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SECURITIES AND EXCHANGE
COMMISSION Washington, D.C. 20549

# Form 10-KSB

(Mark One)

|X | Annual Report under Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ------------------------------------------------------------------------------

| | For the fiscal year ended December 31, 2004
| | -------------------------------------------

| | or
| | --

| | Transition report under Section 13 or 15(d) of the Securities Exchange Act of 1934
| | ----------------------------------------------------------------------------------
| | For the transition period from __________ to ________                             

Commission file no.
000-26061

NEW COMMERCE BANCORP
(Name of Small Business Issuer in Its Charter)

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

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

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

Securities
registered pursuant to Section 12(b) of the Act: None. Securities registered pursuant to
Section 12(g) of the Act: Common Stock.

Check
whether the issuer (1) 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 past 90 days.   Yes X   No

Check
if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B
in this form, and no disclosure will be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-KSB or any amendment to this Form 10-KSB. [  ]

The
issuers revenues for the year ended December 31, 2004 were approximately $4,791,000.

As
of March 14, 2005, there were 1,000,000 shares of Common Stock issued and outstanding. The
aggregate market value of the Common Stock held by non-affiliates (shareholders holding
less than 5% of the Common Stock, excluding directors and executive officers) of the
company on March 14, 2005 was $13,089,027. This calculation is based upon an estimate of
the fair market value of the Common Stock of $17.77 per share, which was the price of the
last trade of which management is aware prior to this date. There is not an active trading
market for the Common Stock and it is not possible to identify precisely the market value
of the Common Stock.

Transitional Small Business
Disclosure Format.  (Check one):    Yes  NoX

# DOCUMENTS INCORPORATED
BY REFERENCE

None

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# Item 1.   Description of
Business

This
Report contains statements which constitute forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and the Securities Exchange Act of 1934.
These statements are based on many assumptions and estimates and are not guarantees of
future performance. Our actual results may differ materially from those projected in any
forward-looking statements, as they will depend on many factors about which we are unsure,
including many factors which are beyond our control. The words may,
would, could, will, expect,
anticipate, believe, intend, plan, and
estimate, as well as similar expressions, are meant to identify such
forward-looking statements. Potential risks and uncertainties include, but are not limited
to, those described below under risk factors.

# General

New
Commerce BanCorp was incorporated to operate as a bank holding company pursuant to the
Federal Bank Holding Company Act of 1956 and the South Carolina Banking and Branching
Efficiency Act, and to purchase 100% of the issued and outstanding stock of New Commerce
Bank, an association organized under the laws of the United States, to conduct a general
banking business in the Golden Strip area of Greenville, South Carolina.

The
bank engages in a commercial banking business from our main office located at 501 New
Commerce Court, in Greenville, South Carolina and from our branch location at 1 Five Forks
Plaza Court in Simpsonville, South Carolina (both located in Greenville County). The bank
is a full service commercial bank without trust powers. We offer a full range of interest
bearing and non-interest bearing accounts, including commercial and retail checking
accounts, money market accounts, individual retirement accounts, certificates of deposit,
commercial loans, real estate loans, home equity loans and consumer/installment loans. In
addition, we provide such consumer services as U.S. Savings Bonds, travelers checks,
cashiers checks, safe deposit boxes, bank by mail services, direct deposit, credit cards
and automated teller machines.

# Pending Merger

On
December 16, 2004, we entered into a merger agreement with SCBT Financial Corporation
(SCBT), which was amended on January 20, 2005. Under the amended agreement,
SCBT Interim Corporation, a wholly-owned subsidiary of South Carolina Bank & Trust,
N.A, will merge with and into New Commerce BanCorp. Immediately thereafter, New Commerce
BanCorp and the New Commerce Bank will merge with and into South Carolina Bank &
Trust, N.A., a wholly-owned subsidiary of SCBT. Under the agreement, our shareholders will
receive $18.00 per share in cash of common stock. Holders of stock options and warrants
will receive a cash payment equal to the spread between $18.00 per share and the exercise
price per share of the stock covered by the option or warrant. The boards of directors of
our company and SCBT have approved the merger agreement. The merger is subject to the
approval of our shareholders, regulatory approvals, and other customary closing
conditions. Closing is expected to occur in the second quarter of 2005.

Risk Factors

# We cannot guarantee the consummation
of the contemplated merger, and if we do not complete the merger our results of operations
and financial condition will be adversely affected.

We
will not be able to consummate the merger without the approval of certain state and
federal regulatory agencies and our shareholders. Accordingly, we can give no assurances
that those approvals will be obtained or that the acquisition will be completed. If we do
not consummate the merger, our results of operations and financial condition will be
adversely affected due to the costs we have incurred and time we have spent in preparing
for the merger. It would also be harder for us to compete as a local, independent
community bank after having announced that we intended to enter into this merger. Various
factors, such as economic conditions, regulatory and legislative considerations, and
competition, may also impede our future results.

2

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# Our decisions regarding credit risk
and reserves for loan losses may materially and adversely affect our business.

Making
loans and other extensions of credit is an essential element of our business. Although we
seek to mitigate risks inherent in lending by adhering to specific underwriting practices,
our loans and other extensions of credit may not be repaid. The risk of nonpayment is
affected by a number of factors, including:

| | o | the duration of the credit;
| | - | ---------------------------

| | o | credit risks of a particular customer;
| | - | --------------------------------------

| | o | changes in economic and industry conditions; and
| | - | ------------------------------------------------

| | o | in the case of a collateralized loan, risks resulting from uncertainties about the future value of the
collateral.
| | - | ------------------------------------------------------------------------------------------------------------------

We
attempt to maintain an appropriate allowance for loan losses to provide for potential
losses in our loan portfolio. We periodically determine the amount of the allowance based
on consideration of several factors, including:

| | o | an ongoing review of the quality, mix, and size of our overall loan portfolio;
| | - | ------------------------------------------------------------------------------

| | o | our historical loan loss experience;
| | - | ------------------------------------

| | o | evaluation of economic conditions;
| | - | ----------------------------------

| | o | regular reviews of loan delinquencies and loan portfolio quality; and
| | - | ---------------------------------------------------------------------

| | o | the amount and quality of collateral, including guarantees, securing the loans.
| | - | -------------------------------------------------------------------------------

There
is no precise method of predicting credit losses; therefore, we face the risk that
charge-offs in future periods will exceed our allowance for loan losses and that
additional increases in the allowance for loan losses will be required. Additions to the
allowance for loan losses would result in a decrease of our net income, and possibly our
capital.

# Lack of seasoning of our loan
portfolio may increase the risk of credit defaults in the future.

Due
to our short operating history, a large portion of the loans in our loan portfolio and of
our lending relationships are of relatively recent origin. In general, loans do not begin
to show signs of credit deterioration or default until they have been outstanding for some
period of time, a process we refer to as seasoning. As a result, a portfolio
of older loans will usually behave more predictably than a newer portfolio. Because our
loan portfolio is relatively new, the current level of delinquencies and defaults may not
be representative of the level that will prevail when the portfolio becomes more seasoned,
which may be higher than current levels. If delinquencies and defaults increase, we may be
required to increase our provision for loan losses, which would adversely affect our
results of operations and financial condition.

# An economic downturn, especially one
affecting Greenville County area, could reduce our customer base, our level of deposits,
and demand for financial products such as loans.

If
the merger is not consummated, our success will significantly depend upon the growth in
population, income levels, deposits, and housing starts in our market of Greenville
County. If the community in which we operate does not grow or if prevailing economic
conditions locally or nationally are unfavorable, our business may not succeed. An
economic downturn would likely contribute to the deterioration of the quality of our loan
portfolio and reduce our level of deposits, which in turn would hurt our business. If an
economic downturn occurs in the economy as a whole, or in the Greenville County area,
borrowers may be less likely to repay their loans as scheduled. Moreover, the value of
real estate or other collateral that may secure our loans could be adversely affected.
Unlike many larger institutions, we are not able to spread the risks of unfavorable local
economic conditions across a large number of diversified economies. An economic downturn
could, therefore, result in losses that materially and adversely affect our business.

3

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# Changes in prevailing interest rates
may reduce our profitability.

Our
results of operations depend in large part upon the level of our net interest income,
which is the difference between interest income from interest-earning assets, such as
loans and mortgage-backed securities, and interest expense on interest-bearing
liabilities, such as deposits and other borrowings. Depending on the terms and maturities
of our assets and liabilities, a significant change in interest rates could have a
material adverse effect on our profitability. Many factors cause changes in interest
rates, including governmental monetary policies and domestic and international economic
and political conditions. While we intend to manage the effects of changes in interest
rates by adjusting the terms, maturities, and pricing of our assets and liabilities, our
efforts may not be effective and our financial condition and results of operations could
suffer. After operating in a historically low interest rate environment, the Federal
Reserve began raising short-term interest rates in the second quarter of 2004. Because we
were liability sensitive at December 31, 2004, we generally would not benefit from a
rising interest rate environment. However, no assurance can be given that the Federal
Reserve will actually continue to raise interest rates or that the results we anticipate
will actually occur.

# We are dependent on key individuals,
and the loss of one or more of these key individuals could curtail our growth and
adversely affect our prospects.

Frank
Wingate, our chairman and chief executive officer, has extensive and long-standing ties
within our primary market area and substantial experience with our operations, and he has
contributed significantly to our growth. If we lose the services of Mr. Wingate, he would
be difficult to replace and our business and development could be materially and adversely
affected.

Our
success also depends, in part, on our continued ability to attract and retain experienced
loan originators, as well as other management personnel. The loss of the services of
several of such key personnel could adversely affect our growth strategy and prospects to
the extent we are unable to replace such personnel.

# We are subject to extensive
regulation that could limit or restrict our activities.

We
operate in a highly regulated industry and are subject to examination, supervision, and
comprehensive regulation by various regulatory agencies. Our compliance with these
regulations is costly and restricts certain of our activities, including payment of
dividends, mergers and acquisitions, investments, loans and interest rates charged,
interest rates paid on deposits, and locations of offices. We are also subject to
capitalization guidelines established by our regulators, which require us to maintain
adequate capital to support our growth.

The
laws and regulations applicable to the banking industry could change at any time, and we
cannot predict the effects of these changes on our business and profitability. Because
government regulation greatly affects the business and financial results of all commercial
banks and bank holding companies, our cost of compliance could adversely affect our
ability to operate profitably.

The
Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the
Securities and Exchange Commission that are now applicable to us, have increased the
scope, complexity, and cost of corporate governance, reporting, and disclosure practices.
We have experienced, and we expect to continue to experience, greater compliance costs,
including costs related to internal controls, as a result of the Sarbanes-Oxley Act.

# Our continued pace of growth may
require us to raise additional capital in the future if the merger is not consummated, but
that capital may not be available when it is needed.

We
are required by regulatory authorities to maintain adequate levels of capital to support
our operations. To support our continued growth, we may need to raise additional capital
if the merger is not consummated. Our ability to raise additional capital, if needed, will
depend in part on conditions in the capital markets at that time, which are outside our
control. Accordingly, we cannot assure you of our ability to raise additional capital, if
needed, on terms acceptable to us. If we cannot raise additional capital when needed, our
ability to further expand our operations through internal growth and acquisitions could be
materially impaired. In addition, if we decide to raise additional equity capital, your
interest could be diluted.

4

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# We face strong competition for clients, which could prevent us from obtaining clients and may
cause us to pay higher interest rates to attract clients.

The
banking business is highly competitive, and we experience competition in our market from
many other financial institutions. We compete with commercial banks, credit unions,
savings and loan associations, mortgage banking firms, consumer finance companies,
securities brokerage firms, insurance companies, money market funds, and other mutual
funds, as well as other super-regional, national, and international financial institutions
that operate offices in our primary market areas and elsewhere. We compete with these
institutions both in attracting deposits and in making loans. In addition, we have to
attract our client base from other existing financial institutions and from new residents.
Many of our competitors are well-established, larger financial institutions. These
institutions offer some services, such as extensive and established branch networks, that
we do not provide. If the merger is not consummated, there is a risk that we will not be
able to compete successfully with other financial institutions in our market, and that we
may have to pay higher interest rates to attract deposits, resulting in reduced
profitability. In addition, competitors that are not depository institutions are generally
not subject to the extensive regulations that apply to us.

# Marketing Focus

The
bank draws a large percentage of its business from the cities of Simpsonville, Mauldin and
Fountain Inn, as well as from the surrounding unincorporated areas. This area is located
in the southeastern portion of Greenville County and is known locally as the Golden
Strip. It is bounded by Interstate 85 to the north, Highway 25 to the west, Laurens
County to the south, and Spartanburg County to the east. The Golden Strips median
household income, household growth, and population growth trends have consistently
outpaced the rest of Greenville County and the State of South Carolina.

The
bank targets its products and services to meet the needs of the areas customer base
and is a full-service bank, focusing on providing small- to middle-market business loans,
residential mortgages, and consumer loans to these customers. The primary service area
represents a diverse market with a growing population and economy.

# Location and Service Area

While
the bank does not compete with large institutions for the primary banking relationships of
large corporations, it does compete for niches in this business and for the consumer
business of their employees. It also focuses on small- to medium-sized businesses and
their employees. This includes retail, service, and wholesale distribution, manufacturing,
and international businesses. The bank is active in providing residential mortgages;
construction and permanent financing for commercial real estate, particularly owner
occupied property; commercial business loans; and to a lesser extent acquisition and
development loans for commercial and residential land developments.

# Deposits

Our
bank offers a full range of deposit services that typically are available in most banks
and savings and loan associations, including checking accounts, commercial accounts,
savings accounts, money market accounts and time deposits of various types. The
transaction accounts and time certificates are tailored to our principal market area at
rates competitive to those offered by other financial institutions in the Greenville
County area. In addition, we offer certain retirement account services, such as individual
retirement accounts. We solicit these accounts from individuals, businesses, associations,
organizations, and governmental entities.

5

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# Lending Activities

General 
- The bank emphasizes a range of lending services, including real estate, commercial,
and consumer loans to individuals and small- to medium-sized businesses and professional
concerns that are located in or conduct a substantial portion of their business in our
market area.

Real
Estate Loans - Approximately 62% of our loan portfolio consists of loans that are
secured by first or second mortgages on real estate. These loans generally fall into three
categories: commercial real estate loans, construction and development loans, and
residential real estate loans. Each of these categories is discussed in more detail below,
including their specific risks. Also, our home equity lines are secured by real estate
mortgages. However, they are not included in real estate loans, but rather are classified
as consumer loans, which are discussed separately below. Interest rates for all categories
may be fixed or variable. We may charge an origination fee for each loan.

The
principal economic risk associated with any category of loans, including real estate
loans, is the cash flow capability and creditworthiness of our borrowers. The risks
associated with real estate loans vary with many economic factors, including employment
levels and fluctuations in the value of real estate.

Commercial
Real Estate Loans - Commercial real estate loans generally have terms of three to
seven years, although payments may be structured on a longer amortization basis. Risks
associated with commercial real estate loans include the general risk of the failure of
each commercial borrower, which is different for each type of business and commercial
entity. We evaluate each business on an individual basis and attempt to determine its
business risks and credit profile. Our bank attempts to reduce credit risk in the
commercial real estate portfolio by emphasizing loans on owner-occupied office and retail
buildings where the loan-to-value ratio, established by independent appraisals, does not
exceed 85%. Generally we require that debtor cash flow exceeds 120% of monthly debt
service obligations. Typically, the bank reviews the personal financial statements of the
principal owners and requires their personal guarantees. One purpose of these reviews is
to reveal secondary sources of repayment and liquidity to support a loan request.

Construction
and Development Real Estate Loans - We offer adjustable and fixed rate residential
and commercial construction loans to builders and developers and to consumers who wish to
build their own home. The terms of construction and development loans generally are
limited to 12 months, although terms may be longer depending upon the type of construction
project. Most loans mature and require payment in full upon the sale or occupancy of the
property. Construction and development loans generally carry a higher degree of risk than
long term financing of existing properties. Repayment depends on the ultimate completion
of the project and usually on the sale of the property. Risks include:

| | o | cost overruns;
| | - | --------------

| | o | mismanaged construction;
| | - | ------------------------

| | o | inferior or improper construction techniques;
| | - | ---------------------------------------------

| | o | economic changes or downturns during construction;
| | - | --------------------------------------------------

| | o | a downturn in the real estate market;
| | - | -------------------------------------

| | o | rising interest rates which may prevent sale of the property; and
| | - | -----------------------------------------------------------------

| | o | failure to sell completed projects in a timely manner.
| | - | ------------------------------------------------------

The bank attempts to reduce risk by
obtaining personal guarantees where possible, and by keeping the loan-to-value ratio of
the completed project below specified percentages. We also reduce the risk by selling
participations in larger loans to other institutions when possible.

Residential
Real Estate Loans - We originate conventional residential mortgage loans. Residential
real estate loans generally have longer terms up to 30 years, so we typically make these
loans through brokerage relationships with large wholesale mortgage companies. From time
to time we originate loans on residential real estate and retain them in our portfolio.
These loans have shorter terms, typically five years or less, although amortization terms
may be longer, or they carry variable rates.

6

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Commercial
Loans  - The bank makes loans for commercial purposes to various types of businesses.
Equipment loans typically are for a term of five years or less at fixed or variable rates,
with the loan fully amortized over the term and secured by the financed equipment and
typically with a loan-to-value ratio of 80% or less. Working capital loans typically have
terms not exceeding one year and are usually secured by accounts receivable, inventory, or
personal guarantees of the principals of the business. For loans secured by accounts
receivable or inventory, principal typically is repaid as the assets securing the loan are
converted into cash, although we may make these loans with principal due at maturity.
Trade letters of credit and foreign exchange are handled through a correspondent bank as
agent for our bank.

Consumer
Loans  - The bank makes a variety of loans to individuals for personal and household
purposes. Installment loans typically carry balances of less than $50,000 and are
amortized over periods up to 60 months. Consumer loans may be offered on a single maturity
basis where a specific source of repayment is available. The principal economic risk
associated with consumer loans is the creditworthiness and cash flow of our borrowers.

We
also offer home equity lines. The underwriting criteria for and the risks associated with
home equity lines generally are the same as those for first mortgage loans. Home equity
lines of credit typically have terms of 10 years or less, and may extend up to 100% of the
available equity of each property.

Loan
Approval and Review  - The banks loan approval policies provide for various
levels of officer lending authority. When the amount of aggregate loans to a single
borrower exceeds that individual officers lending authority, the loan request will
be considered and approved by an officer with a higher lending limit or the Management
Loan Committee. Any loan in excess of the Management Loan Committees lending limit,
which currently is $600,000, must be approved by the loan committee of the Board of
Directors (Board Loan Committee), whose lending limit is $900,000. Additionally, certain
loans must be approved by the Board of Directors. Such loans include loans in excess of
the Board Loan Committees lending authority and loans to directors. The bank will
not make any loans to any director, officer, or employee of the bank unless the loan is
made on terms not more favorable to such person than would be available to a person not
affiliated with us.

Credit
Administration  - We have a credit administration function which is designed to manage
the risks associated with our lending activities. This function reviews past due loans,
risk rating, documentation, and policy exceptions, among other duties. Reports are
generated and provided to management and the Board of Directors on a regular basis. We
also use outside consulting firms for internal auditing and loan reviews. The internal
auditing firm reviews our loans for regulatory compliance and reviews internal and
operational controls of our lending activities. The loan review consultants review loans
for proper underwriting and policy compliance. These consultants report directly to the
audit committee of the Board of Directors. As part of its regular examination process, the
Office of the Comptroller of the Currency reviews our lending activities, including loan
underwriting and loan quality. See the discussion below under Supervision and
Regulation  New Commerce Bank.

