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 MARCH 31, 2003

                             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
                            (Bank's Telephone Number)

          Securities registered pursuant to Section 12 (g) of the Act:

                           COMMON STOCK, NO PAR VALUE

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


State the number of shares outstanding of each of the issuer's classes of common
equity,  as of the latest  practical date:  Common Stock, no par value,  920,780
shares outstanding on April 30, 2003.

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

                  Notes to Unaudited Statements .......................      7


         Item 2.  Management's Discussion and Analysis ................   8-16

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


Part II -         OTHER INFORMATION

         Item 6.  Exhibits and Reports on Form 8-K ....................     18


SIGNATURES ............................................................     19














                                       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)
                                                                                                 March 31,              December 31,
                                                                                                   2003                     2002
                                                                                                   ----                     ----
Assets
<S>                                                                                             <C>                       <C>
Cash & due from banks ..........................................................                $   4,923                 $   4,192
Due from banks - interest bearing ..............................................                    9,700                       100
Investment securities:
     Securities held to maturity ...............................................                    2,367                     2,369
     Securities available for sale .............................................                    9,737                    14,855
Loans ..........................................................................                  174,946                   158,861
      Less, allowance for loan losses ..........................................                   (1,926)                   (1,750)
Loans - net ....................................................................                  173,020                   157,111
Property & equipment, net ......................................................                    3,367                     2,834
Other assets ...................................................................                    4,057                     3,638
                                                                                                ---------                 ---------
Total assets ...................................................................                $ 207,171                 $ 185,099
Liabilities
Deposits:
      Noninterest-bearing ......................................................                $  14,668                 $  14,535
      Interest-bearing .........................................................                  162,343                   141,163
                                                                                                ---------                 ---------
Total deposits .................................................................                  177,011                   155,698
Securities sold under repurchase agreements ....................................                    3,828                     3,230
Other borrowed funds ...........................................................                   10,000                    10,000
Demand notes issued to the U.S. Treasury .......................................                      213                       455
Other liabilities ..............................................................                    1,349                     1,366
                                                                                                ---------                 ---------
Total liabilities ..............................................................                  192,401                   170,749

Shareholders' equity
Common stock - no par value; 20,000,000 shares
     authorized; Outstanding 920,780 shares ....................................                    4,604                     4,604
Additional paid-in capital .....................................................                    6,541                     6,541
Undivided profits ..............................................................                    3,553                     3,121
Accumulated other comprehensive income .........................................                       72                        84
                                                                                                ---------                 ---------
Total shareholders' equity .....................................................                   14,770                    14,350
                                                                                                ---------                 ---------

Total liabilities and Shareholders' Equity .....................................                $ 207,171                 $ 185,099
</TABLE>



                                       3
<PAGE>

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                             Statement of Operations

<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                        Three Months ended March 31,
                                                                                                        ----------------------------
                                                                                                          2003               2002
                                                                                                          ----               ----
                                                                                                          ($ amounts in thousands,
                                                                                                           except per share)
Interest income
<S>                                                                                                <C>                      <C>
         Loans, including fees ...................................................                 $ 2,640                  $ 2,165
         Investment securities ...................................................                     159                      151
         Interest bearing deposits ...............................................                      17                       34
                                                                                                   -------                  -------
         Total interest income ...................................................                   2,816                    2,350

Interest expense
         Deposits and borrowings .................................................                   1,031                    1,126
                                                                                                   -------                  -------

Net interest income ..............................................................                   1,785                    1,224
         Provision for loan losses ...............................................                    (208)                    (110)
                                                                                                   -------                  -------
Net interest income after provision ..............................................                   1,577                    1,114

Other income
         Service charges on deposit accounts .....................................                      70                       60
         Other income ............................................................                     130                      250
                                                                                                   -------                  -------
         Total noninterest income ................................................                     200                      310

Other expenses
         Salaries and benefits ...................................................                     707                      595
         Occupancy and equipment .................................................                     128                      125
         Other expense ...........................................................                     311                      195
                                                                                                   -------                  -------
         Total other expense .....................................................                   1,146                      915

Income before income taxes .......................................................                     631                      509
         Provision for income taxes ..............................................                     199                      172
                                                                                                   -------                  -------

