SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q

(Mark One)
[X]  Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

    For the quarterly period ended: June 30, 2006
                                    -------------

[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

    For the transition period from          to
                                   --------    --------

                           SEC File Number: 000-50467
                                            ---------

                          SYNERGY FINANCIAL GROUP, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

          New Jersey                                             52-2413926
-------------------------------                              -------------------
(State or other jurisdiction of                               (I.R.S. Employer
 incorporation or organization)                              Identification No.)

310 North Avenue East, Cranford, New Jersey                          07016
--------------------------------------------------------------------------------
(Address of principal executive offices)                           (Zip Code)

                                 (908) 272-3838
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


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

Indicate by check mark whether the Registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer" and "large  accelerated  filer" in Rule 12b-2 of the Exchange Act. (Check
one):

Large accelerated filer      Accelerated filer  X   Non-accelerated filer
                       -----                  -----                      ----

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

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

Number of shares outstanding of common stock as of July 28, 2006:

$0.10 Par Value Common Stock                                 11,344,188
----------------------------                          --------------------------
          Class                                          Shares Outstanding



<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES

                                TABLE OF CONTENTS


PART I        FINANCIAL INFORMATION                                         Page
------        ---------------------                                         ----

Item 1.       Financial Statements  (unaudited)

              Consolidated Balance Sheets as of June 30, 2006  and
                  December 31, 2005...........................................1

              Consolidated Statements of Income for the three and
                  six months ended June 30, 2006 and 2005.....................2

              Consolidated Statement of Changes in Stockholders' Equity
                  for the six months ended June 30, 2006......................3

              Consolidated Statements of Cash Flows for the six months
                  ended June 30, 2006 and 2005................................4

              Notes to Consolidated Financial Statements......................5

Item 2.       Management's Discussion and Analysis of Financial Condition
                  and Results of Operations..................................14

Item 3.       Quantitative and Qualitative Disclosures about Market Risk.....23

Item 4.       Controls and Procedures........................................24


PART II       OTHER INFORMATION
-------       -----------------

Item 1.       Legal Proceedings..............................................25

Item 1A.      Risk Factors...................................................25

Item 2.       Unregistered Sales of Equity Securities and Use of Proceeds....25

Item 3.       Defaults Upon Senior Securities................................26

Item 4.       Submission of Matters to a Vote of Security Holders............26

Item 5.       Other Information..............................................26

Item 6.       Exhibits.......................................................26

Signatures...................................................................27



<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                           Consolidated Balance Sheets
                        (In thousands, except share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                      June 30,         December 31,
                                                                        2006               2005
                                                                     ---------         ------------

<S>                                                                <C>                <C>
Assets:
Cash and amounts due from banks                                      $   6,769          $   4,635
Interest-bearing deposits with banks                                     7,095              1,948
                                                                     ---------          ---------
Cash and cash equivalents                                               13,864              6,583
Investment securities available-for-sale,
   at fair value                                                        74,264             85,319
Investment securities held-to-maturity (fair
   value of $82,738 and $93,575, respectively)                          86,331             95,621
Federal Home Loan Bank of New York
   stock, at cost                                                       12,298             13,263
Loans receivable, net                                                  770,658            733,183
Accrued interest receivable                                              3,553              3,313
Property and equipment, net                                             18,304             18,570
Cash surrender value of bank-owned life insurance                       15,424             13,138
Other assets                                                             4,991              4,897
                                                                     ---------          ---------
     Total assets                                                    $ 999,687          $ 973,887
                                                                     =========          =========

Liabilities:
Deposits                                                             $ 658,417          $ 606,471
Other borrowed funds                                                   242,705            266,600
Advance payments by borrowers for taxes and insurance                    2,837              2,215
Accrued interest payable on advances                                       503                611
Other liabilities                                                          693              2,740
                                                                     ---------          ---------
     Total liabilities                                                 905,155            878,637
                                                                     ---------          ---------

Stockholders' equity:
Preferred stock; $0.10 par value, 5,000,000 shares
   authorized; issued and outstanding - none                                 -                  -
Common stock; $0.10 par value, 20,000,000 shares authorized;
   Issued - 12,471,681 in 2006 and 12,471,481 in 2005
   Outstanding  - 11,344,188 in 2006 and 11,545,881 in 2005              1,247              1,247
Additional paid-in-capital                                              84,071             85,959
Retained earnings                                                       33,655             32,794
Unearned ESOP shares                                                    (4,939)            (5,282)
Unearned RSP compensation                                                    -             (2,567)
Treasury stock acquired for the RSP, at cost;
   326,264 in 2006 and 363,037 in 2005                                  (3,706)            (4,124)
Treasury stock, at cost; 1,127,493 in 2006 and
   925,600 in 2005                                                     (14,125)           (11,426)
Accumulated other comprehensive loss, net of taxes                      (1,671)            (1,351)
                                                                     ---------          ---------
     Total stockholders' equity                                         94,532             95,250
                                                                     ---------          ---------
     Total liabilities and stockholders' equity                      $ 999,687          $ 973,887
                                                                     =========          =========
</TABLE>

        The accompanying notes are an integral part of these statements.


                                      -1-
<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                        Consolidated Statements of Income
                      (In thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                   For the Three Months            For the Six Months
                                                                      ended June 30,                 ended June 30,
                                                                  ----------------------         ----------------------
                                                                    2006          2005             2006         2005
                                                                  ---------     --------         ---------    ---------

<S>                                                             <C>           <C>              <C>          <C>
Interest income:
   Loans, including fees                                          $  11,917     $  9,122         $  23,257    $  17,342
   Investment securities                                              1,658        2,244             3,421        4,514
   Other                                                                172          143               345          234
                                                                  ---------     --------         ---------    ---------
     Total interest income                                           13,747       11,509            27,023       22,090
                                                                  ---------     --------         ---------    ---------
Interest expense:
   Deposits                                                           5,057        3,013             9,414        5,733
   Borrowed funds                                                     2,429        2,037             4,971        3,830
                                                                  ---------     --------         ---------    ---------
     Total interest expense                                           7,486        5,050            14,385        9,563
                                                                  ---------     --------         ---------    ---------
     Net interest income before provision for loan losses             6,261        6,459            12,638       12,527
Provision for loan losses                                               252          477               668          922
                                                                  ---------     --------         ---------    ---------
     Net interest income after provision for loan losses              6,009        5,982            11,970       11,605
                                                                  ---------     --------         ---------    ---------
Other income:
   Service charges and other fees on deposit accounts                   519          504             1,013        1,012
   Net gain (loss) on sale of investments                                 -          (34)                -          (34)
   Commissions                                                          184          201               414          449
   Other                                                                181          140               333          283
                                                                  ---------     --------         ---------    ---------
     Total other income                                                 884          811             1,760        1,710
                                                                  ---------     --------         ---------    ---------
Other expenses:
   Salaries and employee benefits                                     3,047        2,834             6,124        5,477
   Premises and equipment                                               671          768             1,333        1,461
   Occupancy                                                            564          507             1,126        1,012
   Professional services                                                262          199               459          394
   Advertising                                                          146          241               260          415
   Other operating                                                      489          467             1,043          960
                                                                  ---------     --------         ---------    ---------
     Total other expenses                                             5,179        5,016            10,345        9,719
                                                                  ---------     --------         ---------    ---------
     Income before income tax expense                                 1,714        1,777             3,385        3,596
Income tax expense                                                      654          672             1,276        1,371
                                                                  ---------     --------         ---------    ---------
     Net income                                                   $   1,060     $  1,105         $   2,109    $   2,225
                                                                  =========     ========         =========    =========

Per share of common stock:
   Basic earnings per share                                       $    0.10     $   0.10         $    0.20    $    0.20
                                                                  =========     ========         =========    =========
   Diluted earnings per share                                     $    0.10     $   0.10         $    0.20    $    0.19
                                                                  =========     ========         =========    =========

Basic weighted average shares outstanding                            10,313       11,043            10,335       11,136
                                                                     ======       ======            ======       ======
Diluted weighted average shares outstanding                          10,802       11,395            10,798       11,536
                                                                     ======       ======            ======       ======
</TABLE>



        The accompanying notes are an integral part of these statements.


                                      -2-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
            Consolidated Statement of Changes in Stockholders' Equity
                     For the Six Months Ended June 30, 2006
                  (Dollars in thousands, except share amounts)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                                                                  Other
                                                                                          Treasury              accumulated
                             Common stock                                      Unearned     stock              comprehensive
                         -------------------  Additional            Unearned     RSP      acquired                income
                           Shares      Par     paid-in-   Retained    ESOP      compen-   for the    Treasury    (loss),
                           issued     value    capital    earnings   shares     sation      RSP       Stock        net       TOTAL
                         ----------------------------------------------------------------------------------------------------------

<S>                    <C>          <C>      <C>        <C>       <C>        <C>        <C>        <C>         <C>        <C>
BALANCE AT
 JANUARY 1, 2006         12,471,481   $1,247   $85,959    $32,794   $(5,282)   $(2,567)   $(4,124)   $(11,426)   $(1,351)   $95,250

   Net income                     -        -         -      2,109         -          -          -           -          -      2,109

   Other comprehensive
    income, net of
    reclassification
    adjustment and
    taxes                         -       --         -          -         -          -          -           -       (320)      (320)
                                                                                                                            -------

Total comprehensive
 income                                                                                                                       1,789

   Dividends declared             -        -         -     (1,248)        -          -          -           -          -     (1,248)

   Common stock issued
    for options
    exercised                   200        -         2          -         -          -          -           -          -          2

   Common stock held
    by ESOP committed
    to be released
    (49,812 shares)               -        -       355          -       343          -          -           -          -        698

   Transfer due to
    adoption of
    SFAS 123(R)                   -        -    (2,567)         -         -      2,567          -           -          -          -

   Compensation
    recognized under
    stock plans                   -        -       740          -         -          -          -           -          -        740

   Purchase of
    treasury stock
    (201,893 shares)              -        -         -          -         -          -          -      (2,699)         -     (2,699)

   Common stock issued
    by RSP (36,773)               -        -      (418)         -         -          -        418           -          -          -
                         ----------------------------------------------------------------------------------------------------------

BALANCE AT
 JUNE 30, 2006           12,471,681   $1,247   $84,071    $33,655   $(4,939)   $     -    $(3,706)   $(14,125)   $(1,671)   $94,532
                         ==========================================================================================================
</TABLE>


        The accompanying notes are an integral part of these statements.


