# U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549

# FORM 10-QSB

|[X] | Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|--- | ---------------------------------------------------------------------------------
|    | For the quarterly period ended June 30, 2004                                     

|[   ] | Transition report under Section 13 or 15(d) of the Exchange Act
|----- | ---------------------------------------------------------------
|      | For the transition period from ___________ to _____________    

Commission file number
000-26061

NEW COMMERCE BANCORP(Exact Name of Small Business Issuer as Specified in its Charter)

|South Carolina           |  | 58-2403844                          
|------------------------ |  | ------------------------------------
|(State of Incorporation) |  | (I.R.S. Employer Identification No.)

501 New Commerce
Court, Greenville, South Carolina 29607
(Address of Principal Executive Offices)   (Zip Code)

(864) 297-6333(Issuer's Telephone Number, Including Area Code)

Not Applicable(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

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

State the number of shares  outstanding  of each of the  issuer's  classes of common  equity,  as of the latest
practicable  date:  1,000,000 shares of common stock, par value $.01 per share,  outstanding as of August 5,
2004.

Transitional Small Business Disclosure
Format (check one):   Yes    NoX

---

# PART I.  FINANCIAL
INFORMATION

# Item 1.  Financial
Statements

# NEW COMMERCE BANCORP
AND SUBSIDIARYCONSOLIDATED BALANCE SHEETS (UNAUDITED)

|                                                   | June 30, | December 31,
|-------------------------------------------------- | -------- | ------------
|
|
|Assets:                                            |          |             
|Cash and due from banks                            |          |             
|Federal funds sold                                 |          |             
|Investment securities, available for sale          |          |             
|Investment securities, held to maturity            |          |             
|Federal Reserve Bank stock                         |          |             
|Federal Home Loan Bank stock                       |          |             
|Loans, net                                         |          |             
|Property and equipment, net                        |          |             
|Accrued interest receivable                        |          |             
|Other assets                                       |          |             
|                                                   |          |             
|Total assets                                       |          |             
|                                                   |          |             
|Liabilities and Shareholders' Equity:              |          |             
|Liabilities:                                       |          |             
|Deposits                                           |          |             
|Advances from Federal Home Loan Bank               |          |             
|Drafts outstanding                                 |          |             
|Other liabilities                                  |          |             
|                                                   |          |             
|Total liabilities                                  |          |             
|                                                   |          |             
|Shareholders Equity:                               |          |             
|Preferred stock, $.01 par value, 10,000,000 shares |          |             
|authorized, no shares issued                       |          |             
|Common stock, $.01 par value, 10,000,000 shares    |          |             
|authorized, 1,000,000 issued and outstanding       |          |             
|Additional paid-in capital                         |          |             
|Retained deficit                                   |          |             
|Accumulated other comprehensive (loss) income      |          |             
|                                                   |          |             
|Total shareholders' equity                         |          |             
|                                                   |          |             
|Total liabilities and shareholders' equity         |          |             
|                                                   |          |             

See Notes to Consolidated Financial
Statements, which are an integral part of these statements.

2

---

# NEW COMMERCE BANCORP
AND SUBSIDIARYCONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

|                                                    | Three Months Ended | Six Months Ended
|--------------------------------------------------- | ------------------ | ----------------
|
|
|Interest Income:                                    |                    |                 
|Interest and fees on loans                          |                    |                 
|Investment securities                               |                    |                 
|Federal funds sold                                  |                    |                 
|                                                    |                    |                 
|Total interest income                               |                    |                 
|                                                    |                    |                 
|Interest Expense:                                   |                    |                 
|Deposits                                            |                    |                 
|Advances from Federal Home Loan Bank                |                    |                 
|Federal funds purchased                             |                    |                 
|                                                    |                    |                 
|Total interest expense                              |                    |                 
|                                                    |                    |                 
|Net Interest Income                                 |                    |                 
|                                                    |                    |                 
|Provision for Loan Losses                           |                    |                 
|                                                    |                    |                 
|Net Interest Income After Provision for Loan Losses |                    |                 
|                                                    |                    |                 
|Non-Interest Income:                                |                    |                 
|Service fees on deposit accounts                    |                    |                 
|Mortgage brokerage income                           |                    |                 
|Gain on sale of investment securities               |                    |                 
|Other                                               |                    |                 
|                                                    |                    |                 
|Total non-interest income                           |                    |                 
|                                                    |                    |                 
|Total Income                                        |                    |                 
|                                                    |                    |                 
|Non-Interest Expense:                               |                    |                 
|Salaries and benefits                               |                    |                 
|Occupancy, furniture and equipment                  |                    |                 
|Data processing                                     |                    |                 
|Marketing                                           |                    |                 
|Printing, supplies and postage                      |                    |                 
|Other                                               |                    |                 
|                                                    |                    |                 
|Total non-interest expense                          |                    |                 
|                                                    |                    |                 
|Income Before Income Taxes                          |                    |                 
|                                                    |                    |                 
|Income Tax Provision                                |                    |                 
|                                                    |                    |                 
|Net Income                                          |                    |                 
|                                                    |                    |                 
|                                                    |                    |                 
|Basic and Diluted Earnings per Share                |                    |                 
|                                                    |                    |                 
|Weighted Average Shares Outstanding - Basic         |                    |                 
|                                                    |                    |                 
|Weighted Average Shares Outstanding - Diluted       |                    |                 
|                                                    |                    |                 

See Notes to Consolidated Financial Statements, which are an integral part of these statements.

