management and new homes groups. Mr. Halter received his B.S. in finance from the
University of South Carolina and has earned the Graduate Realtors Institute and the
Certified Real Estate Broker designations from the National Association of Realtors. Mr.
Halter is a member of the South Carolina Association of Realtors board of directors, and
is president of the Greenville Downtown Business Association. He is a member of the City
Board of Zoning Appeals, of the Greater Greenville Chamber of Commerce Board of Governors
and a director of the Greenville Convention and Visitors Bureau (CVB). He also
serves on the Greenville Hospital System Advisory

53

---

Board. Mr. Halter is a past director of the Greater Greenville Association of Realtors,
          past president of the Associations Multiple Listing Service, and past
          chairman of the Associations Professional Standards Committee.

R. Bruce Harman,52, Class II director and Audit Committee Chairman,has
          been employed in various positions since 1986 with R. L. Kunz, Inc., a
          manufacturers representative for industrial and commercial air handling
          equipment, and has served as president of the company since 2001. Mr. Harman is
          also a shareholder in the company and is corporate secretary. He attended
          Clemson University on a basketball scholarship and graduated in 1976 with a B.S.
          degree in administrative management. In 1979, Mr. Harman obtained an M.B.A.
          degree in management and marketing from Concordia University in Montreal,
          Quebec. Since 1986, Mr. Harman has been a licensed certified public accountant
          in the state of South Carolina and is a member of the American Institute of
          Certified Public Accountants and the South Carolina Association of Certified
          Public Accountants.

Arthur
L. Howson, Jr.,55, Class II director and chairman of our board,is a
shareholder of Gallivan, White & Boyd, P.A., where he has practiced since 1981,
specializing in real estate, banking, and corporate law. He is a member of the South
Carolina Bar, the Greenville County Bar, and the American Bar Association. Mr. Howson
received an A.B. degree in History from the University of North Carolina at Chapel Hill in
1973 and a J.D. degree from the University of South Carolina School of Law in 1976. While
in law school, Mr. Howson was a member of the Order of Wig and Robe. He was admitted to
practice law in the State of South Carolina in 1976. Mr. Howson has been active in the
community through business, civic, and church activities. He has served as president of
Senior Action, Inc., the Greenville Chorale, and Greenville Friends of the Zoo and has
served as a member of the board of directors of Gateway House, Inc. He is a member of
Westminster Presbyterian Church, where he has served as an elder and has sung in the
Sanctuary Choir since 1981. He is also a member of the Real Estate Economic Development
Committee of the Greenville Chamber of Commerce.

Paula
S. King, CPA, 46, Class II director, is our executive vice president and chief
financial officer. Ms. King, a Greenville native, began her career in the financial
services industry in 1986 as vice president of Shelter Mortgage and Investment Company, a
commercial mortgage loan brokerage firm. She began her banking career in 1992 as senior
vice president and controller of Greenville National Bank and served in that capacity
until the banks acquisition by Regions Bank in 1999. In 1999, Ms. King became the
senior vice president and chief financial officer of New Commerce Bank, serving in this
role from the banks start-up until 2002. From 2002 until 2003, Ms. King was a
consultant for de novo banks, providing board and senior management training. Most
recently she was employed in the banking group of Elliott Davis, LLC from 2004 until she
began organizing efforts for our bank in February 2005. Ms. King is a 1982 graduate of
Furman University with a B.A. in accounting and business administration and is a member of
the South Carolina Association of Certified Public Accountants and American Institute of
CPAs. She has attended the AICPA National Banking School at the University of Virginia.
Ms. King has served on the South Carolina Bankers Associations (SCBA)
Asset-Liability committee and is a past chairman of the SCBA Operations committee and past
chairman of the board of Junior Achievement of Greenville. She serves on the Greenville
United Way Helping Youth Succeed Impact Council and Evaluation Committee.

Jonathan
T. McClure,47, Class III director,is a Greenville native and founder and
chief executive officer of ISO Poly Films, Inc., a plastic films provider founded in 1998
and located in Gray Court, South Carolina. Mr. McClure attended Liberty University from
1979 to 1981 and received his B.S. degree in business administration in 1983 from the
University of South Carolina Upstate. In 2001 and 2002, Mr. McClure was named Ernst &
Youngs South Carolina Entrepreneur of the Year and in 2002 was elected to the
E&Y Entrepreneur Hall of Fame. Mr. McClures company was recognized by
Entrepreneur Magazine and Dun & Bradstreet as one of the Hot 100 Small
Businesses in the United States from 1999 to 2001. In 2002, then-Governor Jim Hodges named
Mr. McClure as an economic ambassador for South Carolina. Mr. McClure received the Silver
Crescent Award for Manufacturing Excellence & Manufacturer of the Year in 2003 and his
company was named one of the Top 25 Fastest Growing Companies in South
Carolina in 2002. He has made numerous presentations to the Darla Moore School of Business
of the University of South Carolina, the Clemson University School of Business, and the
Kenan-Flagler Business School at the University of North Carolina. Mr. McClure is
president of the board of directors of the Boys Home of the South and serves on the board
of the Laurens County Chamber of Commerce.