                                      -3-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                      Consolidated Statements of Cash Flows
                                 (In thousands)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                                 For the Six Months
                                                                                   Ended June 30,
                                                                             -------------------------
                                                                                2006            2005
                                                                                ----            ----

<S>                                                                        <C>              <C>
Operating activities:
     Net income                                                              $  2,109         $  2,225
   Adjustments to reconcile net income to net cash
     provided by operating activities
       Depreciation and amortization                                              749              750
       Provision for loan losses                                                  668              922
       Deferred income taxes                                                     (314)            (294)
       Amortization of deferred loan fees and costs                               (83)             (49)
       Amortization of premiums on investment securities                          268              462
       Net loss on sale of investment securities                                    -               34
       Release of ESOP shares                                                     698              612
       Compensation under RSP and stock option plans                              740              405
       Increase in accrued interest receivable                                   (240)            (263)
       Decrease in other assets                                                   220                3
       Decrease in other liabilities                                           (2,159)          (1,884)
       Increase in cash surrender value of bank-owned life insurance             (466)            (247)
       (Decrease) increase in accrued interest payable on advances               (108)             208
                                                                             --------         --------
     Net cash provided by operating activities                                  2,082            2,884
                                                                             --------         --------

Investing activities:
   Purchase of investment securities held-to-maturity                               -          (12,536)
   Purchase of investment securities available-for-sale                        (1,000)          (2,199)
   Maturity and principal repayments of investment
     securities held-to-maturity                                                9,240           12,473
   Maturity and principal repayments of investment
     securities available-for-sale                                             11,517           20,137
   Purchase of property and equipment                                            (483)          (1,546)
   Sale (purchase) of FHLB stock                                                  965           (2,330)
   Proceeds from the sale of investment securities available for sale               -           12,779
    Purchase of bank owned life insurance                                      (1,820)               -
   Loan originations, net of principal repayments                             (44,237)         (86,555)
   Purchase of loans                                                           (2,940)          (6,699)
   Proceeds from sale of loans                                                  9,117                -
                                                                             --------         --------
     Net cash used in investing activities                                    (19,641)         (66,476)
                                                                             --------         --------
Financing activities:
   Net increase in deposits                                                    51,946           19,087
   (Decrease) increase in short-term FHLB advances                             (6,245)          73,572
   Proceeds from long-term FHLB advances                                       17,000            7,500
   Repayments of long-term FHLB advances                                      (34,650)         (31,464)
   Increase in advance payments by borrowers
     for taxes and insurance                                                      622              457
   Dividends paid                                                              (1,136)          (1,134)
   Purchase of treasury stock for the RSP Plan                                      -             (765)
   Purchase of treasury stock                                                  (2,699)          (6,050)
   Common stock issued for options exercised                                        2               83
                                                                             --------         --------
     Net cash provided by financing activities                                 24,840           61,286
                                                                             --------         --------
     Net increase in cash and cash equivalents                                  7,281           (2,306)
Cash and cash equivalents at beginning of year                                  6,583            6,446
                                                                             --------         --------
Cash and cash equivalents at end of period                                   $ 13,864         $  4,140
                                                                             ========         ========

Supplemental disclosure of cash flow information:
   Cash paid during the period for income taxes                              $  1,563         $  2,174
                                                                             ========         ========
   Interest paid on deposits and borrowed funds                              $ 14,278         $  9,771
                                                                             ========         ========
</TABLE>

        The accompanying notes are an integral part of these statements.

                                      -4-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


1.  BASIS OF FINANCIAL STATEMENT PRESENTATION

The  accounting   policies  followed  by  Synergy  Financial  Group,  Inc.  (the
"Company")  conform to accounting  principles  generally  accepted in the United
States of America and to predominant practice within the banking industry.

The consolidated  financial  statements  include the accounts of the Company and
its wholly-owned  subsidiaries,  Synergy Bank (the "Bank") and Synergy Financial
Services, Inc. All significant inter-company accounts and transactions have been
eliminated  in  consolidation.  Certain  amounts  previously  reported have been
reclassified to conform to the current year's presentation.

The accompanying  unaudited  condensed  consolidated  financial  statements were
prepared in accordance with  instructions to Form 10-Q, and,  therefore,  do not
include  information  or  footnotes  necessary  for a complete  presentation  of
financial position,  results of operations,  changes in equity and cash flows in
conformity with accounting principles generally accepted in the United States of
America.  However,  all normal  recurring  adjustments  that,  in the opinion of
management,  are necessary for a fair presentation of the consolidated financial
statements  have been included.  These  financial  statements  should be read in
conjunction  with  the  audited   consolidated   financial  statements  and  the
accompanying  notes thereto included in the Company's Annual Report on Form 10-K
for the period ended  December  31,  2005.  The results for the six months ended
June 30, 2006 are not necessarily indicative of the results that may be expected
for the fiscal year ending December 31, 2006 or any other period.

In preparing the financial statements,  management is required to make estimates
and assumptions that affect the reported amounts of assets and liabilities,  the
disclosure  of  contingent  assets and  liabilities  at the date of the  balance
sheets,  and the reported  amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

The principal  estimates that are susceptible to significant  change in the near
term relate to the allowance for loan losses.  The evaluation of the adequacy of
the allowance for loan losses  includes an analysis of the individual  loans and
overall risk  characteristics  and size of the different  loan  portfolios,  and
takes into consideration current economic and market conditions,  the capability
of specific borrowers to pay specific loan obligations,  as well as current loan
collateral  values.  However,  actual losses on specific  loans,  which also are
encompassed in the analysis, may vary from estimated losses.

Statement of Financial  Accounting Standards ("SFAS") No. 131, Disclosures About
Segments of an Enterprise and Related Information, establishes standards for the
way business  enterprises  report information about operating segments in annual
financial  statements.  The Company has one operating segment and,  accordingly,
has one reportable segment, "Community Banking." All of the Company's activities
are interrelated,  and each activity is dependent and assessed based on how each
of the activities of the Company  supports the others.  For example,  commercial
lending is  dependent  upon the  ability of the Bank to fund  itself with retail
deposits and other  borrowings and to manage interest rate and credit risk. This
situation  is  also  similar  for  consumer,   residential,   multi-family   and
non-residential  mortgage  lending.   Accordingly,   all  significant  operating
decisions are based upon analysis of the Company as one operating segment.

                                      -5-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


2.  EARNINGS PER SHARE

Basic  earnings  per share is computed by dividing  income  available  to common
stockholders by the weighted average number of common shares outstanding for the
period.  Diluted  earnings per share reflects the potential  dilution that could
occur if  securities  or other  contracts  to issue  common stock (such as stock
options)  were  exercised  or resulted in the  issuance of common  stock.  These
potentially  dilutive  shares would then be included in the  weighted  number of
shares outstanding for the period using the treasury stock method. Shares issued
and shares  re-acquired  during any period are  weighted  for the portion of the
period that they were outstanding.

The  computation  of both basic and  diluted  earnings  per share  includes  the
Employee  Stock   Ownership  Plan  ("ESOP")  shares   previously   allocated  to
participants  and shares committed to be released for allocation to participants
and restricted stock plan ("RSP") shares that have vested or have been allocated
to participants.  ESOP and RSP shares that have been purchased but not committed
to be released have not been considered in computing basic and diluted  earnings
per share.

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted earnings per share computation (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                                                 For the Three Months Ended June 30, 2006
                                                                 ----------------------------------------
                                                                                Weighted
                                                           Income            average shares              Per
                                                         (numerator)          (denominator)         share amount
                                                       -------------        ---------------        -------------

<S>                                                        <C>                  <C>                  <C>
Basic earnings per share:
   Income available to common stockholders                   $1,060               10,313               $   0.10
   Effect of dilutive common stock equivalents                    0                  489                   0.00
                                                             ------               ------               --------

Diluted earnings per share:
   Income available to common stockholders                   $1,060               10,802               $   0.10
                                                             ======               ======               ========
</TABLE>


<TABLE>
<CAPTION>
                                                                 For the Three Months Ended June 30, 2005
                                                                 ----------------------------------------
                                                                                Weighted
                                                           Income            average shares              Per
                                                         (numerator)          (denominator)         share amount
                                                         -----------          -------------         ------------

<S>                                                        <C>                  <C>                  <C>
Basic earnings per share:
   Income available to common stockholders                   $1,105               11,043               $   0.10
   Effect of dilutive common stock equivalents                    0                  352                   0.00
                                                             ------               ------               --------
Diluted earnings per share:
   Income available to common stockholders                   $1,105               11,395               $   0.10
                                                             ======               ======               ========
</TABLE>



                                      -6-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


<TABLE>
<CAPTION>
                                                                 For the Six Months Ended June 30, 2006
                                                                 --------------------------------------
                                                                                Weighted
                                                           Income            average shares              Per
                                                         (numerator)          (denominator)         share amount
                                                         -----------          -------------         ------------

