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, 2001

                             Commission File Number
                                    000-28037

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


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

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

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


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


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practical date: Common Stock, no par value, 917,780
shares outstanding on March 31, 2001.

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








<PAGE>




                            FIRST SOUTH BANCORP, INC.

                                   FORM 10-QSB

                                      INDEX


PART I - FINANCIAL INFORMATION                                              Page

         Item 1.  Financial Statements

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

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

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

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

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

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


         Item 2.  Management's Discussion and Analysis ...................  9-17


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,                Dec. 31,
                                                                                                    2001                     2000
                                                                                                    ----                     ----
Assets
<S>                                                                                              <C>                      <C>
Cash & due from banks ............................................................               $   1,915                $   2,043
Due from banks - interest bearing ................................................                   5,055                    8,854
 Investment securities:
         Securities held to maturity .............................................                   3,849                    4,349
         Securities available for sale ...........................................                  13,226                   12,282
Loans ............................................................................                  89,475                   82,838
      Less, allowance for loan losses ............................................                  (1,110)                  (1,055)
                                                                                                 ---------                ---------
Loans - net ......................................................................                  88,365                   81,783
Property & equipment, net ........................................................                   2,855                    2,906
Other assets .....................................................................                   2,499                    2,504
                                                                                                 ---------                ---------
Total assets .....................................................................               $ 117,764                $ 114,721

Liabilities
Deposits:
      Noninterest-bearing ........................................................               $   6,293                $   6,355
      Interest-bearing ...........................................................                  85,191                   92,230
                                                                                                 ---------                ---------
                  Total deposits .................................................                  91,484                   98,585

Securities sold under repurchase agreements ......................................                   2,743                    2,553
Other borrowed funds .............................................................                  10,000                        0
Demand notes issued to the U.S. Treasury .........................................                     339                      130
Other liabilities ................................................................                   1,001                    1,563
                                                                                                 ---------                ---------
                  Total liabilities ..............................................                 105,567                  102,831

Shareholders' equity
Common stock - no par value; 20,000,000 authorized,
     outstanding 917,780 and 917,780, respectively ...............................                   4,589                    4,589
Additional paid-in capital .......................................................                   6,508                    6,508
Undivided profits ................................................................                   1,036                      796
Accumulated other comprehensive income (loss) ....................................                      64                       (3)
                                                                                                 ---------                ---------
         Total shareholders' equity ..............................................                  12,197                   11,890
                                                                                                 ---------                ---------

         Total liabilities and shareholders' equity ..............................               $ 117,764                $ 114,721
                                                                                                 =========                =========
</TABLE>


                                       3
<PAGE>


                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY

                             Statement of Operations

<TABLE>
<CAPTION>
                                                                                                            (Unaudited)
                                                                                                       Period ended March 31,
                                                                                                       ----------------------
                                                                                                            Three Months
                                                                                                            ------------
                                                                                                     2001                    2000
                                                                                                     ----                    ----
                                                                                            (Dollars in thousands, except per share)
Interest income
<S>                                                                                                <C>                      <C>
         Loans, including fees ...................................................                 $ 2,145                  $ 1,504
         Investment securities ...................................................                     265                      150
         Interest bearing deposits ...............................................                      44                       37
         Other investments .......................................................                       0                        3
                                                                                                   -------                  -------

         Total interest income ...................................................                   2,454                    1,694

Interest expense
         Deposits and borrowings .................................................                   1,355                      866

Net interest income ..............................................................                   1,099                      828
         Provision for loan losses ...............................................                     (55)                     (35)
                                                                                                   -------                  -------
Net interest income after provision ..............................................                   1,044                      793

Other income
         Service charges on deposit accounts .....................................                      45                       31
         Other income ............................................................                      42                       93
                                                                                                   -------                  -------
         Total noninterest income ................................................                      87                      124

Other expenses
         Salaries and benefits ...................................................                     493                      410
         Occupancy and equipment .................................................                     118                       98
         Other expense ...........................................................                     182                      181
                                                                                                   -------                  -------
         Total other expense .....................................................                     793                      689

Income before income taxes .......................................................                     338                      228
         Provision for income taxes ..............................................                      98                       56
                                                                                                   -------                  -------

Net income .......................................................................                 $   240                  $   172

         Basic per share earnings ................................................                 $   .26                  $   .19
</TABLE>