Lending
Limits  - Our banks lending activities are subject to a variety of lending
limits imposed by federal law. While differing limits apply in certain circumstances based
on the type of loan or the nature of the borrower (including the borrowers
relationship to the bank), in general the banks internal target limit for loan
exposure to any borrower is $750,000, although occasionally, the bank will extend credit
up to, but not exceeding the legal lending limit. This limit will increase or decrease as
our banks capital increases or decreases. In order to meet the needs of customers
with borrowing needs in excess of our internal lending limit, we maintain relationships
with other banks which purchase participating interests in larger loans.

# Other Banking Services

Other
banking services include commercial cash management services, commercial and deposit
pick-up services. In addition, we provide services such as internet banking; a toll-free,
24-hour telephone voice response system; drive up ATMs; safe deposit boxes; travelers
checks; direct deposit of payroll and social security checks; and automatic drafts for
various accounts. The bank is associated with the STAR and Cirrus ATM networks that may be
used by our customers throughout the country. The bank waives the foreign ATM charge on
customer withdrawals of $50 or more from other bank ATMs. The bank also offers a
debit card, VISA credit cards through a correspondent bank, and merchant bankcard services
through a correspondent bank.

7

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# Competition

Competition
in our banks primary service area is intense. As of June 2004, there were
approximately 153 banking offices representing 25 financial institutions operating in
Greenville County, holding approximately $7.4 billion in deposits.

Financial
institutions primarily compete with one another for loans and deposits. Primary methods of
competition include interest rates on deposits and loans, service charges on deposit
accounts and the designing of unique financial services products. We are competing with
financial institutions which have much greater financial resources than we have, and which
may be able to offer more and unique services and possibly better terms to their
customers. However, we believe that we are attracting sufficient loans and deposits to
enable us to compete effectively with other area financial institutions. The bank believes
it has the advantage of being locally owned and managed, enabling it to benefit from the
high visibility and excellent business contacts of its organizers and local, timely loan
decisions.

# Employees

As
of March 14, 2005, we had 21 full-time employees and 5 part-time employees.

# Supervision and
Regulation  General

Both
the company and the bank are subject to extensive state and federal banking laws and
regulations that impose specific requirements or restrictions on and provide for general
regulatory oversight of virtually all aspects of our operations. These laws and
regulations are generally intended to protect depositors, not shareholders. The following
summary is qualified by reference to the statutory and regulatory provisions discussed.
Changes in applicable laws or regulations may have a material effect on our business and
prospects. Beginning with the enactment of the Financial Institutions Reform Recovery and
Enforcement Act in 1989 and followed by the FDIC Improvement Act in 1991 and the
Gramm-Leach-Bliley Act in 1999, numerous additional regulatory requirements have been
placed on the banking industry in the past several years, and additional changes have been
proposed. Our operations may be affected by legislative changes and the policies of
various regulatory authorities. We cannot predict the effect that fiscal or monetary
policies, economic control, or new federal or state legislation may have on our business
and earnings in the future.

The
following discussion is not intended to be a complete list of all the activities regulated
by the banking laws or of the impact of such laws and regulations on our operations. It is
intended only to briefly summarize some material provisions.

USA
PATRIOT Act of 2002 - In October 2002, the USA PATRIOT Act of 2002 was enacted in
response to the terrorist attacks in New York, Pennsylvania, and Washington D.C. that
occurred on September 11, 2001. The PATRIOT Act is intended to strengthen U.S. law
enforcements and the intelligence communities abilities to work cohesively to
combat terrorism on a variety of fronts. The potential impact of the PATRIOT Act on
financial institutions is significant and wide ranging. The PATRIOT Act contains sweeping
anti-money laundering and financial transparency laws and imposes various regulations,
including standards for verifying client identification at account opening, and rules to
promote cooperation among financial institutions, regulators, and law enforcement entities
in identifying parties who may be involved in terrorism or money laundering.

8

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Check
21 - On October 28, 2003, President Bush signed into law the Check Clearing for the
21st Century Act, also known as Check 21. The new law gives substitute checks, such as a digital image of a check
and copies made from that image, the same legal standing as the original paper check. Some
of the major provisions include:

| | o | allowing check truncation without making it mandatory;
| | - | ------------------------------------------------------

| | o | demanding that every financial institution communicate to accountholders in writing a
description of its substitute check processing program and their rights under the law;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | legalizing substitutions for and replacements of paper checks without agreement from consumers;
| | - | -----------------------------------------------------------------------------------------------

| | o | retaining in place the previously mandated electronic collection and return of checks between financial institutions
only when individual agreements are in place;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | requiring that when accountholders request verification, financial institutions produce
the original check (or a copy that accurately represents the original) and demonstrate
that the account debit was accurate and valid; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | requiring recrediting of funds to an individuals account on the next business day
after a consumer proves that the financial institution has erred.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------

This
new legislation will likely affect bank capital spending as many financial institutions
assess whether technological or operational changes are necessary to stay competitive and
take advantage of the new opportunities presented by Check 21.

# Supervision and
Regulation    New Commerce BanCorp

We
own 100% of the outstanding capital stock of the bank, and therefore we are considered to
be a bank holding company under the federal Bank Holding Company Act of 1956 and the South
Carolina Banking and Branching Efficiency Act.

The
Bank Holding Company Act. Under the Bank Holding Company Act, we are subject to periodic
examination by the Federal Reserve and are required to file periodic reports of our
operations and any additional information that the Federal Reserve may require. Our
activities at the bank and holding company levels are limited to:

| | o | banking and managing or controlling banks;
| | - | ------------------------------------------

| | o | furnishing services to or performing services for our subsidiaries; and
| | - | -----------------------------------------------------------------------

| | o | engaging in other activities that the Federal Reserve determines to be so closely related
to banking and managing or controlling banks as to be a proper incident thereto.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Investments,
Control, and Activities. With certain limited exceptions, the Bank Holding Company Act
requires every bank holding company to obtain the prior approval of the Federal Reserve
before:

| | o | acquiring substantially all the assets of any bank;
| | - | ---------------------------------------------------

| | o | acquiring direct or indirect ownership or control of any voting shares of any bank if
after the acquisition it would own or control more than 5% of the voting shares of such
bank (unless it already owns or controls the majority of such shares); or
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | merging or consolidating with another bank holding company.
| | - | -----------------------------------------------------------

In
addition, and subject to certain exceptions, the Bank Holding Company Act and the Change
in Bank Control Act, together with regulations promulgated thereunder, require Federal
Reserve approval prior to any person or company acquiring control of a bank
holding company. Control is conclusively presumed to exist if an individual or company
acquires 25% or more of any class of voting securities of a bank holding company. Control
is rebuttably presumed to exist if a person acquires 10% or more, but less than 25%, of
any class of voting securities and either the company has registered securities under
Section 12 of the Securities Exchange Act of 1934 or no other person owns a greater
percentage of that class of voting securities immediately after the transaction. Our
common stock is registered under the Securities Exchange Act of 1934. The regulations
provide a procedure for rebutting control when ownership of any class of voting securities
is below 25%.

9

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Under
the Bank Holding Company Act, a bank holding company is generally prohibited from engaging
in, or acquiring direct or indirect control of more than 5% of the voting shares of any
company engaged in, nonbanking activities unless the Federal Reserve Board, by order or
regulation, has found those activities to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto. Some of the activities that the
Federal Reserve Board has determined by regulation to be proper incidents to the business
of a bank holding company include:

| | o | making or servicing loans and certain types of leases;
| | - | ------------------------------------------------------

| | o | engaging in certain insurance and discount brokerage activities;
| | - | ----------------------------------------------------------------

| | o | performing certain data processing services;
| | - | --------------------------------------------

| | o | acting in certain circumstances as a fiduciary or investment or financial adviser;
| | - | ----------------------------------------------------------------------------------

| | o | owning savings associations; and
| | - | --------------------------------

| | o | making investments in certain corporations or projects designed primarily to promote community welfare.
| | - | -------------------------------------------------------------------------------------------------------

The
Federal Reserve Board imposes certain capital requirements on the company under the Bank
Holding Company Act, including a minimum leverage ratio and a minimum ratio of
qualifying capital to risk-weighted assets. These requirements are described
below under - New Commerce Bank  Capital Regulations. Subject to our
capital requirements and certain other restrictions, we are able to borrow money to make a
capital contribution to the bank, and these loans may be repaid from dividends paid from
the bank to the company. Our ability to pay dividends will be subject to regulatory
restrictions as described below in - New Commerce Bank  Dividends. We
are also able to raise capital for contribution to the bank by issuing securities without
having to receive regulatory approval, subject to compliance with federal and state
securities laws.

Source
of Strength; Cross-Guarantee. In accordance with Federal Reserve Board policy, we are
expected to act as a source of financial strength to the bank and to commit resources to
support the bank in circumstances in which we might not otherwise do so. Under the Bank
Holding Company Act, the Federal Reserve Board may require a bank holding company to
terminate any activity or relinquish control of a nonbank subsidiary, other than a nonbank
subsidiary of a bank, upon the Federal Reserve Boards determination that such
activity or control constitutes a serious risk to the financial soundness or stability of
any depository institution subsidiary of the bank holding company. Further, federal bank
regulatory authorities have additional discretion to require a bank holding company to
divest itself of any bank or nonbank subsidiaries if the agency determines that
divestiture may aid the depository institutions financial condition.

The
Gramm-Leach-Bliley Act. The Gramm-Leach-Bliley Act was signed into law on November 12,
1999. Among other things, the Act repealed the restrictions on banks affiliating with
securities firms contained in sections 20 and 32 of the Glass-Steagall Act. The Act also
permits bank holding companies that become financial holding companies to engage in a
statutorily provided list of financial activities, including insurance and securities
underwriting and agency activities, merchant banking, and insurance company portfolio
investment activities. The Act also authorizes activities that are
complementary to financial activities. We have not elected to become a
financial holding company.

The
Act is intended, in part, to grant to community banks certain powers as a matter of right
that larger institutions have accumulated on an ad hoc basis. Nevertheless, the Act may
have the result of increasing the amount of competition that we face from larger
institutions and other types of companies. In fact, it is not possible to predict the full
effect that the Act will have on us.

South
Carolina State Regulation. As a South Carolina bank holding company under the South
Carolina Banking and Branching Efficiency Act, we are subject to limitations on sale or
merger and to regulation by the South Carolina Board of Financial Institutions. We are not
required to obtain the approval of the Board prior to acquiring the capital stock of a
national bank, but we must notify them at least 15 days prior to doing so. We must receive
the Boards approval prior to engaging in the acquisition of a South Carolina state
chartered bank or another South Carolina bank holding company.

10

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# Supervision and
Regulation - New Commerce Bank

The
bank operates as a national banking association incorporated under the laws of the United
States and subject to examination by the Office of the Comptroller of the Currency.
Deposits in the bank are insured by the Federal Deposit Insurance Corporation
(FDIC) up to a maximum amount, which is generally $100,000 per depositor
subject to the aggregation rule.

The
Office of the Comptroller of the Currency and the FDIC regulate or monitor virtually all
areas of the banks operations, including

| | o | security devices and procedures;
| | - | --------------------------------

| | o | adequacy of capitalization and loss reserves;
| | - | ---------------------------------------------

| | o | loans;
| | - | ------

| | o | investments;
| | - | ------------

| | o | borrowings;
| | - | -----------

| | o | deposits;
| | - | ---------

| | o | mergers;
| | - | --------

| | o | issuances of securities;
| | - | ------------------------

| | o | payment of dividends;
| | - | ---------------------

| | o | interest rates payable on deposits;
| | - | -----------------------------------

| | o | interest rates or fees chargeable on loans;
| | - | -------------------------------------------

| | o | establishment of branches;
| | - | --------------------------

| | o | corporate reorganizations;
| | - | --------------------------

| | o | maintenance of books and records; and
| | - | -------------------------------------

| | o | adequacy of staff training to carry on safe lending and deposit gathering practices.
| | - | ------------------------------------------------------------------------------------

The
Office of the Comptroller of the Currency requires the bank to maintain specified capital
ratios and imposes limitations on the banks aggregate investment in real estate,
bank premises, and furniture and fixtures. The Office of the Comptroller of the Currency
also requires the bank to prepare annual reports on the banks financial condition
and to conduct an annual audit of its financial affairs in compliance with its minimum
standards and procedures.

Under
the FDIC Improvement Act, all insured institutions must undergo regular on-site
examinations by their appropriate banking agency. The cost of examinations of insured
depository institutions and any affiliates may be assessed by the appropriate agency
against each institution or affiliate as it deems necessary or appropriate. Insured
institutions are required to submit annual reports to the FDIC, their federal regulatory
agency, and state supervisor when applicable. The FDIC Improvement Act directs the FDIC to
develop a method for insured depository institutions to provide supplemental disclosure of
the estimated fair market value of assets and liabilities, to the extent feasible and
practicable, in any balance sheet, financial statement, report of condition or any other
report of any insured depository institution. The FDIC Improvement Act also requires the
federal banking regulatory agencies to prescribe, by regulation, standards for all insured
depository institutions and depository institution holding companies relating, among other
things, to the following:

| | o | internal controls;
| | - | ------------------

| | o | information systems and audit systems;
| | - | --------------------------------------

| | o | loan documentation;
| | - | -------------------

| | o | credit underwriting;
| | - | --------------------

| | o | interest rate risk exposure; and
| | - | --------------------------------

| | o | asset quality.
| | - | --------------

National
banks and their holding companies which have been chartered or registered or have
undergone a change in control within the past two years or which have been deemed by the
Office of the Comptroller of the Currency or the Federal Reserve Board to be troubled
institutions must give the Office of the Comptroller of the Currency or the Federal
Reserve Board 30 days prior notice of the appointment of any senior executive officer or
director. Within the 30 day period, the Office of the Comptroller of the Currency or the
Federal Reserve Board, as the case may be, may approve or disapprove any such appointment.

11

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Deposit
Insurance - The FDIC has adopted a risk-based assessment system for determining an
insured depository institutions insurance assessment rate. The system takes into
account the risks attributable to different categories and concentrations of assets and
liabilities. An institution is placed into one of three capital categories: (1) well
capitalized; (2) adequately capitalized; or (3) undercapitalized. The FDIC also assigns an
institution to one of three supervisory subgroups, based on the FDICs determination
of the institutions financial condition and the risk posed to the deposit insurance
funds. Assessments range from 0 to 27 cents per $100 of deposits, depending on the
institutions capital group and supervisory subgroup. In addition, the FDIC imposes
assessments to help pay off the $780 million in annual interest payments on the $8 billion
Financing Corporation bonds issued in the late 1980s as part of the government rescue of
the thrift industry. The FDIC assessment rate on our bank deposits currently is zero but
may change in the future. The FDIC may increase or decrease the assessment rate schedule
on a semiannual basis. An increase in the BIF assessment rate could have a material
adverse effect on our earnings, depending on the amount of the increase.

The
FDIC may terminate its insurance of deposits if it finds that the institution has engaged
in unsafe and unsound practices, is in an unsafe or unsound condition to continue
operations, or has violated any applicable law, regulation, rule, order, or condition
imposed by the FDIC.

Transactions
with Affiliates and Insiders - The bank is subject to the provisions of Section 23A
of the Federal Reserve Act, which places limits on the amount of loans or extensions of
credit to, or investments in, or certain other transactions with, affiliates and on the
amount of advances to third parties collateralized by the securities or obligations of
affiliates. The aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of the banks capital and surplus and, as to all affiliates
combined, to 20% of the banks capital and surplus. Furthermore, within the foregoing
limitations as to amount, each covered transaction must meet specified collateral
requirements. Compliance is also required with certain provisions designed to avoid the
taking of low quality assets.

The
bank also is subject to the provisions of Section 23B of the Federal Reserve Act which,
among other things, prohibits an institution from engaging in certain transactions with
certain affiliates unless the transactions are on terms substantially the same, or at
least as favorable to such institution or its subsidiaries, as those prevailing at the
time for comparable transactions with nonaffiliated companies. The bank is subject to
certain restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit (i) must be
made on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with third parties and (ii) must not
involve more than the normal risk of repayment or present other unfavorable features.

The
Federal Reserve Board has recently issued Regulation W, which codifies prior regulations
under Sections 23A and 23B of the Federal Reserve Act and interpretative guidance with
respect to affiliate transactions. Regulation W incorporates the exemption from the
affiliate transaction rules but expands the exemption to cover the purchase of any type of
loan or extension of credit from an affiliate. In addition, under Regulation W:

| | o | a bank and its subsidiaries may not purchase a low-quality asset from an affiliate;
| | - | -----------------------------------------------------------------------------------

| | o | covered transactions and other specified transactions between a bank or its subsidiaries and an
affiliate must be on terms and conditions that are consistent with safe and sound banking practices;
and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | with some exceptions, each loan or extension of credit by a bank to an affiliate must be
secured by collateral with a market value ranging from 100% to 130%, depending on the type
of collateral, of the amount of the loan or extension of credit.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Regulation
W generally excludes all non-bank and non-savings association subsidiaries of banks from
treatment as affiliates, except to the extent that the Federal Reserve Board decides to
treat these subsidiaries as affiliates. Concurrently with the adoption of Regulation W,
the Federal Reserve Board has proposed a regulation which would further limit the amount
of loans that could be purchased by a bank from an affiliate to not more than 100% of the
banks capital and surplus. This regulation has not yet been adopted.

12

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Dividends
 - A national bank may not pay dividends from its capital. All dividends must be paid
out of undivided profits then on hand, after deducting expenses, including reserves for
losses and bad debts. In addition, a national bank is prohibited from declaring a dividend
on its shares of common stock until its surplus equals its stated capital, unless there
has been transferred to surplus no less than one-tenth of the banks net profits of
the preceding two consecutive half-year periods (in the case of an annual dividend). The
approval of the Office of the Comptroller of the Currency is required if the total of all
dividends declared by a national bank in any calendar year exceeds the total of its net
profits for that year combined with its retained net profits for the preceding two years,
less any required transfers to surplus.

Branching
 - National banks are required by the National Bank Act to adhere to branch office
banking laws applicable to state banks in the states in which they are located. Under
current South Carolina law, the bank may open branch offices throughout South Carolina
with the prior approval of the Office of the Comptroller of the Currency. In addition,
with prior regulatory approval, the bank is able to acquire existing banking operations in
South Carolina. Furthermore, federal legislation permits interstate branching, including
out-of-state acquisitions by bank holding companies, interstate branching by banks if
allowed by state law, and interstate merging by banks. South Carolina law, with limited
exceptions, currently permits branching across state lines through interstate mergers.

Community
Reinvestment Act - The Community Reinvestment Act requires that, in connection with
examinations of financial institutions within their respective jurisdictions, the Federal
Reserve, the FDIC, or the Office of the Comptroller of the Currency, shall evaluate the
record of each financial institution in meeting the credit needs of its local community,
including low and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or facility. Failure
to adequately meet these criteria could impose additional requirements and limitations on
our bank.

The
Gramm-Leach-Bliley Act - Under the Gramm-Leach-Bliley Act, subject to certain
conditions imposed by their respective banking regulators, national and state-chartered
banks are permitted to form financial subsidiaries that may conduct financial
or incidental activities, thereby permitting bank subsidiaries to engage in certain
activities that previously were impermissible. The Gramm-Leach-Bliley Act imposes several
safeguards and restrictions on financial subsidiaries, including that the parent
banks equity investment in the financial subsidiary be deducted from the banks
assets and tangible equity for purposes of calculating the banks capital adequacy.
In addition, the Gramm-Leach-Bliley Act imposes new restrictions on transactions between a
bank and its financial subsidiaries similar to restrictions applicable to transactions
between banks and nonbank affiliates.