<S>                                                        <C>                  <C>                  <C>
Basic earnings per share:
   Income available to common stockholders                   $2,109               10,335               $   0.20
   Effect of dilutive common stock equivalents                    0                  463                   0.00
                                                             ------               ------               --------
Diluted earnings per share:
   Income available to common stockholders                   $2,109               10,798               $   0.20
                                                             ======               ======               ========

</TABLE>

<TABLE>
<CAPTION>
                                                                 For the Six Months Ended June 30, 2005
                                                                 --------------------------------------
                                                                                Weighted
                                                           Income            average shares              Per
                                                         (numerator)          (denominator)         share amount
                                                         -----------          -------------         ------------

<S>                                                        <C>                  <C>                  <C>
Basic earnings per share:
   Income available to common stockholders                   $2,225               11,136               $   0.20
   Effect of dilutive common stock equivalents                    0                  400                  (0.01)
                                                             ------               ------               --------
Diluted earnings per share:
   Income available to common stockholders                   $2,225               11,536               $   0.19
                                                             ======               ======               ========
</TABLE>


3.  STOCK-BASED COMPENSATION

Effective  January  1, 2006,  the  Company  adopted  SFAS  123(R),  "Share-Based
Payment."  Under the  accounting  requirements,  the Company is now  required to
recognize  compensation expenses related to stock options outstanding based upon
the fair value of such  awards at the date of grant  over the  period  that such
awards are  earned.  For the three  months  ended  June 30,  2006,  the  Company
recognized  approximately $169,000 of compensation expense relating to its stock
option plans and approximately $41,000 of income tax benefit resulting from this
expense for that period.  For the six months  ended June 30,  2006,  the Company
recognized  approximately $328,000 of compensation expense relating to its stock
option plans and approximately $82,000 of income tax benefit resulting from this
expense for that period.

At the  Annual  Meeting  held on April 22,  2003,  stockholders  of the  Company
approved the Company's 2003 Stock Option Plan making available 165,746 shares of
common stock for granting.  Prior to April 22, 2003,  the Company did not have a
stock option plan.  Under the 2003 Stock Option Plan,  each stock option granted
entitles  the holder to purchase one share of the  Company's  common stock at an
exercise price of not less than the fair market value of a share of common stock
at the date of grant. Options granted vest over a five-year period from the date
of grant and will expire no later than 10 years following the grant date. During
the year ended  December  31,  2003,  the  Company  granted  165,746  options to
purchase  common  shares of the  Company.  As a result of the  January  20, 2004
second-step  mutual-to-stock  conversion,  the shares  associated  with the 2003
Stock Option Plan converted at the exchange ratio of 3.7231 to 617,086 shares.

                                      -7-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


At the Annual Meeting held on August 25, 2004 and reconvened on August 31, 2004,
stockholders of the Company approved the Company's 2004 Stock Option Plan making
available  703,591  shares for  granting  under the plan.  During the year ended
December 31, 2004, the Company granted 694,569 options to purchase common shares
of the  Company.  Under the 2004 Stock Option  Plan,  each stock option  granted
entitles  the holder to purchase one share of the  Company's  common stock at an
exercise price of not less than the fair market value of a share of common stock
at the date of grant. Options granted vest over a five-year period from the date
of grant and will expire no later than 10 years following the grant date.

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes  options price model. The following  weighted average  assumptions
were  utilized for grants in 2006,  which have a weighted  average fair value of
$3.59:  dividend  yield of  1.50%;  expected  volatility  of  25.47%;  risk-free
interest  rate of 4.63%;  and, an expected  life of five  years.  The  following
weighted  average  assumptions  were  utilized for grants in 2005,  which have a
weighted  average  fair  value  of  $3.40:  dividend  yield of  2.00%;  expected
volatility of 32.51%; risk-free interest rate of 3.83%; and, an expected life of
five years. The following weighted average  assumptions were utilized for grants
in 2004,  which have a weighted  average fair value of $3.04:  dividend yield of
1.60%; expected volatility of 32.85%;  risk-free interest rate of 3.33%; and, an
expected life of five years.  The following  weighted  average  assumptions were
utilized for grants in 2003,  which have a weighted average fair value of $1.80:
dividend yield of 0.00%; expected volatility of 29.44 %; risk-free interest rate
of 3.01%; and, an expected life of five years.

As of June 30, 2006, there were  approximately  $2.0 million and $2.5 million of
total unrecognized  compensation  expense relating to unvested stock options and
unvested restricted stock plan shares, respectively. These costs are expected to
be recognized over a weighted average period of 2.9 years and 3.0 years, for the
stock option plans and restricted stock plans, respectively.

The Company  continues  to recognize  compensation  expense for shares of common
stock awarded under the  restricted  stock plans over the vesting  period at the
fair  market  value of the shares on the dates they are  awarded.  For the three
months  ended  June 30,  2006 and 2005,  the  Company  recognized  approximately
$212,000 and $202,000,  respectively,  of compensation  expense  relating to the
restricted stock plans, and approximately $76,000 and $73,000,  respectively, of
income tax benefit  resulting from this expense for these  periods.  For the six
months  ended  June 30,  2006 and 2005,  the  Company  recognized  approximately
$412,000 and $405,000,  respectively,  of compensation  expense  relating to the
restricted stock plans, and approximately  $148,000 and $145,000,  respectively,
of income tax benefit resulting from this expense for these periods.

                                      -8-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


The  following is a summary of the  Company's  stock  options  plans for the six
months ended June 30, 2006:

                                                        Weighted
                                                         Average
                                           Shares     Exercise Price
                                           ------     --------------

Outstanding at beginning of period        1,213,301      $ 8.25
Granted..........................            83,500       13.50
Exercised........................              (200)      10.15
Forfeited........................            (2,000)      10.15
Expired..........................                 -           -
                                          ---------       -----
Outstanding at end of period              1,294,601      $ 8.59
                                          =========      ======
Exercisable at end of period.....           443,713      $ 6.89
                                          =========      ======
Weighted average remaining
    contractual life..............                    7.7 years
Aggregate intrinsic value for
    exercisable options...........                       $ 8.11

The following is a summary of the Company's  restricted  stock plans for the six
months ended June 30, 2006:

                                                           Weighted
                                                         Average Grant
                                             Shares     Date Fair Value
                                             ------     ---------------
Outstanding at beginning of period          334,560        $  8.84
Granted..........................            27,200          13.50
Vested...........................           (36,773)          5.65
Forfeited........................              (250)         13.50
Expired..........................                 -              -
                                            -------        -------
Outstanding at end of period                324,737        $  9.58
                                            =======        =======


The Company has established an ESOP covering eligible employees with one year of
service, as defined by the ESOP. The Company accounts for the ESOP in accordance
with the  American  Institute  of  Certified  Public  Accountants'  Statement of
Position  ("SOP") No. 93-6,  Employers'  Accounting for Employee Stock Ownership
Plans.  SOP No. 93-6  addresses  the  accounting  for shares of stock  issued to
employees  by  an  ESOP.  SOP  No.  93-6  requires  that  the  employer   record
compensation  expense in the amount equal to the fair value of shares  committed
to be released from the ESOP to employees.

Compensation  expense for the ESOP is recorded at an amount  equal to the shares
allocated by the ESOP  multiplied by the average fair market value of the shares
during the year. The Company  recognizes  compensation  expense ratably over the
year for the ESOP  shares  to be  allocated  based  upon the  Company's  current
estimate  of the number of shares  expected to be  allocated  by the ESOP during
each calendar year. The difference between the average fair market value and the
cost of the  shares  allocated  by the  ESOP is  recorded  as an  adjustment  to
additional paid-in-capital.

                                      -9-
<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


4.  RECENT ACCOUNTING PRONOUNCEMENTS

In March  2006,  the FASB  issued SFAS No. 156,  "Accounting  for  Servicing  of
Financial Assets". This Statement amends SFAS No. 140, "Accounting for Transfers
and  Servicing of Financial  Assets and  Extinguishments  of  Liabilities",  and
requires  that  all  separately   recognized   servicing  assets  and  servicing
liabilities be initially  measured at fair value, if practicable and permits the
entities  to elect  either  fair value  measurement  with  changes in fair value
reflected in earnings or the  amortization  and impairment  requirements of SFAS
No. 140 for subsequent  measurement.  The  subsequent  measurement of separately
recognized  servicing assets and servicing  liabilities at fair value eliminates
the necessity for entities  that manage the risks  inherent in servicing  assets
and  servicing  liabilities  with  derivatives  to qualify for hedge  accounting
treatment  and  eliminates  the  characterization  of  declines in fair value as
impairments  or  direct  write-downs.  This  Statement  is  effective  as of the
beginning of an entity's first fiscal year that begins after September 15, 2006.
The Company is evaluating the impact,  if any, of the adoption of this Statement
on its financial results.

In June 2006, the FASB issued FASB Interpretation No. ("FIN") 48 "Accounting for
Uncertainty in Income Taxes - an  interpretation  of FASB Statement No. 109", to
clarify  certain  aspects of accounting for uncertain tax  positions,  including
issues related to the  recognition  and measurement of those tax positions 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, disclosure, and transition. This interpretation is effective for fiscal
years  beginning  after  December  15,  2006.  The  Company is in the process of
evaluating  the impact of the adoption of this  interpretation  on the Company's
results of operations and financial condition.

