Select Bancorp (SLCT) 10-Q 2008 Q3 Quarterly report

U.S. Securities and Exchange Commission

Washington, D.C. 20549

Form 10-Q

x Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended September 30, 2008

¨ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period ended                            

Commission File Number 000-50400

New Century Bancorp, Inc.

(Exact name of Registrant as specified in its charter)

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

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

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

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

As of November 10, 2008, the Registrant had outstanding 6,827,649 shares of Common Stock, $1 par value per share.

			Page No.
Part I. FINANCIAL INFORMATION
Item 1 - Consolidated Financial Statements (Unaudited)
		Consolidated Balance Sheets September 30, 2008 and December 31, 2007	3
		Consolidated Statements of Operations Three Months and Nine Months Ended September 30, 2008 and 2007	4
		Consolidated Statements of Changes in Shareholders’ Equity Nine Months Ended September 30, 2008 and 2007	5
		Consolidated Statements of Cash Flows Nine Months Ended September 30, 2008 and 2007	6
		Notes to Consolidated Financial Statements	8
Item 2 - Management’s Discussion and Analysis of Financial Condition and Results of Operations			12
Item 4T - Controls and Procedures			20
Part II. OTHER INFORMATION
Item 6 - Exhibits			22
	Signatures		23
	Exhibit Index		24

- 2 -

Part I. FINANCIAL INFORMATION

Item 1 – Financial Statements

NEW CENTURY BANCORP, INC.

CONSOLIDATED BALANCE SHEETS

	September 30, 2008 (Unaudited)			December 31, 2007*
	(In thousands, except share and per share data)
ASSETS
Cash and due from banks	$	12,579		$	11,467
Interest-earning deposits in other banks		13,761			748
Federal funds sold		6,658			25,981
Investment securities available for sale, at fair value		74,797			76,509
Loans held for sale		—			3,905
Loans		457,784			442,875
Allowance for loan losses		(7,140	)		(8,314	)
NET LOANS		450,644			434,561
Accrued interest receivable		2,602			3,182
Stock in Federal Home Loan Bank of Atlanta, at cost		1,154			1,087
Foreclosed real estate		669			542
Premises and equipment		11,986			12,038
Bank owned life insurance		7,137			6,935
Goodwill		8,674			8,674
Core deposit intangible		1,045			1,160
Other assets		4,751			4,236
TOTAL ASSETS	$	596,457		$	591,025
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Demand	$	68,317		$	65,623
Savings		29,115			36,361
Money market and NOW		68,021			53,397
Time		336,370			342,741
TOTAL DEPOSITS		501,823			498,122
Short term debt		17,896			16,967
Long term debt		12,372			12,372
Accrued interest payable		643			844
Accrued expenses and other liabilities		2,070			1,547
TOTAL LIABILITIES		534,804			529,852
Shareholders’ Equity
Common stock, $1 par value, 10,000,000 shares authorized; 6,827,649 and 6,730,874 shares issued and outstanding at September 30, 2008 and December 31, 2007, respectively		6,828			6,731
Additional paid-in capital		41,211			40,651
Retained earnings		13,819			13,579
Accumulated other comprehensive income (loss)		(205	)		212
TOTAL SHAREHOLDERS’ EQUITY		61,653			61,173
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	596,457		$	591,025

* Derived from audited consolidated financial statements.

See accompanying notes.

- 3 -

NEW CENTURY BANCORP, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(In thousands, except share and per share data)
INTEREST INCOME
Loans	$	7,633		$	9,363		$	23,474		$	27,710
Federal funds sold and interest-earning deposits in other banks		122			508			564			1,329
Investments		923			728			2,848			2,216
TOTAL INTEREST INCOME		8,678			10,599			26,886			31,255
INTEREST EXPENSE
Money market, NOW and savings deposits		403			635			1,187			1,891
Time deposits		3,437			4,267			11,453			12,180
Short term debt		50			149			241			548
Long term debt		153			238			501			705
TOTAL INTEREST EXPENSE		4,043			5,289			13,382			15,324
NET INTEREST INCOME		4,635			5,310			13,504			15,931
PROVISION FOR LOAN LOSSES		895			2,474			2,141			5,518
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES		3,740			2,836			11,363			10,413
NON-INTEREST INCOME
Fees from presold mortgages		111			153			401			587
Service charges on deposit accounts		467			476			1,387			1,316
Gains on sale of loans held for sale		—			64			—			438
Loss on repurchase of loan participation		—			—			(357	)		—
Loss on write down of OREO		—			—			(139	)		—
Refund of SBA premiums		(125	)		—			(125	)		—
Other fees and income		167			206			550			629
TOTAL NON-INTEREST INCOME		620			899			1,717			2,970
NON-INTEREST EXPENSE
Personnel		2,154			2,323			6,586			6,982
Occupancy and equipment		405			351			1,156			1,026
Marketing and advertising		127			93			300			270
Professional fees		338			363			925			925
Information systems		402			343			1,179			1,032
Other		682			683			2,213			1,931
TOTAL NON-INTEREST EXPENSE		4,108			4,156			12,359			12,166
INCOME (LOSS) BEFORE INCOME TAXES		252			(421	)		721			1,217
INCOME TAXES (BENEFIT)		93			(147	)		248			419
NET INCOME (LOSS)	$	159		$	(274	)	$	473		$	798
NET INCOME (LOSS) PER COMMON SHARE
Basic	$	.02		$	(.04	)	$	.07		$	.12
Diluted	$	.02		$	(.04	)	$	.07		$	.12
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
Basic		6,826,481			6,639,617			6,808,914			6,560,750
Diluted		6,879,919			6,639,617			6,869,419			6,761,640

See accompanying notes.

