# UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-Q

(Mark One)

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

| | For the Quarterly Period Ended June 30, 2008
| | --------------------------------------------

| | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
| | ----------------------------------------------------------------------------------------

| | For the Transition Period from ___________ to _____________
| | -----------------------------------------------------------

Commission file number
333-127409

BANKGREENVILLE FINANCIAL CORPORATION(Exact name of small business issuer as specified in its charter)

|South Carolina               |  | 20-2645711         
|---------------------------- |  | -------------------
|(State or other jurisdiction |  | (I.R.S. Employer   
|of incorporation)            |  | Identification No.)

499 Woodruff RoadGreenville, South Carolina 29607
(Address of principal executive offices)

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

Not Applicable(Former name, former address and former fiscal year, if changed since last report)

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company.  See the definitions of large accelerated filer,
accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

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

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

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest
practicable date:

1,180,000 shares of common stock, no par value per share, were issued and outstanding as of August 11, 2008.

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# INDEX

Part I  Financial
Information

Item 1.   Financial Statements (unaudited) Item 2.   Managements Discussion and Analysis or Plan of OperationItem 3.   Quantitative and Qualitative Disclosures About Market RiskItem 4.   Controls and Procedures

Part II  Other
Information

Item 1.   Legal Proceedings Item 2.   Unregistered Sales of Equity Securities and Use of ProceedsItem 3.   Default Upon Senior SecuritiesItem 4.   Submission of Matters to a Vote of Security HoldersItem 5.  Other InformationItem 6.   Exhibits

SIGNATURES

EXHIBIT INDEX

Exhibit 31.1   Rule
13a-14(a) Certification of the Principal Executive Officer

Exhibit 31.2   Rule 13a-14(a)
Certification of the Principal Financial Officer

Exhibit 32   Section
1350 Certifications

2

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# PART I  FINANCIAL
INFORMATION

# Item 1. Financial
Statements

# Consolidated Balance
Sheets

|                                                       | June 30 | December 31,
|------------------------------------------------------ | ------- | ------------
|
|
|Assets                                                 |         |             
|Cash and due from banks                                |         |             
|Federal funds sold                                     |         |             
|                                                       |         |             
|Total cash and cash equivalents                        |         |             
|Investment securities available for sale               |         |             
|Federal Home Loan Bank Stock                           |         |             
|Loans, net                                             |         |             
|Property and equipment, net                            |         |             
|Accrued interest receivable                            |         |             
|Other assets                                           |         |             
|                                                       |         |             
|Total assets                                           |         |             
|                                                       |         |             
|Liabilities and Shareholders Equity                   |         |             
|Liabilities                                            |         |             
|Deposits                                               |         |             
|Non-interest bearing                                   |         |             
|Interest bearing                                       |         |             
|                                                       |         |             
|Total deposits                                         |         |             
|Federal funds purchased                                |         |             
|Federal Home Loan Bank advances                        |         |             
|Accrued interest payable                               |         |             
|Accounts payable and accrued liabilities               |         |             
|                                                       |         |             
|Total liabilities                                      |         |             
|                                                       |         |             
|Shareholders Equity                                   |         |             
|Preferred stock, no par value; 10,000,000 shares       |         |             
|authorized; none issued and outstanding                |         |             
|Common stock, no par value; 10,000,000 shares          |         |             
|authorized; 1,180,000 shares issued and outstanding at |         |             
|June 30, 2008 and December 31, 2007                    |         |             
|Accumulated other comprehensive income (loss)          |         |             
|Retained deficit                                       |         |             
|                                                       |         |             
|Total shareholders' equity                             |         |             
|                                                       |         |             
|Total liabilities and shareholders' equity             |         |             
|                                                       |         |             

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

3

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# Consolidated Statements
of Operations (Unaudited)

|                                                             | Three Months Ended | Six Months Ended
|------------------------------------------------------------ | ------------------ | ----------------
|
|
|Interest income                                              |                    |                 
|Loans and fees                                               |                    |                 
|Investment securities and Federal Home Loan Bank stock       |                    |                 
|Federal funds sold                                           |                    |                 
|                                                             |                    |                 
|Total interest income                                        |                    |                 
|                                                             |                    |                 
|Interest expense                                             |                    |                 
|Deposits                                                     |                    |                 
|Borrowings                                                   |                    |                 
|                                                             |                    |                 
|Total interest expense                                       |                    |                 
|                                                             |                    |                 
|Net interest income                                          |                    |                 
|                                                             |                    |                 
|Provision for loan losses                                    |                    |                 
|                                                             |                    |                 
|Net interest income after provision for loan losses          |                    |                 
|                                                             |                    |                 
|Non-interest income                                          |                    |                 
|Gains on investment securities sales and calls               |                    |                 
|Mortgage brokerage fees                                      |                    |                 
|Service charges on deposit accounts                          |                    |                 
|                                                             |                    |                 
|Total non-interest income                                    |                    |                 
|                                                             |                    |                 
|Non-interest expense                                         |                    |                 
|Compensation and employee benefits                           |                    |                 
|Occupancy and equipment                                      |                    |                 
|Data processing and related costs                            |                    |                 
|Marketing, advertising and shareholder communications        |                    |                 
|Legal and audit                                              |                    |                 
|Other professional fees                                      |                    |                 
|Supplies, postage and telephone                              |                    |                 
|Insurance                                                    |                    |                 
|Credit related expenses                                      |                    |                 
|Courier and armored carrier service                          |                    |                 
|Regulatory fees and FDIC insurance                           |                    |                 
|Other                                                        |                    |                 
|                                                             |                    |                 
|Total non-interest expense                                   |                    |                 
|                                                             |                    |                 
|Loss before income taxes                                     |                    |                 
|Income taxes                                                 |                    |                 
|                                                             |                    |                 
|Net loss                                                     |                    |                 
|                                                             |                    |                 
|Basic and diluted loss per common share                      |                    |                 
|                                                             |                    |                 
|Weighted average common shares outstanding-basic and diluted |                    |                 
|                                                             |                    |                 

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

4

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# Consolidated Statements
of Changes In Shareholders Equity and Comprehensive Loss (Unaudited)

|                                |  |  | Accumulated |           | 
|------------------------------- |  |  | ----------- | --------- | 
|
|
|
|
|Balance, December 31, 2006      |  |  |             | 1,180,000 | 
|                                |  |  |             |           | 
|Stock compensation expense      |  |  |             | -         | 
|                                |  |  |             |           | 
|Comprehensive loss:             |  |  |             |           | 
|                                |  |  |             |           | 
|Net loss                        |  |  |             | -         | 
|                                |  |  |             |           | 
|Unrealized losses on investment |  |  |             |           | 
|securities available for sale,  |  |  |             |           | 
|no tax effect                   |  |  |             | -         | 
|                                |  |  |             |           | 
|Total comprehensive loss        |  |  |             | -         | 
|                                |  |  |             |           | 
|Balance, June 30, 2007          |  |  |             | 1,180,000 | 
|                                |  |  |             |           | 
|                                |  |  |             |           | 
|Balance, December 31, 2007      |  |  |             | 1,180,000 | 
|                                |  |  |             |           | 
|Stock compensation expense      |  |  |             | -         | 
|                                |  |  |             |           | 
|Comprehensive loss:             |  |  |             |           | 
|                                |  |  |             |           | 
|Net loss                        |  |  |             | -         | 
|                                |  |  |             |           | 
|Unrealized losses on investment |  |  |             |           | 
|securities available for sale,  |  |  |             |           | 
|no tax effect                   |  |  |             | -         | 
|                                |  |  |             |           | 
|Total comprehensive loss        |  |  |             | -         | 
|                                |  |  |             |           | 
|Balance, June  30, 2008         |  |  |             | 1,180,000 | 
|                                |  |  |             |           | 