                                      -10-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


5.  INVESTMENT SECURITIES

The  amortized  cost,  gross  unrealized  gains and losses and fair value of the
Company's investment securities  available-for-sale  and held-to-maturity are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                    June 30, 2006
                                  --------------------------------------------------
                                                  Gross        Gross
                                  Amortized     unrealized   unrealized      Fair
                                     cost         gains        losses        value
                                  -------------------------------------------------
<S>                              <C>          <C>          <C>           <C>
Available-for-sale
------------------
  U.S. government obligations      $ 1,999      $     -      $  (109)      $ 1,890
  Mortgage-backed securities:
    FHLMC                           49,069            2       (1,615)       47,456
    FNMA                            23,786            2         (778)       23,010
  Equity securities                  2,000            -          (92)        1,908
                                   -------      -------      -------       -------

      Total                        $76,854      $     4      $(2,594)      $74,264
                                   =======      =======      =======       =======
</TABLE>


<TABLE>
<CAPTION>
                                                    June 30, 2006
                                  --------------------------------------------------
                                                  Gross        Gross
                                  Amortized     unrealized   unrealized      Fair
                                     cost         gains        losses        value
                                  -------------------------------------------------
<S>                              <C>          <C>          <C>           <C>
Held-to-maturity
----------------
  Mortgage-backed securities:
    FHLMC                          $34,321      $     -      $(1,504)      $32,817
    FNMA                            49,420            1       (2,008)       47,413
    GNMA                             2,580            4          (86)        2,498
  Other debt securities                 10            -            -            10
                                   -------      -------      -------       -------

    Total                          $86,331      $     5      $(3,598)      $82,738
                                   =======      =======      =======       =======
</TABLE>


<TABLE>
<CAPTION>
                                                    December 31, 2005
                                  --------------------------------------------------
                                                  Gross        Gross
                                  Amortized     unrealized   unrealized      Fair
                                     cost         gains        losses        value
                                  -------------------------------------------------

<S>                              <C>          <C>          <C>           <C>
Available-for-sale
------------------
  U.S. government obligations      $ 2,000      $     -      $   (94)      $ 1,906
  Mortgage-backed securities:
    FHLMC                           56,076            1       (1,331)       54,746
    FNMA                            28,334            5         (612)       27,727
  Equity securities                  1,000            -          (60)          940
                                   -------      -------      -------       -------

      Total                        $87,410      $     6      $(2,097)      $85,319
                                   =======      =======      =======       =======
</TABLE>

                                      -11-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)

<TABLE>
<CAPTION>
                                                    December 31, 2005
                                  --------------------------------------------------
                                                  Gross        Gross
                                  Amortized     unrealized   unrealized      Fair
                                     cost         gains        losses        value
                                  -------------------------------------------------
<S>                              <C>          <C>          <C>           <C>
Held-to-maturity
----------------
  Mortgage-backed securities:
    FHLMC                          $39,234      $     -      $  (976)      $38,258
    FNMA                            53,469            4       (1,059)       52,414
    GNMA                             2,908           11          (26)        2,893
  Other debt securities                 10            -            -            10
                                   -------      -------      -------       -------

      Total                        $95,621      $    15      $(2,061)      $93,575
                                   =======      =======      =======       =======
</TABLE>

6.  LOANS RECEIVABLE

Major groupings of loans are as follows (in thousands):

                                          June 30,                December 31,
                                            2006                      2005
                                     -----------------------------------------
Mortgages:
  Residential, 1-4 family               $  243,500                $  243,188
  Multi-family / non-residential           306,373                   271,600
  Construction                               9,717                     9,525
Automobile                                 162,719                   185,812
Commercial                                  50,903                    24,794
Other consumer                               3,430                     3,830
                                        ----------                ----------

Loans receivable                           776,642                   738,749
Deferred loan fees and costs                   106                       197
Allowance for loan losses                   (6,090)                   (5,763)
                                        ----------                ----------

Loans receivable, net                   $  770,658                $  733,183
                                        ==========                ==========


A summary of the activity in the allowance for loan losses is as follows (in
thousands):

                                              For the Six Months Ended
                                    --------------------------------------------
                                          June 30,                 June 30,
                                           2006                      2005
                                    --------------------------------------------

   Balance, beginning of period        $    5,763                $    4,427
   Provision for loan losses                  668                       922
   Recoveries                                 228                       154
   Loans charged-off                         (569)                     (394)
                                       ----------                ----------

   Balance, end of period              $    6,090                $    5,109
                                       ==========                ==========

                                      -12-

<PAGE>

                 SYNERGY FINANCIAL GROUP, INC. AND SUBSIDIARIES
                   Notes to Consolidated Financial Statements
                                   (unaudited)


7. DEPOSITS

Deposits are summarized as follows (in thousands):

                                               June 30,            December 31,
                                                 2006                  2005
                                              ----------------------------------

     Non-interest-bearing checking accounts   $  63,354             $  58,152
     Interest-bearing checking accounts           1,811                 3,320
     Savings and club accounts                   55,824                60,608
     Money market accounts                      126,306               117,930
     Certificate of deposit accounts            411,122               366,461
                                              ---------             ---------
                                              $ 658,417             $ 606,471
                                              =========             =========

8. OTHER BORROWED FUNDS

1. Short-Term Borrowings
   ---------------------

Short-term  borrowings,  which  consist  primarily  of  Federal  Home  Loan Bank
("FHLB") advances,  generally have maturities of less than one year. The details
of these borrowings are presented below (in thousands, except percentages):

<TABLE>
<CAPTION>
                                                                                At or For The
                                                                       -----------------------------------
                                                                           Six Months      Twelve Months
                                                                              Ended            Ended
                                                                            June 30,       December 31,
                                                                              2006             2005
                                                                       -----------------------------------

<S>                                                                     <C>               <C>
Average balance outstanding                                               $ 67,286          $  75,411
Maximum amount outstanding at any month end during the period               91,975            115,000
Balance outstanding at period end                                           80,405             86,650
Weighted average interest rate during the period                              4.93%              3.59%
Weighted average interest rate at period end                                  5.49%              4.13%
</TABLE>

2. Long-Term Borrowings
   --------------------

At June 30, 2006, long-term borrowings,  which consist of FHLB advances, totaled
$162.3 million.  Advances consist of fixed-rate advances that will mature within
one to nine years.  The  advances are  collateralized  by FHLB stock and certain
first  mortgage  loans,   first-lien  home  equity  loans  and   mortgage-backed
securities. These advances had a weighted average interest rate of 3.93%.

As of June 30, 2006, long-term FHLB advances mature as follows (in thousands):

   2006                                                     $  14,500
   2007                                                        57,000
   2008                                                        45,100
   2009                                                         8,000
   2010                                                        10,000
   Thereafter                                                  27,700
                                                            ---------
                                                            $ 162,300
                                                            =========

                                      -13-
<PAGE>

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

General

         Management's discussion and analysis of financial condition and results
of  operations  is  intended  to  provide   assistance  in   understanding   our
consolidated  financial condition and results of operations.  The information in
this section should be read with the consolidated  interim financial  statements
and the notes thereto included in this Form 10-Q.

         Our results of operations  are primarily  dependent on our net interest
income.  Net interest  income is a function of the balances of  interest-earning
assets  outstanding in any one period, the yields earned on those assets and the
interest paid on deposits and borrowed funds that were  outstanding in that same
period.  To a lesser extent,  the relative  levels of our other income and other
expenses  also  affect our  results of  operations.  Our other  income  consists
primarily of fees and service  charges,  commissions and gains and losses on the
sale of loans and investments.  The other expenses consist primarily of employee
compensation  and benefits,  occupancy and equipment  expenses,  data processing
costs,  marketing  costs,  professional  fees,  office  supplies,  telephone and
postage costs. Our results of operations are also significantly  impacted by the
amount of provisions for loan losses which, in turn, are dependent  upon,  among
other things,  the size and makeup of the loan portfolio,  loan quality and loan
trends.


Forward-Looking Statements

         This report  contains  certain  forward-looking  statements  within the
meaning  of  Section  27A of  the  Securities  Act  of  1933,  as  amended  (the
"Securities  Act"), and Section 21 E of the Securities  Exchange Act of 1934, as
amended  (the  "Exchange  Act").   The  Company  intends  such   forward-looking
statements  to be  covered by the safe  harbor  provisions  for  forward-looking
statements  contained in the Private  Securities  Litigation Reform Act of 1995,
and is including this statement for the purpose of these safe harbor provisions.
Forward-looking statements,  which are based on certain assumptions and describe
future  plans,  strategies  and  expectations  of  the  Company,  are  generally
identified  by use of the words  "believe,"  "expect,"  "intend,"  "anticipate,"
"estimate," "project," or similar expressions.  The Company's ability to predict
results  or the  actual  effect  of future  plans or  strategies  is  inherently
uncertain.  Factors which could have a material adverse effect on the operations
of the Company and its subsidiaries  include, but are not limited to, changes in
interest rates,  general economic  conditions,  legislative/regulatory  changes,
monetary and fiscal policies of the U.S.  Government,  including policies of the
U.S.  Treasury and the Federal Reserve Board,  the quality or composition of the
loan  or  investment  portfolios,  demand  for  loan  products,  deposit  flows,
competition,  demand for  financial  services in the  Company's  market area and
accounting  principles and guidelines.  These risks and uncertainties  should be
considered in evaluating  forward-looking  statements and undue reliance  should
not be placed on such statements. Further information concerning the Company and
its business,  including  additional  factors that could  materially  affect the
Company's financial results, is included in the Company's filings with the SEC.

         The  Company  does  not  undertake  - and  specifically  disclaims  any
obligation - to release  publicly the results of any revisions which may be made
to any  forward-looking  statements to reflect events or circumstances after the
date  of  such  statements  or to  reflect  the  occurrence  of  anticipated  or
unanticipated events.

                                      -14-

<PAGE>

Critical Accounting Policies, Judgments and Estimates

         The accounting and reporting  policies of the Company  conform with the
accounting  principles  generally  accepted in the United  States of America and
with general practices within the financial services  industry.  The preparation
of the 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 amounts reported in the financial statements and
the accompanying notes. Actual results could differ from those estimates.

