SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                               Amendment No. 1 to
                                   FORM 10-Q

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

                    FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2006

                             Commission File Number
                                    000-28037

                            FIRST SOUTH BANCORP, INC.
             (Exact Name of registrant 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
                          (Registrant's Telephone Number)



Check whether the registrant (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 ( )

Indicate by check mark whether the registrant is a large  accelerated  filer, an
accelerated  filer, or a  non-accelerated  filer. See definition of "accelerated
filer and a large  accelerated  filer" in Rule 12b-2 of the Exchange Act. (Check
one): Large accelerated filer ( ) Accelerated filer ( ) Non-accelerated filer(X)

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

State the number of shares  outstanding of each of the  registrant's  classes of
common equity,  as of the latest  practical  date:  Common Stock,  no par value,
2,121,437 shares outstanding on May 5, 2006.









<PAGE>










                            FIRST SOUTH BANCORP, INC.

                                   FORM 10-Q/A

                                      INDEX


PART I - FINANCIAL INFORMATION                                             Page

         Item 1.  Financial Statements

                  Consolidated Balance Sheets.................................3

                  Consolidated Statements of Operations.......................4

                  Consolidated Statements of Comprehensive Income.............5

                  Consolidated Statements of Cash Flows.......................6

                  Notes to Unaudited Consolidated Financial Statements......7-9


         Item 2.  Management's Discussion and Analysis ...................10-19

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk.20

         Item 4.  Controls and Procedures ...................................21


Part II- OTHER INFORMATION

         Item 6.  Exhibits...................................................22




















                                       2
<PAGE>





                         PART I - FINANCIAL INFORMATION

                          Item 1 - Financial Statements

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

                                                     (Unaudited)
                                                       March 31,        Dec. 31,
                                                         2006             2005
                                                         ----             ----
Assets
Cash & due from banks ............................     $   6,617      $   5,022
Due from banks - interest bearing ................        17,567         13,510
 Investment securities:
    Securities held to maturity ..................         7,148          7,264
    Securities available for sale ................        25,582         23,366
Loans ............................................       288,342        268,033
      Less, allowance for loan losses ............        (3,325)        (3,000)
Loans - net ......................................       285,017        265,033
Property & equipment, net ........................         5,403          5,289
Investment in FSBS Capital Trust .................           155            155
Other assets .....................................         5,758          5,093
                                                       ---------      ---------
Total assets .....................................     $ 353,247      $ 324,732
                                                       ---------      ---------

Liabilities
Deposits:
      Noninterest-bearing ........................     $  15,616      $  13,821
      Interest-bearing ...........................       282,644        251,904
                                                       ---------      ---------
    Total deposits ...............................       298,260        265,725

Securities sold under repurchase agreements ......         4,524          5,740
Other borrowed funds .............................        10,000         15,000
Demand notes issued to the U.S. Treasury .........           210            298
Subordinated debt ................................         5,155          5,155
Other liabilities ................................         3,053          1,943
                                                       ---------      ---------
    Total liabilities ............................       321,202        293,861

Shareholders' equity
Common stock - no par value; 36,000,000
authorized,
Outstanding 2,100,497
Paid-in capital ..................................        19,422         19,422
Retained earnings ................................        12,838         11,624
Accumulated other comprehensive income/(loss) ....          (215)          (175)
                                                       ---------      ---------
Total shareholders' equity .......................        32,045         30,871

Total liabilities and shareholders' equity .......     $ 353,247      $ 324,732
                                                       ---------      ---------





                                       3
<PAGE>





                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Operations



<TABLE>
<CAPTION>
                                                                                                              (Unaudited)
                                                                                                          Three Months ended,
                                                                                                                March 31
                                                                                                                --------
                                                                                                      2006                   2005
                                                                                                      ----                   ----
                                                                                            (Dollars in thousands, except per share)
Interest income
<S>                                                                                                 <C>                     <C>
              Loans, including fees ................................................                $ 6,126                 $ 4,390
              Investment securities ................................................                    356                     202
              Interest bearing deposits ............................................                    127                      83
                                                                                                    -------                 -------

              Total interest income ................................................                  6,609                   4,675
Interest expense
              Deposits and borrowings ..............................................                  2,794                   1,730

