SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                    FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2005

                             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 of Incorporation)                    (IRS Employer Identification number)

                         1450 John B. White, Sr., Blvd.
                        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 such 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,  1,682,490
shares outstanding on April 11, 2005.

Transitional Small Business Disclosure Format (Check One)     YES { }   NO {X}









                                       1
<PAGE>









                            FIRST SOUTH BANCORP, INC.

                                   FORM 10-QSB

                                      INDEX


PART I - FINANCIAL INFORMATION                                              Page

         Item 1.  Financial Statements

                  Consolidated Balance Sheets .................................1

                  Consolidated Statements of Operations .......................2

                  Consolidated Statements of Comprehensive Income .............3

                  Consolidated Statements of Cash Flows .......................4

                  Notes to Unaudited Consolidated Financial Statements ......5-6


         Item 2.  Management's Discussion and
                      Analysis or Plan of Operation ........................6-16

         Item 3.  Controls and Procedures ....................................17


Part II -         OTHER INFORMATION

         Item 6.  Exhibits ...................................................17


SIGNATURES ...................................................................18


















                                       2
<PAGE>





                         PART I - FINANCIAL INFORMATION

                          Item 1 - Financial Statements

                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY
                           Consolidated Balance Sheets
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                               (Unaudited)
                                                                                                 March 31,                Dec. 31,
                                                                                                    2005                    2004
                                                                                                    ----                    ----
Assets
<S>                                                                                             <C>                       <C>
Cash & due from banks ..........................................................                $   5,801                 $   4,092
Due from banks - interest bearing ..............................................                   19,000                     9,200
 Investment securities:
    Securities held to maturity ................................................                    2,772                     3,358
    Securities available for sale ..............................................                   18,417                    18,506
Loans ..........................................................................                  260,046                   254,749
      Less, allowance for loan losses ..........................................                   (3,150)                   (2,900)
Loans - net ....................................................................                  256,896                   251,849
Property & equipment, net ......................................................                    5,256                     5,334
Investment in FSBS Capital Trust ...............................................                      155                       155
Other assets ...................................................................                    4,670                     3,936
                                                                                                ---------                 ---------
Total assets ...................................................................                $ 312,967                 $ 296,430
                                                                                                =========                 =========

Liabilities
Deposits:
      Noninterest-bearing ......................................................                $  16,355                 $  18,633
      Interest-bearing .........................................................                  245,339                   229,242
                                                                                                ---------                 ---------
    Total deposits .............................................................                  261,694                   247,875

Securities sold under repurchase agreements ....................................                    5,708                     4,700
Other borrowed funds ...........................................................                   10,000                    10,000
Demand notes issued to the U.S. Treasury .......................................                      278                       417
Subordinated debt ..............................................................                    5,155                     5,155
Other liabilities ..............................................................                    2,510                     1,439
                                                                                                ---------                 ---------
    Total liabilities ..........................................................                  285,345                   269,586

Shareholders' equity
Common stock - no par value; 30,000,000 authorized,
Outstanding 1,682,490
Paid-in capital ................................................................                   18,638                    18,638
Undivided profits ..............................................................                    9,099                     8,225
Accumulated other comprehensive income/(loss) ..................................                     (115)                      (19)
                                                                                                ---------                 ---------
Total shareholders' equity .....................................................                   27,622                    26,844

Total liabilities and shareholders' equity .....................................                $ 312,967                 $ 296,430
                                                                                                =========                 =========
</TABLE>



                                       3
<PAGE>



                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations



                                                                 (Unaudited)
                                                             Three Months ended,
                                                                  March 31
                                                                  --------
                                                             2005          2004
                                                             ----          ----
                                                          (Dollars in thousands,
                                                           except per share)
Interest income
                Loans, including fees .................   $ 4,390       $ 3,411
                Investment securities .................       202           119
                Interest bearing deposits .............        83             5
                                                          -------       -------

                Total interest income .................     4,675         3,535
Interest expense
                Deposits and borrowings ...............     1,730         1,132

Net interest income ...................................     2,945         2,403
                Provision for loan losses .............      (287)          (13)
                                                          -------       -------
Net interest income after provision ...................     2,658         2,390

Noninterest income
                Service charges on deposit accounts ...        71            93
                Other income ..........................       146           120
                                                          -------       -------
                Total noninterest income ..............       217           213

Noninterest expense
                Salaries and benefits .................       929           828
                Occupancy and equipment ...............       202           215
                Other expense .........................       371           366
                                                          -------       -------
                Total noninterest expense .............     1,502         1,409