- 4 -

NEW CENTURY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (Unaudited)

	Common stock			Additional paid-in capital		Retained earnings			Accumulated other comprehensive income (loss)			Total shareholders’ equity
	Shares	Amount
	(Amounts in thousands, except share data)
Balance at December 31, 2006	6,497,022	$	6,497	$	39,177	$	11,785		$	(20	)	$	57,439
Adjustment related to the adoption of FASB Interpretation No. 48	—		—		—		136			—			136
Net income	—		—		—		798			—			798
Other comprehensive income	—		—		—		—			8			8
Exercise of stock options	233,852		234		940		—			—			1,174
Tax benefit from stock option exercises	—		—		297		—			—			297
Stock based compensation	—		—		183		—			—			183
Balance at September 30, 2007	6,730,874	$	6,731	$	40,597	$	12,719		$	(12	)	$	60,035
Balance at December 31, 2007	6,730,874	$	6,731	$	40,651	$	13,579		$	212		$	61,173
Adjustment related to the adoption of EITF 06-4	—		—		—		(233	)		—			(233	)
Net income	—		—		—		473			—			473
Other comprehensive (loss)	—		—		—		—			(417	)		(417	)
Exercise of stock options	96,775		97		392		—			—			489
Tax benefit from stock option exercises	—		—		27		—			—			27
Stock based compensation	—		—		141		—			—			141
Balance at September 30, 2008	6,827,649	$	6,828	$	41,211	$	13,819		$	(205	)	$	61,653

See accompanying notes.

- 5 -

NEW CENTURY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Nine Months Ended September 30,
	2008			2007
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income	$	473		$	798
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses		2,141			5,518
Depreciation and amortization		406			419
Amortization of core deposit intangible		115			—
Stock-based compensation		141			183
Origination of loans held for sale		—			(5,789	)
Proceeds from loans held for sale		—			4,198
Loss on repurchase of loan participation		357			—
Loss on sale of fixed assets		6			—
Gain on sale of loans held for sale		—			(438	)
Increase in cash surrender value of bank owned life insurance		(202	)		(196	)
Loss on sale and write-downs of foreclosed real estate		139			17
Loss on sale of repossessed assets		17			—
Gain on mortgage-backed securities pay-downs and securities sold		(59	)		—
Change in assets and liabilities:
(Increase) decrease in accrued interest receivable		580			(93	)
(Increase) in other assets		(79	)		(2,172	)
Increase (decrease) in accrued expenses and other liabilities		89			(47	)
NET CASH PROVIDED BY OPERATING ACTIVITIES		4,124			2,398
CASH FLOWS FROM INVESTING ACTIVITIES
Redemption (purchase) of FHLB stock		(67	)		340
Purchases of investment securities available for sale		(17,148	)		(11,712	)
Maturities, sales and prepayments of investment securities available for sale		18,293			14,746
Net (increase) in net loans outstanding		(4,036	)		(35,562	)
Repurchase of loan participations		(11,197	)		—
Proceeds from sale of foreclosed real estate		173			35
Proceeds from sale of premises and equipment		18			—
Purchases of premises and equipment		(504	)		(1,471	)
NET CASH USED BY INVESTING ACTIVITIES		(14,468	)		(33,624	)
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits		3,701			40,417
Increase (decrease) in short term debt		929			(3,467	)
Tax benefit from exercise of stock options		27			297
Proceeds from the exercise of stock options		489			1,174
NET CASH PROVIDED BY FINANCING ACTIVITIES		5,146			38,421
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(5,198	)		7,195
CASH AND CASH EQUIVALENTS, BEGINNING		38,196			32,825
CASH AND CASH EQUIVALENTS, ENDING	$	32,998		$	40,020

See accompanying notes.

- 6 -

NEW CENTURY BANCORP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Continued)

	Nine Months Ended September 30,
	2008			2007
	(In thousands)
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest paid	$	13,583		$	15,324
Income taxes paid		77			1,949
Non-cash transactions:
Unrealized gains (losses) on investment securities available for sale, net of tax		(417	)		8
Transfers from loans to foreclosed real estate		634			275
Transfer from loans held for sale to loans		3,905			—

See accompanying notes.

- 7 -

NEW CENTURY BANCORP, INC.

Notes to Consolidated Financial Statements

NOTE A – BASIS OF PRESENTATION

New Century Bancorp, Inc. (the “Company”) is a bank holding company whose principal business activity consists of ownership of New Century Bank (the “Bank”). The Bank is engaged in general commercial and retail banking and operates under the banking laws of North Carolina and the rules and regulations of the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks. The Bank undergoes periodic examinations by those regulatory authorities.

All significant intercompany transactions and balances have been eliminated in consolidation. In management’s opinion, the financial information, which is unaudited, reflects all adjustments (consisting solely of normal recurring adjustments) necessary for a fair presentation of the financial information as of and for the three and nine month periods ended September 30, 2008 and 2007, in conformity with accounting principles generally accepted in the United States of America.

The preparation of consolidated financial statements requires management to make estimates and assumptions that affect reported amounts of assets and liabilities at the date of the financial statements, as well as the amounts of income and expense during the reporting period. Actual results could differ from those estimates. Operating results for the three and nine month periods ended September 30, 2008 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2008.

The organization and business of the Company, accounting policies followed by the Company and other relevant information are contained in the notes to the financial statements filed as part of the Company’s 2007 Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2008. This quarterly report should be read in conjunction with the Annual Report.

NOTE B – PER SHARE RESULTS

Basic net income (loss) per share is computed based upon the weighted average number of shares of common stock outstanding during the period. Diluted net income (loss) per share includes the dilutive effect of stock options outstanding during the period. There were 134,901 anti-dilutive options outstanding as of September 30, 2008 and 104,950 anti-dilutive options outstanding as of September 30, 2007.

	Three Months Ended September 30,		Nine Months Ended September 30,
	2008	2007	2008	2007
Weighted average shares used for basic net income per share	6,826,481	6,639,617	6,808,914	6,560,750
Effect of dilutive stock options	53,438	—	60,505	200,890
Weighted average shares used for diluted net income per share	6,879,919	6,639,617	6,869,419	6,761,640

- 8 -

NEW CENTURY BANCORP, INC.

