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

# FORM 10-QSB

(Mark One)

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

| | For the Quarterly Period Ended March 31, 2006
| | ---------------------------------------------

| | 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)

______________________________

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

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

State
the number of shares outstanding of each of the issuers classes of common equity, as
of the latest practicable date: 1,180,000 shares of common stock, no par value, outstanding as of May 12, 2006.

Transitional Small Business Disclosure Format (check one)
  Yes          No

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Table of Contents

Part I

---

Financial InformationItem
1. Financial Statements Item 2. Management s
Discussion and Analysis or Plan of OperationItem 3. Controls and Procedures

Part II

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Other InformationItem
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
15d-14(a) Certification of the Principal Executive Officer

Exhibit 31.2 Rule 15d-14(a)
Certification the of Principal Financial Officer

Exhibit 32 Section
1350 Certifications

---

# BankGreenville
Financial Corporation

# Part I  Financial
InformationItem
1.   Financial Statements

# Consolidated Balance
Sheets

|                                                       | March 31, 2006 | December 31, 2005
|------------------------------------------------------ | -------------- | -----------------
|
|
|
|Assets                                                 |                |                  
|Cash and due from banks                                |                |                  
|Federal funds sold                                     |                |                  
|                                                       |                |                  
|Total cash and cash equivalents                        |                |                  
|Investment securities available for sa                 |                |                  
|Loans, net                                             |                |                  
|Land and land improvements                             |                |                  
|Equipment, net                                         |                |                  
|Deposits on bank equipment and computer systems        |                |                  
|Building construction-in-progress                      |                |                  
|Earnest money deposit on land                          |                |                  
|Other assets                                           |                |                  
|                                                       |                |                  
|Total assets                                           |                |                  
|                                                       |                |                  
|Liabilities and Shareholders' Equity                   |                |                  
|Liabilities                                            |                |                  
|Deposits                                               |                |                  
|Non-interest bearing                                   |                |                  
|Interest bearing                                       |                |                  
|                                                       |                |                  
|Total deposits                                         |                |                  
|Accounts payable and accrued liabilities               |                |                  
|                                                       |                |                  
|Total liabilities                                      |                |                  
|Commitments and contingencies                          |                |                  
|                                                       |                |                  
|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 |                |                  
|March 31, 2006 and December 31, 2005, respectively     |                |                  
|Accumulated other comprehensive loss                   |                |                  
|Retained deficit                                       |                |                  
|                                                       |                |                  
|Total shareholders' equity                             |                |                  
|                                                       |                |                  
|Total liabilities and shareholders' equity             |                |                  
|                                                       |                |                  

The
accompanying notes are an integral part of these financial statements. 2

---

# BankGreenville
Financial Corporation

# Consolidated Statement
of OperationsFor the three months ended March 31, 2006
(Unaudited)

|                                                             | 
|------------------------------------------------------------ | 
|Interest income                                              | 
|Loans                                                        | 
|Investment securities                                        | 
|Federal funds sold                                           | 
|                                                             | 
|Total interest income                                        | 
|Interest expense on deposits                                 | 
|                                                             | 
|Net interest income                                          | 
|Provision for loan loss                                      | 
|                                                             | 
|Net interest income after provision for loan losses          | 
|                                                             | 
|Noninterest income                                           | 
|                                                             | 
|Noninterest expense                                          | 
|Compensation and employee benefits                           | 
|Occupancy and equipment                                      | 
|Data processing                                              | 
|Marketing, advertising and shareholder relations             | 
|Legal and audit                                              | 
|Supplies, printing and telephone                             | 
|Other                                                        | 
|                                                             | 
|Total noninterest expense                                    | 
|                                                             | 
|Loss before income tax benefit                               | 
|                                                             | 
|Income tax benefit                                           | 
|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.3