Net income .......................................................................                 $   432                  $   337

         Basic per share earnings ................................................                 $   .47                  $   .37

         Diluted earnings per share ..............................................                 $   .45                  $   .34
</TABLE>




                                       4
<PAGE>




                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                 Consolidated Statement of Comprehensive Income
                            ($ amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                              (Unaudited)
                                                                                                       Three Months Ended March 31
                                                                                                       ---------------------------
                                                                                                      2003                     2002
                                                                                                      ----                     ----


<S>                                                                                                   <C>                     <C>
Net Income .........................................................................                  $ 432                   $ 337

Other comprehensive income (loss):

Change in unrealized holdings gains &
    losses on available for sale securities ........................................                    (19)                   (105)

Income tax (expense) benefit on other
    comprehensive income (loss) ....................................................                      7                      48
                                                                                                      -----                   -----
Total other comprehensive income (loss) ............................................                    (12)                    (57)

Comprehensive income ...............................................................                  $ 420                   $ 280
                                                                                                      =====                   =====
</TABLE>




















                                       5
<PAGE>





                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statement of Cash Flows
                            ($ amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                        Three Months Ended March 31,
                                                                                                        ----------------------------
                                                                                                        2003                  2002
                                                                                                        ----                  ----

Operating Activities
<S>                                                                                                  <C>                   <C>
Net income .............................................................................             $    432              $    337

Adjustments to reconcile net income to net cash
     provided by operating activities
         Provision for loan losses .....................................................                  208                   110
         Depreciation ..................................................................                   51                    48
         Deferred tax asset ............................................................                  (60)                  (25)
         Decrease in interest receivable ...............................................                    5                    16
         Decrease (increase) in other assets ...........................................                 (340)                    4
         Increase in accrued expenses and other liabilities ............................                   29                    25
                                                                                                     --------              --------

Net cash provided by operating activities ..............................................                  325                   515


Investing Activities
         Purchase of securities available for sale .....................................                    0                (5,000)
         Purchase of restricted FHLB stock .............................................                 (100)                    0
         Proceeds from called available for sale securities ............................                4,500                     0
         Proceeds from sale of other real estate owned .................................                  625                     0
         Origination of loans, net of principal collected ..............................              (16,085)               (8,295)
         Purchase of premises and equipment ............................................                 (601)                  (27)
         Increase in cash surrender value of life insurance ............................                    9                     0
                                                                                                     --------              --------

Net cash used in investing activities ..................................................              (11,652)              (10,322)

Financing Activities
         Net increase in deposits ......................................................               21,302                19,471
         Net increase in retail repurchase agreements ..................................                  598                 1,151
         Net increase (decrease) in other borrowings ...................................                 (242)                  419
         Proceeds from exercise of stock options .......................................                    0                    48
                                                                                                     --------              --------
Net cash provided by financing activities ..............................................               21,658                21,089
                                                                                                     --------              --------

Net increase in cash and cash equivalents ..............................................               10,331                11,282

Cash and cash equivalents, beginning ...................................................                4,292                 6,439

Cash and cash equivalents, ending ......................................................               14,623                17,721
</TABLE>




                                       6
<PAGE>



                   FIRST SOUTH BANCORP, INC. AND SUB6SIDIARY

Notes to Unaudited  Financial Statements

Note 1.  Basis of Presentation

              The accompanying unaudited financial statements have been prepared
in  accordance  with  generally  accepted  accounting   principles  for  interim
financial  information  and with  instructions to Form 10-QSB and Item 310(b) of
Regulation S-B of the Securities and Exchange Commission.  Accordingly,  they do
not contain all of the information and footnotes  required by generally accepted
accounting principles for complete financial statements. However, in the opinion
of management, all adjustments considered necessary for a fair presentation have
been included.  Operating  results for the three months ended March 31, 2003 are
not  necessarily  indicative  of the results  that may be expected  for the year
ended December 31, 2003. For further information,  please refer to the financial
statements  and  footnotes  thereto  for the  Corporation's  fiscal  year  ended
December 31, 2002,  contained in the  Corporation's  2002 Annual  Report on Form
10-KSB.

