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, 2002

                             Commission File Number
                                    000-28037

                            FIRST SOUTH BANCORP, INC.
                            -------------------------
        (Exact Name of Small Business Issuer as Specified in its Charter)


       SOUTH CAROLINA                                    57-1086258
       --------------                                    ----------
(State or Other Jurisdiction of             (IRS Employer Identification number)
 Incorporation or Organization)
                               1450 Reidville Road
                        Spartanburg, South Carolina 29306
                     (Address of Principal Executive Office)

                                 (864) 595-0455
                           (Issuer'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 Issuer 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, 920,780
shares outstanding on November 8, 2002.

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 Shareholder Equity ....................      7

          Notes to Unaudited Statements .................................      8


 Item 2.  Management's Discussion and Analysis ..........................   9-18

 Item 3.  Controls and Procedures .......................................     18

Part II -         OTHER INFORMATION

 Item 6.  Exhibits and Reports on Form 8-K ..............................     19


SIGNATURES ..............................................................     20












                                        2


<PAGE>


                         PART I - FINANCIAL INFORMATION

                          Item 1 - Financial Statements

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                 (Unaudited)          (Unaudited)
                                                                                  Sept. 30,             Sept. 30,          Dec. 31,
                                                                                     2002                2001               2001
                                                                                     ----                ----               ----
Assets
<S>                                                                               <C>                 <C>                 <C>
Cash & due from banks ..................................................          $   3,453           $   2,203           $   3,039
Due from banks - interest bearing ......................................              9,800               3,800               3,400
Investment securities:
         Securities held to maturity ...................................              1,351               1,950               1,350
         Securities available for sale .................................             12,917              11,370               8,901

Loans ..................................................................            145,854             111,137             126,166
         Less allowance for loan losses ................................             (1,620)             (1,340)             (1,450)
                                                                                  ---------           ---------           ---------
Loans - net ............................................................            144,234             109,797             124,716
Property & equipment, net ..............................................              2,788               2,803               2,876
Other assets ...........................................................              2,737               2,552               2,328
                                                                                  ---------           ---------           ---------
                  Total assets .........................................          $ 177,280           $ 134,475           $ 146,610

Liabilities
Deposits: Noninterest-bearing ..........................................          $  13,397           $   8,823           $   9,731
             Interest-bearing ..........................................            134,008              93,968             107,552
                                                                                  ---------           ---------           ---------
                  Total deposits .......................................            147,405             102,791             117,283

Securities sold under repurchase agreements ............................              4,246               5,483               5,209
Other borrowed funds ...................................................             10,000              12,000              10,000
Demand notes issued to the U.S. Treasury ...............................                451                 467                  41
Other liabilities ......................................................              1,079               1,020               1,168
                                                                                  ---------           ---------           ---------
                  Total liabilities ....................................            163,181             121,761             133,701

Shareholders' equity
Common stock - no par value; 20,000,000 authorized, ....................              4,604               4,589               4,589
Outstanding 920,780, 917,780, 917,180, respectively
Additional paid-in capital .............................................              6,541               6,508               6,508
Undivided profits / (loss) .............................................              2,834               1,464               1,702
Accumulated other comprehensive income/(loss) ..........................                120                 153                 110
                                                                                  ---------           ---------           ---------
                  Total shareholders' equity ...........................             14,099              12,714              12,909

         Total liabilities and shareholders' equity ....................          $ 177,280           $ 134,475           $ 146,610
</TABLE>

                                        3


<PAGE>




                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY

                             Statement of Operations


<TABLE>
<CAPTION>
                                                                                                 (Unaudited)
                                                                                          Period ended September 30,
                                                                                          --------------------------
                                                                                Three Months                     Nine Months
                                                                                ------------                     -----------
                                                                            2002            2001             2002            2001
                                                                            ----            ----             ----            ----
                                                                                    (amounts in thousands, except per share)
Interest income
<S>                                                                      <C>              <C>              <C>              <C>
         Loans, including fees .................................         $ 2,375          $ 2,119          $ 6,908          $ 6,437
         Investment securities .................................             210              233              562              723
         Federal funds sold ....................................               0                0                0                1
         Other investments .....................................              35               26              113              153
                                                                         -------          -------          -------          -------
         Total interest income .................................           2,620            2,378            7,583            7,314

