##### Table of Contents

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U.S. Securities and Exchange Commission

Washington, D.C. 20549



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Form 10-QSB



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|x | Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------



For the quarterly period ended September 30, 2004



| ̈ | Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ----------------------------------------------------------------------------------



For the transition period ended



Commission File Number 000-50400



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New Century Bancorp, Inc.

(Exact name of Registrant as specified in its
charter)



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|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|North Carolina                                                 |  | 20-0218264                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                              |  |           
|--------------------------------------------- |  | ----------
|700 W. Cumberland Street Dunn, North Carolina |  | 28334     
|(Address of principal executive offices)      |  | (Zip Code)



Registrants
telephone number, including area code (910) 892-7080



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Securities Registered Pursuant to Section 12(g) of the Exchange Act:

Common Stock, $1 Par Value



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



As of November 8, 2004, the Registrant had outstanding 2,795,821
shares of Common Stock, $1 par value.



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##### Table of Contents

|         |  |                                                           |  |                                                                                                      |  |         
|-------- |  | --------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------- |  | --------
|         |  |                                                           |  |                                                                                                      |  | Page No.
|Part I.  |  | FINANCIAL INFORMATION                                     |  |                                                                                                     
|         |  |                                                          
|Item 1-  |  | Consolidated Financial Statements (Unaudited)             |  |                                                                                                     
|         |  |                                                           | 
|         |  |                                                           |  | Consolidated Balance Sheets September 30, 2004 and December 31, 2003                                 |  | 3       
|         |  |                                                           | 
|         |  |                                                           |  | Consolidated Statements of Operations Three Months and Nine Months Ended September 30, 2004 and 2003 |  | 4       
|         |  |                                                           | 
|         |  |                                                           |  | Consolidated Statements of Cash Flows Nine Months Ended September 30, 2004 and 2003                  |  | 5       
|         |  |                                                           | 
|         |  |                                                           |  | Notes to Consolidated Financial Statements                                                           |  | 6       
|         |  |                                                          
|Item 2 - |  | Managements Discussion and Analysis or Plan of Operation |  | 9                                                                                                   
|         |  |                                                          
|Item 3 - |  | Controls and Procedures                                   |  | 15                                                                                                  
|         |  |                                                          
|Part II. |  | Other Information                                         |  |                                                                                                     
|         |  |                                                          
|Item 6 - |  | Exhibits                                                  |  | 16                                                                                                  



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##### Table of Contents

Part I. FINANCIAL INFORMATION

Item 1 - Financial Statements



NEW CENTURY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS



|                                                                                                                |  |                               |         |   |                   |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | ------- | - | ----------------- | - | ------- | -
|                                                                                                                |  | September 30, 2004(Unaudited) |         |   | December 31,2003* |  
|                                                                                                                |  | (In thousands)                |        
|ASSETS                                                                                                          |  |                               |         |   |                   |   |         |  
|                                                                                                                |  |                              
|Cash and due from banks                                                                                         |  | $                             | 5,540   |   |                   | $ | 4,074   |  
|Interest-earning deposits in other banks                                                                        |  |                               | 381     |   |                   |   | 1,821   |  
|Federal funds sold                                                                                              |  |                               | 38,992  |   |                   |   | 16,102  |  
|Investment securities available for sale, at fair value                                                         |  |                               | 21,510  |   |                   |   | 12,637  |  
|Loans                                                                                                           |  |                               | 251,154 |   |                   |   | 151,930 |  
|Allowance for loan losses                                                                                       |  |                               | (3,540  | ) |                   |   | (2,355  | )
|                                                                                                                |  |                               |         |   |                   |   |         |  
|NET LOANS                                                                                                       |  |                               | 247,614 |   |                   |   | 149,575 |  
|                                                                                                                |  |                              
|Accrued interest receivable                                                                                     |  |                               | 1,233   |   |                   |   | 791     |  
|Stock in Federal Home Loan Bank of Atlanta, at cost                                                             |  |                               | 450     |   |                   |   | 450     |  
|Stock in The Bankers Bank, at cost                                                                              |  |                               | 49      |   |                   |   | 49      |  
|Foreclosed real estate                                                                                          |  |                               |        |   |                   |   | 218     |  
|Bank premises and equipment                                                                                     |  |                               | 4,714   |   |                   |   | 3,285   |  
|Investment in life insurance                                                                                    |  |                               | 2,182   |   |                   |   | 2,118   |  
|Other assets                                                                                                    |  |                               | 1,490   |   |                   |   | 693     |  
|                                                                                                                |  |                               |         |   |                   |   |         |  
|TOTAL ASSETS                                                                                                    |  | $                             | 324,155 |   |                   | $ | 191,813 |  
|                                                                                                                |  |                               |         |   |                   |   |         |  
|LIABILITIES AND SHAREHOLDERS EQUITY                                                                            |  |                               |         |   |                   |   |         |  
|                                                                                                                |  |                              
|Deposits:                                                                                                       |  |                               |         |   |                   |   |         |  
|Demand                                                                                                          |  | $                             | 32,573  |   |                   | $ | 24,265  |  
|Savings                                                                                                         |  |                               | 2,376   |   |                   |   | 1,808   |  
|Money market and NOW                                                                                            |  |                               | 58,575  |   |                   |   | 34,332  |  
|Time                                                                                                            |  |                               | 173,511 |   |                   |   | 91,566  |  
|                                                                                                                |  |                               |         |   |                   |   |         |  
|TOTAL DEPOSITS                                                                                                  |  |                               | 267,035 |   |                   |   | 151,971 |  
|                                                                                                                |  |                              
|Securities sold under agreements to repurchase                                                                  |  |                               | 6,126   |   |                   |   | 2,714   |  
|Federal Home Loan Bank of Atlanta advance                                                                       |  |                               | 9,000   |   |                   |   | 9,000   |  
|Long term debt                                                                                                  |  |                               | 12,372  |   |                   |   |        |  
|Accrued interest payable                                                                                        |  |                               | 236     |   |                   |   | 156     |  
|Accrued expenses and other liabilities                                                                          |  |                               | 983     |   |                   |   | 706     |  
|                                                                                                                |  |                               |         |   |                   |   |         |  
|TOTAL LIABILITIES                                                                                               |  |                               | 295,752 |   |                   |   | 164,547 |  
|                                                                                                                |  |                               |         |   |                   |   |         |  
|Shareholders equity:                                                                                           |  |                               |         |   |                   |   |         |  
|Common stock, $1 par value, 10,000,000 shares authorized; 2,795,821 and 2,541,655 shares issued and outstanding |  |                               | 2,795   |   |                   |   | 2,542   |  
|Additional paid-in capital                                                                                      |  |                               | 22,228  |   |                   |   | 22,481  |  
|Retained earnings                                                                                               |  |                               | 3,281   |   |                   |   | 2,100   |  
|Accumulated other comprehensive income                                                                          |  |                               | 99      |   |                   |   | 143     |  
|                                                                                                                |  |                               |         |   |                   |   |         |  
|TOTAL SHAREHOLDERS EQUITY                                                                                      |  |                               | 28,403  |   |                   |   | 27,266  |  
|                                                                                                                |  |                               |         |   |                   |   |         |  
|TOTAL LIABILITIES AND SHAREHOLDERS EQUITY                                                                      |  | $                             | 324,155 |   |                   | $ | 191,813 |  
|                                                                                                                |  |                               |         |   |                   |   |         |  