Net interest income ................................................................                  3,815                   2,945
              Provision for loan losses ............................................                   (315)                   (287)
                                                                                                    -------                 -------
Net interest income after provision ................................................                  3,500                   2,658

Noninterest income
              Service charges on deposit accounts ..................................                     63                      71
              Other income .........................................................                    101                     146
                                                                                                    -------                 -------
              Total noninterest income .............................................                    164                     217

Noninterest expense
              Salaries and benefits ................................................                  1,099                     929
              Occupancy and equipment ..............................................                    208                     202
              Other expense ........................................................                    458                     371
                                                                                                    -------                 -------
              Total noninterest expense ............................................                  1,765                   1,502

Income before income taxes .........................................................                  1,899                   1,373
              Provision for income
              taxes ................................................................                    685                     499
                                                                                                    -------                 -------

Net income .........................................................................                  1,214                 $   874
                                                                                                    -------                 -------

Basic per share earnings ...........................................................                $  0.58                 $  0.43

Diluted earnings per share .........................................................                $  0.56                 $  0.41
</TABLE>









                                       4
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                 Consolidated Statements of Comprehensive Income
                          (Dollar amounts in thousands)


                                                               (Unaudited)
                                                           Three Months ended
                                                                 March 31,
                                                                 ---------
                                                            2006          2005
                                                            ----          ----
Net Income .........................................      $ 1,214       $   874

Other comprehensive income (loss):

Change in unrealized holdings gains &
    losses on available for sale securities ........          (65)         (155)

Income tax (expense) benefit on other
                comprehensive income (loss) ........           25            59
                                                          -------       -------

Total other comprehensive income (loss) ............          (40)          (96)
                                                          -------       -------

Comprehensive income ...............................      $ 1,174       $   779

















                                       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,
                                                                                                                 ---------
                                                                                                          2006               2005
                                                                                                          ----               ----

Operating Activities
<S>                                                                                                    <C>                 <C>
Net income .................................................................................           $  1,214            $    874

Adjustments to reconcile net income to net cash provided by operating activities
            Provision for loan
            losses .........................................................................                315                 287
            Depreciation ...................................................................                104                  92
            Net Amortization of Securities .................................................                  4                   1
            (Increase) in cash surrender value of life insurance ...........................                 (8)                 (7)
            (Increase) in other assets .....................................................               (464)                (97)
            Increase (decrease) in accrued expenses and other liabilities ..................                184                 358
                                                                                                       --------            --------

Net cash provided by operating activities ..................................................              1,349               1,508
                                                                                                       --------            --------


Investing Activities
            Purchase of securities available
            for sale .......................................................................             (4,500)                  -
            Sale/(Purchase) of restricted FHLB stock .......................................                168                 (90)
            Proceeds from MBS principal paydowns ...........................................                167                 234
            Proceeds from matured available for sale
            securities .....................................................................              2,000                 383
            Origination of loans, net of principal
            collected ......................................................................            (19,501)             (5,297)
            (Purchase) of premises and equipment ...........................................               (262)                (56)

Net cash used in investing
activities .................................................................................            (21,928)             (4,826)
                                                                                                       --------            --------

Financing Activities
            Net increase in deposits .......................................................             32,535              13,819
            Net increase (decrease) in retail repurchase agreements ........................             (1,216)              1,008
            Net (decrease) in other borrowings .............................................             (5,088)                  -
                                                                                                       --------            --------


Net cash provided by financing activities ..................................................             26,231              14,827
                                                                                                       --------            --------

Net increase in cash and cash equivalents ..................................................              5,652              11,509

Cash and cash equivalents,
beginning ..................................................................................             18,532              13,292
                                                                                                       --------            --------

Cash and cash equivalents, ending ..........................................................           $ 24,184            $ 24,801
                                                                                                       --------            --------
</TABLE>




                                       6
<PAGE>

                   FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

Notes to Unaudited Consolidated Financial Statements

Note 1.  Basis of Presentation and Use of Estimates

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-Q and Regulation S-X 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  a  fair
presentation  have been included.  Operating  results for the three months ended
March 31,2006 are not necessarily indicative of the results that may be expected
for the year ended December 31, 2006. For further  information,  please refer to
the financial statements and footnotes thereto for the Corporation's fiscal year
ended December 31, 2005,  contained in the  Corporation's  2005 Annual Report on
Form 10-KSB.

