----

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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**WASHINGTON,      DC 20549**

**FORM      10-Q**

|   | x QUARTERLY                REPORT                PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF                1934 |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------|

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

**TRANSCOMMUNITY      FINANCIAL**

**CORPORATION**

| Virginia                                                               |   | 54-2032355                         |
|------------------------------------------------------------------------|--------|------------------------------------|
| (State                or other jurisdiction of                    |   | (I.R.S.                Employer    |
| incorporation                or organization)                          |   | Identification                No.) |
|                                                                   |   |                               |
| 4235                Innslake Drive                                     |   |                               |
| Glen                Allen, Virginia                                    |   | 23060                              |
| (Address                of principal executive                offices) |   | (Zip                Code)          |

|   | (804)                934-9999                        |   |
|--------|------------------------------------------------------|--------|
|   | (Registrant’s                Telephone Number) |   |

| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated              filer x |
|---------------------------|--------|---------------------|--------|--------------------------------------|

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**TRANSCOMMUNITY      FINANCIAL CORPORATION**

|                      |   |                                                                                                                                                  |   | Page                  No. |
|---------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------|
| PART                  I   |   | FINANCIAL                  INFORMATION                                                                                                                |   |                      |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  1.  |   | Financial                  Statements                                                                                                                 |   | 1                         |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   | Consolidated                  Statements of Financial Condition - March                    31, 2006 (Unaudited) and December 31, 2005                 |   | 1                         |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   | Consolidated                  Statements of Operations - Three                  Months Ended March 31, 2006 and 2005 (Unaudited)                      |   | 2                         |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   | Consolidated                  Statements of Changes in Stockholders' Equity - Three                  Months Ended March 31, 2006 and 2005 (Unaudited) |   | 3                         |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   | Consolidated                  Statements of Cash Flows -Three                  Months Ended March 31, 2006 and 2005 (Unaudited)                       |   | 4                         |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   | Notes                  to Consolidated Financial Statements (Unaudited)                                                                               |   | 5                         |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  2.  |   | Management’s                  Discussion and Analysis of Financial Condition                  and Results of Operations                         |   | 13                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  3.  |   | Quantitative                  and Qualitative Disclosures About Market risk                                                                           |   | 21                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  4.  |   | Controls                  and Procedures                                                                                                              |   | 22                        |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   |                                                                                                                                                  |   |                      |
| PART                  II  |   | OTHER                  INFORMATION                                                                                                                    |   |                      |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  1.  |   | Legal                  Proceedings                                                                                                                    |   | 23                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  1A. |   | Risk                  Factors                                                                                                                         |   | 23                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  2.  |   | Unregistered                  Sales of Equity Securities and Use of Proceeds                                                                          |   | 23                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  3.  |   | Defaults                  Upon Senior Securities                                                                                                      |   | 23                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  4.  |   | Submission                  of Matters to a Vote of Security Holders                                                                                  |   | 23                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  5.  |   | Other                  Information                                                                                                                    |   | 23                        |
|                      |   |                                                                                                                                                  |   |                      |
| Item                  6.  |   | Exhibits                                                                                                                                              |   | 24                        |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   |                                                                                                                                                  |   |                      |
|                      |   | SIGNATURES                                                                                                                                            |   | 25                        |

----

**Part      I**
**Financial      Information**

**Item      1.**
**Financial      Statements **

**TRANSCOMMUNITY        FINANCIAL CORPORATION**

**CONSOLIDATED        STATEMENTS OF FINANCIAL CONDITION**

**MARCH        31, 2006 AND DECEMBER 31, 2005**

|                                                                                                                                                                                                        |   | **March                  31, 2006** |        | **December                  31, 2005** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|----------------------------------------|--------|
|                                                                                                                                                                                                        |   | **Unaudited**                       |        | **Audited**                            |   |
| **Assets**                                                                                                                                                                                                  |   |                                |        |                                   |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |
| Cash                  and due from banks                                                                                                                                                                    |   | $                                   | 4,557,637   |                                   | $      | 4,131,988 |   |
| Federal                  funds sold                                                                                                                                                                         |   |                                | 8,965,608   |                                   |   | 12,683,935 |   |
|                                                                                                                                                                                                        |   |                                |             |                                   |   |  |   |
| Total                  cash and cash equivalents                                                                                                                                                            |   |                                | 13,523,245  |                                   |   | 16,815,923 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| Securities                  available for sale, at fair value                                                                                                                                               |   |                                | 7,354,073   |                                   |   | 5,354,856 |   |
| Securities                  held to maturity, fair value of $25,206,294 and $25,722,042 at                  March 31,                  2006 and December 31, 2005, respectively                             |   |                                | 25,392,664  |                                   |   | 25,882,680 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |  |   |
| Loans                                                                                                                                                                                                       |   |                                | 121,717,554 |                                   |   | 122,573,489 |   |
| Allowance                  for loan losses                                                                                                                                                                  |   |                                | (1,724,708  | )                                      |   | (1,692,153 | ) |
| Total                  loans, net                                                                                                                                                                           |   |                                | 119,992,846 |                                   |   | 120,881,336 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| Premises                  and equipment, net                                                                                                                                                                |   |                                | 6,950,323   |                                   |   | 7,005,040 |   |
| Federal                  Reserve bank stock (restricted)                                                                                                                                                    |   |                                | 571,879     |                                   |   | 535,010 |   |
| Other                  assets                                                                                                                                                                               |   |                                | 1,506,764   |                                   |   | 1,657,542 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| Total                  assets                                                                                                                                                                               |   | $                                   | 175,291,794 |                                   | $      | 178,132,387 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| **Liabilities**                                                                                                                                                                                             |   |                                |        |                                   |   |   |   |
|                                                                                                                                                                                                        |   |                                |             |                                   |   |  |   |
| Deposits:                                                                                                                                                                                                   |   |                                |        |                                   |   |   |   |
| Demand:                                                                                                                                                                                                     |   |                                |        |                                   |   |   |   |
| Noninterest                  bearing                                                                                                                                                                        |   | $                                   | 19,392,614  |                                   | $      | 17,253,634 |   |
| Interest                  bearing                                                                                                                                                                           |   |                                | 37,112,653  |                                   |   | 46,143,538 |   |
| Savings                                                                                                                                                                                                     |   |                                | 10,753,158  |                                   |   | 9,470,537 |   |
| Time                                                                                                                                                                                                        |   |                                | 75,926,102  |                                   |   | 73,735,109 |   |
|                                                                                                                                                                                                        |   |                                |             |                                   |   |  |   |
| Total                  deposits                                                                                                                                                                             |   |                                | 143,184,527 |                                   |   | 146,602,818 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| Federal                  funds purchased                                                                                                                                                                    |   |                                | 1,049,000   |                                   |   | 272,000 |   |
| Accrued                  interest payable                                                                                                                                                                   |   |                                | 323,030     |                                   |   | 301,699 |   |
| Accrued                  expenses and other liabilities                                                                                                                                                     |   |                                | 471,812     |                                   |   | 586,171 |   |
|                                                                                                                                                                                                        |   |                                |             |                                   |   |  |   |
| Total                  liabilities                                                                                                                                                                          |   |                                | 145,028,369 |                                   |   | 147,762,688 |   |
|                                                                                                                                                                                                        |   |                                |             |                                   |   |  |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| **Stockholders'                  Equity**                                                                                                                                                                   |   |                                |        |                                   |   |   |   |
| Common                  stock (25,000,000 shares authorized $.01 par value) 4,581,741 shares                  issued and outstanding at March 31, 2006 and December 31, 2005,                  respectively |   |                                | 45,817      |                                   |   | 45,817 |   |
| Additional                  paid in capital                                                                                                                                                                 |   |                                | 39,795,522  |                                   |   | 39,777,578 |   |
| Accumulated                  deficit                                                                                                                                                                        |   |                                | (9,502,363  | )                                      |   | (9,378,963 | ) |
| Accumulated                  other comprehensive income (loss)                                                                                                                                              |   |                                | (75,551     | )                                      |   | (74,733 | ) |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| Total                  stockholders' equity                                                                                                                                                                 |   |                                | 30,263,425  |                                   |   | 30,369,699 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |
| Total                  liabilities and stockholders' equity                                                                                                                                                 |   | $                                   | 175,291,794 |                                   | $      | 178,132,387 |   |
|                                                                                                                                                                                                        |   |                                |        |                                   |   |   |   |

