# 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 quarter ended June 30, 2003                                              

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

Commission file number
333-70589

NEW COMMERCE BANCORP(Exact name of registrant 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)

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 8, 2003.

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

---

# PART I. FINANCIAL
INFORMATION

# Item 1. Financial
Statements

# NEW COMMERCE BANCORP
AND SUBSIDIARY CONSOLIDATED 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 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 SUBSIDIARY CONSOLIDATED 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                                            |                    |                 
|Securities sold under agreements to repurchase      |                    |                 
|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 expenses                         |                    |                 
|                                                    |                    |                 
|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 FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2003 AND 2002 (UNAUDITED)

|                                   |  |  |  |           | Accumulated
|---------------------------------- |  |  |  | --------- | -----------
|
|
|
|
|Balance, December 31, 2001         |  |  |  | 1,000,000 |            
|                                   |  |  |  |           |            
|Net income                         |  |  |  | -         |            
|Other comprehensive income, net of |  | 
|tax:                               |  | 
|Unrealized holding gain on         |  | 
|securities available for sale      |  | 
|net of tax effect of $49,007       |  |  |  | -         |            
|                                   |  |  |  |           |            
|Comprehensive income               |  |  |  | -         |            
|                                   |  |  |  |           |            
|Balance, June 30, 2002             |  |  |  | 1,000,000 |            
|                                   |  |  |  |           |            
|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 |            
|                                   |  |  |  |           |            

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

4

---

# NEW COMMERCE BANCORP
AND SUBSIDIARY CONSOLIDATED 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) decrease in accrued interest receivable                  |                 
|Increase in other assets                                            |                 
|Decrease in other liabilities                                       |                 
|                                                                    |                 
|Net cash (used for) provided by operating activities                |                 
|                                                                    |                 
|Investing Activities:                                               |                 
|Increase in loans, net                                              |                 
|Purchase of investment securities available for sale                |                 
|Purchase of investment securities held to maturity                  |                 
|Redemption (purchase) of Federal Home Loan Bank stock               |                 
|Proceeds from principal payments on investment securities available |                 
|for sale                                                            |                 
|Proceeds from principal payments on investment securities held to   |                 
|maturity                                                            |                 
|Proceeds from sale or call of investment securities available for   |                 
|sale                                                                |                 
|Purchase of property and equipment                                  |                 
|                                                                    |                 
|Net cash used for investing activities                              |                 
|                                                                    |                 
|Financing Activities:                                               |                 
|Increase in deposits, net                                           |                 
|(Decrease) increase in drafts outstanding                           |                 
|Net decrease in advances from Federal Home Loan Bank                |                 
|Net decrease in  securities sold under agreement to repurchase      |                 
|Net increase in federal funds purchased                             |                 
|                                                                    |                 
|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                                                        |                 
|                                                                    |                 

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

OrganizationNew 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 PresentationThe 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, 2003 are not necessarily indicative of the results for the year
ending December 31, 2003. For further information, refer to the consolidated financial
statements and footnotes thereto included in our Form 10-KSB for the period ended December
31, 2002 (Registration Number 333-70589) 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-month and six-month periods ended June 30, 2003 and 2002.
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           |                    |                 
|                                        |                    |                 

The following is an analysis of stock
option activity for the six months ended June 30, 2003 and 2002:

|                                   | 2003 | 2002
|---------------------------------- | ---- | ----
|
|
|
|
|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

---

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

The following is our discussion and
analysis of certain significant factors that have affected our financial position and
operating results and those of our subsidiary, New Commerce Bank, during the periods
included in the accompanying consolidated financial statements. This commentary should be
read in conjunction with the financial statements and the related notes and the other
statistical information included in this report.

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 each quarter is
subject to various risks and uncertainties that are discussed in detail in our filings
with the Securities and Exchange Commission, including, without limitation:

| | 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 loss;
| | - | -------------------------------------

| | 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 | 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

---

# Critical 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
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, 2003 Compared to the Three Months Ended June 30, 2002  Provision for Loan
Losses, Results of Operations for the Six Months Ended June 30, 2003 Compared
to the Six Months Ended June 30, 2002  Provision for Loan Losses, and
Balance Sheet Review at June 30, 2003  Loans and Allowance for Loan
Losses discussions below.