The consolidated  financial  statements  include the accounts of the Corporation
and its wholly-owned subsidiary, the Bank. All significant intercompany balances
and transactions have been eliminated in consolidation.

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

Note 2.  Accounting for Stock-Based Compensation

The Company implemented SFAS No. 123(R),Share-Based Payment, on January 1, 2006.
However,  actions by the board of directors  whereby the vesting of all unvested
stock options was accelerated to December 30, 2005, avoided  recognition of pre-
tax compensation expense by the Company related to the adoption of SFAS 123 (R).
As a result,  the  adoption  of SFAS No. 123 (R) had no impact on the  financial
position or results of operations of the Company.

The schedule below reflects pro forma  information had the Company accounted for
stock options in 2005 using the fair value method under SFAS No.123.


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

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

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

Pro forma ......................................................    $   836
                                                                    -------

Basic earnings per share:
             As reported .......................................    $  0.43
             Pro forma .........................................    $  0.41

Diluted earnings per share
            As reported ........................................    $  0.41
           Pro forma ...........................................    $  0.39

In 2005 the fair value of each option  grant was  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; a dividend
yield of 0%, expected  volatility of 50%,  risk-free interest rate of 4.33%, 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, 2006 and 2005,  basic earnings per share has been computed based
upon the weighted average common shares  outstanding of 2,100,497 and 2,018,988,
respectively.

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, 2006
and 2005 (Dollars in thousands, except share and per share data):

                                                          Three Months Ended
                                                              March 31,
                                                              ---------
                                                         2006            2005
                                                         ----            ----

Net Income ...................................       $    1,214       $      874

Weighted average outstanding shares ..........        2,100,497        2,018,988

Dilutive effect of stock options .............           71,098          131,938
                                                     ----------       ----------

Weighted average diluted shares ..............        2,171,595        2,150,926

Diluted earnings per share ...................       $     0.56       $     0.41


Note 4 - Impact of Recently Issued Accounting Standards

In February  2006,  the FASB issued SFAS No. 155,  Accounting for Certain Hybrid
Financial  Instruments,  an amendment of FASB  Statements  No. 133 and 140. This
Statement amends SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities,  and SFAS  No.  140,  Accounting  for  Transfers  and  Servicing  of
Financial  Assets and  Extinguishment  of  Liabilities,  and resolves  issues in
Statement No. 133  Implementation  Issue No. D1, Application of Statement 133 to
Beneficial  Interests in Securitized  Financial  Assets.  The provisions of this
statement are effective for all financial  instruments  acquired or issued after
the beginning of an entity's  first fiscal year that begins after  September 15,
2006. The adoption of SFAS No. 155 is not expected to have a material  impact on
the consolidated financial statements of the Company.

In March  2006,  the FASB  issued  SFAS No. 156,  Accounting  for  Servicing  of
Financial  Assets, an amendment of FASB Statement No. 140. This statement amends
SFAS No. 140,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishments of Liabilities, a replacement of FASB Statement 125 with respect
to the  accounting  for  separately  recognized  servicing  assets and servicing
liabilities.  The  provisions  of this  statement are effective for fiscal years
beginning after September 15, 2006. The adoption of SFAS No. 156 is not expected
to have a  material  impact  on the  consolidated  financial  statements  of the
Company.

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.


                                       8
<PAGE>

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

Forward Looking Statements

           Statements  included  in this Form 10-Q 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  and  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 of Financial Condition and Results
        of Operations

          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 2005 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, 2006 COMPARED TO THE
SAME PERIOD ENDED MARCH 31, 2005.