Interest expense
         Deposits and borrowings ...............................           1,072            1,269            3,278            3,952

Net interest income ............................................           1,548            1,109            4,305            3,362
         Provision for loan losses .............................            (152)            (105)            (442)            (311)
Net interest income after provision ............................           1,396            1,004            3,863            3,051

Other income
         Service charges on deposit accounts ...................              60               71              178              177
         Other income ..........................................             156               44              502              126
                                                                         -------          -------          -------          -------
         Total noninterest income ..............................             216              115              680              303

Other expenses
         Salaries and benefits .................................             607              475            1,749            1,447
         Occupancy and equipment ...............................             117              122              366              371
         Other expense .........................................             251              187              660              547
                                                                         -------          -------          -------          -------
         Total other expense ...................................             975              784            2,775            2,365

Income before income taxes .....................................             637              335            1,768              989
         Provision for income taxes ............................             212              110              636              321
                                                                         -------          -------          -------          -------
Net income .....................................................         $   425          $   225          $ 1,132          $   668

Basic per share earnings .......................................         $   .46          $   .24          $  1.23          $   .73
</TABLE>


                                        4


<PAGE>





                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                        Statement of Comprehensive Income
                             (amounts in thousands)

                                                               (Unaudited)
                                                  Nine Months Ended September 30
                                                        2002               2001
                                                        ----               ----


Net Income .........................................  $ 1,132           $   668

Other comprehensive income (loss):
Change in unrealized holding gains &
    losses on available for sale securities ........       16               250

Income tax (expense) benefit on other
                comprehensive income (loss) ........       (6)              (94)
                                                      -------           -------
Total other comprehensive income (loss) ............       10               156

Comprehensive income ...............................    1,142               824
                                                      =======           =======


















                                        5


<PAGE>




                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                             Statement of Cash Flows
              For the Nine Months ended September 30, 2002 and 2001


<TABLE>
<CAPTION>
                                                                                                                (Unaudited)
                                                                                                             Nine Months Ended
                                                                                                               September 30,
                                                                                                          2002               2001
                                                                                                          ----               ----
                                                                                                           (amounts in thousands)
Operating Activities
<S>                                                                                                    <C>                 <C>
Net income .................................................................................           $  1,132            $    668

Adjustments to reconcile net income to net cash
                    provided by operating activities
         Provision for loan losses .........................................................                442                 311
         Depreciation ......................................................................                144                 158
         Director fees .....................................................................                 44                  43
         Deferred tax asset ................................................................               (124)               (126)
         (Increase) decrease in other assets ...............................................               (255)                 19
         Increase (decrease) in accrued expenses and other liabilities .....................               (321)               (265)

Net cash provided by operating activities ..................................................              1,062                 808


Investing Activities
         Purchase of securities available for sale .........................................            (10,000)             (8,000)
         Purchase of restricted FHLB stock .................................................                  0                (436)
         Proceeds from call of available for sale securities ...............................              3,000               9,000
         Proceeds from maturities of held to maturity securities ...........................              3,000               3,000
         Origination of loans, net of principal collected ..................................            (19,688)            (28,340)
         Purchase of premises and equipment ................................................                (76)                (61)

Net cash used in investing activities ......................................................            (23,764)            (24,837)

Financing Activities
         Net increase in deposits ..........................................................             30,070               4,205
         Net increase (decrease) in retail repurchase agreements ...........................               (964)             (2,930)
         Proceeds/(Payment)  of other borrowings ...........................................                410              12,000
Net cash provided by financing activities ..................................................             29,516              19,135

Net increase (decrease) in cash and cash equivalents .......................................              6,814              (4,894)