3

---

# NEW COMMERCE BANCORP
AND SUBSIDIARY CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY AND COMPREHENSIVE INCOME (LOSS)FOR THE SIX
MONTH PERIODS ENDED JUNE 30, 2004 AND 2003 (UNAUDITED)

|                                 |  |  |  |           | Accumulated | Total
|-------------------------------- |  |  |  | --------- | ----------- | -----
|
|
|
|Balance, December 31, 2002       |  |  |  | 1,000,000 |             | $    
|                                 |  |  |  |           |             |      
|Net income                       |  |  |  | -         |             |      
|Other comprehensive loss, net of |  |  |  |           |             |      
|tax:                             |  |  |  |           |             |      
|Unrealized holding gain on       |  | 
|securities available for sale    |  | 
|net of tax effect of $1,044      |  |  |  | -         |             |      
|Reclassification of net gain on  |  |  |  |           |             |      
|securities available for sale    |  |  |  |           |             |      
|included in net income, net of   |  |  |  |           |             |      
|tax effect of $28,574            |  |  |  | -         |             |      
|                                 |  |  |  |           |             |      
|Other comprehensive loss         |  |  |  | -         |             |      
|                                 |  |  |  |           |             |      
|Comprehensive loss               |  |  |  | -         |             |      
|                                 |  |  |  |           |             |      
|Balance, June 30, 2003           |  |  |  | 1,000,000 |             | $    
|                                 |  |  |  |           |             |      
|Balance, December 31, 2003       |  |  |  | 1,000,000 |             | $    
|                                 |  |  |  |           |             |      
|Net income                       |  |  |  | -         |             |      
|Other comprehensive loss, net of |  |  |  |           |             |      
|tax:                             |  |  |  |           |             |      
|Unrealized holding loss on       |  | 
|securities available for sale,   |  | 
|net of tax effect of $(133,346)  |  |  |  | -         |             |      
|Unrealized holding loss on       |  |  |  |           |             |      
|security held to maturity        |  |  |  |           |             |      
|transferred to securities        |  |  |  |           |             |      
|available for sale, net of tax   |  |  |  |           |             |      
|effect of $(5,550)               |  |  |  | -         |             |      
|                                 |  |  |  |           |             |      
|Other comprehensive loss         |  |  |  | -         |             |      
|                                 |  |  |  |           |             |      
|Comprehensive loss               |  |  |  | -         |             |      
|                                 |  |  |  |           |             |      
|Balance, June 30, 2004           |  |  |  | 1,000,000 |             | $    
|                                 |  |  |  |           |             |      

See Notes to Consolidated Financial Statements, which are an integral part of these statements

4

---

# NEW COMMERCE BANCORP
AND SUBSIDIARYCONSOLIDATED STATEMENTS OF CASH FLOWS(UNAUDITED)

|                                                                       | Six Months Ended
|---------------------------------------------------------------------- | ----------------
|
|
|Operating Activities:                                                  |                 
|Net income                                                             |                 
|Adjustments to reconcile net income to net cash provided by operating  |                 
|activities:                                                            |                 
|Provision for loan losses                                              |                 
|Depreciation and amortization                                          |                 
|Gain on sale of investment securities                                  |                 
|Increase in accrued interest receivable                                |                 
|Decrease (increase) in other assets                                    |                 
|Decrease (increase) in other liabilities                               |                 
|                                                                       |                 
|Net cash provided by (used for) operating activities                   |                 
|                                                                       |                 
|Investing Activities:                                                  |                 
|Increase in loans, net                                                 |                 
|Purchase of investment securities available for sale                   |                 
|(Purchase) redemption of Federal Home Loan Bank stock                  |                 
|Principal payments received on investment securities:                  |                 
|Available for sale                                                     |                 
|Held to maturity                                                       |                 
|Proceeds from sale or call of investment securities available for sale |                 
|Proceeds from sale of investment securities held to maturity           |                 
|Purchase of property and equipment                                     |                 
|                                                                       |                 
|Net cash used for investing activities                                 |                 
|                                                                       |                 
|Financing Activities:                                                  |                 
|Increase in deposits, net                                              |                 
|Net increase (decrease) in advances from Federal Home Loan Bank        |                 
|Decrease (increase) in drafts outstanding                              |                 
|                                                                       |                 
|Net cash provided by financing activities                              |                 
|                                                                       |                 
|Net Decrease in Cash and Cash Equivalents                              |                 
|                                                                       |                 
|Cash and Cash Equivalents, Beginning of Period                         |                 
|                                                                       |                 
|Cash and Cash Equivalents, End of Period                               |                 
|                                                                       |                 
|Supplemental Disclosures of Cash Flow Information:                     |                 
|Cash Paid For:                                                         |                 
|Interest                                                               |                 
|                                                                       |                 
|Income taxes                                                           |                 
|                                                                       |                 
|Transfer from loans to other real estate owned (other assets)          |                 
|                                                                       |                 

See Notes to Consolidated Financial
Statements, which are an integral part of these statements.

5

---

# NEW COMMERCE BANCORP
AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

# Note 1 
Organization and Basis of Presentation

Organization
New Commerce BanCorp (the Holding
Company) is incorporated under the laws of the
State of South Carolina for the purpose of operating as a bank holding company for New
Commerce Bank (the Bank). The Bank provides full commercial banking services
to customers and is subject to regulation of the Office of the Comptroller of the Currency
and the Federal Deposit Insurance Corporation. The Holding Company is subject to the
regulation of the Federal Reserve Board.

Basis of Presentation
The accompanying unaudited
consolidated financial statements have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes required by
generally accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals and adjustments)
considered necessary for a fair presentation have been included. Operating results for the
six months ended June 30, 2004 are not necessarily indicative of the results for the year
ending December 31, 2004. For further information, refer to the consolidated financial
statements and footnotes thereto included in our Form 10-KSB for the period ended December
31, 2003 (Commission File Number 000-26061) as filed with the Securities and Exchange
Commission.