                                       4
<PAGE>

                     FIRST SOUTH BANCORP, INC AND SUBSIDIARY

                 Consolidated Statement of Comprehensive Income


                                                              (Unaudited)
                                                     Three Months Ended March 31
                                                     ---------------------------
                                                          2001             2000
                                                          ----             ----
                                                          (Dollars in thousands)

Net Income ...........................................   $ 240            $ 172

Other comprehensive income (loss):

Change in unrealized holdings gains &
    losses on available for sale securities ..........     107              (52)

Income tax (expense) benefit on other
                comprehensive income (loss) ..........     (40)              20
                                                         -----            -----
Total other comprehensive income (loss) ..............      67              (32)

Comprehensive income .................................   $ 307            $ 140
                                                         =====            =====




















                                       5
<PAGE>

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                      Consolidated Statement of Cash Flows
               For the Three Months ended March 31, 2001 and 2000


<TABLE>
<CAPTION>
                                                                                                                 (Unaudited)
                                                                                                             Three Months Ended
                                                                                                                 March 31,
                                                                                                                 ---------
                                                                                                           2001             2000
                                                                                                           ----             ----
                                                                                                           (Dollars in thousands)
Operating Activities
<S>                                                                                                    <C>                 <C>
Net income .................................................................................           $    240            $    172

Adjustments to reconcile net income to net cash
    provided by operating activities
         Provision for loan losses .........................................................                 55                  35
         Depreciation ......................................................................                 54                  44
         Director fees .....................................................................                 15                   8
         Increase in other assets ..........................................................                (35)               (355)
         Increase (decrease) in accrued expenses and other liabilities .....................               (353)               (200)
                                                                                                       --------            --------

Net cash provided (used) by operating activities ...........................................                (24)               (296)


Investing Activities
         Purchase of securities available for sale .........................................             (4,001)                  0
         Purchase of securities held for investment ........................................                  0                   0
         Purchase of restricted FHLB stock .................................................               (336)                  0
         Proceeds from call of available for sale securities ...............................              3,000                   0
         Proceeds from call of held to maturity securities .................................              1,000                   0
         Origination of loans, net of principal collected ..................................             (6,636)             (7,133)
         Purchase of premises and equipment ................................................                (19)               (200)
                                                                                                       --------            --------

Net cash used in investing activities ......................................................             (6,992)
                                                                                                                             (7,333)

Financing Activities
         Net increase (decrease) in deposits ...............................................             (7,101)             12,983
         Net increase (decrease) in retail repurchase agreements ...........................                190                (332)
         Net increase (decrease) in other borrowings .......................................             10,000              (2,500)
                                                                                                       --------            --------

Net cash provided by financing activities ..................................................              3,089              10,151

Net increase (decrease) in cash and cash equivalents .......................................             (3,927)              2,522

Cash and cash equivalents, beginning .......................................................             10,897
                                                                                                                              3,840

Cash and cash equivalents, ending ..........................................................              6,970               6,362
</TABLE>




                                       6
<PAGE>

                    FIRST SOUTH BANCORP, INC. AND SUBSIDIARY

                  Statement of Changes in Shareholders' Equity
       Year-ended December 31, 2000 and Three Months Ended March 31, 2001
                                   (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, 1999 .........................        917,180        $11,090,139        $  14,211        $ (195,018)        $10,909,332

Exercised
stock options .............................            600              6,850                                                  6,850

Net income ................................                                            781,730

Net change in
unrealized gain on
available for sale
securities, net of tax ....................                                                              192,032

Comprehensive income ......................                                                                                  973,762
                                                   -------        -----------        ---------        ----------         -----------
Balance at
December 31, 2000 .........................        917,780         11,096,989          795,941            (2,986)         11,889,944
                                                   =======        ===========        =========        ==========         ===========
</TABLE>

<TABLE>
<CAPTION>
                                                                                                    ACCUMULATED
                                                   SHARES OF                         ACCUMULATED        OTHER              TOTAL
                                                    COMMON           PAID-IN          EARNINGS      COMPREHENSIVE      STOCKHOLDERS'
                                                     STOCK           CAPITAL                        INCOME (LOSS)         EQUITY
                                                     -----           -------          ---------     -------------         ------
Balance at
<S>                                                 <C>            <C>                  <C>                <C>            <C>
December 31, 2000 ..........................        917,780        11,096,989           795,941            (2,986)        11,889,944