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|* | Derived from audited consolidated financial statements.
|- | -------------------------------------------------------



See accompanying notes.



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##### Table of Contents

NEW CENTURY BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)



|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|--------------------------------------------------------------- |  | ----------------------------------------------- | --------- | ------------------------------ | - | --------- |  | ---- | --------- |  | - | ---------
|                                                                |  | Three Months EndedSeptember 30,                 |           | Nine Months EndedSeptember 30,
|                                                                |  | 2004                                            |           | 2003                           |   | 2004      |  | 2003
|                                                                |  | (In thousands, except share and per share data)
|INTEREST INCOME                                                 |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|Loans                                                           |  | $                                               | 3,879     |                                | $ | 2,234     |  | $    | 9,989     |  | $ | 6,202    
|Federal funds sold and interest-earning deposits in other banks |  |                                                 | 124       |                                |   | 49        |  |      | 208       |  |   | 104      
|Investments                                                     |  |                                                 | 140       |                                |   | 139       |  |      | 381       |  |   | 436      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|TOTAL INTEREST INCOME                                           |  |                                                 | 4,143     |                                |   | 2,422     |  |      | 10,578    |  |   | 6,742    
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|INTEREST EXPENSE                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|Money market, NOW and savings deposits                          |  |                                                 | 166       |                                |   | 123       |  |      | 454       |  |   | 334      
|Time deposits                                                   |  |                                                 | 1,212     |                                |   | 645       |  |      | 2,847     |  |   | 1,925    
|Long term debt                                                  |  |                                                 | 15        |                                |   |          |  |      | 15        |  |   |         
|Federal Home Loan Bank of Atlanta advance                       |  |                                                 | 52        |                                |   | 27        |  |      | 154       |  |   | 63       
|Securities sold under agreements to repurchase                  |  |                                                 | 17        |                                |   | 5         |  |      | 37        |  |   | 22       
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|TOTAL INTEREST EXPENSE                                          |  |                                                 | 1,462     |                                |   | 800       |  |      | 3,507     |  |   | 2,344    
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|NET INTEREST INCOME                                             |  |                                                 | 2,682     |                                |   | 1,622     |  |      | 7,071     |  |   | 4,398    
|                                                                |  |                                                 |           |                               
|PROVISION FOR LOAN LOSSES                                       |  |                                                 | 310       |                                |   | 214       |  |      | 1,389     |  |   | 694      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES             |  |                                                 | 2,372     |                                |   | 1,408     |  |      | 5,682     |  |   | 3,704    
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|NON-INTEREST INCOME                                             |  |                                                 | 452       |                                |   | 362       |  |      | 1,211     |  |   | 938      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|NON-INTEREST EXPENSE                                            |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|Personnel                                                       |  |                                                 | 1,022     |                                |   | 802       |  |      | 2,973     |  |   | 2,009    
|Occupancy and equipment                                         |  |                                                 | 135       |                                |   | 99        |  |      | 389       |  |   | 245      
|Marketing and advertising                                       |  |                                                 | 72        |                                |   | 39        |  |      | 131       |  |   | 92       
|Professional fees                                               |  |                                                 | 60        |                                |   | 41        |  |      | 185       |  |   | 192      
|Information systems                                             |  |                                                 | 158       |                                |   | 134       |  |      | 433       |  |   | 326      
|Other operating expense                                         |  |                                                 | 338       |                                |   | 204       |  |      | 945       |  |   | 530      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|TOTAL NON-INTEREST EXPENSE                                      |  |                                                 | 1,785     |                                |   | 1,319     |  |      | 5,056     |  |   | 3,394    
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|INCOME BEFORE INCOME TAXES                                      |  |                                                 | 1,039     |                                |   | 451       |  |      | 1,837     |  |   | 1,248    
|                                                                |  |                                                 |           |                               
|INCOME TAXES                                                    |  |                                                 | 378       |                                |   | 161       |  |      | 656       |  |   | 454      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|NET INCOME                                                      |  | $                                               | 661       |                                | $ | 290       |  | $    | 1,181     |  | $ | 794      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|NET INCOME PER SHARE                                            |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|Basic                                                           |  | $                                               | .24       |                                | $ | .12       |  | $    | .42       |  | $ | .37      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|Diluted                                                         |  | $                                               | .22       |                                | $ | .11       |  | $    | .40       |  | $ | .36      
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|WEIGHTED AVERAGE SHARES OUTSTANDING                             |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|Basic                                                           |  |                                                 | 2,795,821 |                                |   | 2,462,375 |  |      | 2,795,821 |  |   | 2,138,179
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          
|Diluted                                                         |  |                                                 | 2,966,700 |                                |   | 2,571,533 |  |      | 2,936,904 |  |   | 2,234,762
|                                                                |  |                                                 |           |                                |   |           |  |      |           |  |   |          



See accompanying notes.



