UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

                   QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                  15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

                  FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 2003

                             Commission File Number
                                    000-28037

                            FIRST SOUTH BANCORP, INC.
                      (Exact Name of Small Business Issuer)


            SOUTH CAROLINA                          57-1086258
        (State of Incorporation)         (IRS Employer Identification number)

                       1450 John B. White, Sr., Boulevard
                        Spartanburg, South Carolina 29306
                     (Address of Principal Executive Office)

                                 (864) 595-0455
                            (Bank's Telephone Number)




Check  whether the issuer (1) has filed all reports to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for shorter  period that
the Bank was  required to file such  reports),  and (2) has been subject to such
filing requirements for the past 90 days. YES [X] N0 [ ]


State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practical date:  Common Stock, no par value,  921,380
shares outstanding on November 7, 2003.

Transitional Small Business Disclosure Format (Check One) YES [ ] NO [X]









<PAGE>




                            FIRST SOUTH BANCORP, INC.

                                   FORM 10-QSB

                                      INDEX


PART I - FINANCIAL INFORMATION                                              Page

         Item 1.  Financial Statements

                  Balance Sheet ...........................................    3

                  Statement of Operations .................................    4

                  Statement of Comprehensive Income .......................    5

                  Statement of Cash Flows .................................    6

                  Statement of Changes in Shareholders' Equity ............    7

                  Notes to Unaudited Statements ........................... 8-10


         Item 2.  Management's Discussion and Analysis ....................11-21

         Item 3.  Controls and Procedures .................................   21


Part II - OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K ........................   22


SIGNATURES ................................................................   23














                                       2
<PAGE>



                         PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets
                      (amounts in thousands, except shares)

<TABLE>
<CAPTION>
                                                         (Unaudited)
                                                           Sept. 30,    Dec. 31,
                                                             2003         2002
                                                             ----         ----
Assets
<S>                                                      <C>          <C>
Cash & due from banks ................................   $   7,474    $   4,192
Due from banks - interest bearing ....................       7,300          100
Investment securities:
         Securities held to maturity .................       2,365        2,969
         Securities available for sale ...............      11,889       14,255

Loans ................................................     208,728      158,861
      Less, allowance for loan losses ................      (2,400)      (1,750)
Loans - net ..........................................     206,328      157,111
Property & equipment, net ............................       5,116        2,812
Other assets .........................................       3,772        3,610
Total assets .........................................   $ 244,244    $ 185,049

Liabilities
Deposits: Noninterest-bearing ........................   $  17,922    $  14,487
             Interest-bearing ........................     194,366      141,163
                  Total deposits .....................     212,288      155,650

Securities sold under repurchase agreements ..........       3,873        3,230
Other borrowed funds .................................      10,000       10,000
Demand notes issued to the U.S. Treasury .............         124          454
Other liabilities ....................................       2,204        1,365
                   Total liabilities .................     228,489      170,699

Shareholders' equity
Common stock - no par value; 20,000,000 authorized,
Outstanding 921,380 and 920,780, respectively
Additional paid-in capital ...........................      11,152       11,145
Undivided profits / (loss) ...........................       4,560        3,121
Accumulated other comprehensive income/(loss) ........          43           84
           Total shareholders' equity ................      15,755       14,350

           Total liabilities and shareholders' equity    $ 244,244    $ 185,049
</TABLE>




                                       3
<PAGE>

                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY

                             Statement of Operations

<TABLE>
<CAPTION>
                                                                                                  (Unaudited)
                                                                                          Period ended September 30,
                                                                                          --------------------------
                                                                                Three Months                      Nine Months
                                                                                ------------                      -----------
                                                                            2003            2002             2003             2002
                                                                            ----            ----             ----             ----
                                                                                 (amounts in thousands, except per share)
Interest income
<S>                                                                      <C>              <C>              <C>              <C>
         Loans, including fees .................................         $ 3,152          $ 2,375          $ 8,887          $ 6,908
         Investment securities .................................             125              210              402              562
         Other investments .....................................               9               35               49              113
                                                                         -------          -------          -------          -------
         Total interest income .................................           3,286            2,620            9,338            7,583

Interest expense
         Deposits and borrowings ...............................           1,131            1,072            3,264            3,278

Net interest income ............................................           2,155            1,548            6,074            4,305
         Provision for loan losses .............................            (213)            (152)            (731)            (442)
Net interest income after provision ............................           1,942            1,396            5,343            3,863

Other income
         Service charges on deposit accounts ...................              88               60              245              178
         Other income ..........................................             453              156              745              502
                                                                         -------          -------          -------          -------
         Total other income ....................................             541              216              990              680

Other expenses
         Salaries and benefits .................................             884              607            2,325            1,749
         Occupancy and equipment ...............................             188              117              454              366
         Other expense .........................................             564              251            1,303              660
                                                                         -------          -------          -------          -------
         Total other expense ...................................           1,636              975            4,082            2,775

Income before income taxes .....................................             847              637            2,251            1,768
         Provision for income taxes ............................             305              212              811              636
                                                                         -------          -------          -------          -------
Net income .....................................................         $   542          $   425          $ 1,440          $ 1,132

Basic per share earnings .......................................         $   .59          $   .46          $  1.56          $  1.23
Diluted per share earnings .....................................         $   .56          $   .44          $  1.49          $  1.18

</TABLE>











                                       4
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                        Statement of Comprehensive Income
                             (amounts in thousands)

                                                                 (Unaudited)
                                                              Nine Months Ended
                                                                September 30
                                                                ------------
                                                             2003           2002
                                                             ----           ----


Net Income .........................................      $ 1,440       $ 1,132

Other comprehensive income (loss):