         Allowance   for  Loan   Losses.   The  Company   recognizes   that  the
determination  of the  allowance  for loan  losses  involves a higher  degree of
judgment and complexity  than its other  significant  accounting  policies.  The
balance in the  allowance for loan losses is  determined  based on  management's
review and evaluation of the loan portfolio in relation to past loss experience,
the  size  and  composition  of  the  portfolio,  current  economic  events  and
conditions,  and other pertinent factors,  including management's assumptions as
to future  delinquencies,  recoveries  and losses.  All of these  factors may be
susceptible to significant  change.  To the extent actual  outcomes  differ from
management's  estimates,  additional  provisions for loan losses may be required
that would adversely impact earnings in future periods.

         Intangible  Assets.  Intangible  assets,  such as goodwill and the core
deposit  intangible  associated with the Company's  January 2003  acquisition of
First Bank of Central Jersey, are subject to annual impairment tests and, in the
case of the core deposit intangible,  amortization of the asset through a charge
to expense.  To the extent the outcome of the  impairment  tests differ from the
carrying  value,  additional  charges to expense could be required to reduce the
carrying value, which would adversely impact earnings in future periods.

         Income  Taxes.  Under the  liability  method,  deferred  tax assets and
liabilities  are  determined  based  on the  difference  between  the  financial
statement  and tax basis of assets  and  liabilities.  Deferred  tax  assets are
subject to  management's  judgment  based upon  available  evidence  that future
realization is more likely than not. If management  determines  that the Company
may be unable  to  realize  all or part of the net  deferred  tax  assets in the
future,  a direct  charge to income tax  expense  may be  required to reduce the
recorded value of the net deferred tax assets to the expected realizable amount,
thereby impacting  earnings.

Comparison of Financial Condition at June 30, 2006 and December 31, 2005

         Assets.  Total  assets  reached  $999.7  million on June 30,  2006,  an
increase of 2.6%, or $25.8  million,  from $973.9  million on December 31, 2005.
This growth was primarily  attributable  to an increase in net loans,  partially
offset by a decline in investment securities.

         Between  December  31, 2005 and June 30,  2006,  investment  securities
decreased $20.3 million,  or 11.2%, from $180.9 million to $160.6 million.  This
decrease was due to  maturities  and principal  repayments  during the first six
months of 2006. FHLB stock holdings  decreased  7.3%, or $1.0 million,  to $12.3
million at June 30, 2006, from $13.3 million at December 31, 2005.

         Net loans increased  5.1%, or $37.5 million,  to $770.7 million at June
30, 2006,  from $733.2 million at December 31, 2005.  This growth includes $47.2
million in originations and purchased loans, net of principal repayments, offset
by $9.1 million in participation  loan sales, the amortization of the premium on
purchased loans and net deferred loan costs,  along with a provision of $668,000
recorded to the allowance for loan losses.  During the first six months of 2006,
the Bank sold  approximately  $9.1  million  of  participation  loans  that were
providing  yields below current  market  levels.  The most  significant  changes
during the six months  ended June 30, 2006 were in  multi-family/non-residential
mortgage and commercial loans.  Multi-family/non-residential mortgages increased
by $34.8 million, or 12.8%, to $306.4 million,  while commercial loans increased
by $26.1

                                      -15-

<PAGE>

million,  or 105.3%, to $50.9 million.  Automobile loans declined $23.1 million,
or 12.4%,  to $162.7 million,  as greater  emphasis was placed on commercial and
multi-family/non-residential mortgage products.

         On June 30, 2006, total loans of $776.6 million were comprised of 39.4%
in  multi-family/non-residential   mortgage  loans,  21.4%  in  consumer  loans,
comprised  mostly of  direct  automobile  loans for both new and used  vehicles,
16.6% in one-to-four  family real estate loans, 14.8% in home equity loans, 6.5%
in commercial loans and 1.3% in construction loans.

         The  allowance  for loan  losses  was $6.1  million  at June 30,  2006,
compared to $5.8  million at December 31, 2005.  This  reflects a provision  for
loan losses of $668,000 for the six-month period ended June 30, 2006,  offset by
net  charge-offs  of  $341,000.  The ratio of the  allowance  for loan and lease
losses to total loans was 0.78% on both June 30,  2006 and  December  31,  2005.
Non-performing  assets  represented  0.05% of  total  assets  on June 30,  2006,
compared to 0.04% on December 31, 2005.

       Liabilities. Total liabilities increased $26.5 million, or 3.0%, to
$905.1 million at June 30, 2006, from $878.6 million at December 31, 2005. The
increase in total liabilities resulted primarily from an increase of $51.9
million, or 8.6%, in deposits, partially offset by a decline in FHLB advances of
$23.9 million, or 9.0%. The balance of the change was attributable to a decline
in total other liabilities of $1.5 million, or 27.5%.

       Deposits reached $658.4 million at June 30, 2006, an increase of $51.9
million, or 8.6%, from the $606.5 million reported at December 31, 2005. This
growth resulted from increases in certificates of deposit of $44.6 million, or
12.2%, from the $366.5 million reported at year-end 2005, and in core deposits,
which consist of checking, savings and money market accounts, of $7.3 million,
or 3.0%. Core deposits represented 37.6% of total deposits at June 30, 2006,
compared to 39.6% at December 31, 2005.

       The $23.9 million decrease in FHLB advances between December 31, 2005 and
June 30, 2006 was primarily due to the growth in deposits.

         Equity. Stockholders' equity totaled $94.5 million at June 30, 2006, a
decrease of $0.7 million, or 0.8%, from $95.2 million at December 31, 2005. The
decline was attributable to the repurchase of 201,893 shares of the Company's
common stock in open market transactions, partially offset by the net income for
the period. Additionally, on June 28, 2006, the Company's Board of Directors
declared a quarterly cash dividend of $0.06 per common share, which represented
an increase of $0.01, or 20.0%, over the prior quarterly cash dividend. The
dividend was payable on July 28, 2006 to stockholders of record on July 14,
2006.

    The repurchase of shares associated with the Company's stock repurchase
programs resulted in a cumulative reduction in stockholders' equity of $2.7
million. The decrease in accumulated other comprehensive loss, net of tax
effect, totaled $320,000.

                                      -16-

<PAGE>

Average Balance Sheet.  The following  table sets forth certain  information for
the three months ended June 30, 2006 and 2005.  The average yields and costs are
derived  by  dividing  income or  expense  by the  average  balance of assets or
liabilities,  respectively,  for the periods  presented.  Average  balances  are
derived from daily  average  balances.  The table does not include the allowance
for loan losses in the average balances of loans receivable. Management does not
believe that this causes any material differences in the information presented.

<TABLE>
<CAPTION>
                                                                          For the Three Months Ended June 30,
                                                 -----------------------------------------------------------------------------------
                                                                  2006                                         2005
                                                 -----------------------------------------------------------------------------------
                                                      Average                  Average            Average                  Average
                                                      Balance    Interest     Yield/Cost          Balance     Interest    Yield/Cost
                                                      -------    --------     ----------          -------     --------    ----------
<S>                                                <C>          <C>            <C>             <C>          <C>            <C>
Interest-earning assets:
  Loans receivable, net(1)                           $762,211     $11,917        6.25%           $623,790     $ 9,122        5.85%
  Securities(2)                                       166,505       1,658        3.98             236,324       2,244        3.80
  Other interest-earning assets(3)                     11,879         172        5.79              12,363         143        4.63
                                                     --------     -------        ----            --------     -------       ----
     Total interest-earning assets                    940,595      13,747        5.85             872,477      11,509        5.28
Non-interest-earning assets                            48,034                                      40,580
                                                     --------                                    --------
     Total assets                                    $988,629                                    $913,057
                                                     ========                                    ========
Interest-bearing liabilities:
 Checking accounts(4)                                $ 64,714     $     9        0.06            $ 58,655     $    15        0.10
 Savings and club accounts                             58,456          79        0.54              68,769          86        0.50
 Money market accounts                                117,882         837        2.84             157,293         834        2.12
 Certificates of deposit                              415,538       4,132        3.98             276,832       2,078        3.00
 Other borrowed funds                                 235,254       2,429        4.13             246,300       2,037        3.31
                                                     --------     -------        ----            --------     -------        ----
   Total interest-bearing liabilities                 891,844       7,486        3.36             807,849       5,050        2.50
Non-interest-bearing liabilities                        2,651     -------                           2,873     -------
                                                     --------                                    --------
     Total liabilities                                894,495                                     810,722
Stockholders' equity                                   94,134                                     102,335
                                                     --------                                    --------
     Total liabilities and stockholders' equity      $988,629                                    $913,057
                                                     ========                                    ========
Net interest income                                               $ 6,261                                     $ 6,459
                                                                  =======                                     =======
Net interest rate spread(5)                                                      2.49%                                       2.78%
Net interest margin(6)                                                           2.66%                                       2.96%
Ratio of average interest-earning assets to
   average interest-bearing liabilities                                        105.47%                                     108.00%
</TABLE>

-------------------------------
(1)  Non-accruing  loans have been included in loans receivable,  and the effect
     of such inclusion was not material.
(2)  Includes  U.S.  government  obligations,   mortgage-backed  securities  and
     interest-bearing deposits in banks.
(3)  Includes FHLB stock at cost.
(4)  Includes both interest-bearing and non-interest-bearing checking accounts.
(5)  Net interest  rate spread  represents  the  difference  between the average
     yield on  interest-earning  assets and the average cost of interest-bearing
     liabilities (including non-interest-bearing checking accounts).
(6)  Net  interest  margin  represents  net interest  income as a percentage  of
     average interest-earning assets.

                                      -17-

<PAGE>

Average Balance Sheet. The following table sets forth certain information for
the six months ended June 30, 2006 and 2005. The average yields and costs are
derived by dividing income or expense by the average balance of assets or
liabilities, respectively, for the periods presented. Average balances are
derived from daily average balances. The table does not include the allowance
for loan losses in the average balances of loans receivable. Management does not
believe that this causes any material differences in the information presented.