The
Gramm-Leach-Bliley Act also contains provisions regarding consumer privacy. These
provisions require financial institutions to disclose their policy for collecting and
protecting confidential information. Customers generally may prevent financial
institutions from sharing personal financial information with nonaffiliated third parties
except for third parties that market an institutions own products and services.
Additionally, financial institutions generally may not disclose consumer account numbers
to any nonaffiliated third party for use in telemarketing, direct mail marketing, or other
marketing to the consumer.

Other
Regulations - Interest and other charges collected or contracted for by the bank are
subject to state usury laws and federal laws concerning interest rates. The banks
loan operations are also subject to federal laws applicable to credit transactions, such
as:

| | o | the federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;
| | - | ----------------------------------------------------------------------------------------------

| | o | the Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to
enable the public and public officials to determine whether a financial institution is fulfilling its
obligation to help meet the housing needs of the community it serves;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other
         prohibited factors in extending credit;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the Fair Credit Reporting Act of 1978, governing the use and provision of information to credit
         reporting agencies;
| | - | ----------------------------------------------------------------------------------------------------------------------------

| | o | the Fair Debt Collection Act, governing the manner in which consumer debts may be collected by
         collection agencies; and
| | - | --------------------------------------------------------------------------------------------------------------------------------

| | o | the rules and regulations of the various federal agencies charged with the responsibility
of implementing such federal laws.
| | - | ----------------------------------------------------------------------------------------------------------------------------

13

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The deposit operations of the bank
also are subject to:

| | o | the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of
consumer financial records and prescribes procedures for complying with administrative
subpoenas of financial records; and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | o | the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to
implement that Act, which governs automatic deposits to and withdrawals from deposit
accounts and customers rights and liabilities arising from the use of automated
teller machines and other electronic banking services.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Capital
Regulations - The federal bank regulatory authorities have adopted risk-based capital
guidelines for banks and bank holding companies that are designed to make regulatory
capital requirements more sensitive to differences in risk profiles among banks and bank
holding companies and account for off-balance sheet items. The guidelines are minimums,
and the federal regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their capital ratios
and should maintain ratios in excess of the minimums. We have not received any notice
indicating that either New Commerce BanCorp or New Commerce Bank is subject to higher
capital requirements. The current guidelines require all bank holding companies and
federally-regulated banks to maintain a minimum risk-based total capital ratio equal to
8%, of which at least 4% must be Tier 1 capital. Tier 1 capital includes common
shareholders equity, qualifying perpetual preferred stock, and minority interests in
equity accounts of consolidated subsidiaries, but excludes goodwill and most other
intangibles and excludes the allowance for loan and lease losses. Tier 2 capital includes
the excess of any preferred stock not included in Tier 1 capital, mandatory convertible
securities, hybrid capital instruments, subordinated debt and intermediate term-preferred
stock, and general reserves for loan and lease losses up to 1.25% of risk-weighted assets.

Under
these guidelines, banks and bank holding companies assets are given
risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance sheet items are
given credit conversion factors to convert them to asset equivalent amounts to which an
appropriate risk-weight applies. These computations result in the total risk-weighted
assets. Most loans are assigned to the 100% risk category, except for first mortgage loans
fully secured by residential property and, under certain circumstances, residential
construction loans, both of which carry a 50% rating. Most investment securities are
assigned to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United States
Treasury or United States Government agencies, which have a 0% rating.

The
federal bank regulatory authorities also have implemented a leverage ratio, which is equal
to Tier 1 capital as a percentage of average total assets less intangibles, to be used as
a supplement to the risk-based guidelines. The principal objective of the leverage ratio
is to place a constraint on the maximum degree to which a bank holding company may
leverage its equity capital base. The minimum required leverage ratio for top-rated
institutions is 3%, but most institutions are required to maintain an additional cushion
of at least 100 to 200 basis points.

The
FDIC Improvement Act established a new capital-based regulatory scheme designed to promote
early intervention for troubled banks, which requires the FDIC to choose the least
expensive resolution of bank failures. The new capital-based regulatory framework contains
five categories of compliance with regulatory capital requirements, including well
capitalized, adequately capitalized, undercapitalized,
significantly undercapitalized, and critically undercapitalized.
To qualify as a well capitalized institution, a bank must have a leverage
ratio of no less than 5%, a Tier 1 risk-based ratio of no less than 6%, and a total
risk-based capital ratio of no less than 10%, and the bank must not be under any order or
directive from the appropriate regulatory agency to meet and maintain a specific capital
level. Currently, we qualify as well capitalized.

14

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Under
the FDIC Improvement Act regulations, the applicable agency can treat an institution as if
it were in the next lower category if the agency determines (after notice and an
opportunity for hearing) that the institution is in an unsafe or unsound condition or is
engaging in an unsafe or unsound practice. The degree of regulatory scrutiny of a
financial institution increases, and the permissible activities of the institution
decrease, as it moves downward through the capital categories. Institutions that fall into
one of the three undercapitalized categories may be required to do some or all of the
following:

| | o | submit a capital restoration plan;
| | - | ----------------------------------

| | o | raise additional capital;
| | - | -------------------------

| | o | restrict their growth, deposit interest rates, and other activities;
| | - | --------------------------------------------------------------------

| | o | improve their management;
| | - | -------------------------

| | o | eliminate management fees; or
| | - | -----------------------------

| | o | divest themselves of all or a part of their operations.
| | - | -------------------------------------------------------

These
capital guidelines can affect us in several ways. If we grow at a rapid pace, our capital
may be depleted too quickly, and a capital infusion from our holding company may be
necessary which could impact our ability to pay dividends. Our capital levels currently
are adequate; however, rapid growth, poor loan portfolio performance, poor earnings
performance, or a combination of these factors could change our capital position in a
relatively short period of time. If we fail to meet these capital requirements, our bank
would be required to develop and file a plan with the Office of the Comptroller of the
Currency describing the means and a schedule for achieving the minimum capital
requirements. In addition, our bank would generally not receive regulatory approval of any
application that requires the consideration of capital adequacy, such as a branch or
merger application, unless our bank could demonstrate a reasonable plan to meet the
capital requirement within a reasonable period of time. A bank that is not well
capitalized is also subject to certain limitations relating to so-called
brokered deposits. Bank holding companies controlling financial institutions
can be called upon to boost the institutions capital and to partially guarantee the
institutions performance under their capital restoration plans.

Enforcement
Powers - The Financial Institutions Reform Recovery and Enforcement Act expanded and
increased civil and criminal penalties available for use by the federal regulatory
agencies against depository institutions and certain institution-affiliated
parties. Institution-affiliated parties primarily include management, employees, and
agents of a financial institution, as well as independent contractors and consultants such
as attorneys and accountants and others who participate in the conduct of the financial
institutions affairs. These practices can include the failure of an institution to
timely file required reports or the filing of false or misleading information or the
submission of inaccurate reports. Civil penalties may be as high as $1,000,000 a day for
such violations. Criminal penalties for some financial institution crimes have been
increased to twenty years. In addition, regulators are provided with greater flexibility
to commence enforcement actions against institutions and institution-affiliated parties.
Possible enforcement actions include the termination of deposit insurance. Furthermore,
banking agencies power to issue cease-and-desist orders were expanded. Such orders
may, among other things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnifications or
guarantees against loss. A financial institution may also be ordered to restrict its
growth, dispose of certain assets, rescind agreements or contracts, or take other actions
as determined by the ordering agency to be appropriate.

Effect
of Governmental Monetary Policies - Our earnings are affected by domestic economic
conditions and the monetary and fiscal policies of the United States government and its
agencies. The Federal Reserve Banks monetary policies have had, and are likely to
continue to have, an important impact on the operating results of commercial banks through
its power to implement national monetary policy in order, among other things, to curb
inflation or combat a recession. The monetary policies of the Federal Reserve Board have
major effects upon the levels of bank loans, investments and deposits through its open
market operations in United States government securities and through its regulation of the
discount rate on borrowings of member banks and the reserve requirements against member
bank deposits. It is not possible to predict the nature or impact of future changes in
monetary and fiscal policies.

15

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Proposed
Legislation and Regulatory Action.  New regulations and statutes are regularly proposed
that contain wide-ranging proposals for altering the structures, regulations, and
competitive relationships of the nations financial institutions. We cannot predict
whether or in what form any proposed regulation or statute will be adopted or the extent
to which our business may be affected by any new regulation or statute.

# Item 2.   Description of
Property

The
headquarters for the company and the bank are located at 501 New Commerce Court, at the
intersection of East Butler Road and I-385, in Greenville, South Carolina. This 12,089
square foot facility, situated on approximately 2 acres, was completed in May 2000 at a
cost of approximately $1.5 million and is owned by the bank. This facility houses a
full-service branch as well as the companys administrative and operations staff. The
banks first branch was opened in June 2000 at 1 Five Forks Plaza Court at the
intersection of Woodruff and Batesville Roads in Simpsonville, South Carolina. This 3,050
square foot facility is situated on approximately 1 acre and is owned by the bank. The
branch was completed at a cost of approximately $595,000. In October 1999, the company
purchased a building at 111 North Main Street in Mauldin, South Carolina for $403,000 to
be used for future expansion. In April 2001, we leased the building for a lease term of
five years.

# Item 3.   Legal Proceedings.

We
are not a party to, nor are any of our properties subject to, any material legal
proceedings, other than routine litigation incidental to our business.

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

No
matter was submitted to a vote of security holders during the fourth quarter of the fiscal
year covered by this report.

# Item 5.   Market for Common Equity,
Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities.

The
common stock of New Commerce BanCorp is quoted on the OTC Bulletin Board under the symbol
NCBS.OB.

As
of February 3, 2004, New Commerce BanCorp had 1,000,000 shares outstanding and 416
shareholders of record (does not include the number of persons or entities that hold stock
in nominee or street name). To date, the company has not repurchased any
shares if its stock.

To
date, the Company has not paid cash dividends on its common stock and currently has no
plans to do so in the future. The ability of the Company to pay cash dividends is
dependent upon receiving cash dividends from the Bank. However, South Carolina and federal
banking regulations restrict the amount of cash dividends that can be paid to the Company
from the Bank. See Dividends in the section entitled Supervision and
Regulation  New Commerce Bank.

The
following table sets forth the high and low bid prices as quoted on the OTC Bulletin Board
during the periods indicated. The quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commissions, and may not represent actual transactions.

|               | 2004 | 2003
|-------------- | ---- | ----
|
|First quarter  |      |     
|Second quarter |      |     
|Third quarter  |      |     
|Fourth quarter |      |     

16

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# Item 6.   Management's Discussion and Analysis or Plan of Operation.

# Financial Highlights

The following table sets forth
certain selected financial data concerning New Commerce BanCorp and subsidiary as of and
for the years ended December 31, 2004, 2003, 2002, 2001 and 2000. This information should
be read in conjunction with the consolidated financial statements, the notes thereto and
Managements Discussion and Analysis of Financial Condition and Results of
Operations contained elsewhere in this report. (Dollar amounts are in thousands,
except per share data.)

|                                           | 2004 | 2003 | 2002 | 2001   | 2000
|------------------------------------------ | ---- | ---- | ---- | ------ | ----
|
|Summary of Operations:                     |      |      |      |        |     
|Net interest income                        |      |      | $    | 2,975  |     
|Provision for loan losses                  |      |      |      | 1,078  |     
|Non-interest income                        |      |      |      | 532    |     
|Non-interest expense                       |      |      |      | 3,130  |     
|                                           |      |      |      |        |     
|Income (loss) before income tax provision  |      |      |      |        |     
|(benefit)                                  |      |      |      | (701   | )   
|Income tax provision (benefit)             |      |      |      | (263   | )   
|                                           |      |      |      |        |     
|Net income (loss)                          |      |      | $    | (438   | )   
|                                           |      |      |      |        |     
|Per Share Data:                            |      |      |      |        |     
|Basic earnings (loss) per share            |      |      | $    | (0.44  | )   
|Diluted earnings (loss) per share          |      |      |      | (0.44  | )   
|Book value per share of common stock       |      |      |      | 8.20   |     
|                                           |      |     
|Balance Sheet Data:                        |      |      |      |        |     
|Total assets                               |      |      | $    | 96,435 |     
|Federal funds sold                         |      |      |      | 6,008  |     
|Investment securities                      |      |      |      | 15,575 |     
|Net loans                                  |      |      |      | 67,457 |     
|Total earning assets                       |      |      |      | 90,729 |     
|Deposits                                   |      |      |      | 80,502 |     
|Federal Home Loan Bank advances            |      |      |      | 6,750  |     
|Other short-term borrowings                |      |      |      | -      |     
|Shareholders' equity                       |      |      |      | 8,196  |     
|                                           |      |     
|Other Data:                                |      |      |      |        |     
|Return on assets                           |      |      |      | (0.49  | )%  
|Return on equity                           |      |      |      | (5.19  | )   
|Net interest margin                        |      |      |      | 3.61   |     
|Gross loans to deposits - average          |      |      |      | 86.04  |     
|Allowance for loan losses to loans         |      |      |      | 1.33   |     
|Net charge-offs to average loans           |      |      |      | 1.41   |     
|Nonperforming assets                       |      |      |      | 0.57   |     
|Shareholders' equity to total assets       |      |      |      |        |     
|(average)                                  |      |      |      | 9.47   |     
|Shareholders' equity to total assets (year |      |      |      |        |     
|end)                                       |      |      |      | 8.50   |     
|Capital ratios (Bank only):                |      |      |      |        |     
|Tier 1 risk-based capital                  |      |      |      | 9.93   |     
|Total risk-based capital                   |      |      |      | 11.10  |     
|Leverage ratio                             |      |      |      | 8.36   |     

17

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# MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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.

# OVERVIEW

New Commerce BanCorp was incorporated
in South Carolina on July 22, 1998 to operate as a bank holding company pursuant to the
Federal Bank Holding Company Act of 1956 and the South Carolina Bank Holding Company Act,
and to own and control all of the capital stock of New Commerce Bank, a nationally
chartered commercial bank. New Commerce Bank conducts a general banking business in the
Golden Strip area of Greenville, South Carolina. The bank currently has two full-service
offices and provides banking services to individuals and businesses, including accepting
demand and time deposits and making commercial and consumer loans.

# 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. Some of the more critical judgments supporting the amount of our
allowance for loan losses include judgments about the creditworthiness of borrowers, the
estimated value of the underlying collateral, the assumptions about cash flow,
determination of loss factors for estimating credit losses, the impact of current events,
and conditions, and other factors impacting the level of probable inherent losses. Under
different conditions or using different assumptions, the actual amount of credit losses
incurred by us may be different from managements estimates provided in our
consolidated financial statements. Refer to the Results of Operations 
Provision for Loan Losses as well as the Balance Sheet Review  Loans and
Allowance for Loan Losses discussions below.

# OFF-BALANCE SHEET RISK

In the ordinary course of business,
we are a party to various contractual commitments not reflected on our balance sheet.
These instruments represent unfunded commitments, not outstanding balances. Therefore, the
risk associated with these financial instruments is referred to as off-balance sheet
risk. Financial instruments with off-balance sheet risk that we have outstanding
consist of (1) commitments to extend credit and (2) standby letters of credit. Both
involve elements of credit and interest rate risk not reflected on the balance sheet. We
use the same credit and collateral policies in making these commitments as we do for
on-balance sheet instruments.

Commitments to extend credit are
legally binding agreements to lend money to a customer as long as there is no violation of
any material condition established in the contract. All of our commitments have
predetermined interest rates and fixed expiration dates. At December 31, 2004, our
commitments to extend credit totaled approximately $13.6 million and represented the
unfunded portion of equity, working capital and general lines of credit. The unfunded
portions have the same contractual terms reflected in the original note and security
agreement. At December 31, 2004, approximately 45% of our total commitments had expiration
dates of one year or less, approximately 20% had expiration dates of one to five years,
and approximately 35% had expiration dates of greater then five years. The majority of the
commitments expiring after five years represented available balances on equity lines of
credit.

18

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At December 31, 2004, our outstanding
standby letters of credit totaled approximately $546,000 with expiration dates of one year
or less. These letters of credit are assurances to third parties that they will not incur
a loss if our customer fails to meet its contractual obligation. Past experience indicates
that many of these commitments to extend credit will expire unused. However, as described
in Liquidity and Capital Resources below, we believe that we have adequate
sources of liquidity to meet these obligations should the need arise. We are not involved
in any other off-balance sheet contractual relationships or transactions, which could
result in liquidity needs or impact earnings significantly nor do we have unconsolidated
related entities.

# RESULTS OF OPERATIONS

Overview

The net loss for the year ended
December 31, 2004 was $438,265, or $0.44 per diluted share, compared to net income of
$85,794, or $0.08 per diluted share, for the year ended December 31, 2003. This was a
$524,059, or $0.52 per diluted share, decline in net income and diluted earnings per
share, respectively, from the prior year. This decrease in our earnings resulted primarily
from an increase in the provision for loan losses resulting from loan charge-offs and an
increase in non-interest expenses offset partially by an increase in net interest income.

Net income for the year ended
December 31, 2003 was $85,794, or $0.08 per diluted share, compared to net income of
$37,528, or $0.04 per diluted share, for the year ended December 31, 2002. This was a
$48,266, or $0.04 per diluted share, improvement in the net income and diluted earnings
per share, respectively, over the prior year. This improvement in our earnings resulted
primarily from an increase in the volume of earning assets and an increase in non-interest
income. These factors which increased earnings were offset partially by a decrease in our
net interest margin.

Net Interest Income

The largest component of our 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. Net interest
margin is determined by dividing the annual net interest income by average earning assets.

For the year ended December 31, 2004,
net interest income was $2.98 million, which represented a 32% increase from $2.26 million
earned in the year ended December 31, 2003. The improvement in 2004 was attributable
principally to an increase in the volume of earning assets, particularly in loans, and a
decrease in the rate paid on our interest-bearing liabilities. The increase in the volume
of earning assets was offset partially by an increase in the volume of interest-bearing
liabilities, as well as a decrease in the yield on our earning assets. Net interest margin
was 3.61% for 2004 and 2003.

For the year ended December 31, 2003
net interest income was $2.26 million, which represented a 15% increase from $1.97 million
earned in the year ended December 31, 2002. The improvement in 2003 was attributable
principally to an increase in the volume of earning assets, particularly in loans, and a
decrease in the rate paid on our interest-bearing liabilities. The increase in the volume
of earning assets was offset partially by an increase in the volume of interest-bearing
liabilities, as well as a decrease in the yield on our earning assets. Net interest margin
for 2003 was 3.61% compared to 4.06% in 2002.

See further details of the changes in
and components of net interest income following under the headings: Interest
Income, Interest Expense, Average Balances, Yields, and
Rates, and Rate/Volume Analysis.

Interest Income

Interest income totaled $4.26 million
in 2004 compared to $3.28 million in 2003, an increase of 30%. This increase resulted from
the net effect of increased outstanding balances and a decrease in the yield of earning
assets. Average earning assets were $82.4 million for 2004, with an average yield of
5.17%. In 2003, average earning assets and average yield were $62.5 million and 5.24%,
respectively.

19

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Loan interest income for the year
ended December 31, 2004 totaled $3.47 million, compared to $2.58 million in 2003. The
annualized average yield on loans was 5.45% in 2004, compared to 5.40% in 2003. The
increase in yield in 2004 as compared to 2003 is primarily the result of the impact of
increases in prime rate in 2004 on our variable rate loan portfolio. Average balances of
loans increased to $63.6 million during the year ended December 31, 2004, an increase of
$15.8 million over the average of $47.8 million during the year ended December 31, 2003.