Note 2.  Accounting for Stock-Based Compensation

In accordance  with SFAS No. 123,  Accounting for Stock-Based  Compensation,  as
amended by SFAS No. 148,  Accounting for  Stock-Based  Compensation - Transition
and Disclosure - An Amendment of FASB Statement No. 123, the Company has adopted
the disclosure-only option and elected to apply the provisions of APB No. 25 for
financial  statement  purposes.  No stock-based  employee  compensation  cost is
reflected in net income for these plans.

Pro forma  information  regarding  net income and  earnings  per share have been
determined as if the Company had accounted for its employee  stock options using
the fair value method, and is presented below.

<TABLE>
<CAPTION>
                                                                                              Three months              Three months
                                                                                                 ended                     ended
($ amounts in thousands, except per share amounts)                                          March 31, 2003            March 31, 2002
                                                                                            --------------            --------------

<S>                                                                                             <C>                       <C>
Net income: As reported ............................................................            $    432                  $    337

Deduct: Total stock-based compensation cost
         determined under the fair value method,
         net of tax ................................................................                  22                        21
                                                                                                --------                  --------

Pro forma ..........................................................................            $    410                  $    316

Basic earnings per share:
         As reported ...............................................................            $    0.47                 $   0.37
         Pro forma .................................................................            $    0.45                 $   0.34

Diluted earnings per share:
         As reported ...............................................................            $    0.45                 $   0.34
         Pro forma .................................................................            $    0.42                 $   0.32
</TABLE>

The fair value of each option  grant is estimated on the date of grant using the
Black-Scholes   option-pricing   model  with  the  following   weighted  average
assumptions  used for the  three-month  periods  ended  March 31, 2003 and 2003;
dividend yield of 0%, expected  volatility of 50%,  risk-free  interest rates of
4.00%, and expected lives of 10 years for the options.



                                       7
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

Note 3 - Earnings per Share

         Earnings  per share has been  determined  under the  provisions  of the
statement of Financial Accounting Standards No. 128, Earnings Per Share. For the
quarters  ended  March 31,  2003 and  2002,  basic  earnings  per share has been
computed based upon the weighted  average common shares  outstanding of 920,780,
respectively.

         The only potential  stock of the Company as defined in the Statement of
Financial  Accounting  Standards No. 128,  Earnings Per Share,  is stock options
granted to various directors,  officers and employees of the Bank. The following
is a summary of the diluted earnings per share  calculation for the three months
ended March 31, 2003 and 2002 (in thousands, except share data):

                                                          Three Months Ended
                                                               March 31,
                                                           2003          2002
                                                           ----          ----
Net income .......................................       $    432       $    337

Weighted average outstanding shares ..............        920,780        920,780
Dilutive effect of stock options .................         64,032         57,397
                                                         --------       --------
Weighted average diluted shares ..................        984,812        978,177

Diluted earnings per share .......................       $    .44       $    .34

Note 4 - Impact of Recently Issued Accounting Standards

SFAS No. 146, Accounting for Costs Associated with Exit or Disposal  Activities,
was issued in June 2002 and  addresses  financial  accounting  and reporting for
costs associated with exit or disposal  activities.  This statement is effective
for exit or disposal activities  initiated after December 31, 2002; its adoption
effective  January  1,  2003 did not have a  material  impact  on the  financial
statements of the Company.

SFAS  No.  148,  Accounting  for  Stock-Based   Compensation  -  Transition  and
Disclosure - An Amendment of FASB Statement No. 123, was issued in December 2002
and provides  alternative  methods of transition  for a voluntary  change to the
fair value based method of accounting for stock-based employee compensation.  In
addition,  SFAS No. 148 amends the  disclosure  requirements  of SFAS No. 123 to
require prominent  disclosures in both annual and interim  financial  statements
about the method of accounting for  stock-based  employee  compensation  and the
effect of the method used on reported  results.  The disclosure  requirements of
this statement are effective for fiscal years ending after December 15, 2002 and
are included in these interim financial statements.