Notes to Consolidated Financial Statements

NOTE C – COMPREHENSIVE INCOME

A summary of comprehensive income (loss) is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(Amounts in thousands)
Net income (loss)	$	159		$	(274	)	$	473		$	798
Other comprehensive income (loss):
Unrealized gain (loss) on investment securities available for sale		359			634			(678	)		12
Tax effect		(139	)		(244	)		261			(4	)
Total		220			390			(417	)		8
Total comprehensive income	$	379		$	116		$	56		$	806

NOTE D – RECENT ACCOUNTING PRONOUNCEMENTS

The following summarizes recent accounting pronouncements and their expected impact on the Company:

Statement of Financial Accounting Standard (SFAS) No. 159 “The Fair Value Option for Financial Assets and Financial Liabilities”

The provisions of SFAS 159 became effective January 1, 2008 since the Company did not early adopt in February 2007. SFAS 159 generally permits the measurement of selected eligible financial instruments at fair value at specified election dates. Changes in fair value from one period to the next are recognized through the income statement. This election can generally be applied on an instrument by instrument basis. The Company chose not to account for any financial assets or liabilities under the fair value option.

Statement of Financial Accounting Standard (SFAS) No. 157 “Fair Value Measurement”

Effective January 1, 2008, the Company was required to adopt SFAS No. 157, “Fair Value Measurement” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements.

Fair Value Hierarchy

Under SFAS 157, the Company groups assets and liabilities at fair value in three levels, based on the markets in which the assets and liabilities are traded and the reliability of the assumptions used to determine fair value. These levels are:

• Level 1 – Valuation is based upon quoted prices for identical instruments traded in active markets.

• Level 2 – Valuation is based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant assumptions are observable in the market.

- 9 -

NEW CENTURY BANCORP, INC.

Notes to Consolidated Financial Statements

NOTE D – RECENT ACCOUNTING PRONOUNCEMENTS(continued)

• Level 3 – Valuation is generated from model-based techniques that use at least one significant assumption not observable in the market. These unobservable assumptions reflect estimates of assumptions that market participants would use in pricing the asset or liability. Valuation techniques include use of option pricing models, discounted cash flows models and similar techniques.

Following is a description of valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities Available-for-Sale

Investment securities available-for-sale are recorded at fair value on a recurring basis. Fair value measurement is based upon quoted prices, if available. If quoted prices are not available, fair values are measured using independent pricing models or other model-based valuation techniques such as the present value of future cash flows, adjusted for the security’s credit rating, prepayment assumptions and other factors such as credit loss assumptions. Level 1 securities include those traded on an active exchange, such as the New York Stock Exchange, U.S. Treasury securities that are traded by dealers or brokers in active over-the-counter markets and money market funds. Level 2 securities include mortgage-backed securities issued by government sponsored entities, municipal bonds and corporate debt securities. Securities classified as Level 3 include asset-backed securities in less liquid markets.

Loans

The Company does not record loans at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired, management measures impairment in accordance with SFAS 114, “Accounting by Creditors for Impairment of a Loan,” (SFAS 114). The fair value of impaired loans is estimated using one of several methods, including collateral value, market value of similar debt, enterprise value, liquidation value and discounted cash flows. Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At September 30, 2008, substantially all of the total impaired loans were evaluated based on the fair value of the collateral. In accordance with SFAS 157, impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the impaired loan as nonrecurring Level 2. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the impaired loan as nonrecurring Level 3.

- 10 -

NEW CENTURY BANCORP, INC.

Notes to Consolidated Financial Statements

The following table summarizes quantitative disclosures about the fair value measurement for each category of assets carried at fair value as of September 30, 2008 (dollars in thousands):

Description	September 30, 2008		Quoted Prices in Active Markets for Identical Assets (Level 1)	Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Available for sale securities	$	74,797	—	$	74,797	$	—
Impaired loans	$	1,640	—	$	1,352	$	288

As of September 30, 2008, the Bank identified $9.1 million in impaired loans, of which $3.4 million required a specific allowance of $1.7 million.

Emerging Issues Task Force (EITF) No. 06-4 “Accounting for Deferred Compensation and Postretirement benefit Aspects of Endorsement Split-Dollar Life Insurance Arrangements”

In September 2006, the FASB ratified the consensuses reached by the FASB’s Emerging Issues Task Force (“EITF”) relating to EITF 06-4. EITF 06-4 states that an employer accounting for endorsement split-dollar life insurance arrangements that provide a benefit to an employee that extends to postretirement periods should recognize a liability for future benefits in accordance with SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”, or Accounting Principles Board (“APB”) Opinion No. 12, “Omnibus Opinion—1967”. The Company adopted EITF 06-4 on January 1, 2008, and in connection therewith recorded a liability of $233,000 as a reduction of retained earnings. Subsequent increases in this liability will be reflected as an expense in determining operating results.

Statement of Financial Accounting Standard (SFAS) No. 161 “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133”

In March 2008, the FASB issued SFAS No. 161. SFAS 161 applies to all derivative instruments and related hedged items accounted for under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities,” (SFAS 133). The Company does not currently utilize derivative instruments for hedging activities and therefore does not expect the adoption of the provisions of SFAS 161 to have a material effect on the Corporation’s financial condition and results of operations.

- 11 -

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

Management’s discussion and analysis is intended to assist readers in the understanding and evaluation of the financial condition and results of operations of New Century Bancorp, Inc. (the “Company”). This report contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 relating to, without limitation, our future economic performance, plans and objectives for future operations, and projections of revenues and other financial items that are based on our beliefs, as well as assumptions made by and information currently available to us. The words “may,” “will,” “anticipate,” “should,” “would,” “believe,” “contemplate,” “could,” “project,” “predict,” “expect,” “estimate,” “continue,” and “intend,” as well as other similar words and expressions of the future, are intended to identify forward-looking statements. Our actual results, performance or achievements may differ materially from the results expressed or implied by our forward-looking statements. Factors that could influence actual results, performance or achievements include changes in national, regional and local market conditions, legislative and regulatory conditions, and the interest rate environment.

