UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-QSB

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

                  FOR QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                             Commission File Number
                                    000-28037

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


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

                               1450 Reidville Road
                        Spartanburg, South Carolina 29306
                     (Address of Principal Executive Office)

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


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


State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practical date:  Common Stock, no par value,  917,180
shares outstanding on September 30, 2000.

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










<PAGE>
                            FIRST SOUTH BANCORP, INC.

                                   FORM 10-QSB

                                      INDEX


PART I - FINANCIAL INFORMATION                                          Page

         Item 1.  Financial Statements

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

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

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

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

              Consolidated Statement of Changes in Shareholder Equity ....    7

              Notes to Unaudited Consolidated Financial Statements .......    8


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


Part II -         OTHER INFORMATION

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


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














                                       2
<PAGE>




                         PART I - FINANCIAL INFORMATION

                          Item 1 - Financial Statements

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY
                           Consolidated Balance Sheets
                            ( $ amounts in thousands)
<TABLE>
<CAPTION>
                                                                                 (Unaudited)          (Unaudited)
                                                                                  Sept. 30,            Sept. 30,           Dec. 31,
                                                                                    2000                 1999                1999
                                                                                    ----                 ----                ----
Assets
<S>                                                                               <C>                 <C>                 <C>
Cash & due from banks ..................................................          $   5,382               1,321                 978
Due from banks - interest bearing ......................................                  5                  13                  12
Federal funds sold .....................................................             10,100               5,490               2,850
Investment securities:
         Securities held to maturity ...................................              3,375                 375                 375
         Securities available for sale .................................             10,072              10,074               9,972
Loans ..................................................................             77,102              47,924              57,001
      Less, allowance for loan losses ..................................             (1,010)               (700)               (800)
                                                                                  ---------           ---------           ---------
Loans - net ............................................................             76,092              47,224              56,201
Property & equipment, net ..............................................              2,925               2,782               2,863
Other assets ...........................................................              2,410               2,510               1,804
                                                                                  ---------           ---------           ---------
Total assets ...........................................................          $ 110,360           $  69,789           $  75,055

Liabilities
Deposits: Noninterest-bearing ..........................................          $   5,341           $   3,272           $   3,389
             Interest-bearing ..........................................             90,330              52,885              55,326
                                                                                  ---------           ---------           ---------
Total deposits .........................................................             95,671              56,157              58,715

Securities sold under repurchase agreements ............................              1,678               1,808               1,723
Other borrowed funds ...................................................                  0                   0               2,500
Demand notes issued to the U.S. Treasury ...............................                175                 248                 234
Other liabilities ......................................................              1,337                 838                 974
                                                                                  ---------           ---------           ---------
                   Total liabilities ...................................             98,861              59,051              64,146

Shareholders' equity
Common stock - no par value; 20,000,000 authorized, ....................              4,586               4,579               4,586
Outstanding 917,180, 915,861, 917,180, respectively
Additional paid-in capital .............................................              6,504               6,488               6,504
Undivided profits / (loss) .............................................                542                (198)                 14
Accumulated other comprehensive income/(loss) ..........................               (133)               (131)               (195)
                                                                                  ---------           ---------           ---------
           Total shareholders' equity ..................................             11,499              10,738              10,909

           Total liabilities and shareholders' equity ..................          $ 110,360           $  69,789           $  75,055

</TABLE>


                                       3
<PAGE>

                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY

                      Consolidated Statement of Operations

<TABLE>
<CAPTION>
                                                                                                (Unaudited)
                                                                                          Period ended September 30,
                                                                                 Three Months                     Nine Months
                                                                           2000             1999             2000             1999
                                                                           ----             ----             ----             ----
                                                                                   (Dollars in thousands, except per share)
Interest income
<S>                                                                      <C>              <C>              <C>              <C>
         Loans, including fees .................................         $ 2,048          $ 1,094          $ 5,345          $ 2,896
         Investment securities .................................             161              160              462              465
         Federal funds sold ....................................             150               62              294              147
         Other investments .....................................                              3 7               10               26
                                                                         -------          -------          -------          -------
         Total interest income .................................           2,362            1,323            6,111            3,534