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##### Table of Contents

NEW CENTURY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)



|                                                                                         |  |                                |          |   |      |   |         |  
|---------------------------------------------------------------------------------------- |  | ------------------------------ | -------- | - | ---- | - | ------- | -
|                                                                                         |  | Nine Months EndedSeptember 30, |         
|                                                                                         |  | 2004                           |          |   | 2003 |  
|                                                                                         |  | (In thousands)                 |         
|CASH FLOWS FROM OPERATING ACTIVITIES                                                     |  |                                |          |   |      |   |         |  
|Net income                                                                               |  | $                              | 1,181    |   |      | $ | 794     |  
|Adjustments to reconcile net income to net cash provided (used) by operating activities: |  |                                |          |   |      |   |         |  
|Provision for loan losses                                                                |  |                                | 1,389    |   |      |   | 694     |  
|Depreciation                                                                             |  |                                | 176      |   |      |   | 220     |  
|Net amortization of investment premiums                                                  |  |                                | 253      |   |      |   |        |  
|Decrease in loans held for sale                                                          |  |                                | 709      |   |      |   |        |  
|Deferred income taxes                                                                    |  |                                | (553     | ) |      |   | 14      |  
|Loss on sale of foreclosed real estate                                                   |  |                                | 12       |   |      |   |        |  
|Increase in cash surrender value of bank owned life insurance                            |  |                                | 65       |   |      |   |        |  
|Change in assets and liabilities:                                                        |  |                                |          |   |      |   |         |  
|Increase in accrued interest receivable and other assets                                 |  |                                | (424     | ) |      |   | (459    | )
|Decrease in accrued expenses and other liabilities                                       |  |                                | 358      |   |      |   | (822    | )
|                                                                                         |  |                                |          |   |      |   |         |  
|NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                                         |  |                                | 3,166    |   |      |   | 441     |  
|                                                                                         |  |                                |          |   |      |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                                                     |  |                                |          |   |      |   |         |  
|Purchase of FHLB stock                                                                   |  |                                |         |   |      |   | (111    | )
|Purchase of investment in life insurance                                                 |  |                                |         |   |      |   | (2,000  | )
|Purchases of investment securities available for sale                                    |  |                                | (11,122  | ) |      |   | (4,898  | )
|Maturities and prepayments of investment securities available for sale                   |  |                                | 1,934    |   |      |   | 4,590   |  
|Net increase in gross loans outstanding                                                  |  |                                | (100,137 | ) |      |   | (29,534 | )
|Proceeds from sale of foreclosed real estate                                             |  |                                | 206      |   |      |   |        |  
|Investment in New Century Statutory Trust I                                              |  |                                | (372     | ) |      |   |        |  
|Purchases of bank premises and equipment                                                 |  |                                | (1,606   | ) |      |   | (1,049  | )
|                                                                                         |  |                                |          |   |      |   |         |  
|NET CASH USED BY INVESTING ACTIVITIES                                                    |  |                                | (111,097 | ) |      |   | (33,002 | )
|                                                                                         |  |                                |          |   |      |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                     |  |                                |          |   |      |   |         |  
|Increase in deposits                                                                     |  |                                | 115,063  |   |      |   | 43,155  |  
|Increase (decrease) in repurchase agreements                                             |  |                                | 3,412    |   |      |   | (193    | )
|Proceeds from FHLB advance                                                               |  |                                |         |   |      |   | 4,000   |  
|Proceeds in long term debt                                                               |  |                                | 12,372   |   |      |   |        |  
|Proceeds from sale of common stock                                                       |  |                                |         |   |      |   | 9,144   |  
|                                                                                         |  |                                |          |   |      |   |         |  
|NET CASH PROVIDED BY FINANCING ACTIVITIES                                                |  |                                | 130,847  |   |      |   | 56,106  |  
|                                                                                         |  |                                |          |   |      |   |         |  
|NET INCREASE IN CASH AND DUE FROM BANKS                                                  |  |                                | 22,916   |   |      |   | 23,545  |  
|                                                                                         |  |                               
|CASH AND DUE FROM BANKS, BEGINNING                                                       |  |                                | 21,997   |   |      |   | 10,482  |  
|                                                                                         |  |                                |          |   |      |   |         |  
|CASH AND DUE FROM BANKS, ENDING                                                          |  | $                              | 44,913   |   |      | $ | 34,027  |  
|                                                                                         |  |                                |          |   |      |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION                                        |  |                                |          |   |      |   |         |  
|Interest paid                                                                            |  | $                              | 3,427    |   |      | $ | 2,322   |  
|Income tax paid                                                                          |  |                                | 778      |   |      |   | 814     |  
|Unrealized loss on investment securities available for sale, net of tax                  |  |                                | (44      | ) |      |   | (63     | )



See accompanying notes.



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##### Table of Contents

NEW CENTURY BANCORP, INC.

Notes to Consolidated Financial Statements



NOTE A - BASIS OF PRESENTATION



New Century Bancorp, Inc. (Company) is a bank holding company whose principal
business activity consists of ownership of New Century Bank and New Century Bank of Fayetteville (collectively referred to as the Banks). New Century Bank became a wholly-owned subsidiary of the Company as part of a holding company
reorganization in September 2003. In June 2003, the Bank opened an office in Fayetteville, which operated as a branch of New Century Bank until January 2004, when the Fayetteville office was sold to New Century Bank of Fayetteville, a de novo
banking corporation, which now operates as a wholly-owned subsidiary of the Company. The consolidated financial statements include the accounts of the Company and the Banks. All significant intercompany transactions and balances have been eliminated
in consolidation. In managements opinion, the financial information, which is unaudited, reflects all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial information as of and for
the three and nine month periods ended September 30, 2004 and 2003, in conformity with accounting principles generally accepted in the United States of America.