Interest earned on investment
securities amounted to $732,827 in 2004 as compared to $655,917 earned in 2003, an
increase of $76,910. The increase resulted from an increase in the amount of investment
securities held on average during 2004 offset partially by a decrease in their average
yield. The average balance of investment securities was $15.5 million in 2004, an increase
of $2.9 million from the average balance of $12.6 million in 2003. Investment securities
yielded 4.72% during the year ended December 31, 2004, compared to 5.20% during the
previous year. This difference principally was the result of purchases of securities in
2004 that had a lower yield than the average yield on the other securities held in the
portfolio.

Interest income totaled $3.28 million
in 2003 compared to $2.97 million in 2002, an increase of 10%. This increase resulted from
the net effect of increased outstanding balances and a decrease in the yield of earning
assets. Average earning assets were $62.5 million for 2003, with an average yield of
5.24%. In 2002, average earning assets and average yield were $48.5 million and 6.12%,
respectively.

Loan interest income for the year
ended December 31, 2003 totaled $2.6 million, compared to $2.1 million in 2002. The
annualized average yield on loans was 5.40% in 2003, compared to 6.32% in 2002. The
decrease in yield in 2003 as compared to 2002 is primarily the result of the impact of
decreases in prime rate in 2003 and late 2002 on our variable rate loan portfolio. In
addition, our variable rate loan portfolio increased to 76% of total loans at December 31,
2003 as compared to 72% at December 31, 2002. Due to the lower interest-rate risk inherent
in variable-rate loans, their yield was on average less than that of fixed-rate loans.
Turnover in our fixed rate portfolio also contributed to the decrease in yield, as the
yield on fixed rate loans in 2003 reflected the decreases in interest rates in 2001, 2002,
and 2003. Average balances of loans increased to $47.8 million during the year ended
December 31, 2003, an increase of $15.3 million over the average of $32.5 million during
the year ended December 31, 2002. The increase in average balances offset the impact of
the decrease in yield on interest income.

Interest earned on investment
securities amounted to $655,917 in 2003 as compared to $876,674 earned in 2002, a decrease
of $220,757. The decrease resulted from a decrease in the amount of investment securities
held on average during 2003 as well as a decrease in their average yield. The average
balance of investment securities was $12.6 million in 2003, a decrease of $1.8 million
from the average balance of $14.4 million in 2002. Investment securities yielded 5.20%
during the year ended December 31, 2003, compared to 6.09% during the previous year. This
difference resulted from the effect of sales of securities held in the portfolio during
2003 and 2002 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 resulted
in the lowering of our yield on investment securities as the proceeds of the repayments
were reinvested at lower rates. Further, accelerated principal repayments on
mortgage-related securities accelerated the amortization of purchase premiums, which in
turn 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 lower prevailing mortgage interest rates at the time. See Non-Interest
Income for further discussion of sales of investment securities.

Interest Expense

Interest expense totaled $1.28
million in 2004 compared to $1.02 million in 2003. This increase resulted from the effect
of increased outstanding balances of interest-bearing liabilities, offset partially by a
decrease in their average cost. Average interest-bearing liabilities were $69.3 million
with an average cost of 1.85% in 2004, compared to $52.4 million and 1.94%, respectively
in 2003.

Interest expense on deposits totaled
$1,089,478 in 2004 compared to $881,887 in 2003. Average interest-bearing deposits were
$63.5 million with an average cost of 1.72% in 2004, compared to $47.8 million and 1.85%,
respectively in 2003. Although market interest rates increased in 2004, the impact of the
market rate increases were not fully reflected in our average cost of deposits in 2004.
This is due to the lagging effect of certificates of deposits which reprice at market
rates as they mature according to their contractual terms.

20

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Interest expense totaled $1.02
million in 2003 and $1.00 million in 2002. There was an increase in outstanding balances
of interest-bearing liabilities. However, the impact of the increased balances on interest
expense was almost entirely offset by a decrease in their average cost. Average
interest-bearing liabilities were $52.4 million with an average cost of 1.94% in 2003,
compared to $40.7 million and 2.45%, respectively in 2002.

Interest expense on deposits totaled
$881,887 in 2003 compared to $861,469 in 2002. Average interest-bearing deposits were
$47.8 million with an average cost of 1.85% in 2003, compared to $35.3 million and 2.44%,
respectively in 2002. The decrease in cost resulted from decreases in rates paid on all
accounts due to the continued declining interest rate environment of 2003.

Average Balances, Yields
and Rates

The following table presents average
earning assets and interest-bearing liabilities, net interest income and margin, and
weighted average yields and rates on earning assets and interest-bearing liabilities for
the years ended December 31, 2004 and 2003. Yields and rates are derived by dividing
annual income or expense by the average balance of the corresponding asset or liability.

|                                   | 2004 | 2003
|---------------------------------- | ---- | ----
|
|
|Earning assets:                    |      |     
|Loans                              |      |     
|Investment securities              |      |     
|Federal funds sold                 |      |     
|FHLB and FRB stock                 |      |     
|                                   |      |     
|Total interest-earning assets      |      |     
|                                   |      |     
|Non-earning assets                 |      |     
|                                   |      |     
|Total assets                       |      |     
|                                   |      |     
|Interest-bearing liabilities:      |      |     
|Deposits:                          |      |     
|Interest checking                  |      |     
|Savings accounts                   |      |     
|Money market accounts              |      |     
|Time deposits                      |      |     
|FHLB advances                      |      |     
|Federal funds purchased            |      |     
|                                   |      |     
|Total interest-bearing liabilities |      |     
|                                   |      |     
|Non-interest-bearing liabilities   |      |     
|                                   |      |     
|Total liabilities                  |      |     
|                                   |      |     
|Net interest income and margin     |      |     
|                                   |      |     

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Rate/Volume Analysis

Net interest income can be analyzed
in terms of the impact of changing rates and changing volume. The following table shows
the effects which changes in the levels of earning assets and interest-bearing liabilities
and associated yields and rates had on interest income and interest expense for 2004 and
2003. Information is provided with respect to: (i) effects attributable to changes in rate
(changes in rate multiplied by prior volume); and (ii) effects attributable to changes in
volume (changes in volume multiplied by prior rate). The net change attributable to the
combined impact of rate and volume has been allocated proportionately to the change due to
rate and the change due to volume.

|                              | 2004 compared to 2003 | 2003 compared to 2002
|----------------------------- | --------------------- | ---------------------
|
|
|
|
|
|Earning assets:               |                       |                      
|Loans                         |                       |                      
|Investment securities         |                       |                      
|Federal funds sold            |                       |                      
|FHLB and FRB stock            |                       |                      
|                              |                       |                      
|Total earning assets          |                       |                      
|                              |                       |                      
|Interest-bearing liabilities: |                       |                      
|Deposits:                     |                       |                      
|Interest checking             |                       |                      
|Savings accounts              |                       |                      
|Money market accounts         |                       |                      
|Time deposits                 |                       |                      
|Repurchase agreements         |                       |                      
|FHLB advances                 |                       |                      
|Federal funds purchased       |                       |                      
|                              |                       |                      
|Total interest-bearing        |                       |                      
|liabilities                   |                       |                      
|                              |                       |                      
|Net interest income           |                       |                      
|                              |                       |                      

Provision for Loan Losses

The provision for loan losses is the
charge to operating earnings that we believe to be 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. The provision for loan losses was
$1,077,734, $271,632, and $110,093 for the years ended December 31, 2004, 2003 and 2002,
respectively. See Balance Sheet Review  Loans and Allowance for Loan
Losses.

Non-Interest Income

Non-interest income for the year
ended December 31, 2004 was $532,356, a decrease of $114,662, or 18% compared to $647,018
in 2003. The principal component of this decrease is the decrease in gain on sale of
securities which was $16,400 in 2004 compared to $125,261 in 2003, a decrease of $108,861
over the prior year. The decrease was because there was less volume of securities
transactions in 2004. We sell securities from time to time for various reasons including
liquidity needs, changes in credit quality, and market valuation factors.

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Non-interest income for the year
ended December 31, 2003 was $647,018, an increase of $238,606, or 58% compared to $408,412
in 2002. The largest component of this increase was the increase in service charges on
deposit accounts which was $243,740 in 2003 compared to $130,953 in 2002, an increase of
$112,787. This increase was 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 during 2003. Mortgage brokerage
income was $220,283 in 2003 compared to $142,267 in 2002, an increase of $78,016. This
increase was indicative of the refinancing and purchase money activity associated with the
continued declining interest rate environment that existed in much of 2003. Gain on sale
of investments was $125,261 in 2003 compared to $87,826 in 2002, an increase of $37,435
over the prior year.

Non-Interest Expense

Non-interest expense for the year
ended December 31, 2004 was $3,130,693, compared to $2,498,519 in the previous year. The
largest component of this increase of $632,174, or 25%, was in salaries and benefits which
is the largest component of non-interest expense. Salaries and benefits increased by
$337,229 to $1,691,901 in 2004 from $1,354,672 in 2003. This increase is principally the
result of the hiring of a senior credit officer, an additional commercial lender and other
additional staff since the prior year. Additionally, in connection with the signing of the
merger agreement (discussed earlier), there were bonuses to the companys chief
executive officer and chief financial officer paid or accrued in the aggregate amount of
$120,000 in 2004. Data processing increased by $63,356 to $256,290 in 2004 from $192,934
in 2003 as the result of enhancements to the companys computer system. Marketing
increased by $48,612 to $128,983 in 2004 from $80,371 in 2003. This increase is the result
of the retention of a new marketing firm in 2004 who assisted us in developing advertising
programs. Other expense increased by $134,661 to $509,053 in 2004 from $374,392 in 2003,
which was due principally to expenses of approximately $120,000 in 2004 for legal and
financial advisory services related to the pending merger.

Non-interest expense for the year
ended December 31, 2003 was $2,498,519, compared to $2,206,868 in the previous year. The
largest component of this increase of $291,651, or 13%, was in salaries and benefits which
is the largest component of non-interest expense. Salaries and benefits increased by
$139,226 to $1,354,672 in 2003 from $1,215,446 in 2002. This increase is the result of
annual raises and the hiring of additional staff since the prior year as well as an
increase in commissions paid on mortgage loan originations in 2003 due to increased
mortgage origination income as previously discussed. Marketing increased by $44,322 to
$80,371 in 2003 from $36,049 in 2002. This increase is the result of the retention of a
marketing consultant in 2003 to assist us in developing new marketing material and several
print media and direct mail marketing campaigns. Other expense increased by $53,871 to
$374,392 in 2003 from $320,521 in 2002, which was due principally to expenses related to
start-up costs, administrative costs, and losses associated with the overdraft protection
product implemented in 2003, increased accounting and auditing expenses, and other
increases associated with the growth of the Company.

BALANCE SHEET REVIEW

At December 31, 2004, assets totaled
$96.4 million, an increase of $11.4 million, or 13% from $85.0 million at December 31,
2003. The increase was comprised principally of an increase in net loans, and to a lesser
extent, federal funds sold and investment securities. Total liabilities increased by $11.9
million, or 16%, to $88.2 million at December 31, 2004 from $76.4 million at December 31,
2003. The increase in liabilities was comprised primarily of an increase in deposits and
to a lesser extent, advances from the Federal Home Loan Bank.

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Cash and Cash Equivalents

Cash and cash equivalents are
comprised of cash and due from banks and federal funds sold. These are short-term, highly
liquid balances that are used to fund operations, including projected funding of loans.
These balances totaled $7.4 million at December 31, 2004 as compared to $8.2 million at
December 31, 2003.

Investment Securities

At December 31, 2004, investment
securities totaled $15.6 million and represented 17% of earning assets compared to a total
of $14.1 million or 18% of earning assets at December 31, 2003. We invest primarily in
U.S. Government agency securities, government-sponsored agency securities, mortgage-backed
securities, collateralized mortgage obligations and corporate bonds.

Contractual maturities and yields on
our investment securities at December 31, 2004 and 2003 are shown below. Expected
maturities may differ from contractual maturities because issuers may have the right to
call or prepay obligations with or without call or prepayment penalties.

|                        |  |  | After One |           | After Five |  |      | 
|----------------------- |  |  | --------- | --------- | ---------- |  | ---- | 
|
|
|December 31, 2004:      |  |  |           |           |            |  |      | 
|Federal agency          |  |  | $         | -         |            |  | -%   | 
|Mortgage-backed         |  |  |           | 1,356,532 |            |  | 4.25 | 
|Collateralized mortgage |  | 
|obligations             |  |  |           | 197,606   |            |  | 4.25 | 
|Corporate               |  |  |           | 1,297,620 |            |  | 7.13 | 
|                        |  |  |           |           |            |  |      | 
|Total                   |  |  | $         | 2,851,758 |            |  |      | 
|                        |  |  |           |           |            |  |      | 
|December 31, 2003:      |  |  |           |           |            |  |      | 
|Federal agency          |  |  | $         | -         |            |  | -%   | 
|Mortgage-backed         |  |  |           | 1,047,831 |            |  | 5.29 | 
|Collateralized mortgage |  | 
|obligations             |  |  |           | 88,210    |            |  | 4.29 | 
|Corporate               |  |  |           | -         |            |  | -    | 
|                        |  |  |           |           |            |  |      | 
|Total                   |  |  | $         | 1,136,041 |            |  |      | 
|                        |  |  |           |           |            |  |      | 

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 we 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. This security was sold in October 2004 for $500,000.

The Bank, as a member institution, is
required to own certain stock investments in the Federal Home Loan Bank of Atlanta
(FHLB) and the Federal Reserve Bank (FRB). No ready market exists
for these stocks and they have no quoted market values. However, redemptions of these
stocks historically have been at par value, therefore they are carried at cost. These
stocks generally are pledged against any borrowings from these institutions. These
investments are shown on the balance sheet in separate captions.

Loans and Allowance for
Loan Losses

Outstanding loans represent the
largest component of earning assets. At December 31, 2004 outstanding loans totaled $68.5
million, an increase of $10.3 million, or 18%, over the $58.1 million reported at December
31, 2003. Outstanding loans represented 75% and 74% of total earning assets, at December
31, 2004 and 2003, respectively.

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The following table summarizes the
composition of the loan portfolio at December 31, 2004 and 2003.

|                           | 2004 | 2003
|-------------------------- | ---- | ----
|
|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 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 maintain an allowance for loan
losses, which we establish through charges in the form of a provision for loan losses on
our statement of operations. 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 problematic 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.

As discussed in Results of
Operations  Provision for Loan Losses, the loan loss provision for the year
ended December 31, 2004 was $1,077,734 as compared to $271,632 for the year ended December
31, 2003, an increase of $806,102. The principal component of the increase was provision
made for loan losses in the amount of $700,000 in the third quarter of 2004 related to an
aggregate principal balance of approximately $1.3 million of loans to two commercial
borrowers secured by real estate, inventory and accounts receivable which were determined
to have become impaired. As of September 30, 2004, approximately $810,000 of the principal
balance of these loans was written off to the allowance for loan losses.

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.

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The following is an analysis of
non-performing loans at December 31, 2004 and 2003.

|                        | 2004 | 2003
|----------------------- | ---- | ----
|
|Non-accrual loans:      |      |     
|Commercial              |      |     
|Real estate - mortgage  |      |     
|                        |      |     
|Total non-accrual loans |      |     
|                        |      |     

The non-accrual loans identified
above are included in the total of our classified loans. The total of classified loans at
December 31, 2004 and 2003 were $5,874,300 and $1,098,200, respectively. We are not aware
of any other potentially problem loans beyond the loans included in the total of our
classified loans.

Below is an analysis of the allowance
for loan losses for the years ended December 31, 2004 and 2003.

|                                               | 2004 | 2003
|---------------------------------------------- | ---- | ----
|Allowance for loan losses, beginning of year   |      |     
|Provision for loan losses                      |      |     
|Charge-offs:                                   |      |     
|Consumer loans                                 |      |     
|Commercial loans                               |      |     
|Real estate - mortgage                         |      |     
|                                               |      |     
|Total charge-offs                              |      |     
|                                               |      |     
|Recoveries:                                    |      |     
|Commercial loans                               |      |     
|Real estate - mortgage                         |      |     
|                                               |      |     
|Total recoveries                               |      |     
|                                               |      |     
|Net charge offs                                |      |     
|                                               |      |     
|Allowance for loan losses, end of year         |      |     
|                                               |      |     
|Allowance for loan losses to loans outstanding |      |     
|                                               |      |     
|Net charge-offs to average loans               |      |     
|                                               |      |     

The following table allocates the
allowance for loan losses by loan category at December 31, 2004 and 2003. The allocation
of the allowance to each category is not necessarily indicative of future losses and does
not restrict the use of the allowance to absorb losses in any category.

|                                | 2004 | 2003
|------------------------------- | ---- | ----
|
|
|
|
|Commercial                      |      |     
|Real estate - construction      |      |     
|Real estate - mortgage          |      |     
|Consumer                        |      |     
|                                |      |     
|Total allowance for loan losses |      |     
|                                |      |     

There was no other real estate owned
or repossessed collateral at December 31, 2004 and 2003.

26

---

The following table summarizes loan
maturities, by type, at December 31, 2004 and 2003. The information in the table is based
on the contractual maturities of individual loans, including loans which may be subject to
renewal at their contractual maturity. Renewals of such loans are subject to review and
credit approval, as well as modification of terms upon their maturity. Actual repayments
of loans may differ from maturities reflected below depending on prime rate movement and
because borrowers have the right to prepay obligations with or without prepayment
penalties.

|                                    |  | After One |   |           
|----------------------------------- |  | --------- | - | ----------
|
|
|December 31, 2004:                  |  |           |   |           
|Commercial                          |  |           | $ | 5,596,319 
|Real estate - construction          |  |           |   | 4,488,193 
|Real estate - mortgage              |  |           |   | 9,138,737 
|Consumer                            |  |           |   | 734,311   
|                                    |  |           |   |           
|Total loans                         |  |           | $ | 19,957,560
|                                    |  |           |   |           
|Loans maturing after one year with: |  |           |   |           
|Fixed interest rates                |  |           |   |           
|                                    |  |           |   |           
|Floating interest rates             |  |           |   |           
|                                    |  |           |   |           
|December 31, 2003:                  |  |           |   |           
|Commercial                          |  |           | $ | 6,305,010 
|Real estate - construction          |  |           |   | 756,445   
|Real estate - mortgage              |  |           |   | 8,156,834 
|Consumer                            |  |           |   | 1,184,357 
|                                    |  |           |   |           
|Total loans                         |  |           | $ | 16,402,646
|                                    |  |           |   |           
|Loans maturing after one year with: |  |           |   |           
|Fixed interest rates                |  |           |   |           
|                                    |  |           |   |           
|Floating interest rates             |  |           |   |           
|                                    |  |           |   |           

Deposits

Deposits are our primary source of
funds for loans and investments. Total deposits were $80.5 million at December 31, 2004,
an increase of $8.6 million, or 12%, over the $71.9 million reported at December 31, 2003.
The following is a table of deposits by category at December 31, 2004 and 2003.

|                                  | 2004 | 2003
|--------------------------------- | ---- | ----
|
|
|Non-interest bearing              |      |     
|Interest bearing checking         |      |     
|Money market                      |      |     
|Savings                           |      |     
|Time deposits less than $100,000  |      |     
|Time deposits of $100,000 or more |      |     
|                                  |      |     
|Total deposits                    |      |     
|                                  |      |     

27

---

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 $42.7
million, or 53% of total deposits, at December 31, 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
December 31, 2004, the total of deposits outside of the banks primary market totaled
$28.6 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, however, no assurance can be given that we will be able to
replace these deposits with the same terms.