SFAS No. 149,  Amendment of Statement 133 on Derivative  Instruments and Hedging
Activities,  was  issued  in April  2003 and  amends  SFAS No.  133 for  certain
decisions  made  by the  Financial  Accounting  Standards  Board  as part of the
Derivatives  Implementation  Group  process and to clarify the  definition  of a
derivative.  This statement is effective for contracts  entered into or modified
after June 30, 2003, except for certain specific issues already addressed by the
Derivatives Implementation Group and declared effective that are included in the
statement.  The adoption of the  provisions of this statement is not expected to
have a material impact on the financial statements of the Company.

                                       8

<PAGE>



                           FIRST SOUTH BANCORP, INC.AND SUBSIDIARY

                                 Part I - Item 2

 Management's Discussion and Analysis or Plan of Operation

Forward Looking Statements
Statements included in Management's Discussion and Analysis or Plan of Operation
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:  THREE MONTH PERIOD ENDED MARCH 31, 2003 COMPARED TO THE
SAME PERIOD ENDED MARCH 31, 2002.

Net Income
For the first three  months of 2003,  First  South  Bancorp,  Inc.  earned a net
profit  of  approximately  $432  thousand,  or $  .47  per  share,  compared  to
approximately  $337 thousand,  or $ .37 per share,  for the same period in 2002.
This 27%  increase  in net  income  occurred  despite  (i) a 25%  increase  in
noninterest  expense from $915 thousand to $1.146  million,  (ii) an increase in
the provision for loan losses  related to loan growth from $110 thousand to $208
thousand,  and (iii) a 36% reduction in noninterest income from $310 thousand to
$200 thousand.  Though the deferred tax benefit  recognized in the first quarter
of 2003,  compared  to the  amount  recognized  in the  first  quarter  of 2002,
contributed  to the net  income  increase,  improved  earnings  for  the  period
resulted  primarily from the $561 thousand,  or 45.8%, increase in net interest
income.

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 were .90% and 12.00%, respectively.


                                       9
<PAGE>


Table One                    Selected Earnings Ratios
                      at or for the Periods Ending March 31


                                                          2003             2002
                                                          ----             ----
Return on Average Assets .......................           .90%             .88%

Return on Average Equity .......................         12.00%           10.43%

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

Average Stockholders Equity
as a Percentage of Average Assets ..............          7.47%            8.40%

Performance results as measured by ROAA and ROAE can be primarily  attributed to
changes in the volume and  composition  of earning  assets and the interest rate
environment.  Details of these changes are provided in the following  discussion
of net interest income.

Net Interest Income
Net interest income, the major component of First South Bancorp's income, is the
amount by which interest and fees on earning assets exceeds the interest paid on
interest bearing  liabilities,  primarily deposits.  Net interest income for the
first  three  months of 2003  increased  over that of the same period in 2002 by
$561 thousand,  or 45.8%. A number of factors combined to produce the change in
net interest income which First South Bancorp experienced during the first three
months of 2003.

Though growth in total earning assets of $37.1 million, or 24.8%, was certainly
a significant factor in the area of interest income  performance,  the change in
the earning assets mix also played a major role in the yield on earning  assets.
The segment of total  earning  assets with the highest  interest  yield,  loans,
increased as a percentage of total earning  assets from 87.5% in 2002 to 88.6%
in 2003. The combined result of these two positive influences on interest income
was a $ 466 thousand, or 19.8%, increase in interest income for the period.

For the  first  three  months  of 2003,  the cost of  funds  averaged  2.53%, a
decrease of 93 basis  points  from the  average  cost of funds rate of 3.46% in
2002.  This 93 basis  points  decline in the cost of funds rate was greater than
the 26 basis points decline in the earning assets yield and that  difference was
the chief factor in the net  interest  income  increase.  Increases in the first
quarter's  interest  rate  spread  and  net  interest  margin  can  be  directly
attributed to a larger percentage of interest-bearing  liabilities in 2003, 37.9
%, as  compared  to 28.1% in  2002,  being  immediately  repriceable  as  rates
declined.


                                       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 three months ended March 31, 2003 and 2002.