Recent Industry Developments

In response to the challenges the financial services sector, several regulatory and governmental actions have recently been announced including:

• The Emergency Economic Stabilization Act, approved by Congress and signed by President Bush on October 3, 2008, which, among other provisions, allowed the U.S. Treasury to purchase troubled assets from banks, authorized the Securities and Exchange Commission to suspend the application of mark-to-market accounting, and temporarily raised the basic limit on FDIC deposit insurance from $100,000 to $250,000; the legislation contemplates a return to the $100,000 limit on December 31, 2009.

• On October 7, 2008, the FDIC approved a plan to increase the rates banks pay for deposit insurance;

• On October 14, 2008, the U.S. Treasury announced the creation of a new program, the TARP Capital Purchase Program that encourages and allows financial institutions to build capital through the sale of senior preferred shares to the U.S. Treasury on terms that are not negotiable;

• On October 14, 2008 the FDIC announced the creation of the Temporary Liquidity Guarantee Program (TLPG), which seeks to strengthen confidence and encourage liquidity in the banking system. The TLGP has two primary components that are available to financial institutions:

• Guarantee of newly-issued senior unsecured debt; the guarantee would apply to new debt issued on or before June 30, 2009 and would provide protection until June 30, 2012; issuers electing to participate would pay a 75 basis point fee for the guarantee; and

• Unlimited deposit insurance for non-interest deposit transaction accounts; financial institutions electing to participate will pay a 10 basis point premium on the incremental increase in insured deposits, in addition to the insurance premiums for standard insurance;

The Company evaluated the possibility of participation in the TARP Capital Purchase Program, but has determined that participation would not be in the best interests of shareholders. The Company intends to participate in the TLGP’s enhanced deposit insurance program and will not opt out of the TLPG guarantee of unsecured debt, although there are no current plans to issue unsecured debt. The Company anticipates an increase in 2009 of FDIC premium expenses due to the increases in the deposit insurance coverage recently enacted.

Although it is likely that further regulatory actions may arise as the Federal government attempts to address the economic situation, management is not aware of any further recommendations by regulatory authorities that, if implemented would have or would be reasonably likely to have a material effect on liquidity, capital ratios, or results of operations.

- 12 -

Overview

The Company is a commercial bank holding company that was organized on September 19, 2003 and has one banking subsidiary, New Century Bank, which was acquired as part of the Bank’s holding company reorganization (referred to as the “Bank”). At the close of business on July 13, 2006, the Company completed an acquisition of Progressive State Bank (“Progressive”), a North Carolina-chartered bank headquartered in Lumberton, NC. In September 2004, the Company formed New Century Statutory Trust I, which issued trust preferred securities to provide additional capital for general corporate purposes, including the current and future expansion of the Bank. New Century Statutory Trust I is not a consolidated subsidiary of the Company. The Company’s only business activity is the ownership of the Bank and New Century Statutory Trust I. This discussion focuses primarily on the financial condition and operating results of the Bank.

The Bank’s lending activities are oriented to the consumer/retail customer as well as to the small-to medium-sized businesses located in Harnett, Hoke, Cumberland, Johnston, Robeson, Sampson, and Wayne counties. The Bank offers the standard complement of commercial, consumer, and mortgage lending products, as well as the ability to structure products to fit specialized needs. The deposit services offered by the Bank include small business and personal checking, savings accounts and certificates of deposit. The Bank concentrates on customer relationships in building its customer deposit base and competes aggressively in the area of transaction accounts.

In the fourth quarter of 2007, the Company consolidated its branch locations at 308 North Chestnut Street in Lumberton and 7482 Albert Street in Dublin into its location at 4400 Fayetteville Road in Lumberton. Also, in the fourth quarter of 2007, the Board of Directors of New Century Bancorp, as well as the boards of directors of New Century Bank and New Century Bank South, approved the merger of New Century Bank South into New Century Bank. This transaction was approved by the Federal Deposit Insurance Corporation and the North Carolina Commissioner of Banks and completed on March 28, 2008.

Comparison of Financial Condition at

September 30, 2008 and December 31, 2007

During the first nine months of 2008, total assets grew by $5.4 million to $596.5 million as of September 30, 2008. Earning assets at September 30, 2008 totaled $547.9 million and consisted of $450.6 million in net loans, $74.8 million in investment securities, $20.4 million in overnight investments and interest-bearing deposits in other banks and $2.1 million in non-marketable equity securities. Total deposits and shareholders’ equity at the end of the third quarter were $501.8 million and $61.7 million, respectively.

Since the end of 2007, gross loans have increased by $14.9 million to $457.8 million as of September 30, 2008. Gross loans consisted of $88.7 million in commercial and industrial loans, $164.9 million in commercial real estate loans, $15.5 million in multi-family residential loans, $14.7 million in consumer loans, $110.3 million in residential real estate, and $63.7 million in construction loans. During the first quarter of 2008, the Company decided to not to sell the $3.9 million in loans held for sale as of December 31, 2007, and therefore transferred them to the held for investment portfolio and the Company also repurchased $11.2 million in participations that had previously been sold to another bank.

During 2007, prior to the merger of New Century Bank and New Century Bank South, the Company’s management identified certain underwriting and credit administration weaknesses that existed at New Century Bank. Since then, management and the Board have taken actions to identify problem loans and

- 13 -

improve internal controls in the lending and credit administration areas. These actions included conducting extensive loan risk rating reviews; addressing problem loans and enhancing the credit administration department; improving loan documentation, policies and procedures; and addressing known violations of rules, regulations and policies.

