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


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

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

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

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

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

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

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

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

     Part II - OTHER INFORMATION

     Item 4.  Submission of Matters to a Vote of Security Holders.............19


     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.
                           Consolidated Balance Sheets
                            ( $ amounts in thousands)
<TABLE>
<CAPTION>
                                                                                    (Unaudited)       (Unaudited)
                                                                                      June 30,          June 30,        December 31,
                                                                                        2000              1999              1999
                                                                                        ----              ----              ----
Assets
<S>                                                                                  <C>                <C>                <C>
Cash and due from banks ...................................................          $  1,661           $  1,124           $    978
Due from banks - interest bearing .........................................               330                  9                 12
Federal funds sold ........................................................             7,500              3,325              2,850
Investment securities:
     Securities held to maturity ..........................................               375                375                375
     Securities available for sale ........................................             9,930             10,562              9,972
Loans .....................................................................            72,220             43,716             57,001
     Less allowance for loan losses .......................................              (903)              (640)              (800)
                                                                                     --------           --------           --------
Loans - net ...............................................................            71,290             43,076             56,201
Property and equipment, net ...............................................             3,018              2,815              2,863
Other assets ..............................................................             1,984                751              1,804
                                                                                     --------           --------           --------
         Total assets .....................................................          $ 96,088           $ 62,037           $ 75,055
                                                                                     ========           ========           ========

Liabilities
Deposits:
     Noninterest-bearing ..................................................          $  5,624           $  2,805           $  3,389
     Interest-bearing .....................................................            76,436             46,470             55,326
                                                                                     --------           --------           --------
         Total deposits ...................................................            82,060             49,275             58,715

Securities sold under repurchase agreements ...............................             1,497              1,361              1,723
Other borrowed funds ......................................................                 0                  0              2,500
Demand notes issued to the U. S. Treasury .................................               331                160                234
Other liabilities .........................................................               986                610                974
                                                                                     --------           --------           --------
         Total liabilities ................................................            84,874             51,406             64,146

Shareholders' equity
Common - no par value; 20,000,000 shares authorized;
   outstanding 917,180; 915,759; 917,180, respectively
                                                                                        4,586              4,579              4,586
Additional paid-in capital ................................................             6,504              6,488              6,504
Undivided profits (loss) ..................................................               345               (297)                14
Accumulated other comprehensive income (loss) .............................              (221)              (139)              (195)
                                                                                     --------           --------           --------
         Total shareholders' equity .......................................            11,214             10,631             10,909
                                                                                     --------           --------           --------
         Total liabilities and shareholders' equity .......................          $ 96,088           $ 62,037           $ 75,055
                                                                                     ========           ========           ========
</TABLE>


                                       3
<PAGE>

                            FIRST SOUTH BANCORP, INC

                             Statement of Operations
<TABLE>
<CAPTION>

                                                                                               (Unaudited)
                                                                                           Period ended June 30,
                                                                               Three Months                      Six Months
                                                                           2000            1999            2000             1999
                                                                           ----            ----            ----             ----
                                                                                  (Dollars in thousands, except per share)
Interest income
<S>                                                                      <C>              <C>              <C>              <C>
         Loans, including fees .................................         $ 1,793          $   932          $ 3,297          $ 1,803
         Investment securities .................................             150              153              301              305
         Federal funds sold ....................................             108               42              145               84
         Other investments .....................................               3                0                6               19
                                                                         -------          -------          -------          -------

         Total interest income .................................           2,054            1,127            3,749            2,211

Interest expense
         Deposits and borrowings ...............................           1,120              548            1,987            1,067

Net interest income ............................................             934              579            1,762            1,144
         Provision for loan losses .............................             (95)             (35)            (130)             (65)
                                                                         -------          -------          -------          -------
Net interest income after provision ............................             839              544            1,632            1,079

Other income
         Service charges on deposit accounts ...................              36               31               67               62
         Other income ..........................................              94               52              188               98
                                                                         -------          -------          -------          -------
         Total noninterest income ..............................             130               83              255              160