Income before income taxes ............................     1,373         1,194
                Provision for income taxes ............       499           432
                                                          -------       -------

Net income ............................................   $   874       $   762
                                                          =======       =======

Basic per share earnings ..............................   $  0.52       $  0.55

Diluted earnings per share ............................   $  0.49       $  0.52












                                       4
<PAGE>











                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                 Consolidated Statements of Comprehensive Income
                          (Dollar amounts in thousands)



                                                                 (Unaudited)
                                                             Three Months ended
                                                                  March 31,
                                                                  ---------
                                                               2005        2004
                                                               ----        ----
Net Income ...........................................       $ 874         $762

Other comprehensive income (loss):

Change in unrealized holdings gains &
    losses on available for sale securities ..........        (155)          23

Income tax (expense) benefit on other
                comprehensive income (loss) ..........          59           (9)
                                                             -----         ----

Total other comprehensive income (loss) ..............         (96)          14
                                                             -----         ----

Comprehensive income .................................       $ 779         $776





















                                       5
<PAGE>







                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                                    (Unaudited)
                                                                                                                Three Months ended,
                                                                                                                     March 31,
                                                                                                                2005            2004
                                                                                                                ----            ----

Operating Activities
<S>                                                                                                      <C>               <C>
Net income .....................................................................................         $    874          $    762

Adjustments to reconcile net income to net cash provided by operating activities
              Provision for loan losses ........................................................              287                13
              Depreciation .....................................................................               92                88
              Net Amortization of Securities ...................................................                1                10
              (Increase) in cash surrender value of life insurance .............................               (7)               (8)
              (Increase) in other assets .......................................................              (97)              (95)
              Increase (decrease) in accrued expenses and other liabilities ....................              358                (1)
                                                                                                         --------          --------

Net cash provided by operating activities ......................................................            1,508               769
                                                                                                         --------          --------


Investing Activities
              Purchase of securities available for sale ........................................                -            (1,000)
              Sale/(Purchase) of restricted FHLB stock .........................................              (90)               90
              Proceeds from MBS principal paydowns .............................................              234                56
              Proceeds from called available for sale securities ...............................              383             2,000
              Origination of loans, net of principal collected .................................           (5,297)           (4,839)
              (Purchase) of premises and equipment .............................................              (56)              (53)
              Investments in and advances to subsidiaries ......................................                -              (155)
                                                                                                         --------          --------

Net cash used in investing activities ..........................................................           (4,826)           (3,901)
                                                                                                         --------          --------

Financing Activities
              Net increase in deposits .........................................................           13,819             5,223
              Net increase (decrease) in retail repurchase agreements ..........................            1,008            (2,650)
              Net (decrease) in other borrowings ...............................................                -            (2,072)
              Proceeds from issuance of subordinated debt ......................................                -             5,155
                                                                                                         --------          --------

Net cash provided by financing activities ......................................................           14,827             5,656
                                                                                                         --------          --------

Net increase in cash and cash equivalents ......................................................           11,509             2,524

Cash and cash equivalents, beginning ...........................................................           13,292             4,462
                                                                                                         --------          --------

Cash and cash equivalents, ending ..............................................................         $ 24,801          $  6,986
                                                                                                         ========          ========
</TABLE>





                                       6
<PAGE>






                   FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated  Financial Statements

Note 1.  Basis of Presentation

The accompanying unaudited financial statements have been prepared in accordance
with accounting  principles  generally accepted in the United States 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  accounting
principles  generally  accepted  in the  United  States for  complete  financial
statements.  However, in the opinion of management,  all adjustments  considered
necessary for fair  presentation  have been included.  Operating results for the
three months ended March 31, 2005 are not necessarily  indicative of the results
that  may be  expected  for the  year  ended  December  31,  2005.  For  further
information,  please refer to the financial statements and footnotes thereto for
the  Corporation's  fiscal  year  ended  December  31,  2004,  contained  in the
Corporation's 2004 Annual Report on Form 10-KSB.

Note 2.  Accounting for Stock-Based Compensation

In accordance  with SFAS No. 123,  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.  No stock-based  employee  compensation  cost is
reflected in net income for these plans.

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.