Cash and cash equivalents, beginning .......................................................              6,439              10,897

Cash and cash equivalents, ending ..........................................................             13,253               6,003
</TABLE>



                                        6


<PAGE>




                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                  Statement of Changes in Shareholders' Equity
                      Nine Months Ended September 30, 2002
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                        ACCUMULATED
                                                                     ADDITIONAL                            OTHER           TOTAL
                                                     COMMON           PAID-IN        ACCUMULATED       COMPREHENSIVE   STOCKHOLDERS'
                                                     STOCK            CAPITAL          EARNINGS             INCOME         EQUITY
                                                     -----            -------          --------             ------         ------
<S>                                                <C>               <C>               <C>                 <C>            <C>
Balance at
December 31, 2001 ........................         4,588,900         6,508,089         1,701,776           110,188        12,908,953

Exercised
stock options ............................            15,000            33,000                                                48,000

Net income ...............................                                             1,132,070

Net change in
unrealized gain on
available for sale
securities, net of tax ...................                                                                  10,140

Comprehensive income .....................                                                                                 1,142,210
                                                  ----------        ----------        ----------        ----------        ----------
Balance at
September 30, 2002 .......................         4,603,900         6,541,089         2,833,846           120,328        14,099,163
</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, 2002
are not necessarily  indicative of the results that may be expected for the year
ended December 31, 2002. For further information,  please refer to the financial
statements  and  footnotes  thereto  for the  Corporation's  fiscal  year  ended
December 31, 2001, contained in the Corporation's Annual Report on Form 10-KSB.































                                        8


<PAGE>




                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                                 Part I - 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, 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, 2002 COMPARED TO
THE SAME PERIOD ENDED SEPTEMBER 30, 2001.

Net Income

For the first nine months of 2002, First South Bancorp, Inc. earned a net profit
of  approximately  $1,132,000,  or $ 1.23 per share,  compared to  approximately
$668,000, or $ .73 per share, for the same period in 2001. This 69 % increase in
net income occurred despite (i) a $33,000  increase in net non-interest  expense
from  $2,062,000 to $ 2,095,000,  (ii) a $131,000  increase in the provision for
loan  losses  related to loan growth from  $311,000  to  $442,000,  and (iii) an
increase  in the  effective  tax rate from 32.5% to 36.0%.  The  increase in net
income resulted  exclusively from the $943,000  increase in net interest income,
from $3,362,000 to $4,305,000.

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 increased by eighteen basis points,  or 24.6%, and ROAE
increased by 397 basis points, or 55 %.


                                        9


<PAGE>




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

                                                     2002              2001
                                                     ----              ----
Return on Average Assets                               .91%             .73%

Return on Average Equity                             11.19%            7.22%

Average Stockholders' Equity
as a Percentage of Average Assets                     8.10%           10.07%

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 2002  increased  over that of the
same  period  in 2001 by $943  thousand,  or  28.0%.  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
2002.

Though growth in earning  assets of $ 43.8  million,  or 37.6 %, was certainly a
major factor in the growth of interest income,  the change in the earning assets
mix was equally  important to increasing  interest income.  The segment of total
earning assets with the highest interest yield, loans, increased as a percentage
of total earning assets from 83.0 % in 2001 to 85.8 % in 2002. However, the full
positive  effect of this  change in the  earning  assets  mix was  significantly
offset  by the  reduced  average  loan  yield in 2002,  as  compared  to that of
2001.Compared  to the same period last year, the average yield on loans declined
by 2.17 %. 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
$471 thousand, or 7.3 %.

Also  contributing  significantly to the increase in net interest income was the
$4.9 million  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 2002,  compared to those for the
same period in 2001, can be largely  attributed to balance changes,  both growth
and mix.  This is most evident when the decline from 2001 in the earning  assets
yield,  2.07 %, is compared to an almost  exact  decline in the average  cost of
funds rate, 2.06 %.

                                       10


<PAGE>


Table Two 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, 2002 and 2001.