*See      accompanying notes to unaudited consolidated financial      statements.*

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**TRANSCOMMUNITY        FINANCIAL CORPORATION**

**CONSOLIDATED        STATEMENTS OF OPERATIONS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005**

**(Unaudited)**

|                                                                                                |   |                                        |      |                            |   |
|-----------------------------------------------------------------------------------------------------|--------|---------------------------------------------|-----------|---------------------------------|--------|
|                                                                                                |   | For                  the three months ended |      |
|                                                                                                |   | March                  31, 2006             |      | March                  31, 2005 |   |
|                                                                                                |   |                                        |      |                            |   |
| **Interest                  and dividend income**                                                   |   |                                        |      |                            |   |
| Interest                  on loans, including fees                                                  |   | $                                           | 2,617,374 |                            | $      | 1,976,467 |   |
| Interest                  on federal funds sold                                                     |   |                                        | 243,753   |                            |   | 54,701 |   |
| Interest                  on debt securities                                                        |   |                                        | 167,136   |                            |   | 117,021 |   |
| Dividends                  on equity securities                                                     |   |                                        | —   |                            |   | 4,500 |   |
|                                                                                                |   |                                        |           |                            |   |  |   |
| Total                  interest and dividend income                                                 |   |                                        | 3,028,263 |                            |   | 2,152,689 |   |
|                                                                                                |   |                                        |      |                            |   |  |   |
| **Interest                  expense**                                                               |   |                                        |           |                            |   |  |   |
| Interest                  on deposits                                                               |   |                                        | 904,601   |                            |   | 601,095 |   |
| Interest                  on other borrowed funds                                                   |   |                                        | 3,943     |                            |   | 21,494 |   |
|                                                                                                |   |                                        |      |                            |   |   |   |
| Total                  interest expense                                                             |   |                                        | 908,544   |                            |   | 622,589 |   |
|                                                                                                |   |                                        |           |                            |   |  |   |
| **Net                  interest income**                                                            |   |                                        | 2,119,719 |                            |   | 1,530,100 |   |
|                                                                                                |   |                                        |      |                            |   |   |   |
| **Provision                  for loan losses**                                                      |   |                                        | 51,756    |                            |   | 64,561 |   |
|                                                                                                |   |                                        |      |                            |   |   |   |
| **Net                  interest income after provision for loan losses**                            |   |                                        | 2,067,963 |                            |   | 1,465,539 |   |
|                                                                                                |   |                                        |           |                            |   |  |   |
| **Noninterest                  income**                                                             |   |                                        |      |                            |   |   |   |
| Bank                  service charges and fees                                                      |   |                                        | 241,670   |                            |   | 177,197 |   |
| Commissions                  and fees from loan originations                                        |   |                                        | 876,425   |                            |   | 986,295 |   |
|                                                                                                |   |                                        |           |                            |   |  |   |
| Total                  noninterest income                                                           |   |                                        | 1,118,095 |                            |   | 1,163,492 |   |
|                                                                                                |   |                                        |      |                            |   |  |   |
| **Noninterest                  expense**                                                            |   |                                        |      |                            |   |   |   |
| Salaries                  and employee benefits                                                     |   |                                        | 1,995,219 |                            |   | 1,912,737 |   |
| Occupancy                  expenses                                                                 |   |                                        | 225,561   |                            |   | 204,911 |   |
| Equipment                  expenses                                                                 |   |                                        | 175,738   |                            |   | 153,899 |   |
| Other                  operating expenses                                                           |   |                                        | 912,940   |                            |   | 750,299 |   |
|                                                                                                |   |                                        |           |                            |   |  |   |
| Total                  noninterest expense                                                          |   |                                        | 3,309,458 |                            |   | 3,021,846 |   |
|                                                                                                |   |                                        |           |                            |   |  |   |
| **Net                  loss from continuing operations**                                            |   |                                        | (123,400  | )                               |   | (392,815 | ) |
|                                                                                                |   |                                        |      |                            |   |   |   |
| **Net                  loss from discontinued operations**                                          |   |                                        | —   |                            |   | (80,450 | ) |
|                                                                                                |   |                                        |      |                            |   |   |   |
| **Net                  loss**                                                                       |   | $                                           | (123,400  | )                               | $      | (473,265 | ) |
|                                                                                                |   |                                        |      |                            |   |   |   |
| Net                  loss per share from continuing operations (basic and                  diluted) |   | $                                           | (0.03     | )                               | $      | (0.17 | ) |
|                                                                                                |   |                                        |      |                            |   |   |   |
| Net                  loss per share (basic and diluted)                                             |   | $                                           | (0.03     | )                               | $      | (0.21 | ) |
|                                                                                                |   |                                        |      |                            |   |  |   |
| Weighted                  average number of shares outstanding                                      |   |                                        | 4,581,741 |                            |   | 2,278,155 |   |

*See      accompanying notes to unaudited consolidated financial      statements.*

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**TRANSCOMMUNITY        FINANCIAL CORPORATION**