# Note 2  Earnings
per Share

The following schedule reconciles the
numerators and denominators of the basic and diluted earnings per share (EPS)
computations for the three- and six-month periods ended June 30, 2004 and 2003. Diluted
common shares arise from the potentially dilutive effect of the stock options and warrants
outstanding.

|                                              | Three Months Ended | Six Months Ended
|--------------------------------------------- | ------------------ | ----------------
|
|
|Basic EPS:                                    |                    |                 
|Net income                                    |                    |                 
|Average common shares outstanding             |                    |                 
|                                              |                    |                 
|Basic earnings per share                      |                    |                 
|                                              |                    |                 
|Diluted EPS:                                  |                    |                 
|Net income                                    |                    |                 
|                                              |                    |                 
|Average common shares outstanding             |                    |                 
|Dilutive effect of stock options and warrants |                    |                 
|                                              |                    |                 
|Average dilutive shares outstanding           |                    |                 
|                                              |                    |                 
|Diluted earnings per share                    |                    |                 
|                                              |                    |                 

6

---

# Note 3  Stock
Options and Warrants

We have two stock-based employee
compensation plans and we account for those plans under the recognition and measurement
principles of Accounting Principles Board Opinion No. 25, Accounting for Stock
Issued to Employees, and related Interpretations. No stock-based employee
compensation cost is reflected in net income, as all stock options and warrants
granted under those plans had an exercise price equal to the market value of the
underlying common stock on the date of grant. The following table illustrates the effect
on net income and earnings per share as if we had applied the fair value recognition
provisions of Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 123, Accounting for Stock-Based Compensation to stock-based
employee compensation.

|                                        | Three Months Ended | Six Months Ended
|--------------------------------------- | ------------------ | ----------------
|
|
|Net income as reported                  |                    |                 
|Deduct:  Total stock-based employee     |                    |                 
|compensation expense determined under   |                    |                 
|fair value based method for all awards, |                    |                 
|net of related income tax effect        |                    |                 
|                                        |                    |                 
|Pro forma net income (loss)             |                    |                 
|                                        |                    |                 
|Earnings (loss) per share:              |                    |                 
|Basic and diluted - as reported         |                    |                 
|                                        |                    |                 
|Basic and diluted - pro forma           |                    |                 
|                                        |                    |                 

At the annual meeting of shareholders
held on April 28, 2004, our shareholders approved an amendment to our stock option plan
which increased the shares allowed to be issued under the plan from 150,000 shares to
250,000 shares.

The following is an analysis of stock
option activity under our stock option plan for the six months ended June 30, 2004 and
2003:

|                                   | 2004 | 2003
|---------------------------------- | ---- | ----
|
|
|
|
|
|Outstanding at beginning of period |      |     
|Granted                            |      |     
|Forfeitures                        |      |     
|                                   |      |     
|Outstanding at end of period       |      |     
|                                   |      |     
|Options exercisable                |      |     
|                                   |      |     
|Shares available for grant         |      |     
|                                   |      |     

Upon completion of the 1999 stock
offering, each of our organizers received warrants to purchase 7,500 shares of common
stock or a total of 90,000 shares at $10.00 per share. The warrants vested immediately and
are exercisable through January 12, 2009.

7

---

# Note 4  Transfer
of Held to Maturity Securities

The Holding Company sold all of its
held-to-maturity securities in June 2004 in order to make a capital contribution to the
Bank in the form of cash. As a result of the sale of these securities, we reassessed our
intention to hold the only other investment security classified as held-to-maturity.
Accordingly, that security was transferred to available-for-sale securities and the
unrealized holding loss (net of applicable income taxes) on the date of transfer was
reported in other comprehensive income. The security had a cost basis of $500,000 and a
market value of $485,000 at the date of transfer.

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

This discussion and analysis is
intended to assist the reader in understanding the financial condition and results of
operations of New Commerce BanCorp and subsidiary. This commentary should be read in
conjunction with the financial statements and the related notes and other statistical
information included in this report.

# Forward-Looking
Statements

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

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

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

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

| | o | the level of allowance for loan losses;
| | - | ---------------------------------------

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

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

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

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

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

| | o | changes in technology;
| | - | ----------------------

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

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

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

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

8

---

# Significant Accounting
Policies

We have adopted various accounting
policies which govern the application of accounting principles generally accepted in the
United States in the preparation of our financial statements. Certain accounting policies
involve significant judgments and assumptions by management. These judgments have a
material impact on the carrying value of certain assets and liabilities. Managements
judgments and assumptions are based on historical experience and other factors, which are
believed to be reasonable under the circumstances. Because of the nature of these
judgments, actual results could differ and could have a material impact on the carrying
values of assets and liabilities and the results of operations. We believe that the
allowance for loan losses methodology represents a significant accounting policy, which
requires the most critical judgments and estimates used in preparation of our consolidated
financial statements. Refer to the Results of Operations for the Three Months Ended
June 30, 2004 Compared to the Three Months Ended June 30, 2003  Provision for Loan
Losses, Results of Operations for the Six Months Ended June 30, 2004 Compared
to the Six Months Ended June 30, 2003  Provision for Loan Losses, and
Balance Sheet Review at June 30, 2004  Loans and Allowance for Loan
Losses discussions below.

Results of Operations for the
Three Months Ended June 30, 2004 Compared to the Three Months Ended June 30, 2003

Consolidated net income for our
second quarter, which ended June 30, 2004, was $59,434, or $0.06 per diluted share,
compared to net income of $12,281, or $0.01 per diluted share, for the second quarter of
2003. The following is a discussion of the more significant components of our net income.

Net Interest Income
The largest component of total income
is net interest income, the difference between the income earned on assets and the
interest expense on deposits and borrowings used to support such assets. The volume and
mix of assets and liabilities and their sensitivity to interest rate movement determine
changes in net interest income. Net interest margin is determined by dividing annualized
net interest income by average earning assets. Net interest income for the second quarter
of 2004 was $708,364, compared to $519,014 for the same period last year, an increase of
36%. This increase was the result of the effects of increased balances of earning assets
and lower interest rates on our interest-bearing liabilities, offset partially by the
effects of increased balances of interest-bearing liabilities and lower interest rates on
earning assets.

For the second quarter of 2004,
average earning assets totaled $80.6 million with an annualized average yield of 4.99%.
Average earning assets and annualized average yield were $59.9 million and 5.22%,
respectively, for the same period last year. For the second quarter of 2004, average
interest-bearing liabilities totaled $78.5 million with an annualized average cost of
1.51%. Average interest-bearing liabilities and annualized average cost were $57.2 million
and 1.84%, respectively, for the quarter ended June 30, 2003.