Other expenses
         Salaries and benefits .................................             438              294              848              564
         Occupancy and equipment ...............................             117               83              215              170
         Other expense .........................................             166              106              348              228
                                                                         -------          -------          -------          -------
         Total other expense ...................................             721              483            1,411              962

Income before income taxes .....................................             248              144              476              277
         Provision for income taxes ............................              89               33              146               83
                                                                         -------          -------          -------          -------

Net Income .....................................................         $   159          $   111          $   330          $   194

         Basic per share earnings ..............................         $   .17          $   .12          $   .36          $   .21
</TABLE>


                                       4
<PAGE>


                            FIRST SOUTH BANCORP, INC.

                        Statement of Comprehensive Income

<TABLE>
<CAPTION>
                                                                                                                (Unaudited)
                                                                                                          Six Months Ended June 30
                                                                                                         2000                 1999
                                                                                                         ----                 ----
                                                                                                           (Dollars in thousands)

<S>                                                                                                  <C>                  <C>
Net Income ...............................................................................           $ 330,509            $ 194,418

Other comprehensive income (loss):

Change in unrealized holdings gains and losses on
     available for sale securities .......................................................             (41,636)            (207,177)

Income tax (expense) benefit on other comprehensive income (loss) ........................              15,822               78,727
                                                                                                     ---------            ---------

Total other comprehensive income (loss) ..................................................             (25,814)            (128,450)
                                                                                                     ---------            ---------

Comprehensive income .....................................................................           $ 304,695            $  65,968
                                                                                                     =========            =========
</TABLE>





                                       5
<PAGE>

                            FIRST SOUTH BANCORP, INC.

                             Statement of Cash Flows
                 For the Six Months ended June 30, 2000 and 1999

<TABLE>
<CAPTION>
                                                                                                               (Unaudited)
                                                                                                            Six Months Ended
                                                                                                                 June 30
                                                                                                          2000              1999
                                                                                                          ----              ----
                                                                                                          (Dollars in thousands)
Operating Activities
<S>                                                                                                    <C>                 <C>
Net Income .................................................................................           $    330            $    194

Adjustment to reconcile net income to net cash provided by operating
      activities
         Provision for loan losses .........................................................                130                  65
         Depreciation ......................................................................                 96                  86
         Director fees .....................................................................                 18                  14
         (Accretion) amortization, net .....................................................                  0                   0
         Deferred tax asset ................................................................                (48)                  0
         Increase in other assets ..........................................................               (336)               (264)
         Increase (decrease) in accrued expenses and other liabilities .....................             (2,084)                236
                                                                                                       --------            --------

Net cash provided (used) by operating activities ...........................................             (1,894)                331

Investing Activities
         Purchase of securities available for sale .........................................                  0              (1,000)
         Purchase of securities held for investment ........................................                  0                   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                   0
         Origination of loans, net of principal collected ..................................            (15,219)             (7,857)
         Purchase of premises and equipment ................................................               (356)                (38)
                                                                                                       --------            --------

Net cash used in investing activities ......................................................            (15,575)             (8,454)

Financing Activities
         Net increase in deposits ..........................................................             23,345               7,328
         Net increase (decrease) in retail repurchase agreements ...........................               (226)                 34
                                                                                                       --------            --------

Net cash provided by financing activities ..................................................             23,119               7,362

Net increase (decrease) in cash and cash equivalents .......................................              5,650                (761)
Cash and cash equivalents, beginning .......................................................              3,840               5,220
Cash and cash equivalents, ending ..........................................................              9,490               4,459
</TABLE>



                                       6
<PAGE>



                            FIRST SOUTH BANCORP, INC.