Results of Operations for the
Three Months Ended June 30, 2003 Compared to the Three Months Ended June 30, 2002

Consolidated net income for our
second quarter of 2003, which ended June 30, 2003, was $12,281, or $0.01 per share,
compared to net income of $6,425, or $0.01 per share, for the second quarter of 2002,
which ended June 30, 2002. 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 accrued or paid 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 spread is derived
from determining the weighted-average rate of interest paid on deposits and borrowings and
subtracting them from the weighted-average yield on earning assets. Net interest income
for the quarter ended June 30, 2003 was $519,014, compared to $485,835 for the same period
last year, an increase of 7%. This increase was the result of increased balances of
earning assets and the impact of lower interest rates on our interest-bearing liabilities,
offset partially by the effect of lower interest rates on earning assets.

For the quarter ended June 30, 2003,
average earning assets totaled $59.9 million with an annualized average yield of 5.22%.
Average earning assets and annualized average yield were $46.6 million and 6.22%,
respectively, for the quarter ended June 30, 2002. For the quarter ended June 30, 2003,
average interest-bearing liabilities totaled $57.2 million with an annualized average cost
of 1.84%. Average interest-bearing liabilities and annualized average cost were $43.4
million and 2.21%, respectively, for the quarter ended June 30, 2002. Net interest margin
was 3.47% for the quarter ended June 30, 2003 compared to 4.17% for the quarter ended June
30, 2002. The decrease in net interest margin is the result of earning assets repricing
faster than our interest-bearing liabilities in the recent declining interest rate
environment. Details of the components of earning assets and interest-bearing liabilities
are discussed in the following paragraphs.

The prime rate was further lowered by
25 basis points in late June 2003. We expect that this event will further decrease our net
interest margin, but we cannot predict to what degree.

9

---

Because loans often 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% and 66% of average earning assets for the second quarter of 2003 and 2002,
respectively. Loan interest income for the quarter ended June 30, 2003 totaled $622,849,
compared to $497,262 for the same period in 2002. The annualized average yield on loans
was 5.47% for the quarter ended June 30, 2003, compared to 6.43% for the same period in
2002. The yield decreased as a result of the declining interest rate environment and its
impact on our variable rate loan portfolio (which is about 75% of our loans). Turnover in
our fixed rate portfolio has also resulted in a decrease in yield, as the yield on fixed
rate loans now reflect the decreases in interest rates in 2001, 2002, and 2003. Average
balances of loans increased to $45.6 million during the quarter ended June 30, 2003, an
increase of $14.7 million over the average of $30.9 million during the comparable quarter
in 2002. The increase in average balances offset the impact of the decrease in yield on
interest income.

Investment securities averaged $12.7
million, or 21% of average earning assets, for the second quarter of 2003, compared to
$15.6 million, or 34% of average earning assets, for the same period in 2002. Interest
earned on investment securities amounted to $154,201 for the quarter ended June 30, 2003,
compared to $227,378 for the quarter ended June 30, 2002. Investment securities yielded
4.87% during the second quarter of 2003, compared to 5.85% during the same period last
year. This difference resulted from the effect of the sale of securities held in the
portfolio during the period ended June 30, 2002 that had a higher yield than the average
yield on securities held in the portfolio during the quarter ended June 30, 2003 and the
purchase of lower yielding securities subsequent to the prior year quarter. Also,
accelerated principal repayments on mortgage-related securities have resulted in the
lowering of our yield on investment securities as the proceeds of the repayments have been
reinvested at lower current rates. Further, accelerated principal repayments on
mortgage-related securities have accelerated the amortization of purchase premiums, which
in turn have lowered their yields. The accelerated principal repayments on
mortgage-related securities are largely the result of the refinancing of the underlying
mortgages due to the current lower prevailing mortgage interest rates.