Because loans typically provide a
higher yield than other types of earning assets, one of our goals is to maintain our loan
portfolio as the largest component of total earning assets. Loans comprised approximately
76% of average earning assets for both the second quarter of 2004 and 2003. Loan interest
income for the second quarter of 2004 totaled $813,964, compared to $622,849 for the same
period in 2003. The annualized average yield on loans was 5.30% for the second quarter of
2004, compared to 5.47% for the same period in 2003. The decrease in yield in 2004 as
compared to 2003 is primarily the result of the impact of a decrease in prime rate in 2003
on our variable rate loan portfolio. Turnover in our fixed rate portfolio also has
contributed to the decrease in yield, as the yield on fixed rate loans now reflects the
decreases in interest rates in 2001, 2002, and 2003. Average balances of loans increased
to $61.4 million during the second quarter of 2004, an increase of $15.8 million over the
average of $45.6 million during the comparable quarter in 2003. The increase in average
balances offset the impact of the decrease in yield on interest income.

9

---

Interest earned on investment
securities increased by $28,914 to $183,115 in the second quarter of 2004 as compared to
$154,201 earned in the same period of 2003. The increase resulted from an increase in the
balances of investment securities held on average during the second quarter of 2004 offset
partially by a decrease in their yield. Average balances of investments increased to $15.9
million during the second quarter of 2004, an increase of $3.2 million over the average of
$12.7 million during the comparable quarter in 2003. Investment securities yielded 4.59%
during the second quarter of 2004, compared to 4.87% during the same period last year.
This difference resulted from the effect of sales of securities held in the portfolio
during 2003 that had a higher yield than the average yield on the balance of the
portfolio. In some cases, new securities with lower yields were purchased with proceeds of
the sales. Also, accelerated principal repayments on mortgage-related securities received
subsequent to the prior year quarter resulted in the lowering of our yield on investment
securities as the proceeds of the repayments were reinvested at lower rates. The
accelerated principal repayments on mortgage-related securities were largely the result of
the refinancing of the underlying mortgages due to the lower prevailing mortgage interest
rates during the period.

Interest expense for the second
quarter of 2004 was $296,693 compared to $263,074 for the same period last year. The
largest component of interest expense is interest on deposit accounts. Interest on deposit
accounts for the second quarter of 2004 was $255,040 at an average cost of 1.39% compared
to $226,336 at an average cost of 1.73% during the same period in 2003. The average
balance of deposits increased to $73.5 million during the second quarter of 2004 from
$52.5 million during the same period last year. The decrease in average rates was due to
market interest rates declining throughout 2003, which has impacted the rates we offer to
our depositors. Interest on other interest-bearing liabilities for the second quarter of
2004 was $41,653 at an average rate of 3.30% compared to $36,738 at an average rate of
3.10% during the same period in 2003. The average balance of interest-bearing liabilities
increased to $5.1 million during the second quarter of 2004 from $4.7 million during the
same period last year. The overall cost of funds was 1.51% for the second quarter of 2004,
compared to 1.84% for the same period in 2003.

Provision for Loan Losses 
The provision for loan losses is the
charge to operating earnings that our management believes is necessary to maintain the
allowance for loan losses at an adequate level. The amount charged to the provision is
based on a review of past-due loans and delinquency trends, actual losses, classified and
criticized loans, loan portfolio growth, concentrations of credit, economic conditions,
historical charge-off activity and internal credit risk ratings. Loan charge-offs and
recoveries are charged or credited directly to the allowance. For the second quarter of
2004, the provision for loan losses was $26,391 compared to $68,934 for the same period
last year. See Balance Sheet Review at June 30, 2004  Loans and Allowance for
Loan Losses.

Non-Interest Income 
Non-interest income for the second
quarter of 2004 was $156,804, compared to $206,325 for the same period in 2003, a decrease
of $49,521. The largest component of this decrease was the decrease in gain on sale of
investments due to a lower volume of investment sales in the current year quarter. Gain on
sale of investments was $16,400, compared to $65,512 for the same period in 2003, a
decrease of $49,112. We sell securities from time to time for various reasons including
liquidity needs, changes in credit quality, and market valuation factors. Since the
principal purpose of our investment portfolio is liquidity management and not to derive
income from trading activity, we consider such gains to be nonrecurring items. Currently,
we have no plans to sell additional investment securities. Mortgage brokerage income was
$48,473, compared to $57,763 for the same period in 2003, a decrease of $9,290. Mortgage
loan originations decreased due to a lower level of consumer refinancing activity in 2004
than we experienced in 2003. Recent refinancing activity has decreased as interest rate
levels have risen in recent months to levels higher than last year. Also, in general,
interest rates have been at historically low levels for some period of time and many
homeowners have already refinanced their mortgages at the lower rates.

10

---

Non-Interest Expense
Non-interest expense for the second
quarter of 2004 was $744,463, compared to $636,674 for the same period in 2003. The
principal component of this increase was in salaries and benefits, the largest component
of non-interest expense, which increased by $74,181 to $414,889 for the second quarter of
2004 from $340,708 for the same period in 2003. This increase is the result of annual
raises and the hiring of additional staff since the prior year quarter, particularly an
additional commercial lender and a senior credit officer. We expect salaries and benefits
to continue to increase as we continue to grow and add personnel to support the growth. We
also intend to offer internet banking services in the fourth quarter of 2004. Initially,
we expect the costs associated with this service to increase non-interest expense by
$30,000 to $40,000 annually. Upon commencement of online banking, we will unveil a newly
designed website at www.newcommercebank.com with new features and enhanced functionality.

# Results of Operations for the Six
Months Ended June 30, 2004 Compared to the Six Months Ended June 30, 2003

Consolidated net income for the six
months ended June 30, 2004 was $83,110, or $0.08 per diluted share, compared to net income
of $18,634, or $0.02 per diluted share, for the six months ended June 30, 2003. Following
is a discussion of the more significant components of our net income.

Net Interest Income
Net interest income for the six
months ended June 30, 2004 was $1,378,683, compared to $1,042,608 for the same period last
year, an increase of 32%. This increase was the result of the effects of increased
balances of earning assets and lower interest rates on our interest-bearing liabilities,
offset partially by the effects of increased balances of interest-bearing liabilities and
lower interest rates on earning assets.