**CONSOLIDATED        STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2005 AND 2006**

**(Unaudited)**

|                                                 |   | Shares                  of Common Stock |      |  Common                  Stock Subscriptions |   |  Common                  Stock |   |  Additional                  Paid in Capital |    |  Accumulated                  Deficit |   |  Accumulated                  Other Comprehensive Income (Loss) |   |  Total  |       |
|------------------------------------------------------|--------|-----------------------------------------|-----------|---------------------------------------------------|--------|-------------------------------------|--------|---------------------------------------------------|---------|--------------------------------------------|--------|----------------------------------------------------------------------|--------|--------------|------------|
| **Balance,**                                         |   |                                    |      |                                         |   |                           |   |                                         |    |                                  |   |                                                            |   |    |       |
| **December                  31, 2004**          |   |                                    | 2,250,508 |                                              | $      | —                             |   | $                                                 | 22,505  |                                       | $      | 22,753,004                                                           |   | $            | (7,607,270 | ) | $ | (43,648 | ) | $ | 15,124,591 |   |
|                                                 |   |                                    |           |                                              |   |                                     |   |                                              |         |                                       |   |                                                                      |   |         |            |   |   |   |   |   |   |   |
| Net                  loss                            |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | —                                                              |   |         | (473,265   | ) |   | — |   |   | (473,265 | ) |
| Unrealized                  loss on securities  |   |                                    |      |                                              |   |                                |   |                                              |    |                                       |   |                                                                 |   |         |       |   |   |   |   |   |   |   |
|  available                  for sale            |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | —                                                              |   |         | —    |   |   | (35,583 | ) |   | (35,583 | ) |
| Total                  comprehensive loss       |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | —                                                              |   |         | —    |   |   | — |   |   | (508,848 | ) |
| Common                  stock issued                 |   |                                    | 42,733    |                                              |   | —                             |   |                                              | 427     |                                       |   | 453,051                                                              |   |         | —    |   |   | — |   |   | 453,478 |   |
| Deferred                  compensation expense       |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | 23,733                                                               |   |         | —    |   |   | — |   |   | 23,733 |   |
| **Balance,**                                         |   |                                    |      |                                              |   |                                |   |                                              |    |                                       |   |                                                                 |   |         |       |   |   |   |   |   |   |   |
| **March                  31, 2005**             |   |                                    | 2,293,241 |                                              | $      | —                             |   | $                                                 | 22,932  |                                       | $      | 23,229,788                                                           |   | $            | (8,080,535 | ) | $ | (79,231 | ) | $ | 15,092,954 |   |
|                                                 |   |                                    |      |                                              |   |                                |   |                                              |    |                                       |   |                                                                 |   |         |       |   |   |   |   |   |   |   |
|                                                 |   |                                    |      |                                              |   |                                |   |                                              |    |                                       |   |                                                                 |   |         |       |   |   |   |   |   |   |   |
| **Balance,**                                         |   |                                    |      |                                              |   |                                |   |                                              |    |                                       |   |                                                                 |   |         |       |   |   |   |   |   |   |   |
| **December                  31, 2005**          |   |                                    | 4,581,741 |                                              | $      | —                             |   | $                                                 | 45,817  |                                       | $      | 39,777,578                                                           |   | $            | (9,378,963 | ) | $ | (74,733 | ) | $ | 30,369,699 |   |
|                                                 |   |                                    |           |                                              |   |                                     |   |                                              |         |                                       |   |                                                                      |   |         |            |   |   |   |   |   |   |   |
| Net                  loss                            |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | —                                                              |   |         | (123,400   | ) |   | — |   |   | (123,400 | ) |
| Unrealized                  loss on securities  |   |                                    |      |                                              |   |                                |   |                                              |    |                                       |   |                                                                 |   |         |       |   |   |   |   |   |   |   |
|  available                  for sale            |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | —                                                              |   |         | —    |   |   | (818 | ) |   | (818 | ) |
| Total                  comprehensive loss       |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | —                                                              |   |         | —    |   |   | — |   |   | (124,218 | ) |
| Stock-based                  compensation expense    |   |                                    | —   |                                              |   | —                             |   |                                              | — |                                       |   | 17,944                                                               |   |         | —    |   |   | — |   |   | 17,944 |   |
| **Balance,**                                         |   |                                    |      |                                              |   |                                |   |                                              |    |                                       |   |                                                                 |   |         |       |   |   |   |   |   |   |   |
| **March                  31, 2006**             |   |                                    | 4,581,741 |                                              | $      | —                             |   | $                                                 | 45,817  |                                       | $      | 39,795,522                                                           |   | $            | (9,502,363 | ) | $ | (75,551 | ) | $ | 30,263,425 |   |

*See      accompanying notes to unaudited consolidated financial      statements.*

----

**TRANSCOMMUNITY        FINANCIAL CORPORATION**
**CONSOLIDATED        STATEMENTS OF CASH FLOWS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005**

**(Unaudited)**

|                                                                                                                        |   | For                  the three months ended   |        |
|-----------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------|-------------|
|                                                                                                                        |   | March                  31, 2006                         |        | March                  31, 2005 |   |
|                                                                                                                        |   |                                                    |        |   |   |
| **Operating                  activities:**                                                                                  |   |                                                    |        |   |   |
| Net                  loss from continuing operations                                                                        |   | $                                                       | (123,400    | ) | $ | (392,815 | ) |
| Net                  loss from discontinued operations                                                                      |   |                                                    | —     |   |   | (80,450 | ) |
| Adjustments                  to reconcile net loss to net cash provided by (used in) operating                  activities: |   |                                                    |             |   |   |  |   |
| Provision                  for loan losses                                                                                  |   |                                                    | 51,756      |   |   | 64,561 |   |
| Amortization                  of security premiums and accretion of discounts, net                                          |   |                                                    | (10,019     | ) |   | (17,812 | ) |
| Depreciation                                                                                                                |   |                                                    | 139,933     |   |   | 111,562 |   |
| Deferred                  compensation expense                                                                              |   |                                                    | —     |   |   | 23,733 |   |
| Stock-based                  compensation expense                                                                           |   |                                                    | 17,944      |   |   | — |   |
| Decrease                  (increase) in other assets                                                                        |   |                                                    | 150,778     |   |   | (213,946 | ) |
| Increase                  (decrease) in interest payable                                                                    |   |                                                    | 21,331      |   |   | 17,546 |   |
| Decrease                  in accrued expenses and other liabilities                                                         |   |                                                    | (114,359    | ) |   | (36,426 | ) |
|                                                                                                                        |   |                                                    |             |   |   |  |   |
| Net                  cash provided by (used in) operating activities                                                        |   |                                                    | 133,964     |   |   | (524,047 | ) |
|                                                                                                                        |   |                                                    |        |   |   |  |   |
| **Investing                  activities:**                                                                                  |   |                                                    |             |   |   |  |   |
| Purchase                  of securities held to maturity                                                                    |   |                                                    | (19,000,000 | ) |   | (16,996,293 | ) |
| Purchase                  of securities available for sale                                                                  |   |                                                    | (2,000,000  | ) |   | — |   |
| Proceeds                  from maturities of securities held to maturity                                                    |   |                                                    | 19,500,000  |   |   | 5,000,000 |   |
| Proceeds                  from maturities of securities available for sale                                                  |   |                                                    | —     |   |   | 10,470,220 |   |
| Purchase                  of Federal Reserve bank stock                                                                     |   |                                                    | (36,869     | ) |   | — |   |
| Net                  (increase) decrease in loans                                                                           |   |                                                    | 836,734     |   |   | (139,131 | ) |
| Purchase                  of premises and equipment                                                                         |   |                                                    | (85,216     | ) |   | (599,665 | ) |
|                                                                                                                        |   |                                                    |        |   |   |   |   |
| Net                  cash used in investing activities                                                                      |   |                                                    | (785,351    | ) |   | (2,264,869 | ) |
|                                                                                                                        |   |                                                    |             |   |   |  |   |
| **Financing                  activities:**                                                                                  |   |                                                    |             |   |   |  |   |
| Net                  change in federal funds purchased                                                                      |   |                                                    | 777,000     |   |   | (251,000 | ) |
| Proceeds                  from offering of common stock                                                                     |   |                                                    | —     |   |   | 640,495 |   |
| Costs                  of stock offering                                                                                    |   |                                                    | —     |   |   | (934 | ) |
| Net                  (decrease) in noninterest bearing and interest bearing demand                  deposits                |   |                                                    | (6,891,905  | ) |   | (1,153,073 | ) |
| Net                  increase in savings deposits                                                                           |   |                                                    | 1,282,621   |   |   | 162,157 |   |
| Net                  increase in time deposits                                                                              |   |                                                    | 2,190,993   |   |   | 5,650,355 |   |
|                                                                                                                        |   |                                                    |        |   |   |   |   |
| Net                  cash (used in) provided by financing activities                                                        |   |                                                    | (2,641,291  | ) |   | 5,048,000 |   |
|                                                                                                                        |   |                                                    |        |   |   |   |   |
| **Net                  increase (decrease) in cash and cash equivalents**                                                   |   |                                                    | (3,292,678  | ) |   | 2,259,084 |   |
|                                                                                                                        |   |                                                    |        |   |   |   |   |
| **Cash                  and cash equivalents:**                                                                             |   |                                                    |        |   |   |   |   |
| Beginning                  of the period                                                                                    |   |                                                    | 16,815,923  |   |   | 3,760,266 |   |
|                                                                                                                        |   |                                                    |        |   |   |   |   |
| End                  of the period                                                                                          |   | $                                                       | 13,523,245  |   | $ | 6,019,350 |   |
|                                                                                                                        |   |                                                    |        |   |   |  |   |
| Supplemental                  disclosures of cash flow information:                                                         |   |                                                    |             |   |   |   |   |
| Interest                  paid                                                                                              |   | $                                                       | 887,213     |   | $ | 605,043 |   |