Change in unrealized holding gains &
    losses on available for sale securities ........          (67)           16

Income tax (expense) benefit on other
                comprehensive income (loss) ........           25            (6)
                                                          -------       -------
Total other comprehensive income (loss) ............          (42)           10

Comprehensive income ...............................      $ 1,398       $ 1,142
                                                          =======       =======



























                                       5
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                             Statement of Cash Flows
              For the Nine Months ended September 30, 2003 and 2002

<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                            Nine Months Ended
                                                                                                              September 30,
                                                                                                         2003                 2002
                                                                                                         ----                 ----
                                                                                                           (amounts in thousands)
Operating Activities
<S>                                                                                                    <C>                 <C>
Net income .................................................................................           $  1,440            $  1,132

Adjustments to reconcile net income to net cash
                    provided by operating activities
         Provision for loan losses .........................................................                731                 442
         Depreciation ......................................................................                171                 144
         Director fees .....................................................................                 61                  44
         Deferred tax asset ................................................................               (215)               (124)
         (Increase) decrease in other assets ...............................................               (771)               (255)
         Increase (decrease) in accrued expenses and other liabilities .....................                865                (321)
                                                                                                       --------            --------

Net cash provided by operating activities ..................................................              2,282               1,062

Investing Activities
         Purchase of securities available for sale .........................................             (5,000)            (10,000)
         Purchase of restricted FHLB stock .................................................               (100)                  0
         Proceeds from call of available for sale securities ...............................              8,000               3,000
         Proceeds from maturities of held to maturity securities ...........................                  0               3,000
         Origination of loans, net of principal collected ..................................            (49,867)            (29,688)
         Proceeds from other real estate owned .............................................                625                   0
         Purchase of premises and equipment ................................................             (2,458)                (76)
                                                                                                       --------            --------

Net cash used in investing activities ......................................................            (48,800)            (23,764)

Financing Activities
         Net increase in deposits ..........................................................             56,680              30,070
         Proceeds from exercise of stock options ...........................................                  8                   0
         Net increase (decrease) in retail repurchase agreements ...........................                643                (964)
         Proceeds/(Payment)  of other borrowings ...........................................               (331)                410
                                                                                                       --------            --------

Net cash provided by financing activities ..................................................             57,000              29,516

Net increase (decrease) in cash and cash equivalents .......................................             10,482               6,814

Cash and cash equivalents, beginning .......................................................              4,292               6,439

Cash and cash equivalents, ending ..........................................................           $ 14,774            $ 13,253
</TABLE>



                                       6
<PAGE>

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                  Statement of Changes in Shareholders' Equity
                      Nine Months Ended September 30, 2003
                                   (Unaudited)
                 (amounts in thousands, except number of shares)

<TABLE>
<CAPTION>
                                                                                                        ACCUMULATED
                                                    SHARES OF                                              OTHER           TOTAL
                                                     COMMON           PAID-IN          ACCUMULATED     COMPREHENSIVE   STOCKHOLDERS'
                                                     STOCK            CAPITAL            EARNINGS         INCOME           EQUITY
                                                     -----            -------            --------         ------           ------
Balance at
<S>                                                 <C>               <C>               <C>               <C>               <C>
December 31, 2001 .......................           917,780           $ 11,097          $  1,702          $    110          $ 12,909

Exercised
stock options ...........................             3,000                 48                                                    48

Net income ..............................                                                  1,419

Net change in
unrealized gain on
available for sale
securities, net of tax ..................                                                                      (26)

Comprehensive income ....................                                                                                      1,393
                                                    -------           --------          --------          --------          --------
Balance at
December 31, 2002 .......................           920,780           $ 11,145          $  3,121          $     84          $ 14,350
</TABLE>



<TABLE>
<CAPTION>
                                                                                                        ACCUMULATED
                                                    SHARES OF                                              OTHER           TOTAL
                                                     COMMON           PAID-IN          ACCUMULATED     COMPREHENSIVE   STOCKHOLDERS'
                                                     STOCK            CAPITAL            EARNINGS         INCOME           EQUITY
                                                     -----            -------            --------         ------           ------
Balance at
<S>                                                 <C>               <C>               <C>               <C>               <C>
December 31, 2002 .......................           920,780           $ 11,145          $  3,121          $     84          $ 14,350

Exercised
stock options ...........................               600                  7                                                     7

Net income ..............................                                                 1,440

Net change in
unrealized gain on
available for sale
securities, net of tax ..................                                                                     (42)

Comprehensive income ....................                                                                                      1,398
                                                    -------           --------          --------          --------          --------

Balance at
September 30, 2003 ......................           921,380           $ 11,152          $  4,561          $     42          $ 15,755
</TABLE>




                                       7
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

Notes to Unaudited  Financial Statements

Note 1.  Basis of Presentation

         The accompanying  unaudited financial  statements have been prepared in
accordance with generally accepted  accounting  principles for interim financial
information  and with  instructions to Form 10-QSB and Item 310(b) of Regulation
S-B of the Securities and Exchange Commission.  Accordingly, they do not contain
all of the information and footnotes required by generally  accepted  accounting
principles  for  complete  financial  statements.  However,  in the  opinion  of
management,  all adjustments  considered  necessary for a fair presentation have
been included.  Operating  results for the nine months ended  September 30, 2003
are not necessarily  indicative of the results that may be expected for the year
ended December 31, 2003. For further information,  please refer to the financial
statements  and  footnotes  thereto  for the  Corporation's  fiscal  year  ended
December 31, 2002, contained in the Corporation's Annual Report on Form 10-KSB.