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

5

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# Consolidated Statements
of Cash FlowsFor the Six Months Ended (Unaudited)

|                                                                             | June 30, | June 30,
|---------------------------------------------------------------------------- | -------- | --------
|
|Operating activities                                                         |          |         
|Net loss                                                                     |          |         
|Provision for loan losses                                                    |          |         
|Stock compensation expense                                                   |          |         
|Depreciation                                                                 |          |         
|Net amortization (accretion) of premium (discounts) on investment securities |          |         
|Gains on sales and calls of investment securities                            |          |         
|Increase in interest receivable                                              |          |         
|(Increase) decrease in other assets                                          |          |         
|(Decrease) increase in accrued interest payable                              |          |         
|Decrease in accounts payable and accrued liabilities                         |          |         
|                                                                             |          |         
|Net cash used by operating activities                                        |          |         
|                                                                             |          |         
|Investing activities                                                         |          |         
|Increase in loans, net                                                       |          |         
|Purchase of investment securities available for sale                         |          |         
|Proceeds from sales of investment securities available for sale              |          |         
|Proceeds from called investment securities available for sale                |          |         
|Proceeds from principal paydowns on mortgage-backed securities               |          |         
|Purchase of FHLB Stock                                                       |          |         
|Purchase of property and equipment                                           |          |         
|                                                                             |          |         
|Net cash used for investing activities                                       |          |         
|                                                                             |          |         
|Financing activities                                                         |          |         
|Increase in deposits, net                                                    |          |         
|Increase in Federal Home Loan Bank advances                                  |          |         
|Decrease in federal funds purchased                                          |          |         
|                                                                             |          |         
|Net cash provided by financing activities                                    |          |         
|                                                                             |          |         
|Net increase (decrease) in cash and cash equivalents                         |          |         
|                                                                             |          |         
|Cash and cash equivalents, beginning of period                               |          |         
|                                                                             |          |         
|Cash and cash equivalents, end of period                                     |          |         
|                                                                             |          |         
|Supplemental information                                                     |          |         
|Cash paid for:                                                               |          |         
|Interest                                                                     |          |         
|                                                                             |          |         
|Schedule of non-cash transactions:                                           |          |         
|Unrealized losses on investment securities,                                  |          |         
|no income tax                                                                |          |         
|                                                                             |          |         

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

6

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# Notes to Consolidated
Financial Statements

# NOTE 1  NATURE OF
BUSINESS AND BASIS OF PRESENTATION

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

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

# Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America
for interim financial information and with the instructions to Form 10-Q. Accordingly,
they do not include all information and footnotes required by accounting principles
generally accepted in the United States of America for complete financial statements.
However, in the opinion of management, all adjustments (consisting of normal recurring
adjustments) considered necessary for a fair presentation have been included.

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

Operating
results for the six months ended June 30, 2008 are not necessarily indicative of the
results that may be expected for the year ending December 31, 2008. For further
information, refer to the audited consolidated financial statements and footnotes thereto
included in the Companys 10-KSB for the year ended December 31, 2007 as filed with
the Securities and Exchange Commission.

# NOTE 2  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

A
summary of the Companys significant accounting policies is included in our Annual
Report on Form 10-KSB filed with the Securities and Exchange Commission for the year ended
December 31, 2007. For further information, refer to the financial statements and
footnotes thereto included in that filing. Accounting standards that have been issued or
proposed by the Financial Accounting Standards Board (FASB) that do not
require adoption until a future date are not expected to have a material impact on the
consolidated financial statements upon adoption.

# Net Loss per Share

Basic
loss per share represents net loss to shareholders divided by the weighted-average number
of common shares outstanding during the period. Potential common shares that may be issued
by the Company relate to outstanding stock options and warrants, and are determined using
the treasury stock method. For the quarters and six months ended June 30, 2008 and 2007,
the stock options and warrants were not in-the-money. The exercise price of
the stock options and warrants exceeded the weighted average fair market value of the
common stock. The outstanding stock options and warrants were anti-dilutive, and basic and
dilutive shares and loss per common share, respectively, were the same.

7

---

# NOTE 2  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES (continued)

# Stock Compensation Plans

Upon
completion of the offering, the Company issued stock warrants to the organizing directors
for the purchase of three shares of common stock at $10.00 per share for every four shares
purchased in the stock offering, up to a maximum of 10,000 warrants per director. The
Company issued a total of 107,500 warrants, all of which immediately vested upon
completion of the offering. Of these warrants, 10,000 warrants expired in February 2008,
due to the death of one of our organizing directors in 2007. The average fair value per
share of warrants issued amounted to approximately $1.83.  The fair value of each
warrant granted was estimated on the date of grant using the Black-Scholes pricing model
with the following assumptions used for grants:  expected volatility of 6%, risk-free
interest rate of 4.0% and expected lives of five years.

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

There
were 10,000 options forfeited and no options granted during the six months ended June 30,
2008. At June 30, 2008 and December 31, 2007, the Company had 95,900 and 105,900 options
outstanding, respectively, at $10.00 per share. Vested options amounted to 38,060 and
37,760 at June 30, 2008 and December 31, 2007, respectively. Options outstanding at June
30, 2008 have a weighted average remaining contractual term of approximately 7 3/4 years.
Total unrecognized compensation cost related to non-vested options granted as of June 30,
2008 was $157,798, and is expected to be expensed ratably over the remaining vesting
periods of the stock options. Net loss, as reported, included stock-based employee
compensation expense of $13,497 for the three months ended June 30, 2008 and $28,029 for
the six month period, and net loss, as reported, included stock-based employee
compensation expense of $15,015 and $29,043 for the three months and six months ended June
30, 2007, respectively. The exercise or conversion ratio of all stock options granted was
1:1 and the aggregate intrinsic value of the stock options was zero for both periods.

# Statement of Cash Flows

For
purposes of reporting cash flows, cash equivalents include amounts due from banks and
federal funds sold. Generally, federal funds are sold for one-day periods. Federal funds
sold were $1,078,000 as of June 30, 2008 and $3,252,000 as of June 30, 2007.

# Investment Securities

Investment securities are accounted for in accordance with SFAS No. 115, Accounting
for Certain Investments in Debt and Equity Securities.  Management classifies
securities at the time of purchase into securities held to maturity, trading securities
and securities available for sale. Securities held to maturity are securities which the
Company has the positive intent and ability to hold to maturity, and are reported at
amortized cost. Trading securities are purchased and held principally for the purpose of
selling them in the near future and are reported at fair value with unrealized gains and
losses included in earnings. Securities available for sale are securities that may be sold
under certain conditions, and are reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a separate component of shareholders equity
as accumulated other comprehensive income (loss). At June 30, 2008, the Companys
investment securities were classified as available for sale. The amortization of premiums
and accretion of discounts on investment securities are recorded as adjustments to
interest income. Gains or losses on sales of investment securities are based on the net
proceeds and the adjusted carrying amount of the securities sold, using the specific
identification method. Unrealized losses on securities, reflecting a decline in value or
impairment judged by the Company to be other than temporary, are charged to earnings in
the consolidated statements of operations.

8

---

# NOTE 3  FAIR VALUE

Effective
January 1, 2008, the Company adopted SFAS No. 157, Fair Value Measurements
(SFAS 157) which provides a framework for measuring and disclosing fair value
under generally accepted accounting principles. SFAS 157 requires disclosures about the
fair value of assets and liabilities recognized in the balance sheet in periods subsequent
to initial recognition, whether the measurements are made on a recurring basis (for
example, available for sale investment securities) or on a nonrecurring basis (for
example, impaired loans).