                  Statement of Changes in Shareholders' Equity
         Year-ended December 31, 1999 and Six Months Ended June 30, 2000
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                        Accumulated
                                                                       Additional       Accumulated        Other           Total
                                                         Common          Paid-In         Earnings      Comprehensive   Stockholders'
                                                          Stock          Capital         (Deficit)     Income (loss)      Equity
                                                          -----          -------         ---------     -------------      ------

<S>                                                   <C>               <C>              <C>              <C>             <C>
Balance at 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       Accumulated          Other           Total
                                                      Common          Paid-In         Earnings        Comprehensive   Stockholders'
                                                       Stock          Capital         (Deficit)       Income (loss)      Equity
                                                       -----          -------         ---------       -------------      ------


<S>                                                <C>             <C>                  <C>              <C>              <C>
Balance at December 31, 1999 ...............       4,585,900       6,504,239            14,211           (195,018)        10,909,332

Stock in lieu of director fees .............               -               -                 -                  -                  -

Net income .................................                                           330,509                  -                  -

Net change in unrealized gain
    on available for sale
    securities, net of tax .................                                                              (25,814)

Comprehensive income .......................                                                                                 304,695
                                                   ---------       ---------       -----------        -----------        -----------
Balance at June 30, 2000 ...................       4,585,900       6,504,239           344,720           (220,832)        11,214,027
</TABLE>



                                       7
<PAGE>



                            FIRST SOUTH BANCORP, INC.

Notes to Unaudited  Financial Statements

Note 1.  Basis of Presentation

              The accompanying unaudited financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information  and with  instructions to Form 10-QSB and Item 310(b) of
Regulation 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 six months ended June 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 Company's  fiscal year ended December
31, 1999, contained in the Company's annual report on Form 10-KSB.




                                       8
<PAGE>


                            FIRST SOUTH BANCORP, INC.


Item 2.  Management's Discussion and Analysis

Forward Looking Statements

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

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

Net Income

For the first six months of 2000, First South Bancorp,  Inc. earned a net profit
of $330,000,  compared to $194,000  for the same period in 1999,  an increase of
70.0 % or  $136,000.  Basic  earnings  per share  were $.36 in the 2000  period,
compared to $ .21 for the 1999  period.  The  improvement  in net income for the
period can be attributed primarily to one income component, net interest income.
Net interest income increased $617,500 or 54.0 %. That increase was supplemented
by a $95,000 increase in noninterest  income for the period but was reduced by a
$449,000 increase in noninterest expense and a $65,000 increase in the loan loss
reserve provision amount.

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 14.7 % and 63.0 %, respectively.

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

                                                     2000                  1999
                                                     ----                  ----
Return on Average Assets ......................      .78%                  .68%
Return on Average Equity ......................     6.00%                 3.68%
Dividend Payout Ratio .........................       N/A                   N/A
Average Stockholders Equity
    as a Percentage of Average Assets .........    13.03%                18.36%


                                       9
<PAGE>


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 was stated earlier,  net
interest income for the first six months of 2000 increased over that of the same
period in 1999 by  $617,500,  or 54.0 %. As in most,  if not all,  instances  of
comparing  the net  interest  income  performance  between  two  different  time
periods,  a number of factors  combined to provide the  improvement  First South
Bancorp experienced during the first six months of 2000.

Though growth in earning  assets of $ 25.6  million,  or 47.5 %, was certainly a
significant  factor in the improvement of net interest income, the change in the
earning assets mix also contributed to the improvement experienced.  The segment
of total earning assets with the highest interest yield,  loans,  increased as a
percentage  of total earning  assets from 72.2 % in 1999 to 80.7 % in 2000.  The
growth in earning assets, coupled with the change in earning assets mix during a
period  when  interest  rates were  rising,  combined  to add 1.21% to the total
earning assets yield.

For the first six months of 2000, the cost of funds averaged 5.80 %, an increase
of 0.9% over the average cost of funds rate of 4.90 % in 1999.  This increase in
the cost of funds partially  offset the increase in the yield on earning assets.
The effect of these changes was an improvement in the interest  spread of 0.31%,
from 3.35 % in 1999 to 3.66 % in 2000. First South Bancorp's net interest margin
(net interest income divided by total average earning assets) improved to 4.45 %
in 2000 from 4.27 % in 1999.

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 six months ended June 30, 2000 and 1999.