In accordance  with SFAS No. 148,  Accounting for Stock-Based  Compensation,  as
amended by SFAS No. 148,  Accounting for  Stock-Based  Compensation - Transition
and Disclosure - An Amendment of FASB Statement No. 123, the Company has adopted
the disclosure-only option and elected to apply the provisions of APB No. 25 for
financial statement purposes, with respect to its employee stock option plan. No
stock-based employee compensation cost is reflected in net income for this plan.

Pro forma  information  regarding  net income and  earnings  per share have been
determined as if the Company had accounted for its employee  stock options using
the fair value method, and is presented below.

<TABLE>
<CAPTION>
                                                                            Three months ended                 Nine months ended
                                                                          9/30/03         9/30/02            9/30/03        9/30/02
                                                                          -------         -------            -------        -------
Net income:

<S>                                                                      <C>             <C>             <C>               <C>
As reported ....................................................         $   542         $   425         $   1,440         $   1,132

Deduct:
Total stock-based compensation cost
   determined under the fair value method, net .................              23              21                70                62
                                                                         -------         -------         ---------         ---------
         Pro forma .............................................         $   519         $   404         $   1,370         $   1,070

Basic earnings per share:
         As reported ...........................................         $   .59         $   .46         $    1.56         $    1.23
         Pro forma .............................................         $   .56         $   .44         $    1.49         $    1.16

Diluted earnings per share:
         As reported ...........................................         $   .56         $   .44         $    1.49         $    1.18
         Pro forma .............................................         $   .54         $   .42         $    1.42         $    1.11

</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions  used for the three and nine month periods ended  September 30, 2003
and 2002;  dividend yield of 0%, expected  volatility of 50%, risk-free interest
rates of 4.00 %, and expected lives of 10 years for the options.





                                       8
<PAGE>


Note 2 - Earnings per share

         Earnings  per share has been  determined  under the  provisions  of the
Statement of Financial Accounting Standards No. 128, Earnings Per Share. For the
year-to-date  period ended September 30, 2003 and 2002, basic earnings per share
has been computed upon the weighted average common shares outstanding of 921,116
and 920,527, respectively.

         The only employee stock-based compensation arrangements of the Company,
as defined in the Statement of Financial  Accounting Standards No. 128, Earnings
Per Share,  are the stock options  granted to various  officers and employees of
the  Bank.  The  following  is a  summary  of the  diluted  earnings  per  share
calculation  for the  three  months  ended  September  30,  2003  and  2002  (in
thousands, except share data):

                                                             Nine Months Ended
                                                               September 30,
                                                               -------------
                                                           2003            2002
                                                           ----            ----
Net income .......................................       $  1,440       $  1,132
Weighted average outstanding shares ..............        921,116        920,527
Basic earnings per share .........................       $   1.56       $   1.23

Weighted average outstanding shares ..............        921,116        920,527
Dilutive effect of stock options .................         43,712         41,139
                                                         --------       --------
Weighted average diluted shares ..................        964,828        961,666

Diluted earnings per share .......................       $   1.49       $   1.18


Note 3 - Impact of Recently Issued Accounting Standards

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal  Activities,
was issued in June 2002 and  addresses  financial  accounting  and reporting for
costs associated with exit or disposal  activities.  This statement is effective
for exit or disposal activities  initiated after December 31, 2002. Its adoption
effective  January 1,  2003,  did not have a  material  impact on the  financial
statements of the Company.

SFAS  No.  148,  Accounting  for  Stock-Based   Compensation  -  Transition  and
Disclosure - An Amendment of FASB Statement No. 123. was issued in December 2002
and provides  alternative  methods of transition  for a voluntary  change to the
fair value based method of accounting for stock-based employee compensation.  In
addition,  SFAS No. 148 amends the  disclosure  requirements  of SFAS No. 123 to
require  prominent  disclosure in both annual and interim  financial  statements
about the method for accounting for stock-based  employee  compensation  and the
effect of the method used on reported  results.  The disclosure  requirements of
this  statement are  effective for fiscal years ending after  December 15, 2002,
and are included in these interim financial statements.

SFAS No. 149,  Amendment of Statement 133 on Derivative  Instruments and Hedging
Activities,  was  issued  in April  2003 and  amends  SFAS No.  133 for  certain
decisions  made  by the  Financial  Accounting  Standards  Board  as part of the
Derivatives  Implementation  Group  process and to clarify the  definition  of a
derivative.  This statement is effective for contracts  entered into or modified
after June 30, 2003, except for certain specific issues already addressed by the
Derivatives Implementation Group and declared effective that are included in the
statement.  The  adoption of the  provisions  of this  statement  did not have a
material impact on the financial statements of the Company.





                                       9
<PAGE>


SFAS No. 150, Accounting for Certain Financial  Instruments with Characteristics
of Both Liabilities and Equity, was issued in May 2003 and establishes standards
for  how  to  classify   and  measure   certain   financial   instruments   with
characteristics of both liabilities and equity.  This statement is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15,  2003.  The  adoption of the  provisions  of this  statement  did not have a
material impact on the financial statements of the Company.

FASB Interpretation No. 45, Guarantor's  Accounting and Disclosure  Requirements
for Guarantees, Including Guarantees of Indebtedness of Others an interpretation
of FASB Statements No. 5, 57, and 107, and rescission of FASB Interpretation No.
34 was issued in November 2002 and elaborates on the disclosures to be made by a
guarantor in its interim and annual  financial  statements about its obligations
under certain  guarantees that it has issued. It also clarifies that a guarantor
is required to recognize,  at the inception of a guarantee,  a liability for the
fair value of the obligation  undertaken in issuing the guarantee.  The adoption
of the provision of this FASB  interpretation  did not have a significant effect
on the financial position or results of operations of the Company.