For the six months ended June 30,
2004, average earning assets totaled $78.7 million with an annualized average yield of
4.94%. Average earning assets and annualized average yield were $57.3 million and 5.41%,
respectively, for the six months ended June 30, 2003. For the six months ended June 30,
2004, average interest-bearing liabilities totaled $76.2 million with an annualized
average cost of 1.49%. Average interest-bearing liabilities and annualized average cost
were $54.6 million and 1.86%, respectively, for the six months ended June 30, 2003.

Loan interest income for the six
months ended June 30, 2004 totaled $1,576,131, compared to $1,186,577 for the same period
in 2003. Average balances of loans increased to $60.5 million during the six months ended
June 30, 2004, an increase of $17.7 million over the average of $42.8 million during the
comparable period in 2003. The annualized average yield on loans was 5.21% for the six
months ended June 30, 2004, compared to 5.54% for the same period in 2003. The increase in
average balances offset the impact of the decrease in yield on interest income.

Interest earned on investment
securities amounted to $357,010 in 2004 as compared to $355,692 earned in 2003, an
increase of $1,318. The increase resulted from an increase in the balances held on average
during the six months ended June 30, 2004 offset partially by a decrease in the yield of
investment securities. Average balances of investments increased to $15.6 million during
the six months ended June 30, 2004, an increase of $2.3 million over the average of $13.3
million during the comparable period in 2003. Investment securities yielded 4.59% during
the six months ended June 30, 2004, compared to 5.34% during the same period last year.
The same factors previously mentioned in the discussion of the results of the second
quarter contributed to the decrease in the yield on investments.

Interest expense for the six months
ended June 30, 2004 was $567,381, compared to $508,123 for the same period last year. The
largest component of interest expense is interest on deposit accounts. Interest on deposit
accounts for the six months ended June 30, 2004 was $494,994 at an average cost of 1.38%
compared to $435,471 at an average cost of 1.76% during the same period in 2003. The
average balance of deposits increased to $71.7 million during the six months ended June
30, 2004 from $49.5 million during the same period last year. The decrease in average
rates was due to market interest rates declining throughout 2003, which has impacted the
rates we offer to our depositors. Interest on other interest-bearing liabilities for the
six months ended June 30, 2004 was $72,387 at an average rate of 3.22% compared to $72,652
at an average rate of 2.85% during the same period in 2003. The average balance of
interest-bearing liabilities decreased to $4.5 million during the six months ended June
30, 2004 from $5.1 million during the same period last year. The overall cost of funds was
1.49% for the six months ended June 30, 2004, compared to 1.86% for the same period in
2003.

11

---

Provision for Loan Losses 
The provision for loan losses is the
charge to operating earnings that our management believes is necessary to maintain the
allowance for loan losses at an adequate level. The amount charged to the provision is
based on a review of past-due loans and delinquency trends, actual losses, classified and
criticized loans, loan portfolio growth, concentrations of credit, economic conditions,
historical charge-off activity and internal credit risk ratings. Loan charge-offs and
recoveries are charged or credited directly to the allowance. For the six months ended
June 30, 2004, the provision for loan losses was $89,204 compared to $113,159 for the same
period last year. See Balance Sheet Review at June 30, 2004  Loans and
Allowance for Loan Losses.

Non-Interest Income 
Non-interest income for the six
months ended June 30, 2004 was $279,263, compared to $307,210 for the same period in 2003,
a decrease of $27,947. The largest component of this decrease was the decrease in gain on
sale of investments due to a lower volume of investment sales in the current year quarter.
Gain on sale of investments was $16,400, compared to $77,226 for the same period in 2003,
a decrease of $60,826. Mortgage brokerage income was $75,863, compared to $95,603 for the
same period in 2003, a decrease of $19,740. See the discussion of the factors leading to
the decreases in gain on sale of investments and mortgage brokerage income in the previous
discussion of the results of the second quarter. These decreases were offset partially by
an increase in service charges on deposit accounts which was $144,490 in the six months
ended June 30, 2004 compared to $105,415 in 2003, an increase of $39,075. This increase is
the result of increased deposit account fees associated with the growth in deposit
accounts and fee income attributable to the implementation of an overdraft protection
product on our checking accounts late in the second quarter of 2003.

Non-Interest Expense 
Non-interest expense for the six
months ended June 30, 2004 was $1,436,802, compared to $1,206,775 for the same period in
2003. The principal component of this increase was in salaries and benefits, the largest
component of non-interest expense, which increased by $148,183 to $805,271 for the six
months ended June 30, 2004 from $657,088 for the six months ended June 30, 2003. This
increase is the result of annual raises and the hiring of additional staff since the prior
year period, particularly additional commercial lenders and a senior credit officer. We
expect salaries and benefits to continue to increase as we continue to grow and add
personnel to support the growth.

# Balance Sheet Review at
June 30, 2004

General
Total consolidated assets increased
$8.1 million to $93.1 million at June 30, 2004 from $85.0 million at December 31, 2003.
The largest component of this 9% increase in assets was a $5.5 million increase in net
loans receivable. Our loans have increased due to our continued focus on establishing new
client relationships.  Our focus continues to be on asset growth which we believe is the key to
increased earnings.  We recently added a new commercial lender who specializes in construction and development
lending in order to increase loan production in those areas and to serve as a resource for our other
commercial lenders. In January, we added a new senior credit officer who, as a part of his credit
administration duties, is developing new lending programs that we anticipate will contribute to asset
growth and increased noninterest income.

Total deposits were $76.1 million at
June 30, 2004, an increase of $4.2 million, or 6%, over the $71.9 million reported at
December 31, 2003.

For more analysis of the components
of the changes in asset and liabilities, see the following discussion of major balance
sheet categories and the Consolidated Statements of Cash Flows included in Item 1.
Financial Statements.

We closely monitor and seek to
maintain appropriate levels of interest earning assets and interest-bearing liabilities so
that maturities of assets are such that adequate funds are provided to meet customer
withdrawals and loan demand.