                                       10
<PAGE>

Table Two
                Net interest Income and Average Balance Analysis
                        for the Six Months Ended June 30
                                  2000 and 1999
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                              Interest                Average
                                                   Average Balance         Income/Expense            Yield/cost
                                                   ---------------         --------------            ----------
                                                 2000        1999        2000        1999        2000        1999
                                                 ----        ----        ----        ----        ----        ----
Interest Earning Assets
<S>                                              <C>           <C>         <C>            <C>      <C>         <C>
Federal Funds Sold ........................      $ 4,712       3,641       $ 145          84       6.19%       4.65%
Investments ...............................       10,661      11,363         307         324       5.76%       5,76%
Loans .....................................       64,317      39,039       3,297       1,803      10.31%       9.31%
                                                 -------      ------     -------       -----      -----        ----
Total Interest Earning Assets .............      $79,690      54,043     $ 3,749       2,211       9.46%       8.25%

Noninterest-Earning assets
Cash and Due From Banks ...................      $ 1,591       1,306
Loan Loss Reserve .........................        (839)       (597)
Investments: Fair value ...................        (377)        (50)
Premises and Equipment ....................        2,971       2,848
Interest Receivable and Other .............        1,961         520
                                                 -------      ------
Total Noninterest-Earning Assets ..........        5,315       4,027

TOTAL ASSETS ..............................      $85,005      58,070
                                                 =======      ======

Interest-Bearing Liabilities
NOW Accounts ..............................      $17,499      14,391       $ 444         314       5.10%       4.40%
Money Market and Savings ..................        1,941         797          36          10       3.73%       2.53%
Time Deposits and IRA's ...................       47,055      27,178       1,433         714       6.17%       5.30%
Fed Funds Purchased and Repos .............        1,655       1,404          43          27       5.22%       3.81%
Other borrowed funds ......................          600           0          17           0       5.70%          0%
Demand Notes Issued to Treasury ...........          200         106           4           2       4.02%       3.80%
                                                 -------      ------      ------       -----       ----        ----
Total Interest-Bearing Liabilities ........      $68,950      43,876      $1,987       1,067       5.80%       4.90%

Noninterest-Bearing Liabilities
Demand Deposits ...........................      $ 4,148       3,006
Interest Payable ..........................          577         334
Other Liabilities .........................          247         190
                                                 -------      ------
Total Noninterest-Bearing Liabilities .....      $ 4,972       3,530

Stockholders' Equity ......................      $11,083      10,664

Total Liabilities and Equity ..............      $85,005      58,070
                                                 =======      ======

Net Interest Income .......................                              $ 1,762     $ 1,144

Net Yield on Earning Assets ...............                                                        4.45%       4.27%

Interest Rate Spread ......................                                                        3.66%       3.35%
</TABLE>



                                       11
<PAGE>

Non-Interest Income

Non-interest  income for the first six  months of 2000 grew to $ 255,000  from $
160,000 in 1999.  Most of this $95,000  increase was in the area of  commissions
and fees,  which  increased by $73,000.  Commissions  and fees  generated by the
bank's brokerage  services  subsidiary,  First South Financial  Services,  Inc.,
accounted almost exclusively for this increase. Table Three provides a six month
2000 to 1999 performance comparative of categories of non-interest income.

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

                                                  2000                1999
                                                  ----                ----
Service Charges ............................    $   67               $  62
Commissions and Fees .......................       138                  65
Other Noninterest Income* ..................        49                  32
                                                ------               -----
Total ......................................    $  254               $ 160

* 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 six months of 2000 increased by $449,000,  or
46.7 %, over the first six months total in 1999 of  $961,000.  While some of the
operational  expense  increase  experienced in 2000 resulted from the growth the
bank  experienced  in the  market  area which  existed in 1999,  adding a branch
office in  Columbia,  S.C.  in the first  quarter  of 2000 was the  single  most
significant   factor  associated  with  the  growth  in  non-interest   expense.
Non-interest  expense for the Columbia office,  $256,000,  represented 56.8 % of
the total increase experienced in 2000.

Table Three provides a six month 2000 to 1999 performance comparative of various
categories of non-interest expense.