The maturity distribution of our time
deposits of $100,000 or more at December 31, 2004 is shown in the following table.

|                               | 
|------------------------------ | 
|Three months or less           | 
|Over three through six months  | 
|Over six through twelve months | 
|Over twelve months             | 
|                               | 
|Total                          | 
|                               | 

# Other Borrowings

We maintain federal funds lines of
credit with correspondent banks to meet short-term liquidity needs. Also, as a member of
the FHLB, we have access to borrowings through various FHLB programs. At December 31, 2004
and 2003, there were no short-term borrowings outstanding. At December 31, 2004, there
were $6.7 million of FHLB advances outstanding at fixed rates of 2.44%  3.78% (with
a weighted average rate of 3.41%) having maturities ranging from approximately 8 months to
53 months. One of the advances (with an outstanding balance of $3.0 million) is
convertible at the option of the FHLB to three-month LIBOR if three-month LIBOR exceeds 7%
in the five business days preceding May 30, 2006. There were investment securities with a
market value of approximately $7.8 million pledged as collateral on the FHLB advances.

At December 31, 2003, there were $3.8
million of FHLB advances outstanding at fixed rates of 2.65%  3.78% (with a weighted
average rate of 3.22%) having maturities ranging from approximately 8 months to 3 years
and there were investment securities with a market value of approximately $5.1 million
pledged as collateral. See Liquidity and Capital Resources for additional
details of our borrowing arrangements.

# LIQUIDITY AND CAPITAL
RESOURCES

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.

28

---

At December 31, 2004, our liquid
assets, consisting of cash and due from banks and federal funds sold, net of drafts
outstanding totaled $6.9 million. Investment securities that have not been pledged as
security for deposits and other borrowings, classified as available for sale, provide a
secondary source of liquidity because they can be converted to cash in a timely manner.
These non-pledged securities had a market value of $4.4 million at December 31, 2004. Our
ability to raise additional deposits and to borrow funds also serves as an additional
liquidity resource. Our regulatory capital ratios are at levels that support continued
leveraging through expansion of our deposit base and additional borrowings. We maintain
federal funds lines of credit totaling $10.4 million with correspondent banks. Advances
under these agreements are unsecured and are limited to terms ranging from 5 to 30 days.
These banks have reserved the right to withdraw these lines at their option. We have an
approved credit limit of approximately $19.3 million with the FHLB, with $12.5 million
unused at December 31, 2004. Further advances from the FHLB are limited to available
collateral acceptable to the FHLB which at December 31, 2004 amounted to $12.2 million,
consisting of qualifying loans, non-pledged investment securities and FHLB stock.

Until the completion of the merger,
we plan to meet our future cash needs through maturities of loans, maturities and cash
flows from investment securities, expansion of our deposit base, and other borrowings.

At December 31, 2004, unfunded
commitments to extend credit were approximately $13.6 million and outstanding letters of
credit were $546,324. No material capital expenditures are planned in 2005.

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 New Commerce BanCorp
has less than $150 million in assets, it currently is not subject to these guidelines.
However, New Commerce 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 December 31, 2004 and 2003. The following
is a table that reflects the leverage and risk-based regulatory capital ratios of the bank
at December 31, 2004 and 2003.

|                                         | 2004 | 2003
|---------------------------------------- | ---- | ----
|
|Total capital (to risk-weighted assets)  |      |     
|Tier 1 capital (to risk-weighted assets) |      |     
|Tier 1 capital (to average assets)       |      |     

29

---

# 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 capital while
maintaining 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.

As a part of our measurement of
interest rate sensitivity, we use 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. Also, net interest income may be impacted by other significant factors in a
given interest rate environment, including changes in the volume and mix of earning assets
and interest-bearing liabilities. 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 time frame 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 $310,000 and plus $263,000, 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.

Interest sensitivity is monitored and
managed by our management and a committee consisting of certain members of management and
our board of directors. We believe that the current level of interest sensitivity is
acceptable and manageable considering our business plan, capital level and other factors.

30

---

The following table presents our gap
analysis as of December 31, 2004 and 2003. The difference between rate-sensitive assets
and rate sensitive liabilities is shown below as the period interest-sensitive
gap.

|                                       |  | After Three |   |            |  
|-------------------------------------- |  | ----------- | - | ---------- | -
|
|
|
|December 31, 2004:                     |  |             |   |            |  
|Earning assets:                        |  |             |   |            |  
|Loans, gross                           |  |             | $ | 52,441,131 |  
|Investment securities                  |  |             |   | 1,883,118  |  
|Federal funds sold                     |  |             |   | 6,008,171  |  
|FHLB and FRB stock                     |  |             |   | 692,450    |  
|                                       |  |             |   |            |  
|Total earning assets                   |  |             |   | 61,024,870 |  
|                                       |  |             |   |            |  
|Interest-bearing liabilities:          |  |             |   |            |  
|Deposits:                              |  |             |   |            |  
|Interest checking                      |  |             |   | 4,727,892  |  
|Savings accounts                       |  |             |   | 958,610    |  
|Money market accounts                  |  |             |   | 16,446,820 |  
|Time deposits                          |  |             |   | 23,584,068 |  
|FHLB advances                          |  |             |   | -          |  
|                                       |  |             |   |            |  
|Total interest-bearing liabilities     |  |             |   | 45,717,390 |  
|                                       |  |             |   |            |  
|Period interest-sensitive gap          |  |             | $ | 15,307,480 |  
|                                       |  |             |   |            |  
|Cumulative interest-sensitive gap      |  |             | $ | 15,307,480 |  
|                                       |  |             |   |            |  
|Ratio of cumulative interest-sensitive |  |             |   |            |  
|gap to earning assets                  |  |             |   | 16.9       | %
|                                       |  |             |   |            |  
|December 31, 2003:                     |  |             |   |            |  
|Earning assets:                        |  |             |   |            |  
|Loans, gross                           |  |             | $ | 44,244,125 |  
|Investment securities                  |  |             |   | 1,109,094  |  
|Federal funds sold                     |  |             |   | 5,613,657  |  
|FHLB and FRB stock                     |  |             |   | 433,150    |  
|                                       |  |             |   |            |  
|Total earning assets                   |  |             |   | 51,400,026 |  
|                                       |  |             |   |            |  
|Interest-bearing liabilities:          |  |             |   |            |  
|Deposits:                              |  |             |   |            |  
|Interest checking                      |  |             |   | 4,650,485  |  
|Savings accounts                       |  |             |   | 931,551    |  
|Money market accounts                  |  |             |   | 13,254,094 |  
|Time deposits                          |  |             |   | 15,292,264 |  
|FHLB advances                          |  |             |   | -          |  
|                                       |  |             |   |            |  
|Total interest-bearing liabilities     |  |             |   | 34,128,394 |  
|                                       |  |             |   |            |  
|Period interest-sensitive gap          |  |             | $ | 17,271,632 |  
|                                       |  |             |   |            |  
|Cumulative interest-sensitive gap      |  |             | $ | 17,271,632 |  
|                                       |  |             |   |            |  
|Ratio of cumulative interest-sensitive |  |             |   |            |  
|gap to earning assets                  |  |             |   | 22.1       | %
|                                       |  |             |   |            |  

31

---

# 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, we seek 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 and
pronouncements of a recent nature are discussed in Notes to Consolidated Financial
Statements, Note 1  Summary of Significant Accounting Policies. Other accounting
standards that have been issued or proposed by authoritative standards-setting bodies that
do not require adoption until a future date are not expected to have a material impact on
the consolidated financial statements upon adoption.

32

---

Item 7.   Financial Statements.

REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM

Board of DirectorsNew Commerce
BanCorp and SubsidiaryGreenville, South Carolina

We have audited the accompanying
consolidated balance sheets of New Commerce BanCorp and Subsidiary (the
Company) as of December 31, 2004 and 2003 and the related consolidated
statements of operations, shareholders equity and comprehensive income (loss), and
cash flows for each of the years in the three year period ended December 31, 2004. These
consolidated financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these consolidated financial statements
based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform audits to obtain reasonable assurance about
whether the consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects, the
financial position of New Commerce BanCorp and Subsidiary at December 31, 2004 and 2003
and the results of their operations and cash flows for each of the years in the three year
period ended December 31, 2004, in conformity with accounting principles generally
accepted in the United States of America.

/s/ Elliott Davis, LLCElliott
Davis, LLCGreenville, South CarolinaJanuary 28, 2005

33

---

# NEW COMMERCE BANCORP AND SUBSIDIARY

Consolidated Balance SheetsDecember 31, 2004 and 2003

|                                                                 | 2004 | 2003
|---------------------------------------------------------------- | ---- | ----
|Assets:                                                          |      |     
|Cash and due from banks                                          |      |     
|Federal funds sold                                               |      |     
|                                                                 |      |     
|Total cash and cash equivalents                                  |      |     
|                                                                 |      |     
|Investment securities, available for sale                        |      |     
|Investment securities, held to maturity (fair value of $987,890) |      |     
|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                                       |      |     
|Accumulated deficit                                              |      |     
|Accumulated other comprehensive income                           |      |     
|                                                                 |      |     
|Total shareholders' equity                                       |      |     
|                                                                 |      |     
|Total liabilities and shareholders' equity                       |      |     
|                                                                 |      |     

See accompanying notes to consolidated financial statements.

34

---

# NEW COMMERCE BANCORP AND SUBSIDIARY

Consolidated Statements of OperationsYears Ended December
31, 2004, 2003 and 2002

|                                                    | 2004 | 2003 | 2002
|--------------------------------------------------- | ---- | ---- | ----
|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                           |      |      |     
|                                                    |      |      |     
|Non-Interest Expense:                               |      |      |     
|Salaries and benefits                               |      |      |     
|Occupancy, furniture and equipment                  |      |      |     
|Data processing                                     |      |      |     
|Marketing                                           |      |      |     
|Printing, supplies and postage                      |      |      |     
|Other operating                                     |      |      |     
|                                                    |      |      |     
|Total non-interest expense                          |      |      |     
|                                                    |      |      |     
|Income (Loss) Before Income Taxes                   |      |      |     
|                                                    |      |     
|Income Tax Provision (Benefit)                      |      |      |     
|                                                    |      |      |     
|Net Income (Loss)                                   |      |      | $   
|                                                    |      |      |     
|Basic Earnings (Loss) per Share                     |      |      | $   
|                                                    |      |      |     
|Diluted Earnings (Loss) per Share                   |      |      | $   
|                                                    |      |      |     
|Weighted Average Shares Outstanding - Basic         |      |      |     
|                                                    |      |      |     
|Weighted Average Shares Outstanding - Diluted       |      |      |     
|                                                    |      |      |     

See accompanying notes to consolidated financial statements.

35

---

# NEW COMMERCE BANCORP AND SUBSIDIARY

Consolidated Statements of Shareholders' Equity and Comprehensive Income (Loss)

Years Ended December 31, 2004, 2003 and 2002

|                                |  |  |  |           | Accumulated |  
|------------------------------- |  |  |  | --------- | ----------- | -
|
|
|
|
|
|Balance, December 31, 2001      |  |  |  | 1,000,000 |             | $
|                                |  |  |  |           |             |  
|Net income                      |  |  |  | -         |             |  
|Other comprehensive income,     |  |  |  |           |             |  
|net of tax:                     |  |  |  |           |             |  
|Unrealized gains on securities  |  |  |  |           |             |  
|available for sale, net of tax  |  |  |  |           |             |  
|effect of $76,135               |  |  |  | -         |             |  
|Reclassification of net gain on |  |  |  |           |             |  
|securities available for sale   |  |  |  |           |             |  
|included in net income, net of  |  |  |  |           |             |  
|tax effect of $32,496           |  |  |  | -         |             |  
|                                |  |  |  |           |             |  
|Other comprehensive income      |  |  |  |           |             |  
|                                |  |  |  |           |             |  
|Comprehensive income            |  |  |  | -         |             |  
|                                |  |  |  |           |             |  
|Balance, December 31, 2002      |  |  |  | 1,000,000 |             |  
|                                |  |  |  |           |             |  
|Net income                      |  |  |  | -         |             |  
|Other comprehensive income,     |  | 
|net of tax:                     |  |  |  |           |             |  
|Unrealized losses on securities |  |  |  |           |             |  
|available for sale, net of tax  |  |  |  |           |             |  
|effect of $103,728              |  |  |  | -         |             |  
|Reclassification of net gain on |  |  |  |           |             |  
|securities available for sale   |  |  |  |           |             |  
|included in net income, net of  |  |  |  |           |             |  
|tax effect of $46,347           |  |  |  | -         |             |  
|                                |  |  |  |           |             |  
|Other comprehensive loss        |  |  |  |           |             |  
|                                |  |  |  |           |             |  
|Comprehensive loss              |  |  |  | -         |             |  
|                                |  |  |  |           |             |  
|Balance, December 31, 2003      |  |  |  | 1,000,000 |             |  
|                                |  |  |  |           |             |  
|Net loss                        |  |  |  | -         |             |  
|Other comprehensive income,     |  |  |  |           |             |  
|net of tax:                     |  |  |  |           |             |  
|Unrealized losses on securities |  |  |  |           |             |  
|available for sale, net of tax  |  |  |  |           |             |  
|effect of $20,654               |  |  |  | -         |             |  
|                                |  |  |  |           |             |  
|Comprehensive loss              |  |  |  | -         |             |  
|                                |  |  |  |           |             |  
|Balance, December 31, 2004      |  |  |  | 1,000,000 |             | $
|                                |  |  |  |           |             |  

See accompanying notes to consolidated financial statements.

36

---

# NEW COMMERCE BANCORP AND SUBSIDIARY

Consolidated Statements of Cash Flows

Years Ended December
31, 2004, 2003 and 2002

|                                                              | 2004 | 2003 | 2002
|------------------------------------------------------------- | ---- | ---- | ----
|Operating Activities:                                         |      |      |     
|Net income (loss)                                             |      |      | $   
|Adjustments to reconcile net income (loss) to net cash        |      |      |     
|provided by operating activities:                             |      |      |     
|Provision for loan losses                                     |      |      |     
|Deferred income tax provision (benefit)                       |      |      |     
|Depreciation and amortization                                 |      |      |     
|Gain on sale of investment securities available for sale      |      |      |     
|Gain on sale of investment securities held to maturity        |      |      |     
|Loss on disposal of property and equipment                    |      |      |     
|(Increase) decrease in other assets                           |      |      |     
|Increase (decrease) in other liabilities                      |      |      |     
|                                                              |      |      |     
|Net cash 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 of Federal Reserve Bank stock                      |      |      |     
|(Purchase) redemption of Federal Home Loan Bank stock         |      |      |     
|Principal payments received on investment securities:         |      |      |     
|Held to maturity                                              |      |      |     
|Available for sale                                            |      |      |     
|Proceeds from sale, maturity 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                                     |      |      |     
|Advances from Federal Home Loan Bank                          |      |      |     
|Repayment of advances from Federal Home Loan Bank             |      |      |     
|Net decrease in securities sold under repurchase agreements   |      |      |     
|Increase (decrease) in drafts outstanding                     |      |      |     
|                                                              |      |      |     
|Net cash provided by financing activities                     |      |      |     
|                                                              |      |      |     
|Net (Decrease) Increase in Cash and Cash Equivalents          |      |      |     
|                                                              |      |     
|Cash and Cash Equivalents, Beginning of Year                  |      |      |     
|                                                              |      |      |     
|Cash and Cash Equivalents, End of Year                        |      |      | $   
|                                                              |      |      |     
|Supplemental Disclosures of Cash Flow Information:            |      |      |     
|Cash Paid For:                                                |      |      |     
|Interest                                                      |      |      | $   
|                                                              |      |      |     
|Income Taxes                                                  |      |      | $   
|                                                              |      |      |     
|Transfer from loans to other real estate owned (other assets) |      |      | $   
|                                                              |      |      |     

See accompanying notes to consolidated financial statements.

37

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 1 - SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Organization - New Commerce
BanCorp (the Holding Company), was incorporated under the laws of the State of
South Carolina in 1998 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
consolidated financial statements include the accounts of the Holding Company and its
wholly-owned subsidiary, the Bank (collectively referred to as the Company).
All significant intercompany balances and transactions have been eliminated. The
accounting and reporting policies conform to accounting principles generally accepted in
the United States of America and to general practices in the banking industry. The Company
uses the accrual basis of accounting.

Use of Estimates - The
preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities as of the date of the financial statements and the
reported amount of income and expenses during the reporting periods. Actual results could
differ from those estimates.

Nature of Operations and
Concentrations of Credit Risk - The Companys principal business activities are
conducted through the Bank, which is engaged in the business of accepting demand and time
deposits and providing loans to individuals and businesses. The Companys business is
limited primarily to Greenville and adjacent counties in the northwestern area of South
Carolina. The Company has a diversified loan portfolio and the borrowers ability to
repay their loans is not dependent upon any specific economic sector.

Disclosure Regarding Segments - The Company reports as one operating segment, as the chief operating decision-maker
reviews the results of operations of the Company as a single enterprise.

Cash and Cash Equivalents - For
purposes of reporting cash flows, cash and cash equivalents include cash on hand, amounts
due from banks, short-term interest bearing deposits and federal funds sold. Cash and cash
equivalents have an original maturity of three months or less.

Investment Securities - 
Investments in debt and equity securities are classified into three categories:

| | Available for Sale Securities: These are debt and equity securities which are not classified as
either held to maturity or as trading securities. These securities are reported at fair
market value. Unrealized gains and losses are reported, net of income taxes, as a separate
component of shareholders equity, net of income taxes.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Held to Maturity Securities: These are debt securities which the Company has the intent and
ability to hold until maturity. These securities are stated at cost, adjusted for
amortization of premiums and the accretion of discounts. The Company had no held to
maturity securities at December 31, 2004.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Trading Securities: These are debt and equity securities which are bought and held principally for
the purpose of selling in the near term. Trading securities are reported at fair market
value, and related unrealized gains and losses are recognized in the income statement. The
Company has no trading securities.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

38

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Gains or losses on dispositions of
investment securities are determined on a trade date basis and are based on the
differences between the net proceeds and the adjusted carrying amount of the securities
sold, using the specific identification method. Premiums and discounts are amortized or
accreted into interest income by a method that approximates a level yield.

The Bank, as a member institution, is
required to own certain stock investments in the Federal Home Loan Bank (FHLB)
and the Federal Reserve Bank (FRB). No ready market exists for these stocks
and they have no quoted market values. However, redemptions of these stocks historically
have been at par value, therefore they are carried at cost. These stocks generally are
pledged against any borrowings from these institutions.

Loans, Interest, and Fee Income on
Loans - Loans are stated at the principal balance outstanding and reduced by the
allowance for loan losses and net deferred loan origination fees. Loan origination fees
and certain direct loan origination costs are deferred and the net amount is accreted as
an adjustment of the related loans yield over the contractual life of the loan.
Interest income is recognized over the term of the loan based on the contractual interest
rate and the principal balance outstanding.

Loans generally are placed on
non-accrual status when principal or interest becomes ninety days past due, or when
payment in full is not anticipated. Interest payments received after a loan is placed in
non-accrual status are applied as principal reductions until such time the loan is
returned to accrual status. Generally, a loan is returned to accrual status when the loan
is brought current and the collectibility of principal and interest no longer is in doubt.