12

---

Loans and Allowance for
Loan LossesOutstanding loans represented the
largest component of earning assets as of June 30, 2004 at $62.8 million, or 73% of total
earning assets. Gross loans have increased 9.4% since December 31, 2003. The following
table summarizes the composition of the loan portfolio at June 30, 2004 and December 31,
2003.

|                           | June 30, | December 31,
|-------------------------- | -------- | ------------
|
|
|
|Commercial                 |          |             
|Real estate - construction |          |             
|Real estate - mortgage     |          |             
|Consumer                   |          |             
|                           |          |             
|Total loans                |          |             
|                           |          |             
|Allowance for loan losses  |          |             
|Deferred loan costs, net   |          |             
|                           |          |             
|Net loans                  |          |             
|                           |          |             

There are risks inherent in making
all loans, including risks with respect to the period of time over which loans may be
repaid, risks resulting from changes in economic and industry conditions, risks inherent
in dealing with individual borrowers, and risks resulting from uncertainties about the
future value of collateral on loans. To address these risks, we have developed policies
and procedures to identify and evaluate the overall quality of our credit portfolio and
the timely identification of potentially problem loans.

We have established an allowance for
loan losses through a provision for loan losses charged to expense on our statement of
income. We charge loan losses and credit recoveries directly to this allowance. We attempt
to maintain the allowance at a level that will be adequate to provide for potential losses
in our loan portfolio. Our judgment as to the adequacy of the allowance for loan losses is
based on a number of assumptions about future events, which we believe to be reasonable,
but which may or may not prove to be accurate. We consider a number of factors in
determining the level of this allowance, including the total amount of outstanding loans,
the amount of past due loans, historic loan loss experience, general economic conditions
and the assessment of risk elements in our portfolio. The assessment of risk in our
portfolio includes the identification and analysis of loss potential in various portfolio
segments utilizing a credit risk grading process and specific reviews and evaluations of
problem loans. We use a classification system to identify and evaluate loans that are
currently problematic and those that we believe have the potential to be in the future
(collectively referred to as classified loans). Periodically, we adjust the
amount of the allowance based on changing circumstances.

Our evaluation of the allowance for
loan losses is inherently subjective as it requires estimates that are susceptible to
significant change. Our losses will undoubtedly vary from our estimates, and there is a
possibility that charge-offs in future periods will exceed the allowance for loan losses
as estimated at any point in time. Further, the allowance for loan losses is subject to
periodic evaluation by various regulatory authorities and may be subject to adjustment
upon their examination.

Generally, loans are placed on
non-accrual status when they become 90 days past due, or when management believes that the
borrowers financial condition is such that collection of the loan is doubtful.
Interest stops accruing when a loan is placed on non-accrual status. Payments of interest
on these loans are recognized when received. The following is an analysis of
non-performing loans at June 30, 2004 and December 31, 2003.

|                        | June 30, | December 31, |  
|----------------------- | -------- | ------------ | -
|
|
|Non-accrual loans:      |          |              |  
|Commercial              |          |              | $
|Real estate - mortgage  |          |              |  
|                        |          |              |  
|Total non-accrual loans |          |              | $
|                        |          |              |  

13

---

The non-accrual loans identified
above are included in the total of our classified loans. Nonaccrual loans at June 30, 2004
consisted of two loans secured by commercial real estate. The total of classified loans at
June 30, 2004 and December 31, 2003 was $1.6 million and $1.1 million, respectively. Below
is an analysis of the allowance for loan losses for the three months ended June 30, 2004.

|                                                |  | 
|----------------------------------------------- |  | 
|Allowance for loan losses, December 31, 2003    |  | 
|Provision                                       |  | 
|Charge-offs:                                    |  | 
|Commercial                                      |  | 
|Real estate - mortgage                          |  | 
|Recoveries:                                     |  | 
|Commercial                                      |  | 
|Real estate - mortgage                          |  | 
|                                                |  | 
|Allowance for loan losses, June 30, 2004        |  | 
|                                                |  | 
|Allowance for loan losses to loans outstanding: |  | 
|June 30, 2004                                   |  | 
|                                                |  | 
|December 31, 2003                               |  | 
|                                                |  | 

Investment Portfolio
Investment securities represented 20%
and 19% of earning assets at June 30, 2004 and December 31, 2003, respectively. We
primarily invest in government agency or government-sponsored agency securities,
mortgage-backed securities, collateralized mortgage obligations and credit quality
corporate bonds. We also own stock in the Federal Reserve Bank and the Federal Home Loan
Bank of Atlanta.

In June 2004, we sold most of our
heldto-maturity securities to obtain cash for a capital contribution to our bank. As
a result of the sale of these securities, as required by accounting standards, we
reassessed our intention to hold the only other investment security classified as
held-to-maturity and transferred that security to the available-for-sale category. The
security had a cost basis of $500,000 and a market value of $485,000 at the date of
transfer. We reported the unrealized holding loss (net of applicable income taxes) on the
date of transfer in other comprehensive income.

During the six months ended June 30,
2004, there was a gross unrealized loss in the amount of approximately $375,000. This
unrealized loss in our investment portfolio was the result of rising market interest rates
during the period which lowered the market value of our fixed-rate investment securities.
While these investment securities are available to be sold, we currently have no intention
to sell any.