Table Three
                      Summary of Total Noninterest Expense
                        For the Six Months Ended June 30
                                  2000 and 1999
                             (Dollars in thousands)

                                                  2000                1999
                                                  ----                ----

Salaries and Employee Benefits ............     $  847              $  563
Occupancy and Equipment ...................        214                 169
Other .....................................        347                 227
                                                ------              ------
Total .....................................     $1,410              $  961



                                       12
<PAGE>

Income Taxes

Through  June 30,  2000,  $48,000  had been  accrued as a deferred  tax  benefit
resulting  from a  deferred  tax  asset  created  by income  transferred  to the
provision for loan losses above the amount deductible for income tax purposes in
the current year. The  non-deductibility  for federal income tax purposes of the
$130,000  year-to-date  charge to earnings as a provision for  potential  future
loan losses  created a significant  increase in 2000 over 1999 of the percentage
of  income  being  accrued  for  income  tax  payments,   40.7  %  and  29.9  %,
respectively.


CHANGES IN FINANCIAL POSITION

Investment portfolio

During the first six months of 2000,  there have been no purchases,  maturities,
or calls of investment  securities.  As is shown in Table Four, the only changes
which have occurred in the investment  portfolio during this six month have been
in the market value of the securities.

Table Four
                        Analysis of Investment Securities
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                   Available for Sale                    Held for Investment
                                                                   ------------------                    -------------------
                                                                  Amortized            Fair             Amortized            Fair
                                                                    Cost               Value              Cost               Value
                                                                    ----               -----              ----               -----
June 30, 2000

<S>                                                              <C>                 <C>                 <C>                 <C>
Due in one year or less ............................             $     0             $     0             $     0             $     0
Due from one to five years .........................               9,163               8,860                   0                   0
Due from five to ten years .........................               1,000                 958                   0                   0
Due After ten years ................................                 123                 112                 375                 354
                                                                 =======              ======             =======             =======
                                                                 $10,286              $9,930             $   375             $   354
</TABLE>

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

<S>                                                              <C>                 <C>                 <C>                 <C>
Due in one year or less ............................             $     0             $     0             $     0             $     0
Due from one to five years .........................               9,163               8,900                   0                   0
Due from five to ten years .........................               1,000                 962                   0                   0
Due after ten years ................................                 123                 109                 375                 383
                                                                 =======              ======             =======             =======
                                                                 $10,286              $9,971             $   375             $   383
</TABLE>

Loan portfolio

From June 30, 1999 to June 30, 2000,  loans increased by $28.5 million,  or 65.2
%. As is shown in Table Five,  however,  the  composition  of the loan portfolio
remained approximately the same.

                                       13
<PAGE>

The bank's loan portfolio on June 30, 2000, as shown in Table Six,  continued to
be  comprised of a  significant  percentage,  88.0 %, of variable  rate loans as
compared to 91.3% at June 30, 1999.

On June 30, 2000, there was one loan in the amount of $352,000 which was 30 days
past due. This loan is secured by real estate.  Also on June 30, 2000,  the bank
had one loan on  nonaccrual  status.  This loan,  in the amount of $678,000,  is
secured by real estate and also has a government guarantee of 80 % of the amount
outstanding.

Table Five
                                Analysis of Loans
                                June 30 Balances
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                    2000                           1999
                                                    ----                           ----
Real Estate:
<S>                                           <C>                    <C>        <C>                  <C>
   Construction / Land Development ........   $    9,428             13.0%      $    4,880           11.2%
   1-4 Family Residential Properties ......       15,408             21.3%           9,606           22.0%
   Multifamily Residential Properties .....        1,102              1.5%             749            1.7%
   Nonfarm Nonresidential Properties ......       24,479             33.9%          16,423           37.5%
   Other Real Estate Loans ................          549               .8%             381             .9%
Commercial & Industrial ...................       20,696             28.7%          11,043           25.3%
Consumer ..................................          558               .8%             634            1.4%
                                              ----------                        ----------
TOTAL .....................................   $   72,220            100.0%      $   43,716          100.0%
</TABLE>