Allowance for Loan Losses - The
Company provides for loan losses using the allowance method. Provisions for loan losses
are added to the allowance through charges to operating expenses. Loans which are
determined to be uncollectible are charged against the allowance and recoveries on loans
previously charged off are added to the allowance. The provision for loan losses is the
amount deemed appropriate by management to establish an adequate allowance to meet the
present and foreseeable risk characteristics of the current loan portfolio.
Managements judgment is based on periodic and regular evaluation of individual
loans, the overall risk characteristics of the various portfolio segments, past experience
with losses, delinquency trends, and prevailing and anticipated economic conditions. While
management uses the best information available to make evaluations, future adjustments to
the allowance may be necessary if economic conditions differ substantially from the
assumptions used in making the evaluation. The allowance for loan losses is subject to
periodic evaluation by various regulatory authorities and may be subject to adjustment
upon their examination.

A loan is considered to be impaired
when full payment according to the terms of the loan agreement is not probable or when the
terms of a loan are modified. The fair value of impaired loans may be determined based
upon the present value of expected cash flows discounted at the loans effective
interest rate, the market price of the loan, if available, or value of the underlying
collateral if the loan is collateral-dependent. If a loan is determined to be impaired, a
portion of the allowance for loan losses is allocated specifically to each impaired loan.
When the ultimate collectibility of an impaired loans principal is in doubt, wholly
or partially, all cash receipts are applied to principal. Once the reported principal
balance has been reduced to zero, future cash receipts are applied to interest income, to
the extent that any interest has been foregone. Further cash receipts are recorded as
recoveries of any amounts previously charged off.

39

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property and Equipment - Property and equipment are stated at cost, net of accumulated depreciation. Depreciation
is computed using the straight-line method over the estimated useful lives of the related
assets. Maintenance and repairs are charged to operations, while major improvements are
capitalized. Upon retirement, sale, or other disposition of property and equipment, the
cost and accumulated depreciation are eliminated from the accounts and gain or loss is
included in income from operations.

Drafts Outstanding - The Company
invests any excess funds on a daily basis by depositing the excess in other banks. The
amount invested includes amounts outstanding for disbursement checks, and accordingly,
outstanding checks are reported as a liability.

Advertising - Advertising,
promotional, and other business development costs are generally expensed as incurred.
External costs incurred in producing media advertising are expensed the first time the
advertising takes place. External costs relating to direct mailing costs are expensed in
the period in which the direct mailings are sent.

Income Taxes - The asset and
liability approach is utilized to account for income taxes, which requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of temporary
differences between the financial statement carrying values and the tax bases of assets
and liabilities, as well as net operating loss carry forwards. Deferred tax assets and
liabilities are measured using the enacted tax rates expected to apply to taxable income
in the years in which those temporary differences are expected to be realized or settled.
A current tax asset or liability is recognized for taxes that are presently payable.

Stock-Based Compensation - The
Company has two stock-based employee compensation plans which are described more fully in
Note 14. The Company accounts for those plans under the recognition and measurement
principles of Accounting Principles Board (APB) Opinion No. 25, Accounting for
Stock Issued to Employees, and related Interpretations. No stock-based employee
compensation cost is reflected in net income (loss), as all stock options and warrants
granted under these 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 (loss) and earnings (loss) per share as if the Company had applied the fair
value recognition provisions of Financial Accounting Standards Board (FASB)
Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for
Stock-Based Compensation, to stock-based employee compensation.

|                                                             | Years Ended December 31,
|------------------------------------------------------------ | ------------------------
|
|Net income (loss) 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 as reported                                            |                         
|                                                             |                         
|Diluted as reported                                          |                         
|                                                             |                         
|Basic and diluted - pro forma                                |                         
|                                                             |                         

40

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Earnings (Loss) Per Share - Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted
average number of common shares outstanding during the period. Diluted earnings (loss) per
share is computed by dividing net income (loss) by the weighted average number of common
shares and potential common shares outstanding during the period. Potential common shares
consist solely of dilutive stock options determined by the treasury stock method using the
average market price of the shares during the period. Potential common shares for the
years ended December 31, 2004, 2003 and 2002 were 0, 18,961, and 14,473, respectively.

Comprehensive Income (Loss) - Comprehensive income (loss) consists of net income (loss) and net unrealized gains and
losses on investment securities available for sale and is presented in the consolidated
statements of shareholders equity and comprehensive income.

Reclassifications - Certain
amounts previously reported have been reclassified to conform to the current presentation
of these consolidated financial statements. These reclassifications had no effect on
previously reported net income (loss) or shareholders equity.

Fair Values of Financial Instruments - 
The following methods and assumptions were used by the Company in estimating fair
values of financial instruments recorded or disclosed in the financial statements.

| | Cash and Due from Banks:  For these short-term instruments, the carrying amounts approximate
their fair value.
| | --------------------------------------------------------------------------------------------------------------

| | Federal Funds Sold and Purchased:  The carrying amounts of federal funds sold and purchased
approximate their fair value due to their short maturities (generally daily maturities).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Investment Securities:  Fair values for investment securities are based on quoted market prices, if a
market exists. If no market exists, fair values are estimated based upon bids from
securities dealers, trading of similar instruments or indices adjusted for known
differences in security being valued and the security or index to which it is being
compared.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | FRB and FHLB Stock:  No ready market exists for these stocks and they have no quoted market
values. However, redemptions of these stocks historically have been at par value,
therefore the cost basis is used as an estimate of their fair values.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Loans:  For variable rate loans that reprice frequently and for loans that mature within one year,
fair values are based on carrying values. Fair values for all other loans are estimated
using discounted cash flow analyses, with interest rates currently being offered for loans
with similar terms to borrowers of similar credit quality. Fair values for impaired loans
are estimated using discounted cash flow analyses or underlying collateral values, where
applicable.
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Deposits:  The fair values disclosed for demand deposits are, by definition, equal to their carrying
amounts. Fair values for fixed-rate certificates of deposit are estimated using a
discounted cash flow calculation that applies interest rates currently being offered on
certificates to a schedule of aggregated monthly maturities.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Advances from FHLB:  Fair values for advances from FHLB are estimated using a discounted cash flow
analysis, with interest rates currently being offered for remaining terms of the advances.
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Accrued Interest Receivable and Payable and Drafts Outstanding:  The carrying amounts of these
items approximate their fair values due to the short period to settlement (three months or
less).
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

41

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

| | Off-Balance Sheet Instruments:  Fair values of off-balance sheet lending commitments are based on fees
currently charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the counterparties credit standing. The total fair value
of such instruments is not material.
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fair value estimates are made at a
specific point in time, based on relevant market information and information about the
financial instrument. Because no market exists for a significant portion of the
Companys financial instruments, fair value estimates are based on judgments
regarding future expected loss experience, current economic conditions, risk
characteristics of various financial instruments, and other factors. These estimates are
subjective in nature and involve uncertainties and, therefore, cannot be determined with
precision. Changes in assumptions could affect these estimates significantly.

Recently Issued Accounting Standards - In
December 2004, the Financial Accounting Standards Board (FASB)
issued SFAS No. 123 (revised 2004), Share-Based Payment (SFAS No. 123(R)).
SFAS No. 123(R) will require companies to measure all employee stock-based compensation
awards using a fair value method and record such expense in its financial statements. In
addition, the adoption of SFAS No. 123(R) requires additional accounting and disclosure
related to the income tax and cash flow effects resulting from share-based payment
arrangements. SFAS No. 123(R) is effective beginning as of the first interim or annual
reporting period beginning after December 15, 2005. The Company is currently evaluating
the impact that the adoption of SFAS No. 123(R) will have on its financial position,
results of operations and cash flows. The cumulative effect of adoption, if any, will be
measured and recognized in the statement of operations on the date of adoption.

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

42

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 2 - PENDING
MERGER

On December 16, 2004, the Holding
Company entered into a merger agreement with SCBT Financial Corporation
(SCBT), which was amended on January 20, 2005. Under the amended agreement
SCBT Interim Corporation, a wholly-owned subsidiary of South Carolina Bank & Trust,
N.A, will merge with and into the Holding Company. Immediately thereafter, the Holding
Company and the Bank will merge with and into South Carolina Bank & Trust, N.A., a
wholly-owned subsidiary of SCBT. Under the Merger Agreement, shareholders of the Holding
Company will receive $18.00 per share in cash of common stock. Holders of stock options
and warrants will receive a cash payment equal to the spread between $18.00 per share and
the exercise price per share of the stock covered by the option or warrant. The boards of
directors of both the Holding Company and SCBT have approved the merger agreement. The
merger is subject to the approval of the shareholders of the Holding Company, regulatory
approvals, and other customary closing conditions. Closing is expected to occur in the
second quarter of 2005. There are certain expenses which have been and will be incurred
which are not contingent upon the closing of the transaction. These expenses are
recognized as incurred and approximately $240,000 of such expenses were charged to
earnings in 2004. Certain other expenses will be incurred only upon closing of the
transaction, such as obligations under employment contracts, success fees to the
Companys financial advisor, contract termination penalties, etc. As closing has not
yet occurred, such expenses have not been recognized in these financial statements.

# NOTE 3 - RESTRICTIONS ON CASH AND DUE FROM BANKS

The Bank is required to maintain
average reserve balances, computed by applying prescribed percentages to its various types
of deposits, either at the bank or on deposit with the FRB. At December 31, 2004 and 2003
these required reserves were met by vault cash.

# NOTE 4 - INVESTMENT
SECURITIES

The amortized cost and fair value of
investment securities at December 31, 2004 and 2003 are as follows:

|                                    | Amortized | Gross Unrealized | Fair
|----------------------------------- | --------- | ---------------- | ----
|
|December 31, 2004                   |           |                  |     
|Available for sale:                 |           |                  |     
|Federal agency obligations          |           |                  | $   
|Mortgage-backed securities          |           |                  |     
|Collateralized mortgage obligations |           |                  |     
|Corporate bonds                     |           |                  |     
|                                    |           |                  |     
|Total available for sale            |           |                  | $   
|                                    |           |                  |     
|December 31, 2003                   |           |                  |     
|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              |           |                  | $   
|                                    |           |                  |     

43

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 4 - INVESTMENT SECURITIES (Continued)

At December 31, 2004, there were
securities with a fair value of $3.4 million pledged as collateral for public deposits and
securities with a fair value of $7.8 million pledged as collateral for FHLB advances.

In 2004, certain held to maturity
securities were sold to obtain cash for a capital contribution to the Bank. As a result of
the sale of these securities, as required by accounting standards, management reassessed
its 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. Subsequent to
the transfer, the security was sold for $500,000.

The Company had gross realized gains
on sales of investment securities in the amount of $16,400, $125,261, and $87,826 during
the years ended December 31, 2004, 2003, and 2002, respectively. There were no realized
losses during any period presented herein.

All of the Companys investments
that were in an unrealized loss position at December 31, 2004 have been evaluated and
deemed not to be other-than-temporarily impaired under relevant accounting principles.
This determination was made by consideration of the nature of the investments and the
causal factors of the unrealized losses. In all cases, the principal cause of the decline
in market value was due to the increase in market interest rates subsequent to purchase of
the securities. The unrealized losses are comprised of nine securities that have had
continuous losses of less than 12 months and two securities that have had continuous
losses 12 months or longer. None of the individual investment securities had an unrealized
loss which exceeded 5% of its amortized cost.

Gross unrealized losses on investment
securities and the fair value of the related securities, aggregated by investment category
and length of time that individual securities have been in a continuous unrealized loss
position, at December 31, 2004 are as follows:

|                           | Less than 12 Months | 12 Months or Longer | Total
|-------------------------- | ------------------- | ------------------- | -----
|
|
|Federal agency obligations |                     |                     | $    
|Mortgage-backed securities |                     |                     |      
|Collateralized mortgage    |                     |                     |      
|obligations                |                     |                     |      
|                           |                     |                     |      
|Total                      |                     |                     | $    
|                           |                     |                     |      

44

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 5 - LOANS

Loans receivable at December 31, 2004
and 2003 consisted of the following:

|                           | 2004 | 2003
|-------------------------- | ---- | ----
|Commercial                 |      |     
|Real estate - construction |      |     
|Real estate - mortgage     |      |     
|Consumer                   |      |     
|                           |      |     
|                           |      |     
|Less:                      |      |     
|Allowance for loan losses  |      |     
|Deferred loan fees, net    |      |     
|                           |      |     
|Net loans                  |      |     
|                           |      |     

The changes in the allowance for loan losses
consisted of the following for the years ended December 31, 2004, 2003 and 2002:

|                           | 2004 | 2003 | 2002
|-------------------------- | ---- | ---- | ----
|Balance, beginning of year |      |      | $   
|Provision for loan losses  |      |      |     
|Recoveries                 |      |      |     
|Loans charged off          |      |      |     
|                           |      |      |     
|Balance, end of year       |      |      | $   
|                           |      |      |     

At December 31, 2004 and 2003, the
Company had loans totaling $390,040 and $536,100, respectively, that were in non-accrual
status. Interest income that would have been recognized for the years ended December 31,
2004 and 2003 had these non-accrual loans been current in accordance with their
contractual terms amounted to $14,075 and $22,003, respectively. The amount of interest
included in interest income on such loans for the years ended December 31, 2004 and 2003
was $3,917 and $21,731, respectively. There were no non-accrual loans at December 31,
2002.

Impaired loans at December 2004 and
2003 were as follows:

|                                | 2004 | 2003
|------------------------------- | ---- | ----
|Impaired loans:                 |      |     
|No valuation allowance required |      |     
|Valuation allowance required    |      |     
|                                |      |     
|                                |      |     
|                                |      |     
|Valuation allowance             |      |     
|                                |      |     

45

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 5 - LOANS
(Continued)

The average recorded investment in
impaired loans was $523,363 and $955,496 for the years ended December 31, 2004 and 2003,
respectively. Interest income recognized on impaired loans in the years ended December 31,
2004 and 2003 was $6,900 and $34,773, respectively. There were no impaired loans at
December 31, 2002.

Certain directors, executive officers
and companies with which they are affiliated (collectively referred to as
insiders) are customers of and have banking transactions with the Bank in the
ordinary course of business. Loans to insiders were made on substantially the same terms,
including interest rates and collateral, as those prevailing at the time for comparable
arms-length transactions.

Loan transactions with insiders
during the years ended December 31, 2004 and 2003 are summarized as follows:

|                           | 2004 | 2003
|-------------------------- | ---- | ----
|Balance, beginning of year |      |     
|New loans                  |      |     
|Less loan payments         |      |     
|                           |      |     
|Balance, end of year       |      |     
|                           |      |     

# NOTE 6 - PROPERTY
AND EQUIPMENT

Property and equipment at December
31, 2004 and 2003 are summarized as follows:

|                              | 2004 | 2003
|----------------------------- | ---- | ----
|Land                          |      |     
|Building and improvements     |      |     
|Furniture and equipment       |      |     
|                              |      |     
|                              |      |     
|Less accumulated depreciation |      |     
|                              |      |     
|Property and equipment, net   |      |     
|                              |      |     

Depreciation expense for the years ended
December 31, 2004, 2003 and 2002 was $214,840, $183,063, and $162,918, respectively.

46

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 7 - DEPOSITS

Deposit accounts at December 31, 2004
and 2003 are summarized as follows:

|                              | 2004 | 2003
|----------------------------- | ---- | ----
|Non-interest bearing deposits |      |     
|Interest bearing deposits:    |      |     
|Interest checking             |      |     
|Money market                  |      |     
|Savings                       |      |     
|Time, less than $100,000      |      |     
|Time, $100,000 and over       |      |     
|                              |      |     
|Total deposits                |      |     
|                              |      |     

Deposits by insiders at December 31,
2004 and 2003 approximated $3,176,000 and $3,768,000, respectively.

Deposits from outside the
Companys market area obtained through brokers amounted to $28,592,150,or
approximately 36%, and $22,039,790, or approximately 31%, at December 31, 2004 and 2003,
respectively.

At December 31, 2004 the scheduled
maturities of time deposits were as follows:

|                    | 
|------------------- | 
|2005                | 
|2006                | 
|2007                | 
|                    | 
|Total time deposits | 
|                    | 

Interest expense by type of deposit
account for the years ended December 31, 2004, 2003 and 2002 is summarized as follows:

|                  | 2004 | 2003 | 2002
|----------------- | ---- | ---- | ----
|Interest checking |      |      | $   
|Money market      |      |      |     
|Savings           |      |      |     
|Time              |      |      |     
|                  |      |      |     
|Interest expense  |      |      | $   
|                  |      |      |     

47

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 8 - ADVANCES
FROM FHLB

Advances from FHLB consisted of the
following at December 31, 2004 and 2003:

|                           | 2004 | 2003
|-------------------------- | ---- | ----
|
|
|
|Maturing within:           |      |     
|1 year                     |      |     
|2 years                    |      |     
|3 years                    |      |     
|5 years                    |      |     
|                           |      |     
|Outstanding at end of year |      |     
|                           |      |     

At December 31, 2004, the FHLB
advances were at fixed rates with original maturities ranging from one to five years. At
December 31, 2004, one of the advances (with an outstanding balance of $3,000,000) is
convertible at the option of the FHLB to three-month LIBOR if three-month LIBOR exceeds 7%
in the five business days preceding May 30, 2006. Investment securities with a market
value of approximately $7.8 million were pledged as collateral on the advances. At
December 31, 2004, the Company had a total approved credit limit of approximately $19.3
million, subject to the Companys ability to pledge qualifying collateral.

# NOTE 9 - OTHER
BORROWINGS

The following sets forth certain
information about securities sold under agreements to repurchase during the years ended
December 31, 2004, 2003 and 2002:

|                                                             | 2004 | 2003 | 2002
|------------------------------------------------------------ | ---- | ---- | ----
|Balance outstanding at end of year                           |      |      | $   
|Average balance for months outstanding                       |      |      |     
|Maximum month-end balance during year                        |      |      |     
|Average interest rate for months outstanding                 |      |      |     
|Average interest rate at end of year                         |      |      |     
|Investment securities underlying the agreements at year end: |      |     
|Carrying value                                               |      |      | $   
|Estimated fair value                                         |      |      |     

The Company maintains federal funds
lines of credit with correspondent banks to meet short-term liquidity needs. Advances
under these agreements are unsecured and are limited to terms ranging from one to seven
days. These banks have reserved the right to withdraw these lines at their option. At
December 31, 2004, the Company had credit availability of $10,400,000 under these lines
with no advances outstanding.

48

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 10 - INCOME
TAXES

The income tax effects of temporary
differences in financial statement carrying values and the tax bases of assets and
liabilities, as well as net operating loss carryforwards at December 31, 2004 and 2003 are
as follows:

|                                                      | 2004 | 2003
|----------------------------------------------------- | ---- | ----
|Deferred tax assets:                                  |      |     
|Net operating loss carryforwards                      |      |     
|Allowance for loan losses                             |      |     
|Other                                                 |      |     
|                                                      |      |     
|Total deferred tax assets before valuation allowance  |      |     
|Less valuation allowance                              |      |     
|                                                      |      |     
|Total deferred tax assets                             |      |     
|                                                      |      |     
|Deferred tax liabilities:                             |      |     
|Unrealized net gains on securities available for sale |      |     
|Depreciation                                          |      |     
|Other                                                 |      |     
|                                                      |      |     
|Total deferred tax liabilities                        |      |     
|                                                      |      |     
|Net deferred tax asset                                |      |     
|                                                      |      |     

Net operating loss carryforwards
expire in 2013 through 2016. The net deferred tax asset is included in other assets in the
consolidated balance sheets.