FASB  Interpretation  No. 46,  Consolidation  of Variable  Interest  Entities an
interpretation  of ARB  No.  51,  was  issued  in  January  2003  and  addresses
consolidation  by  business  enterprises  of  variable  interest  entities.  The
adoption  of  the  provisions  of  this  FASB  Interpretation  did  not  have  a
significant  effect on  financial  position  or  results  of  operations  of the
Company.































                                       10
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

Item 2

Management's Discussion and Analysis or Plan of Operations

Forward Looking Statements

Statements  included  in  Management's  Discussion  and  Analysis  which are not
historical  in nature are intended to be, and are hereby  identified as "forward
looking  statements"  for the purpose of the safe harbor provided by Section 21E
of the Securities  Exchange Act of 1934, as amended.  The  Corporation  cautions
readers that forward looking  statements,  including without  limitation,  those
relating to the  Corporation's  future  business  prospects,  revenues,  working
capital,  liquidity,  capital needs,  interest costs,  adequacy of allowance for
loan losses,  and income,  are subject to certain risks and  uncertainties  that
could cause  actual  results to differ  materially  from those  indicated in the
forward looking statements,  due to several important factors herein identified,
among others,  and other risks and factors  identified  from time to time in the
Corporation's reports filed with the Securities and Exchange Commission.


RESULTS OF  OPERATIONS:  NINE MONTH PERIOD ENDED  SEPTEMBER 30, 2003 COMPARED TO
THE SAME PERIOD ENDED SEPTEMBER 30, 2002.

Net Income

For the first nine months of 2003, First South Bancorp, Inc. earned a net profit
of  approximately  $1,440,000,  or $ 1.56 per share,  compared to  approximately
$1,132,000,  or $ 1.23 per  share,  for the same  period  in 2002.  This  27.2 %
increase in net income occurred despite a $997,000  increase in net non-interest
expense from $2,095,000 to $ 3,092,000, and a $289,000 increase in the provision
for loan losses primarily related to loan growth from $442,000 to $731,000. With
the current  income tax accruals for both years  equaling 36 % of pretax income,
the  increase  in  net  income  can  be  almost  exclusively  attributed  to the
$1,769,000 increase in net interest income, from $4,305,000 to $6,074,000.

Profitability

Earnings of  financial  institutions  are most  commonly  measured  through ROAA
(return on average  assets)  and ROAE  (return  on  average  equity).  Return on
average assets is the income for the period, annualized,  divided by the average
assets for the  period.  Return on average  equity is the income for the period,
annualized,  divided by the average equity for the period.  As is shown in Table
One,  ROAA  for the  period  decreased  by 2 basis  points,  or  2.2%,  and ROAE
increased by 156 basis points, or 13.9%.








                                       11
<PAGE>


Table One                   Selected Earnings Ratios
                 for the Nine Month Periods Ending September 30

                                                           2003           2002
                                                           ----           ----
Return on Average Assets .........................          .89%           .91%

Return on Average Equity .........................        12.75%         11.19%

Average Stockholders' Equity
as a Percentage of Average Assets ................         6.96%          8.10%

The  changes  in ROAA and ROAE can be  primarily  attributed  to  changes in the
balance  sheet,  volume and  composition,  and the  interest  rate  environment.
Details  of these  changes  are  provided  in the  following  discussion  of net
interest income.

Net Interest Income

Net interest income, the major component of First South Bancorp's income, is the
amount by which interest and fees on earning assets exceeds the interest paid on
interest bearing  liabilities,  primarily deposits.  As was stated earlier,  net
interest  income for the first nine  months of 2003  increased  over that of the
same period in 2002 by $1,769,000,  or 41.1%. As in most, if not all,  instances
of comparing the net interest  income  performance  between two  different  time
periods,  a number of factors  combined  to produce  the change in net  interest
income  which First South  Bancorp  experienced  during the first nine months of
2003, as compared to the first nine months of 2002. Net interest  income for the
first nine months ended  September 30, 2003,  included  $409,882  generated by a
deferred presentment (payday) lending program initiated in the fourth quarter of
2002.  In  June  2003  the  Corporation   decided  to  exit  the  program  after
consultation  with its bank  regulators (the  "Regulators")  because of concerns
expressed  by the  Regulators  about such  lending  and their  requirements  for
engaging in it. In September  2003,  the Board of Directors of the Bank signed a
memorandum of understanding with the Regulators covering various matters related
to the Bank's exiting its deferred  presentment  lending  program,  as well as a
number  of  other   matters   related  to  capital   and   strategic   planning,
implementation of new products and services,  credit policies and procedures and
agreeing  that the Bank would not pay dividends  without  prior  approval of the
Regulators.  The  Corporation  expects  to be out of  the  deferred  presentment
lending  program  not later  than the fourth  quarter  of 2003.  The loss of net
interest income from the program will be  substantially  offset by reductions in
other expenses associated with the program (such costs totaling $254,035 for the
first nine months of 2003).

Though  growth in earning  assets of $ 46.4  million,  or 29 %, was  certainly a
major factor in the growth of interest income,  the change in the earning assets
mix between the two periods also  contributed  significantly  to the increase in
interest  income.  The segment of total earning assets with the highest interest
yield,  loans,  increased as a percentage of total earning  assets from 85.7% in
2002 to 90.6 % in 2003. However,  the full positive effect of this change in the
earning  assets mix was  partially  offset by the reduced  average loan yield in
2003,  as compared to that of 2002.  Compared to the same period last year,  the
average yield on loans declined by 29 basis points.