The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at
the date of the financial statements, as well as the amounts of income and expense during the reporting period. Actual results could differ from those estimates. Operating results for the three and nine month periods ended September 30, 2004 are not
necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2004.



The organization and business of the Company, accounting policies followed by the Company and other relevant information are contained in the notes to the financial statements filed as part of the Companys 2003
Annual Report on Form 10-KSB, filed with the Securities and Exchange Commission. This quarterly report should be read in conjunction with the Annual Report.



NOTE B - LOAN COMMITMENTS



At September 30, 2004, loan commitments were $61,971,000.



NOTE C - PER SHARE RESULTS



Basic net income per share is computed based upon the weighted average number of shares of common stock outstanding during the period. Diluted net income per share
includes the dilutive effect of stock options outstanding during the period. A summary of shares outstanding follows:



|                                                              |  |                                 |  |                                |  |           |  |          
|------------------------------------------------------------- |  | ------------------------------- |  | ------------------------------ |  | --------- |  | ---------
|                                                              |  | Three Months EndedSeptember 30, |  | Nine Months EndedSeptember 30,
|                                                              |  | 2004                            |  | 2003                           |  | 2004      |  | 2003     
|Weighted average shares used for basic net income per share   |  | 2,795,821                       |  | 2,462,375                      |  | 2,795,821 |  | 2,138,179
|Incremental shares from assumed exercise of stock options     |  | 170,879                         |  | 109,158                        |  | 141,083   |  | 96,583   
|                                                              |  |                                 |  |                                |  |           |  |          
|Weighted average shares used for diluted net income per share |  | 2,966,700                       |  | 2,571,533                      |  | 2,936,904 |  | 2,234,762
|                                                              |  |                                 |  |                                |  |           |  |          



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##### Table of Contents

NEW CENTURY BANCORP, INC.

Notes to Consolidated Financial Statements



NOTE C - PER SHARE RESULTS (Continued)



On September 26, 2003, the Board of Directors of the Company declared an 11-for-10 stock split in the form of a 10% stock dividend. The stock split was payable to shareholders of record as of October 10, 2003, and upon surrender of New
Century Bank stock certificates in the holding company reorganization described in Note A. Also, on May 28, 2004, the Board of Directors of the Company declared another 11-for-10 stock split in the form of a stock dividend, which was payable to
shareholders of record as of June 15, 2004, and which resulted in the issuance of 253,679 additional common shares. All references to average shares outstanding and net income per share have been adjusted to reflect these stock splits.



NOTE D - STOCK COMPENSATION PLANS



Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, encourages all entities to adopt a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized
over the service period, which is usually the vesting period. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board
Opinion No. 25, Accounting for Stock Issued to Employees,whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire
the stock. Stock options issued under the Companys stock option plans have no intrinsic value at the grant date and, under Opinion No. 25, no compensation cost is recognized for them. The Company has elected to continue with the accounting
methodology in Opinion No. 25 and, as a result, has provided pro forma disclosures of net income and earnings per share and other disclosures as if the fair value based method of accounting had been applied.



|                                                                                                                                      |  |                                               |     |                                |   |      |  |      |       |  |   |    
|------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | --- | ------------------------------ | - | ---- |  | ---- | ----- |  | - | ---
|                                                                                                                                      |  | Three Months EndedSeptember 30,               |     | Nine Months EndedSeptember 30,
|                                                                                                                                      |  | 2004                                          |     | 2003                           |   | 2004 |  | 2003
|                                                                                                                                      |  | (Amounts in thousands, except per share data)
|Net income:                                                                                                                           |  |                                               |     |                                |   |      |  |      |       |  |   |    
|As reported                                                                                                                           |  | $                                             | 661 |                                | $ | 290  |  | $    | 1,181 |  | $ | 794
|Deduct: Total stock-based employee compensation expense determined under fair value method for all awards, net of related tax
effects |  |                                               | 9   |                                |   | 10   |  |      | 213   |  |   | 33 
|                                                                                                                                      |  |                                               |     |                                |   |      |  |      |       |  |   |    
|Pro forma                                                                                                                             |  | $                                             | 652 |                                | $ | 280  |  | $    | 968   |  | $ | 761
|                                                                                                                                      |  |                                               |     |                                |   |      |  |      |       |  |   |    
|Basic earnings per share:                                                                                                             |  |                                               |     |                                |   |      |  |      |       |  |   |    
|As reported                                                                                                                           |  | $                                             | .24 |                                | $ | .13  |  | $    | .42   |  | $ | .37
|Pro forma                                                                                                                             |  |                                               | .23 |                                |   | .13  |  |      | .35   |  |   | .36
|                                                                                                                                      |  |                                               |     |                               
|Diluted earnings per share:                                                                                                           |  |                                               |     |                                |   |      |  |      |       |  |   |    
|As reported                                                                                                                           |  | $                                             | .22 |                                | $ | .12  |  | $    | .40   |  | $ | .36
|Pro forma                                                                                                                             |  |                                               | .22 |                                |   | .12  |  |      | .33   |  |   | .34



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NEW CENTURY BANCORP, INC.

Notes to Consolidated Financial Statements



NOTE E - COMPREHENSIVE INCOME



A
summary of comprehensive income is as follows:



|                                                                                                  |  |                                 |     |      |                                |      |      |  |   |       |   |  |   |     |  
|------------------------------------------------------------------------------------------------- |  | ------------------------------- | --- | ---- | ------------------------------ | ---- | ---- |  | - | ----- | - |  | - | --- | -
|                                                                                                  |  | Three Months EndedSeptember 30, |     |      | Nine Months EndedSeptember 30, |     
|                                                                                                  |  | 2004                            |     | 2003 |                                |      | 2004 |  |   | 2003  |  
|                                                                                                  |  | (Amounts in thousands)          |    
|Net income                                                                                        |  | $                               | 661 |      | $                              | 290  |      |  | $ | 1,181 |   |  | $ | 794 |  
|                                                                                                  |  |                                 |     |     
|Other comprehensive income:                                                                       |  |                                 |     |      |                                |      |      |  |   |       |   |  |   |     |  
|Net increase (decrease) in the fair value of investment securities available for sale, net of tax |  |                                 | 94  |      |                                | (134 | )    |  |   | (44   | ) |  |   | (63 | )
|                                                                                                  |  |                                 |     |      |                                |      |      |  |   |       |   |  |   |     |  
|Total comprehensive income                                                                        |  | $                               | 755 |      | $                              | 156  |      |  | $ | 1,137 |   |  | $ | 731 |  
|                                                                                                  |  |                                 |     |      |                                |      |      |  |   |       |   |  |   |     |  



