UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington, DC 20549

                                   FORM 10-QSB

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

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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 John B White Sr. Blvd.
                        Spartanburg, South Carolina 29306
                     (Address of Principal Executive Office)

                                 (864) 595-0455
                           (Issuer'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,  921,380
shares outstanding on July 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 Sheets ..............................................     3

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

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

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

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

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


  Item 2.  Management's Discussion and Analysis or Plan of Operation ...  11-20


Part II -         OTHER INFORMATION

  Item 6.  Exhibits and Reports on Form 8-K ............................     21


SIGNATURES .............................................................     22














                                       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)
                                                                                                    June 30,               Dec. 31,
                                                                                                     2003                    2002
                                                                                                     ----                    ----
Assets
<S>                                                                                              <C>                      <C>
Cash & due from banks ............................................................               $   4,917                $   4,192
Due from banks - interest bearing ................................................                     100                      100
Investment securities:
         Securities held to maturity .............................................                   2,366                    2,969
         Securities available for sale(1) ........................................                   8,768                   14,255
Loans ............................................................................                 203,967                  158,861
      Less, allowance for loan losses ............................................                  (2,238)                  (1,750)
                                                                                                 ---------                ---------
Loans - net ......................................................................                 201,729                  157,111
Property & equipment, net ........................................................                   4,236                    2,812
Other assets .....................................................................                   3,672                    3,610
                                                                                                 ---------                ---------
Total assets .....................................................................               $ 225,788                $ 185,049

Liabilities
Deposits:
      Noninterest-bearing ........................................................               $  14,967                $  14,487
      Interest-bearing ...........................................................                 179,110                  141,163
                                                                                                 ---------                ---------
                  Total deposits .................................................                 194,077                  155,650

Securities sold under repurchase agreements ......................................                   3,920                    3,230
Other borrowed funds .............................................................                  10,000                   10,000
Demand notes issued to the U.S. Treasury .........................................                     459                      454
Other liabilities ................................................................                   2,069                    1,365
                                                                                                 ---------                ---------
                  Total liabilities ..............................................               $ 210,525                $ 170,699

Shareholders' equity
Common stock - no par value; 20,000,000 authorized,
Outstanding 921,380 and 920,780 respectively
Additional paid-in capital .......................................................                  11,153                   11,145
Undivided profits ................................................................                   4,019                    3,121
Accumulated other comprehensive income/(loss) ....................................                      91                       84
                                                                                                 ---------                ---------
         Total shareholders' equity ..............................................                  15,263                   14,350
                                                                                                 ---------                ---------
         Total liabilities and shareholders' equity ..............................               $ 225,788                $ 185,049
                                                                                                 =========                =========
</TABLE>

(1)  Includes FHLB Stock



                                       3
<PAGE>


                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY

                            Statements of Operations

<TABLE>
<CAPTION>
                                                                                               (Unaudited)
                                                                                            Period ended June 30,
                                                                                            ---------------------
                                                                                Three Months                     Six Months
                                                                                ------------                     ----------
                                                                            2003         2002              2003              2002
                                                                            ----         ----              ----              ----
                                                                                   (Amounts in thousands, except per share)
Interest income
<S>                                                                      <C>              <C>              <C>              <C>
         Loans, including fees .................................         $ 3,095          $ 2,367          $ 5,735          $ 4,533
         Investment securities .................................             118              201              277              352
         Interest bearing deposits .............................              23               45               40               79
                                                                         -------          -------          -------          -------

         Total interest income .................................           3,236            2,613            6,052            4,964

Interest expense
         Deposits and borrowings ...............................           1,102            1,080            2,133            2,207

Net interest income ............................................           2,134            1,533            3,919            2,757
         Provision for loan losses .............................            (310)            (181)            (518)            (291)
                                                                         -------          -------          -------          -------
Net interest income after provision ............................           1,824            1,352            3,401            2,466

Other income
         Service charges on deposit accounts ...................              87               57              157              117
         Other income ..........................................             162               97              292              347
                                                                         -------          -------          -------          -------
         Total noninterest income ..............................             249              154              449              464