Net income .................................                                            240,310

Net change in
unrealized gain on
available for sale
securities, net of tax .....................                                                               66,454

Comprehensive income .......................                                                                                 306,764
                                                    -------        ----------         ---------            ------         ----------
Balance at
March 31, 2001 .............................        917,780        11,096,989         1,036,251            63,468         12,196,708
                                                    =======        ==========         =========            ======         ==========
</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  SB of the
Securities and Exchange Commission.  Accordingly, they do not contain all of the
information and footnotes required by generally accepted  accounting  principles
for complete financial  statements.  However, in the opinion of management,  all
adjustments  considered  necessary for a fair  presentation  have been included.
Operating  results for the three months ended March 31, 2001 are not necessarily
indicative  of the results that may be expected for the year ended  December 31,
2001.  For further  information,  please refer to the financial  statements  and
footnotes  thereto for the  Corporation's  fiscal year ended  December 31, 2000,
contained in the Corporation's Annual Report on Form 10-KSB.

































                                       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  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, 2001 COMPARED TO THE
SAME PERIOD ENDED MARCH 31, 2000.

Net Income

For the first three  months of 2001,  First  South  Bancorp,  Inc.  earned a net
profit  of  approximately  $240.3  thousand,  or $ .26 per  share,  compared  to
approximately $171.9 thousand,  or $ .19 per share, for the same period in 2000.
This 39.8 % increase  in net income  occurred  despite  (i) a 15.2 % increase in
noninterest expense from $688.9 thousand to $793.4 thousand, (ii) an increase in
the  provision  for loan losses  related to loan  growth from $35.0  thousand to
$55.0 thousand and (iii) a decrease of $37.7  thousand,  in noninterest  income.
With the  effective tax rate for 2001  approximately  that of the same period in
2000, the primary source of the improved  earnings was net interest income.  Net
interest  income  increased  slightly more than $271.1 thousand during the first
three months of 2001, or 32.8 %, over the same period in 2000.

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 .86 % and 8.06 %, respectively.


                                       9
<PAGE>


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

                                                            2001           2000
                                                            ----           ----
Return on Average Assets .........................           .86%           .88%

Return on Average Equity .........................          8.06%          6.26%

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

Average Stockholders Equity
as a Percentage of Average Assets ................         10.71%         14.09%

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

Net Interest Income

Net interest income, the major component of First South Bancorp's income, is the
amount by which interest and fees on earning assets exceeds the interest paid on
interest bearing  liabilities,  primarily deposits.  Net interest income for the
first  three  months of 2001  increased  over that of the same period in 2000 by
$271 thousand,  or 32.8%. A number of factors  combined to produce the change in
net interest income which First South Bancorp experienced during the first three
months of 2001.

Though growth in earning assets of $33.4  million,  or 45.7 %, was certainly the
most  significant  factor in the growth of  interest  income,  the change in the
earning  assets mix also  contributed  significantly  to the  improvement in the
earning  assets  yield.  The  segment of total  earning  assets with the highest
interest  yield,  loans,  increased as a percentage of total earning assets from
80.6 % in 2000 to 81.3 % in 2001.

For the  first  three  months  of 2001,  the cost of funds  averaged  5.88 %, an
increase of 34 basis  points  over the  average  cost of funds rate of 5.54 % in
2000. Declining liquidity created by the loan demand in 2001 necessitated growth
in deposits,  which could only be  accomplished  with time deposit  offerings at
rates  near  or at  the  top of  the  market.  The  growth  in  interest-bearing
liabilities with the highest interest cost  significantly  increased the cost of
funds rate. This increase in the cost of funds partially  offset the increase in
the yield on earning  assets.  The overall effect of these changes was a decline
in the  interest  spread  of 31 basis  points,  from 3.77 % in 2000 to 3.46 % in
2001.  First South Bancorp's net interest margin (net interest income divided by
total average earning assets) declined by 37 basis points, from 4.55% in 2000 to
4.18% in 2001.


                                       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, 2001 and 2000.