Interest expense for the quarter
ended June 30, 2003 was $263,074 compared to $239,278 for the same period last year. The
largest component of interest expense is interest on deposit accounts. The average balance
of deposits increased to $52.5 million during the quarter ended June 30, 2003 from $37.7
million during the quarter ended June 30, 2002 and 2003. The annualized average cost of
deposits was 1.73% for the quarter ended June 30, 2003, compared to 2.18% for the same
period in 2002. The decrease was due to market interest rates declining throughout 2002,
which has impacted the rates we offer to our depositors. Interest on other
interest-bearing liabilities for the quarter ended June 30, 2003 was $36,738 at an average
cost of 3.10% compared to $33,925 at an average rate of 2.36% during the same period in
2002. The overall cost of funds was 1.84% for the quarter ended June 30, 2003, compared to
2.21% for the same period in 2002.

Provision for Loan LossesThe 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 quarter ended June
30, 2003, the provision for loan losses was $68,934 compared to $20,675 for the same
period last year. This increase of $48,259 reflects, and is consistent with, our loan
growth since the quarter ended June 30, 2002. See Balance Sheet Review at
June 30, 2003  Loans and Allowance for Loan Losses.

Non-Interest IncomeNon-interest income for the quarter
ended June 30, 2003 was $206,325, compared to $62,342 for the same period in 2002, an
increase of $142,983. The largest component of the increase was a gain of $65,512 on the
sale of investment securities during the quarter ended June 30, 2003 that was not present
in the prior year quarter. 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 this gain a nonrecurring item. Currently,
we have no plans to sell additional securities.

10

---

Service fees on deposit accounts was
$67,640, compared to $27,673 for the same period in 2002, an increase of $39,967. This
increase is the result in the growth of deposit accounts and fee income attributable to
the implementation of an overdraft protection product on our checking accounts during the
current quarter. Mortgage brokerage income was $57,763, compared to $19,852 for the same
period in 2002, an increase of $37,911. Mortgage loan originations in recent months have
increased due to refinancing activity related to the current low mortgage loan interest
rate environment.

Non-Interest ExpenseNon-interest expense for the quarter
ended June 30, 2003 was $636,674, compared to $519,227 for the same period in 2002. The
principal component of this increase was in salaries and benefits, the largest component
of non-interest expense, which increased by $69,312 to $340,708 for the quarter ended June
30, 2003 from $271,396 for the quarter ended June 30, 2002. This increase is the result of
annual raises and the hiring of additional staff since the prior year quarter.
Additionally, commissions paid on mortgage loan originations increased during the current
quarter due to the increase in mortgage origination income as previously discussed. We
expect salaries and benefits to continue to increase as we continue to grow and add
personnel to support the growth.

Results of Operations for the Six
Months Ended June 30, 2003 Compared to the Six Months Ended June 30, 2002

Consolidated net income for the six
months ended June 30, 2003, was $18,634, or $0.02 per share, compared to net income of
$10,931, or $0.01 per share, for the six months ended June 30, 2002. Following is a
discussion of the more significant components of our net income.

Net Interest IncomeNet interest income for the six
months ended June 30, 2003 was $1,042,608, compared to $948,162 for the same period last
year, an increase of 10%. This increase was the result of increased balances of earning
assets and the impact of lower interest rates on our interest-bearing liabilities, offset
partially by the effect of lower interest rates on earning assets.

For the six months ended June 30,
2003, average earning assets totaled $57.3 million with an annualized average yield of
5.41%. Average earning assets and annualized average yield were $45.7 million and 6.24%,
respectively, for the six months ended June 30, 2002. For the six months ended June 30,
2003, average interest-bearing liabilities totaled $54.6 million with an annualized
average cost of 1.86%. Average interest-bearing liabilities and annualized average cost
were $42.5 million and 2.25%, respectively, for the six months ended June 30, 2002. Net
interest margin was 3.64% for the six months ended June 30, 2003 compared to 4.15% for the
six months ended June 30, 2002. The decrease in net interest margin is the result of
earning assets repricing faster than our interest-bearing liabilities in the recent
declining interest rate environment. Details of the components of earning assets and
interest-bearing liabilities are discussed in the following paragraphs.