Other expenses
         Salaries and benefits .................................             734              546            1,441            1,142
         Occupancy and equipment ...............................             138              125              266              250
         Other expense .........................................             428              214              739              408
                                                                         -------          -------          -------          -------
         Total other expense ...................................           1,300              885            2,446            1,800

Income before income taxes .....................................             773              621            1,404            1,130
         Provision for income taxes ............................             307              251              506          $   423
                                                                         -------          -------          -------          -------

Net income .....................................................         $   466          $   370          $   898          $   707

         Basic per share earnings ..............................         $   .51          $   .40          $   .97          $   .77
         Diluted per share earnings ............................         $   .48          $   .38          $   .93          $   .73
</TABLE>






                                       4
<PAGE>


                     FIRST SOUTH BANCORP, INC.AND SUBSIDIARY

                 Consolidated Statements of Comprehensive Income


                                                               (Unaudited)
                                                        Six Months Ended June 30
                                                        ------------------------
                                                          2003           2002
                                                          ----           ----
                                                          (Amounts in Thousands)

Net Income ...........................................    $ 898        $ 707

Other comprehensive income (loss):

Change in unrealized holdings gains &
    losses on available for sale securities ..........       11           27

Income tax (expense) benefit on other
                comprehensive income (loss) ..........       (4)         (10)
                                                          -----        -----
Total other comprehensive income (loss) ..............        7           17

Comprehensive income (loss) ..........................    $ 905        $ 724
                                                          =====        =====






















                                       5
<PAGE>


                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statements of Cash Flows
                For the Six Months ended June 30, 2003 and 20021
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                               Six Months Ended
                                                                                                                   June 30,
                                                                                                                   --------
                                                                                                           2003               2002
                                                                                                           ----               ----
                                                                                                           (Amounts in thousands)
Operating Activities
<S>                                                                                                    <C>                 <C>
Net income .................................................................................           $    898            $    707

Adjustments to reconcile net income to net cash
    provided by operating activities
         Provision for loan losses .........................................................                518                 291
         Depreciation ......................................................................                109                  97
         Director fees .....................................................................                 42                  30
         Deferred tax asset ................................................................               (165)                (72)
         Increase in other assets ..........................................................                151                (109)
         Increase (decrease) in accrued expenses and other liabilities .....................                572                (308)
                                                                                                       --------            --------

Net cash provided by operating activities ..................................................              2,125                 636


Investing Activities
         Purchase of securities available for sale .........................................             (2,000)            (10,000)
         Redemption of restricted FHLB stock ...............................................                100                   0
         Proceeds from call of available for sale securities ...............................              8,000               4,000
         Origination of loans, net of principal collected ..................................            (45,106)            (12,545)
         Purchase of premises and equipment ................................................             (1,522)                (45)
                                                                                                       --------            --------

Net cash used in investing activities ......................................................            (40,528)            (18,590)

Financing Activities
         Net increase in deposits ..........................................................             38,434              21,855
         Net increase in retail repurchase agreements ......................................                690               2,029
         Proceeds from other borrowings ....................................................                  4                 285
                                                                                                       --------            --------

Net cash provided by financing activities ..................................................             39,128              24,169

Net increase in cash and cash equivalents ..................................................                725               6,215

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

Cash and cash equivalents, ending ..........................................................              5,017              12,654
</TABLE>






                                       6
<PAGE>



                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                  Statements of Changes in Shareholders' Equity
         Year-ended December 31, 2002 and Six Months Ended June 30, 2003
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                                       ACCUMULATED
                                                SHARES OF                         ACCUMULATED            OTHER            TOTAL
                                                 COMMON           PAID-IN           EARNINGS          COMPREHENSIVE    STOCKHOLDERS'
                                                 STOCK            CAPITAL           (DEFICIT)         INCOME/(LOSS)        EQUITY
                                                 -----            -------           ---------         -------------        ------
Balance at
<S>                                             <C>             <C>                <C>                <C>                <C>
December 31, 2001 ..................            917,180         $11,096,989        $ 1,701,776        $   110,188        $12,908,953

Exercised
  stock options ....................              3,000              48,000                                                   48,000