NOTE F - LONG TERM DEBT



On September 20, 2004, $12.0 million of trust preferred securities were
placed through a newly formed, wholly-owned trust preferred subsidiary, New Century Statutory Trust I (the Trust). The Trust has invested the total proceeds from the sale of the trust preferred securities, together with the $372,000
equity investment in the Trust, in junior subordinated deferrable interest debentures issued by the Company. The terms of the junior subordinated debentures match the terms of the trust preferred securities. The Trust is considered a variable
interest entity as defined in FIN 46. As the Company is not the primary beneficiary of the Trust, the Trust is not consolidated. Accordingly, the Companys $372,000 equity interest in the Trust is accounted for using the equity method, and the
junior subordinated debentures are recorded as long-term debt of the Company. The trust preferred securities pay cumulated cash distributions quarterly at an annual rate, reset quarterly, equal to 3 month LIBOR plus 2.15%. The trust preferred
securities are redeemable on September 20, 2009 or afterwards in whole or in part, on any March 20, June 20, September 20 or December 20. Redemption is mandatory at September 20, 2034. The Company has fully and unconditionally guaranteed repayment
of the trust preferred securities. The Companys obligation under the guarantee is unsecured and subordinate to senior and subordinated indebtedness of the Company. The trust preferred securities qualify as Tier I capital for regulatory capital
purposes subject to certain limitations.



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



Managements discussion and analysis is intended to assist readers in the understanding and evaluation of the financial condition and results of operations of New Century Bancorp, Inc. (the Company).
This report may contain certain forward-looking statements consisting of estimates with respect to the financial condition, results of operations and other business of the Company that are subject to various factors which could cause actual results
to differ materially from those estimates. Factors which could influence the estimates include changes in national, regional and local market conditions, legislative and regulatory conditions, and the interest rate environment.



Overview



The Company is a commercial bank holding company that was incorporated on September 19, 2003
and has two banking subsidiaries, New Century Bank, which was acquired as part of the Banks holding company reorganization, and New Century Bank of Fayetteville, a de novo institution which was formed in January 2004 (collectively referred to
as the Banks). In September 2004, the Company formed New Century Statutory Trust I, which issued trust preferred securities to provide additional capital for general corporate purposes, including the current and future expansion of New
Century Bank. The Companys only business activity is the ownership of the Banks. Accordingly, this discussion focuses primarily on the financial condition and operating results of the Banks.



New Century Bank opened for business on May 24, 2000 as a North Carolina-chartered banking
corporation. On June 17, 2003, the New Century Bank opened an office in Fayetteville, which operated as a branch of New Century Bank until New Century Bank of Fayetteville received its charter on January 2, 2004. At that time, the Fayetteville
office was sold to New Century Bank of Fayetteville. On January 22, 2004, New Century Bank opened an office in Goldsboro, North Carolina.



The Banks lending activities are oriented to the consumer/retail customer as well as to the small-to-medium sized businesses located in Harnett, Cumberland,
Johnston, Sampson, and Wayne counties. The Banks offer the standard complement of commercial, consumer, and mortgage lending products, as well as the ability to structure products to fit specialized needs. The deposit services offered by the Banks
include small business and personal checking, savings accounts and certificates of deposit. The Banks concentrate on customer relationships in building their customer deposit base and compete aggressively in the area of transaction accounts.



On September 26, 2003, the Board of Directors of the Company declared an
11-for-10 stock split in the form of a 10% stock dividend. The stock split was payable to shareholders of record as of October 10, 2003, and upon surrender of New Century Bank stock certificates in the holding company reorganization described in
Note A. Also, on May 28, 2004, the Board of Directors of the Company declared another 11-for-10 stock split in the form of a stock dividend, which was payable to shareholders of record as of June 15, 2004. All references to average shares
outstanding and net income per share have been adjusted to reflect these stock splits.



Comparison of Financial Condition at

September 30, 2004 and December 31, 2003



During the first nine months of 2004, total assets grew by $132.4
million from $191.8 million at December 31, 2003 to $324.2 million at September 30, 2004. Earning assets at September 30, 2004 totaled $312 million and consisted of $251.2 million in gross loans, $21.9 million in investment securities and $39.4
million in overnight investments and interest-bearing deposits in other banks. Total deposits and shareholders equity at September 30, 2004 were $267.0 million and $28.4 million, respectively.



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Since the end of 2003, gross loans have grown $99.2 million to $251.2 million as of September 30, 2004. Gross loans as of
September 30, 2004 consisted of $81.2 million in commercial and industrial loans, $102.7 million in commercial real estate loans, $18.5 million in consumer loans and $48.8 million in residential real estate and construction loans. As of quarter end,
there was $606,000 in loans held for sale. Management has established an allowance for loan losses of $3.5 million or 1.41% of gross loans outstanding. There were twenty-four loans with an aggregate principal balance of $1,180,000 that were 30 days
or more past due. This includes seven loans with an aggregate balance of $597,000 that were more than 90 days past due and on a non-accrual basis.