David
A. Merline, Jr., 48, Class III director, is a shareholder and the president of Merline
& Meacham, P.A. where he has practiced law since 1984. He is a certified specialist in
the fields of both taxation law and estate planning/probate law by the Supreme Court of
South Carolina. He is listed in the book The Best Lawyers in America in the
following three fields: employee benefits law, taxation law, and trusts and estates law.
Mr. Merline received his

54

---

B.A.
          degree, magna cum laude, from Furman University, his J.D. degree from the
          University of South Carolina School of Law, and his Master of Laws In Taxation
          degree from the University of Miami School of Law. He is a Fellow of the
          American College of Trust and Estate Counsel. He is a past chairman of the South
          Carolina Estate Planning and Probate Law Specialization Advisory Board and a
          past member of the board of directors of the University of South Carolina Law
          School Association. He is a past president of the Greenville County Taxation,
          Estate Planning, Probate and Trust Law Section, and the Greenville Young Lawyers
          Association. Mr. Merline is the author of numerous articles and co-author of two
          books: South Carolina Limited Liability Companies & Limited Liability
          Partnerships, South Carolina Bar CLE Division (3d Ed. 2000), and South
          Carolina Corporate Practice Manual, South Carolina Bar CLE Division (2d Ed.
          2005). He is a member of Buncombe Street United Methodist Church and the Rotary
          Club of Greenville and coaches and serves on the board of directors of
          Greenville Little League.

William
H. Pelham,52,Class III director,is a Greenville native who has been
the owner and president of Pelham Architects, L.L.C. since its founding in 1983. The
architectural firm specializes in residential projects, including new houses, renovations
and additions, and historic preservation. Mr. Pelham, a registered architect, graduated
from Clemson University in 1977 with a B.A. degree in pre-architecture and in 1981 with a
masters degree in architecture. Mr. Pelham is a partner in RPM Partnership LLP, a downtown
property owner, and on the board of directors of Central Realty Corporation, Central
Associates, LP, and CI, Inc. Mr. Pelham currently serves as chair of the Christ Church
Episcopal School Annual Fund, on the City of Greenvilles Art in Public Places
Commission, and as president of the Board of Governors of the Poinsett Club. He is a past
member and chair of the City of Greenvilles Zoning Adjustments and Appeals board,
former chair and member of the Poinsett Club Building & Grounds committee, and former
member of the Poinsett Club membership committee. His involvement with the Warehouse
Theatre includes serving as president and as chair of the director search and building
committees. Mr. Pelham is a member of AIA Greenville, SC/AIA, the American Institute of
Architects, the National Trust for Historic Preservation, Upstate Forever, the Greater
Greenville Chamber of Commerce, the Better Business Bureau, and Buncombe Street United
Methodist Church.

Russel
T. Williams, 46, Class III director, is our president and chief executive officer.
From 2001 to 2005 Mr. Williams served as senior vice president, Commercial Lending with
Palmetto Bank, a $900 million Upstate-based community bank. Mr. Williams began his career
with The C&S National Bank of South Carolina in 1985 and has served in positions of
increasing responsibility in the commercial lending and credit administration areas of
several other South Carolina financial institutions. His background includes service as a
commercial lender with Carolina First, Greenville Area Executive with NBSC, and chief
credit officer with New Commerce Bank. Mr. Williams also has five years of experience as a
senior lender and manager in the government guaranteed small business lending industry.
Mr. Williams is a 1983 graduate of Davidson College, a 1985 graduate of the University of
Tennessee M.B.A. program, and a 1992 graduate with honors from the American
Bankers Association Stonier Graduate School of Banking. He is a graduate of
Leadership Greenville Class XVIII. Mr. Williams serves on the Greenville United Way Impact
Council for Strengthening Families and Neighborhoods. He has served as past board
president of The Juvenile Diabetes Research Foundation-Upstate South Carolina Chapter and
the Speech, Hearing and Learning Center, and is a past member of the board of the Internal
Medicine Associates Patient Care Center. Mr. Williams has been active in the South
Carolina Bankers Association, having served as a board member of the SCBA Young Bankers
Division and a member of the SCBA Credit Committee. Mr. Williams has been a Greenville
resident for 21 years.