Table Two       Net interest Income and Average Balance Analysis
              for the Nine Months Ended September 30, 2002 and 2001
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                  Interest               Average
Interest-Earning Assets (000)                                  Average       Balance           Income/Expense          Yield/Cost

                                                                 2002          2001          2002         2001        2002      2001
                                                                 ----          ----          ----         ----        ----      ----
Interest-bearing
<S>                                                           <C>            <C>         <C>            <C>           <C>      <C>
Due from Bank Accounts ...................................    $   9,080        4,590     $     113          155       1.66%    4.51%
Investments ..............................................       13,769       15,165           562          722       5.44%    6.37%
Loans ....................................................      137,510       96,755         6,908        6,437       6.72%    8.89%
                                                              ---------    ---------     ---------      -------       ----     ----
Total Interest Earning Assets ............................    $ 160,359      116,510     $   7,583        7,314       6.32%    8.39%


Noninterest-Earning Assets
Cash & Due From Banks ....................................    $   2,817        2,149
Loan Loss Reserve ........................................       (1,517)      (1,181)
Investments: Fair value ..................................          156           92
Premises & Equipment .....................................        2,823        2,844
Interest Receivable & Other ..............................        2,424        2,309
                                                              ---------      -------
Total Noninterest-Earning Assets .........................    $   6,706        6,213

TOTAL ASSETS .............................................    $ 167,062      122,723
                                                              =========      =======
Interest-Bearing Liabilities
NOW Accounts .............................................    $  30,606       23,726     $     552          706       2.41%    3.98%
Money Market & Savings ...................................        4,789        2,785            62           57       1.73%    2.74%
Time Deposits & IRAs .....................................       88,601       63,071         2,271        2,823       3.43%    5.98%
Fed Funds Purchased & Repos ..............................        5,734        4,086            52          100       1.21%    3.27%
Other borrowed funds .....................................       10,022        7,853           338          260       4.51%    4.42%
Demand Notes Issued to Treasury ..........................          260          211             3            6       1.54%    3.80%
                                                              ---------      -------     ---------      -------       ----     ----
Total Interest-Bearing Liabilities .......................    $ 140,012      101,732     $   3,278        3,952       3.13%    5.19%

Noninterest-Bearing Liabilities
Demand Deposits ..........................................    $  12,426        7,508
Interest Payable .........................................          636          823
Other Liabilities ........................................          466          299
                                                              ---------      -------
Total Noninterest-bearing Liabilities ....................    $  13,528        8,630

Stockholders' Equity .....................................    $  13,522       12,361

Total Liabilities &
Stockholder's Equity .....................................    $ 167,062      122,723
                                                              =========      =======
Net Interest Income ......................................                               $   4,305      $ 3,362

                  Net Yield on Earning Assets ............                                                            3.59%    3.86%
                  Interest Rate Spread ...................                                                            3.19%    3.20%
</TABLE>





                                       11


<PAGE>



Non-Interest Income

Non-interest income for the first nine months of 2002 increased by $ 377,000, or
124.4 %, from the 2001  amount of $ 303,000.  The  largest  increase  in any one
category of  non-interest  income was the $ 370,000  increase in commissions and
fees.  The increase in  commissions  and fees  accounted for 98.1 % of the total
increase in non-interest income.. Table Three provides a nine month 2002 to 2001
performance comparison of categories of non-interest income.

Table Three

                       Summary of Total Noninterest Income
                     for the Nine Months Ended September 30
                                  2002 and 2001
                             (Amounts in thousands)

                                                             2002           2001
                                                             ----           ----
Service Charges ..................................           $178           $177
Commissions & Fees ...............................            457             87
Other Non-interest Income ........................             45             39
                                                             ----           ----
Total ............................................           $680           $303

Non-Interest Expense

Non-interest expense for the first nine months of 2002 increased by $410,000, or
17.3 %, over the first  nine  months of 2001 of  $2,365,000.  While  some of the
operational  expense  increase  experienced in 2002 resulted from the growth the
bank  experienced,  a  significant  portion,  29 %,  of the  total  increase  in
non-interest  expense  can be  attributed  to the  fact  that  the  new  area of
operations  which  generated the increase in commissions and fees income in 2002
resulted in increased compensation in the form of commissions paid.