---

# BankGreenville
Financial Corporation

# Consolidated Statement
of Changes in Shareholders Equity For the three months ended March 31, 2006
(Unaudited)

|                                |  |  | Accumulated |           | 
|------------------------------- |  |  | ----------- | --------- | 
|
|
|
|Balance, December 31, 2005      |  |  |             | 1,180,000 | 
|                                |  |  |             |           | 
|Adjustment of 2005 accrued      |  | 
|offering expenses to actual     |  |  |             | -         | 
|Net loss for the three months   |  | 
|ended March 31, 2006            |  |  |             |           | 
|Unrealized losses on investment |  | 
|securities available for sale,  |  | 
|no tax effect                   |  |  |             | -         | 
|                                |  |  |             |           | 
|Total comprehensive loss        |  |  |             | -         | 
|                                |  |  |             |           | 
|Balance, March 31, 2006         |  |  |             | 1,180,000 | 
|                                |  |  |             |           | 

The
accompanying notes are an integral part of these financial statements.4

---

# BankGreenville
Financial CorporationConsolidated Statement
of Cash Flows For the Three Months Ended March 31, 2006(Unaudited)

|                                                                       | 
|---------------------------------------------------------------------- | 
|Cash flows from operating activities                                   | 
|Net loss                                                               | 
|Adjustments to reconcile net loss to cash used by operating activities | 
|Provision for loan loss                                                | 
|Depreciation                                                           | 
|Net accretion of discounts on investment securities                    | 
|Other assets                                                           | 
|Accounts payable and accrued liabilities                               | 
|                                                                       | 
|Net cash used by operating activities                                  | 
|                                                                       | 
|Cash flows from investing activities                                   | 
|Purchases of investment securities available for sale                  | 
|Net increase in loans                                                  | 
|Purchases of land, equipment and construction-in-progress              | 
|                                                                       | 
|Cash used by investing activities                                      | 
|                                                                       | 
|Cash flows from financing activities                                   | 
|Net increase in deposits                                               | 
|Net increase in common stock due to adjustment of offering costs       | 
|                                                                       | 
|Cash provided by financing activities                                  | 
|                                                                       | 
|Net decrease in cash and cash equivalents                              | 
|                                                                       | 
|Cash and cash equivalents, beginning of period                         | 
|                                                                       | 
|Cash and cash equivalents, end of period                               | 
|                                                                       | 
|Supplemental disclosure for non-cash investing activity:               | 
|Unrealized loss on securities available for sale, no income tax        | 
|effect                                                                 | 
|                                                                       | 

The
accompanying notes are an integral part of these financial statements.5

---

# BankGreenville
Financial Corporation Notes to Unaudited
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 bank under the laws of South Carolina,
organized to conduct general banking business. From our inception on March 18, 2005
through January 29, 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. We received approvals from the FDIC, Federal
Reserve and the State Board of Financial Institutions in January 2006 and opened for
business on January 30, 2006. 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.

# 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-QSB. 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. Operating results for the
three-month period ended March 31, 2006 are not necessarily indicative of the results that
may be expected for the year ending December 31, 2006. 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, 2005 as filed with the Securities
and Exchange Commission.

Until the Bank opened for business on
January 30, 2006, we were accounted for as a development stage enterprise as defined by
Statement of Financial Accounting Standards No. 7, Accounting and Reporting by
Development Stage Enterprises, as we devoted substantially all of our efforts to
establishing a new business, and thus, comparison of the quarter ended March 31, 2006 to
March 31, 2005 is not meaningful. When the Bank opened, certain reclassifications and
adjustments were made to the financial statements to reflect that the Company is now
accounted for as an operating company.

The accounting and reporting policies
conform to accounting principles generally accepted in the United States of America and to
general practices in the banking industry. The Company uses the accrual basis of
accounting. During the period of organization from March 18, 2005 (inception) until May
19, 2005, the Company operated as NGCB, Inc. All activity and agreements of NGCB, Inc.
were assigned to the Company at the time of the filing of an amendment to change the name
of the entity.

# NOTE 2  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
 The consolidated financial statements include the accounts of BankGreenville
Financial Corporation, the parent company, and BankGreenville, its wholly owned
subsidiary. All significant intercompany items have been eliminated in the consolidated
financial statements.

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

Material estimates that are
particularly susceptible to significant change relate to the determination of the
allowance for losses on loans, including valuation allowances for impaired loans, and the
valuation of real estate acquired in connection with foreclosures or in satisfaction of
loans. In connection with the determination of the allowances for losses on loans and
valuation of foreclosed real estate, management obtains independent appraisals for
significant properties. Management must also make estimates in determining the estimated
useful lives and methods for depreciating premises and equipment.