Net Income For the first three months of 2006, First South Bancorp,  Inc. earned
a net  income of  approximately  $1.214  million,  or $ .56 per  diluted  share,
compared to  approximately  $874 thousand,  or $ .41 per diluted share,  for the
same period in 2005.  Earnings per share increased by 32.6%.  The 38.9% increase
in net income is attributed to several factors including a 29.5% increase in net
interest  income from $2.9 million during the first three months in 2005 to $3.8
million during the same period in 2006. The provision for loan losses  increased
from $287 thousand in the first quarter of 2005 to $315 thousand during the same
period in 2006.  Noninterest income declined 24.4% from $217 thousand in 2005 to
$164  thousand  during the first three months of 2006.  Most of the $53 thousand
decline  resulted from a $21 thousand  decline in loan  brokerage fees and a $19
thousand  decline in  investment  brokerage  service fees.  Noninterest  expense
experienced  a 17.5%  increase from $1.5 million in the first quarter of 2005 to
$1.8 million in the same period in 2006. This increase was primarily  attributed
to the increase in salaries and benefits expense of $170 thousand from the first
quarter  of 2005.  With the  total  number  of  full-time  equivalent  employees
remaining  approximately  the same in 2006 as 2005, 61 versus 59,  respectively,
the increased personnel expense is primarily attributable to higher salaries and
benefits  paid to existing  2005 to 2006  employees  during the first quarter of
2006.  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 2006 was 1.45%
and 15.49%, respectively.

Table One
                                                      Selected Earnings Ratios
                                                    at or for the Quarter Ending
                                                            March 31,
                                                            ---------
                                                       2006            2005
                                                       ----            ----
Return on Average Assets .......................       1.45%           1.15%

Return on Average Equity .......................      15.49%          12.75%

Dividend Payout Ratio ..........................        N/A             N/A

Average Shareholders' Equity
as a Percentage of Average
Assets .........................................       9.34%           8.99%

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 2006  increased  over that of the same period in 2005 by
$870 thousand,  or 29.5%. This increase was almost  exclusively the result of an
economic  environment  in which  interest  rates were  rising and the  Company's
earning  assets   repriced   higher  and  more  rapidly  than   interest-bearing
liabilities.

Though total average interest-bearing  liabilities experienced a larger increase
than average  interest-earning  assets from March 31,  2005,  to March 31, 2006,
$34.8 million  versus $33.7 million,  respectively,  the yield on earning assets
over the twelve  months grew faster  than the funding  cost of  interest-bearing
liabilities.  The yield on  earning  assets for the first  quarter  of 2006,  as
compared to the same period in 2005,  increased by 173 basis  points,  while the
increase  in the funding  cost of  interest-bearing  liabilities  from the first
quarter of 2005 to that of 2006 increased by 116 basis points. The net result of
the  volume  and rate  changes  between  the two first  quarter  periods  was an
improvement  of 57 basis points in the interest  spread for the first quarter of
2006.

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, 2006 and 2005.

                                       10
<PAGE>

<TABLE>
<CAPTION>
Table Two                                                                   Net Interest Income and Average Balance Analysis
                                                                                  for the Three Months Ended March 31,
                                                                                             2006 and 2005
                                                                                         (Amounts in thousands)

                                                                                                Interest                Average
                                                              Average Balance                Income/Expense            Yield/Cost
                                                              ---------------                --------------            ----------
Interest-Earning Assets                                     2006          2005             2006          2005        2006      2005
                                                            ----          ----             ----          ----        ----      ----
<S>                                                     <C>             <C>             <C>           <C>            <C>       <C>
Int. Bearing Due from Banks ........................    $  11,752       $  13,819       $     127     $      83      4.38%     2.44%
Investments ........................................       32,706          21,680             356           202      4.41%     3.78%
Loans ..............................................      281,887         257,106           6,126         4,390      8.81%     6.92%
                                                        ---------       ---------       ---------     ---------
Total Interest Earning Assets ......................      326,345         292,605           6,609         4,675      8.21%     6.48%

Noninterest-Earning Assets
Cash & Due From Banks ..............................        6,391           5,328
Allowance for Loan Losses ..........................       (3,102)         (3,034)
Investments: Fair Value ............................         (282)            (72)
Premises & Equipment ...............................        5,338           5,269
Investment in unconsolidated subsidiary ............          155             155
Interest Receivable & Other ........................        5,618           4,520
                                                        ---------        --------
Total Noninterest-Earning Assets ...................       14,118          12,166
                                                        ---------        --------
TOTAL ASSETS .......................................    $ 340,463       $ 304,771
                                                        ---------       ---------
Interest-Bearing Liabilities
NOW Accounts .......................................    $  33,745       $  35,697       $     278     $     201      3.34%     2.28%
Money Market & Savings .............................       46,717          52,480             444           293      3.85%     2.26%
Time Deposits & IRAs ...............................      189,929         146,881           1,826         1,032      3.90%     2.85%