                                       12
<PAGE>

The net effect of the increase in average loans  outstanding  and the decline in
the yield on loans was an increase in the dollar  yield on loans of $ 1,979,000,
or 28.6 %.

Also  contributing  significantly to the increase in net interest income was the
$2,986,000  growth  in  average  non-interest-bearing  deposits.  Growth in this
category of  deposits  served as an  alternative,  and less  expensive,  funding
source to that of funding  earning  assets  with  interest-bearing  liabilities.
Increased earnings for the first nine months of 2003,  compared to those for the
same period in 2002, can be largely  attributed to balance changes,  both growth
and mix.  Additionally,  the  decline in the  average  cost of funds of 77 basis
points compared to the 28 basis points decline in the earning assets yield was a
major factor in the increase in net interest income.

Table Two on the following  page  includes a detailed  comparison of the average
balances,   yields  and  rates  for  the  interest  sensitive  segments  of  the
Corporation's  balance  sheets for the nine months ended  September 30, 2003 and
2002.




































                                       13
<PAGE>


           Table Two Net interest Income and Average Balance Analysis
              for the Nine Months Ended September 30, 2003 and 2002
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>

                                                                                                    Interest      Average Annualized
Interest-Earning Assets (000)                                         Average Balance            Income/Expense        Yield / Cost
                                                                       2003        2002         2003         2002      2003    2002
                                                                       ----        ----         ----         ----      ----    ----
Interest-bearing
<S>                                                                <C>              <C>      <C>              <C>      <C>     <C>
Due from Bank Accounts ........................................... $   5,916        9,080    $     49         113      1.11%   1.66%
Investments ......................................................    13,491       13,769         402         562      3.98%   5.44%
Loans ............................................................   187,386      137,510       8,887       6,908      6.43%   6.72%
                                                                   ---------      -------    --------      ------      ----    ----
Total Interest Earning Assets .................................... $ 206,793      160,359    $  9,338       7,583      6.04%   6.32%

Noninterest-Earning Assets
Cash & Due From Banks ............................................ $   4,553        2,817
Loan Loss Reserve ................................................    (2,044)      (1,517)
Investments: Fair value ..........................................       113          156
Premises & Equipment .............................................     3,862        2,823
Interest Receivable & Other ......................................     3,685        2,424
                                                                   ---------      -------
Total Noninterest-Earning Assets ................................. $  10,169        6,706

TOTAL ASSETS ..................................................... $ 216,962      167,062
                                                                   =========      =======
Interest-Bearing Liabilities
NOW Accounts ..................................................... $  33,054       30,606    $    436         552      1.76%   2.41%
Money Market & Savings ...........................................    31,188        4,789         431          62      1.85%   1.73%
Time Deposits & IRA's ............................................   105,275       88,601       2,034       2,271      2.58%   3.43%
Fed Funds Purchased & Repos ......................................     4,393        5,734          18          52       .55%   1.21%
Other borrowed funds .............................................    10,577       10,022         344         338      4.35%   4.51%
Demand Notes Issued to Treasury ..................................       226          260           1           3       .88%   1.54%
                                                                   ---------      -------    --------      ------      ----    ----
Total Interest-Bearing Liabilities ............................... $ 184,713      140,012    $  3,264       3,278      2.36%   3.13%

Noninterest-Bearing Liabilities
Demand Deposits .................................................. $  15,412       12,426
Interest Payable .................................................       512          636
Other Liabilities ................................................     1,218          466
                                                                   ---------      -------
Total Noninterest-bearing Liabilities ............................ $  17,142       13,528

Shareholders' Equity ............................................. $  15,107       13,522

Total Liabilities and
Shareholders' Equity ............................................. $ 216,962      167,062
                                                                   =========      =======
Net Interest Income ..............................................                           $  6,074    $   4,305

        Net Yield on Earning Assets ..............................                                                      3.93% 3.59%
        Interest Rate Spread .....................................                                                      3.68% 3.19%
</TABLE>
















                                       14
<PAGE>


Other Income

Other income for the first nine months of 2003 increased by $310,000, or 45.6 %,
from the 2002  amount  of  $680,000.  The  largest  dollar  increase  in any one
category of  non-interest  income was the $196,000  increase in commissions  and
fees.  The increase in  commissions  and fees  accounted for 63.2 % of the total
increase  in other  income.  Table  Three  provides  a nine  month  2003 to 2002
performance comparison of categories of non-interest income.

Table Three               Summary of Total Other Income
                     for the Nine Months Ended September 30
                                  2003 and 2002
                             (Amounts in thousands)

                                                             2003           2002
                                                             ----           ----
Service Charges ..................................           $245           $178
Commissions & Fees ...............................            653            457
Other Non-interest Income ........................             92             45
                                                             ----           ----
Total ............................................           $990           $680

Other Expense

Non-interest  expense for the first nine months of 2003 increased by $1,307,000,
or 47.1 %, over the first nine months of 2002 of  $2,775,000.  While some of the
operational  expense  increase  experienced in 2003 resulted from the growth the
bank  experienced,  a significant  portion,  27 %, of the total  increase can be
attributed to opening a new branch office. An expense of $254,000,  or 19.4 % of
the total other expense  increase,  associated  with both the  initiation in the
fourth quarter of 2002 and termination in 2003 of a deferred presentment lending
program was also a significant factor in the total increase.

Table Four provides a nine month 2003 to 2002 performance  comparison of various
categories of other expense.