Management strives to maintain a position of liquidity sufficient to fund future loan demand and to satisfy fluctuations in deposit levels. This is achieved primarily in
the form of federal funds sold on an overnight basis and an investment portfolio that includes a laddered maturity schedule. At September 30, 2004, federal funds sold were $38.9 million, an increase of $22.8 million from the $16.1 million held as of
December 31, 2003. Interest-earning deposits in other banks decreased from $1.8 million at December 31, 2003 to $381,000 as of September 30, 2004. The Banks investment securities as of September 30, 2004 were $21.5 million, an increase of $8.9
million from December 31, 2003. The investment portfolio as of September 30, 2004 consisted of $12.2 million in government agency debt securities, $6.7 million in mortgage-backed securities and $2.6 million in municipal securities. The unrealized
gain on these securities at September 30, 2004 was $176,000.



At September 30,
2004, non-earning assets were $15.2 million, which reflect an increase of $4.0 million from the $11.2 million as of December 31, 2003. Non-earning assets as of September 30, 2004 included $4.7 million in premises and equipment, accrued interest
receivable of $1.2 million, bank owned life insurance of $2.2 million and other assets of $1.5 million. Non-interest-earning cash and due from bank balances totaled $5.5 million as of quarter end.



Total deposits at September 30, 2004 were $267.0 million and consisted of $32.6 million in
non-interest-bearing demand deposits, $58.6 million in money market and NOW accounts, $2.4 million in savings accounts, and $173.5 million in time deposits. Total deposits grew by $115.1 million from $151.9 million as of December 31, 2003. Money
market and NOW accounts grew by $24.3 million and time deposits grew by $81.9 million during the first nine months of 2004. Non-interest-bearing demand deposits increased by $8.3 million from $24.3 million as of December 31, 2003. Overall deposit
growth is due in part to the opening of New Century Banks Goldsboro office in January 2004. Time deposit growth resulted from certificate of deposit specials promoted in connection with the opening of the Goldsboro branch and New Century Bank
of Fayetteville.



As of September 30, 2004, the Company has $9.0 million in
advances outstanding on its line of credit with the FHLB. The advances are collateralized by a lien on 1-4 family first mortgage loans with $4.0 million maturing in February 2006 and $5.0 million maturing in June 2005. In addition the borrowings
from the FHLB, the Company also issued $12.4 million of junior subordinated debentures in September 2004. These proceeds will provide additional capital for the current and future expansion of New Century Bank. Under the current applicable
regulatory guidelines, $12.0 million of these debentures qualify as Tier I capital.



Total shareholders equity at September 30, 2004 was $28.4 million, an increase of $1.1 million from $27.3 million as of December 31, 2003. This increase was due to $1.2 million in net income that was partially offset by a decrease of
$44,000, net of tax, in the fair value of the Companys investment securities available for sale.



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Comparison of Results of Operations for the

Three months ended September 30, 2004 and 2003



Net Income. During the third quarter of 2004, the Company generated net income of $661,000 compared with net income of $290,000 for the third quarter of 2003. Net
income per share for the quarter ended September 30, 2004 was $.24 per share-basic and $.22 per share-diluted, compared with net income per share of $.12 per share-basic and $.11 per share-diluted, for the third quarter of 2003. The increase in net
income is due to higher net interest income and higher noninterest income, which were partially offset by increases in loan loss provision and noninterest expenses.



Net Interest Income.Like most financial institutions, the primary component of earnings for the Company is net interest income. Net
interest income is the difference between interest income, principally from loan and investment securities portfolios, and interest expense, principally on customer deposits and borrowings. Changes in net interest income result from changes in
volume, spread and margin. For this purpose, volume refers to the average dollar level of interest-earning assets and interest-bearing liabilities, spread refers to the difference between the average yield on interest-earning assets and the average
cost of interest-bearing liabilities, and margin refers to net interest income divided by average interest-earning assets. Margin is influenced by the level and relative mix of interest-earning assets and interest-bearing liabilities, as well as by
levels of non-interest-bearing liabilities and capital.



Net interest income
increased nearly $1.1 million to $2.7 million for the quarter ended September 30, 2004. The Companys total interest income benefited from strong growth in interest-earning assets. This growth was partially offset by lower yields caused by the
repricing of interest-earning assets since September 2003. Average total interest-earning assets were $296.3 million in the third quarter of 2004 compared with $160.3 million during the same period one year earlier, while the yield on those assets
dropped 43 basis points from 5.99% to 5.56%. The Companys average interest-bearing liabilities grew by $116.5 million to $242.6 million since the quarter ended September 30, 2003, while the cost of those funds dropped from 2.52% to 2.40% or 12
basis points. For the quarter ended September 30, 2004, the Companys net interest margin was 3.60% and our net interest spread was 3.46%. For the quarter ended September 30, 2003, net interest margin was 4.01% and net interest spread was
3.84%. The compression of our margin and spread are due to the asset sensitivity of the Banks and the repricing of interest sensitive assets since September 2003.



Provision for Loan Losses.The Company recorded a $310,000 provision for loan losses in the third quarter of 2004, representing an
increase of $96,000 over the $214,000 provision made in the same period of 2003. Provisions for loan losses are charged to income to bring the allowance for loan losses to a level deemed appropriate by management. In evaluating the allowance for
loan losses, management considers factors that include growth, composition and industry diversification of the portfolio, historical loan loss experience, current delinquency levels, adverse situations that may affect a borrowers ability to
repay, estimated value of any underlying collateral, prevailing economic conditions and other relevant factors. In the third quarter of 2004, the provision for loan losses reflected loan charge-offs of $117,000 as well as accommodation for loan
growth of $17.8 million. In the third quarter of 2003, the provision for loan losses reflected loan charge-offs of $42,000 as well as accommodation for loan growth of $7.7 million. At September 30, 2004, the allowance for loan losses was $3.5
million, representing 1.41% of gross loans outstanding. At December 31, 2003, the allowance for loan losses was $2.4 million, or 1.55% of gross loans outstanding. There was $597,000 of nonaccrual loans at quarter end September 30, 2004, compared to
$180,000 at December 31, 2003.