Net income .........................                                                 1,418,764

Net change in
  unrealized gain on
  available for sale
  securities, net of tax ...........                                                                      (25,986)

Comprehensive income ...............                                                                                       1,392,778
                                            -----------         -----------        -----------        -----------        -----------
Balance at
December 31, 2002 ..................            920,780         $11,144,989        $ 3,120,540        $    84,202        $14,349,731
</TABLE>

<TABLE>
<CAPTION>
                                                                                                     ACCUMULATED
                                                                 ADDITIONAL                             OTHER              TOTAL
                                                 COMMON           PAID-IN          ACCUMULATED       COMPREHENSIVE     STOCKHOLDERS'
                                                  STOCK           CAPITAL           EARNINGS         INCOME/(LOSS)         EQUITY
                                                  -----           -------           --------         -------------         ------
Balance at
<S>                                              <C>            <C>                <C>                <C>                <C>
December 31, 2002 ...................            920,780        $11,144,989        $ 3,120,540        $    84,202        $14,349,731
Exercised
  stock options .....................                600              7,500                                                    7,500

Net income ..........................            898,135

Net change in
  unrealized gain on
  available for sale
  securities, net of tax ............              6,416

Comprehensive income ................            904,551
                                             -----------        -----------        -----------        -----------        -----------
Balance at
June 30, 2003 .......................            921,380        $11,152,489        $ 4,018,675        $    90,618        $15,261,782
</TABLE>







                                       7
<PAGE>




                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

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 notes  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, 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 notes thereto for the  Corporation's  fiscal year ended December
31, 2002, contained in the Corporation's annual report on Form 10-KSB.

In accordance  with SFAS No. 148,  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>
                                                                                          Six months ended          Six months ended
                                                                                           June 30, 2003             June 30, 2002
                                                                                           -------------             -------------
Net income:
<S>                                                                                             <C>                    <C>
     As reported .....................................................................          $   898                $   707

     Deduct: total stock-based compensation cost
       determined under the fair value method, net
       of tax ........................................................................               41                     47
                                                                                                -------                -------
     Pro forma .......................................................................          $   857                $   660
                                                                                                =======                =======

Basic earnings per share:
     As reported .....................................................................          $   0.97               $  0.77
     Pro forma .......................................................................          $   0.93               $  0.72
Diluted earnings per share:
     As reported .....................................................................          $   0.93               $  0.73
     Pro forma .......................................................................          $   0.89               $  0.69
</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  six-month  periods  ended  June 30,  2003 and  2002;
dividend yield of 0%, expected  volatility of 50%,  risk-free  interest rates of
4.00%, and expected lives of 10 years for the options.


                                       8
<PAGE>

Note 2 - 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  June 30,  2003 and  2002,  basic  earnings  per  share has been
computed based upon the weighted  average  common shares  outstanding of 920,980
and 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 June 30, 2003 and 2002 (in thousands, except share data):

                                                             Six Months Ended
                                                                 June 30,
                                                                 --------
                                                           2003           2002
                                                           ----           ----

Net income .......................................       $    898       $    707
Weighted average outstanding shares ..............        920,980        920,780

Basic earnings per share .........................       $   0.97       $   0.77


Weighted average outstanding shares ..............        920,980        920,780
Dilutive effect of stock options .................         43,712         41,139
                                                         --------       --------
Weighted average diluted shares ..................        964,692        961,919

Diluted earnings per share .......................       $   0.93       $   0.73

Note 3 - 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.


                                       9
<PAGE>

SFAS No. 150, Accounting for Certain Financial  Instruments with Characteristics
of Both Liabilities and Equity, was issued in May 2003 and establishes standards
for  how  to  classify   and  measure   certain   financial   instruments   with
characteristics of both liabilities and equity.  This statement is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period  beginning  after June
15, 2003.  The adoption of the  provisions of this  statement is not expected to
have a material impact on the financial statements of the Company.