Fed funds and Purchased and Repos ..................        4,147           4,816              39            24      3.81%     2.02%
Other Borrowed Funds ...............................       10,111          10,000             113           111      4.53%     4.50%
Subordinated Debt ..................................        5,000           5,000              93            68      7.54%     5.52%
Demand Notes Issued to Treasury ....................          164             189               1             1      2.47%     2.15%
                                                        ---------       ---------         -------     ---------
Total Interest-Bearing Liabilities .................      289,813         255,063           2,794         1,730      3.91%     2.75%

Noninterest-Bearing Liabilities
Demand Deposits ....................................       15,705          19,945
Interest Payable ...................................        1,001             643
Other Liabilities ..................................        1,898           1,703
                                                        ---------        --------
Total Noninterest-Bearing Liabilities ..............       18,604          22,291

Stockholders' Equity ...............................       32,046          27,417
                                                        ---------       ---------
TOTAL LIABILITIES & EQUITY .........................    $ 340,463       $ 304,771
                                                        ---------       ---------
Net Interest Income ................................    $   3,815       $   2,945
                                                        ---------       ---------
  Net Yield on Earning Assets ......................                                                                 4.74%     4.08%
  Interest Rate Spread .............................                                                                 4.30%     3.73%
</TABLE>



                                       11
<PAGE>



Noninterest Income

Noninterest  income  for the  first  three  months  of 2006  declined  from $217
thousand during the first three months in 2005 to $164 thousand in 2006, a 24.4%
decrease.  Service charges decreased by $8 thousand from $71 thousand during the
first  quarter  of 2005 to $63  thousand  during the same  period in 2006.  This
decrease resulted  primarily from the increase in 2006 of the earnings allowance
interest rate which resulted in a larger credit against business account service
charges determined through full account analysis.  The largest dollar decline in
any of the three categories of noninterest income was experienced in the area of
commissions and fees. The $38 thousand decline in total  commissions and fees in
2006 was most  directly  related to the $40.8  thousand  decline  from the first
quarter's 2005 total brokerage services income of $94.4 thousand.

Table Three provides a three month 2006 to 2005 comparison of various categories
of noninterest income.
  Table Three                               Summary of Total Noninterest Income
                                            for theThree Months Ended March 31
                                                       2006 and 2005
                                                  (Amounts in thousands)

                                                    2006             2005
                                                    ----             ----
Service Charges ..............................      $ 63             $ 71
Commissions & Fees ...........................        90              128
Other Noninterest
Income .......................................        11               18
                                                    ----             ----
Total ........................................      $164             $217

Noninterest Expense
Noninterest  expense  for the  first  three  months  of 2006  increased  by $263
thousand,  or 17.5%,  over the  first  three  months  of the 2005  total of $1.5
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 $929 thousand during the first quarter of 2005 to $1.099 million during the
same period in 2006, a $170 thousand or 18.3% increase.  This increase  resulted
primarily from increases in salaries and benefits for existing  employees and to
a lesser extent,  the increase in full time  equivalent  employees from 59 as of
March 31,  2005 to 61 as of March 31,  2006.  Table Four  provides a three month
2006 to 2005 comparison of various categories of noninterest expense.


Table Four                                Summary of Total Noninterest Expense
                                           For the Three Months Ended March 31
                                                      2006 and 2005
                                                 (Amounts in thousands)

                                                  2006             2005
                                                  ----             ----

Salaries & Employee Benefits ..............      $1,099          $  929
Occupancy & Equipment .....................         208             202
Other expense .............................         458             371
                                                 ------          ------
Total .....................................      $1,765          $1,502



                                       12
<PAGE>


Income Taxes

Provision  for income  taxes for the three  months ended March 31, 2006 was $685
thousand as compared to $499  thousand in 2005 during the same  period,  a 37.3%
increase.  This increase was due to the overall  increase in income before taxes
of $526 thousand or 38.3% during the same period.