(Dollar amounts in thousands, except per share            Three          Three
amounts)                                                 Months         Months
                                                          ended          ended
                                                       March 31,      March 31,
                                                          2005           2004
                                                          ----           ----

Net income: As reported ..............................  $   874          $   762

Deduct:  Total stock-based compensation cost
             determined under the fair value method
             net of tax ..............................       38               41
                                                        -------          -------

Pro forma ............................................  $   836          $   721
                                                        =======          =======


Basic earnings per share:
             As reported .............................  $  0.52          $  0.55
             Pro forma ...............................  $  0.50          $  0.52

Diluted earnings per share
            As reported ..............................  $  0.49          $  0.52
            Pro forma ................................  $  0.47          $  0.49

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-month  periods  ended  March 31, 2005 and 2004;
dividend yield of 0%, expected  volatility of 50%,  risk-free  interest rates of
4.33% and 3.77%, respectively, and expected lives of 10 years for the options.



                                       7
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

Note 3 - Earnings per Share

Earnings  per share has been  determined  under the  provisions  of statement of
Financial  Accounting  Standards No. 128,  Earnings Per Share.  For the quarters
ended March 31, 2005 and 2004,  basic earnings per share has been computed based
upon the weighted average common shares  outstanding of 1,682,490 and 1,382,040,
respectively.  The Board of  Directors  approved  a  three-for-two  split of the
Company's common stock effected in the form of a stock dividend for shareholders
of  record on March 5,  2004.  Accordingly  all share and per share  information
presented  throughout the financial  statements has been restated to reflect the
effect of the stock split.

         The only  potential  stock of the  Company as defined in  Statement  of
Financial Accounting Standards No. 128, Earnings Per Share, is 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
March 31, 2005 and 2004 (Dollars in thousands, except share data):

                                                          Three Months Ended
                                                               March 31,
                                                               ---------
                                                           2005          2004
                                                           ----          ----

Net Income ...................................       $      874       $      762

Weighted average outstanding shares ..........        1,682,490        1,382,040

Dilutive effect of stock options .............          109,948           84,553
                                                     ----------       ----------

Weighted average diluted shares ..............        1,792,438        1,466,593

Diluted earnings per share ...................       $     0.49       $     0.52


Note 4 - Impact of Recently Issued Accounting Standards

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


In April 2005,  the  Securities  and Exchange  Commission's  Office of the Chief
Accountant and its Division of Corporation Finance has released Staff Accounting
Bulletin  (SAB) No.107 to provide  guidance  regarding the  application  of FASB
Statement  No.123 (revised 2004),  "Share-Based  Payment".  Statement  No.123(R)
covers a wide range of share-based  compensation  arrangements  including  share
options,  restricted share plans,  performance-based  awards, share appreciation
rights,  and  employee  share  purchase  plans.  SAB 107  provides  interpretive
guidance related to the interaction  between  Statement  No.123R and certain SEC
rules and  regulations,  as well as the staff's views regarding the valuation of
share-based  payment  arrangements  for public  companies.  SAB 107 also reminds
public companies of the importance of including  disclosures within filings made
with the SEC relating to the accounting for  share-based  payment  transactions,
particularly during the transition to Statement No.123R.


                                       8
<PAGE>


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




Forward Looking Statements
         Statements  included in this Form 10-QSB  which are not  historical  in
nature  are  intended  to be,  and are  hereby  identified  as  "forward-looking
statements"  for  purposes  of the safe  harbor  provided  by Section 21E of the
Securities  Exchange  Act  of  1934,  as  amended.  Words  such  as  "estimate",
"project",  "intend",  "expect",  "believe",  "anticipate",  "plan", and similar
expressions  identify forward looking  statements.  The Company cautions readers
that forward looking statements, including without limitation, those relating to
the Company's new offices, future business prospects, revenues, working capital,
liquidity, capital needs, adequacy of allowance for loan losses, interest costs,
and income,  are  subject to certain  risks and  uncertainties  that could cause
actual results to differ from those indicated in forward looking statements, due
to several important factors herein  identified,  among others,  and other risks
and factors identified from time to time in the Company's reports filed with the
Securities and Exchange Commission.  These forward-looking  statements are based
on  current   expectations,   estimates  and  projections  about  our  industry,
management's  beliefs,  and  assumptions  made by management.  Such  information
includes,  without  limitation,   discussions  as  to  estimates,  expectations,
beliefs,  plans,  strategies,  and objectives  concerning  the Company's  future
financial and operating  performance.  These  statements  are not  guarantees of
future performance and are subject to risks,  uncertainties and assumptions that
are difficult to predict,  particularly in light of the fact that the Company is
a relatively  new company  with limited  operating  history.  Therefore,  actual
results may differ from those  expressed or forecasted  in such  forward-looking
statements. The risks and uncertainties include, but are not limited to:

     o    The Company's growth and ability to maintain growth;
     o    government  monetary and fiscal  policies,  as well as legislative and
          regulatory changes;
     o    the effect of interest  rate changes on our level and  composition  of
          deposits,  loan  demand  and the  value  of our  loan  collateral  and
          securities;
     o    the effects of competition from other financial institutions operating
          in the Company's  market areas and elsewhere,  including  institutions
          operating locally, regionally, nationally and internationally;
     o    failure of assumptions  underlying the  establishment of the allowance
          for loan losses, including the value of collateral securing loans; and
     o    loss of consumer  confidence and economic  disruptions  resulting from
          terrorist activities.