Table Two             Net interest Income and Average Balance Analysis
                       for the Three Months Ended March 31
                                  2003 and 2002
                            ($ amounts in thousands)

<TABLE>
<CAPTION>
                                                                                            Interest                    Average
                                                                                            --------                    -------
Interest-Earning Assets (000)                             Average  Balance               Income/Expense                Yield/Cost
                                                          ----------------               --------------                ----------
                                                        2003            2002          2003            2002          2003        2002
                                                        ----            ----          ----            ----          ----        ----
<S>                                                 <C>               <C>          <C>                <C>           <C>        <C>
Due From Banks - Int-Bearing ....................       5,876           8,270      $      17             34         1.17%      1.67%
Investments .....................................      15,432          10,340            159            151         4.18%      5.92%
Loans ...........................................     165,209         130,815          2,640          2,165         6.48%      6.71%
                                                    ---------         -------      ---------          -----
Total Interest Earning Assets ...................     186,517         149,425      $   2,816          2,350         6.12%      6.38%

Noninterest-Earning Assets
Cash & Due From Banks ...........................       4,210           2,715
Loan Loss Reserve ...............................      (1,802)         (1,457)
Investments: Fair value .........................         136             160
Premises & Equipment ............................       3,004           2,846
Interest Receivable & Other .....................       3,652           2,256
                                                    ---------         -------
Total Noninterest-Earning Assets ................       9,200           6,520
                                                    ---------         -------

TOTAL ASSETS ....................................   $ 195,717         155,945
                                                    =========         =======
Interest-Bearing Liabilities
NOW Accounts ....................................   $  32,960          28,463      $     153            170         1.88%      2.42%
Money Market & Savings ..........................      24,959           2,707            117              9         1.90%      1.35%
Time Deposits & IRA's ...........................      91,913          85,039            639            817         2.82%      3.90%
Fed Funds Purchased & Repos .....................       4,511           5,627              7             17          .63%      1.23%
Other borrowed funds ............................      10,844          10,067            114            112         4.26%      4.51%
Demand Notes Issued to Treasury .................         206             336              1              1         1.02%      1.21%
                                                    ---------         -------      ---------      ---------
Total Interest-Bearing Liabilities ..............     165,393         132,239      $   1,031          1,126         2.53%      3.46%
                                                                                   ---------      ---------

Noninterest-Bearing Liabilities
Demand Deposits .................................      14,351           5,986
Interest Payable ................................         510             928
Other Liabilities ...............................         849             379
                                                    ---------         -------
Total Non Int-Bearing Liabilities ...............      15,710           7,293

Stockholders' Equity ............................      14,614          12,093
                                                    ---------         -------

Total Liabilities & Equity ......................   $ 195,717         112,880
                                                    =========         =======
Net Interest Income .............................                                  $   1,785      $   1,224
                                                                                   =========      =========

            Net Yield on Earning Assets .........                                                                   3.88%      3.32%
            Interest Rate Spread ................                                                                   3.59%      2.92%
</TABLE>







                                       11
<PAGE>



Non-Interest Income
Non-interest  income  for the  first  three  months of 2003  decreased  by $ 110
thousand,  or  35.5%,  from the  2002  amount  of $ 310  thousand.  Though  some
categories  of  non-interest  income  experienced  an increase in 2003 over 2002
amounts,  commissions  and fees generated by loan  brokerage  services were down
significantly,  $177  thousand.  Table Three  provides  the details of the three
month 2003 to 2002 performance comparison of categories of non-interest income.

Table Three            Summary of Total Noninterest Income
                       for the Three Months Ended March 31
                                  2003 and 2002
                            ($ amounts in thousands)

                                                             2003           2002
                                                             ----            ---
Service Charges ..................................           $ 70           $ 60
Commissions & Fees ...............................            105            235
Other Non-interest Income ........................             25             15
                                                             ----           ----
Total ............................................           $200           $310

Non-Interest Expense
Non-interest  expense  for the  first  three  months of 2003  increased  by $231
thousand,  or 25.2%, over the first three months total of $915 thousand in 2002.
While  some of the  operational  expense  increase  experienced  in 2003  can be
attributed to the overall growth the bank experienced,  start-up expenses of new
employees and expenses shown in the "Other" category related to recent expansion
into a new operational area, deferred  presentment,  accounted for approximately
one-third of the total increase in non-interest expense.

Table Four provides a three month 2003 to 2002 performance comparison of various
categories of non-interest expense.