FASB Interpretation No. 45, Guarantor's  Accounting and Disclosure  Requirements
for Guarantees, Including Guarantees of Indebtedness of Others an interpretation
of FASB Statements No. 5, 57, and 107 and rescission of FASB  Interpretation No.
34 was issued in November 2002 and elaborates on the disclosures to be made by a
guarantor in its interim and annual  financial  statements about its obligations
under certain  guarantees that it has issued. It also clarifies that a guarantor
is required to recognize,  at the inception of a guarantee,  a liability for the
fair value of the obligation  undertaken in issuing the guarantee.  The adoption
of the provisions of this FASB  Interpretation did not have a significant effect
on financial position or results of operations of the Company.

FASB  Interpretation  No. 46,  Consolidation  of Variable  Interest  Entities an
interpretation  of  ARB  No.  51  was  issued  in  January  2003  and  addresses
consolidation  by  business  enterprises  of  variable  interest  entities.  The
adoption  of  the  provisions  of  this  FASB  Interpretation  did  not  have  a
significant  effect on  financial  position  or  results  of  operations  of the
Company.





                                       10
<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,  adequacy of allowance for
loan losses,  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, 2003 COMPARED TO THE SAME
PERIOD ENDED JUNE 30, 2002.

Net Income

For the first six months of 2003, First South Bancorp,  Inc. earned a net profit
of $898,000,  compared to $707,000  for the same period in 2002,  an increase of
$191,000,  or 27%.  Basic  earnings  per  share  were  $.97 in the 2003  period,
compared  to $.77 for the 2002  period.  The  improvement  in net income for the
period can be directly attributed to one income component,  net interest income.
Net interest  income  increased  $1,162,000,  or 42%. As detailed in Table Four,
however, a substantial portion of the increase in net interest income was offset
by a $646,000, or 36%, increase in non-interest expense.

Profitability

Earnings of financial  institutions  are often measured  through ROAA (return on
average assets) and ROAE (return on average equity). Return on average assets is
the income for the period,  annualized,  divided by the  average  assets for the
period.  Return on  average  equity is the income  for the  period,  annualized,
divided by the average equity for the period. As is shown in Table One, ROAA and
ROAE for the first six months of 2003 were .87 % and 11.87 %, respectively.





                                       11
<PAGE>


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

                                                          2003           2002
                                                          ----           ----
Return on Average Assets .........................         .87%           .87%
Return on Average Equity .........................       11.87%         10.71%
Dividend Payout Ratio ............................         N/A            N/A
Average Stockholders Equity
as a Percentage of Average Assets ................        7.37%          8.15%

The changes in 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 2003 increased over that of the same
period in 2002 by  $1,162,000,  or 42%.  A number  of  factors  discussed  below
combined to produce the change in net interest  income.  Net interest income for
the six months  ended June 30, 2003  included  $285,000  generated by a deferred
presentment  lending  program  initiated in the fourth  quarter of 2002. In June
2003 the  Corporation  decided to exit the program after  consultation  with its
bank  regulators  because of concerns  expressed  by the  regulators  about such
lending and their requirements for engaging in it. The Corporation expects to be
out of the  program not later than the fourth  quarter of 2003.  The loss of net
interest income from the program will be  substantially  offset by reductions in
non-interest  expenses  associated with the program (such costs totaled $161,000
for the first six months of 2003).

Though  growth in  average  earning  assets of $41.2  million,  or 26.3 %, was a
significant  factor in the improvement in net interest income, the change in the
earning assets mix also  contributed to the  improvement.  Deferred  presentment
loans were  responsible  for $2.1  million of the growth in average  loans.  The
segment  of  total  earning  assets  with the  highest  interest  yield,  loans,
increased as a percentage of total earning  assets from 85.8 % in 2002 to 89.5 %
in 2003.  Additionally,  the category of earning assets with the lowest interest
yield,  interest-bearing  due from banks,  decreased  as a  percentage  of total
earning assets from 6.1 % in 2002 to 3.5 % in 2003.  The positive  effect on the
earning  assets  yield of the  growth in  earning  assets  and the change in the
earning  assets mix was  diminished,  however,  by a  continuation  of declining
interest rates.  The overall yield on earning assets for the first six months of
2003 decreased by 22 basis points as compared to the same period in 2002.