*See      accompanying notes to unaudited consolidated financial      statements.*

----

**TRANSCOMMUNITY      FINANCIAL CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**
**      (Unaudited)**

**NOTE      1**
**Principles      of Consolidation and Basis of Presentation:**

**NOTE      2 **
**Impact      of Certain Accounting Pronouncements**

----

**TRANSCOMMUNITY      FINANCIAL CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**NOTE      2 **
**Impact      of Certain Accounting Pronouncements (**
***Continued***
**)**

----

**TRANSCOMMUNITY      FINANCIAL CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**NOTE      3**
**Investment      Securities:**

| **Securities                Available for Sale**   |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |
|----------------------------------------------------|--------|-------------------------------|-------------------------------------------|--------------------------------------------|--------|-------------------------------------------------------|--------|---------------------------|-------------------------------------------------------|
| **March                31, 2006**                  |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |
|                                               |   | Amortized                Cost |                                      | Gross Unrealized                Gains |   | Gross                Unrealized                Losses |   | Fair                Value |                                                  |
| U.S.                Agency discount notes          |   | $                             | 1,000,000                                 |                                       | $      | —                                               |   | $                         | (2,500                                                | ) | $ | 997,500 |   |
| U.S.                Agency notes                   |   |                          | 6,429,624                                 |                                       |   | —                                               |   |                      | (73,051                                               | ) |   | 6,356,573 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| Total                Securities Available for Sale |   | $                             | 7,429,624                                 |                                       | $      | —                                               |   | $                         | (75,551                                               | ) | $ | 7,354,073 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| **Securities                Held to Maturity**     |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| **March                31, 2006**                  |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
|                                               |   |                          | Amortized                Cost   |                                       |   | Gross Unrealized                Gains            |   |                      | Gross Unrealized                Losses           |   |   | Fair                Value |   |
| U.S.                Agency discount notes          |   | $                             | 16,993,193                                |                                       | $      | —                                               |   | $                         | (10,523                                               | ) | $ | 16,982,670 |   |
| U.S.                Agency notes                   |   |                          | 8,399,471                                 |                                       |   | —                                               |   |                      | (175,847                                              | ) |   | 8,223,624 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| Total                Securities Held to Maturity   |   | $                             | 25,392,664                                |                                       | $      | —                                               |   | $                         | (186,370                                              | ) | $ | 25,206,294 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| **Securities                Available for Sale**   |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| **December                31, 2005**               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
|                                               |   |                          | Amortized                Cost   |                                       |   | Gross                Unrealized                Gains  |   |                      | Gross                Unrealized                Losses |   |   | Fair                Value |   |
| U.S.                Agency notes                   |   |                          | 5,429,589                                 |                                       |   | —                                               |   |                      | (74,733                                               | ) |   | 5,354,856 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| Total                Securities Available for Sale |   | $                             | 5,429,589                                 |                                       | $      | —                                               |   | $                         | (74,733                                               | ) | $ | 5,354,856 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| **Securities                Held to Maturity**     |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| **December                31, 2005**               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
|                                               |   |                          | Amortized                Cost             |                                       |   | Gross                Unrealized                Gains  |   |                      | Gross Unrealized Losses                     |   |   | Fair                Value |   |
| U.S.                Agency discount notes          |   | $                             | 19,482,772                                |                                       | $      | —                                               |   | $                         | (12,043                                               | ) | $ | 19,470,729 |   |
| U.S.                Agency notes                   |   |                          | 6,399,908                                 |                                       |   | —                                               |   |                      | (148,595                                              | ) |   | 6,251,313 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |
| Total                Securities Held to Maturity   |   | $                             | 25,882,680                                |                                       | $      | —                                               |   | $                         | (160,638                                              | ) | $ | 25,722,042 |   |
|                                               |   |                          |                                      |                                       |   |                                                  |   |                      |                                                  |   |   |   |   |

----

**TRANSCOMMUNITY      FINANCIAL CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**NOTE      3**
**Investment      Securities (**
***Continued***
**):**

|                                        |   | Less                  than 12 months |                                                                           | 12                  months or more |   | Total                                                                                                  |   |
|---------------------------------------------|--------|--------------------------------------|--------------------------------------------------------------------------------|------------------------------------|--------|--------------------------------------------------------------------------------------------------------|--------|
| **March                  31, 2006**         |   | Fair                  Value          |                                                                           | Unrealized                  Loss   |   | Fair                  Value                                                                            |   | Unrealized                  Loss |   | Fair                  Value |   | Unrealized                  Loss |   |
| Description                  of securities: |   |                                 |                                                                           |                               |   |                                                                                                   |   |   |   |   |   |   |   |
| US                  Agency notes            |   | $                                    | 5,457,813                                                                      |                               | $      | (41,743                                                                                                | )      | $ | 8,122,384 |   | $ | (207,156 | ) | $ | 13,580,197 |   | $ | (248,899 | ) |
| US                  Agency discount notes   |   |                                 | 17,980,170                                                                     |                               |   | (13,022                                                                                                | )      |   | — |   |   | — |   |   | 17,980,170 |   |   | (13,022 | ) |
|                                        |   |                                 |               |                               |   |                   |   |   |                           |   |   |                 |   |   |                 |   |   |              |   |
|                                        |   |                                 |                                                                           |                               |   |                                                                                                   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $                                    | 23,437,983                                                                     |                               | $      | (54,765                                                                                                | )      | $ | 8,122,384 |   | $ | (207,156 | ) | $ | 31,560,367 |   | $ | (261,921 | ) |