CHANGES IN FINANCIAL POSITION

Investment portfolio

During the first three months of 2006, five government agency issues for a total
of  $4,500,000  were  purchased.  The average  annual  yield on these  purchased
investments is 5.36 %. During the same period, one agency issue in the amount of
$2,000,000 with an annual yield of 3.04% matured.


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

December 31 ,2005                                               Available-for-Sale                      Held-for-Investment
                                                                ------------------                      -------------------

                                                           Amortized           Estimated           Amortized          Estimated
                                                              Cost             Fair Value            Cost             Fair Value
                                                              ----             ----------            ----             ----------
<S>                                                         <C>                 <C>                 <C>                 <C>
Due in one year or less ............................        $ 9,000             $ 8,938             $     -             $     -
Due from one to five years .........................         10,491              10,327               4,000               3,990
Due from five to 10 years
Due after ten years ................................          1,123               1,105                 481                 634
Mortgage backed securities .........................            766                 742                 783                 795
                                                            -------             -------             -------             -------

                                                            $22,380             $22,097             $ 7,264             $ 7,427
                                                            -------             -------             -------             -------


<CAPTION>
March 31, 2006                                                  Available-for-Sale                      Held-for-Investment
                                                                ------------------                      -------------------

                                                           Amortized           Estimated           Amortized          Estimated
                                                              Cost             Fair Value            Cost             Fair Value
                                                              ----             ----------            ----             ----------
<S>                                                         <C>                 <C>                 <C>                 <C>
Due in one year or less ............................        $ 7,000             $ 6,954             $     -             $     -
Due from one to five years .........................         11,491              11,286               4,000               3,955
Due from five to 10 years
Due after ten years ................................          1,123               1,093                 481                 641
Mortgage backed securities .........................            715                 692                 667                 676
                                                            -------             -------             -------             -------

                                                            $24,829             $24,482             $ 7,148             $ 7,260
                                                            -------             -------             -------             -------
</TABLE>
Excludes equity securities with no readily  determinable  market value of $1.269
million on December 31, 2005 and $1.101 million on March 31, 2006.



                                       13
<PAGE>

Loan portfolio

From December 31, 2005 to March 31, 2006 total loans grew from $268.5 million to
$288.3 million,  or 7.4%. For the twelve month period between March 31, 2005 and
March 31, 2006,  loans  increased by $28.3  million,  or 10.9%.  The  percentage
composition of the loan portfolio,  as shown in Table Six,  changed  slightly as
the  percentage  of real estate loans grew by 1.3% of the total  portfolio  from
81.8% on March 31, 2005 to 83.1% on March 31, 2006.  Commercial  and  industrial
loans  decreased by 1.24% as a percentage of the loan  portfolio  from 17.98% on
March 31, 2005 to 16.74% as of March 31 ,2006.

As shown in Table Seven,  Variable Rate Loans  comprised 87.7% of the total loan
portfolio. On March 31, 2006, there were thirteen loans totaling $2.2 million on
non-accrual status.

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

Real Estate:                                                                   2006                              2005
                                                                               ----                              ----
<S>                                                              <C>                   <C>            <C>                   <C>
   Construction/Land Development .........................       $ 15,909                5.52%        $ 18,394                7.07%
   1-4 Family Residential Properties .....................         68,982               23.92%          66,695               25.65%
   Multifamily Residential Properties ....................          6,978                2.42%           4,081                1.57%
   Nonfarm Nonresidential Properties .....................        144,630               50.16%         122,502               47.10%
   Other Real Estate Loans ...............................          3,230                1.12%           1,185                0.46%
Commercial & Industrial ..................................         48,279               16.74%          46,754               17.98%
   Consumer ..............................................            361                0.12%             435                0.17%
                                                                 --------               -----         --------               -----
       Total .............................................       $288,342               100.0%        $260,046               100.0%
                                                                 --------               -----         --------               -----
</TABLE>


<TABLE>
<CAPTION>
Table Seven                                                            Analysis of Loan Maturities and Repricing Frequency
                                                                                      as of March 31, 2006
                                                                                     (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 ........................................     $250,945      $    -     $    -      $    -      $    -    $250,945

Fixed Rate Loans ...........................................     $  7,255      $6,815     $9,553      $9,998      $1,576    $ 35,197
                                                                 --------      ------     ------      ------      ------    --------