SFAS
157 defines fair value as the exchange price that would be received for an asset or paid
to transfer a liability (an exit price) in the principal or most advantageous market for
the asset or liability in an orderly transaction between market participants on the
measurement date. SFAS 157 also establishes a fair value hierarchy which requires an
entity to maximize the use of observable inputs and minimize the use of unobservable
inputs when measuring fair value. The standard describes three levels of inputs that may
be used to measure fair value:

|Level 1 | Quoted prices in active markets for identical assets or liabilities. Level 1 assets
and liabilities include debt and equity securities and derivative contracts that are
traded in an active exchange market, as well as U.S. Treasury, other U.S. Government and
agency mortgage-backed debt securities that are highly liquid and are actively traded in
over-the-counter markets.
|------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Level 2 | Observable inputs other than Level 1 prices such as quoted prices for similar assets
or liabilities; quoted prices in markets that are not active; or other inputs that are
observable or can be corroborated by observable market data for substantially the full
term of the assets or liabilities. Level 2 assets and liabilities include debt securities
with quoted prices that are traded less frequently than exchange-traded instruments and
derivative contracts whose value is determined using a pricing model with inputs that are
observable in the market or can be derived principally from or corroborated by observable
market data. This category generally includes certain derivative contracts and impaired
loans.
|------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Level 3 | Unobservable inputs that are supported by little or no market activity and that are
significant to the fair value of the assets or liabilities. Level 3 assets and liabilities
include financial instruments whose value is determined using pricing models, discounted
cash flow methodologies, or similar techniques, as well as instruments for which the
determination of fair value requires significant management judgment or estimation. For
example, this category generally includes certain private equity investments, retained
residual interests in securitizations, residential mortgage servicing rights, and
highly-structured or long-term derivative contracts.
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Available
for sale investment securities ($21,474,189 at June 30, 2008) are the only assets whose
fair values are measured on a recurring basis using Level 1 inputs (active market quotes).

The
Company is predominantly an asset-based lender with real estate serving as collateral on a
substantial majority of loans. Loans which are deemed to be impaired are primarily valued
on a nonrecurring basis at the fair values of the underlying real estate collateral. Such
fair values are obtained using independent appraisals, which the Company considers to be
level 2 inputs. The aggregate carrying amount of impaired loans at June 30, 2008 was $-0-.

FASB
Staff Position No. 157-2 delays the implementation of SFAS 157 until the first quarter of
2009 with respect to goodwill, other intangible assets, real estate and other assets
acquired through foreclosure and other non-financial assets measured at fair value on a
nonrecurring basis.

The
Company has no assets or liabilities whose fair values are measured using level 3 inputs.

The Company
has no liabilities carried at fair value or measured at fair value on a nonrecurring
basis.

9

---

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

The following discussion reviews our results of operations and assesses our
financial condition. You should read the following discussion and analysis in conjunction
with the accompanying consolidated financial statements. The commentary should be read in
conjunction with the discussion of forward-looking statements, the financial statements,
and the related notes and the other statistical information included in this report and in
our 2007 Form 10-KSB.

# DISCUSSION OF
FORWARD-LOOKING STATEMENTS

This
report contains forward-looking statements relating to, without limitation,
future economic performance, plans and objectives of management for future operations, and
projections of revenues and other financial items that are based on the beliefs of
management, as well as assumptions made by and information currently available to
management. The words may, will, anticipate,
should, would, believe, contemplate,
expect, estimate, continue, and intend, as
well as other similar words and expressions of the future, are intended to identify
forward-looking statements. Our actual results may differ materially from the results
discussed in the forward-looking statements, and our operating performance each quarter is
subject to various risks and uncertainties that are discussed in detail in our 2007 Form
10-KSB under the Risk Factors heading as filed with the Securities and
Exchange Commission and that include, without limitation, the following:

| |  | our short operating history;
| | - | ----------------------------

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

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

| |  | our ability to control costs, expenses and loan delinquency rates;
| | - | ------------------------------------------------------------------

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

| |  | general economic conditions, either nationally or regionally and especially in our primary service area, becoming
less favorable than expected resulting in, among other things, a deterioration in credit quality;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

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

| |  | changes in deposit flows;
| | - | -------------------------

| |  | the lack of seasoning of our loan portfolio;
| | - | --------------------------------------------

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

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

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

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

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

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

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

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

We
undertake no obligation to publicly update or otherwise revise any forward-looking
statements, whether as a result of new information, future events, or otherwise.

# General

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

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

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

10

---

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

# Critical Accounting
Policies

We
have adopted various accounting policies that govern the application of accounting
principles generally accepted in the United States and with general practices within the
banking industry in the preparation of our financial statements. Our significant
accounting policies are described in footnote 1 to our audited consolidated financial
statements as of December 31, 2007, as filed on our annual report on Form 10-KSB.

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

# Allowance for Loan Losses

We
believe the allowance for loan losses is the critical accounting policy that requires the
most significant judgments and estimates used in preparation of our consolidated financial
statements. Some of the more critical judgments supporting the amount of our allowance for
loan losses include judgments about the creditworthiness of borrowers, the estimated value
of the underlying collateral, cash flow assumptions, determination of loss factors for
estimating credit losses, the impact of current events, and conditions, and other factors
impacting the level of probable inherent losses. Under different conditions or using
different assumptions, the actual amount of credit losses incurred by us may be different
from managements estimates provided in our consolidated financial statements. Refer
to the portion of this discussion that addresses our allowance for loan losses for a more
complete discussion of our processes and methodology for determining our allowance for
loan losses.

# Income Taxes

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

# Results of Operations

Three months ended June
30, 2008 and 2007

General

Our
net loss for the quarter ended June 30, 2008 was $92,165, or $0.08 per share, compared to
a net loss of $177,673, or $0.15 per share, for the quarter ended June 30, 2007, for an
improvement of $85,508, or 48%. As described below, most of this improvement in net loss
is attributable to an increase in our net interest income, which reflects the continued
growth of our bank and the volume increases in our interest-earning assets for the three
months ended June 30, 2008 compared to the same period in 2007.

Net Interest Income

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

11

---

these interest-earning assets and
interest-bearing liabilities, net interest income is affected by the timing of re-pricing
these interest-earning assets and interest-bearing liabilities.

Net
interest income was $432,272 for the quarter ended June 30, 2008, an increase of $124,846,
or 41%, over net interest income of $307,426 for the quarter ended June 30, 2007. Interest
income increased $348,606, or 56%, to $974,681 for the quarter ended June 30, 2008, due to
volume increases in loans and investment securities. Loan interest and related fees
improved $314,593, or 85%, over the quarter ended June 30, 2007, due to continued growth
in the loan portfolio. Average loans as a percentage of average assets were 63% and 44% at
June 30, 2008 and 2007, respectively. Interest expense for the quarter ended June 30, 2008
increased $223,760, or 70%, over the same period in 2007, due to volume increases in
deposits and Federal Home Loan Bank advances.

The
following table sets forth information related to our average balance sheet, average
yields on assets, and average costs of liabilities for the quarters ended June 30, 2008
and 2007. We derived these yields and rates by dividing annualized income or expense by
the average balance of the corresponding assets or liabilities. We derived average
balances from the daily balances throughout the periods indicated.

# Average Balances,
Income and Expenses, Yields and Rates

|                                           | For the Quarter Ended June 30,
|------------------------------------------ | ------------------------------
|
|
|
|
|Interest-earning assets:                   |                               
|Federal funds sold                         |                               
|Investment securities and FHLB stock       |                               
|Loans (1)                                  |                               
|                                           |                               
|Total interest-earning  assets             |                               
|Non-earning assets                         |                               
|                                           |                               
|Total assets                               |                               
|                                           |                               
|                                           |                               
|Interest-bearing liabilities:              |                               
|Interest checking                          |                               
|Savings and money market                   |                               
|Time deposits                              |                               
|Federal funds purchased                    |                               
|FHLB borrowings                            |                               
|                                           |                               
|Total interest-bearing liabilities         |                               
|                                           |                               
|Non-interest bearing liabilities           |                               
|Shareholders equity                       |                               
|                                           |                               
|Total liabilities and shareholders equity |                               
|                                           |                               
|Net interest spread                        |                               
|                                           |                               
|Net interest income/margin                 |                               
|                                           |                               

(1)       
          Loan fees, which are immaterial, are included in interest income. There were no
          nonaccrual loans for either period.