One of our organizers and directors,
Robert L. Kunz, passed away in February 2007. We have not decided whether or when to fill
his vacancy on the board, and for the time being we have reduced the size of the board
from 11 to 10 directors.

# Audit Committee

The
companys board of directors has appointed a number of committees, including audit,
compensation, corporate governance and nominating, and asset-liability committees.
Information about the audit committee is provided in this section. See the discussion
under Item 12 below for information on the other committees.

The
audit committee is composed of Mr. Harman, Mr. McClure, Mr. Merline and Mr. Pelham. Each
of these members is considered independent under Rule 4350 of the National
Association of Securities Dealers listing standards. The audit committee met four
times in 2006.

55

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The
Board of Directors has determined that Mr. Harman is an audit committee financial
expert as defined in Item 401(e)(2) of the SECs Regulation S-B. Mr. Harman is
independent as that term is used in Item 7(d)(3)(iv) of Schedule 14A under the
Securities Exchange Act of 1934. Additionally, the board has determined that each member
is fully qualified to monitor the performance of management, the public disclosures by the
company of its financial condition and performance, our internal accounting operations,
and our independent auditors.

The
audit committee has the responsibility for reviewing financial statements, evaluating
internal accounting controls, reviewing reports of regulatory authorities, and determining
that all audits and examinations required by law are performed. The committee recommends
to the board the appointment of the independent auditors for the next fiscal year, reviews
and approves the auditors audit plans, and reviews with the independent auditors the
results of the audit and managements responses. The audit committee is responsible
for overseeing the entire audit function and appraising the effectiveness of internal and
external audit efforts. The audit committee reports its findings to the board of
directors.

Our
board of directors has implemented a process for shareholders of the company to send
communications to the board. Each of our directors may receive mail at our principal
office location. Any shareholder desiring to communicate with the board, or with specific
individual directors, may so do by writing to the board or board member at BankGreenville
Financial Corporation, P. O. Box 6246, Greenville, South Carolina 29606.

We
do not have a class of securities registered under Section 12 of the Securities Exchange
Act of 1934. Therefore, our directors, executive officers, promoters and control persons
are not required to comply with Section 16(a) of the Exchange Act.

# Code of Ethics

We
have adopted a Code of Ethics that applies to our directors, principal executive officer,
principal financial officer, principal accounting officer or controller, persons
performing similar functions and all other employees. The Code of Ethics is available
without charge to shareholders upon request. Shareholders may contact Ms. Paula S. King,
BankGreenville Financial Corporation, P. O. Box 6246, Greenville, South Carolina 29606, to
obtain a copy.

# Item 10.   Executive
Compensation

The
following table shows the cash compensation we paid to our two executive officers for the
year ended December 31, 2006.

# Summary Compensation
Table

|                   |  |  |  |      |  | Non- | Non-    |  |  
|------------------ |  |  |  | ---- |  | ---- | ------- |  | -
|
|
|
|
|
|Russel T. Williams |  |  |  | 2006 |  | $    | 108,750 |  | $
|Chief Executive    |  |  |  |      |  |      |         |  |  
|Officer            |  |  |  |      |  |      |         |  |  
|Paula S. King      |  |  |  | 2006 |  |      | 104,917 |  |  
|Chief Financial    |  |  |  |      |  |      |         |  |  
|Officer            |  |  |  |      |  |      |         |  |  

56

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| | (1) | On February 14, 2006, each of our named executive officers was granted stock
               options for 47,200 shares of common stock exercisable at $10.00 per share. The
               options vest at 20% per year over a five-year vesting period. The options must
               be exercised within ten years from the grant date. There were no forfeitures
               during 2006. Refer to Note 1, stock compensation plans in the Notes
               to Consolidated Financial Statements for a discussion of the assumptions used in
               the valuation of the option awards
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (2) | Includes car allowance of $7,754, club dues of $5,555 and insurance premiums of
               $513
| | --- | ---------------------------------------------------------------------------------------------------

| | (3) | Includes car allowance of $5,538, and insurance premiums of $5,107
| | --- | ------------------------------------------------------------------

# Employment Agreements

Russel T. Williams. On
July 1, 2005, we entered into an employment agreement with Mr. Williams, under
which he agreed to serve as chief executive officer of BankGreenville Financial
Corporation and BankGreenville for a term of three years. Mr. Williams
employment with the company will be automatically extended for additional terms of one
year each unless the company delivers a notice of termination at least six months prior to
the end of the term. During this term, Mr. Williams is entitled to:

  Base salary of $95,000 per
year, which increased to $110,000 on January 30, 2006, the date we opened our bank for
business. Beginning January 1, 2007, the board (or an appropriate committee of the
board) shall review the executives performance and salary at least annually and may
increase, but not decrease, his salary;

  An annual cash bonus of up to
45% of his annual salary based on achievement of overall bank financial performance
benchmarks, which will be established by the board of directors annually. The board will
consider factors such as comparison to peer data, actual to projected performance, and
other measurements as deemed appropriate from time to time;

  Options to purchase 47,200
shares of common stock. These options were approved and issued on February 14, 2006. The
award agreement for the stock option provides that one-fifth of the shares subject to the
option will vest on each of the first five anniversaries of the opening date of the bank,
but only if the executive remains employed by the company or one of its subsidiaries on
such date, and shall contain other customary terms and conditions. These options are a
portion of the options available for issuance under the companys stock incentive
plan.

  Reasonable car allowance not
to exceed $700 per month;

  Participation in our
retirement, welfare, and other benefit programs;

  Payment of club dues and
related assessments; and

  Reimbursement for travel and
business expenses.

Pursuant
to the terms of his employment agreement, Mr. Williams is prohibited from disclosing
our trade secrets or confidential information. If we terminate Mr. Williams
employment without cause, he will be entitled to severance equal to 12 months of his
then base salary. In addition, following a change in control, if Mr. Williams
terminates his employment for a good reason within a 90-day period beginning on the
30th day following a change in control or within a 90-day period beginning on
the one year anniversary of the change in control, he will be entitled to severance equal
to 24 months of his then base salary. Finally, during his employment and for a period
of 12 months thereafter, Mr. Williams may not, subject to limited exceptions,
(a) compete with us by forming, serving as an organizer, director, or officer of, or
acquiring or maintaining an ownership interest in, a depository financial institution or
holding company of a depository financial institution, if the depository institution or
holding company has one or more offices or branches within our territory, (b) solicit
our clients for a competing business, or (c) solicit our employees for a competing
business.

Paula
S. King. On July 1, 2005, we also entered into an employment agreement with
Ms. King to serve as the chief financial officer of BankGreenville Financial
Corporation and BankGreenville for a term of three years. Ms. Kings employment
with the company will be automatically extended for additional terms of one year each
unless the company delivers a notice of termination at least six months prior to the end
of the term. During this term, Ms. King is entitled to:

57

---

  Base salary of $93,000 per
year, which increased to $106,000 on January 30, 2006, the date we opened our bank for
business. Beginning January 1, 2007, the board (or an appropriate committee of the
board) shall review the executives performance and salary at least annually and may
increase, but not decrease, her salary;

  An annual cash bonus of up to
45% of her annual salary based on achievement of overall bank financial performance
benchmarks, which will be established by the board of directors annually. The board will
consider factors such as comparison to peer data, actual to projected performance, and
other measurements as deemed appropriate from time to time;

  Options to purchase 47,200
shares of common stock. These options were approved and issued on February 14, 2006. The
award agreement for the stock option provides that one-fifth of the shares subject to the
option will vest on each of the first five anniversaries of the opening date of the bank,
but only if the executive remains employed by the company or one of its subsidiaries on
such date, and shall contain other customary terms and conditions. These options are a
portion of the options available for issuance under the companys stock incentive
plan.

  Reasonable car allowance not
to exceed $500 per month;

  Participation in our
retirement, welfare, and other benefit programs;

  Payment of professional dues
and continuing professional education costs associated with her CPA designation; and

  Reimbursement for travel and business
expenses.

Pursuant
to the terms of her employment agreement, Ms. King is prohibited from disclosing our
trade secrets or confidential information. If we terminate Ms. Kings employment
without cause, she will be entitled to severance equal to 12 months of her then base
salary. In addition, following a change in control, if Ms. King terminates her
employment for a good reason within a 90-day period beginning on the 30th day
following a change in control or within a 90-day period beginning on the one year
anniversary of the change in control, she will be entitled to severance equal to
24 months of her then base salary. Finally, during her employment and for a period of
12 months thereafter, Ms. King may not, subject to limited exceptions,
(a) compete with us by forming, serving as an organizer, director, or officer of, or
acquiring or maintaining an ownership interest in, a depository financial institution or
holding company of a depository financial institution, if the depository institution or
holding company has one or more offices or branches within our territory, (b) solicit
our clients for a competing business, or (c) solicit our employees for a competing
business.