Table Four            For the Three Months Ended March 31
                                  2003 and 2002
                            ($ amounts in thousands)

                                                           2003            2002
                                                           ----            ----
Salaries & Employee Benefits ...................          $  707          $  596
Occupancy & Equipment ..........................             128             125
Other ..........................................             311             194
                                                          ------          ------
Total ..........................................          $1,146          $  915





                                       12
<PAGE>


Income Taxes
Through March 31, 2003,  $60 thousand had been accrued as a deferred tax benefit
resulting  from a  deferred  tax  asset  created  by income  transferred  to the
provision for loan losses above the amount deductible for income tax purposes in
the  current  year.  Though  deductible  for  state  income  tax  purposes,  the
non-deductibility   for  federal  income  tax  purposes  of  the  $208  thousand
year-to-date  charge to earnings as a provision for potential future loan losses
served for book tax purposes to reduce the Corporation's taxes by 23.2%.

CHANGES IN FINANCIAL POSITION

Investment portfolio

During the first three months of 2003,  $4,500,000  investment  securities  were
called. There were no investment securities purchased.

Table Five               Analysis of Investment Securities
                            ($ amounts in thousands)
<TABLE>
<CAPTION>
March 31, 2003                                                        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 .........................               8,497               8,593               1,516               1,544
Due from five to ten years .........................               1,000               1,017                   0                   0
Due After ten years ................................                 123                 127                 851                 932
                                                                  ======              ======              ======              ======
                                                                   9,620               9,737               2,367               2,476
</TABLE>

<TABLE>
<CAPTION>
December 31, 2002                                                     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 .........................              11,997              12,104               1,517               1,548
Due from five to ten years .........................               1,000               1,019                   0                   0
Due After ten years ................................               1,123               1,132                 851                 936
                                                                 =======             =======             =======             =======
                                                                  14,120              14,255               2,368               2,484
</TABLE>

Excludes  equity  securities with no readily  determinable  market value of $600
thousand on 12/31/02 and $700 thousand on 3/31/03.




                                       13
<PAGE>

Loan portfolio

For the twelve month  period  between  March 31, 2002 and March 31, 2003,  loans
increased by $40.5 million,  or 30.1%. The  percentage  composition of the loan
portfolio,  as shown in Table Six,  remained  relatively  stable  excluding  the
categories  of   Construction/Land   development   and  Nonfarm   Nonresidential
Properties.  The changes in these  categories  resulted  from the  discovery and
error  corrections  of loan  classification  codes which were not being  changed
after construction projects were completed and permanent financing established.

As shown in Table Seven,  Variable Rate Loans comprised 86.2% of the total loan
portfolio.

On March 31, 2003,  there were two loans  totaling  $114  thousand on nonaccrual
status.

Table Six                       Analysis of Loans
                                March 31 Balances
                            ($ amounts in thousands)
<TABLE>
<CAPTION>
                                                                                 2003                               2002
                                                                                 ----                               ----
Real Estate:
<S>                                                                    <C>                <C>             <C>                 <C>
   Construction / Land Development .........................           $  5,887              3.4%         $ 13,191              9.8%
   1-4 Family Residential Properties .......................             36,769             21.0%           26,208             19.5%
   Multifamily Residential Properties ......................              1,167               .7%            1,126               .8%
   Nonfarm Nonresidential Properties .......................             78,353             44.8%           52,917             39.4%
   Other Real Estate Loans .................................              1,749              1.0%            1,137               .9%
Commercial & Industrial ....................................             48,506             27.7%           39,000             29.6%
Consumer ...................................................              2,470              1.4%              830               .6%
Other ......................................................                 45                -%               52                -%
                                                                       ========                           ========
TOTAL ......................................................           $174,946            100.0%         $134,461            100.0%
</TABLE>

Table Seven     Analysis of Loan Maturities and Repricing Frequency
                              as of March 31, 2003
                            ($ 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 ................        $150,842                                                                        $150,842

Fixed Rate Loans ...................        $  9,265           4,849           3,034           3,812           3,030        $ 23,990

Total Loans ........................        $160,107           4,849           3,034           3,812           3,030        $174,832
</TABLE>