At September 30, 2008, the Company had nearly $1.5 million in loans that were 30-89 days past due. This represented .34% of gross loans outstanding on that date. This is a decrease from December 31, 2007 when there were $5.8 million in loans that were 30-89 days past due, or 1.31% of gross loans outstanding. The decrease in past dues is due largely to a migration of loans from the 30-89 day past due category into the non-accrual status. Non-accrual loans increased $3.5 million during the first nine months of 2008 to $9.1 million as of September 30, 2008.

The percentage of non-performing loans (nonaccrual loans, restructured loans and loans that were 90 days or more past due but still in accruing status) to total loans excluding loans held for sale increased 87 basis points from 1.13% at December 31, 2007 to 2.00% at September 30, 2008. The Company had no loans that were considered troubled debt restructured loans.

There were $9.1 million of loans that were considered to be impaired due to management’s assessment of the loans current asset valuations at September 30, 2008 of which $3.4 million required a specific reserve of $1.7 million. The $12.1 million classified as impaired at December 31, 2007 required a specific reserve $2.3 million. The allowance for loan losses was $7.1 million at September 30, 2008 or 1.56% of gross loans outstanding. This is a decrease of 32 basis points from the 1.88% of gross loans, excluding loans held for sale, at December 31, 2007. The allowance for loan losses at September 30, 2008 represented 78.46% of impaired loans. The decrease in the allowance resulted from net charge-offs of $3.3 million during the first nine months of 2008, partially offset by provisions for loan losses of $2.1 million. Most of the loans charged-off in 2008 were classified as impaired at December 31, 2007 and had been specifically reserved for as part of the allowance for loan loss calculation. It is management’s assessment that the allowance for loan losses as of September 30, 2008 is appropriate in light of the risk inherent within the Company’s loan portfolio. The following is a roll forward of the Company’s allowance for loan losses as of September 30, 2008 and 2007:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2008			2007			2008			2007
	(Amounts in thousands)
Allowance for loan losses at beginning of period	$	6,483		$	6,682		$	8,314		$	7,496
Provision for loan losses		895			2,474			2,141			5,518
Charge-offs		(489	)		(813	)		(3,816	)		(4,796	)
Recoveries		251			293			501			418
Allowance for loan losses at end of period	$	7,140		$	8,836		$	7,140		$	8,636

Management strives to maintain a position of liquidity sufficient to fund future loan demand and to satisfy fluctuations in deposit levels. This is achieved primarily in the form of federal funds sold on an overnight basis and an investment portfolio that includes a laddered maturity schedule. At September 30, 2008, federal funds sold were $6.7 million, a decrease of $19.3 million from the $26.0 million at December 31, 2007, of which $13.0 million was transferred to the FHLB overnight interest bearing account, during the third quarter of 2008. The Company also holds an investment of $1.2 million in the form of Federal Home Loan Bank stock with an annualized yield of 2.89%. Interest-earning deposits in other banks increased from $748,000 at December 31, 2007 to $13.8 million as of September 30, 2008 as $13.0 million was placed in the Bank’s FHLB account from federal funds sold. The Company’s investment securities at September 30, 2008 were $74.8 million, a decrease of $1.7 million from December 31, 2007. The investment portfolio as of September 30, 2008 consisted of $28.9 million in government agency debt securities, $39.6 million in mortgage-backed securities and $6.7 million in municipal securities. The unrealized loss on these securities was $330,000.

- 14 -

The Company also has an investment in bank owned life insurance of $7.1 million, which increased $202,000 from December 31, 2007 due to an increase in cash surrender value. Since the income on this investment is included in non-interest income, the asset is not included in the Company’s calculation of earning assets.

At September 30, 2008, non-earning assets were $42.3 million, which reflects an increase of $1.0 million from the $41.3 million as of December 31, 2007. Non-earning assets as of September 30, 2008 included $12.6 million in cash and due from banks, bank premises and equipment of $12.0 million, goodwill of $8.7 million, core deposit intangible of $1.0 million, accrued interest receivable of $2.6 million, and other assets totaling $6.4 million. As indicated previously, goodwill amounted to $8.7 million at June 30, 2008. Under purchase accounting, goodwill may become impaired under certain conditions. At June 30, 2008, management performed an annual expanded review of the existing goodwill value to test for impairment. Based on this analysis, management concluded that no impairment to goodwill existed at June 30, 2008. A follow-up review of the value of existing goodwill will be performed at December 31, 2008.

Total deposits at September 30, 2008 were $501.8 million and consisted of $68.3 million in non-interest-bearing demand deposits, $68.0 million in money market and NOW accounts, $29.1 million in savings accounts, and $336.4 million in time deposits. Total deposits grew by $3.7 million from $498.1 million as of December 31, 2007. Brokered deposits totaled $1.6 million or .32% of quarter-end deposits.

As of September 30, 2008, the Company had $17.9 million in short-term debt and $12.4 million in long-term debt. Short-term debt consisted of repurchase agreements with local customers. Long-term debt consisted of $12.4 million of junior subordinated debentures that were issued in September 2004. The proceeds of the junior subordinated debentures have provided capital for the expansion of the Bank.

Total shareholders’ equity at September 30, 2008 was $61.7 million, an increase of $480,000 from $61.2 million as of December 31, 2007. Other comprehensive income relating to available for sale securities decreased $417,000 and shareholders’ equity increased $489,000 from the exercise of stock options. As a result of the initial adoption of EITF 06-4,the Company recorded a decrease in opening retained earnings of $233,000. Other changes in shareholders’ equity included $141,000 in stock-based compensation with a $27,000 tax benefit from stock options that were exercised, and net income of $473,000.