Our
consolidated net interest margin for the quarter ended June 30, 2008 was 2.64%, a decrease
of 80 basis points from the net interest margin of 3.44% for the same period in 2007. The
prime interest rate was 8.25% during the three months ended June 30, 2007, while the prime
interest rate during the three-month period ended June 30, 2008 was 5.00%. With a 325
basis point difference in prime rate during the comparable periods, and with approximately
61% of our loan portfolio tied to the prime rate, we experienced an immediate decrease in
loan yields as the prime rate decreases occurred. Conversely, we relied on a higher volume
of certificates of deposit, both local and brokered, to fund the growth of our loan
portfolio. These deposits are priced higher than core deposits and have stated maturity
dates, so there is not an immediate decrease in the interest rates paid on these time
deposits. Additionally, during the quarter ended June 30, 2008, we utilized alternative
funding sources of federal funds purchased and FHLB borrowings. The net interest margin is
calculated by dividing annualized net interest income by year-to-date average earning
assets. Our net interest spread was 2.09% and 2.28% for the quarters ended June 30, 2008
and 2007, respectively. The net interest spread is the difference between the yield we
earn on our interest-earning assets and the rate we pay on our interest-bearing
liabilities. In pricing deposits, we consider our liquidity needs, the direction and
levels of interest rates and local market conditions.

Provision for Loan Losses

We
have established an allowance for loan losses through a provision for loan losses charged
as a non-cash expense to our statements of operations. We review our loan portfolio
periodically to evaluate our outstanding loans and to measure both the

12

---

performance of the portfolio and the
adequacy of the allowance for loan losses. Refer to the discussion below under
Allowance for Loan Losses for a description of the factors we consider in
determining the amount of the provision we expense each period in order to maintain an
appropriate allowance for loan losses.

Our
provision for loan losses for the quarter ended June 30, 2008 was $79,000 compared to
$45,621 for the quarter ended June 30, 2007. This increase of 73% was due to growth in the
loan portfolio.

Non-interest Income

Non-interest
income totaled $20,560 for the quarter ended June 30, 2008 compared to $23,515 for the
quarter ended June 30, 2007. Mortgage brokerage fees decreased $16,333, while service
charges on deposit accounts increased $13,378.

Non-interest Expenses

The
following table sets forth our non-interest expenses for the second quarter of 2008 and
2007.

|                                                      | Three Months Ended
|----------------------------------------------------- | ------------------
|
|
|Compensation and employee benefits                    |                   
|Occupancy and equipment                               |                   
|Data processing and related costs                     |                   
|Marketing, advertising and shareholder communications |                   
|Legal and audit                                       |                   
|Other professional fees                               |                   
|Supplies, postage and telephone                       |                   
|Insurance                                             |                   
|Credit related expenses                               |                   
|Courier and armored carrier service                   |                   
|Regulatory fees and FDIC insurance                    |                   
|Other                                                 |                   
|                                                      |                   
|Total non-interest expense                            |                   
|                                                      |                   

Non-interest
expenses totaled $465,997 for the quarter ended June 30, 2008 compared to $462,993 for the
quarter ended June 30, 2007, for an increase of 1%. The most significant component of
non-interest expense is compensation and benefits, which totaled $271,390 for the quarter
ended June 30, 2008, compared to $246,275 for the quarter ended June 30, 2007. The
increase primarily related to staff additions associated with the banks growth,
performance raises and increases in bank-paid employee health care and other insurance
costs. Occupancy and equipment costs decreased from $69,323 during the three months ended
June 30, 2007 to $51,293. Until May 2007, we incurred expenses for our modular facility
site preparation, as well as modular site ground lease costs and rental of the modular
facility. We moved into our headquarters building in April 2007. Partially offsetting the
modular facilities costs included the addition of real estate taxes and building
depreciation during the three months ended June 30, 2008 versus June 30, 2007. Data
processing costs increased from $43,207 for the quarter ended June 30, 2007 to $53,673 for
the quarter ended June 30, 2008. This increase was due to growth of the banks
deposit accounts as well as upgrades to the banks computer systems. Marketing,
advertising and shareholder communications expenses decreased from $36,498 during the
three months ended June 30, 2007 to $11,620 for the same period 2008. In the first half of
2007, we incurred expenses for our grand opening, including an event and promotional
giveaway items. Other professional fees increased from $7,262 for the quarter ended June
30, 2007 to $13,586 for the quarter ended June 30, 2008, due to increased external
compliance and outsourced internal audit exams. Regulatory fees and FDIC insurance
increased from $7,997 for the quarter ended June 30, 2007 to $12,341 for the quarter ended
June 30, 2008. Our FDIC insurance assessments continue to increase as deposits grow.

# Six months ended June 30, 2008 and 2007

General

Our
net loss for the six months ended June 30, 2008 was $85,434, or $0.07 per share, compared
to a net loss of $310,568, or $0.26 per share, for the six months ended June 30, 2007, for
an improvement of $225,134, or 72%. As described below, most of this improvement in net
loss is attributable to increases in our net interest income, which reflects the continued
growth of our bank and the volume increases in our loans and investment securities. Also,
we recorded $38,924 in gains on investment securities called and sold during the first
quarter of 2008. Refer to Non-interest Income for a discussion of these gains.

13

---

Net Interest Income

Net
interest income was $861,931 for the six months ended June 30, 2008, and represented an
increase of $269,153, or 45%, over net interest income of $592,778 for the same period
ended June 30, 2007. Interest income increased $791,409, or 70%, to $1,926,328 for the six
months ended June 30, 2008, due to volume increases in interest earning assets.

Average
earning assets increased to $62 million for the six months ended June 30, 2008 from $33
million for the six months ended June 30, 2007, an increase of $29 million, or 91%. Loan
interest and related fees improved $701,077, or 104%, over the same period ended 2007 due
to continued growth in the loan portfolio. Interest expense for the six months ended June
30, 2008 increased $522,256, or 96%, to $1,064,397 due to volume increases in deposits and
Federal Home Loan Bank advances.

The
following table sets forth information related to our average balance sheet, average
yields on assets, and average costs of liabilities for the six months ended June 30, 2008
and 2007. We derived these yields and rates by dividing annualized income or expense by
the average balance of the corresponding assets or liabilities. We derived average
balances from the daily balances throughout the periods indicated.

# Average Balances,
Income and Expenses, Yields and Rates

|                                           | For the Six Months Ended June 30,
|------------------------------------------ | ---------------------------------
|
|
|
|
|Interest-earning assets:                   |                                  
|Federal funds sold                         |                                  
|Investment securities and FHLB stock       |                                  
|Loans (1)                                  |                                  
|                                           |                                  
|Total interest-earning  assets             |                                  
|Non-earning assets                         |                                  
|                                           |                                  
|Total assets                               |                                  
|                                           |                                  
|Interest-bearing liabilities:              |                                  
|Interest checking                          |                                  
|Savings and money market                   |                                  
|Time deposits                              |                                  
|Federal funds purchased                    |                                  
|FHLB borrowings                            |                                  
|                                           |                                  
|Total interest-bearing liabilities         |                                  
|                                           |                                  
|Non-interest bearing liabilities           |                                  
|Shareholders' equity                       |                                  
|                                           |                                  
|Total liabilities and shareholders' equity |                                  
|                                           |                                  
|Net interest spread                        |                                  
|                                           |                                  
|Net interest income/margin                 |                                  
|                                           |                                  

(1)  Loan fees, which are immaterial, are included in interest income.  There were no nonaccrual loans for either period.