<TABLE>
<CAPTION>
                                                                            For the Six Months Ended June 30,
                                                 -----------------------------------------------------------------------------------
                                                                  2006                                         2005
                                                 -----------------------------------------------------------------------------------
                                                      Average                  Average            Average                  Average
                                                      Balance    Interest     Yield/Cost          Balance     Interest    Yield/Cost
                                                      -------    --------     ----------          -------     --------    ----------
<S>                                                <C>          <C>            <C>             <C>          <C>            <C>
Interest-earning assets:
  Loans receivable, net(1)                           $752,817     $23,257        6.18%           $601,603      $17,342       5.77%
  Securities(2)                                       171,619       3,421        3.99             238,851        4,514       3.78
  Other interest-earning assets(3)                     12,359         345        5.58              12,398          234       3.77
                                                     --------     -------        ----            --------      -------       ----
     Total interest-earning assets                    936,795      27,023        5.77             852,852       22,090       5.18
Non-interest-earning assets                            47,697                                      40,659
                                                     --------                                    --------

     Total assets                                    $984,492                                    $893,511
                                                      =======                                    ========
Interest-bearing liabilities:
 Checking accounts(4)                                 $62,746     $    23        0.07             $55,463      $    28       0.10
 Savings and club accounts                             59,023         153        0.52              67,480          168       0.50
 Money market accounts                                112,604       1,405        2.50             157,187        1,604       2.04
 Certificates of deposit                              406,060       7,833        3.86             269,929        3,933       2.91
 Other borrowed funds                                 246,994       4,971        4.03             236,594        3,830       3.24
                                                     --------     -------        ----            --------      -------       ----
   Total interest-bearing liabilities                 887,427      14,385        3.24             786,653        9,563       2.43
Non-interest-bearing liabilities                        2,758     -------                           3,575      -------
                                                     --------                                    --------
     Total liabilities                                890,185                                     790,228
Stockholders' equity                                   94,307                                     103,283
                                                     --------                                    --------
     Total liabilities and stockholders' equity      $984,492                                    $893,511
                                                     ========                                    ========
Net interest income                                               $12,638                                      $12,527
                                                                  =======                                      =======
Net interest rate spread(5)                                                      2.53%                                       2.75%
Net interest margin(6)                                                           2.70%                                       2.94%
Ratio of average interest-earning assets to
   average interest-bearing liabilities                                        105.56%                                     108.42%
</TABLE>

-------------------------------
(1)  Non-accruing  loans have been included in loans receivable,  and the effect
     of such inclusion was not material.
(2)  Includes  U.S.  government  obligations,   mortgage-backed  securities  and
     interest-bearing deposits in banks.
(3)  Includes FHLB stock at cost.
(4)  Includes both interest-bearing and non-interest-bearing checking accounts.
(5)  Net interest  rate spread  represents  the  difference  between the average
     yield on  interest-earning  assets and the average cost of interest-bearing
     liabilities (including non-interest-bearing checking accounts).
(6)  Net  interest  margin  represents  net interest  income as a percentage  of
     average interest-earning assets.

                                      -18-

<PAGE>

Comparison of Operating Results for Three Months Ended June 30, 2006 and 2005

         Net Income. Net income decreased by $45,000, to $1.060 million, for the
three months ended June 30, 2006, compared to $1.105 million for the same period
in 2005, a 4.1% decline.  Diluted net income per common share was $0.10 for both
the second  quarter of 2006 and 2005.  The decrease in net income was  primarily
attributable  to a $163,000  increase  in other  expenses  and a decrease in net
interest income of $198,000,  partially offset by an increase in other income of
$73,000,  a $225,000  decrease  in the  provision  for loan losses and a $18,000
decrease in income tax expense as a result of lower  pre-tax  earnings.  Results
for the second quarter of 2006 included $128,000, or $0.01 per diluted share, in
after-tax stock option expense  associated with the adoption of SFAS No. 123(R),
"Share-Based Payment," which became effective January 1, 2006.

         Net Interest Income. Net interest income declined $198,000, or 3.1%, to
$6.3 million for the three months ended June 30, 2006,  compared to $6.5 million
for the same period in 2005. Total interest income increased by $2.2 million, to
$13.7  million,  for the three months ended June 30, 2006,  while total interest
expense  increased by $2.4 million,  to $7.5 million,  when compared to the same
three-month  period  last  year.  Last  year's  results  included  approximately
$117,000 of loan prepayment  fees,  which related to two large credits.  The net
interest  margin for the second  quarter of 2006  declined 30 basis  points,  to
2.66%,  from 2.96% in the same period last year,  and  declined 7 basis  points,
from the 2.73% in the first quarter of 2006. The year-over-year  compression was
the result of a series of increases in short-term  interest rates by the Federal
Reserve Board and the prolonged, flat yield curve.

         The 19.4%  increase in total  interest  income was  primarily  due to a
$68.1  million,  or  7.8%,  increase  in the  average  interest-earning  assets,
combined  with a 57 basis point  increase in the average  yield  earned on these
assets when  compared to the same  quarter of the prior  year.  The  increase in
interest-earning  assets  was a result of the  Company's  growth  strategy.  The
increase  in the  average  yield was  primarily  attributable  to higher  market
interest rates on originated loans, a higher yield on investment  securities and
increased dividend income resulting from a higher yield on FHLB stock balances.

         The 48.2% increase in total interest expense primarily resulted from an
$84.0 million, or 10.4%, increase in the average  interest-bearing  liabilities,
coupled  with an 86 basis  point  increase  in the  average  cost of funds  when
compared to the same quarter of the prior year. The increase in the average cost
of  interest-bearing  liabilities  was primarily  attributable  to higher market
interest rates, as well as a significant increase in higher cost certificates of
deposits and other borrowed funds, which consist of FHLB advances.  The majority
of the increase in average  interest-bearing  liabilities  for the quarter ended
June 30,  2006 was a result  of a $138.7  million,  or  50.1%,  increase  in the
average balance of certificate of deposit accounts.

         Provision  for Loan Losses.  We maintain an  allowance  for loan losses
through  provisions for loan losses that are charged to earnings.  The provision
is made to  adjust  the  total  allowance  for loan  losses  to an  amount  that
represents  management's  best  estimate of incurred and probable  losses in the
loan  portfolio at the balance sheet date that are  reasonable  to estimate.  In
estimating  the  losses  in the  loan  portfolio  that  are  both  probable  and
reasonable  to  estimate,  management  considers  factors  such  as an  internal
analysis of credit  quality,  general levels of loan  delinquencies,  collateral
values,   the  Bank's   historical  loan  loss   experience,   changes  in  loan
concentrations by loan category,  peer group information and economic and market
trends affecting our market area. The provision established for loan losses each
month reflects management's assessment of these factors in relation to the level
of the  allowance at such time.  Management  allocates  the allowance to various
categories based on its classified  assets,  historical loan loss experience and
its  assessment  of the  risk  characteristics  of each  loan  category  and the
relative  balances at month end of each loan category.  Management's  assessment
did not change either in estimation method or assumptions during either period.

                                      -19-

<PAGE>

         The provision for loan losses  declined by $225,000,  to $252,000,  for
the three  months  ended June 30,  2006,  from  $477,000 for the same quarter in
2005.  The decrease in the provision was primarily due to lower loan  production
during the second  quarter of 2006 as  compared  to the same  period  last year.
Total  charge-offs  amounted to $186,000  and  recoveries  amounted to $125,000,
resulting in a net charge-off  amount of $61,000 for the three months ended June
30, 2006. This represents a $12,000 decrease in net charge-offs when compared to
the same quarter in 2005.

         Other Income.  Other income increased $73,000, or 9.0%, to $884,000 for
the three months ended June 30, 2006,  compared to $811,000 for the same quarter
in 2005.  This was  primarily  the result of an  increase  of $15,000 in service
charges and fees on deposit  accounts  coupled with a $41,000  increase in other
income, primarily from bank-owned life insurance.

         Other Expenses.  Other expenses  increased  $163,000,  or 3.2%, to $5.2
million for the three months  ended June 30, 2006,  compared to $5.0 million for
the same quarter in 2005.  The increase was primarily  attributable  to salaries
and benefits  associated  with the  Company's  growth  strategy of expanding its
branch  network,  coupled with  approximately  $169,000 of pre-tax  stock option
compensation expense associated with the adoption of SFAS No. 123(R).

         Income Tax Expense.  Income tax expense decreased by $18,000,  or 2.7%,
during the three months ended June 30, 2006 when compared to the same quarter in
2005, reflecting lower taxable income for the 2006 period.

Comparison of Operating Results for Six Months Ended June 30, 2006 and 2005

         Net Income.  Net income decreased by $116,000,  to $2.109 million,  for
the six months  ended June 30,  2006,  compared  to $2.225  million for the same
period in 2005,  a 5.2%  decline.  Diluted net income per common share was $0.20
for the six months ended June 30, 2006  compared to $0.19 for the same period in
2005, an increase of 5.3%. The decrease in net income was primarily attributable
to a $626,000 increase in other expenses, partially offset by an increase in net
interest  income of $111,000,  a $50,000  increase in other  income,  a $254,000
decrease in the provision for loan losses,  and a $95,000 decrease in income tax
expense as a result of lower pre-tax earnings.  Results for the six months ended
June 30, 2006 included $246,000,  or $0.02 per diluted share, in after-tax stock
option expense associated with the adoption of SFAS No. 123(R).