Loan interest income for the six
months ended June 30, 2003 totaled $1,186,577, compared to $967,496 for the same period in
2002. The annualized average yield on loans was 5.54% for the six months ended June 30,
2003, compared to 6.47% for the same period in 2002. The yield decreased as a result of
the declining interest rate environment and its impact on our variable rate loan
portfolio. Turnover in our fixed rate portfolio has also resulted in a decrease in yield,
as the yield on fixed rate loans now reflect the decreases in interest rates in 2001,
2002, and 2003. Average balances of loans increased to $42.8 million during the six months
ended June 30, 2003, an increase of $12.9 million over the average of $29.9 million during
the comparable six month period in 2002. The increase in average balances offset the
impact of the decrease in yield on interest income.

11

---

Investment securities averaged $13.3
million for the six months ended June 30, 2003, compared to $14.9 million for the same
period in 2002. Interest earned on investment securities amounted to $355,692 for the six
months ended June 30, 2003, compared to $458,664 for the six months ended June 30, 2002.
Investment securities yielded 5.34% during the six month period ended June 30, 2003,
compared to 5.83% during the same period last year. This difference resulted from the
effect of the sale of securities held in the portfolio during the six months ended June
30, 2002 that had a higher yield than the average yield on securities held in the
portfolio during the six months ended June 30, 2003 and the purchase of lower yielding
securities subsequent to the prior year. Also, accelerated principal repayments on
mortgage-related securities have resulted in the lowering of our yield on investment
securities as the proceeds of the repayments have been reinvested at lower current rates.
Further, accelerated principal repayments on mortgage-related securities have accelerated
the amortization of purchase premiums, which in turn have lowered their yields. The
accelerated principal repayments on mortgage-related securities are largely the result of
the refinancing of the underlying mortgages due to the current lower prevailing mortgage
interest rates.

Interest expense for the six months
ended June 30, 2003 was $508,123 compared to $478,612 for the same period last year. The
largest component of interest expense is interest on deposit accounts. The average balance
of deposits increased to $49.5 million during the six months ended June 30, 2003 from
$36.7 million during the six months ended June 30, 2002. The annualized average cost of
deposits was 1.76% for the six months ended June 30, 2003, compared to 2.25% for the same
period in 2002. The decrease was due to market interest rates declining throughout 2002
and 2003, which has impacted the rates we offer to our depositors. Interest on other
interest-bearing liabilities for the six months ended June 30, 2003 was $72,652 at an
average cost of 2.85% compared to $66,834 at an average rate of 2.28% during the same
period in 2002. The overall cost of funds was 1.86% for the six months ended June 30,
2003, compared to 2.25% for the same period in 2002.

Provision for Loan LossesFor the six months ended June 30,
2003, the provision for loan losses was $113,159 compared to $30,000 for the same period
last year. This increase of $83,159 reflects, and is consistent with, our loan growth
since the six months ended June 30, 2002. See Balance Sheet Review at June 30, 2003
 Loans and Allowance for Loan Losses.

Non-Interest IncomeNon-interest income for the six
months ended June 30, 2003 was $307,210, compared to $117,878 for the same period in 2002,
an increase of $189,332. The largest component of the increase was a gain of $77,226 on
the sale of investment securities during the six months ended June 30, 2003 that was not
present in the prior year. Service fees on deposit accounts was $105,415, compared to
$51,428 for the same period in 2002, an increase of $53,987. This increase is the result
in the growth of deposit accounts and fee income attributable to the implementation of an
overdraft protection product on our checking accounts during the current six month period.
Mortgage brokerage income was $95,603, compared to $36,582 for the same period in 2002, an
increase of $59,021.

Non-Interest ExpenseNon-interest expense for the six
months ended June 30, 2003 was $1,206,775, compared to $1,019,893 for the same period in
2002. The principal component of this increase was in salaries and benefits, the largest
component of non-interest expense, which increased by $101,653 to $657,088 for the six
months ended June 30, 2003 from $555,435 for the six months ended June 30, 2002. This
increase is the result of annual raises and the hiring of additional staff since the prior
year. Additionally, commissions paid on mortgage loan originations increased during the
current six month period due to the increase in mortgage origination income as previously
discussed.