|                                        |   | Less                  than 12 months |                                                                           | 12                  months or more |   | Total                                                                    |   |
|---------------------------------------------|--------|--------------------------------------|--------------------------------------------------------------------------------|------------------------------------|--------|--------------------------------------------------------------------------|--------|
| **December                  31, 2005**      |   | Fair                  Value          |                                                                           | Unrealized                  Loss   |   | Fair                  Value                                              |   | Unrealized                  Loss |   | Fair                  Value |   | Unrealized                  Loss |   |
| Description                  of securities: |   |                                 |                                                                           |                               |   |                                                                     |   |   |   |   |   |   |   |
| US                  Agency notes            |   | $                                    | 5,066,133                                                                      |                               | $      | 58,867                                                                   |   | $ | 6,540,036 |   | $ | 164,461 |   | $ | 11,606,169 |   | $ | 223,328 |   |
| US                  Agency discount notes   |   |                                 | 19,470,729                                                                     |                               |   | 12,043                                                                   |   |   | —  |   |   | —  |   |   | 19,470,729 |   |   | 12,043 |   |
|                                        |   |                                 |               |                               |   |              |   |   |              |   |   |            |   |   |            |   |   |                                    |   |
|                                        |   |                                 |                                                                           |                               |   |                                                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                       |   | $                                    | 24,536,862                                                                     |                               | $      | 70,910                                                                   |   | $ | 6,540,036 |   | $ | 164,461 |   | $ | 31,076,898 |   | $ | 235,371 |   |

----

**TRANSCOMMUNITY      FINANCIAL CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**NOTE      4**
**Stock      Based Compensation:**

|                                                                    |   | **At                  March 31, **  |                       |
|-------------------------------------------------------------------------|--------|-----------------------------------------------|----------------------------|
|                                                                    |   | **2006**                                      |                       | **2005** |   |
|                                                                    |   |                                          |                       |   |   |
| Outstanding                  at January 1                               |   | $                                             | 281,425                    |   | $ | 317,375 |   |
| Granted                                                                 |   |                                          | 5,000                      |   |   | — |   |
| Exercised                                                               |   |                                          | —                    |   |   | (100 | ) |
| Lapsed                                                                  |   |                                          | (1,200                     | ) |   | — |   |
|                                                                    |   |                                          |                            |   |   |  |   |
| Options                  outstanding at the March 31                    |   |                                          | 285,225                    |   |   | 317,275 |   |
| Options                  exercisable at March 31                        |   |                                          | 274,492                    |   |   | 161,175 |   |
| Weighted                  average exercise price                        |   | $                                             | 9.96                       |   | $ | 10.00 |   |
| Weighted                  average remaining contracted life at March 31 |   |                                          | 85                  months |   |   | 93                  months |   |

----

**TRANSCOMMUNITY      FINANCIAL CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**NOTE      4**
**Stock      Based Compensation (**
***Continued***
**):**

|                                   |   | **Three                  months ended** |   |
|----------------------------------------|--------|-----------------------------------------|--------|
|                                   |   | **March                  31, 2006**     |   | **March                  31, 2005** |   |
|                                   |   |                                    |   |   |   |
| Expected                  volatility   |   |                                    | 4.54   | % |   | 0.00 | % |
| Expected                  dividend     |   |                                    | 0      |   |   | 0 |   |
| Expected                  term (years) |   |                                    | 10     |   |   | 10 |   |
| Risk                  free rate        |   |                                    | 4.36   | % |   | 4.00 | % |

|                                                                                                                               |   | **Three                  months ended** |     |
|------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------|----------|
|                                                                                                                               |   | **March                  31, 2005**     |     |
|                                                                                                                               |   |                                    |     |
| Net                  loss, as reported                                                                                             |   | $                                       | (473,265 | ) |
| Deduct:                  total stock-based employee compensation expense determined                  under fair value based method |   |                                    | (36,066  | ) |
|                                                                                                                               |   |                                    |          |   |
| Pro                  forma net loss                                                                                                |   | $                                       | (509,331 | ) |
|                                                                                                                               |   |                                    |          |   |
| Loss                  per share:                                                                                                   |   |                                    |          |   |
| Basic                  and diluted - as reported                                                                                   |   | $                                       | (0.21    | ) |
|                                                                                                                               |   |                                    |     |   |
| Basic                  and diluted - pro forma                                                                                     |   | $                                       | (0.22    | ) |

**NOTE      5**
**Loss      Per Share:**

----

**TRANSCOMMUNITY        FINANCIAL CORPORATION**

**NOTES        TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**NOTE      6**
**Business      Segments:**

|                                                          |   | For                  three months ended March 31, 2006  |    |
|---------------------------------------------------------------|--------|--------------------------------------------------------------|---------|
|                                                          |   | (dollars                  in thousands)                 |    |   |   |   |
|                                                          |   | Community                  Banking                           |    | Main                  Street |   | Trans-Community |   | Eliminations |   | Consolidated |   |
| Net                  interest income (expense)                |   | $                                                            | 2,018   |   | $ | (9 | ) | $ | 111 |   | $ | — |   | $ | 2,120 |   |
| Provision                  for loan losses                    |   |                                                         | (52     | ) |   | — |   |   | — |   |   | — |   |   | (52 | ) |
| Noninterest                  income                           |   |                                                         | 239     |   |   | 880 |   |   | 102 |   |   | (103 | ) |   | 1,118 |   |
| Noninterest                  expense                          |   |                                                         | (1,579  | ) |   | (1,029 | ) |   | (818 | ) |   | 117 |   |   | (3,309 | ) |
| Income                  (loss) from subsidiaries              |   |                                                         | (158    | ) |   | — |   |   | 310 |   |   | (152 | ) |   | — |   |
| Net                  income (loss) from continuing operations |   |                                                         | 468     |   |   | (158 | ) |   | (295 | ) |   | (138 | ) |   | (123 | ) |
|                                                          |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  loss from discontinued operations        |   |                                                         | — |   |   | — |   |   | — |   |   | — |   |   | — |   |
|                                                          |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                  income (loss)                            |   | $                                                            | 468     |   | $ | (158 | ) |   | (295 | ) | $ | (138 | ) | $ | (123 | ) |
|                                                          |   |                                                         |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                  Assets                                 |   | $                                                            | 165,279 |   | $ | 780 |   | $ | 30,552 |   | $ | (21,319 | ) | $ | 175,292 |   |