         The Company  undertakes no obligation to publicly  update or revise any
forward-looking  statements,  whether  as a result  of new  information,  future
events or otherwise.  In light of these risks,  uncertainties,  and assumptions,
the forward-looking events discussed in this report might not occur.

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

         This  discussion is intended to assist in  understanding  the financial
condition  and  results  of  operations  of the  Company,  and should be read in
conjunction with the financial  statements and related notes contained elsewhere
herein and in the Company's 2004 annual report on Form 10-KSB.  Because the Bank
is responsible for all of the Company's operations, the discussion will refer to
the results of operations of the Bank.










                                       9
<PAGE>




RESULTS OF  OPERATIONS:  THREE MONTH PERIOD ENDED MARCH 31, 2005 COMPARED TO THE
SAME PERIOD ENDED MARCH 31, 2004.

Net Income
For the first three  months of 2005,  First  South  Bancorp,  Inc.  earned a net
profit of approximately $874 thousand,  or $ .49 per diluted share,  compared to
approximately $762 thousand,  or $ .52 per diluted share, for the same period in
2004.  Earnings per share decreased because of the issuance of 300,000 shares of
common  stock in the second  quarter of 2004.  The 15% increase in net income is
attributed to several  factors  including a 23% increase in net interest  income
from $2.4 million  during the first three months in 2004 to $2.9 million  during
the same  period in 2005.  The  provision  for loan  losses  increased  from $13
thousand in the first quarter of 2004 to $287 thousand during the same period in
2005.  Noninterest  income grew  slightly  from $213 thousand in 2004 during the
first  three  months of 2004 to $217  thousand  during the same  period in 2005.
Noninterest  expense  experienced  a 7% increase  from $1.4 million in the first
quarter of 2004 to $1.5  million in the same period in 2005.  This  increase was
primarily attributed to the increase in salaries and benefits from $828 thousand
in 2004 to $929  thousand in 2005,  which  resulted  from an increase of 52 full
time  equivalent  employees  as of March  31,  2004 to 59 full  time  equivalent
employees as of March 31, 2005.

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  and  ROAE for the  first  quarter  of 2005  was  1.15%  and  12.75%,
respectively.




Table One
                                            Selected Earnings Ratios
                                           at or for the Quarter Ending
                                                     March 31,
                                                     ---------
                                                 2005        2004
                                                 ----        ----
Return on Average Assets                         1.15%       1.20%

Return on Average Equity                        12.75%      18.02%

Dividend Payout Ratio                              N/A         N/A

Average Stockholders Equity
as a Percentage of Average
Assets                                           8.99%       6.67%

Performance results as measured by ROAA and ROAE can be primarily  attributed to
changes in the volume and  composition  of earning  assets 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.  Net interest income for the
first  three  months of 2005  increased  over that of the same period in 2004 by
$542 thousand, or 23%. A number of factors combined to produce the change in net
interest income.

Total average  interest  earning  assets grew by $48.8 million or 20% during the
period from March 31, 2004 to March 31, 2005.  This  increase in earning  assets
produced greater interest income, an increase from $3.5 million during the first


                                       10
<PAGE>

three  months of 2004 to $4.7 million  during the same period in 2005,  or a 32%
increase.  The overall yield on average  interest earning assets increased by 66
basis points from 5.82% in 2004 to 6.48% in 2005.

Total average interest bearing  liabilities  increased by 17.5% or $37.9 million
from March 31, 2004 to March 31, 2005, which was less than the growth in average
earning  assets  during  this same period of 20% or $48.8  million.  The cost of
funds increased from 2.09% as of March 31, 2004 to 2.75% as of March 31, 2005, a
66 basis point  increase,  the same amount of basis  points as the growth in the
yield on average interest  earning assets.  Because the yield on average earning
assets and the cost of interest  bearing  liabilities  increased  by exactly the
same percentage, the interest rate spread remained unchanged at 3.73% from March
31, 2004 to March 31, 2005.  The net yield on earning  assets did increase by 35
basis  points  during this same  period  primarily  due to the larger  growth in
average  earning  assets  compared  to the  growth in average  interest  bearing
liabilities.