Comparison of Results of Operations for the

Three months ended September 30, 2008 and 2007

General. During the third quarter of 2008, the Company had a net income of approximately $159,000 as compared with a loss of approximately $274,000 for the same quarter in 2007. Net income per share for the quarter was $.02 per share, basic and diluted, compared with a net loss per share of $(.04) per share, basic and diluted, for the third quarter of 2007. Third quarter 2008 results were impacted by a lower provision for loan losses of $895,000, compared to $2.5 million for the same period in 2007. The decrease in the specific reserves established on impaired loans from $2.3 million at December 31, 2007 to $1.7 million at September 30, 2008 was due to management’s continual review and reassessment of the valuations on impaired loans combined with net charge-offs of $3.0 million for the nine months ended September 30, 2008 while at the same time providing adequate loss coverage which also resulted in the percentage decrease in the overall allowance to 1.56% at September 30, 2008 from 1.88% at December 31, 2007. The Company also experienced a decrease in net interest margin resulting from its asset-sensitive position coupled with the recent reductions in interest rates by the Federal Reserve. Additionally, there was a $125,000 refund of SBA premiums during the third quarter of 2008.

- 15 -

Net Interest Income. Net interest income decreased by $675,000 to $4.6 million for the third quarter of 2008. The Company’s total interest income was affected by a reduction in the yield on interest-earning assets, partially offset by growth in those assets. Average total interest-earning assets were $551.4 million in the third quarter of 2008 compared with $544.9 million during the same period in 2007 and the yield on those assets decreased 142 basis points from 7.66% to 6.24%.

The Company’s average interest-bearing liabilities grew by $7.1 million to $461.4 million for the quarter ended September 30, 2008 from $454.3 million for the same period one year earlier and the cost of those funds decreased from 4.62% to 3.48% or 114 basis points. During the third quarter of 2008, the Company’s net interest margin was 3.34% and net interest spread was 2.77%. For the quarter ended September 30, 2007, net interest margin was 3.81% and net interest spread was 3.04%.

Provision for Loan Losses.Provisions for loan losses are charged to income to bring the allowance for loan losses to a level deemed appropriate by management. In evaluating the allowance for loan losses, management considers factors that include growth, composition and industry diversification of the portfolio, historical loan loss experience, current delinquency levels, adverse situations that may affect a borrower’s ability to repay, estimated value of any underlying collateral, prevailing economic conditions and other relevant factors. The Company recorded an $895,000 provision for loan losses in the third quarter of 2008, representing a decrease of $1.6 million from the $2.5 million provision made in the same period of 2007. In both the third quarter of 2008 and 2007, the Company had a high level of net charge-offs, $238,000 in 2008 as compared to $520,000 for the same period in 2007.

Non-Interest Income. Non-interest income for the quarter ended September 30, 2008 was $620,000, a decrease of $279,000 from the third quarter of 2007. The primary reasons for the decline in non-interest income compared to the third quarter of last year were the $125,000 refund of SBA premiums, received for loans previously sold that went into early default, and lower fees earned from pre-sold mortgages which declined by $42,000 to $111,000. Also, in the third quarter of 2007, the Company had $64,000 in gains on the sale of loans available for sale, as compared to no gains for the same period in 2008.

Non-Interest Expenses. Non-interest expenses decreased by $48,000 to $4.1 million for the quarter ended September 30, 2008, from $4.2 million for the same period in 2007. The following are highlights of the significant changes in non-interest expenses from the third quarter of 2007 to the third quarter of 2008:

• Personnel expenses decreased to $2.2 million for the quarter ended September 30, 2008 as compared to $2.3 million in the same period in 2007.

• Professional service expenses decreased from $363,000 in 2007 to $338,000 in 2008, due to a decrease in outsourced services and other consulting fees that were incurred in 2007 to address the aforementioned loan underwriting matters.

• Other non-interest expenses were impacted by FDIC insurance expense which was $143,000 for the third quarter of 2008 compared to $77,000 for the same period in 2007.

Provision for Income Taxes. The Company’s effective tax rate was 36.9% and (34.9%) for the quarters ended September 30, 2008 and 2007, respectively. The effective tax rate in the third quarter of 2007 was impacted by the net loss during the period.

Comparison of Results of Operations for the

Nine months ended September 30, 2008 and 2007

General. During the first nine months of 2008, the Company realized a net profit of approximately $473,000 as compared with net income of approximately $798,000 for the same period in 2007. Net income per share for first nine months of 2008 was $.07 per share, basic and diluted, compared with net

- 16 -

income per share of $.12 per share, basic and diluted, for the first three quarters of 2007. Nine month 2008 results were impacted by a lower provision for loan losses of $2.1 million, compared to $5.5 million for the same period in 2007. The Company also experienced a decrease in net interest margin resulting from its asset-sensitive position coupled with the recent reductions in interest rates by the Federal Reserve. Also, there was a nonrecurring loss of $357,000 related to the purchase of loans that had previously been participated to another bank. This nonrecurring item is included in non-interest income. Additionally, the Bank recorded losses of $139,000 on write downs of foreclosed real estate and refunded $125,000 in SBA premiums as previously discussed.

Net Interest Income. Net interest income decreased by nearly $2.4 million to $13.5 million for the first three quarters of 2008. The Company’s total interest income was affected by a reduction in the yield on interest-earning assets, partially offset by growth in those assets. Average total interest-earning assets were $552.2 million in the nine months of 2008 compared with $536.3 million during the same period in 2007 and the yield on those assets decreased 128 basis points from 7.77% to 6.49%.

The Company’s average interest-bearing liabilities grew by $18.9 million to $465.6 million for the three quarters ended September 30, 2008 from $446.7 million for the same period one year earlier and the cost of those funds decreased from 4.59% to 3.87% or 72 basis points. During the first three quarters of 2008, the Company’s net interest margin was 3.26% and net interest spread was 2.66%. For the three quarters ended September 30, 2007, net interest margin was 3.95% and net interest spread was 3.19%.

Provision for Loan Losses.The Company recorded a $2.1 million provision for loan losses in the first three quarters of 2008, representing a decrease of $3.4 million from the $5.5 million provision made in the same period of 2007. In both 2008 and 2007, the Company had a high level of net charge-offs, $3.3 million in the first nine months of 2008 as compared to $4.4 million for the same period in 2007.