Our
consolidated net interest margin for the six months ended June 30, 2008 was 2.80%, a
decrease of 88 basis points from the net interest margin of 3.68% for the same period in
2007. The prime interest rate was 8.25% for the six months ended June 30, 2007. From
January 1 to April 30, 2008, the prime rate dropped 225 basis points, and the average
prime interest rate during the six months ended June 30, 2008 was 5.65%. With
approximately 61% of our loan portfolio tied to the prime rate, we experienced an
immediate decrease in loan yields as the prime rate decreases occurred. Conversely, we
relied on a higher volume of certificates of deposit, both local and brokered, to fund the
growth of our loan portfolio. These deposits are priced higher than core deposits and have
stated maturity dates, so there is not an immediate decrease in the interest rates paid on
these time deposits. Additionally, during the six months ended June 30, 2008, we utilized
alternative funding sources of federal funds purchased and FHLB borrowings. The net
interest margin is calculated by dividing annualized net interest income by year-to-date
average earning assets. Our net interest spread was 2.17% and 2.39% for the six months
ended June 30, 2008 and 2007, respectively. The net interest spread is the difference
between the yield we earn on our interest-earning assets and the rate we pay on our
interest-bearing liabilities. In pricing deposits, we consider our liquidity needs, the
direction and levels of interest rates and local market conditions.

Provision for Loan Losses

Our
provision for loan losses for the six months ended June 30, 2008 was $112,608, compared to
$81,621 for the same period in 2007. The allowance as a percentage of gross loans was
1.20% at June 30, 2008. Management evaluates the adequacy of the reserve for probable loan
losses given the size, mix, and quality of the current loan portfolio. Management also
relies on our limited history of past-dues and charge-offs, as well as peer data to
determine our loan loss allowance. Refer to the discussion

14

---

below under Allowance for Loan
Losses for a description of the factors we consider in determining the amount of
provision we expense each period in order to maintain an appropriate allowance for loan
losses.

Non-interest Income

Non-interest
income totaled $70,913 for the six months ended June 30, 2008, an improvement of $33,671,
or 90%, over the six months ended June 30, 2007. During the six months ended June 30,
2008, we recognized $38,924 in gains on investment securities called or sold during the
period, compared to no gains for the six months ended June 30, 2007. Three agency bonds
were called during the first quarter of 2008. In addition three other agency bonds were
sold during the first quarter of 2008 prior to April call dates. Management correctly
estimated that interest rates would drop prior to the call dates, and sold these agency
bonds in order to reinvest the proceeds in investment securities prior to the additional
interest rate decreases. One mortgage-backed security was sold as its prepayment speed had
increased and the proceeds were reinvested in a higher yielding investment grade corporate
bond.

Non-interest Expenses

The
following table sets forth our non-interest expenses for the six month periods of 2008 and
2007.

|                                                      | Six Months Ended
|----------------------------------------------------- | ----------------
|
|
|Compensation and employee benefits                    |                 
|Occupancy and equipment                               |                 
|Data processing and related costs                     |                 
|Marketing, advertising and shareholder communications |                 
|Legal and audit                                       |                 
|Other professional fees                               |                 
|Supplies, postage and telephone                       |                 
|Insurance                                             |                 
|Credit related expenses                               |                 
|Courier and armored carrier service                   |                 
|Regulatory fees and FDIC insurance                    |                 
|Other                                                 |                 
|                                                      |                 
|Total non-interest expense                            |                 
|                                                      |                 

Non-interest
expenses were $905,670 for the six months ended June 30, 2008 compared to $858,967 for the
same period ended June 30, 2007, for an increase of 5%. The most significant component of
non-interest expense is compensation and benefits, which totaled $538,909 for the six
months ended June 30, 2008, compared to $448,948 for the same period ended June 30, 2007.
The increase primarily related to staff additions associated with the banks growth,
performance raises and increases in bank-paid employee health care and other insurance
costs. Data processing costs increased from $87,476 for the six months ended June 30, 2007
to $100,599 for the same period ended June 30, 2008. This increase was due to continued
growth of the banks deposit accounts. Other professional fees decreased from $41,672
for the six months ended June 30, 2007 to $19,474 for the same period ended June 30, 2008
primarily due to a search firm fee paid in conjunction with the hiring of a senior lender
during the first quarter of 2007. Regulatory fees and FDIC insurance increased from
$12,367 for the six months ended June 30, 2007 to $23,954 for the same period ended June
30, 2008. Our FDIC insurance assessments continue to increase as deposits grow. Decreases
in marketing, advertising and shareholder communications as well as in occupancy and
equipment expenses relate to the move from our modular facility to our headquarters
building in April 2007, as described in the previous discussion of Non-interest
Expenses.

# Balance Sheet Review

General

At
June 30, 2008, total assets were $73.1 million compared to $58.6 million at December 31,
2007, for an increase of $14.5 million, or 25%. The increase in assets resulted from
volume increases in our loan and investment portfolios and related increases in our
funding sources of deposits and other borrowings. Interest-earning assets comprised
approximately 95% and 93% of total assets at June 30, 2008 and December 31, 2007,
respectively. Gross loans totaled $46.6 million, an increase of $10.4 million, or 29%,
from $36.2 million at December 31, 2007. Investment securities and Federal Home Loan Bank
stock amounted to $21.9 million at June 30, 2008. At June 30, 2008, we were in a federal
funds sold position of $1,078,000.

Deposits
totaled $55.8 million at June 30, 2008, an $11.7 million, or 27%, increase from $44.1
million at December 31, 2007. There were no federal funds purchased at June 30, 2008
compared to $1.6 million at December 31, 2007. Federal Home

15

---

Loan Bank borrowings were $7.9
million at June 30, 2008 compared to $2.4 million at December 31, 2007, for an increase of
$5.4 million, or 222%. Shareholders equity totaled $9.0 million at June 30, 2008, a
$0.7 million, or 7%, decrease from $9.7 million at December 31, 2007.

Investments

On
June 30, 2008 and December 31, 2007, our investment securities portfolio amounted to $21.5
million and $18.5 million and represented 31% and 34%, respectively, of interest-earning
assets. Unrealized losses on available for sale investment securities amounted to $557,674
at June 30, 2008 compared to unrealized gains of $57,834 at December 31, 2007, due to
changes in market interest rates as discussed below. Our portfolio consisted of U.S.
government sponsored agencies of $5.1 million, mortgage-backed agencies of $11.9 million,
taxable municipal securities of $0.9 million and corporate bonds of $3.6 million. All of
our investment securities are classified as available for sale.

The amortized costs and the fair
value of our investment securities are shown in the following table.

|                                   | June 30, 2008 | December 31, 2007
|---------------------------------- | ------------- | -----------------
|
|
|
|
|U.S. Government sponsored agencies |               |                  
|Mortgage-backed agencies           |               |                  
|Taxable municipal securities       |               |                  
|Corporate bonds                    |               |                  
|                                   |               |                  
|Total                              |               |                  
|                                   |               |                  

During
the six month period of 2008, three agency bonds were called and three bonds were sold
prior to call dates in anticipation of additional interest rate decreases. The proceeds of
these calls and sales were reinvested in agency mortgage-backed securities and investment
grade corporate bonds.

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

Investment
securities with market values of approximately $12.4 million and $5.9 million at June 30,
2008 and December 31, 2007, respectively, were pledged to secure public deposits and
Federal Home Loan Bank borrowings.

At
June 30, 2008 and December 31, 2007, we held non-marketable equity securities, which
consisted of Federal Home Loan Bank stock of $458,900 and $183,000, respectively. Federal
Home Loan Bank stock purchases are required as the level of Federal Home Loan Bank
advances increase. Federal Home Loan Bank stock increased during the six-month period
ended June 30, 2008, to reflect the net increase of $5.4 million in Federal Home Loan Bank
advances during the six-month period. No ready market exists for this stock and it has no
quoted market value. Redemptions of this stock have historically been at par value.
Accordingly, this investment is carried at cost, which approximates fair market value.
This stock pays a quarterly dividend, which is currently 5.75%.

Loans

Since
loans typically provide higher interest yields than other interest-earning assets, it is
our goal to ensure that the highest percentage of our earning assets is invested in our
loan portfolio. Gross loans outstanding at June 30, 2008 and December 31, 2007 were $46.6
million and $36.2 million, respectively. Gross loans represented 67% and 66% of
interest-earning assets for June 30, 2008 and December 31, 2007, respectively.