For the first six months of 2003, the cost of funds averaged 2.45 %, a reduction
of 79 basis  points  from the average  cost of funds rate of 3.24% in 2002.  The
single most  significant  factor in the net interest income increase in 2003 was


                                       12
<PAGE>

the fact that the decrease in the cost of funds rate was 57 basis points greater
than the decrease in earning assets yield.  Some of these positive  effects were
offset by a greater  portion of earning assets being funded by  interest-bearing
liabilities, 88.9 % and 87.6 %, respectively.

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, 2003 and 2002.

Table Two
                    Net interest Income and Average Balances
                        for the Six Months Ended June 30
                                  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>
Interest Bearing Due From Banks ....................  $   6,836           9,592              40            79        1.18%     1.66%
Investments ........................................     13,878          12,703             277           352        4.03%     5.59%
Loans ..............................................    177,060         134,308           5,735         4,533        6.53%     6.81%
                                                      ---------       ---------       ---------     ---------        ----      ----
Total Interest Earning Assets ......................  $ 197,774       $ 156,603       $   6,052     $   4,964        6.17%     6.39%

Noninterest-Earning Assets
Cash & Due From Banks ..............................  $   4,227           2,760
Loan Loss Reserve ..................................     (1,923)         (1,484)
Investments: Fair value ............................        126             132
Premises & Equipment ...............................      3,414           2,835
Interest Receivable & Other ........................      3,561           2,352
                                                      ---------       ---------
Total Noninterest-Earning Assets ...................  $   9,405       $   6,595

TOTAL ASSETS .......................................  $ 207,179       $ 163,198
                                                      =========       =========
Interest-Bearing Liabilities
NOW Accounts .......................................  $  32,891          29,658       $     301           354        1.85%     2.41%
Money Market & Savings .............................     28,146           2,833             265            18        1.90%     1.28%
Time Deposits & IRA's ..............................     99,577          88,782           1,325         1,574        2.68%     3.58%
Federal Funds Purchased & Repurchase
  Agreements .......................................      4,663           5,681              14            35         .61%     1.24%
Other borrowed funds ...............................     10,420          10,033             227           224        4.39%     4.50%
Demand Notes Issued to Treasury ....................        213             258               1             2         .95%     1.56%
                                                      ---------       ---------       ---------     ---------        ----      ----
Total Interest-Bearing Liabilities .................  $ 175,910       $ 137,245       $   2,133     $   2,207        2.45%     3.24%

Noninterest-Bearing Liabilities
Demand Deposits ....................................  $  14,880          11,510
Interest Payable ...................................        498             673
Other Liabilities ..................................      1,021             462
                                                      ---------       ---------
Total Non Interest-Bearing Liabilities .............  $  16,399       $  12,645

Stockholders' Equity ...............................  $  14,870       $  13,308

Total Liabilities & Equity .........................  $ 207,179       $ 163,198
                                                      =========       =========
Net Interest Income ................................                                  $   3,919     $   2,757

                Net Yield on Earning Assets ........                                                                 4.00%     3.55%
                    Interest Rate Spread ...........                                                                 3.72%     3.15%
</TABLE>


                                       13
<PAGE>

Other Income

Total other, or non-interest,  income decreased for the first six months of 2003
by $15,000 from $464,000 in 2002.  Although  service charges on deposit accounts
increased  by  $40,000,   or  34%,  the  most  notable  offsetting  decrease  in
noninterest  income occurred in the  commissions and fees category.  Commissions
and fees  decreased  by $64,000  as a result of a decline in the income  derived
from the brokering of loans,  as compared to last year, as a result of a smaller
dollar amount of such loans closing during the period.  Due to the nature of the
loan brokering  business and the Corporation's  limited  involvement in it, this
source  of  income  is  likely  to be  unpredictable.  Table  Three  provides  a
performance  comparison of categories of  non-interest  income for the six month
periods ended June 30, 2002 and 2003.