Table Six
               Analysis of Loan Maturities and Repricing Frequency
                               as of June 30, 2000
                             (Dollars 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 ..............     $62,983                                                              $62,983*

Fixed Rate Loans .................       2,693        $1,572        $1,427        $1,449        $1,418        8,559
                                       -------        ------        ------        ------        ------      -------

Total Loans ......................     $65,676        $1,572        $1,427        $1,449        $1,418      $71,542
</TABLE>
* Excludes nonaccrual loan amount

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 on each  individual  loan and considers the loss risks  associated
with various  risk  categories  in  relationship  to the current and  forecasted
economic environment.  The Bank also monitors the overall portfolio,  as well as
the level of reserves  maintained by peer banks. The monthly  provision for loan
losses may fluctuate based on the results of this analysis. Table Seven provides
the results of the  year-to-date  analysis for the periods  ending June 30, 2000
and 1999, as well as the amounts  charged to this reserve as a loss and credited
to this reserve as a recovery.


                                       14
<PAGE>

Table Seven
                    Analysis of the Allowance for Loan Losses
                        for the Six Months Ended June 30

                                               2000                  1999
                                               ----                  ----
Balance at Beginning of Year .............   $800,000              $575,000
Provision Charged to Operations ..........    130,000                65,320
Loans Charged-off ........................          0                  (400)
Loan Recoveries ..........................          0                    80
                                             --------              --------
Balance At End Of Period .................   $930,000              $640,000

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 June 30,
2000, the cumulative one-year gap for the Bank was a positive or asset sensitive
$ 14.3 million. At June 30, 1999, the cumulative  five-year gap for the Bank was
a positive $ 8.5 million or 8.8 % 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 Eight demonstrates how the relationship
between interest-bearing assets and interest-bearing  liabilities was calculated
for June 30, 2000.



                                       15
<PAGE>


Table Eight

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                     Repricing Schedule as of June 30, 2000
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                      One Year       Over One Year           Over
                                                                       or Less       to Five Years        Five Years           Total
                                                                       -------       -------------        ----------           -----
Interest-Earning Assets
<S>                                                                   <C>               <C>                <C>              <C>
Federal Funds Sold ..........................................         $  7,500          $      0           $      0         $  7,500
Investment Securities .......................................                0             9,000              1,498           10,498
FHLB Stock ..................................................              163                 0                  0              163
Loans ** ....................................................           67,248             2,876              1,418           71,542
                                                                      --------          --------           --------         --------

Total .......................................................         $ 74,911          $ 11,876           $  2,916         $ 89,703

**Excludes $678 loan on nonaccrual status

Interest-Bearing Liabilities
NOW Accounts ................................................         $ 18,213          $      0           $      0         $ 18,213
Savings and MMIA ............................................            1,411                 0                  0            1,411
Time Deposits: $100,000 and over ............................           12,266             3,268                  0           15,534
Time Deposits <$100,000 .....................................           26,919            14,359                  0           41,278
Repurchase Agreements .......................................            1,497                 0                  0            1,497
TT&L Demand Note Funds ......................................              331                 0                  0              331
                                                                      --------          --------           --------         --------

Total .......................................................         $ 60,637          $ 17,627           $      0         $ 78,264

Period Gap ..................................................           14,274            (5,751)             2,916           14,355
Cumulative Gap ..............................................           14,274             8,523             11,439

Period Gap Ratios
Interest Sensitive Assets to Interest
    Sensitive Liabilities ...................................            123.5%             67.4%

Cumulative Gap Ratios:
Interest Sensitive Assets to Interest
    Sensitive Liabilities ...................................            123.5%            110.9%
</TABLE>


<TABLE>
<CAPTION>

                                                                     3 Months          Over 3 Months      Over One
                                                                     and Less          To 12 Months         Year             Total
                                                                     --------          ------------         ----             -----

<S>                                                                    <C>               <C>               <C>               <C>
Time Deposits $100,000 and Greater .........................           $   397           $11,869           $ 3,268           $15,534
</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 69.2 % of total  assets at June 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 $5.1 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  Company  increased  $ 583,000  between  the June 30
periods  ending 2000 and 1999,  and $305,000 from December 31, 1999, to June 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.  For  regulatory  purposes,  the adequacy of the Company's
capital is measured by the adequacy of the Bank's capital.