Table Four provides a nine month 2002 to 2001 performance  comparison of various
categories of non-interest expense.

Table Four           For the Nine Months Ended September 30
                                  2002 and 2001
                             (Amounts in thousands)

                                                           2002             2001
                                                           ----             ----
Salaries & Employee Benefits ...................          $1,749          $1,447
Occupancy & Equipment ..........................             366             371
Other ..........................................             660             547
                                                          ------          ------
Total ..........................................          $2,775          $2,365





                                       12


<PAGE>


Income Taxes

Through September 30, 2002,  $124,000 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 $442,430  year-to-date
charge to earnings as a provision  for potential  future loan losses  created an
income tax benefit.

CHANGES IN FINANCIAL POSITION

Investment portfolio

While a comparison of the corporation's investment portfolio totals at September
30, 2002 and 2001,  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. $9 million of government  agency issues with call dates during
this twelve month period were called - $6 million in the fourth  quarter of 2001
and $3 million in the first nine months of 2002.  The  investments  purchased as
replacements  for the called  issues  resulted  in a decline in the  portfolio's
average yield of just under 100 basis points.

     Table Five  demonstrates the  balance/maturity  changes which occurred from
September 30, 2001 to September 30, 2002.

Table Five              Analysis of Investment Securities
                             (Amounts in thousands)

September 30, 2002                      Available for Sale   Held for Investment
                                        ------------------   -------------------
                                       Amortized     Fair     Amortized    Fair
                                         Cost        Value      Cost      Value
                                         ----        -----      ----      -----
Due in one year or less ............    $     0    $     0    $     0    $     0
Due from one to five years .........     12,000     12,189        500        526
Due from five to ten years .........          0          0          0          0
Due After ten years ................        123        128        851        989
                                        =======    =======    =======    =======
                                        $12,123    $12,317    $ 1,351    $ 1,515

September 30, 2001                      Available for Sale   Held for Investment
                                        ------------------   -------------------
                                       Amortized     Fair     Amortized    Fair
                                         Cost        Value      Cost      Value
                                         ----        -----      ----      -----
Due in one year or less ............    $ 3,000    $ 3,031    $     0    $     0
Due from one to five years .........      3,000      3,065        500        534
Due from five to ten years .........      3,000      3,140          0          0
Due After ten years ................      2,123      2,134        850        896
                                        =======    =======    =======    =======
                                        $11,123    $11,370    $ 1,350    $ 1,430
Excludes $600 FHLB stock

                                       13


<PAGE>



Loan portfolio

From September 30, 2001 to September 30, 2002, loans increased by $34.7 million,
or 31.2 %. As is  shown in  Table  Six,  however,  the  composition  of the loan
portfolio on a percentage of the total basis  remained  relatively  stable.  The
greatest  percentage  change  took  place  in the  category  of  commercial  and
industrial loans. The increase in this category of loans accounted for one-third
of the total amount of increase.

As shown in Table Seven,  variable rate loans continue to comprise a substantial
percentage  (90.7%) of total loans. This percentage is up from the September 30,
2002, percentage of 85.5%.

On September 30, 2002, there were two loans on non-accrual  status which totaled
$225  thousand.  There was one loan in the amount of $765 thousand past due over
90 days.