Table Three
                       Summary of Total Noninterest Income
                        for the Six Months Ended June 30
                                  2003 and 2002
                             (Amounts in thousands)

                                                            2003            2002
                                                            ----            ----
Service Charges ................................            $157            $117
Commissions & Fees .............................             253             317
Other Noninterest Income .......................              39              30
                                                            ----            ----
Total ..........................................            $449            $464

Other Expense

Other,  or  non-interest,  expense for the first six months of 2003 increased by
$646,000,  or 36%, over the first six months total in 2002 of $1,800,000.  While
some of the operational  expense increase  experienced in 2003 can be attributed
to  increases  from  vendors  with  which  the bank  contracts  for  third-party
services,  the most significant  increase was experienced in personnel  expenses
due to the  hiring  of  twelve  additional  full-time  employees.  Salaries  and
benefits expense increased $299,000,  or 46%, of the total $646,000 non-interest
expense increase.  The deferred  presentment lending program was responsible for
$16,000 of the salaries and benefits,  $6,000 of the occupancy and equipment and
$139,000 of the other expenses recorded for the six months ended June 30, 2003.

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

Table Four
                        For the Six Months Ended June 30
                                  2003 and 2002
                             (Amounts in thousands)

                                                           2003            2002
                                                           ----            ----
Salaries & Employee Benefits ...................          $1,441          $1,142
Occupancy & Equipment ..........................             266             250
Other ..........................................             739             408
                                                          ------          ------
Total ..........................................          $2,446          $1,800





                                       14
<PAGE>


Income Taxes

Through  June 30,  2003,  $165,000  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.

CHANGES IN FINANCIAL POSITION

Investment portfolio

During the first six months of 2003,  $8,000,000 in government agency securities
with a weighted rate of 4.24% were called.  During this same period,  $2,000,000
in  government  agency  securities  with a weighted  average  rate of 3.21% were
purchased. A total of $10,000,000 (par) of investment securities were pledged on
June 30, 2003.

Table Five
                       Analysis of Investment Securities
                             (Amounts in thousands)

June 30, 2003                          Available for Sale    Held for Investment
                                       ------------------    -------------------
                                       Amortized    Fair     Amortized    Fair
                                          Cost      Value       Cost      Value
                                          ----      -----       ----      -----

Due in one year or less ............     $    0     $    0     $    0     $    0
Due from one to five years .........      6,997      7,122      1,514      1,552
Due from five to ten years .........      1,000      1,017          0          0
Due After ten years ................        123        129        852        995
                                         ======     ======     ======     ======
                                          8,120      8,268      2,366      2,547

December 31, 2002                      Available for Sale    Held for Investment
                                       ------------------    -------------------
                                       Amortized    Fair     Amortized    Fair
                                          Cost      Value       Cost      Value
                                          ----      -----       ----      -----

Due in one year or less ............    $     0    $     0    $     0    $     0
Due from one to five years .........     11,997     12,104      1,518      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    $ 2,369    $ 2,484

Loan portfolio

From June 30, 2002 to June 30, 2003, loans increased by $65.4 million, or 47.2%.
As is shown in Table Six,  loans secured by real estate  continued to comprise a
substantial percentage of the total loan portfolio,  72.3% versus 71.3% in 2002.
The  Corporation's  loan  portfolio  on June 30,  2003,  as shown in Table Seven
reflects an increase of fixed rate loans as a percentage of the  portfolio  from
8.6% in 2002 to 13.9% in 2003.



                                       15
<PAGE>


Table Six
                                Analysis of Loans
                                June 30 Balances
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                          2003                              2002
                                                                          ----                              ----
 Real Estate:
<S>                                                                    <C>                  <C>           <C>                  <C>
   Construction / Land Development .........................           $  9,253              4.5%         $  7,819              5.7%
   1-4 Family Residential Properties .......................             44,267             21.7%           26,507             19.1%
   Multifamily Residential Properties ......................              1,142               .6%            1,246               .9%
   Nonfarm Nonresidential Properties .......................             91,172             44.7%           62,081             44.8%
   Other Real Estate Loans .................................              1,693               .8%            1,167               .8%
Commercial & Industrial ....................................             51,916             25.5%           38,960             28.1%
Consumer ...................................................              4,524              2.2%              831               .6%
                                                                       ========                           ========
TOTAL ......................................................           $203,967            100.0%         $138,611            100.0%
</TABLE>



Table Seven
               Analysis of Loan Maturities and Repricing Frequency
                               as of June 30, 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 ...............        $174,954                                                                        $174,954*

Fixed Rate Loans ..................        $ 13,007           4,759            4,009           3,964           2,560       $ 28,299
                                           --------           -----            -----           -----           -----       --------

Total Loans .......................        $187,961           4,759            4,009           3,964           2,560       $203,253
</TABLE>

*Excludes two loans on non-accrual which total $714.