                                       11
<PAGE>





Table Two includes a detailed  comparison  of the average  balances,  yields and
rates for the interest  sensitive  segments of the Company's  balance sheets for
the three months ended March 31, 2005 and 2004.


<TABLE>
<CAPTION>

Table Two                                                     Net Interest Income and Average Balance Analysis
                                                                    for the Three Months Ended March 31,
                                                                               2005 and 2004
                                                                           (Amounts in thousands)

                                                                                        Interest                  Average
                                                         Average Balance             Income/Expense             Yield/Cost
Interest-Earning Assets                                  2005          2004         2005          2004          2005    2004
------------------------                                 ----          ----         ----          ----          ----    ----

<S>                                                  <C>           <C>            <C>           <C>            <C>     <C>
Int. Bearing Due from Banks .....................    $ 13,819      $  1,741       $   83        $    5         2.44%   1.15%
Investments .....................................      21,680        13,356          202           119         3.78%   3.57%
Loans ...........................................     257,106       228,730        4,390         3,411         6.92%   5.98%
                                                     --------      --------       ------        ------         -----   -----
Total Interest Earning Assets ...................     292,605       243,827        4,675         3,535         6.48%   5.82%

Noninterest-Earning Assets
Cash & Due From Banks ...........................       5,328         4,172
Allowance for Loan Losses .......................     (3,034)       (2,601)
Investments: Fair Value .........................        (72)            64
Premises & Equipment ............................       5,269         5,393
Investment in unconsolidated subsidiary .........         155           103
Interest Receivable & Other .....................       4,520         3,337
                                                     --------      --------
Total Noninterest-Earning Assets ................      12,166        10,468
                                                     --------      --------

TOTAL ASSETS ....................................    $304,771      $254,295
                                                     ========      ========

Interest-Bearing Liabilities
NOW Accounts ....................................    $ 35,697      $ 34,519       $  201        $  136         2.28%   1.58%
Money Market & Savings ..........................      52,480        45,495          293           186         2.26%   1.64%
Time Deposits & IRAs ............................     146,881       117,943        1,032           655         2.85%   2.23%
Fed Funds Purchased & Repos .....................       4,816         4,557           24             5         2.02%   0.44%
Other borrowed funds ............................      10,000        11,043          111           116         4.50%   4.21%
Subordinated debt ...............................       5,000         3,338           68            34         5.52%   4.09%
Demand Notes Issued to Treasury .................         189           207            1             -         2.15%   0.66%
                                                     --------      --------       ------        ------                 -----
Total Interest-Bearing Liabilities ..............     255,063       217,102        1,730         1,132         2.75%   2.09%

Noninterest-Bearing Liabilities
Demand Deposits .................................      19,945        18,286
Interest Payable ................................         643           553
Other Liabilities ...............................       1,703         1,396
                                                     --------      --------
Total Non Int-Bearing Liabilities ...............      22,291        20,235


Shareholder's Equity ............................      27,417        16,958
                                                     --------      --------

TOTAL LIABILITIES & EQUITY ......................    $304,771      $254,295
                                                     ========      ========

Net Interest Income .............................                                 $2,945        $2,403
                                                                                  ======        ======

  Net Yield on Earning Assets ...................                                                              4.08%   3.91%
  Interest Rate Spread ..........................                                                              3.73%   3.73%
</TABLE>






                                       12
<PAGE>





Noninterest Income
Noninterest  income for the first three months of 2005 grew  slightly  from $213
thousand  during the first three  months in 2004 to $217  thousand in 2005, a 2%
increase. Service charges decreased by $22 thousand from $93 thousand during the
first  quarter  of 2004 to $71  thousand  during the same  period in 2005.  This
decrease was offset by the increase in  commissions  and fees from $101 thousand
during the first three months in 2004 to $128 thousand during the same period in
2005,  a $27  thousand or 27%  increase.  The  decrease  in service  charges was
partially the result of a decrease in NSF fees of $7 thousand from 2004 to 2005.
The increase in  commissions  and fees  primarily  resulted  from an increase in
brokerage  service  commissions of $47 thousand during the first three months of
2004  compared  to 2005,  which  offset the  decrease  of $24  thousand  in loan
brokerage fees between the two periods.

Table Three provides a three month 2005 to 2004 comparison of various categories
of noninterest income.