6

---

# BankGreenville
Financial Corporation

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

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

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,
or 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. At Match 31, 2006, the Companys
investments were classified available for sale. The amortization of premiums and accretion
of discounts on investment securities are recorded as adjustments to interest income.
Gains or losses on sales of investment securities are based on the net proceeds and the
adjusted carrying amount of the securities sold, using the specific identification method.
Unrealized losses on securities, reflecting a decline in value or impairment judged by the
Company to be other than temporary, are charged to earnings in the consolidated statements
of income.

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

When serious doubt exists as to the
collection of a loan or when a loan becomes contractually 90 days past due as to principal
or interest, interest income is generally discontinued unless the estimated net realizable
value of collateral exceeds the principal balance and accrued interest. When interest
accruals are discontinued, income earned but not collected is reversed.

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

Allowance for Loan Losses
 An allowance for loan losses is maintained at a level deemed appropriate by
management to provide adequately for known and inherent losses in the loan portfolio.
Management evaluates current and future economic conditions which may affect
borrowers ability to pay and the underlying collateral value of the loans in
determining the estimate of the allowance for loan losses. Loans which are deemed to be
uncollectible are charged off and deducted from the allowance. The provision for loan
losses and recoveries of loans previously charged off are added to the allowance.

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

7

---

# BankGreenville
Financial Corporation

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

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

Organization costs The
Company has incurred organization costs, which include incorporation, registration and
legal fees associated with establishment of the Company. In accordance with Statement of
Position (SOP) 98-5, Reporting on the Costs of Start-Up Activities,
organization costs are expensed when incurred.

Income Taxes  Income
taxes are provided for the tax effects of transactions reported in the financial
statements and consist of taxes currently due plus deferred taxes related primarily to
differences between the financial reporting and income tax bases of assets and
liabilities. At March 31, 2006, no taxable income has been generated and therefore, no tax
provision has been included in these financial statements. The deferred tax asset related
to the future benefit from operating loss carry-forwards for income tax purposes has been
offset by a valuation allowance as it is not more than likely that such losses will be
used.

Loss Per Share  Basic
loss per share represents income available to shareholders divided by the weighted-average
number of common shares outstanding during the period. Dilutive loss per share reflects
additional common shares that would have been outstanding if dilutive potential common
shares had been issued. 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. Due to the net loss, the outstanding warrants and options are not considered
common stock equivalents and therefore, dilutive loss per share is not presented.

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, immediately vested upon
completion of the offering. In addition, the Company has adopted a stock option plan.
99,400 options to purchase common stock at $10.00 per share were granted on February 14,
2006 and our qualified stock option plan was approved by a majority of our shareholders at
our annual meeting on April 20, 2006. The options vest over a five year period from the
date of grant. On January 1, 2006, the Company adopted the fair value recognition
provisions of Financial Accounting Standards Board (FASB) Statement of
Financial Accounting Standards (SFAS) No. 123(R), Accounting for
Stock-Based Compensation, to account for compensation costs under its stock option
plan. Previously, stock option plans were accounted for using the intrinsic value method
under Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to
Employees (as amended) (APB 25). Under the intrinsic value method
prescribed by APB 25, the Company would not have recognized compensation cost for stock
options because the option exercise price in its plan equals the market price on the date
of grant. In adopting SFAS No. 123, the Company elected to use the modified prospective
method to account for the transition from the intrinsic value method to the fair value
recognition method. Under the modified prospective method, compensation cost is recognized
from the adoption date for all new stock options granted and for any outstanding unvested
awards as if the fair value method had been applied to those awards as of the date of
grant.

In applying SFAS No. 123, for the
quarter ended March 31, 2006, the Company recognized stock-based employee compensation
expense of $7,014 included in compensation and employee benefits and, therefore, in our
reported net loss. The weighted average fair value per share of options granted on
February 14, 2006 amounted to $7.19.  The fair value of each option granted was
estimated on the date of grant using the Black-Scholes option pricing model with the
following assumptions used for grants:  expected volatility of 16%, risk-free
interest rate of 4.45% and expected lives of seven and a half years.