|                                                            |   |  For                    three months ended March 31, 2005  |    |
|-----------------------------------------------------------------|--------|----------------------------------------------------------------------|---------|
|                                                            |   |  (dollars                    in thousands)                 |    |
|                                                            |   | Community                    Banking                                 |    | Main                    Street |   | Trans-Community |   | Eliminations |   | Consolidated |   |
| Net                    interest income (expense)                |   | $                                                                    | 1,557   |   | $ | (14 | ) | $ | (13 | ) | $ | — |   | $ | 1,530 |   |
| Provision                    for loan losses                    |   |                                                                 | (50     | ) |   | (15 | ) |   | — |   |   | — |   |   | (65 | ) |
| Noninterest                    income                           |   |                                                                 | 219     |   |   | 985 |   |   | 86 |   |   | (126 | ) |   | 1,164 |   |
| Noninterest                    expense                          |   |                                                                 | (1,437  | ) |   | (941 | ) |   | (784 | ) |   | 140 |   |   | (3,022 | ) |
| Income                    (loss) from subsidiaries              |   |                                                                 | 15      |   |   | — |   |   | 239 |   |   | (254 | ) |   | — |   |
| Net                    income (loss) from continuing operations |   |                                                                 | 304     |   |   | 15 |   |   | (472 | ) |   | (240 | ) |   | (393 | ) |
|                                                            |   |                                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    loss from discontinued operations        |   |                                                                 | (80     | ) |   | — |   |   | — |   |   | — |   |   | (80 | ) |
|                                                            |   |                                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net                    income (loss)                            |   | $                                                                    | 224     |   | $ | 15 |   |   | (472 | ) | $ | (240 | ) | $ | (473 | ) |
|                                                            |   |                                                                 |    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                    Assets                                 |   | $                                                                    | 147,004 |   | $ | 1,398 |   | $ | 16,723 |   | $ | (17,534 | ) | $ | 147,591 |   |

----

**TRANSCOMMUNITY      FINANCIAL CORPORATION**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)**

**NOTE      7 **
**Capital:**

|                                                 |   | **March                  31, 2006**       |   | **December                  31, 2005** |   |
|------------------------------------------------------|--------|-------------------------------------------|--------|----------------------------------------|--------|
|                                                 |   | **(in                  thousands)**  |   |
| **Tier                  1 Leverage Capital Ratio**   |   |                                      |   |                                   |   |
| Amount                                               |   | $                                         | 29,929 |                                   | $      | 30,028 |   |
| Actual                  Ratio                        |   |                                      | 17.21  | %                                      |   | 18.81 | % |
| Minimum                  Capital Requirement         |   |                                      | 4.00   | %                                      |   | 4.00 | % |
|                                                 |   |                                      |        |                                   |   |  |   |
| **Tier                  1 Risk-Based Capital Ratio** |   |                                      |   |                                   |   |   |   |
| Amount                                               |   | $                                         | 29,929 |                                   | $      | 30,028 |   |
| Actual                  Ratio                        |   |                                      | 20.66  | %                                      |   | 20.59 | % |
| Minimum                  Capital Requirement         |   |                                      | 4.00   | %                                      |   | 4.00 | % |
|                                                 |   |                                      |   |                                   |   |   |   |
| **Total                  Risk-Based Capital Ratio**  |   |                                      |   |                                   |   |   |   |
| Amount                                               |   | $                                         | 31,654 |                                   | $      | 31,720 |   |
| Actual                  Ratio                        |   |                                      | 21.85  | %                                      |   | 21.75 | % |
| Minimum                  Capital Requirement         |   |                                      | 8.00   | %                                      |   | 8.00 | % |

----

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

**Forward**
**-Looking      Statements**

| ·   | Projections                of revenues, expenses, losses, losses per share, net interest margins,                asset growth, loan production, deposit growth, and other performance                measures |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Expansion                of operations, including de novo banks and branch openings, entrance                into                new markets, development of products and                services |
|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| ·   | Discussions                on the outlook of the economy, competition, regulation, taxation,                company                strategies, subsidiaries, investment risk and                policies |
|--------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**Significant      Accounting Policies**

----

**Overview**

| ·   | Increasing                loan originations |
|--------------------|---------------------------------------------|

| ·   | Increasing                total and core deposit balances |
|--------------------|-----------------------------------------------------------|

| ·   | Maintaining                TransCommunity’s history of strong net interest margins |
|--------------------|------------------------------------------------------------------------------------------|

| ·   | Maintaining                high credit standards and low levels of non-performing assets |
|--------------------|------------------------------------------------------------------------------------------|

| ·   | Maintaining                an adequate loan loss reserve |
|--------------------|----------------------------------------------------------|

| ·   | Managing                interest rate risk |
|--------------------|--------------------------------------------|

| ·   | Controlling                expenses |
|--------------------|-------------------------------------|

| ·   | Ensuring                adequate funding for ongoing growth |
|--------------------|-------------------------------------------------------------|

| ·   | Net                loss of $123 thousand or an improvement of 73.9% |
|--------------------|---------------------------------------------------------------------|

| ·   | Yield                on loans, including fees, up 92 basis points to 8.58% |
|--------------------|----------------------------------------------------------------------------|

| ·   | Net                interest income increased by $590 thousand, or 38.5% |
|--------------------|-------------------------------------------------------------------------|