Table Two             Net interest Income and Average Balance Analysis
                       for the Three Months Ended March 31
                                  2001 and 2000
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                                              Interest                  Average
Interest-Earning Assets                                     Average Balance               Income/Expense             Yield / Cost
-----------------------                                     ---------------               --------------             ------------
                                                          2001          2000            2001         2000           2001       2000
                                                          ----          ----            ----         ----           ----       ----

<S>                                                   <C>               <C>         <C>             <C>            <C>        <C>
Due From Banks - Int Bearing .....................    $   3,235          2,564      $      44            37         4.64%      5.79%
Investments ......................................       16,696         10,661            265           153         6.35%      5.76%
Loans ............................................       86,670         59,946          2,145         1,504        10.04%     10.09%
                                                      ---------        -------      ---------       -------        -----      -----
Total Interest Earning Assets ....................    $ 106,601         73,171      $   2,454         1,694         9.34%      9.31%

Noninterest-Earning Assets
Cash & Due From Banks ............................    $   2,095          1,400
Loan Loss Reserve ................................       (1,073)          (812)
Investments: Fair value ..........................           29           (369)
Premises & Equipment .............................        2,877          2,884
Interest Receivable & Other ......................        2,351          1,941
                                                      ---------         ------
Total Noninterest-Earning Assets .................    $   6,279          5,044

TOTAL ASSETS .....................................    $ 112,880         78,215
                                                      =========         ======
 Interest-Bearing Liabilities
NOW Accounts .....................................    $  25,262         16,234      $     302           196         4.85%      4.86%
Money Market & Savings ...........................        2,531          2,085             23            18         3.68%      3.47%
Time Deposits & IRA's ............................       59,597         41,474            965           611         6.56%      5.93%
Fed Funds Purchased & Repos ......................        2,704          1,727             29            22         4.35%      5.05%
Other borrowed funds .............................        3,222          1,199             34            17         4.28%      5.84%
Demand Notes Issued to Treasury ..................          178            180              2             2         4.55%      4.55%
                                                      ---------         ------      ---------       -------         ----       ----
Total Interest-Bearing Liabilities ...............    $  93,494         62,899      $   1,355           866         5.88%      5.54%

Noninterest-Bearing Liabilities
Demand Deposits ..................................    $   5,986          3,449
Interest Payable .................................          928            546
Other Liabilities ................................          379            300
                                                      ---------        -------
Total Non Int-Bearing Liabilities ................    $ 100,787          4,295

Stockholders' Equity .............................    $  12,093         11,021

Total Liabilities & Equity .......................    $ 112,880         78,215
                                                      =========         ======
Net Interest Income ..............................                                  $   1,099       $    828

             Net Yield on Earning Assets .........                                                                  4.18%      4.55%
             Interest Rate Spread ................                                                                  3.46%      3.77%
</TABLE>






                                       11
<PAGE>




Non-Interest Income

Non-interest  income  for the first  three  months of 2001  decreased  by $ 37.8
thousand,  or 30.3%, less than the 2000 amount of $ 124.5 thousand.  Commissions
and fees  declined  due  primarily  to the  reduction  in  commissions  and fees
generated by the bank's  brokerage  services  business.  Table Three  provides a
three month 2001 to 2000  performance  comparative of categories of non-interest
income.

Table Three            Summary of Total Noninterest Income
                       for the Three Months Ended March 31
                                  2001 and 2000
                             (Dollars in thousands)

                                                            2001            2000
                                                            ----            ----
Service Charges ................................            $ 45            $ 31
Commissions & Fees .............................              29              69
Other Noninterest Income .......................              12              24
                                                            ----            ----
Total ..........................................            $ 86            $124

Non-Interest Expense

Non-interest  expense for the first  three  months of 2001  increased  by $104.5
thousand,  or 15.2 %,  over the  first  three  months  total  in 2000 of  $688.9
Thousand.  While some of the operational  expense  increase  experienced in 2001
resulted from the growth the bank  experienced  in the market area which existed
in 2000, adding a branch office in Columbia,  SC at the end of the first quarter
of 2000 was the single most  significant  factor  associated  with the growth in
non-interest expense in 2001 compared to 2000.

Table  Four  provides  a three  month 2001 to 2000  performance  comparative  of
various categories of non-interest expense.

Table Four              For the Three Months Ended March 31
                                  2001 and 2000
                             (Dollars in thousands)

                                                             2001           2000
                                                             ----           ----
Salaries & Employee Benefits .....................           $493           $410
Occupancy & Equipment ............................            118             98
Other ............................................            182            181
                                                             ----           ----
Total ............................................           $793           $689




                                       12
<PAGE>



Income Taxes

Through  March 31,  2001,  $19,500  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 $54,975  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 16.8%.