Excludes loans on non-accrual status of $114 thousand




                                       14
<PAGE>

The  allowance for loan losses is analyzed  monthly in  accordance  with a board
approved  plan.  This  judgmental  analysis is based upon a model that assigns a
risk rating on each individual loan and considers the loss risks associated with
various risk categories in  relationship to the current and forecasted  economic
environment.  Management  also  monitors the overall  portfolio,  as well as the
level of reserves  maintained  by peer banks.  The  monthly  provision  for loan
losses may fluctuate based on the results of this analysis. Table Eight provides
the results of the  year-to-date  analysis for the periods ending March 31, 2003
and 2002, as well as the amounts  charged to this reserve as a loss and credited
to this reserve as a recovery.

Table Eight
                    Analysis of the Allowance for Loan Losses
                       for the Three Months Ended March 31

                                                     2003                2002
                                                     ----                ----
Balance at Beginning of Year .............       $ 1,750,000        $ 1,450,000
Provision Charged to Operations ..........           208,000            109,850
Loans Charged-off ........................          (216,000)           (75,000)
Charged-Off Loan Recoveries ..............           184,000                150
                                                 -----------        -----------
Balance At End Of Period .................         1,926,000          1,485,000

Interest rate risk

Financial  institutions  are  subject to  interest  rate risk to the degree that
their interest bearing liabilities (consisting principally of customer deposits)
mature or reprice more or less frequently,  or on a different basis,  than their
interest earning assets (generally consisting of intermediate or long-term loans
and  investment  securities).  The match  between the  scheduled  repricing  and
maturities of the Bank's earning assets and interest bearing  liabilities within
defined time periods is referred to as "gap"analysis. The Bank's Asset/Liability
Management  Committee is  responsible  for managing  the risks  associated  with
changing interest rates and their impact on earnings.  The regular evaluation of
the  sensitivity  of net  interest  income to  changes in  interest  rates is an
integral  part of  interest  rate  risk  management.  At  March  31,  2003,  the
cumulative one-year gap for the Bank was a positive, or asset sensitive,  $ 33.6
million.  At March 31, 2002,  the  cumulative  five-year  gap for the Bank was a
positive $ 14.6 million.  A positive gap means that assets would reprice  faster
than  liabilities  if interest  rates  changed.  The Bank's gap is within policy
limits which were  established  to reduce the adverse  impact on earnings  which
movements in interest rates can cause.  Intense competition in the Bank's 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
March 31, 2003.






                                       15
<PAGE>

                                   Table Nine

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                     Repricing Schedule as of March 31, 2003
                            ($ 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>
Due from banks .................................             $  9,700             $      0             $      0             $  9,700
Investment securities* .........................                    0               10,013                1,974               11,987
FHLB stock .....................................                  700                    0                    0                  700
Loans** ........................................              164,956                6,846                3,030              174,832
                                                             ========             ========             ========             ========
Total ..........................................             $175,356             $ 16,859             $  5,004             $197,219
</TABLE>

*Amortized cost
** Excludes $114 thousand in loans on non-accrual status.
<TABLE>
<CAPTION>

Interest-Bearing Liabilities
<S>                                                              <C>                <C>                 <C>                 <C>
NOW Accounts .........................................           $ 33,189           $      0            $      0            $ 33,189
Savings & MMIA .......................................             23,054                  0                   0              23,054
Time Deposits:$100m & > ..............................             19,648              4,447                   0              24,095
Time Deposits: < $100m ...............................             59,952             17,691                   0              77,643
Repurchase Agreements ................................              3,828                  0                   0               3,828
Other Borrowed Funds .................................                213                  0              10,000              10,213
                                                                 ========           ========            ========            ========
Total ................................................           $139,884           $ 22,138            $ 10,000            $172,022

Period Gap ...........................................           $ 35,472           $ (5,279)           $ (4,996)           $ 25,197

Cumulative Gap .......................................           $ 35,472           $ 30,193            $ 25,197

Period Gap Ratios:
 Interest Sensitive Assets to
 Interest Sensitive Liabilities ......................              125.4%              76.1%              50.4%

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities .....................              125.4%             118.6%             114.6%
</TABLE>