Interest expense
         Deposits and borrowings ...............................           1,331              677            3,318            1,744

Net interest income ............................................           1,031              646            2,793            1,790
         Provision for loan losses .............................             (80)             (60)            (210)            (125)
                                                                         -------          -------          -------          -------
Net interest income after provision ............................             951              586            2,583            1,665

Other income
         Service charges on deposit accounts ...................              41               31              108               93
         Other income ..........................................              69              142              257              239
                                                                         -------          -------          -------          -------
         Total noninterest income ..............................             110              173              365              332

Other expenses
         Salaries and benefits .................................             451              329            1,298              893
         Occupancy and equipment ...............................             128               90              344              259
         Other expense .........................................             163              174              511              402
                                                                         -------          -------          -------          -------
         Total other expense ...................................             742              593            2,153            1,554

Income before income taxes .....................................             319              166              795              443
         Provision for income taxes ............................             122               68              268              151
                                                                         -------          -------          -------          -------

Net income .....................................................         $   197          $    98          $   527          $   292

Basic per share earnings .......................................         $   .21          $   .11          $   .58          $   .32
</TABLE>



                                       4
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                 Consolidated Statement of Comprehensive Income


                                                           (Unaudited)
                                                  Nine Months Ended September 30
                                                         2000            1999
                                                         ----            ----

Net Income .......................................     $ 527,450      $ 292,663

Other comprehensive income (loss):
Change in unrealized holdings gains &
    losses on available for sale securities ......       100,272       (194,674)

Income tax (expense) benefit on other
                comprehensive income (loss) ......       (38,103)        73,976
                                                       ---------      ---------
Total other comprehensive income (loss) ..........        62,169       (120,698)

Comprehensive income (loss) ......................       589,619        171,965
                                                       =========      =========






















                                       5
<PAGE>



                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statement of Cash Flows
              For the Nine Months ended September 30, 2000 and 1999
                            ($ Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                                (Unaudited)
                                                                                                               Nine Months Ended
                                                                                                                September 30,
                                                                                                            2000               1999
                                                                                                            ----               ----
                                                                                                             (Dollars in thousands)
Operating Activities
<S>                                                                                                       <C>                <C>
Net income ...................................................................................               527                293

Adjustments to reconcile net income to net cash
                    provided by operating activities
         Provision for loan losses ...........................................................               210                125
         Depreciation ........................................................................               149                129
         Director fees .......................................................................                29                 20
         Deferred tax asset ..................................................................               (72)                 0
         Increase in other assets ............................................................              (582)              (129)
         Increase in accrued expenses and other liabilities ..................................               305                454

Net cash provided by operating activities ....................................................               566                892


Investing Activities
         Purchase of securities available for sale ...........................................                 0             (1,000)
         Purchase of securities held for investment ..........................................            (3,000)                 0
         Purchase of restricted FHLB stock ...................................................                 0                (59)
         Proceeds from call of available for sale securities .................................                 0                500
         Proceeds from maturities of held to maturity securities .............................                 0                500
         Origination of loans, net of principal collected ....................................           (20,100)           (13,943)
         Purchase of premises and equipment ..................................................              (223)               (46)

Net cash used in investing activities ........................................................           (23,323)           (14,048)

Financing Activities
         Net increase in deposits ............................................................            36,948             14,227
         Net increase (decrease) in retail repurchase agreements .............................               (45)               482
         Payment (decrease) of other borrowings ..............................................            (2,500)                 0
Net cash provided by financing activities ....................................................            34,403             14,759

Net increase in cash and cash equivalents ....................................................            11,646              1,603

Cash and cash equivalents, beginning .........................................................             3,840              5,220

Cash and cash equivalents, ending ............................................................            15,486              6,823
</TABLE>






                                       6
<PAGE>



                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

            Consolidated Statement of Changes in Shareholders' Equity
      Year-ended December 31, 1999 and Nine Months Ended September 30, 2000
                                   (Unaudited)
<TABLE>
<CAPTION>
                                                                                                     ACCUMULATED
                                                                    ADDITIONAL     ACCUMULATED          OTHER              TOTAL
                                                   COMMON             PAID-IN        EARNINGS       COMPREHENSIVE      STOCKHOLDERS'
                                                    STOCK             CAPITAL        (DEFICIT)       INCOME/(LOSS)        EQUITY
                                                    -----             -------        ---------       -------------        ------
Balance at
<S>                                               <C>                <C>               <C>               <C>              <C>
December 31, 1998 ......................          4,578,795          6,487,737         (490,801)         (10,896)         10,564,835