         Net Interest  Income.  Net interest  income grew $111,000,  or 0.9%, to
$12.6 million for the six months ended June 30, 2006,  compared to $12.5 million
for the same period in 2005. Total interest income increased by $4.9 million, to
$27.0  million,  for the six months  ended June 30, 2006,  while total  interest
expense increased by $4.8 million,  to $14.4 million,  when compared to the same
six month period last year. Last year's results included  approximately $117,000
of loan prepayment  fees,  which related to two large credits.  The net interest
margin for the first six months of 2006  declined 24 basis  points to 2.70% from
2.94% in the same  period  last year.  The  year-over-year  compression  was the
result of a series of  increases  in  short-term  interest  rates by the Federal
Reserve Board and the prolonged, flat yield curve.

         The 22.3%  increase in total  interest  income was  primarily due to an
$83.9  million,  or  9.8%,  increase  in the  average  interest-earning  assets,
combined  with a 59 basis point  increase in the average  yield  earned on these
assets  when   compared  to  the  same  period  last  year.   The   increase  in
interest-earning  assets  was a result of the  Company's  growth  strategy.  The
increase  in the  average  yield was  primarily  attributable  to higher  market
interest rates on originated loans, a higher yield on investment  securities and
increased dividend income resulting from a higher yield on FHLB stock balances.

         The 50.4% increase in total interest expense primarily  resulted from a
$100.8 million, or 12.8%, increase in the average interest-bearing  liabilities,
coupled  with an 81 basis  point  increase  in the  average  cost of funds  when
compared  to the same  period last year.  The  increase  in the average  cost of
interest-bearing

                                      -20-

<PAGE>

liabilities was primarily  attributable to higher market interest rates, as well
as a  significant  increase in higher cost  certificates  of deposits  and other
borrowed funds, which consist of FHLB advances.  The majority of the increase in
average  interest-bearing  liabilities  for the first  six  months of 2006 was a
result of a $136.1  million,  or  50.4%,  increase  in the  average  balance  of
certificate of deposit accounts along with a $10.4 million, or 4.4%, increase in
the average  balance of other  borrowed  funds over the same period of the prior
year.

         Provision  for Loan Losses.  We maintain an  allowance  for loan losses
through  provisions for loan losses that are charged to earnings.  The provision
is made to  adjust  the  total  allowance  for loan  losses  to an  amount  that
represents  management's  best  estimate of incurred and probable  losses in the
loan  portfolio at the balance sheet date that are  reasonable  to estimate.  In
estimating  the  losses  in the  loan  portfolio  that  are  both  probable  and
reasonable  to  estimate,  management  considers  factors  such  as an  internal
analysis of credit  quality,  general levels of loan  delinquencies,  collateral
values,   the  Bank's   historical  loan  loss   experience,   changes  in  loan
concentrations by loan category,  peer group information and economic and market
trends affecting our market area. The provision established for loan losses each
month reflects management's assessment of these factors in relation to the level
of the  allowance at such time.  Management  allocates  the allowance to various
categories based on its classified  assets,  historical loan loss experience and
its  assessment  of the  risk  characteristics  of each  loan  category  and the
relative  balances at month end of each loan category.  Management's  assessment
did not change either in estimation method or assumptions during either period.

         The provision for loan losses  declined by $254,000,  to $668,000,  for
the six months ended June 30, 2006,  from  $922,000 for the same period in 2005.
The decrease in the provision was primarily due to lower loan production  during
the six months  ended June 30,  2006 as  compared  to the same period last year.
Total  charge-offs  amounted to $569,000  and  recoveries  amounted to $228,000,
resulting in a net  charge-off  amount of $341,000 for the six months ended June
30, 2006. This represents a $101,000  increase in net charge-offs  over the same
period in 2005.

         Other Income.  Other income increased $50,000, or 2.9%, to $1.8 million
for the six months  ended June 30,  2006,  compared to $1.7 million for the same
period in 2005. This was primarily the result of an increase of $50,000 in other
income, primarily from bank-owned life insurance.

         Other Expenses.  Other expenses increased  $626,000,  or 6.4%, to $10.3
million for the six months ended June 30, 2006, compared to $9.7 million for the
same period in 2005.  The increase was  primarily  attributable  to salaries and
benefits  associated with the Company's  growth strategy of expanding its branch
network,   coupled  with   approximately   $328,000  of  pre-tax   stock  option
compensation expense associated with the adoption of SFAS No. 123(R).

         Income Tax Expense.  Income tax expense decreased by $95,000,  or 6.9%,
during the six months  ended June 30,  2006 when  compared to the same period in
2005, reflecting lower taxable income for the 2006 period.

Liquidity

         The Bank  maintains  liquid  assets at levels it considers  adequate to
meet liquidity  needs. The liquidity of the Bank reflects its ability to provide
funds to meet loan requests,  accommodate  possible  outflows in deposits,  fund
current and planned  expenditures  and take  advantage  of interest  rate market
opportunities  in  connection  with asset and liability  management  objectives.
Funding loan  requests,  providing  for  liability  outflows and  management  of
interest rate  fluctuations  require  continuous  analysis in order to match the
maturities  of earning  assets with specific  types of deposits and  borrowings.
Bank  liquidity  is  normally  considered  in terms of the nature and mix of the
Bank's sources and uses of funds.

         The  Bank's  primary  sources  of  liquidity  are  deposits,  scheduled
amortization  and  prepayment  of  loans  and  mortgage-backed   securities.  In
addition,  the  Bank  invests  any  excess  funds  in  overnight  federal  funds

                                      -21-

<PAGE>

investments, which provide liquidity. Its cash and cash equivalents,  defined as
cash and deposits in other financial  institutions  with original  maturities of
three  months or less,  totaled  $13.9  million  at June 30,  2006.  To a lesser
extent,  the earnings and funds provided from operating  activities are a source
of liquidity.

         Liquidity management is both a daily and long-term function of business
management.  While scheduled  principal  repayments on loans and mortgage-backed
securities are a relatively  predictable source of funds, deposit flows and loan
and securities  prepayments  are greatly  influenced by general  interest rates,
economic  conditions  and  competition.  If the Bank  requires  funds beyond its
ability to generate them internally,  it has the ability to obtain advances from
the FHLB,  which provides an additional  source of funds.  At June 30, 2006, the
Bank's  borrowing limit with the FHLB was $290.5 million,  excluding  repurchase
agreement advances,  subject to collateral  requirements.  At June 30, 2006, the
Bank had  $157.7  million  of FHLB  advances  outstanding  and $85.0  million in
repurchase agreement advances with the FHLB.

         Management  is not aware of any trends,  events or  uncertainties  that
will have or are  reasonably  likely to have a material  effect on the Company's
liquidity,  capital or operations nor is it aware of any current  recommendation
by regulatory authorities,  which, if implemented,  would have a material effect
on liquidity,  capital or operations. The total amount of the Bank's commitments
to extend  credit for mortgage and consumer  loans as of June 30, 2006 was $42.3
million,  excluding  commitments on unused lines of credit,  which totaled $29.0
million.

         Management  intends to expand the Bank's branch  network either through
opening or acquiring branch offices. Three new offices and the relocation of one
branch are planned for 2006.  The Company also intends to actively  consider the
acquisition  of local  financial  institutions  as part of expanding its banking
operations. It does not, however, have any current understandings, agreements or
arrangements  for the expansion of its  business,  other than opening new branch
office locations.

         The following table discloses the Bank's contractual  obligations as of
June 30, 2006 (in thousands):

<TABLE>
<CAPTION>
                                   Total         Less Than        1-3 Years        4-5 Years       After
                                                   1 Year                                         5 Years
                                 --------          --------        --------          -------      -------
<S>                             <C>               <C>             <C>               <C>           <C>
Certificates of deposit          $411,122          $356,078        $ 47,932          $ 6,659      $   453
FHLB advances (1)                 242,705           131,405          73,600           10,000       27,700
Rental under operating leases      12,056               942           1,728            1,487        7,899
                                 --------          --------        --------          -------      -------
Total                            $665,883          $488,425        $123,260          $18,146      $36,052
                                 ========          ========        ========          =======      =======
</TABLE>

----------------
(1)  At June 30, 2006,  other  borrowed funds  consisted of FHLB  advances.  The
     Bank's  borrowing  limit  with  the  FHLB  was  $290.5  million,  excluding
     repurchase   agreement  advances,   subject  to  collateral   requirements,
     consisting of an overnight line of credit of $61.9  million,  an adjustable
     rate line of credit of $61.9 million and a regular  advance limit of $166.7
     million.

         The following  table  discloses the Bank's  commitments  as of June 30,
2006 (in thousands):

<TABLE>
<CAPTION>
                                       Total        Less Than       1-3 Years      4-5 Years    After
                                                     1 Year                                    5 Years
                                     --------       --------        --------        -------    -------
<S>                                 <C>           <C>              <C>               <C>      <C>
Lines of Credit (1)                   $29,038       $ 2,470           $2,995          $ 64     $23,509
Other commitments to extend credit     42,298        42,298                -             -           -
                                      -------       -------           ------          ----     -------

Total                                 $71,336       $44,768           $2,995          $ 64     $23,509
                                      =======       =======           ======          ====     =======
</TABLE>

----------------
(1)  Represents amounts committed to customers.