Non-Interest Income. Non-interest income for the three quarters ended September 30, 2008 was $1.7 million, a decrease of $1.3 million from the same period of 2007. The primary reasons for the decline in non-interest income compared to the same three quarters of last year were the non-recurring loss of $357,000 that the Company recorded related to the purchase of loans that had previously been participated to another bank, loss on foreclosed real estate write downs of $139,000, a decrease of $186,000 in fees from pre-sold mortgages, a reduction in gains on sale of loans held for sale of $438,000 and a refund of $125,000 in SBA premiums, as previously discussed. These decreases were partially offset by increases in deposit service fees and charges of $71,000.

Non-Interest Expenses. Non-interest expenses increased by $193,000 to $12.4 million for the three quarters ended September 30, 2008, from $12.2 million for the same period in 2007. The following are highlights of the significant changes in non-interest expenses from the first three quarters of 2007 to the first three quarters of 2008:

• Personnel expenses declined from $7.0 million to $6.6 million, in part due to the branch consolidation that took place in the fourth quarter of 2007 and lower compensation for executive management.

• Occupancy and equipment expense increased $130,000 for the first nine months of 2008 as compared to the same period in 2007.

• Information systems expense increased $147,000 in the first three quarters of 2008 to $1.2 million as compared to $1.0 million for the same period in 2007. Approximately $37,000 of this increase related to a system conversion.

• Other non-interest expense increased to $2.2 million for the nine months ended September 30, 2008, compared to $1.9 million for the same period in 2007, an increase of $282,000. This increase is primarily due to a $194,000 increase in FDIC insurance and other smaller increases in various other expenses.

- 17 -

Provision for Income Taxes. The Company’s effective tax rate was 34.4% and 34.4% for the three quarters ended September 30, 2008 and 2007, respectively.

Liquidity

The Company’s liquidity is a measure of its ability to fund loans, withdrawals and maturities of deposits, and other cash outflows in a cost effective manner. The principal sources of liquidity are deposits, scheduled payments and prepayments of loan principal, maturities of investment securities, access to liquid deposits, and funds provided by operations. While scheduled loan payments and maturing investments are relatively predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. Liquid assets (consisting of cash and due from banks, interest-earning deposits with other banks, federal funds sold and investment securities classified as available for sale) comprised 18.07% of total assets at September 30, 2008.

The Company has been a net seller of federal funds since its inception and strives to maintain a position of liquidity sufficient to fund future loan demand and to satisfy fluctuations in deposit levels. Should the need arise; the Company would have the capability to sell securities classified as available for sale or to borrow funds as necessary. The Company has established credit lines with other financial institutions to purchase up to $12.8 million in federal funds. Also, as a member of the Federal Home Loan Bank of Atlanta (FHLB), the Company may obtain advances of up to 10% of total assets, subject to available collateral. A floating lien of $16.2 million of qualifying loans is pledged to the FHLB to secure borrowings. Another source of short-term borrowings is securities sold under agreements to repurchase. At September 30, 2008, total borrowings consisted of securities sold under agreements to repurchase of $17.9 million and junior subordinated debentures of $12.4 million.

Total deposits were $501.8 million at September 30, 2008. Time deposits, which are the only deposit accounts that have stated maturity dates, are generally considered to be rate sensitive. Time deposits represented 67.0% of total deposits at September 30, 2008. Time deposits of $100,000 or more represented 29.7% of the Company’s total deposits at September 30, 2008. At quarter end, the Company had $1.6 million in brokered time deposits. Management believes most other time deposits are relationship-oriented. While the Bank will need to pay competitive rates to retain these deposits at their maturities, there are other subjective factors that will determine their continued retention. Based upon prior experience, the Company anticipates that a substantial portion of outstanding certificates of deposit will renew upon maturity.

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

Capital Resources

A significant measure of the strength of a financial institution is its capital base. Federal regulations have classified and defined capital into the following components: (1) Tier 1 capital, which includes common shareholders’ equity and qualifying preferred equity, and (2) Tier 2 capital, which includes a portion of the allowance for loan losses, certain qualifying long-term debt and preferred stock which does not qualify as Tier 1 capital. Minimum capital levels are regulated by risk-based capital adequacy guidelines, which require a financial institution to maintain capital as a percent of its assets, and certain off-balance sheet items adjusted for predefined credit risk factors (risk-adjusted assets). A financial institution is required to maintain, at a minimum, Tier 1 capital as a percentage of risk-adjusted assets of 4.0% and combined Tier 1 and Tier 2 capital as a percentage of risk-adjusted assets of 8.0%. In addition to the risk-based guidelines, federal regulations require that we maintain a minimum leverage ratio (Tier 1 capital as a percentage of tangible assets) of 4.0%. The Company’s equity to assets ratio was 10.3% at September 30, 2008. As the following table indicates, at September 30, 2008, the Company and its bank subsidiary exceeded regulatory capital requirements.

- 18 -

	At September 30, 2008
New Century Bancorp, Inc.	Actual Ratio		Minimum Requirement		Well-Capitalized Requirement
Total risk-based capital ratio	14.72	%	8.00	%	10.00	%
Tier 1 risk-based capital ratio	13.47	%	4.00	%	6.00	%
Leverage ratio	10.96	%	4.00	%	5.00	%
	At September 30, 2008
New Century Bank	Actual Ratio		Minimum Requirement		Well-Capitalized Requirement
Total risk-based capital ratio	13.80	%	8.00	%	10.00	%
Tier 1 risk-based capital ratio	12.55	%	4.00	%	6.00	%
Leverage ratio	10.21	%	4.00	%	5.00	%

During 2004, the Company issued $12.4 million of junior subordinated debentures to a newly formed subsidiary, New Century Statutory Trust I, which in turn issued $12.0 million of trust preferred securities. The proceeds from the sale of the trust preferred securities provided additional capital for the growth and expansion of the Bank. Under the current applicable regulatory guidelines, all of the trust preferred securities qualify as Tier 1 capital as of September 30, 2008. Management expects that the Company and the Bank will remain “well-capitalized” for regulatory purposes, although there can be no assurance that additional capital will not be required in the near future due to greater-than-expected growth, or otherwise.