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

                                                   2002               2001
                                                   ----               ----
Real Estate:
   Construction / Land Development .....   $ 15,339    10.5%   $ 12,652    11.4%
   1-4 Family Residential Properties ...     29,395    20.2%     23,718    21.3%
   Multifamily Residential Properties ..        967      .7%      1,185     1.1%
   Nonfarm Nonresidential Properties ...     56,632    38.8%     43,332    39.0%
   Other Real Estate Loans .............      1,798     1.2%        300      .3%
Commercial & Industrial ................     40,904    28.1%     29,401    26.4%
Consumer ...............................        769      .5%        528      .5%
Other ..................................         50    <.01%         50    <.01%
                                           ========            ========
TOTAL ..................................   $145,854   100.0%   $111,166   100.0%

Table Seven    Analysis of Loan Maturities and Repricing Frequency
                            as of September 30, 2002
                             (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 ...............        $132,133                                                                        $132,133*

Fixed Rate Loans ..................        $  1,412        $  4,075         $  1,764        $  3,010        $  3,235       $ 13,496

Total Loans .......................        $133,545        $  4,075         $  1,764        $  3,010        $  3,235       $145,629
</TABLE>

o  Excludes nonaccrual loans of $225

                                       14


<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 loss risks  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,
2002 and 2001,  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
                             (Amounts in thousands)

                                                          2002             2001
                                                          ----             ----
Balance at Beginning of Year .................         $ 1,450          $ 1,055
Provision Charged to Operations ..............             443              311
Loans Charged-off ............................            (290)             (27)
Loan Recoveries ..............................              17                1
Balance At End Of Period .....................         $ 1,620          $ 1,340

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, 2002,  the
cumulative  one-year  gap for the Bank was a positive or asset  sensitive $ 26.6
million. At September 30, 2002, the cumulative  five-year gap for the Bank was a
positive $20.8 million, or 11.7 % 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, 2002.

                                       15


<PAGE>


Table Nine

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                   Repricing Schedule as of September 30, 2002
                             (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 ....................................         $  9,800         $      0         $      0          $  9,800
Investment Securities .........................................                0           12,500              974            13,474
FHLB Stock ....................................................              600                0                0               600
Loans** .......................................................          137,620            4,774            3,235           145,629
                                                                        ========         ========         ========          ========
Total .........................................................         $148,020         $ 17,274         $  4,209          $169,503

** Excludes $225 in loans on nonaccrual status

Interest-Bearing Liabilities
NOW Accounts ..................................................         $ 31,681         $      0         $      0          $ 31,681
Savings & MMIA ................................................           15,504                0                0            15,504
Time Deposits:$100m & > .......................................           16,583            1,408                0            17,991
Time Deposits: < $100m ........................................           62,096            6,735                0            68,831
Repurchase Agreements .........................................            4,246                0                0             4,246
Other Borrowings ..............................................              451                0           10,000            10,451
                                                                        ========         ========         ========          ========
Total .........................................................         $130,561         $  8,143         $ 10,000          $148,704

Period  Gap ...................................................         $ 17,459         $  9,131         $ (5,791)         $ 20,799

Cumulative Gap ................................................         $ 17,459         $ 26,590         $ 20,799

Period Gap Ratios:
 Interest Sensitive Assets to
 Interest Sensitive Liabilities ...............................            113.4%           212.1%           (42.1%)

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities ..............................            113.4%           119.2%            114.0%
</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 ...........................              $ 7,359              $ 9,224              $ 1,408              $17,991
</TABLE>

                                                            16


<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 73.1% of total  assets  at  September  30,  2002.  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 to meet its operating needs.

Capital Resources

The equity capital of the Corporation  increased $ 1,385,000  between  September
30, 2001 and 2002. An increase in retained earnings of $1,370,000  accounted for
98.9 % of this increase.

The Bank is  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, 2002 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
As of Sept. 30, 2002                                       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) ..........................         $15,551          10.7%       $11,656          8.0%       $14,570          10.0%

Tier 1 Capital (to risk
weighted assets) ..........................         $13,931           9.6%       $ 5,828          4.0%       $ 8,742           6.0%

Tier 1 Capital (to
average assets) (leverage) ................         $13,931           8.0%       $ 6,984          4.0%       $ 8,730           5.0%
</TABLE>

                                       17


<PAGE>





RESULTS OF OPERATIONS:  THREE MONTH PERIOD ENDED  SEPTEMBER 30, 2002 COMPARED TO
THE SAME PERIOD ENDED SEPTEMBER 30, 2001.