Total Loans ................................................     $258,200      $6,815     $9,553      $9,998      $1,576    $286,142
                                                                 --------      ------     ------      ------      ------    --------

</TABLE>

Excludes loans on non-accrural status of $2.2 million


                                       14
<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
$28,000 in loan loss  provision  for the quarter end March 31, 2006, as compared
to the same  quarter  in 2005,  was  primarily  due to the  bank's  formula  for
calculating  the  allowance  for loan losses based on loan grades and the growth
the bank  experienced.  Table Eight  provides  the  results of the  year-to-date
analysis for the quarters ending March 31, 2006 and 2005, 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

                                              2006                    2005
                                              ----                    ----
Balance at Beginning of Year .........    $3,000,000              $2,900,000
Provision Charged to Operations ......       315,000                 287,000
Loans Charged-Off ....................             0                (39,000)
Loan Recoveries ......................        10,000                   2,000
                                          ----------              ----------
Balance at End Of Period .............    $3,325,000              $3,150,000

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, 2006,  the  cumulative  one-year  gap for the Bank was a positive,  or asset
sensitive,  $22.8 million.  At March 31, 2006, the cumulative  five-year gap for
the Bank was a positive  $34.7  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, 2006.


                                       15
<PAGE>

<TABLE>
<CAPTION>

Table Nine                             Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                                                       Repricing Schedule as of March 31, 2006
                                                                (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 ............................     $ 17,567              $     -           $     -        $ 17,567
Investment Securities* ....................        7,667               16,207             8,104          31,978
FHLB Stock ................................        1,100                    -                 -           1,100
Loans** ...................................      265,015               19,551             1,576         286,142
                                                --------              -------           -------        --------
Total .....................................     $291,349              $35,758           $ 9,680        $336,787

*Amortized Cost
**Excludes $2.2 million in loans on non-accrural status.

Interest Bearing
Liabilities

NOW Accounts ..............................     $ 34,203              $     -           $     -        $ 34,203
Savings & MMIA ............................       49,605                    -                 -          49,605
Time Deposits:$100 & > ....................       59,945                8,331                 -          68,276
Time Deposits: <$100m .....................      115,020               15,538                 -         130,558
Repurchase Agreements .....................        4,524                    -                 -           4,524
Other Borrowed Funds ......................        5,210                    -            10,000          15,210
                                                --------              -------           -------        --------

Total .....................................     $268,507              $23,869           $10,000        $302,376

Period Gap ................................     $ 22,842              $11,889           $ (320)        $ 34,411

Cumulative Gap ............................     $ 22,842              $34,731           $34,411

Period Gap Ratios:
  Interest Sensitive
Assets to
  Interest Sensitive Liabilities ..........       108.5%               149.8%               .9%

Cumulative Gap Ratios:
  Interest Sensitive
Assets to
  Interest Sensitive Liabilities ..........       108.5%               111.9%            111.4%
</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 ......................      $20,323              $39,622            $8,331         $68,276
</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 61% of total assets at March 31, 2006. 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 $4.543 million  increase in Tier 1 capital for the Company during the twelve
month period  between  March 31, 2005 and 2006  resulted  from a $3.759  million
increase in retained  earnings and the exercising of stock options in the amount
of $783.8 thousand. The difference in total risk based capital of $1.325 million
between  the Bank and the  Holding  Company  as of March 31,  2006 is due to the
Board's  intent to keep at this  time that  amount  of  capital  at the  Holding
Company level.

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.

Off-Balance Sheet Arrangements

The Company,  through the operations of the Bank, makes contractual  commitments
to  extend  credit in the  ordinary  course of its  business  activities.  These
commitments  are legally  binding  agreements  to lend money to customers of the
Bank at predetermined interest rates for a specific period of time. At March 31,
2006, the Bank had issued  commitments to extend credit of $43.1 million through
various types of lending  arrangements.  Of these commitments,  81.9 %, or $35.3
million,  expire within one year, and 18.1 %, or $7.8 million,  expiring in more
than one year.  Past  experience  indicates  that many of theses  commitments to
extend credit will expire unused.