58

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# Outstanding Equity
Awards at Fiscal Year-End

# Option awards:

|                   |  |  | Equity |   | 
|------------------ |  |  | ------ | - | 
|
|
|
|
|
|
|
|
|
|Russel T. Williams |  |  |        | - | 
|Paula S. King      |  |  |        | - | 
|W. Curtis Rush     |  |  |        | - | 

There were no stock awards granted as
of December 31, 2006, so corresponding table headings have been deleted. All options were
granted on February 14, 2006 and vest at 20% per year over a five-year vesting period.

59

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# Director Compensation

|                              |  |  |   |   | Change in |   |  
|----------------------------- |  |  | - | - | --------- | - | -
|
|
|
|
|
|
|Jeffrey L. Dezen, Roger H     |  |  |   |   |           |   |  
|Gower, R. Bruce Harman,       |  |  |   |   |           |   |  
|Arthur L. Howson, Jr., Paula  |  |  |   |   |           |   |  
|S. King, Jonathan T. McClure, |  |  |   |   |           |   |  
|David A. Merline, Jr.,        |  |  |   |   |           |   |  
|William H. Pelham, Russel T   |  |  |   |   |           |   |  
|Williams (1)                  |  |  | $ | - |           | $ | -
|                              |  |  |   |   |           |   |  
|Frank B. Halter, Jr.(2)       |  |  |   | - |           |   | -

Our
bylaws permit our directors to receive reasonable compensation as determined by a
resolution of the board of directors. We did not pay any directors fees during the
fiscal year ended December 31, 2006. However, we may, pursuant to our bylaws, begin to
compensate our directors at some time in the future.

In
December 2005, each of our organizers, all of whom also serve as directors, received for
no additional consideration, a warrant to purchase three shares of common stock for $10.00
per share for every four shares they purchased in the offering, up to a maximum of 10,000
shares per organizer. These warrants vested immediately upon the closing of the offering
in December 2005, as they were issued in recognition of the financial risk and efforts
undertaken by the organizers in organizing the bank. Therefore, no compensation related to
stock warrants is shown for 2006. The warrants are represented by separate warrant
agreements and they are exercisable in whole or in part during the 10 year period
following that date. If the South Carolina Board of Financial Institutions or the FDIC
issues a capital directive or other order requiring the bank to obtain additional capital,
the warrants will be forfeited if not immediately exercised.

(1)   
          Each director listed in this group received warrants for 10,000 shares
          exercisable at $10.00 per share (2)    Mr. Halter received warrants for 7,500
          shares exercisable at $10.00 per share

60

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# Item 11.   Security
Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The
following table shows how much common stock in our company is owned by the directors,
certain executive officers, and owners of more than 5% of the outstanding common stock, as
of March 9, 2007. Unless otherwise indicated, the address of each beneficial owner is c/o
BankGreenville Financial Corporation, P. O. Box 6246, Greenville, South Carolina 29606.

|                                     | Number of |  | % of
|------------------------------------ | --------- |  | ----
|
|
|Jeffrey L. Dezen                     |           |  |     
|Roger H. Gower                       |           |  |     
|Frank B. Halter, Jr                  |           |  |     
|R. Bruce Harman                      |           |  |     
|Arthur L. Howson, Jr                 |           |  |     
|Paula S. King                        |           |  |     
|Jonathan T. McClure                  |           |  |     
|David A. Merline, Jr                 |           |  |     
|William H. Pelham                    |           |  |     
|Russel T. Williams                   |           |  |     
|All executive officers and directors |           |  |     
|(10 persons)                         |           |  |     

_________________
*Indicates less than 1% ownership.

|(1) | Includes shares for which the named person has sole voting and investment power,
               has shared voting and investment power, or holds in an IRA or other retirement
               plan program, unless otherwise indicated in these footnotes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes shares that may be acquired within the next 60 days of March 9, 2007 by
               exercising vested stock options or warrants but does not include any unvested
               stock options or warrants.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For each individual, this percentage is determined by assuming the named person
               exercises all options and warrants which he or she has the right to acquire
               within 60 days, but that no other persons exercise any options or warrants. For
               the directors and executive officers as a group, this percentage is determined
               by assuming that each director and executive officer exercises all options or
               warrants which he or she has the right to acquire within 60 days, but that no
               other persons exercise any options. The calculations are based on 1,180,000
               shares of common stock outstanding on March 9, 2007.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) | Mr. Harmans number of shares owned includes 1,000 shares and his shares in
               the Right to Acquire column include warrants for 10,000 shares held
               in the estate of deceased director Robert L. Kunz. Mr. Harman is personal
               representative of Mr. Kunzs estate and has the right to vote the 1,000
               shares of stock owned by the estate. The estate has one year from Mr.
               Kunzs death to exercise the stock warrants.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) | Mr. Halter has 10,000 shares of stock pledged as security on indebtedness to
               another bank.
|--- | ---------------------------------------------------------------------------------------------------------