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

8

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# BankGreenville
Financial Corporation

# NOTE 3  INVESTMENTS

At March 31, 2006, the Companys
available for sale investment portfolio totaled $1,492,383 and included
government-sponsored agencies of $989,449 and agency mortgage-backed securities of
$502,934.

# NOTE 4  LOANS

The Companys loan portfolio
totaled $2,774,691 at March 31, 2006, and the allowance for loan losses was $41,620, for
net loans of $2,733,071. The portfolio included commercial real estate loans of
$1,621,656, commercial loans of $722,344, and consumer, residential property secured loans
and home equity lines of credit of $430,691.

# NOTE 5  LAND AND
LAND IMPROVEMENTS

Land and land improvements totaled
$718,543 at March 31, 2006 and consisted of $645,558 in land costs associated with the
Companys purchase of approximately 1.23 acres, on which to build our permanent bank
headquarters, as well as $72,985 in unamortized land improvement costs associated with our
temporary facility site. Land improvement costs are being expensed over the Companys
temporary facility lease term.

# NOTE 6  DEPOSITS

At March 31, 2006, deposits totaled
$5,527,555 and consisted of demand deposits of $401,204, interest checking of $187,501,
savings and money market accounts of $3,151,572, and certificates of deposit of
$1,787,278. Certificates greater than $100,000 totaled $1,300,751 and those equal to or
less than $100,000 amounted to $486,527.

# NOTE 7  BORROWINGS

At March 31, 2006, the Bank had
short-term lines of credit with correspondent banks to purchase a maximum of $3,000,000 in
unsecured federal funds. The interest rate on borrowings under these lines would be the
prevailing market rate for federal funds purchased. No amounts were outstanding at March
31, 2006.

# NOTE 8  LEASES

The Company has entered into a lease
agreement on our temporary banking facility as well as a ground lease agreement on the
temporary site location of this facility. The monthly rent under these lease agreements is
$2,619 and $1,250, respectively. The lease on our temporary banking facility expires on
September 30, 2006, and we have a month-to-month option thereafter. The ground lease
agreement expires on July 31, 2006, but includes a six month renewal option at the current
monthly rental. The Company leases its modular facility furniture at a monthly rental of
$2,405.

# NOTE 9  RELATED
PARTY TRANSACTIONS

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

The law firm, in which our chairman
of the board is a shareholder, assisted in the negotiation and preparation of our land
purchase agreement and the closing of the headquarters site, as well as the negotiation of
the ground lease agreement for our temporary facility site. The fees for these services
totaled $6,918. One of our directors is the owner and president of a marketing and public
relations firm and assisted us with media relations during our organization process in
2005. The costs for these services totaled $2,000.

9

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# NOTE 10  RECENTLY
ISSUED ACCOUNTING STANDARDS

The following is a summary of recent
authoritative pronouncements that affect our accounting, reporting, and disclosure of
financial information:

In
December 2004, the Financial Accounting Standards Board issued SFAS No. 123 (revised
2004), Share-Based Payment (SFAS No. 123(R)). SFAS No 123(R) requires
companies to measure all employee stock-based compensation awards using a fair value
method and record such expense in its financial statements. In addition, the adoption of
SFAS No. 123(R) requires additional accounting and disclosure related to the income tax
and cash flow effects resulting from share-based payment arrangements. SFAS No. 123 (R) is
effective beginning as of the first interim or annual reporting period beginning after
December 15, 2005.

In
March 2004, the SEC issued SAB No. 105, Application of Accounting Principles to Loan
Commitments, to inform registrants of the SEC staffs view that the fair value
of the recorded loan commitments should not consider the expected future cash flows
related to the associated servicing of the future loan. The provisions of SAB No. 105 must
be applied to loan commitments accounted for as derivatives that are entered into after
March 31, 2004. WE do not expect the adoption of SAB No. 105 to have a material impact on
our financial condition or results of operations.

Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date are not expected
to have a material impact on the consolidated financial statements upon adoption.

10

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

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.