Table Three                                 Summary of Total Noninterest Income
                                            for the Three Months Ended March 31
                                                       2005 and 2004
                                                  (Amounts in thousands)

                                               2005                  2004
                                               ----                  ----
Service Charges ...........................    $ 71                  $ 93
Commissions & Fees ........................     128                   101
Other Noninterest Income ..................      18                    19
                                               ----                  ----
Total .....................................    $217                  $213

Noninterest Expense
Noninterest  expense  for  the  first  three  months  of 2005  increased  by $93
thousand,  or 7%, over the first three months of 2004 total of $1.4 million. The
increase in  salaries  and  employee  benefits  was the  primary  reason for the
overall  increase in noninterest  expense as this  particular  expense grew from
$828 thousand  during the first quarter of 2004 to $929 thousand during the same
period  in  2005,  a $101  thousand  or 12%  increase.  This  increase  resulted
primarily  from the  increase in full time  equivalent  employees  from 52 as of
March 31, 2004 to 59 as of March 31, 2005.


Table Four provides a three month 2005 to 2004 comparison of various  categories
of noninterest expense.

Table Four                                 Summary of Total Noninterest Expense
                                            For the Three Months Ended March 31
                                                       2005 and 2004
                                                  (Amounts in thousands)

                                                 2005                  2004
                                                 ----                  ----

Salaries & Employee Benefits ..............    $  929                $  828
Occupancy & Equipment .....................       202                   215
Other expense .............................       371                   366
                                               ------                ------
Total .....................................    $1,502                $1,409





                                       13
<PAGE>





Income Taxes

Provision  for income  taxes for the three  months ended March 31, 2005 was $499
thousand  as compared to $432  thousand  in 2004 during the same  period,  a 16%
increase.  This increase was due to the overall  increase in income before taxes
of $179 thousand or 15% during the same period.

CHANGES IN FINANCIAL POSITION

Investment portfolio

During the first three  months of 2005,  a  $375,000  investment  security was
called at a premium of $382,500,  a gain of $7,500.  No purchases of  investment
securities were made during this period.


<TABLE>
<CAPTION>
Table Five                                                             Analysis of Investment Securities
                                                                            (Amounts in thousands)


December 31 ,2004                                               Available-for-Sale                     Held-for-Investment
                                                                ------------------                     -------------------
                                                                           Estimated Fair         Amortized         Estimated Fair
                                                        Amortized Cost          Value               Cost                 Value
                                                        --------------          -----               ----                 -----
<S>                                                        <C>                 <C>                 <C>                 <C>
Due in one year or less ............................       $ 1,499             $ 1,494             $ 1,004             $ 1,003
Due from one to five years .........................        13,000              12,985                   -                   -
Due from five to 10 years ..........................         1,000               1,001                   -                   -
Due after ten years ................................         1,123               1,127                 854                 997
Mortgage backed securities .........................           961                 945               1,500               1,539
                                                           -------             -------             -------             -------
                                                           $17,583             $17,552             $ 3,358             $ 3,539
                                                           =======             =======             =======             =======
</TABLE>


<TABLE>
<CAPTION>
March 31, 2005                                                  Available-for-Sale                     Held-for-Investment
                                                                ------------------                     -------------------
                                                                           Estimated Fair         Amortized         Estimated Fair
                                                        Amortized Cost          Value               Cost                 Value
                                                        --------------          -----               ----                 -----
<S>                                                        <C>                 <C>                 <C>                  <C>
Due in one year or less ............................       $ 3,499             $ 3,476             $ 1,003              $1,001
Due from one to five years .........................        11,000              10,878                   -                   -
Due from five to 10 years ..........................         1,000                 991                   -                   -
Due after ten years ................................         1,123               1,110                 480                 607
Mortgage backed securities .........................           937                 918               1,289               1,303
                                                           -------             -------             -------              ------

                                                           $17,559             $17,373             $ 2,772              $2,911
                                                           =======             =======             =======              ======
</TABLE>

Excludes  equity  securities with no readily  determinable  market value of $954
thousand on December 31, 2004 and $1,044 thousand on March 31, 2005.



                                       14
<PAGE>


Loan portfolio
From December 31, 2004 to March 31, 2005 total loans grew from $254.7 million to
$260.0  million,  or 2%. For the twelve month period  between March 31, 2004 and
March 31,  2005,  loans  increased  by $27.9  million,  or 12%.  The  percentage
composition of the loan portfolio,  as shown in Table Six,  changed  slightly as
the  percentage of real estate loans grew by 4% of the total  portfolio from 78%
on March 31, 2004 to 82% on March 31,  2005.  Commercial  and  industrial  loans
decreased by 4% as a percentage of the loan portfolio from 22% on March 31, 2004
to 18% as of March 31 ,2005.

As shown in Table Seven,  Variable Rate Loans  comprised 92.7% of the total loan
portfolio.