The Bank's June 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:


                                       17
<PAGE>

<TABLE>
<CAPTION>
                                                                                               To be well capitalized
                                                                         For capital           under prompt corrective
                                              Actual                  adequacy purposes           action provisions
                                              ------                  -----------------           -----------------
                                                                           Minimum                     Minimum
                                       Amount         Ratio         Amount         Ratio         Amount        Ratio
                                       ------         -----         ------         -----         ------        -----
As of June 30, 2000
(Dollars in thousands)

<S>                                   <C>              <C>          <C>              <C>        <C>             <C>
Total Capital (to risk
    weighted assets) ..............   $ 12,365         16.4%        $6,022           8.0%       $ 7,528         10.0%

Tier 1 Capital (to risk
    weighted assets) ..............    $11,435         15.2%       $ 3,011           4.0%       $ 4,517          6.0%

Tier 1 Capital (to average
    assets) (leverage) ............    $11,435         12.4%       $ 3,681           4.0%        $4,602          5.0%
</TABLE>

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

Net income for the second quarter of 2000 increased by $ 48,000, or 43.2 %, over
the same period in 1999.  Noninterest  expense  was $ 721,000  during the second
quarter 2000 period and exceeded noninterest expense for the same period in 1999
by $238,000,  reflecting the cost of operating the new branch, while noninterest
income  of $  130,000  exceeded  that of 1999 by  only $  47,000.  However,  net
interest  income in the three months  ended June 30, 2000 was  $295,000  greater
than net interest income for the same period of 1999.

Net  interest  income  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 demonstrated below.

                           Three months ended June 30,
                             (Dollars in thousands)

Average Balances                             2000           1999       Increase
----------------                             ----           ----       --------

Earning assets .......................   $ 86,209       $ 55,894       $ 30,315
Earning assets yield ($) .............      2,054          1,127            934
Earning assets yield (%) .............       9.56%          8.09%          1.47%
Interest-bearing liabilities .........   $ 75,276       $ 45,789       $ 29,487
Cost of funds ($) ....................      1,120            548            572
Cost of funds (%) ....................      5.97%           4.80%          1.17%
Interest Spread ($) ..................   $   934             579            355
Interest Spread (%) ..................      3.59%           3.29%           .30%



                                       18
<PAGE>

                           PART II - OTHER INFORMATION


Item 4.  Submission of Matters to a Vote of Security Holders.

          (a)  The Corporation  held its annual meeting of shareholders on April
               26, 2000.

          (b)  The   following   persons   were  elected  as  directors  of  the
               Corporation.

Name                                                 Shares Voted
----                                                 ------------
                                            FOR                       WITHHOLD
                                            ---                       --------

Harold E. Fleming, MD                     688,106                       1,200
Joel C. Griffin                           688,106                       1,200
Barry L. Slider                           688,106                       1,200
Richard H. Brooks                         688,106                       1,200
Herman E. Ratchford                       688,106                       1,200
David G. White                            688,106                       1,200
Roger A. F. Habisreutinger                688,106                       1,200
Chandrakant V. Shanhbag                   688,106                       1,200
Ashley F. Houser                          688,106                       1,200

          (c)  The  shareholders  also approved an amendment to the Stock Option
               Plan of First South  Bancorp.,  Inc.,  to increase  the number of
               shares which may be issued under the plan from 75,000 to 150,000.

         The vote was:

         FOR -     615,315 shares

         AGAINST - 8,250 shares

         ABSTAIN - 3,641 shares

Item 6 - Exhibits and Reports on Form 8-K

         (a)      Exhibits included with this report:

                  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  has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



                               First South Bancorp, Inc.


August 11, 2000                s/ Barry L. Slider
                               ------------------------------------
                               Barry L. Slider, President and Chief
                                Executive Officer



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