<TABLE>
<CAPTION>
                                                              3 Months          Over 3 Months           Over One
Time Deposits                                                  & Less            to 12 Months             Year                Total
                                                               ------            ------------             ----                -----
<C>                                                           <C>                  <C>                  <C>                  <C>
$100,000 and Greater ...........................              $ 9,859              $ 9,789              $ 4,447              $24,095
</TABLE>



                                       16
<PAGE>



Liquidity

Liquidity  is the  ability  to  meet  current  and  future  obligations  through
liquidation or the maturity of existing  assets or the acquisition of additional
liabilities.  Adequate  liquidity  is  necessary  to meet  the  requirements  of
customers for loans and deposit  withdrawals  in the most timely and  economical
manner. Some liquidity is ensured by maintaining assets which may be immediately
converted  into cash at minimal cost  (amounts due from banks and federal  funds
sold).  However,  the most  manageable  sources of  liquidity  are  composed  of
liabilities, with the primary focus on liquidity management being the ability to
obtain  deposits  within the Bank's service area.  Core deposits (total deposits
less wholesale time deposits) provide a relatively stable funding base, and were
equal to 73.9% of total  assets at March 31, 2003.  Asset  liquidity is provided
from several sources,  including  amounts due from banks and federal funds sold,
and funds from maturing loans.  The Bank is a member of the FHLB of Atlanta and,
as such, has the ability to increase its borrowings from that  institution.  The
bank also has $10 million  available through lines of credit with other banks as
an additional source of liquidity funding.  Management  believes that the Bank's
overall liquidity sources are adequate to meet its operating needs.

Capital Resources

The  $1,582,000  increase in equity during the twelve month period between March
31, 2002 and 2003 resulted from a $1,515,000 increase in retained earnings and a
$67,000 increase in the net unrealized gain on available for sale securities.

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 March 31, 2003 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 March 31, 2003                                        Actual                adequacy purposes           action provisions
                                                            ------                -----------------           -----------------
                                                                                         Minimum                     Minimum
                                                                                         -------                     -------
                                                     Amount        Ratio          Amount          Ratio        Amount       Ratio
                                                     ------        -----          ------          -----        ------       -----
<S>                                                 <C>             <C>          <C>               <C>        <C>             <C>
Total Capital (to risk ....................         $16,576         9.6%         $13,843           8.0%       $17,303         10.0%
weighted assets)

Tier 1 Capital (to risk ...................         $14,650         8.5%         $ 6,921           4.0%       $10,382          6.0%
weighted assets)

Tier 1 Capital (to ........................         $14,650         7.5%         $ 7,823           4.0%       $ 9,779          5.0%
average assets) (leverage)
</TABLE>


                                       17
<PAGE>



Item 3 - Controls and Procedures

(a) Based on their evaluation of the issuer's disclosure controls and procedures
(as defined in 17 C.F.R. Sections  240.13a-14(c) and 240.15d-14(c)) as of a date
within 90 days prior to the filing of this quarterly report,  the issuer's chief
executive  officer and chief financial  officer concluded that the effectiveness
of such controls and procedures was adequate.

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

                           PART II - OTHER INFORMATION

Item 6 - Exhibits and Reports on Form 8-K

         (a)      No exhibits are included with this report.

         (b)      Reports on Form 8-K :    None




























                                       18
<PAGE>


SIGNATURE

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



                                  First South Bancorp, Inc.

                                  s/Barry L. Slider
May 12, 2003                      ---------------------------------------------
                                  Barry L. Slider, President and Chief Executive
                                  Officer


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





























                                       19
<PAGE>




                                 CERTIFICATIONS

I, Barry L. Slider, certify that:

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

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

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

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

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

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

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

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

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

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

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


Date:  May 12, 2003                S/Barry L. Slider
                                   ---------------------------------------------
                                   Barry L. Slider
                                   President & Chief Executive Officer








<PAGE>


                                 CERTIFICATIONS

I, V. Lewis Shuler, certify that:

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

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

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

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

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

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

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

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

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

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

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


Date:  May 12, 2003              S/V. Lewis Shuler
                                 -----------------------------------------------
                                 V. Lewis Shuler
                                 Executive Vice President & Chief Financial
                                 Officer