The following is a table of
investment securities by category at June 30, 2004 and December 31, 2003:

|                                    | June 30, | December 31, |  
|----------------------------------- | -------- | ------------ | -
|
|
|Available for sale:                 |          |              |  
|Federal agency obligations          |          |              | $
|Mortgage-backed securities          |          |              |  
|Collateralized mortgage obligations |          |              |  
|Corporate bonds                     |          |              |  
|                                    |          |              |  
|Total available for sale            |          |              | $
|                                    |          |              |  
|Held to maturity                    |          |              |  
|Federal agency obligations          |          |              | $
|Mortgage-backed securities          |          |              |  
|Corporate bonds                     |          |              |  
|                                    |          |              |  
|Total held to maturity              |          |              | $
|                                    |          |              |  

14

---

Deposits
Balances within the major deposit categories as of June 30, 2004 and December 31,
2003 were as follows:

|                                     | June 30, | December 31,
|------------------------------------ | -------- | ------------
|
|
|Non-interest bearing demand deposits |          |             
|Interest bearing checking            |          |             
|Savings deposits                     |          |             
|Money market accounts                |          |             
|Time deposits less than $100,000     |          |             
|Time deposits of $100,000 or more    |          |             
|                                     |          |             
|                                     |          |             
|                                     |          |             

Core deposits, which consist of local
demand deposits and time deposits of less than $100,000, provide a relatively stable
funding source for our lending and investing activities. Our core deposits totaled $39.6
million, or 52% of total deposits, at June 30, 2004 compared to $39.9 million, or 55% of
total deposits, at December 31, 2003. Time deposit balances over $100,000 and deposits
obtained from outside the market area are not considered core deposits because their
retention can be expected to be heavily influenced by rates offered at renewal. At June
30, 2004, the total of deposits outside of the banks primary market totaled $26.4
million. Due to the developed national market for certificates of deposit, we anticipate
being able to either renew or replace the deposits obtained outside of the market area
when they mature, although we may have to offer higher rates to do so.

Other Borrowings 
We maintain federal funds lines of
credit with correspondent banks to meet short-term liquidity needs. As a member of the
FHLB, we have access to borrowings through various FHLB programs. At June 30, 2004, and
December 31, 2003 there were no advances outstanding under lines of credit and there were
outstanding FHLB advances of $7,250,000 and $3,750,000, respectively.

Interest Rate Sensitivity
Interest rate sensitivity is defined
as the exposure to variability in net interest income resulting from changes in
market-based interest rates. Asset/liability management is the process by which we monitor
and control the mix, maturities, and interest sensitivity of our assets and liabilities.
Asset/liability management seeks to ensure adequate liquidity and to maintain an
appropriate balance between interest-sensitive assets and liabilities to minimize
potentially adverse impacts on earnings from changes in market interest rates. Interest
rate sensitivity can be managed by repricing assets or liabilities, selling securities
available-for-sale, replacing an asset or liability at maturity, or adjusting the interest
rate during the life of an asset or liability. We believe that interest rate risk
management becomes increasingly important in an interest rate environment and economy such
as the one that we are currently experiencing.

We monitor interest rate sensitivity
by measuring our interest sensitivity through a gap analysis, which is the
positive or negative dollar difference between assets and liabilities that are subject to
interest rate repricing within a given time period. However, since interest rates and
yields on various interest sensitive assets and liabilities do not all adjust in the same
degree when there is a change in prevailing interest rates (such as prime rate), the
traditional gap analysis is only a general indicator of rate sensitivity and net interest
income volatility. Therefore, we also contract with a third-party to assist in the
preparation of a rate sensitivity model which applies rate sensitivity measures to assets
and liabilities that will reprice within one year at assumed upward and downward shifts in
prime rate. From our latest analysis, we have estimated that net interest income over a
one-year timeframe generally would decrease with a decrease in prime rate and increase
with an increase in prime rate. The estimates, using a 100 basis point shift in prime rate
downward and upward, shows an effect on net interest income of approximately minus $60,000
and plus $10,000, respectively. These numbers are to be taken as general indications only,
in that they were derived from a methodology that utilizes numerous assumptions about
sensitivities of various assets and liabilities to changes in interest rates. These
estimates are used as a guide by management, recognizing that model risk is always present
whenever assumptions of the future must be made. Actual results may differ from the
estimates, should there be changes in interest rates.

15

---

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

At June 30, 2004, our liquid assets,
consisting of cash and due from banks and federal funds sold, amounted to $8.0 million and
represented 9% of total assets. Investment securities totaled $16.6 million and
represented 18% of total assets. Our ability to maintain and expand our deposit base and
borrowing capabilities also serves as a source of liquidity. Our loan to deposit ratio at
June 30, 2004 was 83%. We plan to meet our future cash needs through the liquidation of
temporary investments; maturities of loans; sales, maturities, and cash flows from
investment securities; generation of deposits; and the utilization of borrowing
arrangements with correspondent banks. We maintain federal funds lines of credit with
correspondent banks in the amount of $9.4 million and lines of credit with the Federal
Reserve Bank. We are also a member of the Federal Home Loan Bank, from which application
for borrowings can be made for leverage purposes. At June 30, 2004, we had approximately
$18.6 million in available credit under our FHLB facility, of which $7.3 million had been
utilized. Any advances under the FHLB facility must be collateralized with collateral,
which at June 30, 2004 consisted of qualifying non-pledged investment securities in the
amount of approximately $2.8 million. We believe that our existing stable base of core
deposits and other funding sources, along with continued growth in our deposit base, will
be adequate to meet our operating needs and we are not aware of any events which may
result in a significant adverse impact on liquidity.

Through the operations of our bank,
we have made contractual commitments to extend credit in the ordinary course of our
business activities. These commitments are legally binding agreements to lend money to our
customers at predetermined interest rates for a specified period of time. At June 30,
2004, we had issued commitments to extend credit of $17.3 million through various types of
commercial lending arrangements (principally unfunded lines of credit). We evaluate each
customers credit worthiness on a case-by-case basis. The amount of collateral
obtained, if deemed necessary by us upon extension of credit, is based on our credit
evaluation of the borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, commercial and residential real estate. We
manage the credit risk on these commitments by subjecting them to normal underwriting and
risk management processes.

Capital Adequacy
Shareholders equity was $8.5
million at June 30, 2004 and $8.7 million at December 31, 2003. The Federal Reserve Board
and bank regulatory agencies require bank holding companies and financial institutions to
maintain capital at adequate levels based on a percentage of assets and off-balance sheet
exposures, adjusted for risk weights ranging from 0% to 100%.

The Federal Reserve guidelines also
contain an exemption from the capital requirements for bank holding companies with less
than $150 million in consolidated assets. Because we have less than $150 million in
assets, our holding company is not currently subject to these guidelines. However, the
bank falls under these rules as set by bank regulatory agencies.