Net income for the third quarter of 2002 increased $200,326, or 89.2 %, over the
same period last year. Non-interest expenses increased $191,278, or 24.4 %, over
last year,  and the amount  charged to earnings as a provision  to the loan loss
reserve  increased  $46,870,  or 44.6 %.  Serving as an offset to these  expense
increases  were a  $101,207  increase  in  non-interest  income  and a  $439,279
increase  in net  interest  income.  The  increase  in net  income for the third
quarter can be almost  exclusively  attributed  to the  increase in net interest
income for the period.

                                 Part 1 - Item 3

Controls and Procedures

(a) Based on their evaluation of the issuer's disclosure controls and procedures
(as defined in 17 C.F.R.  Sections  240.13a-14(c) and 240/15d014(c) as of a date
within 90 days prior to the filing of this quarterly report,  the issuer's chief
executive  officer and chief financial  officer concluded that the effectiveness
of such controls and procedures was adequate.

(b) There were no significant  changes in the issuer's  internal  controls or in
other factors that could  significantly  affect these controls subsequent to the
date of their  evaluation,  including  any  corrective  actions  with  regard to
significant deficiencies and material weaknesses.



















                                       18


<PAGE>





                           PART II - OTHER INFORMATION


Item 6 - Exhibits and Reports on Form 8-K

         (a)      No exhibits are included with this report.

         (b)      Reports on Form 8-K :    None


































                                       19


<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, 2002                   --------------------------------------------
                                    Barry L. Slider, President and Chief
                                    Executive Officer


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



























                                       20


<PAGE>


                                 CERTIFICATIONS

I, Barry L. Slider, certify that:

1. I have reviewed this quarterly  report on Form 10-QSB of First South Bancorp,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the registrant's auditors and to the audit committee
of the  registrant's  board of directors (or persons  performing  the equivalent
functions):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weakness in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.


                                            S/Barry L. Slider
Date:    November 12, 2002                  ------------------------------------
                                            Barry L. Slider
                                            President & Chief Executive Officer

                                       21

<PAGE>


                                 CERTIFICATIONS

I, V. Lewis Shuler, certify that:

1. I have reviewed this quarterly  report on Form 10-QSB of First South Bancorp,
Inc.;

2. Based on my  knowledge,  this  quarterly  report  does not contain any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made, not  misleading  with respect to the period covered by this quarterly
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included in this quarterly  report,  fairly present in all material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this quarterly report;

4.  The  registrant's  other  certifying  officer  and  I  are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed  such  disclosure  controls and  procedures  to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this quarterly report is being prepared;

b) evaluated  the  effectiveness  of the  registrant's  disclosure  controls and
procedures  as of a date  within  90  days  prior  to the  filing  date  of this
quarterly report (the "Evaluation Date"); and

c) presented in this quarterly report our conclusions about the effectiveness of
the  disclosure  controls  and  procedures  based  on our  evaluation  as of the
Evaluation Date;

5. The registrant's other certifying officer and I have disclosed,  based on our
most recent evaluation,  to the registrant's auditors and to the audit committee
of the  registrant's  board of directors (or persons  performing  the equivalent
functions):

a) all significant  deficiencies in the design or operation of internal controls
which  could  adversely  affect the  registrant's  ability  to record,  process,
summarize and report  financial data and have  identified  for the  registrant's
auditors any material weakness in internal controls; and

b) any  fraud,  whether  or not  material,  that  involves  management  or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officer  and I have  indicated  in this
quarterly  report  whether or not there  were  significant  changes in  internal
controls or in other factors that could  significantly  affect internal controls
subsequent to the date of our most recent  evaluation,  including any corrective
actions with regard to significant deficiencies and material weaknesses.

                                                s/V. Lewis Shuler
Date:    November 12, 2002                      --------------------------------
                                                V. Lewis Shuler
                                                Executive Vice President & Chief
                                                Financial Officer


                                       22