On March 31, 2005,  there were four loans  totaling  $594 thousand on nonaccrual
status.



<TABLE>
<CAPTION>
Table Six                                                              Analysis of Loans
                                                                       March 31 Balances
                                                                    (Amounts in thousands)


Real Estate:                                                     2005                             2004
                                                                 ----                             ----
<S>                                                    <C>             <C>              <C>             <C>
   Construction/Land Development ...................   $ 18,394         7.07%           $ 17,054         7.35%
   1-4 Family Residential Properties ...............     66,695        25.65%             57,842        24.92%
   Multifamily Residential Properties ..............      4,081         1.57%                604         0.26%
   Nonfarm Nonresidential Properties ...............    122,502        47.11%            104,055        44.84%
   Other Real Estate Loans .........................      1,185         0.46%              1,350         0.58%
Commercial & Industrial ............................     46,754        17.98%             50,618        21.81%
Consumer ...........................................        435         0.17%                555         0.24%
                                                       --------        ------           --------         -----
Total ..............................................   $260,046        100.0%           $232,078        100.0%
                                                       ========        ======           ========        ======
</TABLE>




<TABLE>
<CAPTION>
Table Seven                         Analysis of Loan Maturities and Repricing Frequency
                                                   as of March 31, 2005
                                                  (Amounts in thousands)

                               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          $240,714      $    -     $    -      $    -        $  -    $240,714

Fixed Rate Loans             $  3,818      $3,966     $6,414      $4,121        $419    $ 18,738
                             --------      ------     ------      ------        ----    --------

Total Loans                  $244,532      $3,966     $6,414      $4,121        $419    $259,452
                             ========      ======     ======      ======        ====    ========
</TABLE>


Excludes loans on non-accrural status of $594 thousand


                                       15
<PAGE>


The  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 on each individual loan and considers the loss risks associated with
various risk categories in  relationship to the current and forecasted  economic
environment.  Management  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.  The  increase of
$274,000 in loan loss  provision  from quarter end March 31, 2004 to quarter end
March 31, 2005 was primarily due to the bank's formula for calculating allowance
for loan  losses  based on loan  grades.  The loan  portfolio  during  the first
quarter of 2005 experienced a downgrading  pertaining to some outstanding  loans
in the portfolio.  Table Eight provides the results of the year-to-date analysis
for the quarters  ending March 31, 2005 and 2004, 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 Three Months Ended March 31

                                           2005                        2004
                                           ----                        ----
Balance at Beginning of Year ........  $2,900,000                  $2,600,000
Provision Charged to Operations .....     287,000                      13,000
Loans Charged-Off ...................     (39,000)                    (10,000)
Loan Recoveries .....................       2,000                       2,000
                                       ----------                  ----------
Balance at End Of Period ............  $3,150,000                  $2,605,000

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 March
31, 2005,  the  cumulative  one-year  gap for the Bank was a positive,  or asset
sensitive,  $82.6 million.  At March 31, 2005, the cumulative  five-year gap for
the Bank was a positive  $33.5  million.  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  markets   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 March 31, 2005.


                                       16
<PAGE>

<TABLE>
<CAPTION>
Table Nine                              Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                                                        Repricing Schedule as of March 31, 2005
                                                                 (Amounts in thousands)

                                                One Year        Over One Year         Over
                                                 or Less        to Five Years       Five Years              Total
                                                 -------        -------------       ----------              -----
Interest Earning Assets

<S>                                             <C>              <C>               <C>                    <C>
Due From Banks .............................    $ 19,000         $      -          $     -                $ 19,000
Investment Securities* .....................       6,728           11,000            2,603                  20,331
FHLB Stock .................................       1,044                -                -                   1,044
Loans** ....................................     248,498           10,535              419                 259,452
                                                ========         ========          =======                ========

Total ......................................    $275,270         $ 21,535          $ 3,022                $299,827
*Amortized Cost
**Excludes $594 thousand in loans on non-accrural status.