The income tax provision (benefit)
for the years ended December 31, 2004, 2003 and 2002 is summarized as follows:

|                                        | 2004 | 2003 | 2002
|--------------------------------------- | ---- | ---- | ----
|Income taxes currently payable          |      |      | $   
|Deferred income tax provision (benefit) |      |      |     
|                                        |      |      |     
|Income tax provision (benefit)          |      |      | $   
|                                        |      |      |     

The provision for income taxes for the
years ended December 31, 2004, 2003 and 2002 is reconciled to the amount of income tax
computed at the federal statutory rate on income (loss) before income taxes as follows:

|                                             | 2004 | 2003 | 2002
|-------------------------------------------- | ---- | ---- | ----
|Tax expense (benefit) at statutory rate      |      |      | $   
|Increase (decrease) in taxes resulting from: |      |      |     
|State taxes, net of federal tax benefit      |      |      |     
|Expenses not deductible for tax purposes     |      |      |     
|Valuation allowance adjustment               |      |      |     
|                                             |      |      |     
|Income tax provision (benefit)               |      |      | $   
|                                             |      |      |     

49

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 11 - COMMITMENTS AND CONTINGENCIES

The Company is party to litigation
and claims arising in the normal course of business. Management, after consultation with
legal counsel, believes that the liabilities arising from such litigation and claims will
not be material to shareholders equity or the results from operations.

The Company has entered into
employment agreements with two executive officers which have initial terms of three years.
The agreements specify the annual compensation of the officers, incentive compensation and
other benefits. The agreements also provide that in the event the officers
employment is terminated or their position changed materially after a change in control,
they are entitled to severance compensation in the amount of two times the sum of their
base salary and their most recent bonus. Upon closing of the merger transaction, it is
estimated that the executives will be paid approximately $660,000 in the aggregate.

The Company has a contract for data
processing services through April 2009. Costs under the contract are approximately $13,000
per month. Upon closing of the merger transaction, it is estimated that there will be
penalties of approximately $600,000 relating to early termination of the contracts for
data processing and ancillary services.

# NOTE 12 - FINANCIAL
INSTRUMENTS WITH OFF-BALANCE SHEET RISK

In the ordinary course of business,
and to meet the financing needs of its customers, the Company is a party to various
financial instruments with off-balance sheet risk. These financial instruments, which
include commitments to extend credit and standby letters of credit, involve, to varying
degrees, elements of credit and interest rate risk in excess of the amounts recognized in
the balance sheet. The contract amount of those instruments reflects the extent of
involvement the Company has in particular classes of financial instruments.

The Companys exposure to credit
loss in the event of nonperformance by the other party to the financial instrument for
commitments to extend credit and standby letters of credit is represented by the
contractual amounts of those instruments. The same credit policies used for on-balance
sheet instruments are used in making commitments and conditional obligations.

Commitments to extend credit are
agreements to lend to a customer as long as there is no violation of any material
condition established in the contract. Commitments generally have fixed expiration dates
or other termination clauses and may require the payment of a fee. At December 31, 2004,
unfunded commitments to extend credit were $13,592,135 and outstanding letters of credit
were $546,324. At December 31, 2004, unfunded commitments consisted of $12,754,729 at
variable rates and $837,406 at fixed rates. The Company evaluates each customers
credit worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Company upon extension of credit, is based on managements credit
evaluation of the borrower. Collateral varies but may include accounts receivable,
inventory, property, plant and equipment, and commercial and residential real estate.

# NOTE 13 - EMPLOYEE
BENEFIT PLAN

The Company sponsors a 401(k) Plan
which covers all eligible employees. Participants may contribute up to 15% of eligible
compensation, and the Company contributes a discretionary amount, determined annually.
Both employee and employer contributions are subject to certain limitations. Contributions
to the Plan amounted to $27,349, $21,459, and $17,450 in the years ended December 31,
2004, 2003 and 2002, respectively.

50

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 14 - STOCK
OPTIONS AND WARRANTS

The Company has a stock option plan
for the benefit of the directors, officers and employees. Under terms of the Plan, the
Board of Directors may grant options to purchase common stock (options) of the
Company aggregating up to 250,000 shares. Options issued under the plan have a term of 10
years and vest in equal installments over a five-year period.

The following is a summary of
activity in the stock option plan for the years ended December 31, 2004, 2003 and 2002:

|                               | 2004 | 2003 | 2002
|------------------------------ | ---- | ---- | ----
|
|
|
|
|Outstanding, beginning of year |      |      |     
|Granted                        |      |      |     
|Forfeited                      |      |      |     
|                               |      |      |     
|Outstanding, end of year       |      |      |     
|                               |      |      |     
|Options exercisable            |      |      |     
|                               |      |      |     
|Shares available for grant     |      |      |     
|                               |      |      |     

The following is a summary of stock
options outstanding at December 31, 2004:

|     |  |  | Weighted        | Weighted |  | Weighted
|---- |  |  | --------------- | -------- |  | --------
|
|
|
|1999 |  |  | $10.00          |          |  |         
|2000 |  |  | $  7.38-$10.00  |          |  |         
|2001 |  |  | $  6.60-$  6.88 |          |  |         
|2002 |  |  | $  7.88-$  9.42 |          |  |         
|2003 |  |  | $  9.35         |          |  |         
|2004 |  |  | $10.20-$10.25   |          |  |         
|     |  |  |                 |          |  |         
|     |  |  | $  6.60-$10.25  |          |  |         
|     |  |  |                 |          |  |         

Upon completion of the Companys
1999 stock offering, each of the Companys organizers received warrants to purchase
7,500 shares of common stock, or a total of 90,000 shares, at $10.00 per share and all
were outstanding at December 31, 2004. The warrants vested immediately and are exercisable
through January 12, 2009.

51

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 14 - STOCK
OPTIONS AND WARRANTS (Continued)

As described in Note 1, the Company
accounts for these stock compensation plans under the recognition and measurement
principles of APB Opinion No. 25, and no stock-based employee compensation cost is
reflected in net income (loss). The Company utilizes the Black-Scholes valuation model to
determine the pro forma effect on net income (loss) and earnings (loss) per share as if
the Company had applied the fair value recognition provisions of SFAS No. 123, which is
disclosed in Note 1. The following assumptions were utilized in the application of the
Black-Scholes model for the years ended December 31, 2004, 2003 and 2002:

|                                         | 2004 | 2003 | 2002
|---------------------------------------- | ---- | ---- | ----
|Dividend yield                           |      |      |     
|Weighted average risk-free interest rate |      |      |     
|Expected volatility                      |      |      |     
|Expected life (years)                    |      |      |     

# NOTE 15 - DIVIDENDS

Currently, the Company has no plans
to initiate payment of cash dividends. It is anticipated that any future dividends paid by
the Company would be dependent on the Banks earnings, capital requirements, and
financial condition, as it is anticipated that such dividends would be dependent upon
dividends received by the Holding Company from the Bank. The Bank is restricted by banking
regulations in its ability to pay dividends and must obtain regulatory approval prior to
payment.

# NOTE 16 - REGULATORY
MATTERS

The Bank is subject to various regulatory
capital requirements administered by the federal banking regulatory agencies. Failure to
meet minimum capital requirements can initiate certain mandatory, and possible additional
discretionary actions by regulators that, if undertaken, could have a direct material
effect on the Companys financial statements. Under capital adequacy guidelines and
the regulatory framework for prompt corrective action, the Bank must meet specific capital
guidelines that involve quantitative measures of the Banks assets, liabilities, and
certain off-balance-sheet items as calculated under regulatory accounting practices. The
Banks capital amounts and classification also are subject to qualitative judgments
by the regulators about components, risk weightings, and other factors. Quantitative
measures established by regulation to ensure capital adequacy require the Bank to maintain
minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to
risk-weighted assets, and of Tier 1 capital to average assets. Management believes, as of
December 31, 2004, that the Bank meets all capital adequacy requirements to which it is
subject. As of December 31, 2004, the most recent notification of the banking regulators
categorized the Bank as well capitalized under the regulatory framework for prompt
corrective action. There are no conditions or events since that notification that
management believes have changed the institutions category. The Banks actual
capital amounts and ratios and minimum regulatory amounts and ratios are presented as
follows:

52

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 16 - REGULATORY MATTERS
(Continued)

|                          |  |  | To be Well
|------------------------- |  |  | ----------
|
|
|
|
|
|
|
|As of December 31, 2004   |  |  |           
|Total capital             |  |  |           
|(To risk weighted assets) |  |  | $         
|Tier 1 capital            |  |  |           
|(To risk weighted assets) |  |  |           
|Tier 1 capital            |  |  |           
|(To average assets)       |  |  |           
|                          |  | 
|As of December 31, 2003   |  |  |           
|Total capital             |  |  |           
|(To risk weighted assets) |  |  | $         
|Tier 1 capital            |  |  |           
|(To risk weighted assets) |  |  |           
|Tier 1 capital            |  |  |           
|(To average assets)       |  |  |           

# NOTE 17 - ESTIMATED
FAIR VALUE OF FINANCIAL INSTRUMENTS

The estimated fair values of
financial instruments at December 31, 2004 and 2003 is as follows:

|                                         | 2004 | 2003
|---------------------------------------- | ---- | ----
|
|
|Financial Assets:                        |      |     
|Cash and due from banks                  |      |     
|Federal funds sold                       |      |     
|Investment securities available for sale |      |     
|Investment securities held to maturity   |      |     
|FRB stock                                |      |     
|FHLB stock                               |      |     
|Loans, net                               |      |     
|Accrued interest receivable              |      |     
|                                         |      |     
|Financial Liabilities:                   |      |     
|Deposits                                 |      |     
|Advances from FHLB                       |      |     
|Drafts outstanding                       |      |     
|Accrued interest payable                 |      |     

53

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 18 - PARENT
COMPANY INFORMATION

Following is condensed financial
information of New Commerce BanCorp (parent company only) as of and for the periods
indicated:

# Condensed Balance Sheets

|                                       | December 31,
|-------------------------------------- | ------------
|
|Assets:                                |             
|Cash                                   |             
|Investment in Bank                     |             
|Property and equipment                 |             
|Investment securities held to maturity |             
|Other assets                           |             
|                                       |             
|Total assets                           |             
|                                       |             
|Shareholders' equity                   |             
|                                       |             

# Condensed Statements of
Operations

|                                                                    | Years Ended December 31,
|------------------------------------------------------------------- | ------------------------
|
|Interest income                                                     |                         
|Non-interest income                                                 |                         
|Non-interest expense                                                |                         
|                                                                    |                         
|Income before equity in undistributed net income (loss) of Bank     |                         
|Income tax provision (benefit)                                      |                         
|                                                                    |                         
|Net income (loss) before equity in undistributed net income of Bank |                         
|Equity in undistributed net income (loss) of Bank                   |                         
|                                                                    |                         
|Net income (loss)                                                   |                         
|                                                                    |                         

54

---

NEW COMMERCE BANCORP
AND SUBSIDIARYNotes to Consolidated Financial Statements Years Ended December
31, 2004, 2003 and 2002

# NOTE 18 - PARENT
COMPANY INFORMATION (Continued)

# Condensed Statements of
Cash Flows

|                                                                   | Years Ended December 31,
|------------------------------------------------------------------ | ------------------------
|
|Operating Activities:                                              |                         
|Net income (loss)                                                  |                         
|Adjustments to reconcile net income (loss) to net cash provided by |                         
|operating activities:                                              |                         
|Accretion of discount on investment securities                     |                         
|Depreciation                                                       |                         
|Gain on sale of investment securities held to maturity             |                         
|Decrease (increase) in other assets                                |                         
|Equity in undistributed net loss (income) of Bank                  |                         
|                                                                   |                         
|Net cash (used for) provided by operating activities               |                         
|                                                                   |                         
|Investing Activities:                                              |                         
|Capital contribution to Bank                                       |                         
|Proceeds from principal prepayments on investment securities       |                         
|Proceeds from sale of investment securities held to maturity       |                         
|Purchase of investment securities                                  |                         
|Purchase of property and equipment                                 |                         
|                                                                   |                         
|Net cash (used for) provided by investing activities               |                         
|                                                                   |                         
|Net Increase (Decrease) in Cash and Cash Equivalents               |                         
|                                                                   |                         
|Cash and Cash Equivalents, Beginning of Year                       |                         
|                                                                   |                         
|Cash and Cash Equivalents, End of Year                             |                         
|                                                                   |                         

55

---

# Item 8.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

# Item 8A.   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 December 31, 2004. There have been
no significant changes in our internal controls over financial reporting during the fourth
fiscal quarter ended December 31, 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.

# Item 8B.   Other Information.

None.

# Item 9.   Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the
Exchange Act.

# Directors and Executive
Officers

Set
forth below is information about each of our directors and executive officers. Each
director listed below is also a director of New Commerce Bank.

Richard
W. Bailey, 71, has been a director since 1999 and is the owner of Bayco Development
Company. He is also associated with Coldwell Banker Caine, holds a CCIM designation, and
has been actively involved in commercial real estate and development since 1986. He is a
past member of the Golden Strip and Greenville advisory boards of Branch Banking
&Trust.

Timothy
A. Brett, 51, has been a director since 1999. He is the president of Brett Public
Relations, Inc., a full service public relations company with offices in Greenville,
Spartanburg and Columbia, South Carolina, which he founded in 1993. Mr. Brett previously
served as director of Governmental Affairs and Community Relations for Michelin North
America from 1987 until 1993. He was also a member of the South Carolina House of
Representatives. After leaving the House of Representatives, he served in various
positions under former Governor Carroll A. Campbell, Jr. He continually serves his
community through his involvement in a number of charitable organizations, including the
Salvation Army, the YMCA, and the Blue Ridge Council Boy Scouts. He is a 1974 Graduate of
Newberry College and presently serves as a member of the Colleges Board of Trustees.

Marshall
J. Collins, Jr., 63, is the Chairman of the company and has been a director since 1999. He
is the retired chief executive officer and chairman of BI-LO, LLC and retired president
and chief executive officer of Ahold USA Support Services in Mauldin, South Carolina.
BI-LO, LLC is a multi-state grocery store chain and is one of the largest employers in
Greenville County, South Carolina. Mr. Collins was born and grew up in Chicago, Illinois
and is a graduate of St. Marys University in Winona, Minnesota and the Advanced
Management Program at Harvard Business School. He currently is the chairman of the board
of St. Francis Hospital in Greenville, South Carolina, is a board member of Earth Fare, a
natural and organic food retailer, and is a board member of the South Carolina Waterfowl
Association.

56

---

Ralph
S. Crawley, 70, has been a director since 1999. He is the co-founder and was the president
of Carter and Crawley, Inc., a custom automated control systems supplier to industrial and
utility clients from 1967 until it was sold to AZZ, Inc. of Fort Worth, Texas in 2001. Mr.
Crawley remained as the general manager of Carter and Crawley, Inc. until his retirement
in 2003. He previously was manager of control system manufacturing for Metal Products
Corporation. Mr. Crawley graduated from Ruby High School in 1953 and attended Pierce
College in Reseda, California. He has held several positions with RCA and TRW involving
manufacturing and sales. Mr. Crawley is a past president and member of the Mauldin Rotary
Club. Mr. Crawley was a member of the Mauldin Library Committee and chairman of the
Building and Grounds Committee of the new Greenville County branch library located in
Mauldin; past member of the Chamber of Commerce organizing board and past member of the
Mauldin-Simpsonville advisory board of Bank of America.

G. Mitchell Gault, 49, has been a director since 1999 and is the president of
          Kent-Gault Manufactured Homes, a retailer of manufactured homes to the upstate
          of South Carolina since 1959. Mr. Gault, a second-generation retailer, has been
          with Kent-Gault since 1977. Mr. Gault also is involved in the development of
          manufactured housing subdivisions, as well as owning and operating several
          manufactured housing rental communities in the Upstate. Mr. Gault graduated from
          the University of South Carolina in l977. He is a past president of the Fountain
          Inn Rotary Club. He has served on the board of Manufactured Housing Institute of
          South Carolina for ten years, including two terms as chairman of that
          association. He is a member of the Golden Strip YMCA Board of Directors and is a
          life-long member of Trinity United Methodist Church of Fountain Inn where he has
          served on the board and has chaired various committees.

Robert
T. Kellett, 62, has been a director since 1999. An entrepreneur since 1965, he owns and
operates several businesses in the Golden Strip, including Tommys Snack Bar, Kellett
Fuel Oil, and Kelletts Korner, Inc. He is a native of Greenville County and he
graduated from Hillcrest High School.

Dennis
O. Raines, 53, has been a director since 1999. He is an honor graduate of Limestone
College from which he obtained a degree in business management. He was president of
Utility Partners of America from 2002 to 2003 and was employed at Kemet Electronics for 26
years, serving in various management positions including manufacturing manager, human
relations manager, and most recently business services manager. Mr. Raines served for six
years as a member of the Mauldin City Council, where he was on the Recreation &
Economic Development and Public Safety committees and was the chairman of the Finance
& Policy committee. He is a former member of the Mauldin Library Task Force.

R. Lamar Simpson, CPA, 46, is a senior vice president and the chief financial
          officer of our company and our bank. Mr. Simpson has nine years of experience in
          the financial services industry and before joining us in 2002, was most recently
          employed as chief financial officer of FirstSpartan Financial Corp. and First
          Federal Bank in Spartanburg, South Carolina from 1996 until the banks
          merger with BB&T Corp. in 2001. Prior to 1996, Mr. Simpson was a senior
          manager with Deloitte & Touche LLP, where he served clients principally in
          the financial services and real estate industries. Mr. Simpson received his B.S.
          degree in Business Administration and Accounting from Erskine College in 1981
          and is a member of the American Institute of Certified Public Accountants and
          the South Carolina Association of CPAs.

Frank
W. Wingate, 44, has been a director and the president and chief executive officer of our
company and our bank since October 1, 2001. He is a second-generation banker who has over
20 years of experience in both retail and commercial banking. Mr. Wingate graduated with a
B.S. degree in Financial Management from Clemson University in 1983 and completed the
course of study at The Graduate School of Banking of the South at Louisiana State
University in 1993. His banking career began in 1983 at The Citizens & Southern
National Bank in Atlanta. Mr. Wingate served as the founding president and chief executive
officer of The Community Bank of Greenville, NA from 1996 until the banks merger
with Regions Bank of Greenville in 1998. He held the position of Executive Vice
President-Retail Banking with Community Bank & Trust, Cornelia, Georgia from May 2000
until his return to Greenville. He is a graduate of Leadership Greenville, Class XXIII,
past member of the Board of Regents for Leadership Greenville, past treasurer and board
member of Compass of Carolina, former member of Greenville East Rotary Club, is a board
member and the current chairman of Junior Achievement of Greenville, Inc., and he serves
on the board of the Mauldin Chamber of Commerce.

57

---

# Audit Committee

The
audit committee is comprised of Messrs. Collins, Gault, and Raines. Each of these members
is considered to be an independent director except for Mr. Collins who may not be
independent because his ownership of the company exceeds 5%.

The
audit committee has the responsibility of reviewing internal audit and compliance reports,
evaluating internal accounting controls, reviewing reports of regulatory authorities, and
determining that all audits and examinations required by law are performed. None of the
current members of the audit committee nor any other member of our board qualifies as an
audit committee financial expert as defined under the rules of the Securities
and Exchange Commission. As a relatively small public company, it is difficult to identify
potential qualified candidates that are willing to serve on our board and otherwise meet
our requirements for service. We do not intend to appoint any new directors prior to the
scheduled closing date for our merger with South Carolina Bank & Trust. If we do not
complete our merger, we do not know if or when we will appoint a new board member that
qualifies as an audit committee financial expert.

Although
none of the members of our audit committee qualify as financial experts as
defined in the SEC rules, each of Messrs. Collins, Gault, and Raines has made valuable
contributions to the company and its shareholders as members of the audit committee. The
board has determined that each member is fully qualified to monitor the performance of
management, the public disclosures by the company of its financial condition and
performance, our internal accounting operations, and our independent auditors.