12

---

# Balance Sheet Review at
June 30, 2003

GeneralTotal consolidated assets increased
$6.5 million to $70.1 million at June 30, 2003 from $63.6 at December 31, 2002. This 10%
increase in assets was comprised principally of a $9.7 million increase in loans
receivable, net. Our loans have increased due to our continued focus on establishing new
client relationships. Investment securities decreased by $2.3 million due to the sale of
securities and from principal collections on mortgage-backed securities.

There was a $7.9 million increase in
deposits, bringing deposits up to $55.4 million at June 30, 2003. There were both
increases and decreases in deposit balances of several of our larger commercial and
personal account relationships. The net effect was that we had a decrease in balances of
deposits of clients in our market area. We obtained additional brokered deposits to fund
our loan growth. The total of such brokered deposits at June 30, 2002 was $8.7 million.

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.

Loans and Allowance for
Loan LossesGross loans were $48.2 million, or
75% of total earning assets, compared to $38.4 million, or 68% at December 31, 2002. Loans
have increased 26% since December 31, 2002. Balances within the major loan categories were
as follows:

|                           | June 30, 2003 | December 31, 2002
|-------------------------- | ------------- | -----------------
|
|Commercial                 |               |                  
|Real estate - construction |               |                  
|Real estate - mortgage     |               |                  
|Consumer                   |               |                  
|                           |               |                  
|Total loans                |               |                  
|                           |               |                  
|Allowance for loan losses  |               |                  
|Deferred loan costs, net   |               |                  
|                           |               |                  
|Net loans                  |               |                  
|                           |               |                  

The loan portfolio is periodically
reviewed to evaluate the outstanding loans, to measure both the performance of the
portfolio and the adequacy of the allowance for loan losses, and to provide for probable
losses inherent in the loan portfolio.

This analysis and determination of
the level of the allowance includes 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. Managements judgment as to the adequacy of the allowance is based upon a
number of assumptions about future events, which it believes to be reasonable, but which
may or may not be accurate. Because of the inherent uncertainty of assumptions made during
the evaluation process, there can be no assurance that loan losses in future periods will
not exceed the allowance for loan losses or that additional allocations will not be
required. The following is an analysis of the allowance for loan losses:

13

---

|                                                | 
|----------------------------------------------- | 
|Allowance for loan losses, December 31, 2002    | 
|Provision                                       | 
|Charge-offs - consumer                          | 
|                                                | 
|Allowance for loan losses, June 30, 2003        | 
|                                                | 
|Allowance for loan losses to loans outstanding: | 
|June 30, 2003                                   | 
|                                                | 
|December 31, 2002                               | 
|                                                | 

Nonperforming assets consist of
nonaccrual loans, other real estate owned, and repossessed collateral. Generally, loans
are placed on nonaccrual 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 nonaccrual status. Interest
income on these loans is recognized when payments are received. There were neither any
nonaccrual loans nor any loans delinquent more than 90 days at June 30, 2003 and December
31, 2002.

Investment PortfolioInvestment securities represented 18%
and 25% of earning assets at June 30, 2003 and December 31, 2002, 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.

The following is a table of
investment securities by category at June 30, 2003 and December 31, 2002:

|                                    | 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          |          |             
|Trust preferred securities          |          |             
|                                    |          |             
|Total held to maturity              |          |             
|                                    |          |             
|                                    |          |             

DepositsBalances within the major deposit
categories as of June 30, 2003 and December 31, 2002 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    |          |             
|                                     |          |             
|                                     |          |             
|                                     |          |             

14

---

Other BorrowingsWe 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, 2003 and
December 31, 2002 there were outstanding FHLB advances of $4,075,000 and $4,725,000,
respectively, and no advances outstanding under lines of credit.

Interest Rate SensitivityInterest 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. As stated in Results of Operations for the Three Months Ended
June 30, 2003 Compared to the Three Months Ended June 30, 2002  Net Interest
Income, our net interest margin has been declining during the current year. We
believe that net interest margin will further decline due to the recent 25 basis point
reduction in prime rate, although we are unable to quantify the amount at this time. If
net interest margin declines further, net income will likely decline also.