|(6) | Mr. Howson has 13,500 shares of stock pledged as security on indebtedness to another bank
|--- | -----------------------------------------------------------------------------------------

|(7) | Ms. King has 10,300 shares of stock pledged as security on indebtedness to another bank.
|--- | ----------------------------------------------------------------------------------------

|(8) | Mr. McClure has 13,400 shares of stock pledged as security on indebtedness to another bank.
|--- | -------------------------------------------------------------------------------------------

|(9) | Mr. Williams has 12,500 shares of stock pledged as security on indebtedness to another bank.
|--- | --------------------------------------------------------------------------------------------

61

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The following table sets forth equity
compensation plan information at December 31, 2006.

# Equity Compensation
Plan Information

|                             | Number of securities to be | Weighted-average exercise | Number of securities
|---------------------------- | -------------------------- | ------------------------- | --------------------
|
|
|
|Equity compensation plans    |                            |                           |                     
|approved by security holders |                            |                           |                     
|                             |                            |                           |                     
|Equity compensation plans    |                            |                           |                     
|not approved by security     |                            |                           |                     
|holders                      |                            |                           |                     
|                             |                            |                           |                     

Each
of our organizing directors received, for no additional consideration, a warrant to
purchase three shares of common stock for each four shares purchased in our initial public
offering, up to a maximum of 10,000 shares, at a price of $10.00 per share. The warrants
are represented by separate warrant agreements. All warrants vested immediately upon
closing of the offering, and are exercisable in whole or in part during the ten-year
period following this date. The warrants may not be assigned, pledged, or hypothecated in
any way. The 107,500 shares issued pursuant to the warrant agreements are transferable,
subject to compliance with applicable securities laws. If the South Carolina Board of
Financial Institutions or the FDIC issues a capital directive or other order requiring the
bank to obtain additional capital, the warrants will be forfeited if not immediately
exercised.

On
February 14, 2006, our board adopted a stock incentive plan and authorized the issuance of
212,400 shares under the stock incentive plan. We also authorized and issued stock options
to several employees at $10.00 per share. The stock incentive plan was approved by our
shareholders at our 2006 annual meeting and is a qualified stock incentive plan. All of
the options we have issued to date have a ten year exercise period and a five year vesting
period. We will not issue stock options at less than the fair market value of the common
stock on the date of grant.

# Item 12.   Certain
Relationships and Related Transactions, and Director Independence.

We
enter into banking and other transactions in the ordinary course of business with our
directors and officers and their affiliates. It is our policy that these transactions be
on substantially the same terms (including price, or interest rates and collateral) as
those prevailing at the time for comparable transactions with unrelated parties. We do not
believe that these transactions involve more than the normal risk of collectibility nor
present other unfavorable features to us. Loans to individual directors and officers must
also comply with our banks lending policies and statutory lending limits, and
directors with a personal interest in any loan application are excluded from the
consideration of the loan application. All of our transactions with our affiliates are on
terms no less favorable to us than could be obtained from an unaffiliated third party and
to be approved by a majority of disinterested directors.

We
purchased approximately 1.23 acres, on which to build our permanent headquarters building
on January 30, 2006. A family partnership of one of our directors is a one-third partner
in an entity, which owned fifty percent of the property. The purchase price of the
property was $614,238, and we obtained an MAI appraisal, which values the property at
$655,000. Additionally, we entered into a six-month ground lease on our temporary facility
site in January 2006. A family partnership of one of our directors is a one-third partner
in an entity, which owns 100 percent of this site. Ground lease payments are $1,250 per
month. One of our organizers and chairman of our board is a shareholder in a local law
firm, which assisted in the negotiation and preparation of our land purchase agreement and
closing on our headquarters site. The firm also negotiated the ground lease agreement for
our temporary modular banking facility site. The fee for these services totaled $6,918 for
the year ended December 31, 2006.

One
of our organizers is the owner and president of Jeff Dezen Public Relations, a marketing
and public relations firm, and has assisted us with our press releases and media relations
to date. Expenses incurred through December 31, 2005 totaled $2,000 and -0- for the year
ended December 31, 2006.