# 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 filings with the
Securities and Exchange Commission, including, without limitation:

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

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

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

| |  | general economic conditions, 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 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.
| | - | --------------------------------------------------------------------------------------------------------------------

# Overview

The following discussion describes
our results of operations for the quarter ended March 31, 2006, and also analyzes our
financial condition as of March 31, 2006. Because our bank did not open for business until
January 30, 2006, a comparison of the quarter ended March 31, 2006 to the quarter ended
March 31, 2005 is not meaningful. Until January 30, 2006, our principal activities related
to our organization, the conducting of our initial public offering, and the pursuit of
approvals from the South Carolina Board of Financial Institutions for our application to
charter the bank, from the Federal Reserve to become a bank holding company, and from the
FDIC for our application for insurance of the deposits of the bank. We received all
regulatory approvals in January 2006 and commenced business on January 30, 2006. We
completed our stock offering in December 2005 and issued 1,180,000 shares. Offering
proceeds, net of offering costs and underwriting fee totaled $11,035,287. We capitalized
the bank with $11 million of the proceeds from the stock offering.

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

11

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

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

# Critical Accounting
Policies

We have adopted various accounting
policies that govern the application of accounting principles generally accepted in the
United States of America and with general practices within the banking industry in the
preparation of our financial statements. Our significant accounting policies are described
in the footnotes to our unaudited consolidated financial statements included in this
report on Form 10-QSB.

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.

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

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

# Results of Operations

Our net loss for the quarter ended
March 31, 2006 was $245,554 and net loss per share was $0.21. Included in this loss was
$48,215 in additional net pre-opening and organizational expenses from the period January
1, 2006 to January 29, 2006. Operating activity began upon opening of the bank on January
30, 2006. First quarter interest income totaled $132,867, and was primarily derived from
interest of $113,882 on federal funds sold, as our net offering proceeds were invested in
federal funds sold from January 1, 2006 until our opening date. The Bank began originating
loans, purchasing investment securities and procuring deposits when the Bank opened on
January 30, 2006. Interest income on loans and investments was $12,988 and $5,997,
respectively. Interest expense on deposits totaled $17,291 and our first quarter loan loss
provision was $41,620. Non-interest expense was $321,608 for the quarter ended March 31,
2006 and primarily included compensation and employee benefits of $162,848, occupancy and
equipment expense of $77,400, and supplies, printing and telephone expense of $23,182.
Legal and audit expense of $13,019 and shareholder relations expense of $4,468 represent
costs associated with first quarter public reporting requirements and with our annual
shareholder meeting.

12

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# Financial Condition

Overview

Total assets were $16.1 million at
March 31, 2006 and included federal funds sold of $10.6 million, net loans of $2.7 million
and investments of $1.5 million. Deposits were $5.5 million and shareholders equity
was $10.5 million.

Loans

Since loans typically provide higher
interest yields than other types of interest earning assets, our goal is to have the
highest percentage of our earning assets in our loan portfolio. At March 31, 2006, our
loan portfolio totaled $2.8 million and consisted primarily of approximately $1.6 million
in commercial real estate loans, $722,000 in commercial loans, and $431,000 in consumer,
residential property secured, and home equity lines.

We will discontinue accrual of
interest on a loan when we conclude it is doubtful that we will be able to collect
interest from the borrower. We will reach this conclusion by taking into account factors
such as the borrowers financial condition, economic and business conditions, and the
results of our previous collection efforts. Generally, we will place a delinquent loan in
non-accrual status when the loan becomes 90 days or more past due. When we place a loan in
non-accrual status, we will reverse all interest which has been accrued on the loan but
remains unpaid and we will deduct this interest from earnings as a reduction of reported
interest income. We will not accrue any additional interest on the loan balance until we
conclude the collection of both principal and interest is reasonably certain. At March 31,
2006, there were no non-performing loans, and we had no loans that were 90 days or more
past due or non-accruing.