REGULATORY MATTERS

Effective December 27, 2007, the Board of Directors of the Bank entered into a Memorandum of Understanding with the FDIC and the North Carolina Commissioner of Banks. The Memorandum of Understanding represents an agreement between the Board of Directors of the Bank, the Regional Director of the FDIC’s Atlanta Regional Office and the North Carolina Commissioner of Banks and requires that the Bank’s management take certain actions to improve the Bank’s lending function. Specifically, the Memorandum of Understanding required the Bank to address problem loans by charging off certain classified assets within 30 days and also required that the Bank accomplish the following within a 90 day time frame; formulate a proposal for the reduction or improvement of any classified lines of credit, conduct a reevaluation of the performance and abilities of the bank’s loan officers and credit administration staff; improve loan documentation, policies and procedures; and correct known violations of rules, regulations and policies. The Memorandum of Understanding also required management to file various reports with the FDIC and the North Carolina Commissioner of Banks within 90 days, including a budget, earnings forecast and capital plan, with quarterly progress reports thereafter.

To date, the Bank has filed all reports required by the Memorandum of Understanding and has taken all actions required to be taken, with the exception of (i) two credits that have not been charged off due to improved collateral positions and/or credit risk profiles; and (ii) the correction of certain violations, which the Bank is actively addressing.

Specific additional actions taken have included the hiring of a new Chief Credit Officer, who started in 2008, with substantial experience; evaluation and reorganization of lending and credit administration personnel; assessment and revision of lending and credit administration policies and procedures; and more effective processes for identification and valuation of problem credits. In addition, the consolidation of the Company’s wholly owned banking subsidiaries, New Century Bank and New Century Bank South, was accomplished pursuant to a merger on March 28, 2008.

- 19 -

Item 4T. Controls and Procedures

(a)Disclosure Controls and Procedures.As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) pursuant to Exchange Act Rule 13a-15(b). Based upon that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that, due to the material weakness disclosed in the Company’s 2007 annual report on Form 10-K, the Company’s disclosure controls and procedures are not effective (1) to provide reasonable assurance that information required to be disclosed by the Company in the reports filed or submitted by it under the Securities Exchange Act was recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) to provide reasonable assurance that information required to be disclosed by the Company in such reports is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate to allow for timely decisions regarding required disclosure. Management is addressing the material weakness disclosed in the Company’s 2007 annual report on Form 10-K and is in the process of implementing new controls designed to remediate this material weakness.

(b)Changes in internal control over financial reporting.Management of the Company has evaluated, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, changes in the Company’s internal controls over financial reporting (as defined in Rule 13a–15(f) and 15d–15(f) of the Exchange Act) during the third quarter of 2008. In connection with such evaluation, the Company has determined that, with the exception of the remedial measures undertaken to address the material weakness disclosed in the Company’s 2007 annual report on Form 10-K, there have been no changes in internal control over financial reporting during the third quarter that have materially affected or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

- 20 -

Part II. OTHER INFORMATION

Item 5. Other Information

On November 13, 2008, the Company’s Board of Directors determined that participation in the Treasury Department Capital Purchase Program would not be in the best interests of the Company’s shareholders. As a result, the Company will not hold a special meeting of shareholders in December to vote on a proposal to authorize the issuance of preferred stock.

- 21 -

Item 6. Exhibits

Exhibit Number	Description of Exhibit
3.1	Articles of Incorporation of Registrant*
3.2	Bylaws of Registrant*
4	Form of Stock Certificate*
10.1	2000 Incentive Stock Option Plan**
10.2	2000 Nonqualified Stock Option Plan for Directors**
10.3	Employment Agreement of John Q. Shaw*
10.4	Employment Agreement of Lisa F. Campbell*
10.5	Salary Continuation Agreement with John Q. Shaw*
10.6	2004 Incentive Stock Option Plan**
10.7	Employment Agreement of William L. Hedgepeth II***
10.8	Employment Agreement of J. Daniel Fisher***
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes Oxley Act (Filed herewith)
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes Oxley Act (Filed herewith)
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes Oxley Act (Filed herewith)
32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes Oxley Act (Filed herewith)

* Incorporated by reference from the Registrant’s Annual Report on Form 10-KSB, filed with the Securities and Exchange Commission on March 30, 2004.

** Incorporated by reference from Registrant’s Registration Statement on Form S-8 (Registration No. 333-117476), filed with the Securities and Exchange Commission on July 19, 2004.

*** Incorporated by reference from Registrant’s Annual Report on Form 10-K, filed with the Securities and Exchange Commission on March 31, 2008.

- 22 -

SIGNATURES

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

	NEW CENTURY BANCORP, INC.
Date: November 14, 2008	By:	/s/ William L. Hedgepeth II
		William L. Hedgepeth II
		President and Chief Executive Officer
Date: November 14, 2008	By:	/s/ Lisa F. Campbell
		Lisa F. Campbell
		Executive Vice President and Chief Financial Officer and Chief Operating Officer

- 23 -

EXHIBIT INDEX

Exhibit Number	Description of Exhibit
3.1	Articles of Incorporation of Registrant*
3.2	Bylaws of Registrant*
4	Form of Stock Certificate*
10.1	2000 Incentive Stock Option Plan*
10.2	2000 Nonqualified Stock Option Plan for Directors*
10.3	Employment Agreement of John Q. Shaw*
10.4	Employment Agreement of Lisa F. Campbell*
10.5	Salary Continuation Agreement with John Q. Shaw*
10.6	2004 Incentive Stock Option Plan*
10.7	Employment Agreement of William L. Hedgepeth II*
10.8	Employment Agreement of J. Daniel Fisher*
31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act (Filed herewith)
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act (Filed herewith)
32.1	Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act (Filed herewith)
32.2	Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act (Filed herewith)

* Incorporated by reference

- 24 -