Exercised
stock options ..........................                510                674                                                 1,184

Stock in lieu of
director fees ..........................              6,595             15,828                                                22,423

Net income .............................                                                505,012

Net change in
unrealized gain on
available for sale
securities, net of tax .................                                                                (184,122)

Comprehensive income ...................                                                                                     320,890
                                                 ----------         ----------         --------         --------          ----------
Balance at
December 31, 1999 ......................          4,585,900          6,504,239           14,211         (195,018)         10,909,332
</TABLE>

<TABLE>
<CAPTION>
                                                                                                      ACCUMULATED
                                                                  ADDITIONAL                             OTHER            TOTAL
                                                    COMMON         PAID-IN           ACCUMULATED      COMPREHENSIVE    STOCKHOLDERS'
                                                     STOCK         CAPITAL            EARNINGS        INCOME/(LOSS)      EQUITY
                                                     -----         -------            --------        -------------      ------
Balance at
<S>                                                <C>              <C>                  <C>             <C>              <C>
December 31, 1999 .........................        4,585,900        6,504,239            14,211          (195,018)        10,909,332

Net income ................................                                             527,450                 -                  -

Net change in
unrealized gain on
available for sale
securities, net of tax ....................                                                                62,169

Comprehensive income ......................                                                                                  589,619
                                                   ---------        ---------        ----------        ----------         ----------
Balance at
Sept 30, 2000 .............................        4,585,900        6,504,239           541,661          (132,849)        11,498,951
</TABLE>



                                       7
<PAGE>

                            FIRST SOUTH BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

Note 1.  Basis of Presentation

              The accompanying unaudited financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information  and with  instructions to Form 10-QSB and Item 310(b) of
Regulation SB of the Securities and Exchange  Commission.  Accordingly,  they do
not contain all of the information and footnotes  required by generally accepted
accounting principles for complete financial statements. However, in the opinion
of management, all adjustments considered necessary for a fair presentation have
been included.  Operating  results for the nine months ended  September 30, 2000
are not necessarily  indicative of the results that may be expected for the year
ended December 31, 2000. For further information,  please refer to the financial
statements  and footnotes  thereto for the Bank's fiscal year ended December 31,
1999, contained in the Bank's registration statement on Form 10-SB.



































                                       8
<PAGE>


                            FIRST SOUTH BANCORP, INC.

                                 Part I - Item 2

 Management's Discussion and Analysis of Financial Results of Operations

Forward Looking Statements

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

RESULTS OF  OPERATIONS:  NINE MONTH PERIOD ENDED  SEPTEMBER 30, 2000 COMPARED TO
THE SAME PERIOD ENDED SEPTEMBER 30, 1999.

Net Income

For the first nine months of 2000, First South Bancorp, Inc. earned a net profit
of approximately $527.5 thousand,  or $ .57 per share, compared to approximately
$292.7  thousand,  or $ .32 per share,  for the same period in 1999. This 80.2 %
increase in net income  occurred  despite  (i) a 38.5 % increase in  noninterest
expense  from $  $1.55  million  to $ 2.15  million,  (ii)  an  increase  in the
provision  for loan losses  related to loan  growth  from $125  thousand to $210
thousand,  and (iii)  only a slight,  $ 32  thousand,  increase  in  noninterest
income.  Though the  effective  tax rate for 2000 was slightly less than that of
1999, 33.7 % versus 34.0 %, the primary source of the improved  earnings was net
interest income.  Net interest income increased  slightly more than $1.0 million
during the first nine months of 2000, or 56.0 %, over the same period in 1999.

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 period increased by 21.9 % and 72.8 %, respectively.