Liquidity ManagementLiquidity 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, 2003, our liquid assets,
consisting of cash and due from banks and federal funds sold, amounted to $5.2 million and
represented 8% of total assets. Investment securities totaled $11.7 million and
represented 17% of total assets. Investment securities that have not been pledged as
collateral for deposits in excess of FDIC coverage or for other borrowings (and classified
as available-for sale) provide a secondary source of liquidity since they can be converted
to cash in a timely manner. At June 30, 2003, we had securities with a market value of
$3.2 million classified as available for sale that were not pledged. 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, 2003 was 87%. We plan to meet our future
cash needs through the liquidation of temporary investments, maturities of loans,
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 $5.8 million, lines of credit
with the Federal Reserve Bank, and we are a member of the Federal Home Loan Bank, from
which application for borrowings can be made for leverage purposes. At June 30, 2003, we
had approximately $14.0 million in available credit under our FHLB facility, of which
approximately $4.1 million had been utilized. Any advances under the FHLB facility must be
collateralized with qualifying collateral, which at June 30, 2003 consisted of non-pledged
investment securities and FHLB stock. We believe that our existing stable base of core
deposits and other funding sources, such as in-market deposit promotions and out of market
brokered deposits, are adequate to meet our operating needs, and we are not aware of any
events which may result in a significant adverse impact on liquidity.

15

---

Impact of Off-Balance
Sheet InstrumentsThrough 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,
2003, we had issued commitments to extend credit of $8.2 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

The bank has a five-year contract for
data processing services through April 2004. Costs under this contract are approximately
$10,500 per month.

Capital AdequacyShareholders equity was $8.8
million at both June 30, 2003 and December 31, 2002. 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.

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, 2003. Below is a table that
reflects the leverage and risk-based regulatory capital ratios of the bank at June 30,
2003.

|                        | Required |  | Actual |      
|----------------------- | -------- |  | ------ | -----
|
|
|Total capital           |          |  | $      | 4,645
|Tier 1 capital          |          |  |        | 2,322
|Tier 1 leverage capital |          |  |        | 2,598

# 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.

16

---

# 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, 2003.

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

There was one matter submitted to a
vote of security holders during the quarter ended June 30, 2003 at our annual meeting of
shareholders held on April 30, 2003  the election of two members of the Board of
Directors as Class I directors for a three-year term.

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 I directors expired at the
annual meeting. Each of the two current Class I directors was nominated for election and
stood for election at the Annual Meeting on April 30, 2003 for a three-year term. The
number of votes for the election of the Class I directors were as follows: For Mr. Collins
 752,319 votes and for Mr. Greer  760,519 votes. The number of votes which
withheld authority for Mr. Collins  11,755 and withheld authority for Mr. Greer
 3,555. The number of votes against the election of directors was as follows:
against Mr. Collins  0 and against Mr. Greer  0. The terms of the Class II
directors will expire at the 2004 annual meeting of shareholders.

# Item 5. Other Information

None.

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

(a)    
          Exhibits:

| | 31 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
| | -- | ------------------------------------------------------------------------------------------------------------------------------

| | 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002. This exhibit is not filed for purposes
of Section 18 of the Securities Exchange Act of 1934 but is instead furnished as provided
by applicable rules of the Securities and Exchange Commission.
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

(b)    
          Reports on Form 8-K.

The following reports were filed on
Form 8-K during the second quarter ended June 30, 2003.

| |  | The Company filed a Form 8-K on April 29, 2003 to report that the company issued a press
release announcing its financial results for the first quarter ended March 31, 2003 and a
Form 8-K/A on April 30, 2003 to correct the actual date of release.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

18

---

# 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 13, 2003 |  | President and Chief Executive Officer

|                       |  | By:   /s/  R. Lamar Simpson
|---------------------- |  | ---------------------------
|                       |  | R. Lamar Simpson           
|Date:  August 13, 2003 |  | Chief Financial Officer    

19

---

Exhibit Index

| | 31 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section
302 of the Sarbanes-Oxley Act of 2002.
| | -- | -------------------------------------------------------------------------------------------------------------------------------

| | 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
| | -- | -------------------------------------------------------------------------------------------------------------------------------

20