The Company evaluates each customer's  creditworthiness on a case-by-case basis.
The amount of collateral  obtained,  if deemed necessary by the Company upon the
extension  of  credit,  is  based  on the  credit  evaluation  of the  borrower.
Collateral varies,  but may include accounts  receivable,  inventory,  property,
plant and equipment, commercial and residential real estate.


                                       17
<PAGE>

The Bank's and  Company's  March 31, 2006  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>
The Bank                                                                                                         To Be Well
(Dollar Amounts in Thousands)                                                                                Capitalized Under
                                                                                  For Capital                Prompt Corrective
                                                             Actual            Adequacy Purposes             Action Provisions
                                                             ------            -----------------             -----------------
                                                       Amount       Ratio      Amount       Ratio           Amount         Ratio
                                                       ------       -----      ------       -----           ------         -----
March 31, 2006
<S>                                                    <C>          <C>        <C>          <C>             <C>            <C>
                   Total Capital
                   (To Risk Weighted Assets) ......    $39,203      13.50%     $23,233      >8.0%           $29,041        >10.0%
                   Tier I Capital
                   (To Risk Weighted Assets) ......    $30,978      10.67%     $10,324      >4.0%           $17,425         >6.0%
                   Tier I Capital
                   (To Average Assets) ............    $30,978      9.10%      $13,609      >4.0%           $17,012         >5.0%

<CAPTION>
The Holding Company                                                                                              To Be Well
                                                                                                             Capitalized Under
(Dollar Amounts in Thousands)                                                     For Capital                Prompt Corrective
                                                             Actual            Adequacy Purposes             Action Provisions
                                                             ------            -----------------             -----------------
                                                       Amount       Ratio      Amount       Ratio           Amount         Ratio
                                                       ------       -----      ------       -----           ------         -----
March 31, 2006
                   Total Capital
<S>                                                    <C>          <C>        <C>          <C>             <C>            <C>
                   (To Risk Weighted Assets) ......    $40,528      13.96%     $23,233      >8.0%           $29,041        >10.0%
                   Tier I Capital
                   (To Risk Weighted Assets) ......    $32,303      11.12%     $10,324      >4.0%           $17,425         >6.0%
                   Tier I Capital
                   (To Average Assets) ............    $32,660       9.49%     $13,610      >4.0%           $17,012         >5.0%
</TABLE>


                                       18
<PAGE>

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company's  exposure to market risk is primarily  related to the risk of loss
from adverse  changes in market prices and rates.  This risk arises  principally
from interest rate risk inherent in the Company's lending, deposit gathering and
borrowing activities. Management actively monitors and manages its interest rate
risk exposure.  Although the Company manages other risks, such as credit quality
and  liquidity  risk in the  normal  course of  business,  management  considers
interest rate risk to be its most  significant  market risk, and this risk could
potentially  have  the  largest  material  effect  on  the  Company's  financial
condition  and  results  of  operations.  Other  types of market  risk,  such as
commodity  price risk and foreign  currency  exchange  risk, do not arise in the
normal course of the Company's community banking operations.

The Company  periodically uses a simulation model to assist in the management of
interest rate risk. As of March 31, 2006, the model  indicates that net interest
income would  increase  approximately  $1.4 million in the next twelve months if
interest  rates rose 100 basis  points.  Conversely,  net interest  income would
decrease approximately $950 thousand in the next twelve months if interest rates
declined 100 basis  points.  Since the model  incorporates  the use of estimated
changes  in  growth  and  mix  of  both  earning  assets  and   interest-bearing
liabilities  over  established  time  periods,  as well as projected  changes in
interest  rates,  the resulting  "What-if"  scenarios  are heavily  dependant on
accurate  forecasts  and can not be relied  on as  indicative  of actual  future
results.

As of March  31,  2006,  there  was no  significant  change  from  the  interest
sensitivity  analysis  performed and disclosed in the 2005 Annual Report on Form
10-KSB filed with the Securities and Exchange Commission.


Item 4 - 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.




                                       19
<PAGE>


                           PART II - OTHER INFORMATION

Item 6 - 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

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



                                  First South Bancorp, Inc.

                                  s/Barry L. Slider
November 30, 2006                 ---------------------------------------------
                                  Barry L. Slider, President and CEO


                                  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