CHANGES IN FINANCIAL POSITION

Investment portfolio

During the first three months of 2001,  $4,000,000 in investment securities were
called.  These called  securities  were replaced  with  $4,000,000 in government
agency securities.

Table Five              Analysis of Investment Securities
                            ($ amounts in thousands)

March 31, 2001                         Available for Sale    Held for Investment
                                       ------------------    -------------------
                                        Amortized     Fair     Amortized   Fair
                                           Cost      Value       Cost      Value
                                           ----      -----       ----      -----
Due in one year or less ............    $ 6,001    $ 6,021     $    0     $    0
Due from one to five years .........      4,000      4,005        500        522
Due from five to ten years .........      3,000      3,078      1,000      1,014
Due after ten years ................        123        122      1,849      1,905
                                        =======    =======     ======     ======
                                         13,124     13,226      3,375      3,441



December 31, 2000                      Available for Sale    Held for Investment
                                       ------------------    -------------------
                                        Amortized     Fair     Amortized   Fair
                                           Cost      Value       Cost      Value
                                           ----      -----       ----      -----
Due in one year or less ............    $ 3,500    $ 3,486     $    0     $    0
Due from one to five years .........      6,500      6,474        500        513
Due from five to ten years .........      2,000      2,036      1,000      1,010
Due after ten years ................        123        122      2,849      2,909
                                        =======    =======     ======     ======
                                         12,123     12,188      4,349      4,432





                                       13
<PAGE>

Loan portfolio

For the twelve month  period  between  March 31, 2000 and March 31, 2001,  loans
increased  by $25  million,  or 39.5%.  As is shown in Table Six,  however,  the
composition  of the loan  portfolio on a percentage of the total basis  remained
relatively stable. The greatest  percentage changes took place in the categories
of  Construction/Land  Development  which  declined  2.3  %  of  the  total  and
Commercial & Industrial which increased 2.6% of the total.

As shown in Table Seven,  Variable Rate Loans  comprised 89.4% of the total loan
portfolio.

On March 31, 2001, there was one loan for $252,334 which was on nonaccrual
status.

Table Six                       Analysis of Loans
                                March 31 Balances
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                                                           2001                              2000
                                                                           ----                              ----
Real Estate:
<S>                                                                      <C>                 <C>           <C>                 <C>
   Construction / Land Development ...........................           $11,284             12.6%         $ 9,550             14.9%
   1-4 Family Residential Properties .........................            18,368             20.5%          13,726             21.4%
   Multifamily Residential Properties ........................             1,569              1.8%             727              1.1%
   Nonfarm Nonresidential Properties .........................            29,859             33.4%          20,589             32.1%
   Other Real Estate Loans ...................................               503               .6%             549               .9%
Commercial & Industrial ......................................            27,378             30.6%          17,980             28.0%
Consumer .....................................................               462               .5%             462               .7%
Other ........................................................                52                -%             552               .9%
                                                                         =======                           =======
TOTAL ........................................................           $89,475            100.0%         $64,135            100.0%
</TABLE>

Table Seven          Analysis of Loan Maturities and Repricing Frequency
                              as of March 31, 2001
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                         Within        >3 Months        >1 Year         >3 Years          Over
                                        3 Months       12  Months       3  Years         5 Years         5 Years         Total
                                        --------       ----------       --------        --------         --------        -----

<S>                                      <C>                                                                           <C>
Variable Rate Loans .................    $79,951                                                                       $79,951

Fixed Rate Loans ....................        621         1,819            4,039            862           2,183         $ 9,524
                                        --------         -----            -----          -----           -----         -------

Total Loans .........................   $ 80,572         1,819            4,039            862           2,183         $89,475
</TABLE>


                                       14
<PAGE>

The Bank's  allowance for loan losses is analyzed  monthly in accordance  with a
board approved plan. This judgmental analysis is based upon a model that assigns
a risk rating to each  individual  loan and considers the loss risks  associated
with various  risk  categories  in  relationship  to the current and  forecasted
economic environment.  The Bank also monitors the overall portfolio,  as well as
the level of reserves  maintained by peer banks. The monthly  provision for loan
losses may fluctuate based on the results of this analysis. Table Eight provides
the results of the  year-to-date  analysis for the periods ending March 31, 2001
and 2000, 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