Table Four           For the Nine Months Ended September 30
                                  2003 and 2002
                             (Amounts in thousands)

                                                           2003             2002
                                                           ----             ----
Salaries & Employee Benefits ...................          $2,325          $1,749
Occupancy & Equipment ..........................             454             366
Other ..........................................           1,303             660
                                                          ------          ------
Total ..........................................          $4,082          $2,775









                                       15
<PAGE>


Income Taxes
Through September 30, 2003,  $215,000 had been accrued as a deferred tax benefit
resulting  from a  deferred  tax  asset  created  by income  transferred  to the
provision for loan losses above the amount deductible for income tax purposes in
the  current  year.  Though  deductible  for  state  income  tax  purposes,  the
non-deductibility  for federal income tax purposes of the $731,302  year-to-date
charge to earnings as a provision  for potential  future loan losses  created an
income tax benefit  resulting  in a net current year tax accrual rate of 36.0 %,
the same percentage as that of 2002.

CHANGES IN FINANCIAL POSITION

Investment portfolio

While a comparison of the corporation's investment portfolio totals at September
30, 2003 and 2002,  would seem to indicate  that during this twelve month period
there was little activity in this area of the corporation's  balance sheet, this
was not the case.  Thirteen  million  government  agency  issues with call dates
during this twelve month  period were called - eight  million in the first three
quarters  of 2003 and five  million in the last  quarter of 2002.  The  thirteen
million government agency issues purchased as replacements for the called issues
resulted in a 131 basis points decline in the  portfolio's  average yield,  from
5.33% in September 2002 to 4.02 % in September 2003. A total of $9,500,000 (par)
investments were pledged on September 30, 2003.

    Table Five demonstrates the  balance/maturity  changes which occurred during
the twelve months which ended September 30, 2003.

Table Five              Analysis of Investment Securities
                             (Amounts in thousands)

<TABLE>
<CAPTION>
September 30, 2003                                                    Available for Sale                    Held for Investment
                                                                      ------------------                    -------------------
                                                                 Amortized             Fair             Amortized             Fair
                                                                   Cost               Value                Cost               Value
                                                                   ----               -----                ----               -----
<S>                                                              <C>                 <C>                 <C>                 <C>
Due from one to five years .........................             $ 8,997             $ 9,049             $ 1,513             $ 1,532
Due from five to ten years .........................               1,000               1,009                   0                   0
Due After ten years ................................               1,123               1,130                 852                 950
                                                                 =======             =======             =======             =======
                                                                 $11,120             $11,188             $ 2,365             $ 2,482
</TABLE>

<TABLE>
<CAPTION>
September 30, 2002                                                    Available for Sale                    Held for Investment
                                                                      ------------------                    -------------------
                                                                 Amortized             Fair             Amortized             Fair
                                                                   Cost               Value                Cost               Value
                                                                   ----               -----                ----               -----
<S>                                                               <C>                 <C>                    <C>                 <C>
Due from one to five years .........................              12,000              12,189                 500                 526
Due After ten years ................................                 123                 128                 851                 989
                                                                 =======             =======             =======             =======
                                                                 $12,123             $12,317             $ 1,351             $ 1,515
</TABLE>

Excludes $700 and $600 FHLB Stock respectively for 9/30/03 and 9/30/02.





                                       16
<PAGE>


Loan portfolio

From September 30, 2002 to September 30, 2003, loans increased by $62.9 million,
or 43.1 %. Table Six, shows the changes in the composition of the loan portfolio
on a percentage basis during the twelve month period.

As shown in Table Seven,  variable rate loans continue to comprise a substantial
percentage of total loans,  86.2 %. This percentage is down,  however,  from the
September 30, 2002, percentage of 90.7 %.

At September 30, 2003, there were no loans on non-accrual status.  There were no
loans past due 90 days or more.

Table Six                       Analysis of Loans
                              September 30 Balances
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                         2003                                2002
                                                                         ----                                ----
Real Estate:
<S>                                                                   <C>                     <C>          <C>                 <C>
   Construction / Land Development ........................           $ 12,151                5.8%         $ 15,339            10.5%
   1-4 Family Residential Properties ......................             49,674               23.8%           29,395            20.2%
   Multifamily Residential Properties .....................              1,107                 .5%              967              .7%
   Nonfarm Nonresidential Properties ......................             95,640               45.8%           56,632            38.8%
   Other Real Estate Loans ................................              1,577                 .8%            1,798             1.2%
Commercial & Industrial ...................................             43,540               20.9%           40,904            28.1%
Consumer ..................................................              4,981                2.4%              769              .5%
Other .....................................................                 58               <.01%               50            <.01%
                                                                                                           ========           =====
TOTAL .....................................................           $208,728              100.0%         $145,854           100.0%
</TABLE>

Table Seven    Analysis of Loan Maturities and Repricing Frequency
                            as of September 30, 2003
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                             Within         > 3 Months     > 1 Year         > 3 Years       Over
                                            3 Months        12 Months      3 Years          5 Years        5 Years           Total
                                            --------        ---------      -------          -------        -------           -----
<S>                                         <C>             <C>             <C>             <C>             <C>             <C>
Variable Rate Loans ................        $179,961                                                                        $179,961

Fixed Rate Loans ...................        $  7,641        $  8,143        $  5,812        $  4,650        $  2,521        $ 28,767
                                            --------        --------        --------        --------        --------        --------

Total Loans ........................        $187,602        $  8,143        $  5,812        $  4,650        $  2,521        $208,728
</TABLE>









                                       17
<PAGE>


The Bank's  allowance for loan losses is analyzed  monthly in accordance  with a
board approved plan. This judgmental analysis is based upon a model that assigns
a risk rating to each  individual  loan and considers the probable level of loss
associated  with  various risk  categories  in  relationship  to the current and
forecasted economic  environment.  The Bank also monitors the overall portfolio,
as well as the level of reserves maintained by peer banks. The monthly provision
for loan losses may fluctuate based on the results of this analysis. Table Eight
provides  the  results  of the  year-to-date  analysis  for the  periods  ending
September 30, 2003 and 2002, as well as the amounts charged to this reserve as a
loss and credited to this reserve as a recovery.