                                       9
<PAGE>



Table One                   Selected Earnings Ratios
                    at or for the Periods Ending September 30

                                                      2000             1999
                                                      ----             ----
Return on Average Assets                               .78%             .64%

Return on Average Equity                              6.29%            3.64%

Dividend Payout Ratio                                  N/A              N/A

Average Stockholders' Equity
as a Percentage of Average Assets                    12.36%           17.46%

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

Net Interest Income

Net interest income, the major component of First South Bancorp's income, is the
amount by which interest and fees on earning assets exceeds the interest paid on
interest bearing liabilities,  primarily deposits. As stated above, net interest
income for the first nine months of 2000  increased over that of the same period
in 1999 by $1.003 million, or 56.0%. A number of factors combined to produce the
change in net interest income during the first nine months of 2000.

Though growth in earning assets of $ 28.2 million, or 49.5 %, was a major factor
in the growth of  interest  income,  the change in the  earning  assets mix also
contributed  significantly  to the improvement in the earning assets yield.  The
segment  of  total  earning  assets  with the  highest  interest  yield,  loans,
increased as a percentage of total earning  assets from 72.7 % in 1999 to 80.0 %
in 2000.  This change in earning assets mix, when coupled with the change in the
interest rate  environment  (the average prime rate for the first nine months of
2000 was 125 basis  points  over the  average  prime rate for the same period in
1999), accounted for 95 % of the increase in interest income.

For the  first  nine  months  of 2000,  the cost of  funds  averaged  5.97 %, an
increase of 102 basis  points  over the average  cost of funds rate of 4.95 % in
1999.  Declining  liquidity  created by the loan demand in 2000  necessitated  a
growth in deposits.  This growth could only be  accomplished  by acquiring  time
deposits at rates near or at the top of the market.  The result of this increase
in high cost  interest-bearing  liabilities  was a  significant  increase in the
Corporation's cost of funds. This increase in the cost of funds partially offset
the increase in the yield on earning assets. The overall effect of these changes
was an  improvement  in the interest  spread of 28 basis points,  from 3.35 % in
1999 to 3.63 % in 2000.  First South Bancorp's net interest margin (net interest
income divided by total average earning assets)  improved to 4.38 % in 2000 from
4.21 % in 1999.


                                       10
<PAGE>


Table Two includes a detailed  comparison  of the average  balances,  yields and
rates for the interest  sensitive  segments of the Corporation's  balance sheets
for the nine months ended September 30, 2000 and 1999.

Table Two             Net interest Income and Average Balance Analysis
                     for the Nine Months Ended September 30
                                  2000 and 1999
<TABLE>
<CAPTION>

                                                                                        Interest                      Average
Interest-Earning Assets (000)                           Average Balance              Income/Expense                 Yield / Cost
                                                        ---------------              --------------                 ------------
                                                       2000          1999           2000           1999          2000         1999
                                                       ----          ----           ----           ----          ----         ----
<S>                                                  <C>              <C>          <C>                <C>        <C>          <C>
Federal Funds Sold ..........................        $ 6,156          4,282        $   294            147        6.38%        4.59%
Investments .................................         10,844         11,252            472            491        5.81%        5.84%
Loans .......................................         68,062         41,362          5,345          2,896       10.49%        9.36%
                                                     -------        -------        -------        -------        -----         ----
Total Interest Earning Assets ...............        $85,062         56,896        $ 6,111          3,534        9.60%        8.30%

Noninterest-Earning Assets
Cash & Due From Banks .......................       $  1,666          1,299
Loan Loss Reserve ...........................           (880)          (620)
Investments: Fair value .....................           (349)           (40)
Premises & Equipment ........................          2,979          2,833
Interest Receivable & Other .................          2,040          1,224
                                                    --------       --------
Total Noninterest-Earning Assets ............       $  5,456          4,696

TOTAL ASSETS ................................       $ 90,518         61,592
                                                    ========       ========
Interest-Bearing Liabilities
NOW Accounts ................................        $18,191         14,987        $   712            500         5.23%        4.46%
Money Market & Savings ......................          1,953            951             58             19         3.97%        2.67%
Time Deposits & IRA's .......................         51,831         29,539          2,459          1,175         6.34%        5.32%
Fed Funds Purchased & Repos .................          1,643          1,553             65             47         5.28%        4.04%
Other borrowed funds ........................            398              0             17              0         5.70%           0%
Demand Notes Issued to Treasury .............            179            108              7              3         5.22%        3.71%
                                                     -------        -------        -------        -------         ----         ----
Total Interest-Bearing Liabilities ..........        $74,195         47,138        $ 3,318          1,744         5.97%        4.95%