Non-Interest Income.Non-interest
income for the quarter ended September 30, 2004 was $452,000, an increase of $90,000 over the third quarter of 2003. This increase is primarily due to increases in late charges on loans of $24,000, deposit service fees and charges of $73,000 and in
other fees and income of $13,000. These gains were partially offset by a decrease in other lending related income, which declined by $20,000 from the 3rdquarter of 2003. The growth in fees and service charges is directly related to the



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growth in loans and transaction accounts since September 30, 2003 and the introduction of an overdraft protection product
tied to qualifying demand deposits during February 2003. The increase in other fees and income is due largely to income from bank owned life insurance, which was purchased in August 2003.



Non-Interest Expenses. Non-interest expenses increased by $466,000 to $1.8 million for the quarter ended September 30, 2004, from
$1.3 million for the quarter ended September 30, 2003. Most of the increase in non-interest expenses is directly related to the Companys expansion into two new markets, Fayetteville and Goldsboro. In spite of this, the Companys ratio of
non-interest expenses to average total assets decreased from 3.07% in the third quarter of 2003 to 2.32% in the third quarter of 2004. Salaries and employee benefits increased to $1.0 million in the third quarter of 2004 from $802,000 in the same
quarter of 2003 due mostly to the increase of Company personnel from 44 full-time equivalent employees at September 30, 2003 to 68 full-time equivalent employees at September 30, 2004. Occupancy and equipment expenses increased by $36,000 to
$135,000 for the quarter ended September 30, 2004 due to the addition of the Goldsboro office and an office to house loan operations, which opened in the second quarter of 2004. Marketing and advertising expenses increased by $33,000 to $72,000 for
the third quarter of 2004 due to the promotion of New Century Bank of Fayetteville and the Goldsboro office of New Century Bank. The following expenses have increased as a result of the general growth of the Company since September 2003.
Professional fees increased by $19,000 to $60,000 in third quarter 2004, up from $41,000 in the third quarter 2003. Information systems expenses increased $24,000 to $158,000 for the quarter ended September 30, 2004. Other operating expenses
increased to $338,000 in the third quarter of 2004 compared with $204,000 for the same period of 2003.



Provision for Income Taxes. The Companys effective tax rate was 36% for the quarters ended September 30, 2004 and 2003.



Comparison of Results of Operations for the

Nine months ended September 30, 2004 and 2003



Net Income. During the first nine months of 2004, the Company generated net income of $1.2 million compared with net income of $794,000 for the first nine months
of 2003. Net income per share for the nine months ended September 30, 2004 was $.42 per share, basic, and $.40 per share, diluted, compared with net income per share of $.37 per share, basic and $.36 per share, diluted, for the first nine months of
2003. The increase in net income is primarily due to growth in interest-earning assets since September 30, 2004 and the resulting increase in net interest income in addition to growth in non-interest income. This increase was substantially offset by
increases in the provision for loan losses and non-interest expenses.



Net
Interest Income.Net interest income before the provision for loan losses increased $2.7 million to $7.1 million for the nine months ended September 30, 2004. The Companys total interest income benefited from strong growth in
interest-earning assets. This growth was partially offset by lower yields caused by the repricing of interest-earning assets during this sustained period of lower interest rates. Average total interest-earning assets were $248.8 million in the first
nine months of 2004 compared with $142.7 million during the same period one year earlier, while the yield on those assets dropped 64 basis points from 6.32% to 5.68%. The Companys average interest-bearing liabilities grew by $89.4 million to
$199.5 million since September 30, 2003, while the cost of those funds dropped from 2.85% to 2.35% or 50 basis points. For the nine months ended September 30, 2004, net interest margin was 3.80% and net interest spread was 3.64%. For the same period
in 2003, net interest margin was 4.12% and net interest spread was 3.47%.



Provision for Loan Losses.The Company recorded a $1.4 million provision for loan losses in the first nine months of 2004, representing an increase of $695,000 over the $694,000 provision made in the same period of 2003. In the first
nine months of 2004, the provision for loan losses reflected loan charge-offs of $219,000 as well as accommodation for loan growth of $99.2 million. In the first nine months of 2003, the provision for loan losses reflected loan charge-offs of
$176,000 as well as accommodation for loan growth as total loans outstanding increased by $29.3 million during that period.



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Non-Interest Income.Non-interest income for the nine months ended September 30, 2004 was $1.2 million, an
increase of $273,000 over the same period in 2003. This increase is primarily due to increases in deposit service fees and charges of $209,000, and other fees and service charges of $60,000. Late charges on loans grew by nearly $39,000 but other
lending related income declined by $34,000 due to a decrease in fees from pre-sold mortgages. The growth in deposit fees and service charges is directly related to the growth in transaction accounts since September 30, 2003 and the introduction of
an overdraft protection product tied to qualifying demand deposits. The increase in other fees and income is due largely to income from bank owned life insurance, which was purchased in August 2003.



Non-Interest Expenses. Non-interest expenses increased by $1.7 million to nearly $5.1
million for the first nine months of 2004 from $3.4 million for the same period of 2003. Most of the increase in non-interest expenses is directly related to the Companys expansion into two new markets, Fayetteville and Goldsboro. The
Companys ratio of non-interest expenses to average total assets decreased from 3.03% in the nine months ended September 30, 2003 to 2.62% in the nine months ended September 30, 2004. Salaries and employee benefits increased to nearly $3.0
million in the nine months of 2004 from $2.0 million in the same period of 2003 due mostly to the increase in personnel from 44 full-time equivalent employees at September 30, 2003 to 68 full-time equivalent employees at September 30, 2004.
Occupancy and equipment expenses increased by $144,000 to $389,000 for the nine months ended September 30, 2004. Marketing and advertising expenses increased $39,000 to $131,000 for the first nine months of 2004. Professional fees decreased from
$192,000 in the first nine months of 2003 to $185,000 in the same period of 2004. The decrease in professional fees is due to higher legal fees in 2003 incurred as a result of a stock offering, the organization of New Century Bank of Fayetteville,
and the holding company reorganization. The following expenses have increased as a result of the general growth of the Company since September 2003. Information systems expenses were impacted by the Companys expansion, increasing $107,000 to
$433,000 for the nine months ended September 30, 2004. Other operating expenses increased to $945,000 in the first nine months of 2004 compared with $530,000 for the same period of 2003.