Table Eight
                    Analysis of the Allowance for Loan Losses
                     for the Nine Months Ended September 30
                          (Dollar amounts in thousands)

                                                         2003             2002
                                                         ----             ----
Balance at Beginning of Year .................         $ 1,750          $ 1,450
Provision Charged to Operations ..............             731              443
Loans Charged-off ............................          (1,270)            (290)
Loan Recoveries ..............................           1,189               17
                                                       -------          -------
Balance At End Of Period .....................         $ 2,400          $ 1,620

Interest rate risk

Financial  institutions  are  subject to  interest  rate risk to the degree that
their interest bearing liabilities (consisting principally of customer deposits)
mature or reprice more or less frequently,  or on a different basis,  than their
interest earning assets (generally consisting of intermediate or long-term loans
and  investment  securities).  The match  between the  scheduled  repricing  and
maturities of the Bank's earning assets and interest bearing  liabilities within
defined   time   periods  is   referred  to  as  "gap"   analysis.   The  Bank's
Asset/Liability  Management  Committee  is  responsible  for  managing the risks
associated  with  changing  interest  rates and their  impact on  earnings.  The
regular  evaluation  of the  sensitivity  of net  interest  income to changes in
interest  rates  is an  integral  part of  interest  rate  risk  management.  At
September 30, 2003, the  cumulative  one-year gap for the Bank was a positive or
asset  sensitive $ 24.9  million,  or 10.2 % of total  assets.  At September 30,
2003, the cumulative five-year gap for the Bank was a positive $26.4 million, or
10.8 % of total assets. These positive positions are the results of management's
efforts  to limit the risk of loss in  earnings  over the long run by  extending
loans with  variable  interest  rates.  A positive  gap means that assets  would
reprice faster than  liabilities  if interest  rates changed.  The Bank's gap is
within  policy  limits which were  established  to reduce the adverse  impact on
earnings which movements in interest rates can cause. Intense competition in the
Bank's market continues to pressure quality loan rates downward while conversely
pressuring  deposit rates upward.  Table Nine  demonstrates how the relationship
between interest-bearing assets and interest-bearing  liabilities was calculated
for September 30, 2003.




                                       18
<PAGE>



Table Nine

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                   Repricing Schedule as of September 30, 2003
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                              One Year         Over One Year            Over
                                                              or Less          To Five Years          Five Years             Total
                                                              -------          -------------          ----------             -----
Interest Earning Assets
<S>                                                            <C>                 <C>                 <C>                  <C>
Int-Bearing Due From Banks .........................           $  7,300            $      0            $      0             $  7,300
Investment Securities ..............................                  0              10,510               2,975               13,485
FHLB Stock .........................................                700                   0                   0                  700
Loans ..............................................            195,745              10,462               2,521              208,728
                                                               ========            ========            ========             ========
Total ..............................................           $203,745            $ 20,972            $  5,496             $230,213



Interest-Bearing Liabilities
NOW Accounts .......................................           $ 33,742            $      0            $      0             $ 33,742
Savings & MMIA .....................................             41,012                   0                   0               41,012
Time Deposits:$100m & > ............................             27,656               4,789                   0               32,445
Time Deposits: < $100m .............................             72,415              14,752                   0               87,167
Repurchase Agreements ..............................              3,873                   0                   0                3,873
Other Borrowings ...................................                124                   0              10,000               10,124
                                                               ========            ========            ========             ========
Total ..............................................           $178,822            $ 19,541            $ 10,000             $208,363

Period  Gap ........................................           $ 24,923            $  1,431            $ (4,504)            $ 21,850

Cumulative Gap .....................................           $ 24,923            $ 26,354            $ 21,850

Period Gap Ratios:
 Interest Sensitive Assets to
 Interest Sensitive Liabilities ....................             113.9%              107.3%               (55.0%)

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities ...................             113.9%              113.3%               110.5%
</TABLE>

<TABLE>
<CAPTION>
                                                              3 Months           Over 3 Months         Over One
Time Deposits                                                  & Less             to 12 Months           Year                Total
                                                               ------             ------------           ----                -----
<C>                                                           <C>                  <C>                 <C>                  <C>
$100,000 and Greater ...........................              $12,496              $15,160             $ 4,789              $32,445
</TABLE>







                                       19
<PAGE>


Liquidity
Liquidity  is the  ability  to  meet  current  and  future  obligations  through
liquidation or the maturity of existing assets, or the acquisition of additional
liabilities.  Adequate  liquidity  is  necessary  to meet  the  requirements  of
customers for loans and deposit  withdrawals  in the most timely and  economical
manner. Some liquidity is ensured by maintaining assets which may be immediately
converted  into cash at minimal cost  (amounts due from banks and federal  funds
sold).  However,  the most  manageable  sources of  liquidity  are  composed  of
liabilities, with the primary focus on liquidity management being the ability to
obtain  deposits  within the Bank's service area.  Core deposits (total deposits
less wholesale time deposits) provide a relatively stable funding base, and were
equal to 73.6% of total  assets  at  September  30,  2003.  Asset  liquidity  is
provided  from  several  sources,  including  amounts due from banks and federal
funds sold, and funds from maturing  loans.  The Bank is a member of the FHLB of
Atlanta and, as such,  has the ability to borrow against the security of its 1-4
family  residential  mortgage  loans.  The Bank also has $10  million  available
through  lines of credit with other banks as an  additional  source of liquidity
funding.  Management  believes  that the Bank's  overall  liquidity  sources are
adequate.