Our
board of directors has determined that, with the exception of Mr. Williams and Ms. King,
who also serve as executive officers of the company, all of our directors are considered
independent directors, based upon the independence criteria set forth in the
corporate governance listing standards of The NASDAQ Stock Market, the

62

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exchange that we selected in order to
determine whether its directors and committee members meet the independence criteria of a
national securities exchange, as required by Item 407(a) of Regulation S-B.

Our
board of directors has created an audit committee, a nominating committee and a
compensation committee of the board. The members of each of these committee is
independent as contemplated in the listing standards of The NASDAQ Stock
Market.

Our
compensation committee is composed of Mr. Dezen, Mr. Gower, Mr. McClure, and Mr. Merline.
The compensation committee has the responsibility of annually reviewing the performance of
our executive officers and approving the specific compensation for all executive officers.
The company does not use a third party consultant to assist in determining or recommending
the amount or form of executive officer compensation, but does receive input on
compensation amounts from its executive officers. The committee is also responsible for
reviewing all benefit plans initially as well as any significant changes to our benefit
plans.

The
corporate governance and nominating committee includes Mr. Gower, Mr. Halter, Mr. Howson
and Mr. Merline. This committee considers whether to recommend to the Board the nomination
of those directors for re-election for another term of service. The nominating committee
also considers whether to recommend to the Board the nomination of persons to serve as
directors whose nominations have been recommended by shareholders.

Any
shareholder may recommend the nomination of any person to serve on the Board. Our bylaws
require a shareholder to submit the name of the person to our secretary in writing no
later than (i) with respect to an election to be held at an annual meeting of
shareholders, 90 days in advance of such meeting; and (ii) with respect to an election to
be held at a special meeting of shareholders for the election of directors, no more than
seven days after notice of the special meeting is given to shareholders. Each notice must
set forth: (i) the name and address of the shareholder who intends to make the nomination
and of the person or persons to be nominated; (ii) a representation that the shareholder
is a holder of record of stock of the company entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting to nominate the person or persons specified
in the notice; (iii) a description of all arrangements or understandings between the
shareholder and each nominee and any other person or persons (naming such person or
persons) pursuant to which the nomination or nominations are to be made by the
shareholder; (iv) such other information regarding each nominee proposed by such
shareholder as would be required to be included in a proxy statement filed pursuant to the
proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or
intended to be nominated, by the Board of Directors; and (v) the consent of each nominee
to serve as a director of the company if so elected. The chairman of the meeting may
refuse to acknowledge the nomination of any person not made in compliance with the
foregoing procedure.

The
nominating committee considers a number of factors in determining whether to recommend to
the Board the nomination of any person for election as a director. While no single factor
is determinative, the committee considers skills and business background, ability to
devote the requisite time to service, reputation in the community, character and
integrity, and actual and potential conflicts of interest.

In
addition to the above factors, in determining whether to nominate any person for election
by the shareholders, the Board assesses the appropriate size of the Board of Directors,
consistent with the bylaws of the company, and whether any vacancies on the Board are
expected due to retirement or otherwise. If vacancies are anticipated, or otherwise arise,
the Board will consider various potential candidates for director recommended by the
nominating committee. Candidates may come to the attention of the nominating committee or
Board through a variety of sources including, but not limited to, current members of the
Board, shareholders, or other persons. The nominating committee and Board of Directors
consider properly submitted recommendations by shareholders who are not directors,
officers, or employees of the company on the same basis as candidates recommended by any
other person.

The
company does not pay a third party to assist in identifying and evaluating candidates.

The asset-liability
committee is composed of Mr. Gower, Mr. Harman, Mr. Howson, Ms. King, and Mr. Williams.
The asset-liability committee met four times in 2006. The asset-liability committee has
the responsibility of reviewing the asset-liability management policy, investment policy,
and the banks asset/liability structure.

63

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# Item 13.   Exhibits.

|     | 
|---- | 
|3.1  | 
|     | 
|     | 
|3.2  | 
|     | 
|4.1  | 
|     | 
|     | 
|     | 
|4.2  | 
|     | 
|     | 
|10.1 | 
|     | 
|     | 
|     | 
|10.2 | 
|     | 
|     | 
|     | 
|10.3 | 
|     | 
|     | 
|10.4 | 
|     | 
|     | 
|     | 
|10.5 | 
|     | 
|     | 
|     | 
|10.6 | 
|     | 
|     | 
|     | 
|10.7 | 
|     | 
|     | 
|     | 
|21.1 | 
|     | 
|23.1 | 
|     | 
|24.1 | 
|     | 
|31.1 | 
|     | 
|31.2 | 
|     | 
|32   | 

_________________
*        Management contract of compensatory plan or arrangement required to be filed as an Exhibit to this
Annual Report on Form 10-KSB.