Noninterest-Bearing Liabilities
Demand Deposits .............................        $ 4,206          3,122
Interest Payable ............................            660            358
Other Liabilities ...........................            264            220
                                                     -------        -------
Total Noninterest-Bearing Liabilities .......        $ 5,130          3,700

Stockholders' Equity ........................        $11,193         10,754

Total Liabilities & Equity ..................        $90,518         61,592
                                                     =======        =======
Net Interest Income .........................                                      $ 2,793        $ 1,790

          Net Yield on Earning Assets .......                                                                     4.38%        4.21%
          Interest Rate Spread ..............                                                                     3.63%        3.35%
</TABLE>

                                       11
<PAGE>

Non-Interest Income

Non-interest  income for the first nine months of 2000 grew by $ 33,000,  or 9.9
%, over the 1999 amount of $332,000. Commissions and fees declined due primarily
to the  reduction in  commissions  and fees  generated  by the bank's  brokerage
services subsidiary, First South Financial Services, Inc. Table Three provides a
nine month 2000 to 1999  performance  comparison of  categories of  non-interest
income.

Table Three           Summary of Total Noninterest Income
                     for the Nine Months Ended September 30
                                  2000 and 1999
                             (Dollars in thousands)

                                                             2000           1999
                                                             ----           ----
Service Charges ..................................           $108           $ 93
Commissions & Fees ...............................            185            193
Other Noninterest Income* ........................             72             46
                                                             ----           ----
Total ............................................           $365           $332

* Premiums on government guaranteed loans sold in the secondary market continued
to account for most of the amount in this category of noninterest income in both
periods.

Non-Interest Expense

Non-interest expense for the first nine months of 2000 increased by $599,000, or
38.5 %, over the first  nine  months  total in 1999 of  $1,554,000.  Some of the
operational  expense  increase  in  2000  resulted  from  the  growth  the  bank
experienced  in the market  area which  existed in 1999.  However,  opening of a
branch  office in Columbia,  SC in the first quarter of 2000 was the single most
significant   factor  associated  with  the  growth  in  non-interest   expense.
Non-interest  expense  during  the first  nine  months of 2000 for the  Columbia
office, $381,000,  represented 63.6 % of the total non-interest expense increase
experienced as of September 30, 2000.

Table Four provides a nine month 2000 to 1999 performance  comparison of various
categories of non-interest expense.

Table Four            For the Nine Months Ended September 30
                                  2000 and 1999
                             (Dollars in thousands)

                                                           2000            1999
                                                           ----            ----
Salaries & Employee Benefits ...................          $1,298          $  893
Occupancy & Equipment ..........................             344             259
Other ..........................................             511             402
                                                          ------          ------
Total ..........................................          $2,153          $1,554


                                       12
<PAGE>

Income Taxes

Through  September 30, 2000,  $72,000 had been accrued as a deferred tax benefit
resulting  from a  deferred  tax  asset  created  by income  transferred  to the
provision  for loan losses above the amount  deductible  for federal  income tax
purposes in the current  year.  As a result,  the amount  accrued for income tax
payments  in the first nine months of 2000 was 42.7% of income  before  taxes as
compared to 33.9% for the same period of 1999.

CHANGES IN FINANCIAL POSITION

Investment portfolio

During  the first nine  months of 2000,  there  were no  maturities  or calls of
investment  securities.  In September, three different  $1,000,000  purchases of
government  agency securities were made. Beyond the addition of these securities
to the Held-for-Investment category, the only change occurring in the investment
portfolio  since  December 31, 1999,  as shown in Table Five,  was in the market
value of available for sale investments.