**Results      of Operations **

----

***Net      Interest Income***

***Provision      for Loan Losses***

***Noninterest      Income***

----

***Noninterest      Expense***

***Segment      Information***

**Financial      Condition**

----

**TRANSCOMMUNITY        FINANCIAL CORPORATION**

**NET        INTEREST MARGIN ANALYSIS**

**AVERAGE        BALANCE SHEETS**

**FOR        THE THREE MONTHS ENDED MARCH 31, 2006 AND 2005**

|                                                      |   |    |        |  2006     |   |        |   |     |   |  2005     |   |        |   |
|-----------------------------------------------------------|--------|---------|-------------|----------------|--------|-------------|--------|---------------|--------|----------------|--------|-------------|--------|
|                                                      |   | Average |        |  Interest |   | Average     |   |  Average |   |  Interest |   | Average     |   |
|                                                      |   | Balance |        |  Income/  |   | Rates       |   |  Balance |   |  Income/  |   | Rates       |   |
|                                                      |   | Sheet   |        |  Expense  |   | Earned/Paid |   |  Sheet   |   |  Expense  |   | Earned/Paid |   |
|                                                      |   |    |        |      |   |        |   |     |   |      |   |        |   |
| **ASSETS:**                                               |   |    |        |      |   |        |   |     |   |      |   |        |   |
|                                                      |   |    |        |      |   |        |   |     |   |      |   |        |   |
| Loans,                  including fees                    |   | $       | 123,670,253 |           | $      | 2,617,374   |   |          | 8.58   | %              | $      | 104,608,228 |   | $ | 1,976,467 |   |   | 7.66 | % |
| Federal                  funds sold                       |   |    | 22,404,247  |           |   | 243,753     |   |          | 4.41   |           |   | 9,180,333   |   |   | 54,701 |   |   | 2.42 |   |
| Investments                                               |   |    | 17,307,322  |           |   | 167,136     |   |          | 3.92   |           |   | 16,666,271  |   |   | 121,521 |   |   | 2.96 |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Total                  Earning Assets                     |   |    | 163,381,822 |           |   | 3,028,263   |   |          | 7.52   |           |   | 130,454,832 |   |   | 2,152,689 |   |   | 6.69 |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Allowance                  for loan losses                |   |    | (1,702,041  | )              |   |        |   |          |   |           |   | (1,447,089  | )      |   |   |   |   |   |   |
| Non-earning                  assets                       |   |    | 12,756,326  |           |   |        |   |          |   |           |   | 14,708,659  |   |   |   |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Total                  Assets                             |   | $       | 174,436,107 |           |   |             |   |          |   |           | $      | 143,716,402 |   |   |  |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| **LIABILITIES                  AND STOCKHOLDERS' EQUITY** |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Deposits:                                                 |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Demand                  -                                 |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
|  Interest                  bearing                   |   | $       | 37,597,680  |           | $      | 135,829     |   |          | 1.47   | %              | $      | 34,399,204  |   | $ | 87,175 |   |   | 1.03 | % |
| Savings                                                   |   |    | 10,009,888  |           |   | 38,219      |   |          | 1.55   |           |   | 8,612,098   |   |   | 23,016 |   |   | 1.08 |   |
| Time                  deposits                            |   |    | 75,820,260  |           |   | 730,553     |   |          | 3.91   |           |   | 64,646,220  |   |   | 490,904 |   |   | 3.08 |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Total                  deposits                           |   |    | 123,427,828 |           |   | 904,601     |   |          | 2.97   |           |   | 107,657,522 |   |   | 601,095 |   |   | 2.26 |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Other                  borrowed                           |   |    |        |           |   |        |   |          |        |           |   |        |   |   |   |   |   |  |   |
|  Funds                                               |   |    | 162,400     |           |   | 3,943       |   |          | 9.85   |           |   | 2,664,467   |   |   | 21,494 |   |   | 3.27 |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Total                  interest-bearing                   |   |    |        |           |   |        |   |          |        |           |   |        |   |   |   |   |   |  |   |
|  Liabilities                                         |   |    | 123,590,228 |           |   | 908,544     |   |          | 2.98   |           |   | 110,321,989 |   |   | 622,589 |   |   | 2.29 |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Non-interest                  bearing                     |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
|  Deposits                                            |   |    | 19,540,314  |           |   |        |   |          |   |           |   | 17,484,403  |   |   |   |   |   |   |   |
| Other                  liabilities                        |   |    | 948,302     |           |   |        |   |          |   |           |   | 776,418     |   |   |   |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Total                  liabilities                   |   |    | 144,078,844 |           |   |        |   |          |   |           |   | 128,582,810 |   |   |   |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Stockholders'                  equity                     |   |    | 30,357,263  |           |   |        |   |          |   |           |   | 15,133,592  |   |   |   |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Total                  liabilities and                    |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
|  stockholders'                  equity               |   | $       | 174,436,107 |           |   |        |   |          |   |           | $      | 143,716,402 |   |   |   |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Net                  interest earnings                    |   |    |        |           | $      | 2,119,719   |   |          |   |           |   |        |   | $ | 1,530,100 |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Interest                  spread                          |   |    |        |           |   |        |   |          | 4.54   | %              |   |        |   |   |   |   |   | 4.40 | % |
|                                                      |   |    |        |           |   |        |   |          |   |           |   |        |   |   |   |   |   |   |   |
| Net                  interest margin                      |   |    |        |           |   |        |   |          | 5.26   | %              |   |        |   |   |   |   |   | 4.76 | % |

----

**Income      Taxes**

**Loans**

|                                                     |   |  March                  31, 2006 |        |  December                  31, 2005 |   |
|----------------------------------------------------------|--------|---------------------------------------|-------------|------------------------------------------|--------|
| Real                  estate:                            |   |                             |        |                                |   |
| Construction                                             |   | $                                     | 16,393,354  |                                     | $      | 16,040,907 |   |
| Residential                                              |   |                                  | 25,398,438  |                                     |   | 25,146,542 |   |
| Commercial                                               |   |                                  | 48,456,042  |                                     |   | 52,954,477 |   |
| Commercial,                  industrial and agricultural |   |                                  | 23,396,536  |                                     |   | 20,205,294 |   |
| Consumer                  and installment                |   |                                  | 7,612,192   |                                     |   | 7,595,098 |   |
| All                  other                               |   |                                  | 460,992     |                                     |   | 631,171 |   |
|                                                     |   |                                  |        |                                     |   |   |   |
| Total                  Loans                             |   | $                                     | 121,717,554 |                                     | $      | 122,573,489 |   |

**Allocation      of the Allowance for Loan Losses**

|                                                     |   |  **March                  31, 2006** |      | **December                  31, 2005** |   |
|----------------------------------------------------------|--------|-------------------------------------------|-----------|----------------------------------------|--------|
|                                                     |   |  Allowance                           |      | Percent                                |   | Allowance |   | Percent |   |
| Real                  estate:                            |   |                                 |      |                                   |   |   |   |   |   |
| Construction                                             |   | $                                         | 224,212   |                                   |   | 13 | % | $ | 221,448 |   |   | 13 | % |
| Residential                                              |   |                                      | 362,189   |                                   |   | 21 | % |   | 347,153 |   |   | 21 | % |
| Commercial                                               |   |                                      | 689,883   |                                   |   | 43 | % |   | 731,048 |   |   | 43 | % |
| Commercial,                  industrial and agricultural |   |                                      | 327,695   |                                   |   | 16 | % |   | 278,938 |   |   | 16 | % |
| Consumer                  and installment                |   |                                      | 103,482   |                                   |   | 6 | % |   | 104,852 |   |   | 6 | % |
| All                  other                               |   |                                      | 17,247    |                                   |   | 1 | % |   | 8,714 |   |   | 1 | % |
|                                                     |   |                                      |      |                                   |   |   |   |   |   |   |   |   |   |
| Total                  Loans                             |   | $                                         | 1,724,708 |                                   | $      | 100 | % | $ | 1,692,153 |   | $ | 100 | % |

----

**Nonaccrual,      Past Due and Restructured Loans**

**Liquidity      and Interest Sensitivity**

**Contractual      Obligations**

|                                         |   | Payments                  due by period  |      |
|----------------------------------------------|--------|-----------------------------------------------|-----------|
|                                         |   | Total                                         |      | Less                  than One Year |   | 1-3                  Years |   | 3-5                  Years |   | More                  than 5 Years |   |
| Contractual                  Obligations:    |   |                                          |      |   |   |   |   |   |   |   |   |
| Operating                  lease obligations |   | $                                             | 3,635,231 |   | $ | 484,415 |   | $ | 956,126 |   | $ | 954,920 |   | $ | 1,239,770 |   |
| Data                  processing services    |   |                                          | 1,462,989 |   |   | 531,996 |   |   | 930,993 |   |   | - |   |   | - |   |
| Total                                        |   | $                                             | 5,098,220 |   | $ | 1,016,411 |   | $ | 1,887,119 |   | $ | 954,920 |   | $ | 1,239,770 |   |