Loan Loss Allowance and
Provision

We have established an allowance for
loan losses through a provision for loan losses charged to expense on our consolidated
statement of operations. The allowance for loan losses was $41,620, or 1.50% of
outstanding loans, at March 31, 2006. The allowance for loan losses represents an amount
which we believe will be adequate to absorb probable losses on existing loans that may
become uncollectible. Our judgment as to the adequacy of the allowance for loan losses is
based on a number of assumptions about future events, which we believe to be reasonable,
but which may or may not prove to be accurate. Our determination of the allowance for loan
losses will be 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 will also consider
subjective issues such as changes in the lending policies and procedures, changes in the
local/national economy, changes in volume or type of credits, changes in volume/severity
of problem loans, quality of loan review and board of director oversight, concentrations
of credit, and peer group comparisons. Due to our limited operating history, to date the
provision for loan losses has been made primarily as a result of our assessment of general
loan loss risk compared to banks of similar size and maturity. Due to our short operating
history, the loans in our loan portfolio and our lending relationships are of very recent
origin. In general, loans do not begin to show signs of credit deterioration or default
until they have been outstanding for some period of time, a process known as seasoning. As
a result, a portfolio of older loans will usually behave more predictably than a newer
portfolio. Because our loan portfolio is new, the current level of delinquencies and
defaults may not be representative of the level that will prevail when the portfolio
becomes more seasoned, which may be higher than current levels. If delinquencies and
defaults increase, we may be required to increase our provision for loan losses, which
would adversely affect our results of operations and financial condition. Periodically, we
will adjust the amount of the allowance based on changing circumstances. We will charge
recognized losses to the allowance and add subsequent recoveries back to the allowance for
loan losses. There can be no assurance that charge-offs of loans in future periods will
not exceed the allowance for loan losses as estimated at any point in time or that
provisions for loan losses will not be significant to a particular accounting period.

Investments

Investment securities, classified
available for sale, totaled $1.5 million at March 31, 2006 and were comprised of
government-sponsored agencies of approximately $1 million and agency mortgage-backed
securities of $500,000.

13

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Deposits

Local deposits are our primary
funding source for our loans and investments. At March 31, 2006, deposits were $5.5
million and consisted of approximately $3.2 million in money market accounts, $589,000 in
demand deposits and interest checking accounts and $1.8 million in certificates of
deposit.

# Liquidity

Liquidity is the ability to meet
current and future obligations through liquidation or maturity of existing assets or the
acquisition of liabilities. We manage both assets and liabilities to achieve appropriate
levels of liquidity. Cash and short-term investments are our primary sources of asset
liquidity. These funds provide a cushion against short-term fluctuations in cash flow from
both deposits and loans. The investment portfolio is our principal source of secondary
asset liquidity. However, the availability of this source of funds is influenced by market
conditions. Individual and commercial deposits and borrowings are our primary source of
funds for credit activities. We have lines of credit with unrelated banks totaling $3.0
million. These lines are available on a one-to-fourteen day basis for general corporate
purposes. We believe our liquidity sources are adequate to meet our operating needs. The
level of liquidity is measured by the cash and cash equivalents and securities available
for sale-to-total assets ratio, which was at 75.88% at March 31, 2006.

# Off-Balance Sheet
Instruments

Through
the operations of our bank, we have made contractual commitments to extend credit in the
ordinary course of our business activities. These commitments are legally binding
agreements to lend money to our clients at predetermined interest rates for a specified
period of time. At March 31, 2006, we had issued commitments to extend credit of $821,000
through various types of lending arrangements. We evaluate each clients credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed necessary
by us upon extension of credit, is based on our credit evaluation of the borrower.
Collateral varies but may include accounts receivable, inventory, property, plant and
equipment, commercial and residential real estate. We manage the credit risk on these
commitments by subjecting them to normal underwriting and risk management processes.

# Capital Resources

Total shareholders equity
decreased from $10.8 million at December 31, 2005 to $10.5 million at March 31, 2006,
primarily due to our net loss of $245,554 for the period and unrealized losses on
available for sale investment securities of $4,739.

The bank is subject to various
regulatory capital requirements administered by the federal banking agencies. Failure to
meet minimum capital requirements can initiate certain mandatory and possibly additional
discretionary actions by regulators that, if undertaken, could have a 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.