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

September 30, 2000                                                  Available-for-Sale                       Held-for-Investment
                                                                    ------------------                       -------------------
                                                               Amortized              Fair               Amortized            Fair
                                                                 Cost                 Value                Cost               Value
                                                                $                   $                     $                   $
                                                               ---------            -------              ---------            ------
<S>                                                               <C>                 <C>                 <C>                 <C>
Due in one year or less ............................                   0                   0                   0                   0
Due from one to five years .........................              10,163               9,958                   0                   0
Due from five to ten years .........................                   0                   0               1,000                 988
Due After ten years ................................                 123                 114               2,375               2,325
                                                                  ======              ======              ======              ======
                                                                  10,286              10,072               3,375               3,313

<CAPTION>
December 31, 1999                                                  Available-for-Sale                       Held-for-Investment
                                                                   ------------------                       -------------------
                                                               Amortized              Fair               Amortized            Fair
                                                                 Cost                 Value                Cost               Value
                                                                $                   $                     $                   $
                                                               ---------            -------              ---------            ------


<S>                                                               <C>                  <C>                  <C>                 <C>
Due in one year or less ............................                   0                   0                   0                   0
Due from one to five years .........................               9,163               8,901                   0                   0
Due from five to ten years .........................               1,000                 962                   0                   0
Due After ten years ................................                 123                 109                 375                 383
                                                                  ======               =====                ====                ====
                                                                  10,286               9,972                 375                 383
</TABLE>


                                       13
<PAGE>

Loan portfolio

For the twelve month period  between  September 30, 1999 and September 30, 2000,
loans increased by $29 million,  or 60.9%. As shown in Table Six,  however,  the
composition  of the loan  portfolio on a percentage of the total basis  remained
relatively stable. The greatest  percentage changes took place in the categories
of Nonfarm  Nonresidential  Properties,  which declined 3.5 % of the total,  and
Commercial & Industrial, which increased 4.1% of the total.

As shown in Table Seven, during the period from September 30, 1999, to September
30, 2000,  variable  rate loans  increased  as a percentage  of total loans from
88.0% to 91.7%.

On September 30, 2000, there was one loan,  secured by real estate, for $353,000
which was 30 days past due, and one loan for $478,000 on nonaccrual  status. The
loan on  nonaccrual  was  secured  by  real  estate  and  had an 80%  government
guarantee.

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

<TABLE>
<CAPTION>
                                                                            2000                            1999
                                                                            ----                            ----
Real Estate:
<S>                                                                      <C>                <C>            <C>                <C>
   Construction/Land Development .............................           $ 9,385             12.2%         $ 5,494             11.5%
   1-4 Family Residential Properties .........................            17,816             23.1%          10,904             22.8%
   Multifamily Residential Properties ........................             1,091              1.4%             742              1.6%
   Nonfarm Nonresidential Properties .........................            25,245             32.7%          17,322             36.1%
   Other Real Estate Loans ...................................               547               .7%             575              1.2%
Commercial & Industrial ......................................            22,064             28.6%          11,739             24.5%
Consumer .....................................................               502               .7%             590              1.2%
Other ........................................................               452               .6%             558              1.1%
                                                                         =======                           =======
 TOTAL ........................................................          $77,102            100.0%         $47,924            100.0%
</TABLE>

Table Seven     Analysis of Loan Maturities and Repricing Frequency
                            as of September 30, 2000
                            ($ amounts in thousands)

<TABLE>
<CAPTION>
                                                       Within      > 3 Months      > 1 Year      > 3 Years      Over
                                                      3 Months     - 12 Months     - 3 Years     - 5 Years     5 Years        Total
                                                      --------     -----------     ---------     ---------     -------        -----
<S>                                                   <C>             <C>           <C>           <C>           <C>         <C>
Variable Rate Loans ...........................       $70,692             -             -             -             -       $70,692

Fixed Rate Loans ..............................       $   749         1,140         1,445         1,290         1,308       $ 5,932
                                                      -------         -----         -----         -----         -----       -------

Total Loans ...................................       $71,441         1,140         1,445         1,290         1,308       $76,624
</TABLE>

* Excludes nonaccrual loan amount


                                       14
<PAGE>

The Bank's  allowance for loan losses is analyzed  monthly in accordance  with a
board approved plan. This judgmental analysis is based upon a model that assigns
a risk rating to each individual loan and considers the risks of loss associated
with various  risk  categories  in  relationship  to the current and  forecasted
economic environment.  The Bank also monitors the overall portfolio,  as well as
the level of reserves  maintained by peer banks. The monthly  provision for loan
losses may fluctuate based on the results of this analysis. Table Eight provides
the results of the  year-to-date  analysis for the periods ending  September 30,
2000 and 1999,  as well as the  amounts  charged  to this  reserve as a loss and
credited to this reserve as a recovery.