                                      -22-

<PAGE>

Regulatory Capital Requirements

         The Bank is subject to federal  regulations that impose certain minimum
capital requirements. Quantitative measures, established by regulation to ensure
capital  adequacy,  require the Bank to maintain  amounts and ratios of tangible
and core  capital to adjusted  total assets and of total  risk-based  capital to
risk-weighted  assets.  On June 30, 2006, the Bank was in compliance with all of
its regulatory capital  requirements.  The following table sets forth the Bank's
capital position and relativity to regulatory requirements as of June 30, 2006:

<TABLE>
<CAPTION>
                                                                  OTS Requirements
                                       ----------------------------------------------------------------------
                                                                                             Regulatory
                                                                      Minimum           for classification as
                                            Bank actual           capital adequacy        well-capitalized
                                       --------------------     ------------------      ---------------------
                                        Amount       Ratio       Amount      Ratio       Amount       Ratio
                                        ------       -----       ------      -----       ------       -----
<S>                                  <C>          <C>         <C>          <C>        <C>          <C>
Total risk-based capital
   (to risk-weighted assets)           $92,744      12.15%      $61,079       8.00%      $76,348     10.00%
Tier 1 capital
   (to risk-weighted assets)            86,654      11.35%          N/A        N/A        45,809      6.00%
Tier 1 capital
   (to adjusted total assets)           86,654       8.68%       39,915       4.00%       49,893      5.00%
Tangible capital
   (to adjusted total assets)           86,654       8.68%       14,968       1.50%          N/A        N/A
</TABLE>

Impact of Inflation and Changes Prices

         The consolidated financial statements of the Company and notes thereto,
presented  elsewhere  herein,  have been prepared in accordance  with accounting
principles generally accepted in the United States of America, which require the
measurement of financial  position and operating  results in terms of historical
dollars without considering the change in the relative purchasing power of money
over time and due to  inflation.  The impact of  inflation  is  reflected in the
increased cost of the Company's operations,  primarily those at the Bank. Unlike
most industrial companies,  nearly all of the assets and liabilities of the Bank
are financial.  As a result,  interest rates have a greater impact on the Bank's
performance  than do the effects of general levels of inflation.  Interest rates
do not  necessarily  move in the same  direction  or to the same  extent  as the
prices of goods and services.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

Management of Interest Rate Risk and Market Risk

         Quantitative  Analysis.  Management actively monitors its interest rate
risk  exposure.  The  Bank's  objective  is to  maintain a  consistent  level of
profitability  within  acceptable  risk  tolerances  across  a  broad  range  of
potential  interest  rate  environments.  The Bank  uses the  Office  of  Thrift
Supervision  Net Portfolio Value (NPV) Model to monitor its exposure to interest
rate risk, which calculates  changes in net portfolio value.  Reports  generated
from  assumptions  provided and modified by management are reviewed by the Asset
and  Liability  Management  Committee  and  reported  to the Board of  Directors
quarterly. The Interest Rate Sensitivity of Net Portfolio Value Report shows the
degree  to which  balance  sheet  line  items  and the net  portfolio  value are
potentially affected by a 100 to 200 basis point (1/100th of a percentage point)
upward and downward shift (shock) in the Treasury yield curve.

         Management  believes that there has not been a material  adverse change
in market risk during the three month period ended June 30, 2006.

                                      -23-

<PAGE>

         Qualitative   Analysis.    Because   the   majority   of   the   Bank's
interest-earning  assets  and  interest-bearing  liabilities  are  sensitive  to
changes in interest  rates,  a  significant  form of market risk for the Bank is
interest rate risk, or changes in interest  rates.  The Bank is vulnerable to an
increase  in  interest  rates to the extent  that  interest-bearing  liabilities
mature or re-price more rapidly than interest-earning assets. Our assets include
long-term,  fixed-rate loans and investments, while our primary sources of funds
are deposits and borrowings  with  substantially  shorter  maturities.  Although
having   interest-bearing   liabilities   that  re-price  more  frequently  than
interest-earning  assets is generally beneficial to net interest income during a
period of declining  interest rates,  this type of  asset/liability  mismatch is
generally detrimental during periods of rising interest rates.

         The  Board  of  Directors  has   established  an  Asset  and  Liability
Management and Budget  Committee.  The Committee meets quarterly with management
to  review  current  investments:   average  lives,   durations  and  re-pricing
frequencies  of loans  and  securities;  loan and  deposit  pricing,  production
volumes and alternative funding sources; interest rate risk analysis;  liquidity
and  borrowing  needs;  and a variety of other  asset and  liability  management
topics.  The management  session of the Committee is held monthly with President
Fiore  presiding  and  senior  management  in  attendance.  The  results  of the
quarterly  and monthly  meetings of the Committee are reported to the full Board
at its regular  meetings.  In addition,  the  Committee  generally  meets during
October and November each year with the goal of  developing  an annual  business
and operating plan for presentation to the full Board.

         To reduce the effect of interest  rate changes on net interest  income,
the Bank has adopted various  strategies to enable it to improve the matching of
interest-earning asset maturities to interest-bearing  liability maturities. The
main elements of these strategies include seeking to:

          o    originate loans with adjustable-rate features or fixed-rate loans
               with short  maturities,  such as home equity and consumer  loans,
               comprised mostly of direct automobile loans for both new and used
               vehicles;
          o    expand commercial and industrial loans, which  predominantly have
               variable rates of interest;
          o    increase  production in higher  yielding  commercial  real estate
               loans;
          o    lengthen the maturities of time deposits and  borrowings  when it
               would  be cost  effective  through  the  aggressive  pricing  and
               promotion of  certificates  of deposits and  utilization  of FHLB
               advances;
          o    increase core deposits (i.e., checking,  savings and money market
               accounts), which tend to be less interest rate sensitive; and
          o    purchase  intermediate and adjustable-rate  investment securities
               that  provide a stable cash flow,  thereby  providing  investable
               funds in varying interest rate cycles.

Item 4. Controls and Procedures

         Evaluation  of  disclosure  controls  and  procedures.  Based  on their
evaluation of the Company's  disclosure  controls and  procedures (as defined in
Rule 13a-15(e) under the Securities  Exchange Act of 1934 (the "Exchange Act")),
the Company's  principal  executive officer and principal financial officer have
concluded that as of the end of the period  covered by this Quarterly  Report on
Form 10-Q such disclosure controls and procedures are effective.

         Changes in internal  controls.  During the quarter under report,  there
was no change in the Company's  internal  control over financial  reporting that
has  materially  affected,  or is reasonable  likely to materially  affect,  the
Company's internal control over financial reporting.

                                      -24-

<PAGE>

                           PART II - OTHER INFORMATION

Item 1. Legal Proceedings.
        -----------------

         The Company and its subsidiaries,  from time to time, may be a party to
routine  litigation,  which  arises in the normal  course of  business,  such as
claims to enforce  liens,  condemnation  proceedings  on properties in which the
Bank, the  wholly-owned  subsidiary of the Company,  holds  security  interests,
claims  involving  the making and  servicing  of real  property  loans and other
issues incident to its business.  There were no lawsuits  pending or known to be
contemplated  at June 30, 2006 that would be expected to have a material  effect
on the Company's operations or income.

Item 1A. Risk Factors.
         ------------

         There  has  been no  material  change  in the risk  factors  previously
disclosed in the Company's 2005 Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
        -----------------------------------------------------------

                      ISSUER PURCHASES OF EQUITY SECURITIES

The following table reports information  regarding  repurchases of the Company's
common stock during the second  quarter of 2006 and the stock  repurchase  plans
approved by the Company's Board of Directors.

<TABLE>
<CAPTION>
----------------------------- --------------- ---------------- ------------------------- ----------------------------
                                                                Total Number of Shares    Maximum Number of Shares
                               Total Number                      Purchased as Part of     that May Yet Be Purchased
                                of Shares      Average Price      Publicly Announced         Under the Plans or
          Period                Purchased     Paid per Share    Plans or Programs (1)           Programs (1)
----------------------------- --------------- ---------------- ------------------------- ----------------------------
<S>                             <C>              <C>                   <C>                        <C>
April 1-30, 2006                    -                -                    -                         486,901
----------------------------- --------------- ---------------- ------------------------- ----------------------------
May 1-31, 2006                    16,500           14.69                 16,500                     470,401
----------------------------- --------------- ---------------- ------------------------- ----------------------------
June 1-30, 2006                      -               -                     -                        470,401
----------------------------- --------------- ---------------- ------------------------- ----------------------------
Total                             16,500           14.69                 16,500
----------------------------- --------------- ---------------- ------------------------- ----------------------------
</TABLE>

-------------
(1)  On February 23, 2006, the Company  announced that it intends to purchase up
     to five  percent of its common  stock  outstanding  (approximately  572,294
     shares) in open market  transactions.  This repurchase program incorporates
     the  174,628  shares  that  remained  available  for  repurchase  under the
     Company's  August 2005  repurchase  program.  Such purchases are to be made
     from time to time in the open market,  based on stock  availability,  price
     and the  Company's  financial  performance.  This program has no expiration
     date and has 470,401 shares yet to be purchased.

                                      -25-

<PAGE>

Item 3. Defaults Upon Senior Securities.
        -------------------------------

         None.

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

         None.

Item 5. Other Information.
        -----------------

         None.

Item 6. Exhibits.
        --------

        a) Exhibits:

           31 Certification pursuant to ss.302 of the Sarbanes-Oxley Act of 2002
           32 Certification pursuant to ss.906 of the Sarbanes-Oxley Act of 2002

                                      -26-
<PAGE>

                                   SIGNATURES



          Pursuant to the requirements of Sections 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                          SYNERGY FINANCIAL GROUP, INC.



Date: August 9, 2006                   By: /s/John S. Fiore
                                           -------------------------------------
                                           John S. Fiore
                                           President and Chief Executive Officer
                                           (Duly Authorized Representative)

          Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.

<TABLE>
<CAPTION>

<S>                                         <C>
/s/John S. Fiore                                /s/A. Richard Abrahamian
-------------------------------------           -------------------------------------------------
John S. Fiore                                   A. Richard Abrahamian
President and Chief Executive Officer           Senior Vice President and Chief Financial Officer
(Principal Executive Officer)                   (Principal Financial and Accounting Officer)

Date: August 9, 2006                            Date: August 9, 2006

</TABLE>

                                      -27-