Capital Resources

The equity capital of the Corporation  increased $ 1,734,000  between  September
30, 2002 and 2003. An increase in retained earnings of $1,727,000  accounted for
99.6 % of this increase.

The Corporation and Bank are subject to regulatory  capital adequacy  standards.
Under these standards,  financial  institutions are required to maintain certain
minimum  capital  ratios of capital to  risk-weighted  assets and average  total
assets.  Under the  provisions  of the  Federal  Deposit  Insurance  Corporation
Improvement Act of 1991, federal financial  institutions  regulatory authorities
are  required  to  implement  prescribed  "prompt  corrective  action"  upon the
deterioration  of the capital  position of a bank. If the capital position of an
affected institution were to fall below certain levels,  increasingly  stringent
regulatory corrective actions are mandated.

The Bank's  September  30, 2003 capital  ratios are  presented in the  following
table,  compared with the "well  capitalized"  and minimum ratios under the FDIC
regulatory definitions and guidelines:

<TABLE>
<CAPTION>
                                                                                                             To be well capitalized
                                                                                         For capital         under prompt corrective
At September 30, 2003                                         Actual                   adequacy purposes         action provisions
                                                              ------                   -----------------         -----------------
                                                                                         Minimum                      Minimum
                                                                                         -------                      -------
                                                      Amount          Ratio        Amount          Ratio        Amount       Ratio
                                                      ------          -----        ------          -----        ------       -----
<S>                                                  <C>               <C>        <C>               <C>        <C>            <C>
Total Capital (to risk weighted assets).....         $18,057           8.8%       $16,471           8.0%       $20,589        10.0%

Tier 1 Capital (to risk weighted assets)....         $15,657           7.6%       $ 8,235           4.0%       $12,353         6.0%

Tier 1 Capital (to
average assets) (leverage) .................         $15,657           6.6%       $ 9,447           4.0%       $11,809         5.0%
</TABLE>

Although the Bank's total  capital to risk  weighted  assets ratio grew slightly
from June 30,  2003 to  September  30,  2003 and met  minimum  capital  adequacy
standards,  the ratio was less than the level required to be "well-capitalized."
The Corporation  plans to increase the Bank's total capital in the first half of
2004 in  order  to reach a "well  capitalized"  standard.  In order to do so the
Corporation  may sell stock through  public or private  offerings or issue trust
preferred securities.



                                       20
<PAGE>


RESULTS OF OPERATIONS:  THREE MONTH PERIOD ENDED SEPTEMBER 30, 2003, COMPARED TO
THE SAME PERIOD SEPTEMBER 30, 2002.

Net income for the third quarter of 2003 increased by $117,000,  or 27.5%,  over
the same  period  in 2002.  Net  interest  income  for the  three  months  ended
September  30, 2003,  was $2.2 million,  a 39.2%  increase over the $1.5 million
amount  earned  during  the third  quarter in 2002.  Other  income for the three
months ended  September  30, 2003,  was  $541,000,  or 150.5%,  greater than the
amount  received for the same period in 2002.  Other expense of $1.6 million for
the three months was $661,000,  or 67.8%,  more than the 2002 three month period
amount.  Net interest income improved  primarily due to growth of earning assets
and a change in the earnings assets mix. Other income increased primarily due to
the  timing  of the  receipt  of fees  received  for  loan  brokerage  services.
Approximately  41% of the $277,000 increase in the salaries and benefits expense
category  of  other  expenses  was  directly  related  to  additional   staffing
requirements  associated with opening a new branch  location in Bluffton,  South
Carolina.

                         Three Months Ended September 30
                          (Dollar amounts in thousands)

Average Balances                             2003         2002           Change
                                             ----         ----           ------

Earning assets ......................     $224,590      $167,833      $ 56,757

Yield ($) ...........................     $  3,286      $  2,620      $    666

Yield (%) ...........................         6.39%         6.19%          .20%

Interest-bearing liabilities ........     $202,079      $145,497      $ 56,582

Cost of funds ($) ...................     $  1,132      $  1,072      $     60

Cost of funds (%) ...................         2.22%         2.92%         (.70%)

Interest spread ($) .................     $  2,154      $  1,548      $    606

Interest spread (%) .................         4.17%         3.27%          .90%


Item 3. Controls and Procedures

(a)  Based on the  evaluation  required by  17C.F.R.  Section  240.13a-15(b)  or
     240.15d-15(b)  of the  Company's  disclosure  controls and  procedures  (as
     defined  in  17  C.F.R.  Sections  240.13a-15(e)  and  240.15d-15(e)),  the
     Company's chief executive  officer and chief  financial  officer  concluded
     that the  effectiveness  of such controls and procedures,  as of the end of
     the period covered by this quarterly report, was adequate.

(b)  No disclosure is required under 17 C.F.R. Section 228.308(c).






                                       21
<PAGE>


                           PART II - OTHER INFORMATION


Item 6 - Exhibits and Reports on Form 8-K

         (a)      31-1     Rule 13a-14(a) Certifications of the CEO
                  31-2     Rule 13a-14(a) Certifications of the CFO
                  32       1350 Certifications

         (b)      Reports on Form 8-K :    None









































                                       22
<PAGE>


SIGNATURE

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



                                  First South Bancorp, Inc.

                                  s/Barry L. Slider
November 12, 2003                 ----------------------------------------------
                                  Barry L. Slider, President and Chief
                                  Executive Officer


                                  s/V. Lewis Shuler
                                  ----------------------------------------------
                                  V. Lewis Shuler, Executive Vice President
                                  (Principal Accounting Officer)



































                                       23