Table Eight
                    Analysis of the Allowance for Loan Losses
                     for the Nine Months Ended September 30

                                             2000                      1999
                                             ----                      ----
Balance at Beginning of Year               800,000                   575,000
Provision Charged to Operations            209,900                   125,290
Loans Charged-off                                0                      (400)
Loan Recoveries                                100                       110
Balance At End Of Period                 1,010,000                   700,000

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
September 30, 2000, the cumulative one-year gap for the Bank was a positive,  or
asset sensitive, $ 11.1 million. At September 30, 2000, the cumulative five-year
gap for the Bank was a positive $ 3.4 million,  or 3.1 % of total assets.  These
positive  positions are the results of  management's  efforts to reposition  the
balance  sheet to improve  earnings in a rising  interest  rate  environment.  A
positive gap means that assets would reprice faster than liabilities if interest
rates changed.  The Bank's gap is within policy limits which were established to
reduce the adverse  impact on earnings  which  movements  in interest  rates can
cause.  Intense  competition in the Bank's market  continues to pressure quality
loan rates downward while conversely pressuring deposit rates upward. Table Nine
demonstrates  how  the   relationship   between   interest-bearing   assets  and
interest-bearing liabilities was calculated for September 30, 2000.



                                       15
<PAGE>

Table Nine

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                   Repricing Schedule as of September 30, 2000
                            ($ amounts in thousands)

<TABLE>
<CAPTION>
                                                                 One Year         Over One Year           Over
                                                                  or Less          Five Years           Five Years            Total
                                                                  -------          ----------           ----------            -----
Interest-Earning Assets
<S>                                                               <C>                 <C>                  <C>               <C>
Federal Funds Sold .................................              10,100                   0                   0              10,100
Investment Securities ..............................                   0              10,000               3,498              13,498
FHLB Stock .........................................                 163                   0                   0                 163
Loans** ............................................              72,581               2,735               1,308              76,624
                                                                  ======              ======               =====             =======
Total ..............................................              82,844              12,735               4,806             100,385
</TABLE>

** Excludes $478 loan on nonaccrual status.
<TABLE>
<CAPTION>

Interest-Bearing Liabilities
<S>                                                              <C>                  <C>                  <C>                <C>
NOW Accounts ........................................            21,794                    0                   0              21,794
Savings & MMIA ......................................             2,642                    0                   0               2,642
Time Deposits:$100m & > .............................            15,038                3,894                   0              18,932
Time Deposits: < $100m ..............................            30,443               16,519                   0              46,962
Repurchase Agreements ...............................             1,678                    0                   0               1,678
TT&L Demand Note Funds ..............................               175                    0                   0                 175
                                                                 ======               ======               =====              ======
Total ...............................................            71,770               20,413                   0              92,183

Period  Gap .........................................            11,074               (7,678)              4,806               8,202

Cumulative Gap ......................................            11,074                3,396               8,202

Period Gap Ratios:
 Interest Sensitive Assets to
 Interest Sensitive Liabilities .....................             115.4%                62.4%

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities ....................             115.4%               103.7%
</TABLE>

<TABLE>
<CAPTION>
                                                                  3 Months        Over 3 Months           Over One
Time Deposits                                                      & Less          to 12 Months             Year             Total
                                                                   ------          ------------             ----             -----
<S>                                                                 <C>               <C>                   <C>               <C>
$100,000 and Greater ................................               875               14,163                3,894             18,932
</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 69.5 % of total  assets at  September  30,  2000.  Asset  liquidity  is
provided  from  several  sources,  including  amounts due from banks and federal
funds sold, and funds from maturing  loans.  The Bank is a member of the FHLB of
Atlanta and, as such,  has the ability to borrow against the security of its 1-4
family  residential  mortgage  loans.  The bank also has $5.5 million  available
through  lines of credit with other banks as an  additional  source of liquidity
funding.  Management  believes  that the Bank's  overall  liquidity  sources are
adequate to meet its operating needs.