Although
the loan portfolio grew $10.4 million during six month period of 2008, the percentage of
loans in each category remained relatively stable from December 31, 2007 to March 31,
2008, as shown in the table below. Loans secured by real estate mortgages comprised
approximately 79% of loans outstanding at June 30, 2008 and 78% at December 31, 2007. Most
of our real estate loans are secured by residential and commercial properties. We do not
generally originate traditional long-term residential mortgages, but we do issue
traditional second mortgage residential real estate loans and home equity lines of credit.
We obtain a security interest in real estate whenever possible, in addition to any other
available collateral. This collateral is taken to increase the likelihood of the ultimate
repayment of the loan. Generally, we limit the loan-to-value ratio on loans we make to
80%.

16

---

Due
to the short time our portfolio has existed, the loan mix shown below may not be
indicative of the ongoing portfolio mix. We attempt to maintain a relatively diversified
loan portfolio to help reduce the risk inherent in concentration of certain types of
collateral.

The
following table summarizes the composition of our loan portfolio at June 30, 2008 and
December 31, 2007.

|                                      | June 30, 2008 | December 31, 2007
|------------------------------------- | ------------- | -----------------
|
|
|Real Estate:                          |               |                  
|Construction and development and land |               |                  
|Commercial                            |               |                  
|Residential mortgages                 |               |                  
|Home equity lines                     |               |                  
|                                      |               |                  
|Total real estate                     |               |                  
|                                      |               |                  
|Commercial                            |               |                  
|Consumer                              |               |                  
|Deferred origination fees, net        |               |                  
|                                      |               |                  
|Gross loans                           |               |                  
|                                      |               |                  
|Less allowance for loan losses        |               |                  
|                                      |               |                  
|Total loans, net                      |               |                  
|                                      |               |                  

Commercial real estate loans and construction and development loans generally entail additional risks as these loans
typically involve larger balances to single borrowers or groups of related borrowers.  The repayment of these loans is
typically dependent upon the successful operation of the real estate project.  These risks can be significantly affected by
supply and demand in the market, and, as such, may be subject to a greater extent to adverse conditions in the economy.  In
dealing with these risk factors, we generally limit our loans to our local real estate market or to borrowers with which we
have experience.  Refer to the additional information regarding risks associated with commercial real estate and construction
and development lending under the heading "Risk Factors" in our annual report on Form 10-KSB for the year ended December 31,
2007.

Allowance for Loan Losses

We have established an allowance for loan losses through a provision for loan losses charged to expense on our
consolidated statements of operations. The allowance for loan losses was $558,792 and $446,184 as of June 30, 2008 and
December 31, 2007, respectively, and represented 1.20% of outstanding loans at June 30, 2008 and 1.23% as of December 31,
2007. The allowance for loan losses represents an amount which we believe will be adequate to absorb probable losses on
existing loans that may become uncollectible. Our allowance for loan losses covers estimated credit losses on individually
evaluated loans that are determined to be impaired, as well as estimated credit losses inherent in the remainder of the loan
portfolio. Our judgment as to the adequacy of the allowance for loan losses is based on a number of assumptions about future
events, which we believe to be reasonable, but which may or may not prove to be accurate. We believe we have an effective loan
review system and loan grading system that is designed to identify, monitor and address asset quality problems in an accurate
and timely manner.  Our determination of the allowance for loan losses is based on evaluations of the collectibility of loans,
including consideration of factors such as the balance of impaired loans, the quality, mix, and size of our overall loan
portfolio, economic conditions that may affect the borrower's ability to repay, the amount and quality of collateral securing
the loans, our historical loan loss experience, and a review of specific problem loans. We also consider subjective issues
such as changes in the lending policies and procedures, changes in the local/national economy, changes in volume or type of
credits, changes in volume/severity of problem loans, quality of loan review and board of director oversight, concentrations
of credit, and peer group comparisons. Due to our limited operating history, to date the provision for loan losses has been
made primarily as a result of our assessment of general loan loss risk compared to banks of similar size and maturity.

Due to our short operating history, the loans in our loan portfolio and our lending relationships are of very recent
origin. In general, loans do not begin to show signs of credit deterioration or default until they have been outstanding for
some period of time, a process known as seasoning. As a result, a portfolio of older loans will usually behave more
predictably than a newer portfolio. Because our loan portfolio is new, the current level of delinquencies and defaults may not
be representative of the level that will prevail when the portfolio becomes more seasoned, which may be higher than current
levels. If delinquencies and defaults increase, we may be required to increase our provision for loan losses, which would
adversely affect our results of

17

---

operations and financial condition. Periodically, we will adjust the amount of the allowance based on changing circumstances. We charge recognized losses to the allowance and add subsequent recoveries back to the
allowance for loan losses. There can be no assurance that charge-offs of loans in future periods will not exceed the allowance
for loan losses as estimated at any point in time or that provisions for loan losses will not be significant to a particular
accounting period.

In calculating the allowance for loan losses, we utilize a credit grading system, which we apply to each loan.  We
calculate our general reserve based on historical and peer loss percentage allocations of each of the categories of
unclassified loan types, including commercial, commercial real estate, construction and development, residential mortgages,
home equity lines of credit and consumer loans.  The loss factors are adjusted for qualitative factors, including those
described above. We also analyze individual significant credits not considered impaired and maintain a general unallocated
reserve in accordance with December 2006 regulatory guidance in our assessment of the allowance for loan losses.  Significant
individual credits criticized as special mention or classified as substandard or doubtful require individual analysis.  Loans
in the substandard category are characterized by deterioration in quality exhibited by any number of well-defined weaknesses
requiring corrective action such as declining or negative earnings trends and declining or inadequate liquidity or
collateral.  Loans in the doubtful category exhibit the same weaknesses found in the substandard category, but the weaknesses
are more pronounced.  These loans are not yet rated as loss because certain events may occur which could repay the debt.  At
June 30, 2008 and December 31, 2007, we had no loans in the substandard or doubtful categories.

We have retained an independent consultant to review our loan files on a test basis to assess the grading of samples
of loans.  In addition, various regulatory agencies review our allowance for loan losses through their periodic examinations,
and they may require us to record additions to the allowance for loan losses based on their judgment about information made
available to them at the time of their examination.  Our losses will undoubtedly vary from our estimates, and there is the
possibility that charge-offs in future periods will exceed the allowance for loan losses as estimated at any point in time.

There were no charge-offs during the three month and six month periods ended June 30, 2008 and 2007. The only
addition to the allowance for loan losses for both periods was the accrual of the loan loss provision. There were no
nonaccrual or nonperforming loans at June 30, 2008 and December 31, 2007, and no accruing loans which were contractually past
due 90 days or more as to principal or interest payments. Generally, a loan will be placed on nonaccrual status when it
becomes 90 days past due as to principal or interest, or when management believes, after considering economic and business
conditions and collection efforts, that the borrower's financial condition is such that collection of the loan is doubtful. A
payment of interest on a loan that is classified as nonaccrual will be recognized as income when received.

At June 30, 2008 and December 31, 2007, we were not aware of any potential problem loans, nor any loans considered
impaired.

Deposits

Our primary source of funds for our loans and investments is our deposits.  Deposits increased $11.7 million, from
$44.1 million at December 31, 2007 to $55.8 million at June 30, 2008.  The following table shows the composition of deposits at
June 30, 2008 and December 31, 2007.

|                                           | June 30, 2008 | December 31, 2007
|------------------------------------------ | ------------- | -----------------
|
|
|
|Non-interest bearing demand deposits       |               |                  
|Interest bearing checking                  |               |                  
|Money market and savings                   |               |                  
|Time deposits less than $100,000           |               |                  
|Time deposits $100,000 and over            |               |                  
|Brokered time deposits, less than $100,000 |               |                  
|                                           |               |                  
|Total                                      |               |                  
|                                           |               |                  

Core
deposits, which exclude time deposits of $100,000 or more and brokered certificates of
deposit, provide a relatively stable funding source for our loan portfolio and other
earning assets. Our core deposits were $27.0 million and $20.4 million at June 30, 2008
and December 31, 2007, respectively. Core deposit growth of $6.6 million during the period
included growth of $6.5 million in our money market accounts. Our loan-to-deposit ratio
was 84% and 82% at June 30, 2008 and December 31, 2007, respectively. Due to the
competitive interest rate environment in our market, we utilized brokered certificates of
deposit as a funding source in the six months ended June 30, 2008 when we were able to
procure these certificates at interest rates less than

18

---

those in the local market.  Brokered certificates of deposit purchased outside our
primary market totaled $17.5 million and $12.2 million at June 30, 2008 and December 31, 2007, respectively. All of our time
deposits are certificates of deposits.