                                                        2001              2000
                                                        ----              ----
Balance at Beginning of Year .................       $1,055,000       $  800,000
Provision Charged to Operations ..............           54,975           35,000
Loans Charged-off ............................                0                0
Loan Recoveries ..............................               50                0
Balance At End Of Period .....................       $1,110,025       $  835,000

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,  2001,  the  cumulative  one-year  gap for the Bank was a positive  or asset
sensitive $ 21.9 million.  At March 31, 2001, the  cumulative  five-year gap for
the Bank was a positive $ 5.1 million or 4.3 % of total  assets.  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, 2001.




                                       15
<PAGE>

Table Nine

    Distribution of Interest-Earning Assets and Interest-Bearing Liabilities
                     Repricing Schedule as of March 31, 2001
                            ($ amounts in thousands)

<TABLE>
<CAPTION>
                                                                One Year        Over One Year             Over
                                                                or Less         to Five Years           Five Years           Total
                                                                -------         -------------           ----------           -----
Interest Earning Assets
<S>                                                             <C>                 <C>                  <C>                <C>
Due From Banks .................................                $  5,055            $      0             $      0           $  5,055
Investment Securities ..........................                   6,001               4,500                5,972             16,473
FHLB Stock .....................................                     500                   0                    0                500
Loans** ........................................                  82,391               4,901                2,183             89,475
                                                                ========            ========             ========           ========
Total ..........................................                $ 93,947            $  9,401             $  8,155           $111,503

** Excludes $252 loan on nonaccrual status.

Interest-Bearing Liabilities
NOW Accounts ........................................            $25,534            $      0             $      0           $ 25,534
Savings & MMIA ......................................              2,380                   0                    0              2,380
Time Deposits:$100m & > .............................             10,584               4,811                    0             15,395
Time Deposits: < $100m ..............................             25,491              16,392                    0             41,883
Repurchase Agreements ...............................              2,744                   0                    0              2,744
Other Borrowed Funds ................................              5,339               5,000                    0             10,339
                                                                ========            ========             ========           ========
Total ...............................................           $ 72,072            $ 26,203             $      0           $ 98,275

Period  Gap .........................................           $ 21,875            $(16,802)            $  8,155           $ 13,228

Cumulative Gap ......................................           $ 21,875            $  5,073             $ 13,228

Period Gap Ratios:
 Interest Sensitive Assets to
 Interest Sensitive Liabilities .....................              130.3%              35.8%

Cumulative Gap Ratios:
  Interest Sensitive Assets to
  Interest Sensitive Liabilities ....................              130.3%             105.1%
</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 ...........................              $   500              $10,084              $ 4,811              $15,395
</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 64.6% of total  assets at March 31, 2001.  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 $5.5 million available through lines of credit with other banks as
an additional source of liquidity funding.  Management  believes that the Bank's
overall liquidity sources are adequate to meet its operating needs.

Capital Resources

The  $1,147,374  increase in equity during the twelve month period between March
31,  2000 and 2001  resulted  primarily  from an  $849,673  increase in retained
earnings and a $290,432  change 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, 2001 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, 2001                                        Actual                   adequacy purposes             action provisions
                                                            ------                   -----------------             -----------------
                                                                                          Minimum                      Minimum
                                                                                          -------                      -------
                                                    Amount            Ratio       Amount           Ratio        Amount        Ratio
                                                    ------            -----       ------           -----        ------        -----
<S>                                                 <C>              <C>         <C>               <C>        <C>              <C>
Total Capital (to risk
weighted assets) ..........................         $13,243          14.3%       $ 7,423           8.0%       $ 9,279          10.0%

Tier 1 Capital (to risk
weighted assets) ..........................         $12,133          13.1%       $ 3,712           4.0%       $ 5,568           6.0%

Tier 1 Capital (to
average assets) (leverage) ................         $12,133          10.7%       $ 4,514           4.0%       $ 5,642           5.0%
</TABLE>



                                       17
<PAGE>



                           PART II - OTHER INFORMATION


Item 4 - 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 11, 2001              ------------------------------------------------------
                          Barry L. Slider, President and Chief Executive Officer


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






























                                       19