Capital Resources

The equity  capital of the Bank  increased  $761,000  between the  September  30
periods  ending 2000 and 1999, and $590,000 from December 31, 1999, to September
30, 2000.  These  increases  resulted  from the earnings  retained  during these
periods.

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

The Bank's  September  30, 2000 capital  ratios are  presented in the  following
table,  compared with the "well  capitalized"  and minimum ratios under the FDIC
regulatory definitions and guidelines:
<TABLE>
<CAPTION>
                                                                                                              To be well capitalized
                                                                                      For capital            under prompt corrective
As of Sept. 30, 2000                                         Actual                adequacy purposes            action provisions
                                                             ------                -----------------            -----------------
                                                                                         Minimum                      Minimum
                                                                                         -------                      -------
                                                     Amount          Ratio        Amount         Ratio        Amount          Ratio
                                                     ------          -----        ------         -----        ------          -----
<S>                                                 <C>              <C>         <C>              <C>        <C>              <C>
Total Capital (to risk ....................         $12,637          15.7%       $ 6,429          8.0%       $ 8,037          10.0%
weighted assets)

Tier 1 Capital (to risk ...................         $11,632          14.5%       $ 3,215          4.0%       $ 4,822           6.0%
weighted assets)

Tier 1 Capital (to ........................         $11,632          10.5%       $ 4,414          4.0%       $ 5,518           5.0%
average assets) (leverage)
</TABLE>


                                       17
<PAGE>

RESULTS OF OPERATIONS:  THREE MONTH PERIOD ENDED  SEPTEMBER 30, 2000 COMPARED TO
THREE MONTH PERIOD ENDED SEPTEMBER 30, 1999.

Net income for the third quarter of 2000 increased by $ 98,000,  or 99.4 %, over
the same period in 1999.  Net  noninterest  expense  (noninterest  expense  less
noninterest  income)  in the third  quarter of 2000  exceeded  that for the 1999
period  by  $212,000,  or 50.4 %,  and the  provision  for loan  losses  and the
provision for income taxes  increased in the 2000 period by $20,000 and $54,000,
respectively.

Improved  earnings  were  derived  solely from the  improvement  in net interest
income,  which improved due to growth of earning assets,  actual and relative to
the growth in  interest-bearing  liabilities,  and the increased interest spread
between  the yield on  earning  assets  and the funds  cost of  interest-bearing
liabilities. This improvement is reflected below.

<TABLE>
<CAPTION>
                                  Third Quarter
                            ($ amounts in thousands)

Average Balances                                                                2000                   1999                Increase
                                                                                ----                   ----                --------
<S>                                                                           <C>                    <C>                    <C>
Earning assets ................................................               $95,622                $62,487                $33,135

Earning assets yield($) .......................................                 2,362                  1,323                  1,039

Earning assets yield(%) .......................................                  9.80%                  8.40%                  1.40%


Interest-bearing liabilities ..................................               $84,571                $53,529                $31,042

Cost of funds($) ..............................................                 1,331                    677                    654

Cost of funds(%) ..............................................                  6.24%                  5.02%                  1.22%


Interest Spread($) ............................................               $ 1,031                $   646                $   385

Interest Spread(%) ............................................                  3.56%                  3.38%                   .18%
</TABLE>










                                       18
<PAGE>



                           PART II - OTHER INFORMATION


Item 4 - Exhibits and Reports on Form 8-K

         (a)   Exhibit No. From
               Item 601 of
               Regulation S-B                Description
               --------------                -----------

                    27                       Financial Data Schedule



         (b)   Reports on Form 8-K :    None






































                                       19
<PAGE>




SIGNATURE

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



                                       First South Bancorp, Inc.


November 13, 2000                      /s/V. Lewis Shuler
                                       -----------------------------------------
                                       V. Lewis Shuler, Executive Vice President
                                       (Principal Accounting Officer)