Allowance for loan losses

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 risk  categories in
relationship to the current and forecasted economic environment. The Corporation
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 June 30, 2003 and 2002,  as well as the amounts
charged to the allowance as a loss and credited to the allowance as a recovery.




                                       16
<PAGE>


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

                                                     2003                2002
                                                     ----                ----
Balance at Beginning of Year .............       $ 1,750,000        $ 1,450,000
Provision Charged to Operations ..........           518,000            290,580
Loans Charged-off ........................          (552,000)          (190,616)
Loan Recoveries ..........................           522,000                 36
                                                 -----------        -----------
Balance At End Of Period .................       $ 2,238,000        $ 1,550,000

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 earning  assets and interest  bearing  liabilities  within defined
time periods is referred to as "gap" analysis.  The  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, 2003, the cumulative one-year
gap was a positive or asset  sensitive  $32.1  million.  At June 30,  2003,  the
cumulative five-year gap was a positive $20.8 million or 9.21 % of total assets.
The  positive  gap is largely  attributable  to the  extent to which  management
prefers to make loans on a variable rate basis. A positive gap means that assets
would  reprice  faster  than   liabilities   if  interest  rates  changed.   The
Corporation's  gap is within policy limits that were  established  to reduce the
adverse impact on earnings which movements in interest rates can cause.  Intense
competition in the Corporation'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 June 30, 2003.




                                       17
<PAGE>


Table Nine

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                     Repricing Schedule as of June 30, 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 ...............................................        $    100         $      0          $      0         $    100
Investment Securities ........................................               0            8,511             1,975           10,486
FHLB Stock ...................................................             500                0                 0              500
Loans** ......................................................         192,720            7,973             2,560          203,253**
                                                                      ========         ========          ========         ========
Total ........................................................        $193,320         $ 16,484          $  4,535         $214,339

** Excludes $714 in loans on nonaccrual status

Interest-Bearing Liabilities

NOW Accounts .................................................        $ 32,226         $      0          $      0         $ 32,226
Savings & MMIA ...............................................          33,830                0                 0           33,830
Time Deposits:$100m & > ......................................          23,289            4,921                 0           28,210
Time Deposits: < $100m .......................................          67,485           17,359                 0           84,844
Repurchase Agreements ........................................           3,920                0                 0            3,920
Other Borrowed Funds .........................................             459                0            10,000           10,459
                                                                      ========         ========          ========         ========
Total ........................................................        $161,209         $ 22,280           $10,000         $193,489

Period  Gap ..................................................          32,111           (5,796)           (5,465)          20,850

Cumulative Gap ...............................................          32,111           26,315            20,850

Period Gap Ratios:
 Interest Sensitive Assets to
 Interest Sensitive Liabilities ..............................           119.9%            73.9%

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities .............................           119.9%           114.3%
</TABLE>
<TABLE>
<CAPTION>

                                                              3 Months           Over 3 Months          Over One
Time Deposits                                                  & Less            to 12 Months             Year                Total
                                                               ------            ------------             ----                -----
<S>                                                            <C>                 <C>                  <C>                  <C>
 $100,000 and Greater ...........................              $5,799              $17,490              $ 4,921              $28,210
</TABLE>



                                       18
<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 that 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. At June
30,  2003,  core  deposits  equaled  approximately  62% of total  assets.  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 and commercial  loans. 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
Corporation's  overall  liquidity  sources are  adequate  to meet its  operating
needs.