Interest Bearing
Liabilities

NOW Accounts ...............................    $ 41,924         $      -          $     -                $ 41,924
Savings & MMIA .............................      54,267                -                -                  54,267
Time Deposits:$100 & > .....................      23,120           19,844                -                  42,964
Time Deposits: <$100m ......................      62,366           43,818                -                 106,184
Repurchase Agreements ......................       5,708                -                -                   5,708
Other Borrowed Funds .......................       5,278                -           10,000                  15,278
                                                ========         ========          =======                ========

Total ......................................    $192,663         $ 63,662          $10,000                $266,325

Period Gap .................................    $ 82,607         $(42,127)         $(6,978)               $ 33,502

Cumulative Gap .............................    $ 82,607         $ 40,480          $33,502

Period Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities ...........      142.9%            33.8%            30.2%

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities ...........      142.9%           115.8%           112.6%
</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 .......................    $  4,542             $ 18,578         $ 19,844        $ 42,964
</TABLE>


                                       17
<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 75% of total assets at March 31, 2005. 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 increase its borrowings from that institution. The bank
also has $12 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 $10.6 million  increase in Tier 1 capital for the Company  during the twelve
month period  between  March 31, 2004 and 2005  primarily  resulted  from a $3.1
million  increase in retained  earnings  and the  issuance of 300,000  shares of
common stock for $7.5 million  during the second quarter of 2004. The difference
in total risk based  capital of $541  thousand  between the Bank and the Holding
Company as of March 31, 2005 is due to the Board's  intent to keep $541 thousand
in capital at the Holding Company level at this time.

The Company and the 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.  At March 31, 2005 the Company and
the Bank met all of the requirements to be well capitalized.













                                       18
<PAGE>



The Bank's and  Company's  March 31, 2005  capital  ratios are  presented in the
following table,  compared with the "well  capitalized" and minimum ratios under
the FDIC regulatory definitions and guidelines:


The Bank
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
                                                                                                                 To Be Well
                                                                                                              Capitalized Under
                                                                                      For Capital             Prompt Corrective
                                                              Actual               Adequacy Purposes          Action Provisions
                                                              ------               -----------------          -----------------
                                                        Amount       Ratio       Amount       Ratio           Amount         Ratio
                                                        ------       -----       ------       -----           ------         -----
March 31, 2005
<S>                                                     <C>           <C>        <C>            <C>         <C>             <C>
                     Total Capital
                     (To Risk Weighted Assets) .....    $35,269,000   13.66%     $20,648,400   >8.0%        $25,810,500    >10.0%
                     Tier I Capital
                     (To Risk Weighted Assets) .....    $27,219,000   10.55%     $10,324,200   >4.0%        $15,486,300     >6.0%
                     Tier I Capital
                     (To Average Assets) ...........    $27,219,000    8.94%     $12,184,280   >4.0%        $15,230,350     >5.0%

</TABLE>


<TABLE>
<CAPTION>

The Holding Company
(Dollar Amounts in Thousands)
                                                                                                                 To Be Well
                                                                                                              Capitalized Under
                                                                                      For Capital             Prompt Corrective
                                                              Actual               Adequacy Purposes          Action Provisions
                                                              ------               -----------------          -----------------
                                                        Amount       Ratio       Amount       Ratio           Amount         Ratio
                                                        ------       -----       ------       -----           ------         -----
March 31, 2005
<S>                                                     <C>           <C>        <C>            <C>         <C>             <C>
                     Total Capital
                     (To Risk Weighted Assets) .......  $35,810,000   13.87%     $20,648,400    >8.0%       $25,810,500     >10.0%
                     Tier I Capital
                     (To Risk Weighted Assets) .......  $32,660,000   12.65%     $10,324,200    >4.0%       $15,486,300      >6.0%
                     Tier I Capital
                     (To Average Assets) .............  $32,660,000   10.72%     $12,184,280    >4.0%       $15,230,350      >5.0%
</TABLE>




                                       19
<PAGE>



Item 3 - Controls and Procedures

(a)  Based on the  evaluation  required by 17 C.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 such controls and  procedures,  as of the end of the period covered by
     this quarterly report, were effective.



(b)  There has been no change in the Company's  internal  control over financial
     reporting  during  the most  recent  fiscal  quarter  that  has  materially
     affected,  or is  reasonably  likely to  materially  affect,  the Company's
     internal control over financial reporting.

                           PART II - OTHER INFORMATION

Item 6 - Exhibits

                  Exhibits.

Exhibit No.  Description



31.1     13a-14(a)/15d-14(a) Certifications of Chief Executive Officer

31.2     13a-14(a)/15d-14(a) Certifications of Chief Financial Officer

32       Section 1350 Certifications














                                       20
<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
May 11, 2005                      ---------------------------------------------
                                  Barry L. Slider, President and Chief Executive
                                     Officer


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















                                       21
<PAGE>


                                  Exhibit Index



Exhibit No.   Description


31.1     13a-14(a)/15d-14(a) Certifications of Chief Executive Officer

31.2     13a-14(a)/15d-14(a) Certifications of Chief Financial Officer

32       Section 1350 Certifications























                                       22