Provision for Income Taxes. The Companys effective tax rate was 36% for both nine month periods ended September 30, 2004 and
2003.



Liquidity and Capital Resources



The Companys liquidity is a measure of its ability to fund loans, withdrawals and
maturities of deposits, and other cash outflows in a cost effective manner. The principal sources of liquidity are deposits, scheduled payments and prepayments of loan principal, maturities of investment securities, access to liquid deposits, and
funds provided by operations. While scheduled loan payments and maturing investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and
competition.



Liquid assets (consisting of cash and due from banks,
interest-earning deposits with other banks, federal funds sold and investment securities classified as available for sale) comprised 21% of total assets at September 30, 2004.



The Company has been a net seller of federal funds since its inception and strives to maintain a position of liquidity sufficient to fund
future loan demand and to satisfy fluctuations in deposit levels. Should the need arise, the Company would have the capability to sell securities classified as available for sale or to borrow funds as necessary. The Company has established credit
lines with other financial institutions to purchase up to $20.0 million in federal funds. Also, as a member of the Federal Home Loan Bank of Atlanta (FHLB), the Company may obtain advances of up to 30% of total assets, subject to available



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collateral. A floating lien of $14.9 million of qualifying loans is pledged to FHLB to secure borrowings. Another source
of short-term borrowings are securities sold under agreements to repurchase. At September 30, 2004, borrowings consisted of two advances from the FHLB totaling $9.0 million, and securities sold under agreements to repurchase of $6.1 million and
junior subordinated debentures of $12.4 million. These debentures provide additional capital for the current and future expansion of New Century Bank. Under the current applicable regulatory guidelines, $12.0 million of the debentures qualify as
Tier I capital.



Total deposits were $267.0 million at September 30, 2004. Time
deposits, which are the only deposit accounts that have stated maturity dates, are generally considered to be rate sensitive. Time deposits represented 65% of total deposits at September 30, 2004. Time deposits of $100,000 or more represented 19.3%
of the Companys total deposits at September 30, 2004. At September 30, 2004, the Company had $7.3 million in brokered time deposits. Management believes most other time deposits are relationship-oriented. While the Banks will need to pay
competitive rates to retain these deposits at their maturities, there are other subjective factors that will determine their continued retention. Based upon prior experience, the Company anticipates that a substantial portion of outstanding
certificates of deposit will renew upon maturity.



Management believes that
current sources of funds provide adequate liquidity for our current cash flow needs.



A significant measure of the strength of a financial institution is its capital base. Federal regulations have classified and defined capital into the following components: (1) Tier 1 capital, which includes common shareholders equity
and qualifying preferred equity, and (2) Tier 2 capital, which includes a portion of the allowance for loan losses, certain qualifying long-term debt and preferred stock which does not qualify as Tier 1 capital. Minimum capital levels are regulated
by risk-based capital adequacy guidelines, which require a financial institution to maintain capital as a percent of its assets, and certain off-balance sheet items adjusted for predefined credit risk factors (risk-adjusted assets). A financial
institution is required to maintain, at a minimum, Tier 1 capital as a percentage of risk-adjusted assets of 4.0% and combined Tier 1 and Tier 2 capital as a percentage of risk-adjusted assets of 8.0%. In addition to the risk-based guidelines,
federal regulations require that we maintain a minimum leverage ratio (Tier 1 capital as a percentage of tangible assets) of 4.0%. The Companys equity to assets ratio was 8.77% at September 30, 2004. As the following table indicates, at
September 30, 2004, the Company exceeded regulatory capital requirements.



|                                |  |                       |   |  |                    |   |  |                             |  
|------------------------------- |  | --------------------- | - |  | ------------------ | - |  | --------------------------- | -
|                                |  | At September 30, 2004 |  
|                                |  | ActualRatio           |   |  | MinimumRequirement |   |  | Well-CapitalizedRequirement |  
|Total risk-based capital ratio  |  | 16.84                 | % |  | 8.00               | % |  | 10.00                       | %
|Tier 1 risk-based capital ratio |  | 15.59                 | % |  | 4.00               | % |  | 6.00                        | %
|Leverage ratio                  |  | 13.13                 | % |  | 4.00               | % |  | 5.00                        | %



Management expects that the Company
will remain well-capitalized for regulatory purposes, although there can be no assurance that additional capital will not be required in the near future due to greater-than-expected growth, or otherwise.



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Item 3. - Controls and Procedures



| | (a) | As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys management,
including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e)) pursuant to Exchange Act Rule 13a-14. Based upon that
evaluation, the Companys Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures are effective.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (b) | No change in the Companys internal control over financial reporting occurred during the Companys last fiscal quarter that has materially affected, or is reasonably
likely to materially affect, the Companys internal control over financial reporting.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Part II. OTHER INFORMATION



Item 6. Exhibits



|          |  |                                                                                                                                                                                            
|--------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit # |  | Description                                                                                                                                                                                
|31.1      |  | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934 as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002.
|          | 
|31.2      |  | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities and Exchange Act of 1934 as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002 
|          | 
|32.1      |  | Certification by the Chief Executive Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                               
|          | 
|32.2      |  | Certification by the Chief Financial Officer pursuant to 18 U.S.C. 1350 as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                               



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SIGNATURES



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



|                        |  |                           |  |                                                  
|----------------------- |  | ------------------------- |  | -------------------------------------------------
|                        |  | NEW CENTURY BANCORP, INC.
|                        |  |                          
|Date: November 15, 2004 |  | By:                       |  | /s/ John Q. Shaw, Jr.                            
|                        |  |                           |  | John Q. Shaw, Jr.                                
|                        |  |                           |  | President and Chief Executive Officer            
|                        |  |                          
|Date: November 15, 2004 |  | By:                       |  | /s/ Lisa F. Campbell                             
|                        |  |                           |  | Lisa F. Campbell                                 
|                        |  |                           |  | Senior Vice President and Chief Financial Officer



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