Capital Resources

Tier 1 capital of the bank increased  $1,610,000 between June 30, 2003 and 2002,
and $898,000 from December 31, 2002 to June 30, 2003.  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  Improvements
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 June 30, 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
June 30, 2003                                                Actual                 adequacy purposes          action provisions
                                                     ----------------------         -----------------          -----------------
(Amounts in thousands)
                                                                                         Minimum                      Minimum
                                                                                         -------                      -------
                                                     Amount           Ratio       Amount         Ratio        Amount          Ratio
                                                     ------           -----       ------         -----        ------          -----
<S>                                                 <C>               <C>        <C>              <C>        <C>               <C>
Total Capital (to risk weighted assets)..........   $17,354           8.69%      $15,985          8.0%       $19,981           10.0%


Tier 1 Capital (to risk weighted assets).........   $15,116           7.57%      $ 7,992          4.0%       $11,989            6.0%


Tier 1 Capital (to average assets) ..............   $15,116           6.92%      $ 8,735          4.0%       $10,919            5.0%
</TABLE>


                                       19
<PAGE>

RESULTS OF  OPERATIONS:  THREE MONTH PERIOD ENDED JUNE 30, 2003  COMPARED TO THE
SAME PERIOD ENDED JUNE 30, 2002.

Net income for the second quarter of 2003 increased by $96,000,  or 25.9%,  over
the same period in 2002. Net interest income for the three months ended June 30,
2003,  was $2.1  million,  a 39% increase  over the $1.5 million  amount  earned
during the second  quarter of 2002.  Non-interest  income for three months ended
June 30, 2003,  was $95,000,  or 61%,  greater than the amount  received for the
same period in 2002.  Non-interest  expense of $1.3 million for the three months
was $415,000, or 47%, more than the 2002 three month period amount. Net interest
income  improved  primarily due to growth of earning  assets and a change in the
earning assets mix. Non-interest income increased primarily due to the timing of
the receipt of fees received for loan brokerage services.  Approximately half of
the  $188,000  increase  in  the  salaries  and  benefits  expense  category  of
non-interest  expenses was directly related to additional staffing  requirements
necessitated by asset growth.

                           Three Months Ended June 30,
                             (Amounts in thousands)

Average Balances                           2003          2002          Increase
----------------                           ----          ----          --------

Earning assets ....................      $208,906       $163,703       $ 45,203
Earning assets yield ($) ..........      $  3,236       $  2,613       $    623
Earning assets yield (%) ..........          6.21%          6.40%      ( .19 %)
Interest-bearing liabilities ......      $186,310       $142,198       $ 44,112
Cost of funds ($) .................      $  1,102       $  1,080       $     22
Cost of funds (%) .................          2.37%          3.05%       (.68 %)
Interest Spread ($) ...............      $  2,134       $  1,533       $    601
Interest Spread (%) ...............          3.84%          3.35%           .49%


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  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.



                                       20
<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 May 21,
          2003.

     (b)  The  following  persons were elected as directors of the  Corporation,
          each  to  serve  a  three-year   term  until  the  Annual  Meeting  of
          Shareholders in 2006.

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

Roger A. F. Habisreutinger ...................          505,893          900
Chandrakant V. Shanbhag ......................          505,893          900
Ashley F. Houser .............................          505,893          900

Other directors whose terms continued after the meeting are:

Richard  H.  Brooks;  Harold  E.  Flemming,  M.D.;  Joel C.  Griffin;  Herman E.
Ratchford; Barry L. Slider and David G. White.

Item 6 - Exhibits and Reports on Form 8-K

     (a)  Exhibits included with this report: None

     (b)  Reports on Form 8-K : None























                                       21
<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.

                                          s/ Barry L. Slider
August 11, 2003                        -----------------------------------------
                                       Barry L. Slider, President and Chief
                                       Executive Officer


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











                                       22

<PAGE>


                                  CERTIFICATION

         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 weaknesses 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:    August 11, 2003                      s/ Barry L. Slider
       -----------------                  -----------------------------------
                                          Barry L. Slider
                                          Chief Executive Officer







                                       23
<PAGE>


                                  CERTIFICATION

         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 weaknesses 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:    August 11, 2003                      s/ V. Lewis Shuler
     -------------------                     ----------------------------------
                                             V. Lewis Shuler

                                             Chief Financial Officer




                                       24