The
maturity distribution of our time deposits of $100,000 or more and our brokered time
deposits as of June 30, 2008 was as follows:

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

Borrowings and lines of
credit

At
June 30, 2008, the bank had short-term lines of credit with correspondent banks to
purchase a maximum of $5.8 million in unsecured federal funds on a one to fourteen day
basis for general corporate purposes. The interest rate on borrowings under these lines is
the prevailing market rate for federal funds purchased. These accommodation lines of
credit are renewable annually and may be terminated at any time at the correspondent
banks sole discretion. The Bank utilized these lines of credit during the six months
ended June 30, 2008. The average amount outstanding during the six months ended June 30,
2008 was $601,000. The highest month-end amount outstanding during the six months was $2.2
million and the average interest rate paid on these borrowings was 3.49%. The average
amount outstanding during the year ended December 31, 2007 was $1.6 million and the
highest month-end amount outstanding during 2007 was $2.7 million. The average interest
rate paid on these borrowings during the year was 4.50%. There were no outstanding amounts
on these lines of credit as of June 30, 2008 and $1,648,000 was outstanding at December
31, 2007.

We
are also a member of the Federal Home Loan Bank. At June 30, 2008 and December 31, 2007,
we had $7.9 million and $2.4 million outstanding, respectively, in Federal Home Loan Bank
borrowings. At June 30, 2008, we had available credit with the Federal Home Loan Bank of
$5.2 million. These borrowings were used to fund loans and purchase investment securities,
and were utilized as the interest rates charged on these advances were less than those we
paid for brokered certificates of deposit during the timeframe. The average amount
outstanding during the six months ended June 30, 2008 was $5.2 million and the maximum
balance outstanding during the period was $7.9 million at an average interest rate of
3.14%. The maximum balance outstanding during the year ended December 31, 2007 was $2.4
million at an interest rate of 3.64%.

# Capital Resources

Total
shareholders equity decreased $672,913 from $9.68 million at December 31, 2007 to
$9.01 million at June 30, 2008. Common stock increased $28,029 due to stock options
compensation expense accrued during the six months ended June 30, 2008. We incurred a
gross unrealized loss of $615,508 on investment securities available for sale, which
decreased shareholders equity during the six month period. Our net loss of $85,434
for the six months ended June 30, 2008 contributed to the net decrease in
shareholders equity during the six month period.

The
Federal Reserve and bank regulatory agencies require bank holding companies and financial
institutions to maintain capital at adequate levels based on a percentage of assets and
off-balance sheet exposures, adjusted for risk weights ranging from 0% to 100%. The
Federal Reserve guidelines contain an exemption from the capital requirements for
small bank holding companies, which in 2006 were amended to cover most bank
holding companies with less than $500 million in total assets that do not have a material
amount of debt or equity securities outstanding registered with the SEC. Although we file
periodic reports with the SEC, we believe that because our stock is not registered under
Section 12 of the Securities Exchange Act and is not listed on any exchange or otherwise
actively traded, the Federal Reserve Board will interpret its new guidelines to mean that
we qualify as a small bank holding company. Nevertheless, our Bank remains subject to
these capital requirements. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Banks financial statements.
Under capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Bank must meet specific capital guidelines that involve quantitative measures
of the Banks assets, liabilities and certain off-balance sheet items as calculated
under regulatory accounting practices. The Banks capital amounts and classifications
are also subject to qualitative judgments by the regulators about components, risk
weightings, and other factors. Regardless, our Bank is well capitalized under
these minimum capital requirements as set per bank regulatory agencies.

Under
the capital adequacy guidelines, regulatory capital is classified into two tiers. These
guidelines require an institution to maintain a certain level of Tier 1 and Tier 2 capital
to risk-weighted assets. Tier 1 capital consists of common

19

---

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

At
the bank level, we are subject to various regulatory capital requirements administered by
the federal banking agencies. To be considered adequately capitalized under
these capital guidelines, we must maintain a minimum total risk-based capital of 8%, with
at least 4% being Tier 1 capital. In addition, we must maintain a minimum Tier 1 leverage
ratio of at least 4%. To be considered well-capitalized, we must maintain
total risk-based capital of at least 10%, Tier 1 capital of at least 6%, and a leverage
ratio of at least 5%.

The
following tables set forth the Banks capital ratios at June 30, 2008 and December
31, 2007.

|                          |  |  | Well capitalized | Adequately capitalized
|------------------------- |  |  | ---------------- | ----------------------
|
|
|($ in thousands)          |  |  |                  |                       
|Total risk-based capital  |  |  | $                | 10,087                
|Tier 1 risk-based capital |  |  |                  | 9,528                 
|Leverage capital          |  |  |                  | 9,528                 

|                          |  |  | Well capitalized | Adequately capitalized
|------------------------- |  |  | ---------------- | ----------------------
|
|
|($ in thousands)          |  |  |                  |                       
|Total risk-based capital  |  |  | $                | 10,031                
|Tier 1 risk-based capital |  |  |                  | 9,585                 
|Leverage capital          |  |  |                  | 9,585                 

We
believe that our capital is sufficient to fund the activities of the bank in its initial
stages of operation and that the rate of asset growth will not negatively impact the
capital base. We have no plans for significant capital expenditures for the remainder of
2008.

# Effect of Inflation and
Changing Prices

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

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

# Off-Balance Sheet Risk

Through
the bank, we have made contractual commitments to extend credit in the ordinary course of
its business activities. These commitments are legally binding agreements to lend money to
our clients at predetermined interest rates for a specified period of time. We evaluate
each clients creditworthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by us upon extension of credit, is based on our credit
evaluation of the borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, commercial and residential real estate. We
manage the credit risk on these commitments by subjecting them to normal underwriting and
risk management processes. At June 30, 2008, the bank had issued commitments to extend
credit of $5.8 million through various types of lending arrangements.

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

20

---

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

# Liquidity

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

At
June 30, 2008, our liquid assets, consisting of cash and due from banks and federal funds
sold, amounted to $1,728,628, or approximately 2.37% of total assets. Our investment
securities available for sale amounted to $21.5 million or approximately 29% of total
assets. Unpledged investment securities traditionally provide a secondary source of
liquidity since they can be converted into cash in a timely manner. At June 30, 2008,
$12.4 million of our investment securities were pledged to secure public entity deposits
and as collateral for Federal Home Loan Bank borrowings.

Our
ability to maintain and expand our deposit base and borrowing capabilities serves as our
primary source of liquidity. We plan to meet our future cash needs through the liquidation
of temporary investments and the generation of deposits. In addition, we will receive cash
upon the maturities and sales of loans and maturities, calls and prepayments on investment
securities. We maintain federal funds purchased lines of credit with correspondent banks
totaling $5.8 million. Availability on these lines of credit was $5.8 million at June 30,
2008. We are a member of the Federal Home Loan Bank, from which applications for
borrowings can be made. The Federal Home Loan Bank requires that investment securities or
qualifying mortgage loans be pledged to secure advances from them. We are also required to
purchase Federal Home Loan Bank stock in a percentage of each advance. There was $5.2
million unused borrowing capacity available from the Federal Home Loan Bank at June 30,
2008. Federal Home Loan Bank borrowing capacity increases as our quarterly total assets
increase and as long as we have sufficient collateral to pledge toward these advances. We
believe that our existing stable base of core deposits along with continued growth in our
deposit base will enable us to successfully meet our long term liquidity needs.