16

---

Under the capital adequacy
guidelines, capital is classified into two tiers. Tier 1 capital consists of common
shareholders equity, excluding the unrealized gain or loss on securities available
for sale, minus certain intangible assets. Tier 2 capital consists of the general reserve
for loan losses subject to certain limitations. The qualifying capital base for purposes
of the risk-based capital ratio consists of the sum of its Tier 1 and Tier 2 capital. The
bank is also required to maintain capital at a minimum level based on total average
assets, which is known as the Tier 1 leverage ratio. The bank exceeded the minimum capital
requirements set by the regulatory agencies at June 30, 2004. Below is a table that
reflects the leverage and risk-based regulatory capital ratios of the bank at June 30,
2004.

|                        | Required |  | Actual |         
|----------------------- | -------- |  | ------ | --------
|
|
|
|Total capital           |          |  |        | $  5,766
|Tier 1 capital          |          |  |        | 2,883   
|Tier 1 leverage capital |          |  |        | 3,467   

# Impact of Inflation

The assets and liabilities of
financial institutions such as ours are primarily monetary in nature. Therefore, interest
rates have a more significant effect on our performance than do the effects of changes in
the general rate of inflation and changing prices. In addition, interest rates do not
necessarily move in the same direction or in the same magnitude as the prices of goods and
services. As discussed previously, management seeks to manage the relationships between
interest-sensitive assets and liabilities in order to protect against wide interest rate
fluctuations, including those, which may result from inflation.

# Recently Issued
Accounting Standards

Accounting standards that have been
issued or proposed that do not require adoption until a future date are not expected to
have a material impact on the consolidated financial statements upon adoption.

# Item 3.  Controls and
Procedures

As
of the end of the period covered by this report, we carried out an evaluation, under the
supervision and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and
procedures as defined in Exchange Act Rule 13a-15(e). Based upon that evaluation, our
Chief Executive Officer and Chief Financial Officer have concluded that our current
disclosure controls and procedures are effective as of June 30, 2004. There have been no
significant changes in our internal controls over financial reporting during the fiscal
quarter ended June 30, 2004 that have materially affected, or are reasonably likely to
materially affect, our internal controls over financial reporting.

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

17

---

# PART II  OTHER
INFORMATION

# Item 1.  Legal Proceedings

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

# Item 2.  Changes in
Securities

Not Applicable.

# Item 3.  Defaults upon
Senior Securities

Not Applicable.

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

The annual meeting of shareholders
was held on April 28, 2004. At this meeting there were two matters submitted to a vote of
security holders: (i) the election of four members of the board of directors as Class II
directors for a three-year term and (ii) consideration of a proposal to amend the
companys 1999 Stock Incentive Plan to increase the shares allowed to be issued under
the plan from 150,000 shares to 250,000 shares. The following describes the matters voted
upon at the annual meeting and sets forth the number of votes cast for or withheld as to
each such matter:

Our board of directors is divided
into three classes with each class to be as nearly equal in number as possible. The three
classes of directors have staggered terms, so that the terms of only approximately
one-third of the board members expire at each annual meeting of shareholders. The current
Class I directors are Marshall J. Collins, Jr. and Tommy D. Greer. The current Class II
directors are Ralph S. Crawley, Bobby L. Johnson, Robert T. Kellett, and Dennis O. Raines.
The current Class III directors are Richard W. Bailey, Timothy A. Brett, G. Mitchell
Gault, and Frank W. Wingate. The current terms of the Class II directors expired at the
annual meeting. Each of the four current Class II directors was nominated for election and
stood for election at the Annual Meeting on April 28, 2004 for a three-year term. Each of
the nominees was reelected at the meeting. The number of votes cast for the election of
each of the Class II directors was as follows: for Mr. Crawley  749,309 votes, for
Mr. Johnson  749,309 votes, for Mr. Kellet  808,049 votes, and for Mr. Raines
 807,549 votes. The number of votes which withheld authority for Mr. Crawley 
74,540, withheld authority for Mr. Johnson  74,540, withheld authority for Mr.
Kellet  15,800 votes, and withheld authority for Mr. Raines  16,300. No
shareholders voted to abstain. The terms of the Class III directors will expire at the
2005 annual meeting of shareholders.

On April 28, 2000, the shareholders
approved the 1999 Stock Incentive Plan. Options issued pursuant to the plan were not to
exceed the aggregate of 150,000 shares, subject to adjustment for stock splits and stock
dividends. On January 20, 2004, the Board of Directors of the company approved, subject to
shareholder approval, an amendment to the plan which increased the number of shares of
common stock with respect to which options may be granted from 150,000 shares to 250,000
shares, subject to adjustment for stock splits and stock dividends. The number of votes
cast for the amendment was 465,777, the number of votes withheld was 96,760, and no
shareholders voted to abstain. There were 261,372 broker non-votes related to this
proposal. The proposal to approve the amendment passed as there was a majority of the
votes represented at the meeting in person or by proxy that voted in favor of the
proposal.

# Item 5.  Other Information

None.

18

---

# Item 6.  Exhibits and
Reports on Form 8-K

(a)  Exhibits:

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

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

32        Section 1350
Certifications.

(b)  
          Reports on Form 8-K  The following report was filed on Form 8-K during the
          quarter ended June 30, 2004.

The Company filed a Form 8-K on April
20, 2004 to disclose the issuance of a press release announcing its financial results for
the first quarter ended March 31, 2004.

19

---

# SIGNATURES

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

| |  | NEW COMMERCE BANCORP(Registrant)
| |  | --------------------------------

|                      |  | By:   /s/  Frank W. Wingate          
|--------------------- |  | -------------------------------------
|                      |  | Frank W. Wingate                     
|Date:  August 5, 2004 |  | President and Chief Executive Officer

|                      |  | By:   /s/  R. Lamar Simpson                      
|--------------------- |  | -------------------------------------------------
|                      |  | R. Lamar Simpson                                 
|Date:  August 5, 2004 |  | Senior Vice President and Chief Financial Officer

20

---

# EXHIBIT INDEX

Exhibit Number          
     Description

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

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

32        Section 1350
Certifications.

21