64

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# Item 14.   Principal
Accountant Fees and Services

Elliott
Davis, LLC was our auditor during the fiscal year ended December 31, 2006. The following
table shows the fees that we incurred for services performed in fiscal year ended December
31, 2006 and 2005.

| |  | 2006 | 2005              
| |  | ---- | ------------------
|
| |  |      | Audit fees        
| |  |      | Audit-related fees
| |  |      | Tax fees          
| |  |      |                   
| |  |      | Total             
| |  |      |                   

Audit
Fees. This category includes the aggregate fees billed or accrued for professional
services rendered by the independent auditors during the companys 2006 and 2005
fiscal years for the audits of our annual financial statements in 2006 and 2005 and
reports on Form 10-QSB in 2006 and Form SB-2 in 2005.

Audit-Related
Fees.This category includes the aggregate fees billed for non-audit services,
exclusive of the fees disclosed relating to audit fees. These services related to the
audit of the development stage financial statements and procedures related to SEC filing
of Form SB-2 in connection with the companys registration statement as well as the
issuance of a comfort letter in conjunction with a firm commitment underwriting of the
initial public offering.

Tax
Fees. This category includes the aggregate fees billed for professional services
rendered by the principal accountant for tax compliance, tax advice, and tax planning.

Oversight
of Accountants; Approval of Accounting Fees.Under the provisions of its charter, the
audit committee is responsible for the retention, compensation, and oversight of the work
of the independent auditors. The charter provides that the audit committee must
pre-approve the fees paid for the audit. The policy specifically prohibits certain
non-audit services that are prohibited by securities laws from being provided by an
independent auditor. All of the accounting services and fees reflected in the table above
were reviewed and approved by the audit committee, and none of the services were performed
by individuals who were not employees of the independent auditor.

65

---

# SIGNATURES

In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report
to be signed on its behalf by the undersigned, thereunto duly authorized.

|                      |  | BANKGREENVILLE FINANCIAL CORPORATION 
|--------------------- |  | -------------------------------------
|                      |  |                                      
|Date:  March 30, 2007 |  | By:   /s/  Russel T. Williams        
|                      |  | Russel T. Williams                   
|                      |  | President and Chief Executive Officer

KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Russel T. Williams, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him and in his name, place and stead, in any
and all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB,
and to file the same, with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto attorney-in-fact and
agent full power and authority to do and perform each and every act and thing requisite or
necessary to be done in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that attorney-in-fact and
agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.

In
accordance with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated.

|                          |  | 
|------------------------- |  | 
|
|Signature                 |  | 
|/s/ Jeffrey L. Dezen      |  | 
|Jeffrey L. Dezen          |  | 
|/s/ Roger H. Gower        |  | 
|Roger H. Gower            |  | 
|/s/ Frank B. Halter, Jr.  |  | 
|Frank B. Halter, Jr.      |  | 
|/s/ R. Bruce Harman       |  | 
|R. Bruce Harman           |  | 
|/s/ Arthur L. Howson, Jr. |  | 
|Arthur L. Howson, Jr.     |  | 
|/s/ Paula S. King         |  | 
|Paula S. King             |  | 
|/s/ Jonathan T. McClure   |  | 
|Jonathan T. McClure       |  | 
|/s/ David A. Merline, Jr. |  | 
|David A. Merline, Jr.     |  | 
|/s/ William H. Pelham     |  | 
|William H. Pelham         |  | 
|/s/ Russel T. Williams    |  | 
|Russel T. Williams        |  | 

66

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# Exhibit Index

|     | 
|---- | 
|3.1  | 
|     | 
|     | 
|3.2  | 
|     | 
|4.1  | 
|     | 
|     | 
|     | 
|4.2  | 
|     | 
|     | 
|10.1 | 
|     | 
|     | 
|     | 
|10.2 | 
|     | 
|     | 
|     | 
|10.3 | 
|     | 
|     | 
|10.4 | 
|     | 
|     | 
|     | 
|10.5 | 
|     | 
|     | 
|     | 
|10.6 | 
|     | 
|     | 
|     | 
|10.7 | 
|     | 
|     | 
|     | 
|21.1 | 
|     | 
|23.1 | 
|     | 
|24.1 | 
|     | 
|31.1 | 
|     | 
|31.2 | 
|     | 
|32   |