# Market Risk

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

We
actively monitor and manage our interest rate risk exposure principally by measuring our
interest sensitivity gap, which is the positive or negative dollar difference
between assets and liabilities that are subject to interest rate repricing within a given
period of time. Interest rate sensitivity can be managed by repricing assets or
liabilities, selling securities available for sale, replacing an asset or liability at
maturity, or adjusting the interest rate during the life of an asset or liability.
Managing the amount of assets and liabilities repricing in this same time interval helps
to hedge the risk and minimize the impact on net interest income of rising or falling
interest rates. We generally would benefit from increasing market rates of interest when
we have an asset-sensitive gap position and generally would benefit from decreasing market
rates of interest when we are liability-sensitive. The analysis presents only a static
view of the timing of maturities and repricing opportunities, without taking into
consideration that changes in interest rates do not affect all assets and liabilities
equally. For example, rates paid on a substantial portion of core deposits may change
contractually within a relatively short time frame, but those rates are viewed by us as
significantly less interest-sensitive than market-based rates such as those paid on
noncore deposits. Net interest income may be affected by other significant factors in a
given interest rate environment, including changes in the volume and mix of
interest-earning assets and interest-bearing liabilities.

At
June 30, 2008 and December 31, 2007, we were asset-sensitive over a one-year timeframe.

# Recently Issued
Accounting Standards

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

In
May, 2008, the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standard (SFAS) No. 162, The Hierarchy of Generally
Accepted Accounting Principles, (SFAS No. 162). SFAS No. 162 identifies
the sources of accounting principles and the framework for selecting the principles used
in the preparation of financial statements

21

---

of nongovernmental entities that are
presented in conformity with generally accepted accounting principles (GAAP) in the United
States (the GAAP hierarchy). SFAS No. 162 will be effective 60 days following the
SECs approval of the Public Company Accounting Oversight Boards amendments to
AU Section 411, The Meaning of Present Fairly in Conformity With Generally Accepted
Accounting Principles. The application of the Statement will have no effect on the
Companys financial position, results of operations or cash flows.

The
FASB issued FASB Staff Position No. APB 14-1, Accounting for Convertible Debt
Instruments That May Be Settled in Cash upon Conversion (Including Partial Cash
Settlement), (FSP No. APB 14-1). The Staff Position specifies that
issuers of convertible debt instruments that may be settled in cash upon conversion should
separately account for the liability and equity components in a manner that will reflect
the entitys nonconvertible debt borrowing rate when interest cost is recognized in
subsequent periods. FSP No. APB 14-1 provides guidance for initial and subsequent
measurement as well as derecognition provisions. The Staff Position is effective for
financial statements issued for fiscal years beginning after December 15, 2008, and
interim periods within those fiscal years. Early adoption is not permitted. The adoption
of the Staff Position will have no material effect on the Companys financial
position, results of operations or cash flows.

In
June, 2008, the FASB issued FASB Staff Position No. EITF 03-6-1, Determining Whether
Instruments Granted in Share-Based Payment Transactions are Participating
Securities, (FSP EITF 03-6-1). The Staff Position provides that unvested
share-based payment awards that contain nonforfeitable rights to dividends or dividend
equivalents are participating securities and must be included in the earnings per share
computation. FSP EITF 03-6-1 is effective for financial statements issued for fiscal years
beginning after December 15, 2008, and interim periods within those years. All
prior-period earnings per share data presented must be adjusted retrospectively. Early
application is not permitted. The adoption of the Staff Position will have no material
effect on the Companys financial position, results of operations or cash flows.

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

# Item 3.   Quantitative and
Qualitative Disclosures About Market Risk.

Not applicable.

# Item 4.   Controls and
Procedures.

As
of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our current
disclosure controls and procedures are effective as of June 30, 2008. There have been no
significant changes in our internal controls over financial reporting during the fiscal
quarter ended June 30, 2008 that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.

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

22

---

# PART II  OTHER
INFORMATION

# Item 1.   Legal Proceedings.

There are no material pending legal
proceedings to which we are a party or of which any of our property is the subject.

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

Not applicable.

# Item 3.   Default
Upon Senior Securities.

Not applicable.

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

Our board of directors submitted two
matters to a vote of our security holders during the three months ended June 30, 2008 at
our annual meeting of shareholders held on April 24, 2008.

Our board of directors is divided
into three classes with each class to be as nearly equal in number as possible. The three
classes of directors have staggered terms, so that the terms of approximately one-third of
the board members expire at each annual shareholders meeting. The current Class I
directors are Jeffrey L. Dezen, Roger H. Gower and Frank B. Halter, Jr. The current Class
II directors are R. Bruce Harman, Arthur L. Howson, Jr., Paula S. King and J. Matthew
Shouse. The current Class III directors are Jonathan T. McClure, David A. Merline, Jr.,
William H. Pelham and Russel T. Williams.

The previous terms of the Class III
directors expired at the 2008 annual shareholders meeting. Each of the four current Class
III directors was nominated for election and stood for re-election to a three-year term
expiring at the 2011 annual shareholder meeting. Each of the four Class III directors was
re-elected with voting results as follows: Mr. McClure had 1,058,284 votes in favor of his
re-election and 1,900 votes withheld. Mr. Merline had 1,058,284 votes in favor of his
re-election and 1,900 votes withheld. Mr. Pelham had 1,058,284 votes in favor of his
re-election and 1,900 votes withheld. Mr. Williams had 1,058,284 votes in favor of his
re-election and 1,900 votes withheld.

J. Matthew Shouse was nominated for election as a Class II director for a two-year
          term expiring at the 2010 annual shareholder meeting. Mr. Shouse was elected and
          had 1,055,284 votes in favor of his election and 4,900 votes withheld.

The terms of the Class I directors
will expire at the 2009 annual shareholders meeting, and the terms of the Class II
directors will expire at the 2010 annual shareholders meeting.

The ratification of the appointment
of Elliott Davis, LLC as our independent registered public accounting firm for the year
ending December 31, 2008 was submitted to a vote of our security holders at our 2008
annual shareholders meeting with voting results as follows: 1,050,751 votes in favor,
5,933 votes against, and 3,500 votes abstained.

There were no other matters voted on
by the companys shareholders at our 2008 annual shareholder meeting.

# Item 5.   Other Information.

Not applicable.

# Item 6.   Exhibits

31.1        Rule 13a-14(a) Certification of the Chief Executive Officer.

31.2         Rule 13a-14(a) Certification of the Chief Financial Officer.

32           
Section 1350 Certifications.

23

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# SIGNATURES

Pursuant to the requirements of the
Securities Exchange Act of 1934, the registrant caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.

| |  | BANKGREENVILLE FINANCIAL CORPORATION
| |  | ------------------------------------
| |  | (Registrant)                        

|                       |  |                                                               
|---------------------- |  | --------------------------------------------------------------
|                       |  |                                                               
|Date:  August 11, 2008 |  | By:   /s/  Russel T. Williams                                 
|                       |  | Russel T. Williams                                            
|                       |  | Chief Executive Officer
         (Principal Executive Officer)

|                       |  |                                                               
|---------------------- |  | --------------------------------------------------------------
|                       |  |                                                               
|Date:  August 11, 2008 |  | By:   /s/  Paula S. King                                      
|                       |  | Paula S. King                                                 
|                       |  | Chief Financial Officer
         (Principal Financial Officer)

24

---

# BANKGREENVILLE
FINANCIAL CORPORATION

# EXHIBIT INDEX

ExhibitNumber
              Description

31.1         Rule 13a-14(a) Certification of the Chief Executive Officer.

31.2         Rule 13a-14(a) Certification of the Chief Financial Officer.

32           
Section 1350 Certifications.

25