The Federal Reserve guidelines
contain an exemption from the capital requirements for small bank holding
companies. On March 31, 2006, the Federal Reserve changed the definition of a small
bank holding company to bank holding companies with less than $500 million in total assets
(an increase from $150 million under the prior rule). However, bank holding companies will
not qualify under the new definition if they (i) are engaged in significant nonbanking
activities either directly or indirectly through a subsidiary, (ii) conduct significant
off-balance sheet activities, including securitizations or managing or administering
assets for third parties, or (iii) have a material amount of debt or equity securities
(including trust preferred securities) outstanding that are registered with the SEC.
Although we have less than $500 million in assets, it is unclear at this point whether we
otherwise meet the requirements for qualifying as a small bank holding
company. According to the Federal Reserve Board, the revision of the criterion to
exclude any bank holding company that has outstanding a material amount of SEC-registered
debt or equity securities reflects the fact that SEC registrants typically exhibit a
degree of complexity of operations and access to multiple funding sources that warrants
excluding them from the new policy statement and subjecting them to the capital
guidelines. In the adopting release for the new rule, the Federal Reserve Board stated
that what constitutes a material amount of SEC-registered debt or equity for a
particular bank holding company depends on the size, activities and condition of the
relevant bank holding company.

14

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In lieu of using fixed measurable
parameters of materiality across all institutions, the rule provides the Federal Reserve
with supervisory flexibility in determining, on a case-by-case basis, the significance or
materiality of activities or securities outstanding such that a bank holding company
should be excluded from the policy statement and subject to the capital guidelines. Prior
to adoption of this new rule, our holding company was not subject to these capital
guidelines, as it had less than $150 million in assets. Until the Federal Reserve provides
further guidance on the new rules, it will be unclear whether our holding company will be
subject to the exemption from the capital requirements for small bank holding companies.
Regardless, our bank falls under these minimum capital requirements as set per bank
regulatory agencies.

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

The bank is also required to maintain
capital at a minimum level based on quarterly average assets, which is known as the
leverage ratio. Only the strongest banks are allowed to maintain capital at the minimum
requirement of 3%. All others are subject to maintaining ratios 1% to 2% above the
minimum. The bank exceeded its minimum regulatory capital ratios as of March 31, 2006, as
well as the ratios to be considered well capitalized.

The following table summarizes the
capital amounts and ratios of the bank and the regulatory minimum requirements at March
31, 2006.

(Dollars in thousands)

|                                       |  |  |   |        | Adequately | 
|-------------------------------------- |  |  | - | ------ | ---------- | 
|
|
|
|Total capital to risk weighted assets  |  |  | $ | 10,555 |            | 
|Tier 1 capital to risk weighted assets |  |  | $ | 10,513 |            | 
|Tier 1 capital to average assets       |  |  | $ | 10,513 |            | 

# Item
3. Controls and Procedures

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

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

15

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# Part II  Other
Information

# Item
1. Legal Proceedings

There are no material pending legal
proceedings to which the company is a party or of which any of its 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

Not applicable

# Item 5. Other
Information

Not applicable

# Item 6. Exhibits

31.1    
        Rule 15d-14(a) Certification of the Principal Executive Officer.

31.2    
Rule 15d-14(a) Certification of the Principal Financial Officer.

32       
Section 1350 Certifications.

16

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# SIGNATURES

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

|                    |  |                                                               
|------------------- |  | --------------------------------------------------------------
|                    |  |                                                               
|Date:  May 12, 2006 |  | By:   /s/  Russel T. Williams                                 
|                    |  | Russel T. Williams                                            
|                    |  | Chief Executive Officer
         (Principal Executive Officer)

|                    |  |                                                               
|------------------- |  | --------------------------------------------------------------
|                    |  |                                                               
|Date:  May 12, 2006 |  | By:   /s/  Paula S. King                                      
|                    |  | Paula S. King                                                 
|                    |  | Chief Financial Officer
         (Principal Financial Officer)

17

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# EXHIBIT INDEX

ExhibitNumber
             Description

31.1    
        Rule 15d-14(a) Certification of the Principal Executive Officer.

31.2    
Rule 15d-14(a) Certification of the Principal Financial Officer.

32       
Section 1350 Certifications.