The
committee recommends to the board the appointment of the independent auditors for the next
fiscal year, reviews and approves the auditors audit plans, and reviews with the
independent auditors the results of the audit and managements responses. The audit
committee charter was adopted by the board of directors on November 27, 2000. The charter
outlines the committees responsibilities for overseeing the entire audit function
and appraising the effectiveness of internal and external audit efforts and may be amended
by the board at any time. The audit committee reports its findings to the board of
directors.

# Compliance with Section 16(a) of the
Securities Exchange Act of 1934

As
required by Section 16(a) of the Securities Exchange Act of 1934, our directors and
executive officers and certain other individuals are required to report periodically their
ownership of our common stock and any changes in ownership to the SEC. Based on a review
of Forms 3, 4, and 5 and any representations made to us, it appears that they were filed
in a timely fashion during 2004.

# Code of Ethics

We
have adopted a Code of Ethics that applies to our principal executive officer and
principal financial officer and other executive officers of our company. The Code of
Ethics is available without charge to shareholders upon request. Shareholders should
contact R. Lamar Simpson at our main office to obtain a copy.

58

---

# Item 10.   Executive
Compensation

# Summary of Cash and
Certain Other Compensation

The
following table shows the cash compensation paid to our chief executive officer and chief
financial officer for the years ended December 31, 2004, 2003, and 2002. None of our other
executive officers received total annual compensation, including salary and bonus, in
excess of $100,000 for 2004.

Summary Compensation
Table

|                            |  |  |  |      | Long-Term | 
|--------------------------- |  |  |  | ---- | --------- | 
|
|
|
|
|
|
|Frank W. Wingate            |  |  |  | 2004 |           | 
|President and Chief         |  |  |  | 2003 |           | 
|Executive Officer           |  |  |  | 2002 |           | 
|                            |  | 
|R. Lamar Simpson            |  |  |  | 2004 |           | 
|Senior Vice President and   |  |  |  | 2003 |           | 
|Chief Financial Officer (2) |  |  |  | 2002 |           | 

|(1) | Mr. Wingate and Mr. Simpson also receive indirect compensation in the form of
                    certain perquisites and other personal benefits. The amounts of such benefits
                    received in the fiscal years shown did not exceed the lesser of either $50,000
                    or 10% of their annual salary and bonus, except with respect to the
                    reimbursement of $11,989 in taxes in 2003 for Mr. Wingate. We agreed to pay the
                    cost of moving and selling his previous home, plus reimburse him for income
                    taxes on any part of the reimbursement that was deemed to be taxable income. The
                    payment also included taxes on the taxable income generated from the
                    reimbursement.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Mr. Simpsons annualized salary was $95,000 when he joined our company in
                    June 2002. The 2002 amounts for salary and other annual compensation cover the
                    period June 11, 2002 through December 31, 2002.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | In 2004, Mr. Wingates other compensation consisted of $5,525 in 401(k)
                    matching contributions and $1,584 in group term life premiums. In 2004, Mr.
                    Simpsons other compensation consisted of $3,875 in 401(k) matching
                    contributions and $1,480 in group term life premiums.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

59

---

# Option Grants in Last
Fiscal Year

Pursuant
to the New Commerce BanCorp Amended 1999 Stock Incentive Plan, approved by our board of
directors and shareholders, we may grant options for up to 250,000 shares to our officers,
directors, and employees. The following table sets forth information concerning the grant
of stock options to the named executive officers during the year ended December 31, 2004.

|                 |  | Percent of |  |      
|---------------- |  | ---------- |  | -----
|
|
|
|
|
|
|
|Frank W. Wingate |  |            |  | 1,000
|                 |  |           
|R. Lamar Simpson |  |            |  | 1,000

# Aggregated Option
Exercises and Year-End Option Values

|                 | Number of Unexercised Securities | Value of Unexercised In-
|---------------- | -------------------------------- | ------------------------
|
|
|
|
|Frank W. Wingate |                                  |                         
|                 |                                  |                         
|R. Lamar Simpson |                                  |                         

_______________

|(1) | The values shown equal the difference between the exercise price of unexercised in-the-money options and
         the closing market price ($17.65) of the underlying common stock at December 31, 2004.  Options are
         in-the-money if the fair market value of the common stock exceeds the exercise price of the option.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

# Employment Agreements

We entered into an employment agreement with Mr. Wingate on November 18, 2003 which had an initial
term of three years with a provision for annual renewal.  The agreement provides for an initial annual salary of
$140,000 and a bonus of up to 35% of his salary if the company achieves certain written performance goals.
Additionally, Mr. Wingate participates in our other employee benefit programs, is entitled to a life insurance
policy, is provided an automobile allowance, and is provided travel and business expenses (including club dues).
Mr. Wingate's employment agreement also provides that in the event his employment is terminated or his position
is changed materially after a change in control of the company (as defined in the agreement), he is entitled to
severance compensation in the amount of two times the sum of his base salary and his most recent bonus.  Further,
during Mr. Wingate's employment and for a period of 12 months following the termination of his employment (except
for termination in the case of a change in control), he may not solicit customers or employees of the bank for
any competing business enterprise or compete with the bank by serving as an organizer, director, officer,
consultant or greater than 1% shareholder of any depository financial institution or holding company within our
territory.

60

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Also, we entered into an employment agreement with Mr. Simpson on November 18, 2003 which had an
initial term of three years with a provision for annual renewal.  The agreement provides for an initial annual
salary of $105,000 and a bonus of up to 25% of his salary if the company achieves certain written performance
goals.  Additionally, Mr. Simpson participates in our other employee benefit programs and is provided
reimbursement of travel and business expenses.  Mr. Simpson's employment agreement also provides that in the
event his employment is terminated or his position is changed materially after a change in control of the company
(as defined in the agreement), he is entitled to severance compensation in the amount of two times the sum of his
base salary and his most recent bonus.

Mr. Wingate has also entered into an employment agreement with SCBT.  Upon the effective time of the
merger, Mr. Wingate will serve as Senior Vice President and Area Executive of South Carolina Bank & Trust, N.A.
The agreement is for a term of three years and Mr. Wingate will receive an annual base salary of $160,000.  In
addition and subject to certain exceptions, Mr. Wingate has agreed not to compete with SCBT in Greenville County
during the term of the agreement and for a period of one year after termination of employment.  In connection
with the termination of his existing employment agreement with us, Mr. Wingate will receive a payment of
$410,000.  Mr. Simpson entered into a consulting agreement with SCBT.  Upon the effective time of the merger, Mr.
Simpson has agreed to provide consulting services to SCBT as requested by SCBT for a period of up to 90 days.
Mr. Simpson will receive $11,000 per month for his services (prorated for any partial month).  Under a separate
agreement, Mr. Simpson also agreed not to compete with SCBT by participating in the formation of any new
financial institution in Greenville County for a period of one year after the effective time of the merger.  In
connection with the termination of his existing employment agreement with us, Mr. Simpson will receive a payment
of $250,000.

# Director Compensation

Neither the company nor the bank paid directors' fees during the last fiscal year.

61

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# Item 11.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table shows the number of shares of our common stock owned by our directors, executive
officers, and owners of more than 5% of the outstanding common stock as of March 14, 2005.  Unless otherwise
indicated, the mailing address for each beneficial owner is in care of New Commerce BanCorp, 501 New Commerce
Court, Greenville, South Carolina 29607.  The mailing address for Mr. Stewart is 108 Maple Brook Court,
Simpsonville, S.C.  29681.

| |  | Number of |                          | Percentage of
| |  | --------- | ------------------------ | -------------
|
|
| |  |           | Richard W. Bailey        |              
| |  |           | Timothy A. Brett         |              
| |  |           | Marshall J. Collins, Jr. |              
| |  |           | Ralph S. Crawley         |              
| |  |           | G. Mitchell Gault        |              
| |  |           | Robert T. Kellett        |              
| |  |           | Dennis O. Raines         |              
| |  |           | R. Lamar Simpson         |              
| |  |           | James D. Stewart         |              
| |  |           | Frank W. Wingate         |              
| |  |           | Directors, executive     |              
| |  |           | officers, and 5% owners  |              
| |  |           | as a group (10 persons)  |              

|(1) | Includes shares for which the named person has sole voting and investment power,
          has shared voting and investment power, or holds in an IRA or other retirement
          plan program, unless otherwise indicated in these footnotes.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Includes shares that may be acquired within the next 60 days of the date of this
          report by exercising vested stock options but does not include any unvested
          stock options.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(3) | For each individual, this percentage is determined by assuming the named person
          exercises all options which he or she has the right to acquire within 60 days,
          but that no other persons exercise any options or warrants. For the directors
          and executive officers as a group, this percentage is determined by assuming
          that each director and executive officer exercises all options which he or she
          has the right to acquire within 60 days, but that no other persons exercise any
          options. The calculations are based on 1,000,000 shares of common stock
          outstanding on March 14, 2005.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

62

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The following table sets forth equity
compensation plan information at December 31, 2004.

# Equity Compensation
Plan Information

|                        |  |  | Number of securities
|----------------------- |  |  | --------------------
|
|
|
|
|
|
|
|Equity compensation     |  |  |                     
|plans approved by       |  |  |                     
|security holders        |  |  |                     
|                        |  | 
|Equity compensation     |  |  |                     
|plans not approved      |  |  |                     
|by security holders (1) |  |  |                     
|                        |  | 
|Total                   |  |  |                     

(1)    
          See Note 14 to the consolidated financial statements for a description of the
          material features of the plan.

# Item 12.   Certain
Relationships and Related Transactions

We
enter into banking and other transactions in the ordinary course of business with our
directors and officers and their affiliates. It is the our policy that these transactions
be on substantially the same terms (including price, or interest rates and collateral) as
those prevailing at the time for comparable transactions with unrelated parties. We do not
expect these transactions to involve more than the normal risk of collectibility nor
present other unfavorable features to us or the bank. Loans to individual directors and
officers must also comply with our banks lending policies and statutory lending
limits, and directors with a personal interest in any loan application are excluded from
the consideration of the loan application. We intend for all of our transactions with our
affiliates to be on terms no less favorable to us than could be obtained from an
unaffiliated third party and to be approved by a majority of disinterested directors.

63

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# Item 13.   Exhibits.

|(a) | The following documents are filed as part of this report:
|--- | ---------------------------------------------------------

|2.1 | Agreement and Plan of Merger by and among New Commerce and SCBT Financial Corporation
(incorporated by reference to Form 8-K filed on December 20, 2004).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1. | Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1
          of the Registration Statement on Form SB-2, File No. 333-70589).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2. | Bylaws (incorporated by reference to Exhibit 3.2 of the Registration Statement
          on Form SB-2, File No. 333-70589).
|---- | ---------------------------------------------------------------------------------------------------------------------------

|4.1. | See Exhibits 3.1 and 3.2 for provisions in New Commerce BanCorps Articles
          of Incorporation and Bylaws defining the rights of holders of the common stock
          (incorporated by reference to Exhibits 3.1 and 3.2 of the Registration Statement
          on Form SB-2, File No. 333-70589).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2. | Form of certificate of common stock (incorporated by reference to Exhibit 4.2 of
          the Registration Statement on Form SB-2, File No. 333-70589).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 | Data Processing Services Agreement and Contract Modification dated December 1, 1998
between New Commerce BanCorp and Jack Henry & Associates, Inc. (incorporated by
reference to Exhibit 10.7 of the Registration Statement on Form SB-2, File No. 333-70589).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Form of Stock Warrant Agreement for Warrants issued in 1999 (incorporated by reference to Exhibit 10.8
         of the Registration Statement on Form SB-2, File No. 333-70589).*
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 | New Commerce BanCorp 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.10 of the Form
         10-KSB for the year ended December 31, 1999, File No. 000-26061).*
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 | Employment Agreement with Frank W. Wingate (incorporated by reference to Exhibit 10.4 of the Form 10-KSB
         for the year ended December 31, 2003, File No. 000-26061).*
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 | Employment Agreement with R. Lamar Simpson (incorporated by reference to Exhibit 10.5 of the Form 10-KSB
         for the year ended December 31, 2003, File No. 000-26061).*
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 | Data Processing Services
Agreement, Contract Modification and Addendums dated December 30, 2003 between New
Commerce BanCorp and Jack Henry & Associates, Inc. (incorporated by reference to
Exhibit 10.6 of the Form 10-KSB for the year ended December 31, 2003, File No. 000-26061).
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 | New Commerce BanCorp Amended 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.7 of the Form 10-KSB
for the year ended December 31, 2003, File No. 000-26061).*
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21.1 | Subsidiaries of the company.
|---- | ----------------------------

|23.1 | Consent of Certified Public Accountants.
|---- | ----------------------------------------

|24.1 | Power of Attorney (contained on the signature page hereof).
|---- | -----------------------------------------------------------

|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.
|-- | ----------------------------

|* | Management contract of compensatory plan or arrangement required to be filed as an Exhibit
to this Annual Report on Form 10-KSB.
|- | --------------------------------------------------------------------------------------------------------------------------------

64

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# Item 14.   Principal Accountant Fees and Services.

The
following sets forth the fees paid to our accounting firm during the years ended December
31, 2004 and 2003:

| | Type of Service | 2004 | 2003 
| | --------------- | ---- | -----
|
| |                 |      | Audit
| |                 |      | Tax  
| |                 |      | Other
| |                 |      |      
| |                 |      | Total
| |                 |      |      

Audit
Fees - This category consists the aggregate fees billed for each of the last two
fiscal years for professional services rendered by the principal accountant for the audit
of our annual financial statements and review of financial statements included in our
Forms 10-QSB.

Tax
Fees - This category consists of fees billed for each of the last two fiscal years
for professional services rendered by the principal accountant for the preparation of our
tax returns.

Other
Fees - This category consists of fees billed for each of the last two fiscal years
for professional services rendered by the principal accountant for services rendered for
certain of our employee benefit plans related to compliance and reporting.

# Oversight of Accountants; Approval of
Accounting Fees.

The
audit committee is responsible for the retention, compensation, and oversight of the work
of the independent auditors. The audit committee pre-approves the fees paid for the audit.
No non-audit services that are prohibited by securities laws from being provided by an
independent auditor have been provided. All of the accounting services and fees reflected
in the table above were reviewed and approved by the audit committee, and none of the
services were performed by individuals who were not employees of the independent auditor.

65

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# SIGNATURES

In
accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934 (the
Exchange Act), the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

| |  | NEW COMMERCE BANCORP
| |  | --------------------

|                      |  | By:   /s/  Frank W. Wingate          
|--------------------- |  | -------------------------------------
|                      |  | Frank W. Wingate                     
|Date:  March 23, 2005 |  | President and Chief Executive Officer

KNOW
ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Frank W. Wingate, his true and lawful attorney-in-fact and agent, with full power
of substitution and resubstitution, for him and in his name, place and stead, in any and
all capacities, to sign any and all amendments to this Annual Report on Form 10-KSB, and
to file the same, with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto attorney-in-fact and agent full
power and authority to do and perform each and every act and thing requisite or necessary
to be done in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that attorney-in-fact and agent,
or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

In
accordance with the Exchange Act, this report has been signed below by the following
persons on behalf of the registrant in the capacities and on the dates indicated.

|Signature | Title | Date
|--------- | ----- | ----

| |  | 
| |  | 

|/s/ Richard W. BailyRichard W. Baily | Director | March 23, 2005
|------------------------------------ | -------- | --------------

|/s/ Timothy A. BrettTimothy A. Brett | Director | March 23, 2005
|------------------------------------ | -------- | --------------

|/s/ Marshall J. Collins, Jr.Marshal J. Collins, Jr. | Director | March 23, 2005
|--------------------------------------------------- | -------- | --------------

|/s/ Ralph S. CrawleyRalph S. Crawley | Director | March 23, 2005
|------------------------------------ | -------- | --------------

|_____________G. Mitchell Gault | Director | 
|------------------------------ | -------- | 

66

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|Signature | Title | Date
|--------- | ----- | ----

| |  | 
| |  | 

|/s/ Robert T. KelletRobert T. Kellet | Director | March 23, 2005
|------------------------------------ | -------- | --------------

|/s/ Dennis O. RainesDennis O. Raines | Director | March 23, 2005
|------------------------------------ | -------- | --------------

|/s/ Frank W. WingateFrank W. Wingate | Director | March 23, 2005
|------------------------------------ | -------- | --------------

|/s/  R. Lamar SimpsonR. Lamar Simpson | Principal AccountingOfficer and ChiefFinancial Officer | March 23, 2005
|------------------------------------- | ------------------------------------------------------ | --------------

67

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INDEX TO EXHIBITS

Exhibit Number          
               Description

|2.1 | Agreement and Plan of Merger by and among New Commerce and SCBT Financial Corporation
(incorporated by reference to Form 8-K filed on December 20, 2004).
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------

|3.1. | Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.1
          of the Registration Statement on Form SB-2, File No. 333-70589).
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------

|3.2. | Bylaws (incorporated by reference to Exhibit 3.2 of the Registration Statement
          on Form SB-2, File No. 333-70589).
|---- | ---------------------------------------------------------------------------------------------------------------------------

|4.1. | See Exhibits 3.1 and 3.2 for provisions in New Commerce BanCorps Articles
          of Incorporation and Bylaws defining the rights of holders of the common stock
          (incorporated by reference to Exhibits 3.1 and 3.2 of the Registration Statement
          on Form SB-2, File No. 333-70589).
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4.2. | Form of certificate of common stock (incorporated by reference to Exhibit 4.2 of
          the Registration Statement on Form SB-2, File No. 333-70589).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------

|10.1 | Data Processing Services Agreement and Contract Modification dated December 1, 1998
between New Commerce BanCorp and Jack Henry & Associates, Inc. (incorporated by
reference to Exhibit 10.7 of the Registration Statement on Form SB-2, File No. 333-70589).
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.2 | Form of Stock Warrant Agreement for Warrants issued in 1999 (incorporated by reference to Exhibit 10.8
         of the Registration Statement on Form SB-2, File No. 333-70589).*
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.3 | New Commerce BanCorp 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.10 of the Form
         10-KSB for the year ended December 31, 1999, File No. 000-26061).*
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.4 | Employment Agreement with Frank W. Wingate (incorporated by reference to Exhibit 10.4 of the Form 10-KSB
         for the year ended December 31, 2003, File No. 000-26061).*
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.5 | Employment Agreement with R. Lamar Simpson (incorporated by reference to Exhibit 10.5 of the Form 10-KSB
         for the year ended December 31, 2003, File No. 000-26061).*
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.6 | Data Processing Services
Agreement, Contract Modification and Addendums dated December 30, 2003 between New
Commerce BanCorp and Jack Henry & Associates, Inc. (incorporated by reference to
Exhibit 10.6 of the Form 10-KSB for the year ended December 31, 2003, File No. 000-26061).
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|10.7 | New Commerce BanCorp Amended 1999 Stock Incentive Plan (incorporated by reference to Exhibit 10.7 of the Form 10-KSB
for the year ended December 31, 2003, File No. 000-26061).*
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|21.1 | Subsidiaries of the company.
|---- | ----------------------------

|23.1 | Consent of Certified Public Accountants.
|---- | ----------------------------------------

|24.1 | Power of Attorney (contained on the signature page hereof).
|---- | -----------------------------------------------------------

|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.
|-- | ----------------------------

|______________ | 
|-------------- | 

|* | Management contract of compensatory plan or arrangement required to be filed as an Exhibit
to this Annual Report on Form 10-KSB.
|- | --------------------------------------------------------------------------------------------------------------------------------

68