----

**TRANSCOMMUNITY        FINANCIAL CORPORATION**

**INTEREST        SENSITIVITY ANALYSIS**

**March        31, 2006**

|                                                                     |   | 1                  -                  365 |        | 1                  to 5 |   | Over                  5 |   |   |       |
|--------------------------------------------------------------------------|--------|-------------------------------------------|-------------|-------------------------|--------|-------------------------|--------|--------|------------|
|                                                                     |   | Days                                      |        | Years                   |   | Years                   |   | Total  |       |
| Uses                  of Funds:                                          |   |                                      |        |                    |   |                    |   |   |       |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |
| Loans:                                                                   |   |                                      |        |                    |   |                    |   |   |       |
| Real                  estate                                             |   |                                      |        |                    |   |                    |   |   |       |
| Construction                                                        |   | $                                         | 15,224,286  |                    | $      | 1,169,068               |   | $      | —    |   | $ | 16,393,354 |   |
| Residential                                                         |   |                                      | 17,672,526  |                    |   | 5,809,339               |   |   | 1,916,573  |   |   | 25,398,438 |   |
| Commercial                                                          |   |                                      | 29,377,475  |                    |   | 16,616,621              |   |   | 2,461,946  |   |   | 48,456,042 |   |
| Commercial,                  industrial and agricultural                 |   |                                      | 14,493,014  |                    |   | 8,432,175               |   |   | 471,347    |   |   | 23,396,536 |   |
| Consumer                  and installment                                |   |                                      | 4,672,793   |                    |   | 2,867,120               |   |   | 72,279     |   |   | 7,612,192 |   |
| All                  other                                               |   |                                      | 435,870     |                    |   | 25,122                  |   |   | —    |   |   | 460,992 |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Total                  Loans                                             |   |                                      | 81,875,964  |                    |   | 34,919,445              |   |   | 4,922,145  |   |   | 121,717,554 |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Federal                  funds sold                                      |   |                                      | 8,965,608   |                    |   | —                 |   |   |       |   |   | 8,965,608 |   |
| Investment                  securities held to maturity, at cost         |   |                                      | 18,992,748  |                    |   | 5,399,916               |   |   | 1,000,000  |   |   | 25,392,664 |   |
| Investment                  securities available for sale, at fair value |   |                                      | 4,979,064   |                    |   | 2,375,009               |   |   | —    |   |   | 7,354,073 |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Total                                                                    |   | $                                         | 114,813,384 |                    | $      | 42,694,370              |   | $      | 5,922,145  |   | $ | 163,429,899 |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Sources                  of Funds:                                       |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Demand                  Deposits -                                       |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Interest                  bearing                                        |   | $                                         | 37,112,653  |                    | $      | —                 |   | $      | —    |   | $ | 37,112,653 |   |
| Savings                  accounts                                        |   |                                      | 10,753,158  |                    |   | —                 |   |   | —    |   |   | 10,753,158 |   |
| Time                  Deposits > $100,000                             |   |                                      | 16,398,715  |                    |   | 13,782,433              |   |   | —    |   |   | 30,181,148 |   |
| Time                  Deposits < $100,000                             |   |                                      | 20,974,254  |                    |   | 24,770,700              |   |   | —    |   |   | 45,744,954 |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Total                  interest-bearing deposits                         |   |                                      | 85,238,780  |                    |   | 38,553,133              |   |   | —    |   |   | 123,791,913 |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Federal                  funds purchased                                 |   |                                      | 1,049,000   |                    |   | —                 |   |   | —    |   |   | 1,049,000 |   |
| Borrowings                                                               |   |                                      | —     |                    |   | —                 |   |   | —    |   |   | — |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Total                                                                    |   | $                                         | 86,287,780  |                    | $      | 38,553,133              |   | $      | —    |   | $ | 124,840,913 |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Discrete                  Gap                                            |   | $                                         | 28,525,604  |                    | $      | 4,141,237               |   | $      | 5,922,145  |   | $ | 38,588,986 |   |
| Cumulative                  Gap                                          |   | $                                         | 28,525,604  |                    | $      | 32,666,841              |   | $      | 38,588,986 |   |   |   |   |
|                                                                     |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| Ratio                  of Cumulative Gap                                 |   |                                      |        |                    |   |                    |   |   |       |   |   |   |   |
| to                  Total Earning Assets                                 |   |                                      | 17.45       | %                       |   | 19.99                   | %      |   | 23.61      | % |   |   |   |

----

**Future      Prospects**

| **Item 3.** | **Quantitative                and Qualitative Disclosures About Market Risk**** ** |
|------------------|-----------------------------------------------------------------------------------------|

----

**Item      4. **
**Controls      and Procedures**

----

**Part      II**
**Other      Information**

**Item      1.**
**Legal      Proceedings**

**Item      1A.**
**Risk      Factors**

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

**Item      3.**
**Defaults      Upon Senior Securities**

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

**Item      5.**
**Other      Information **

----

**Item      6.**
**Exhibits      **

|  | Exhibit                No. | Description                  of Exhibits |
|--|----------------------------|------------------------------------------|
|   |   |
|--------|--------|
|  | 3.1 | Articles of Incorporation of TransCommunity                (as amended May 24, 2005) (1) |
|--|-----|------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|  | 3.2 | Bylaws of TransCommunity (as amended                April 26,                2006) (2) |
|--|-----|----------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|  | 31.1 | Certification of Chief Executive                Officer                pursuant to Rule 13a-14(a) (filed herewith) |
|--|------|--------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|  | 31.2 | Certification of Chief Financial                Officer                pursuant to Rule 13a-14(a) (filed herewith) |
|--|------|--------------------------------------------------------------------------------------------------------------------|
|   |   |
|--------|--------|
|  | 32 | Certifications of Chief Executive                Officer and                Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted                pursuant to Section 906 of the Sabanes-Oxley Act of 2002 (filed                herewith) |
|--|----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (1)   | Incorporated                by reference to Exhibit 3.1 to the Company’s Registration Statement on                Form SB-2 (No. 333-125560) filed with the Commission on June 6,                2005. |
|-----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (2)   | Incorporated                by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K                filed with the Commission on May 2,                2006. |
|-----------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|                                              |                                                                                     |                                              |
|---------------------------------------------------|------------------------------------------------------------------------------------------|---------------------------------------------------|
|                                              | TRANSCOMMUNITY                FINANCIAL CORPORATION(Registrant)                          |
|                                         |                                                                                |                                         |
| Date: May              12,              2006 | By:                                                                            | /s/ Bruce              B.              Nolte |
|                                              | Bruce              B. Nolte                                                              |
|                                              | Chief                Executive Officer (principal executive                officer) |
|                                              |                                                                                              |                                      |
|---------------------------------------------------|---------------------------------------------------------------------------------------------------|-------------------------------------------|
|                                         |                                                                                         |                                 |
| Date: May              12,              2006 | By:                                                                                     | /s/ William              B. Littreal |
|                                              | William              B. Littreal                                                                  |
|                                              | Chief                Financial Officer(principal financial and accounting                officer) |